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FLASHCOM, INC. EXH. 10.16
SERIES B PREFERRED STOCK
PURCHASE AGREEMENT
THIS SERIES B PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is
entered into as of February 16, 2000, by and between FLASHCOM, INC., a Delaware
corporation (the "Company"), and each of the persons or entities listed on
Schedule A hereto, each of which is herein referred to as an "Investor," who
hereby agree as follows:
1. PURCHASE AND SALE OF STOCK.
1.1 SALE AND ISSUANCE OF SERIES B PREFERRED STOCK.
(a) The Company shall adopt and file with the Secretary of State
of the State of Delaware on or before the First Closing (as defined below) an
Amended and Restated Certificate of Incorporation in the form attached hereto as
Exhibit A (the "Restated Certificate").
(b) Subject to the terms and conditions of this Agreement, each
Investor agrees, severally and not jointly, to purchase at the First Closing or
Second Closing, as applicable, and the Company agrees to sell and issue to each
Investor at such Closing, that number of shares of the Company's Series B
Preferred Stock set forth opposite each Investor's name on Schedule A hereto at
a purchase price of Six Dollars and Fifty-Seven Cents ($6.57) per share. The
Series B Preferred Stock will have the rights, preferences, privileges and
restrictions set forth in the Restated Certificate.
1.2 CLOSINGS.
(a) First Closing. The initial closing of the purchase and sale
of the Series B Preferred Stock to those Investors listed on Schedule A hereto
under the heading "First Closing" shall take place at the offices of Xxxxxxxxx
Xxxxx Xxxxxxx & Xxxxx, counsel to the Company, in Newport Beach, California, at
10:00 a.m. on February 18, 2000, or at such other time and place as the Company
and such Investors purchasing a majority of the shares of Series B Preferred
Stock to be sold to such Investors at such Closing shall mutually agree, either
orally or in writing (which time and place are designated as the "First
Closing").
(b) Second Closing. A second closing of the purchase and sale of
the Series B Preferred Stock to those Investors listed on Schedule A hereto
under the heading "Second Closing" shall take place at the offices of Xxxxxxxxx
Xxxxx Xxxxxxx & Xxxxx, counsel to the Company, in Newport Beach, California, at
10:00 a.m. on February 29, 2000, or at such other time and place as the Company
and Investors purchasing a majority of the shares of Series B Preferred Stock to
be sold to such Investors at such Closing shall mutually agree, either orally or
in writing (which time and place are designated as the "Second Closing").
(c) At each Closing, the Company shall deliver to each Investor
purchasing shares at such Closing a certificate representing the shares of
Series B Preferred Stock that such Investor is purchasing, against payment of
the purchase price therefor by check, wire transfer, cancellation of
indebtedness, conversion of convertible promissory notes, or any combination
thereof, or such other form of payment as shall be mutually agreed upon by such
Investor and the Company.
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2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to each Investor that, except
as set forth on a Schedule of Exceptions attached hereto as Exhibit B,
specifically identifying the relevant subparagraph(s) hereof, which exceptions
shall be deemed to be representations and warranties as if made hereunder:
2.1 ORGANIZATION; GOOD STANDING, QUALIFICATION. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware, has all requisite corporate power and authority
to own and operate its properties and assets and to carry on its business as now
conducted and as presently proposed to be conducted, to execute and deliver this
Agreement, the Amended and Restated Investors' Rights Agreement (as defined in
Section 4.8), and the Amended and Restated Right of First Refusal and Co-Sale
Agreement (as defined in Section 4.9), to issue and sell the Series B Preferred
Stock and the Common Stock issuable upon conversion of the Series B Preferred
Stock, and to carry out the provisions of this Agreement, the Amended and
Restated Investors' Rights Agreement, the Amended and Restated Right of First
Refusal and Co-Sale Agreement, and the Restated Certificate. The Company is duly
qualified and is authorized to transact business and is in good standing as a
foreign corporation in each jurisdiction in which the nature of its activities
and of its properties (both owned and leased) makes such qualification
necessary, except where the failure to so qualify would not have a material
adverse effect on the business, properties, prospects, or financial condition of
the Company.
