EXHIBIT 10.17
VIRTUAL REALTY NETWORK, INC.
SERIES A PREFERRED STOCK
PURCHASE AGREEMENT
May 19, 1995
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
Table of Contents
1. AUTHORIZATION AND SALE OF SHARES.................................. 1
1.1 Authorization........................................... 1
1.2 Agreement to Purchase and Sell.......................... 1
2. CLOSING; DELIVERY................................................. 1
2.1 The First Closing....................................... 1
2.2 The Second Closing...................................... 2
2.3 Delivery................................................ 2
3. COMPANY REPRESENTATIONS AND WARRANTIES............................ 2
3.1 Organization, Good Standing and Qualification........... 2
3.2 Capitalization.......................................... 3
3.3 Subsidiaries............................................ 3
3.4 Due Authorization....................................... 4
3.5 Valid Issuance Stock.................................... 4
3.6 Liabilities............................................. 4
3.7 Title to Properties and Assets.......................... 5
3.8 Status of Proprietary Assets............................ 5
3.9 Material Contracts and Obligations...................... 6
3.10 Litigation.............................................. 7
3.11 Governmental Consents................................... 7
3.12 Compliance with Other Instruments....................... 7
3.13 Disclosure.............................................. 8
3.14 Registration Rights..................................... 8
3.15 Insurance............................................... 8
3.16 Financial Statements.................................... 8
3.17 Certain Actions......................................... 9
3.18 Activities Since Balance Sheet Date..................... 9
3.19 Tax Matters............................................. 10
3.20 Tax Elections........................................... 10
3.21 Invention Assignment and Confidentiality Agreement...... 11
3.22 Interested Party Transactions........................... 11
3.23 Stock Restriction Agreements............................ 11
3.24 Use of Proceeds......................................... 11
3.25 Business Plan........................................... 12
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.................. 12
4.1 Authorization........................................... 12
4.2 Investigation........................................... 12
4.3 Purchase for Own Account................................ 12
4.4 Exempt From Registration.................................... 12
4.5 Economic Risk............................................... 12
4.6 Restricted Securities....................................... 12
4.7 Restrictive Legends......................................... 13
5. CONDITIONS TO THE PURCHASERS' OBLIGATIONS AT THE CLOSING.......... 13
5.1 Representations And Warranties Correct...................... 13
5.2 Performance Of Obligations.................................. 14
5.3 Compliance Certificate...................................... 14
5.4 Proceedings And Documents................................... 14
5.5 Securities Laws............................................. 14
5.6 Restated Articles Effective................................. 14
5.7 Opinion Of The Company's Counsel............................ 14
5.8 Board Of Directors.......................................... 15
5.9 Ownership Of Technology..................................... 15
5.10 Execution Of Rights Agreement............................... 15
5.11 Execution Of Co-sale Agreement.............................. 15
5.12 Minimum To Close............................................ 16
6. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING................ 16
6.1 Representations And Warranties.............................. 16
6.2 Payment Of Purchase Price................................... 16
6.3 Restated Articles Effective................................. 16
6.4 Securities Exemptions....................................... 16
7. MISCELLANEOUS..................................................... 16
7.1 Governing Law............................................... 16
7.2 Survival.................................................... 17
7.3 Successors And Assigns...................................... 17
7.4 Entire Agreement............................................ 17
7.5 Notices..................................................... 17
7.6 Amendments And Waivers...................................... 17
7.7 Delays Or Omissions......................................... 18
7.8 Legal Fees.................................................. 18
7.9 Finder's Fees............................................... 18
7.10 Titles And Subtitles........................................ 18
7.11 Counterparts................................................ 19
7.12 Severability................................................ 19
7.13 Confidentiality............................................. 19
7.14 Public Announcements........................................ 19
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EXHIBITS
Exhibit A - Schedule Of Purchasers
Exhibit B - Amended And Restated Articles Of Incorporation
Exhibit C - Schedule Of Exceptions
Exhibit D - List Of Outstanding Security Holders
Exhibit E - Rights Agreement
Exhibit F - Co-sale And Right Of First Refusal Agreement
Exhibit G - List Of Material Contracts
Exhibit H - Unaudited Financial Statements
Exhibit I - Form Of Invention Assignment And Confidentiality Agreement
Exhibit J - Form Of Company Counsel Opinion
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SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This Series A Preferred Stock Purchase Agreement (the "Agreement") is made this
19th day of May, 1995 (the "Effective Date") by and between Virtual Realty
Network, Inc., a Nevada corporation (the "Company") and the persons and entities
listed on Exhibit A attached hereto (the "Purchasers").
In consideration of the mutual promises, covenants and conditions hereinafter
set forth, the parties hereto agree as follows:
1. AUTHORIZATION AND SALE OF SHARES
1.1. Authorization.
As of the First Closing (as defined below) the Company will have
authorized the issuance, pursuant to the terms and conditions of this
Agreement, of up to 2,000,000 shares of the Company's Series A
Preferred Stock,with par value of $0.01 per share, having the rights,
preferences, privileges and restrictions set forth in the Restated
and Amended Articles of Incorporation of the Company attached to this
Agreement as Exhibit B (the "Amendment to the Ariticles of
Incorporation and Corporate Resolution").
1.2. Agreement to Purchase and Sell.
Subject to the terms and conditions hereof, each Purchaser agrees to
purchase at the Closing and the Company agrees to sell and issue to
each Purchaser at the Closing that number of shares of Series A
Preferred Stock set forth opposite each such Purchaser's name on
Exhibit A attached hereto at a purchase price of $1.00 per share. The
shares of Series A Preferred Stock issued to the Purchaser pursuant
to this Agreement shall be hereinafter referred to as the "Shares".