2.2 AUTHORIZATION. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement, and the Amended and Restated Investors' Rights
Agreement, and the Amended and Restated Right of First Refusal and Co-Sale
Agreement, the performance of all obligations of the Company hereunder and
thereunder and the authorization, issuance (or reservation for issuance, as
applicable), sale, and delivery of the Series B Preferred Stock being sold
hereunder and the Common Stock issuable upon conversion of the Series B
Preferred Stock has been taken or will be taken prior to the Closing, and this
Agreement, the Amended and Restated Investors' Rights Agreement, and the Amended
and Restated Right of First Refusal and Co-Sale Agreement, when executed and
delivered, will constitute valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies, and (iii) to the extent that the
indemnification provisions contained in the Amended and Restated Investors'
Rights Agreement may be limited by applicable laws.
2.3 VALID ISSUANCE OF PREFERRED AND COMMON STOCK. The Series B Preferred
Stock that is being purchased by the Investors hereunder, when issued, sold, and
delivered in accordance with the terms of this Agreement for the consideration
expressed herein, will be duly and validly issued, fully paid, and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement, the Amended and Restated
Investors' Rights Agreement and the Amended and Restated Right of First Refusal
and Co-Sale Agreement and under applicable state and federal securities laws.
The Common Stock issuable upon conversion of the Series B Preferred Stock has
been duly and validly reserved for issuance and, upon issuance in accordance
with the terms of the Restated Certificate, will be duly and validly issued,
fully paid, and nonassessable and will be free of restrictions on transfer other
than restrictions on transfer under this
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Agreement, the Amended and Restated Investors' Rights Agreement, the Amended and
Restated Right of First Refusal and Co-Sale Agreement and under applicable state
and federal securities laws.
2.4 CAPITALIZATION AND VOTING RIGHTS. The authorized capital of the
Company will consist, immediately prior to the Closing, of:
(a) Preferred Stock. 50,000,000 shares of Preferred Stock, $0.001
par value, of which 5,800,000 have been designated Series A Preferred Stock, of
which 5,771,679 are issued and outstanding and convertible into 17,315,037
shares of Common Stock, and 12,861,500 which have been designated Series B
Preferred Stock, none of which shall be outstanding prior to the First Closing,
and up to all of which shall be outstanding immediately following the Second
Closing. The rights, privileges and preferences of the Series A Preferred Stock
and Series B Preferred Stock are as stated in the Restated Certificate.
(b) Common Stock. 100,000,000 shares of common stock, $0.001 par
value ("Common Stock"), of which 31,707,379 shares are issued and outstanding.
(c) Immediately following the Closing, all issued and outstanding
shares of Series A Preferred Stock, Series B Preferred Stock and Common Stock
have been or will be duly authorized and validly issued, have been or will be
fully paid and nonassessable, and have been or will be issued in accordance with
the registration or qualification provisions of the Securities Act of 1933, as
amended (the "Securities Act") and any relevant state securities laws or
pursuant to valid exemptions therefrom. Except for (i) the conversion privileges
of the Series A Preferred Stock and the Series B Preferred Stock or (ii) as
otherwise disclosed on Schedule 2.4, there are not outstanding any options,
warrants, rights (including conversion or preemptive rights and rights of first
refusal), or agreements of any kind for the purchase or acquisition from the
Company of any of its securities. The Company has reserved 12,500,000 shares of
its Common Stock for purchase upon exercise of options and/or rights to purchase
to be granted in the future under the Company's 1999 Incentive Stock Option,
Nonqualified Stock Option and Restricted Stock Plan (the "1999 Plan"). Except as
disclosed on Schedule 2.4, the Company is not a party or subject to any
agreement or understanding, and, to the best of the Company's knowledge, there
is no agreement or understanding between any persons that affects or relates to
the voting or giving of written consents with respect to any security or the
voting by a director of the Company.
(d) Schedule 2.4 sets forth a true, complete and correct list of
the holders of record of the Company's Common Stock and Series A Preferred
Stock, which list shall identify the name and address of each such holder and
the number of shares of Common and/or Series A Preferred Stock held by each such
holder. Schedule 2.4 also sets forth a true, complete and correct list of the
holders of record of the Company's outstanding warrants, options and other
rights to purchase or subscribe for shares of Common Stock or Preferred Stock.
2.5 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation
or default (i) of any provision of its Amended and Restated Certificate of
Incorporation, as amended or Bylaws, as amended (ii) of any provision of any
mortgage, indenture, agreement, instrument, or contract to which it is a party
or by which it is bound, except where such violation or default would not have a
material adverse effect on the Company, or (iii) to the best of its knowledge,
of any federal or state, statute, rule, regulation or restriction. The
execution, delivery, and performance by the Company of this Agreement, the
Amended and Restated Investors' Rights Agreement, and the Amended and Restated
Right of First Refusal and Co-Sale Agreement, and the consummation of the
transactions
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contemplated hereby and thereby, will not result in any such violation or be in
material conflict with or constitute, with or without the passage of time or
giving of notice, either a material default under any such provision or an event
that results in the creation of any material lien, charge, or encumbrance upon
any assets of the Company or the suspension, revocation, impairment, forfeiture,
or nonrenewal of any material permit, license, authorization, or approval
applicable to the Company, its business or operations, or any of its assets or
properties.
2.6 GOVERNMENTAL CONSENTS. No consent, approval, qualification, order or
authorization of, or filing with, any local, state, or federal governmental
authority is required on the part of the Company in connection with the
Company's valid execution, delivery, or performance of this Agreement, the
offer, sale or issuance of the Series B Preferred Stock by the Company, or the
issuance of Common Stock upon conversion of the Series B Preferred Stock, except
(i) the filing of the Restated Certificate with the Secretary of State of the
State of Delaware, and (ii) such filings as have been made prior to the Closing,
except any post-closing filings as may be required under applicable state
securities laws, which will be timely filed within the applicable periods
therefor. The Company has not offered shares of its Series B Preferred Stock or
any substantially similar securities of the Company for sale to, or solicited
any offers to buy from, or otherwise approached or negotiated in respect thereof
with, any person other than the Investors, and the Company will not take any
action that will cause the issuance and delivery of the shares of its Series B
Preferred Stock as contemplated hereby to constitute a violation of the
Securities Act or the California Corporate Securities Law of 1968, as amended
(the "California Securities Law").
2.7 SUBSIDIARIES. The Company does not own or control, directly or
indirectly, any interest in any other corporation, partnership, limited
liability company, association, or other business entity. The Company is not a
participant in any joint venture, partnership, or similar arrangement.
2.8 CONTRACTS AND OTHER COMMITMENTS. Except as set forth on Schedule
2.8, the Company does not have and is not bound by any contract, agreement,
lease, or other commitment, written or oral, absolute or contingent, other than
(i) contracts for the purchase of supplies and services that were entered into
in the ordinary course of business and that do not involve more than $50,000,
(ii) sales or services contracts entered into in the ordinary course of business
and that do not involve more than $50,000, (iii) contracts terminable at will by
the Company on no more than thirty (30) days' notice without material cost or
liability to the Company and (iv) contracts that are not material to the conduct
of the Company's business. All contracts, agreements and instruments to which
the Company is a party are valid, binding, and in full force and effect, without
any material breach by the Company or, to the best of the Company's knowledge,
any other party thereto and are enforceable by the Company in accordance with
their terms.
2.9 RELATED-PARTY TRANSACTIONS. Except as set forth on Schedule 2.9, no
employee, officer, stockholder or director of the Company or member of his or
her immediate family is indebted to the Company, nor is the Company indebted (or
committed to make loans or extend or guarantee credit) to any of them, other
than (i) for payment of salary for services rendered, (ii) reimbursement for
reasonable expenses incurred on behalf of the Company, and (iii) for other
standard employee benefits made generally available to all employees including
stock option agreements outstanding under any stock option plan approved by the
Board of Directors of the Company. To the best of the Company's knowledge, none
of such persons has any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
business relationship, or any firm or corporation that competes with the
Company. Except as set forth on Schedule 2.9, no officer, director, or
stockholder or any member of their immediate families is,
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directly or indirectly, interested in any contract with the Company (other than
such contracts as relate to any such person's ownership of capital stock or
other securities of the Company). Schedule 2.9 contains a list of all agreements
or transactions currently in effect between the Company and Xxxx Xxxxx, Xxxxx
Xxxxx or any person or entity owned or controlled by either of them in which the
amount involved exceeds $60,000.
2.10 REGISTRATION RIGHTS. Except as provided in the Amended and Restated
Investors' Rights Agreement, the Company is presently not under any obligation
and has not granted any rights to register under the Securities Act any of its
presently outstanding securities or any of its securities that may subsequently
be issued.