The purchase price for the Shares shall be paid by check payable to
the order of the Company, by wire transfer of funds to a designated
account of the Company, provided that wire transfer instructions are
delivered to the Purchasers at least one (1) business day prior to
each Closing, or by cancellation of indebtedness.
2. CLOSINGS; DELIVERY
2.1. The First Closing.
The purchase and sale of up to 500,000 Shares hereunder shall be held
at the offices of the Company, on May 19, 1995, or at such other time
and place as the Company and the Purchasers agreeing to purchase a
majority of the Shares may mutually agree upon (the "First Closing").
2.2. The Second Closing.
The purchase and sale of the remaining unissued and unsold Shares
shall be held at the offices of the Company, at such time promptly
after and in a manner satisfactory to Intel Corporation ("Intel")
that the following has occurred: (i) at least 25 real estate offices
shall have subscribed for the Company's product (the "VRi System")
and key personnel in each office shall have been trained to use the
VRi System, (ii) at least 20 mortgage lenders shall be actively
offering their mortgage products on VRi System "network", be trained
on the use of the VRi System and be fully able to use Intel's
ProShare(TM) with the VRi System and interface with customers using
ProShare at the 25 real estate trial sites, and (iii) a customer
shall have obtained a loan from a lender participating on the VRi
System network for the purchase of real estate using the VRi System
resulting in the payment by the lender to the Company of 0.5% of the
value of the loan (the "Second Closing").
2.3 Delivery.
At each Closing, the Company will deliver to each Purchaser a
certificate representing the Shares to be purchased by such Purchaser
hereunder against payment of the full purchase price therefor by
check payable to the order of the Company or by wire transfer.
3. COMPANY REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to the Purchasers that, except
as set forth in the Schedule of Exceptions ("Schedule of Exceptions")
attached to this Agreement as Exhibit C (which Schedule of Exceptions shall
be deemed to be representations and warranties to Purchasers), the
statements in the following sections of this Section 3 are all true and
correct:
3.1 Organization, Good Standing and Qualification.
The Company is a corporation duly organized, validly existing and in
good standing under, and by virtue of, the laws of the State of
California and has all requisite corporate power and authority to own
its properties and assets and to carry on its business as now
conducted and as presently proposed to be conducted. The Company is
qualified to do business as a foreign corporation in each
jurisdiction where failure to be so qualified would have a material
adverse effect on its financial condition, business, prospects or
operations.
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3.2. Capitalization.
Immediately prior to the Closing, the authorized capital stock of the
Company will consist of the following:
(a) Common Stock. A total of 25,000,000 authorized shares of
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Common Stock ($.001 par value) of which 2,750,000 shares are
issued and outstanding.
(b) Preferred Stock. A total of 10,000,000 authorized shares of
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Preferred Stock ($.001 par value), 2,000,000 of which will be
designated Series A Preferred Stock and none of which will be
issued and outstanding.
(c) Options, Warrants, Reserved Shares. The Company has reserved
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2,000,000 shares of its Common Stock for possible issuance upon
the conversion of the shares of Series A Preferred Stock to be
issued hereunder (the "Conversion Shares"). Except for (i) the
conversion privileges of the Series A Preferred Stock to be
issued hereunder, (ii) the 500,000 shares of Common Stock
reserved for issuance under the Company's 1995 Consultant and
Employees Stock Compensation Plan under which no shares are
outstanding and (iii) employee stock options of 50,000 shares
each contained in the various contracts contained in Exhibit G.
there are no options, warrants, conversion privileges or other
rights, or agreements with respect to the issuance thereof,
presently outstanding to purchase any of the capital stock of
the Company. Apart from the exceptions noted in this Section
3.2 (c), no shares (including the Shares and the Conversion
Shares) of the Company's outstanding capital stock, or stock
issuable upon exercise or exchange of any outstanding options
or other stock issuable by the Company, are subject to any
rights of first refusal or other rights to purchase such stock
(whether in favor of the Company or any other person), pursuant
to any agreement or commitment of the Company.
(d) Outstanding Security Holders. Attached to this Agreement as
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Exhibit D is a complete list of all outstanding shareholders,
option holders and other security holders of the Company as of
the date set forth on such exhibit.
3.3 Subsidiaries.
The Company does not presently own or control, directly or
indirectly, any interest in any other corporation, partnership,
trust, joint venture, association, or other entity.
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3.4. Due Authorization.
All corporate action on the part of the Company, its officers,
directors and shareholders necessary for the authorization, execution
and delivery of, and the performance of all obligations of the
Company under, this Agreement, the Rights Agreement attached as
Exhibit E (the "Rights Agreement") and the Co-Sale and Right of First
Refusal Agreement attached as Exhibit F (the "Co-Sale Agreement") and
the authorization, issuance, reservation for issuance and delivery of
all of the Shares being sold under this Agreement and of the
Conversion Shares has been taken or will be taken prior to each
Closing. This Agreement is a valid and binding obligation of the
Company enforceable in accordance with its terms, subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency,
moratorium, reorganization and similar laws affecting creditors'
rights generally and to general equitable principles. The Shares are
not subject to any preemptive rights or rights of first refusal.
3.5 Valid Issuance of Stock.
(a) The Shares, when issued, sold and delivered in accordance with
the terms of this Agreement for the consideration provided for
herein, will be duly and validly issued, fully paid and non
assessable. The Conversion Shares have been duly and validly
reserved for issuance and, upon issuance in accordance with the
terms of the Restated Articles will be duly and validly issued,
fully paid and nonassessable.