2.11 LICENSES; PERMITS. The Company has all franchises, permits,
licenses, and any similar authority necessary for the conduct of its business as
now being conducted by it, the lack of which could materially and adversely
affect the business, properties, prospects, or financial condition of the
Company, and believes it can obtain, without undue burden or expense, any
similar authority for the conduct of its business as presently planned to be
conducted. The Company is not in default in any material respect under any of
such franchises, permits, licenses or other similar authority.
2.12 LITIGATION. Except as set forth on Schedule 2.12, there is no
action, suit, proceeding, or investigation pending or, to the Company's
knowledge, currently threatened against the Company that questions the validity
of this Agreement, the Amended and Restated Investors' Rights Agreement, or the
Amended and Restated Right of First Refusal and Co-Sale Agreement or the right
of the Company to enter into such agreements, or to consummate the transactions
contemplated hereby or thereby, or that might result, either individually or in
the aggregate, in any adverse change in the assets, business, properties,
prospects, or financial condition of the Company, its properties or assets, or
in any material impairment of the right or ability of the Company to carry on
its business as now conducted or proposed to be conducted. The Company is not a
party to, named in or subject to, and none of its assets are bound by, any
order, writ, injunction, judgment, or decree of any court, government agency, or
instrumentality. There is no action, suit, proceeding or investigation initiated
by the Company currently pending or that the Company currently intends to
initiate.
2.13 YEAR 2000 COMPLIANCE. All of the Company's products (including
products currently under development) record, store, process and calculate and
present calendar dates falling on and after January 1, 2000, and calculate any
information dependent on or relating to such dates in the same manner and with
the same functionality, data integrity and performance as the products record,
store, process, calculate and present calendar dates on or before December 31,
1999, or calculate any information dependent on or relating to such dates
(collectively "Year 2000 Compliant"). The Company's computer system and its
products have been tested and, based on the results of these tests, the Company
believes that its internal systems, including without limitation, its accounting
systems, as well as its products, are Year 2000 Compliant. The Company has not
conducted a review of the computer hardware and software systems of third
parties which may be affected by the Year 2000 problem.
2.14 OFFERING. Subject in part to the truth and accuracy of each
Investor's representations set forth in this Agreement, the offer, sale and
issuance of the Series B Preferred Stock as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act, and the
qualification requirements of the California Securities Law, and neither the
Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of any such exemption.
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2.15 TITLE TO PROPERTY AND ASSETS; LIENS. The Company has good and
marketable title to its properties and assets, in each case subject to no
mortgage, pledge, lien, lease, encumbrance, or charge, other than (a) liens
resulting from taxes which have not yet become delinquent, or (b) minor liens,
encumbrances, or defects of title which do not, individually or in the
aggregate, materially detract from the value of the property subject thereto or
materially impair the operations of the Company.
2.16 FINANCIAL STATEMENTS. The Company has delivered to each Investor
its audited financial statements for the period from May 18, 1998 (inception) to
December 31, 1998, and for the period from January 1, 1999 to June 30, 1999 and
its unaudited financial statements for the eleven-month period ended November
30, 1999 (the "Financial Statements"). The Financial Statements fairly present
the financial condition and operating results of the Company as of the dates,
and for the periods, indicated therein. The Financial Statements have been
prepared in accordance with U.S. generally accepted accounting principles
consistently applied throughout the periods indicated, except that interim
financial statements are subject to normal year-end audit adjustments (which
will not be material either individually or in the aggregate) and lack
footnotes. Except as set forth on Schedule 2.16 or in the Financial Statements,
the Company has no material liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business consistent with past
practices subsequent to November 30, 1999 and (ii) obligations under contracts
and commitments incurred in the ordinary course of business consistent with past
practices, which, in both cases, individually or in the aggregate, are not
material to the financial condition or operating results of the Company. Except
as disclosed in the Financial Statements or on Schedule 2.16, the Company is not
a guarantor or indemnitor of any indebtedness of any other person, firm, or
corporation.