(b) The outstanding shares of the capital stock of the Company are
duly and validly issued, fully paid and nonassessable, and such
shares of such capital stock, and all outstanding options and
other securities of the Company have been issued, in full
compliance with the registration and prospectus delivery
requirements of the Securities Act of 1933, as amended (the
"Securities Act") and the registration and qualification
requirements of all applicable state securities laws, or in
compliance with applicable exemptions therefrom, and all other
provisions of applicable federal and state securities laws,
including, without limitation, anti-fraud provisions.
3.6. Liabilities.
The Company has no indebtedness for borrowed money that the Company
has directly or indirectly created, incurred, assumed, or guaranteed,
or with respect to which the Company has otherwise become directly or
indirectly liable.
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3.7. Title to Properties and Assets.
The Company has good and marketable title to its properties and
assets held in each case subject to no mortgage, pledge, lien,
encumbrance, security interest or charge of any kind. With respect to
the property and assets it leases, the Company is in compliance with
such leases and, to the best of the Company's knowledge, the Company
holds valid leasehold interests in such assets free of any liens,
encumbrances, security interests or claims of any party other than
the lessors of such property and assets.
3.8. Status of Proprietary Assets.
(a) Ownership. The Company has full title and ownership of, or has
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license to, all patents, patent applications, trademarks,
service marks, trade names, copyrights, moral rights,
maskworks, trade secrets, confidential and proprietary
information, compositions of matter, formulas, designs,
proprietary rights, know-how and processes (all of the
foregoing collectively hereinafter referred to as the
"Proprietary Assets") necessary to enable it to carry on its
business as now conducted and as presently proposed to be
conducted without any conflict with or infringement of the
rights of others. To the best of the Company's knowledge, no
third party has any ownership right, title, interest, claim in
or lien on any of the Company's Proprietary Assets and the
Company has taken, and in the future the Company will use its
best efforts to take, all steps reasonably necessary to
preserve its legal rights in, and the secrecy of, all its
Proprietary Assets, except those for which disclosure is
required for legitimate business or legal reasons.
(b) Licenses: Other Agreements. The Company has not granted, and,
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to the best of the Company's knowledge, there are not
outstanding, any options, licenses or agreements of any kind
relating to any Proprietary Asset of the Company, nor is the
Company bound by or a party to any option, license or agreement
of any kind with respect to any of its Proprietary Assets. The
Company is not obligated to pay any royalties or other payments
to third parties with respect to the marketing, sale,
distribution, manufacture, license or use of any Proprietary
Asset or any other property or rights.
(c) No Infringement. To the best of the Company's knowledge, the
---------------
Company has not violated or infringed, and is not currently
violating or infringing, and the Company has not received any
communications alleging that the Company (or any of its
employees or consultants) has violated or infringed or, by
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conducting its business as proposed, would violate or infringe,
any Proprietary Asset of any other person or entity.
(d) No Breach by Employee. The Company is not aware that any
---------------------
employee or consultant of the Company is obligated under any
agreement (including licenses, covenants or commitments of any
nature, or subject to any judgment, decree or order of any
court or administrative agency, or any other restriction that
would interfere with the use of his or her best efforts to
carry out his or her duties for the Company or to promote the
interests of the Company or that would conflict with the
Company's business as proposed to be conducted. The carrying on
of the Company's business by the employees and contractors of
the Company and the conduct of the Company's business as
presently proposed, will not, to the best of the Company's
knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which any of such
employees or contractors or the Company is now obligated. The
Company does not believe it is or will be necessary to utilize
any inventions of any employees of the Company (or persons the
Company currently intends to hire) made prior to their
employment by the Company. At no time during the conception of
or reduction of any of the Company's Proprietary Assets to
practice was any developer, inventor or other contributor to
such patents operating under any grants from any governmental
entity or agency or private source, performing research
sponsored by any governmental entity or agency or private
source or subject to any employment agreement or invention
assignment or nondisclosure agreement or other obligation with
any third party that could adversely affect the Company's
rights in such Proprietary Assets.
3.9. Material Contracts and Obligations.
Attached hereto as Exhibit G is a list of all oral and written
agreements, contracts, leases, licenses, instruments, commitments,
indebtedness, liabilities and other obligations to which the Company
is a party or by which it is bound that are (i) material to the
conduct and operations of its business and properties; (ii) involve
any of the officers, consultants, directors, employees or
shareholders of the Company; or (iii) obligate the Company to share,
license or develop any product or technology. Copies of such
agreements and contracts and documentation evidencing such
liabilities and other obligations have been made available for
inspection by the Purchasers or the special counsel to the
Purchasers. For purposes of this Section 3.9, "material" shall mean
any agreement, contract, indebtedness, liability or other obligation
either: (i) having an
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aggregate value, cost or amount in excess of $25,000, or (ii) not
terminable upon thirty days notice.
3.10. Litigation.
There is no action, suit, proceeding, claim, arbitration or
investigation ("Action") pending (or, to the best of the Company's
knowledge, currently threatened) against the Company, its activities,
properties or assets or, to the best of the Company's knowledge,
against any officer, director or employee of the Company in
connection with such officer's, director's or employee's relationship
with, or actions taken on behalf of, the Company. To the best of the
Company's knowledge, there is no factual or legal basis for any such
Action that might result, individually or in the aggregate, in any
material adverse change in the business, properties, assets,
financial condition, affairs or prospects of the Company. By way of
example but not by way of limitation, there are no Actions pending
or, to the best of the Company's knowledge, threatened (or any basis
therefor known to the Company) relating to the prior employment of
any of the Company's employees or consultants, their use in
connection with the Company's business of any information, technology
or techniques allegedly proprietary to any of their former employers,
clients or other parties, or their obligations under any agreements
with prior employers, clients or other parties. The Company is not a
party to or subject to the provisions of any order, writ, injunction,
judgment or decree of any court or government agency or
instrumentality and there is no Action by the Company currently
pending or which the Company intends to initiate.
3.11 Governmental Consents.
All consents, approvals, orders, authorizations, registrations,
qualifications, designations, declarations or filings with any U.S.,
federal or state governmental authority on the part of the Company
required in connection with the consummation of the transactions
contemplated herein shall have been obtained prior to and be
effective as of the Closing. Based in part on the representations of
the Purchasers set forth in Section 4 below, the offer, sale and
issuance of the Shares in conformity with the terms of this Agreement
are exempt from the registration and prospectus delivery requirements
of the Securities Act and applicable state securities laws.
3.12 Compliance with Other Instruments.
The Company is not in, nor will the conduct of its business as
proposed to be conducted result in, any violation, breach or default
of any term of the Restated Articles or the Company's Bylaws or in
any respect of any term or provision of any mortgage, indenture,
contract, agreement or
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instrument to which the Company is a party or by which it may be
bound, or of any provision of any foreign or domestic state or
federal judgment, decree, order, statute, rule or regulation
applicable to or binding upon the Company. The execution, delivery
and performance of and compliance with this Agreement and the
consummation of the transactions contemplated hereby will not result
in any such violation or default, or be in conflict with or
constitute, with or without the passage of time or the giving of
notice or both, either a default under the Company's Articles of
Incorporation or Bylaws, or any agreement or contract of the Company,
or to the best of the Company's knowledge, a violation of any
statute, law, regulation or order, or an event which results in the
creation of any lien, charge or encumbrance upon any asset of the
Company.
3.13 Disclosure.
No representation or warranty by the Company in this Agreement or in
any statement or certificate signed by any officer of the Company
furnished or to be furnished to the Purchasers pursuant to this
Agreement contains or will contain any untrue statement of a material
fact or omits or will omit to state any material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances in which they are made, not misleading.
3.14 Registration Rights.
Except as provided in the Rights Agreement, the Company has not
granted or agreed to grant any person or entity any rights (including
piggyback registration rights) to have any securities of the Company
registered with the United States Securities and Exchange Commission
or any other governmental authority.
3.15 Insurance.
The Company has obtained, or will obtain (within 15 days after the
First Closing) and will maintain, fire and casualty insurance
policies with extended coverage, sufficient in amount (subject to
reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed.
3.16 Financial Statements.
Attached to this Agreement as Exhibit H is an unaudited balance sheet
of the Company dated April 1, 1995 (the "Balance Sheet Date"), an
unaudited income statement of the Company for the period ended
April 1, 1995 (all such financial statements being collectively
refereed to herein as the "Financial Statements"). Such Financial
Statements (i) are in
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accordance with the books and records of the Company, (ii) are true,
correct and complete and present fairly the financial condition of the
Company at the date or dates therein indicated and the results of
operations for the period or periods therin specified, and (iii) have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis, except as to the unaudited financial
statements, for the omission of notes thereto and normal year-end audit
adjustments. Specifically, but not by way of limitation, the respective
balance sheets of the Financial Statements disclose all of the Company's
material debts, liabilities and obligations of any nature whether due or
to become due as of their respective dates (including, without limitation,
absolute liabilities, accrued liabilities, and contingent liabilities) to
the extent such debts, liabilities and obligations are required to be
disclosed in accordance with generally accepted accounting principles. The
Company has good and marketable title to all assets set forth on the
balance sheets of the Financial Statements, except for such assets as have
been spent, sold or transferred in the ordinary course of business since
their respective dates.
3.17 Certain Actions.
Since the Balance Sheet Date, the Company has not; (i) declared or paid
any dividends, or authorized or made any distribution upon or with respect
to any class or series of its capital stock; (ii) incurred any
indebtedness for money borrowed or incurred any other liabilities
individually in excess of $10,000 or in excess of $25,000 in the
aggregate; (iii) made any loans or advances to any person, other than
ordinary advances for travel expenses; (iv) sold, exchanged or otherwise
disposed of any material assets or rights other than the sale of inventory
in the ordinary course of its business; or (v) entered into any
transactions with any of its officers, directors or employees or any
entity controlled by any of such individuals.
3.18 Activities Since Balance Sheet Date.
Since the Balance Sheet Date, there has not been:
(a) any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting the assets, properties, financial
condition, operating results, prospects or business of the Company
(as presently conducted and as presently proposed to be conducted);
(b) any waiver by the Company of a valuable right or of a material debt
owed to it;
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(c) any satisfaction or discharge of any lien, claim or encumbrance
or payment of any obligation by the Company, except such a
satisfaction, discharge or payment made in the ordinary course
of business that is not material to the assets, properties,
financial condition, operating results or business of the
Company;
(d) any material change or amendment to a material contract or
arrangement by which the Company or any of its assets or pro-
perties is bound or subject, except for changes or amendments
which are expressly provided for or disclosed in this
Agreement;
(e) any material change in any compensation arrangement or
agreement with any present or prospective employee, contractor
or director not approved by the Company's Board of Directors;
or
(f) to the Company's knowledge, and other event or condition of any
character which would materially and adversely affect the
assets, properties, financial condition, operating results or
business of the Company.