2.17 CHANGES. Except as set forth on Schedule 2.17, since November 30,
1999, there has not been:
(a) any change in the assets, liabilities, financial condition,
or operating results of the Company from that reflected in the Financial
Statements, except changes in the ordinary course of business consistent with
past practices that have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business, properties,
prospects, or financial condition of the Company (as such business is presently
conducted and as it is presently proposed to be conducted);
(c) any waiver or compromise by the Company of a material right
or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business consistent with past practices and that is not material to
the business, properties, prospects, or financial condition of the Company (as
such business is presently conducted and as it is presently proposed to be
conducted);
(e) any material change to a material contract or arrangement by
which the Company or any of its assets is bound or subject;
(f) any material change in any compensation arrangement or
agreement with any key employee, officer or director;
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(g) any sale, assignment, or transfer of any patents, trademarks,
copyrights, trade secrets, or other intangible assets material to the Company;
(h) any resignation or termination of employment of any key
employee of the Company; and the Company, to the best of its knowledge, does not
know of the impending resignation or termination of employment of any such
employee,
(i) any mortgage, pledge, transfer of a security interest in, or
lien, created by the Company, with respect to any of its material properties or
assets, except for liens of the type described in Section 2.15;
(j) any loans or guarantees made by the Company to or for the
benefit of its employees, stockholders, officers, or directors, or any members
of their immediate families, other than travel advances and other advances made
in the ordinary course of its business consistent with past practices;
(k) any declaration, setting aside, or payment of any dividend or
other distribution of the Company's assets in respect of any of the Company's
capital stock, or any direct or indirect redemption, purchase, or other
acquisition of any of such stock by the Company;
(l) any other event or condition of any character that might
materially and adversely affect the business, properties, prospects, or
financial condition of the Company (as such business is presently conducted and
as it is presently proposed to be conducted); or
(m) any agreement or commitment by the Company to do any of the
things described in this Section 2.17.
2.18 INTELLECTUAL PROPERTY. Except as set forth on Schedule 2.18, the
Company has sufficient title and ownership of all patents, patent applications,
licenses, trademarks, service marks, trade names, inventions, processes,
formulae, trade secrets, franchises, copyrights and other proprietary rights
(collectively, "Intellectual Property Rights") employed in or necessary for the
operation of its business as now conducted and as proposed to be conducted with
no known infringement of or conflict with the rights of others. Such ownership
and title are exclusive and not subject to termination without the Company's
consent. Except as set forth on Schedule 2.18, there are no outstanding options,
licenses, or agreements of any kind relating to the foregoing Intellectual
Property Rights, nor is the Company bound by or a party to any options, licenses
or agreements of any kind with respect to the Intellectual Property Rights of
any other person or entity. The Company is not aware of any third party that is
infringing or violating any of its Intellectual Property Rights. Except as set
forth on Schedule 2.18, the Company has not received any communications alleging
that the Company has violated or, by conducting its business as proposed, would
violate any of the Intellectual Property Rights of any other person or entity.
The Company does not believe it is or will be necessary to use any inventions of
any of its employees (or persons it currently intends to hire) made prior to
their employment by the Company.
2.19 EMPLOYEES; EMPLOYEE COMPENSATION. To the best of the Company's
knowledge, after reasonable inquiry, no employee of the Company is obligated
under any contract (including licenses, covenants, or commitments of any nature)
or other agreement, or subject to any judgment, decree or order of any court or
administrative agency that would conflict with such employee's obligation to use
his or her best efforts to promote the interests of the Company or that would
conflict
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with the Company's business as conducted or as proposed to be conducted. To the
best of the Company's knowledge, after reasonable inquiry, no employee of the
Company is in violation of any term of any employment contract, proprietary
information and inventions agreement, non-competition agreement, or any other
contract or agreement relating to the relationship of any such employee with the
Company or any previous employer. Neither the execution nor delivery of this
Agreement, nor the carrying on of the Company's business by the employees of the
Company, nor the conduct of the Company's business as proposed, will, 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 is now obligated. The
Company has no collective bargaining agreements with any of its employees and to
the best of the Company's knowledge there is no labor union organizing activity
pending or threatened with respect to the Company. Except as set forth on
Schedule 2.19, there is no pension, health, profit sharing, bonus, stock
purchase, stock option, hospitalization, insurance, severance, or any other
employee benefit or welfare benefit plan with respect to any officer or employee
of the Company which is subject to the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). The Company is not aware that any officer or key
employee, or that any group of key employees, intends to terminate their
employment with the Company, nor does the Company have a present intention to
terminate the employment of any of the foregoing. Subject to general principles
related to wrongful termination of employees, the employment of each officer and
employee of the Company is terminable at the will of the Company. Schedule 2.19
contains a true, complete and correct list of all employment agreements,
severance agreements, compensation plan agreements or arrangements or other
agreements or contractual obligations relating to the employment or service of
any of the Company's employees. True, complete and correct copies of all such
agreements have been delivered or made available to special counsel for the
Investors.