3.19 Tax Matters.
The provisions for taxes in the Financial Statements are sufficient
for the payment of all accrued and unpaid federal, state, county and
local taxes of the Company, whether or not assessed or disputed as of
the date of each such balance sheet. There have been no examinations
or audits of any tax returns or reports by any applicable federal,
state or local governmental agency. The Company has duly filed all
federal, state, county and local tax returns required to have been
filed by it and paid all taxes shown to be due on such returns.
There are in effect no waivers of applicable statutes of limitations
with respect to taxes for any year.
3.20 Tax Elections.
The Company has not elected pursuant to the Internal Revenue Code of
1986, as amended (the "Code"), to be treated as an "S" corporation or
a collapsible corporation pursuant to Section 341(f) or
Section 1362(a) of the Code, nor has it made any other elections pur-
suant to the Code (other than elections which relate solely to
matters of accounting, depreciation or amortization) which have a
material effect on the Company, its financial condition, its business
as presently conducted or presently proposed to be conducted or any
of its properties or material assets.
3.21 Invention Assignment and Confidentiality Agreement
Each employee, officer, consultant and contractor of the Company has
entered into and executed (and each such future employee, officer,
consultant and contractor of the Company will enter into and execute)
an Invention Assignment and Confidentiality Agreement in the form
attached to this Agreement as Exhibit I or an employment or
consulting agreement containing substantially similar terms.
3.22 Interested Party Transactions.
To the best knowledge of the Company, no officer or director of the
Company or any "affiliate" or "associate" (as those terms are defined
in Rule 405 promulgated under the 0000 Xxx) of any such person has
had, either directly or indirectly, a material interest in: (i) any
person or entity which purchases from or sells, licenses or furnishes
to the Company any goods, property, technology, intellectual or other
property rights or services; or (ii) any contract or agreement to
which the Company is a party or by which it may be bound or affected.
3.23 Stock Restriction Agreements.
Each employee, director or consultant who holds any currently
outstanding shares of common stock or other securities of the Company
or any option, warrant or right to acquire such shares or other
securities, has entered into or is otherwise bound by, an agreement
granting the Company (i) the right to repurchase the shares for the
original purchase price, or to cancel the option, warrant or right,
in the event the holder's employment or services with the Company
terminate for any reason, subject to release of such repurchase or
cancellation right at a rate of 12/48ths after the first year of
employment or service and 1/48th per month thereafter, and (ii) a
right of first refusal with respect to all such shares. The Company
has furnished to special counsel to the Purchasers true and complete
copies of the forms of all such stock restriction agreements and/or
option agreements.
3.24 Use of Proceeds.
The Company shall use the proceeds from the sale of the Shares in the
First Closing for the trial launch of the VRi System with San
Xxxxxxxx Valley Realtor's Association (the "Trial"). The Company
shall use the proceeds from the sale of the Shares in the Second
Closing to complete the Trial to launch the VRi System on a national
basis and to define the outstanding debt obligations owed to American
Growth Capital.
3.25 Business Plan.
The business plan prepared by the Company and delivered to Intel at
or prior to the date hereof was prepared in good faith and is not
materially misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser represents and warrants to the Company as follows:
4.1 Authorization.
This Agreement when executed and delivered by Purchaser will
constitute a valid an legally binding obligation of Purchaser.
4.2 Investigation.
Purchaser acknowledges that it has had an opportunity to discuss the
business, affairs and current prospects of the Company with its
officers. Purchaser further acknowledges having had access to
information about the Company that it has requested.
4.3 Purchase for Own Account.
The Shares and the Conversion Shares will be acquired for its own
account, not as a nominee or agent, and not with a view to or in
connection with the sale or distribution of any part thereof.
4.4 Exempt from Registration.
Purchaser understands that the Shares and the Conversion Shares will
not be registered under the Securities Act, on the ground that the
sale provided for in this Agreement is exempt from registration under
of the Securities Act, and that the reliance of the Company on such
exemption is predicated in part on Purchaser's representations set
forth in this Agreement.
4.5 Economic Risk.
Purchaser acknowledges that is able to fend for itself in the
transactions contemplated by this Agreement and has the ability to
bear the economic risks of its investment pursuant to the Agreement.
4.6 Restricted Securities.
Purchaser understands that the Shares and the Conversion Shares being
purchased hereunder are restricted securities within the meaning of
Rule 144 under the Securities Act; that the Shares and the Conversion
Shares
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are not registered and must be held indefinitely unless they are
subsequently registered or an exemption from such registration is
available.
4.7 Restrictive Legends.
It is understood that each certificate representing (i) the Shares,
(ii) Conversion Shares, and (iii) any other securities issued in
respect of the Shares upon any stock split, stock dividend,
recapitalization, merger or similar event (unless no longer required
in the opinion of counsel for the Company) shall be stamped or
otherwise imprinted with a legend substantially in the following form
(in addition to any legend that may now or hereafter be required by
applicable state law):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS. PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
The legend set forth above shall be removed by the Company from any
certificate evidencing Shares or Conversion Shares upon delivery to
the Company of an opinion by counsel, reasonably satisfactory to the
Company, that a registration statement under the Securities Act is at
that time in effect with respect to the legended security or that
such security can be freely transferred in a public sale without such
a registration statement being in effect and that such transfer will
not jeopardize the exemption or exemptions from registration pursuant
to which the Company issued the Shares or Conversion Shares.
5. CONDITIONS TO THE PURCHASERS' OBLIGATIONS AT THE CLOSING
The obligations of the Purchasers under this agreement to purchase the
Shares at the First and Second Closings are subject to the fulfillment, to
the satisfaction of special counsel to the Purchasers on or prior to each
Closing, of the following conditions:
5.1 Representations and Warranties Correct.
The representations and warranties made by the Company in Section 3
hereof shall be true and correct when made, and shall be true and
correct as of the date of each Closing with the same force and effect
as if they had been made on and as of such date, subject, with
respect to the
Second Closing, to the receipt by special counsel to the Purchasers
of a revised Schedule of Exceptions in a manner reasonably acceptable
to the Purchasers of a majority of the Shares to be sold and issued
in the Second Closing.
5.2 Performance of Obligations.
The Company shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before each
Closing and shall have obtained all approvals, consents and
qualifications necessary to complete the purchases and sales
described herein.
5.3 Compliance Certificate.
At the First Closing and the Second Closing, the Company shall
deliver to the Purchasers a certificate, dated the date of First
Closing and Second Closing, respectively, signed by the company's
President certifying that the conditions specified in Sections 5.1
and 5.2 have been fulfilled.
5.4 Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated hereby and all documents and instruments
incident to such transactions shall be satisfactory in substance and
form to special counsel to the Purchasers, and special counsel to the
Purchasers shall have received all such counterpart originals or
certified or other copies of such documents as it may reasonably
request.
5.5 Securities Laws.
The offer and sale of the Shares to the Purchasers pursuant to this
Agreement shall be exempt from the registration requirements of the
Securities Act and the registration and/or qualification requirements
of all applicable state securities laws.
5.6 Amended Articles Effective
The Restated Articles shall have been duly adopted by the company by
all necessary corporate action of its Board of Directors and
shareholders and shall have been duly filed with and accepted by the
Secretary of State of the State of Nevada.
5.7 Opinion of the Company's Counsel.
At the First Closing and the Second Closing, counsel to the Company
shall have delivered to special counsel to the Purchasers an opinion
addressed to the Purchasers, dated the date of each such Closing
substantially in form of Exhibit J attached hereto and reasonably
acceptable to special counsel to the Purchasers.
5.8 Board of Directors.
The Company's Board of Directors on the date of the First Closing
shall consist of Xxxxxxx X. Xxxxxx, Xxxxxx X. Xxxxx, Xxxxxx X.
Xxxxxx, and Xxx Xxxxxx.
5.9 Ownership of Technology.
(a) General. Special counsel to the Purchasers shall have received
-------
from the Company all documents and other material requested by
special counsel to the Purchasers for the purpose of examining
and determining the Company's rights in and to any technology,
products and proprietary assets now used, proposed to be used
in, or necessary to, the Company's business as now conducted
and proposed to be conducted, and the status of the Company's
ownership rights in and to all such technology, products and
proprietary assets shall be reasonably satisfactory to special
counsel to the Purchasers.
(b) MortgageFlex and Software Today Licenses. The Company shall
----------------------------------------
have entered into the MortgageFlex Systems, Inc. License and
the Software Today, Inc. License and shall grant substantial
distribution and development rights. Such licenses shall be
reasonably satisfactory to special counsel to the Purchasers.
5.10 Execution of Rights Agreement.
On the date of the First Closing, the Company shall have executed
and delivered to the Purchasers the Rights Agreement in
substantially the form attached hereto as Exhibit E.
5.11 Execution of Co-Sale Agreement.
On the date of the First Closing, the Company shall have executed
and delivered to the Purchasers, the Co-Sale Agreement in
substantially the form attached hereto as Exhibit F.
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5.12 Minimum to Close
At the First Closing, the Purchasers shall have purchased not
less than 500,000 Shares, with gross proceeds to the Company of
not less than $500,000. At the Second Closing, the Purchasers
shall have purchased not less than 1,500,000 Shares, with gross
proceeds to the Company of not less than $1,500,000.
6. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING
The obligations of the Company under this Agreement to issue and sell
the Shares at the First and Second Closings are subject to the
fulfillment on or prior to each Closing of the following conditions:
6.1 Representations and Warranties.
The representations and warranties of each Purchaser in Section
4 hereof shall be true as of the First and Second Closing,
respectively.
6.2 Payment of Purchase Price.
Each Purchaser shall have delivered to the Company the purchase
price in accordance with the provisions of Section 2.
6.3 Restated Articles Effective.
The Restated Articles shall have been duly adopted by the
Company by all necessary corporate action of its Board of
Directors and shareholders, and shall have been duly filed with
and accepted by the Secretary of State of the State of
California.
6.4 Securities Exemptions.
The offer and sale of the Shares to the Purchasers pursuant to
this Agreement shall be exempt from the registration
requirements of the Securities Act, and the registration and/or
qualification requirements of all applicable state securities
laws.
7. MISCELLANEOUS
7.1 Governing Law.
This Agreement shall be governed in all respects by the laws of
the state of Delaware without regard to provisions regarding
choice of laws.
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7.2 Survival.
The representations, warranties, covenants and agreements made herein
shall survive any investigation made by any party hereto and the
closing of the transactions contemplated hereby.
7.3 Successors and Assigns.
Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto
whose rights or obligations hereunder are affected by such
amendments.
7.4 Entire Agreement.
This Agreement and the exhibits hereto which are hereby expressly
incorporated herein by this reference constitute the entire
understanding and agreement between the parties with regard to the
subjects hereof and thereof; provided, however that nothing in this
-----------------
Agreement shall be deemed to terminate or supersede the provisions of
any confidentiality and nondisclosure agreements executed by the
parties hereto prior to the date hereof, which agreements shall
continue in full force and effect until terminated in accordance with
their respective terms.