2.20 PROPRIETARY INFORMATION.
(a) The Company has taken all reasonable security measures to
protect the secrecy, confidentiality, and value of all trade secrets, know-how,
inventions, designs, processes, and technical data required to conduct its
business.
(b) Each officer, employee, or consultant of the Company has
signed, and each such future officer, employee or consultant will sign, a
proprietary information agreement substantially in the Company's standard form
of such agreement (a copy of which form has been provided to the Investors'
counsel), each of which agreements remains in full force and effect as of the
date hereof. To the best of the Company's knowledge, none of the Company's
current or former officers, employees, or consultants is or will be in violation
thereof, and the Company will use its best efforts to prevent any such
violation.
2.21 TAX RETURNS, PAYMENTS, AND ELECTIONS. The Company has filed all tax
returns (federal, state or local) it has been required to file prior to the date
hereof and the Company has paid all taxes that have been due and payable, and
the Company has no material liability for any federal, state or local taxes. The
Company has not elected to be treated as an S Corporation or a collapsible
corporation pursuant to Section 341(f) or Section 1362(a) of the Internal
Revenue Code of 1986, as amended ("Code"), nor has it made any other elections
pursuant to the Code (other than elections that relate solely to methods of
accounting, depreciation or amortization) that would have a material effect on
the Company, its financial condition, its business as presently conducted or
proposed to be conducted or any of its properties or material assets. The
Company has never had any tax deficiency proposed or assessed against it and has
not executed any waiver of any statute of limitations on the
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assessment or collection of any tax or governmental charge. The Company has
withheld or collected from each payment made to each of its employees, the
amount of all taxes, including, but not limited to, federal income taxes,
Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes
required to be withheld or collected therefrom, and has paid the same to the
proper tax receiving officers or authorized depositaries, except where the
failure to do so would not have a material adverse effect on the Company.
2.22 INSURANCE. The Company has adequate insurance, with financially
sound and reputable insurers, with respect to its properties, business and
operations, that are of a character customarily insured by entities engaged in
the same or a similar business similarly situated, against loss or damage of the
kinds customarily insured against by such entities, which insurance is of such
types as are customarily carried under similar circumstances by such other
entities. Schedule 2.22 sets forth a list of all of such insurance including
coverage amounts and deductibles.
2.23 ENVIRONMENTAL AND SAFETY MATTERS. The operations of the Company (a)
have been, and are now, in compliance in all material respects with all
applicable environmental laws, (b) the Company has obtained all environmental,
health, and safety permits, licenses, and approvals necessary for its operation,
all such permits, licenses, and approvals are in effect, and the Company is in
compliance in all respects with the terms and conditions thereof, (c) with
respect to any property currently or formerly owned, leased, or operated by the
Company, the Company is not subject to any judicial or administrative
proceedings or any order from, or agreement with, any governmental authority,
and the Company has no knowledge of any pending or threatened investigation by
any governmental authority, relating to any violation or alleged violation of
any environmental law, any release or threatened release of a hazardous
substance into the environment, or any remedial action that may be necessary in
connection with any such violation or release, (d) the Company has not filed any
notice under any environmental law indicating past or present treatment,
storage, disposal or release of a hazardous substance into the environment, and
(e) the Company has not received notice of a claim that it may be liable as a
result of a release or threatened release of hazardous substances, and, to the
knowledge of the Company, there is no basis for any such claim, action, suit, or
investigation with respect to any environmental law.
2.24 QUALIFIED SMALL BUSINESS STOCK. As of the Closing Date, the Series
B Preferred Stock and the shares of Common Stock issuable upon exercise thereof
should constitute "qualified small business stock" as defined in Section 1202(c)
of the Code, and the Company shall make all filings required under Section
1202(d)(1)(c) of the Code, any related Treasury Regulations and any state laws
or regulations.