7.5 Notices.
Except as may be otherwise provided herein, all notices and other
communications required or permitted hereunder shall be in writing
and shall be hand delivered or mailed by registered or certified
first class mail, postage prepaid, addressed, (a) if to the
Purchasers, to each such Purchaser's address set forth on Exhibit A
attached hereto, or to such other address as such Purchaser or any of
its successors or assigns shall have furnished to the Company in
writing, or (b) if to the Company, to its address set forth below its
signature hereto, or to such other address as the Company shall have
furnished to the Purchasers or their successors or assigns in
writing. Notices hand delivered shall be effective upon delivery and
notices sent by first class mail shall be effective three days
following deposit in the United States mail.
7.6 Amendments and Waivers.
Any item of this Agreement may be amended and the observance of any
term of the Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only
with the written consent of the Company and the Purchasers holding at
least a majority of the Shares.
7.7 Delays or Omissions.
No delay or omission to exercise any right, power or remedy accruing
to the Company or to the Purchasers, upon any breach or default of
any party hereto under this Agreement, shall impair any such right,
power or remedy of the Company, or the Purchasers, nor shall it be
construed to be a waiver of any such breach or default, or an
acquiescence therein, or of any similar breach of default thereafter
occurring; nor shall any waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of the Company or the
Purchasers of any breach of default under this Agreement or any
waiver on the part of the Company or the Purchasers of any provisions
or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing.
All remedies, either under this Agreement, or be law or otherwise
afforded to the Company or the Purchasers shall be cumulative and not
alternative.
7.8 Legal Fees.
In the event of any action at law, suit in equity or arbitration
proceeding in relation to this Agreement or any Shares or other
securities of the Company issued or to be issued, the prevailing
party, shall be paid by the other party a reasonable sum for
attorney's fees and expenses for such prevailing party.
7.9 Finder's Fees.
Each party (a) represents and warrants to the other party hereto that
it has retained no finder or broker in connection with the
transactions contemplated by this Agreement, and (b) hereby agrees to
indemnify and to hold harmless the other party hereto from and
against any liability for any commission or compensation in the
nature of a finder's fee of any broker or other person or firm (and
the costs and expenses of defending against such liability or
asserted liability) for which the indemnifying party or any of its
employees or representatives are responsible.
7.10 Titles and Subtitles.
The titles of the sections and subsections of this Agreement are for
convenience of reference only and are not to be considered in
construing this Agreement.
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7.11 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall
constitute one instrument.
7.12 Severability.
Should any provision of this Agreement be determined to be illegal or
unenforceable, such determination shall not affect the remaining
provisions of this Agreement.
7.13 Confidentiality.
Each party hereto agrees that, except with the prior written
permission of the other party, it shall at all times keep
confidential and not divulge furnish or make accessible to anyone any
confidential information, knowledge or data concerning or relating to
the business or financial affairs of the other parties to which such
party has been or shall become privy by reason of this Agreement,
discussions or negotiations relating to this Agreement, the
performance of its obligations hereunder or the ownership of Shares
(or Conversion Shares) purchased hereunder. The parties hereto
further agree that there shall be no press release or other public
statement issued by either party relating to this Agreement or the
transactions contemplated hereby, unless the parties otherwise agree
in writing. The provisions of this Section 7.13 shall be in addition
to, and not in substitution for, the provisions of any separate
nondisclosure agreement executed by the parties hereto with respect
to the transactions contemplated hereby.
7.14 Public Announcements.
Neither the Company nor any Purchaser (other than Intel) shall use
Intel's name or refer to Intel directly or indirectly in connection
with Intel's relationship with the Company in any other manner,
unless otherwise required by law or with Intel's prior written
consent, which consent will generally not be granted. The parties
agree that there will be no press release or other public statement
issued by either party relating to the Agreement or the transactions
contemplated hereby unless required by law. If the Company determines
that is required by law to file this Agreement with the Securities
and Exchange Commission, it shall at reasonable time before making
any such filing, consult with Intel regarding such filing and seek
confidential
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treatment for such portions of the Agreement as may be requested by
Intel.
IN WITNESS WHEREOF, the parties hereto have executed this Series A Preferred
Stock Purchase Agreement as of the day and year herein above first written.
VIRTUAL REALTY NETWORK, INC.
0000 XxxXxxxxx Xxxx., Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
By:
----------------------------
Title:
--------------------------
PURCHASERS:
INTEL CORPORATION
By: /s/ Xxxxx Xxxxxxx
----------------------------
Title:
--------------------------
treatment for such portions of the Agreement as may be requested by
Intel.
IN WITNESS WHEREOF, the parties hereto have executed this Series A Preferred
Stock Purchase Agreement as of the day and year herein above first written.
VIRTUAL REALTY NETWORK, INC.
0000 XxxXxxxxx Xxxx., Xxx. 000
Xxxxxxx Xxxxx, XX 00000
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Title: President
--------------------------
PURCHASERS:
INTEL CORPORATION
By:
--------------------------
Title:
--------------------------
Exhibit A
---------
Schedule of Purchasers
First Closing Second Closing
------------- --------------
Purchasers Shares Amount Shares Amount
---------- ------ ------ ------ ------
Intel Corporation 500,000 $500,000 500,000 $500,000
0000 Xxxxxxx Xxxxxxx
Xxxx.
Xxxxx Xxxxx, XX 00000
Attn:____________________
Total 500,000 $750,000 1,500,000 $1,250,000
VRI Series A Purchase Agreement - PREFRD-A.PR2
Draft dated May 18, 1995
Exhibit A
---------
Schedule of Purchasers
First Closing Second Closing
------------- --------------
Purchasers Shares Amount Shares Amount
---------- ------ ------ ------ ------
Intel Corporation ______ $500,000 ______ $500,000
0000 Xxxxxxx Xxxxxxx
Xxxx.
Xxxxx Xxxxx, XX 00000
Attn: _______________
American Growth Fund I
L.P.
00000 Xxxxxxx Xx.,
Xxx. 0
Xxxxxxxx Xxxxx, XX
00000
Attn: Xxxxx Xxxxxx
$250,000 $500,000
---------- -------- --------- --------
$250,000
TOTAL $750,000 $1,250,000
---------- ---------
EXHIBIT "C" - SCHEDULE OF EXCEPTIONS
The following are the Exceptions to the statements contained in the
Virtual Realty Network, Inc. Series A Preferred Stock Purchase Agreement, by
reference to the Section Numbers therein:
1. Section 3.2(c) exceptions: There are options for 200,000 shares of
stock under the four (4) employment/consulting contract, copies of which are
shown under Exhibit G, and Investment Agreement, dated March 21, 1995, between
Virtual Realty Network, Inc. and American Growth Fund I LP, a California
Limited Partnership, and the Addendum to Investment Agreement, dated March 31,
1995, which contains a grant of warrant for 175,000 shares at $.70 per share.
2. Section 3.6 Liabilities - The Company has borrowed $50,000.00 from
Xxxxx Xxxxxx and Xxxxxx Xxxxx, evidenced by a Promissory Note dated March 22,
1995, attached as Exhibit G.
3. Section 3.8(b) Licenses: Other Agreements. The Company has entered
---------------------------
into an Agreement with MortgageFlex, dated April 21, 1995, attached in Exhibit
G, which deals with enchancement of existing programs, new ideas generated by
the agreement, and development of the VRI "Loanmaker" xxxx and methodology.
4. Section 3.8(d) No Breach by Employee. The Company acquired the
----------------------
ownership to the software program and source code for the program called "TIES",
which is a real estate office automation software. This software needs to be
completed, but is not needed for the operation of the Company.
5. Section 3.14 Registration Rights. The Investment Agreement, dated
March 21, 1995, between Virtual Realty Network, Inc. and American Growth Fund I
LP, a California Limited Partnership, and the Addendum to Investment Agreement,
dated March 31, 1995, contains "piggyback" rights to registration of the common
stock (250,000 shares) they obtained as collateral for their "loan" and warrants
(175,000 shares) to convert to common shares. American Growth Fund I L.P. has
agreed to convert their common shares to Series A Preferred Stock and
participate as a "Purchaser" along with Intel. See Exhibit "A".
6. Section 3.15 Insurance. The Company is receiving quotes from various
carriers regarding the fire, casualty and theft insurance, and will have
coverage in place within 15 days after the First Closing, or sooner.
7. Section 3.22 Interested Party Transactions. The Company has entered
into a Financial Consulting Agreement with Nexus Investments, Inc. for
the services of Xxxxx Xxxx, dated April 3, 1995, to provide $10 Million or more
in funding on an Initial Public Offering. Xx. Xxxx has subsequently become a
Director of the Company.
8. Section 3.23 Stock Restriction Agreements. The Company has entered into
Employee/Consultant Agreements, attached as Exhibits G, which provides for
options of 50,000 shares each, 12,500 shares vesting on the anniversary of each
year of employment, for a total of four (4) years.
9. Section 5.9 (b) MortgageFlex and Software Today Licenses. The
-----------------------------------------
Company has entered into an licensing, development, distribution and enhancement
agreement with MortgageFlex, dated April 21, 1995, attached as Exhibit G. The
Company has entered into a Purchase Agreement for Assets only from Software
Today, Inc., attached as Exhibit G.
10. Section 7.9 Finder's Fees. The Company has entered into an
Investment Agreement, dated March 21, 1995, with an Addendum, dated March 31,
1995, with American Growth Fund I L.P., a California Limited Partnership, which
contains a provision in paragraph 4.5 Investment Banking Services for the
payment of certain fees if they produce a lender or investor for an IPO or
Secondary Offering within five (5) years. They have agreed to become
Purchasers, along with Intel, of the Series A Preferred Shares. The Company has
entered into an agreement with Xx. Xxxxxx Xxxxxxx to pay him five (5%) percent
of the cash procured by his introduction to American Growth Fund I L.P.
The following are the Exceptions to the statements contained in the Exhibit
"E" Rights Agreement attached to the Virtual Realty Network, Inc. Series A
Preferred Stock Purchase Agreement, by reference to the Section Numbers therein:
3.11 Limitations on Subsequent Registration Rights.
The Investment Agreement, dated March 21, 1995, between Virtual Realty
Network, Inc. and American Growth Fund I LP, a California Limited Partnership,
and the Addendum to Investment Agreement, dated March 31, 1995, which contains a
grant of warrant for 175,000 shares at $.70 per share, with the "piggyback"
registration rights. They have agreed to become Purchasers, along with Intel, of
the Series A Preferred Shares.
EXHIBIT D
LIST OF OUTSTANDING SHAREHOLDERS
XXXXXXX X. XXXXXX 1,250,000
XXXXXX X. XXXXX 750,000
XXXXXX X. XXXXXX 500,000
AMERICAN GROWTH
FUND I L.P.* 250,000
XXXXX & XXXXXX XXXXXX
AND XXXXXXX XXXXXXX**
* The have a warrant for 175,000 shares at $.70/share
**Unissued shares escrowed pending audited determination of valuation of assets
purchased in exchange for stock.
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