2.25 REAL PROPERTY HOLDING COMPANY. The Company is not and has not been
at any time a "United States real property holding corporation" as defined in
Section 897 of the Code.
2.26 INVESTMENT COMPANY. The Company is not, and after the receipt of
the proceeds from the sale of the Shares hereunder will not be, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
2.27 ACCOUNTING. The Company maintains a system of accounting
established and administered in accordance with generally accepted accounting
principles and has in place reasonable internal controls which are adequate and
appropriate for the Company.
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2.28 REGULATORY MATTERS. The Company's business as currently conducted
and as currently proposed to be conducted complies in all material respects with
applicable federal and state laws, rules, statutes, regulations and orders,
including without limitation any of the foregoing promulgated by the U.S.
Federal Communications Commission and state public utility commissions (or other
regulatory authorities having jurisdiction) relating to the provision of data
communications services and telecommunications services. The Company has
obtained all permits and regulatory approvals and authorizations necessary for
it to conduct its business as currently conducted and as currently proposed to
be conducted, except where the failure to have same would not have a material
adverse effect on the Company.
2.29 OFFERING MEMORANDUM. The Confidential Private Placement Memorandum
dated December 7, 1999 prepared in connection with the Series B Preferred Stock
financing did not, as of the date thereof, and does not, as of the date hereof,
contain any untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that with respect to the projections contained in such Private
Placement Memorandum, the Company only represents that such projections were
prepared in good faith and that the Company believes that there is a reasonable
basis for such projections.
2.30 DISCLOSURE. The Company has provided each Investor with all the
information that such Investor has requested for deciding whether to purchase
the Series B Preferred Stock. Neither this Agreement nor any other written
agreements or certificates made or delivered in connection herewith, taken as a
whole, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not misleading.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.
Each Investor hereby, severally and not jointly, represents and warrants
to the Company that:
3.1 AUTHORIZATION. Such Investor has full power and authority to enter
into this Agreement, the Amended and Restated Investors' Rights Agreement and
the Amended and Restated Right of First Refusal and Co-Sale Agreement, and that
each such agreement, when executed and delivered, will constitute a valid and
legally binding obligation of such Investor, enforceable against such Investor
in accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies, and (iii) to the extent that the indemnification
provisions contained in the Amended and Restated Investors' Rights Agreement may
be limited by applicable laws.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with each
Investor in reliance upon such Investor's representation to the Company, which
by such Investor's execution of this Agreement such Investor hereby confirms,
that the Series B Preferred Stock to be purchased by such Investor, and the
Common Stock issuable upon conversion of the Series B Preferred Stock
(collectively, the "Securities") will be acquired for investment for such
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, each Investor further
represents that such Investor does not have any contract, undertaking, agreement
or arrangement with any person to sell,
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transfer or grant participation to such person or to any third person, with
respect to any of the Series B Preferred Stock or the Common Stock acquired on
conversion of the Series B Preferred Stock.
3.3 RELIANCE UPON INVESTORS' REPRESENTATIONS. Such Investor understands
that the Series B Preferred Stock is not, and the Common Stock acquired on
conversion of the Series B Preferred Stock at the time of issuance may not be,
registered under the Securities Act on the ground that the sale provided for in
this Agreement and the issuance of the Securities hereunder is exempt from
registration under the Securities Act pursuant to Section 4(2) thereof, and that
the Company's reliance on such exemption is predicated on the Investors'
representations set forth herein.
3.4 RECEIPT OF INFORMATION. Such Investor represents that such Investor
has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Series B Preferred
Stock and the business, properties, prospects, and financial condition of the
Company and to obtain additional information (to the extent the Company
possessed such information or could acquire it without unreasonable effort or
expense) necessary to verify the accuracy of any information furnished to such
Investor or to which such Investor had access. The foregoing, however, does not
limit or modify the representations and warranties of the Company in Section 2
of this Agreement or the right of the Investors to rely thereon.
3.5 INVESTMENT EXPERIENCE. Such Investor represents that such Investor
is experienced in evaluating and investing in private placement transactions of
securities of companies in a similar stage of development, can bear the economic
risk of such Investor's investment, and has such knowledge and experience in
financial and business matters that such Investor is capable of evaluating the
merits and risks of the investment in the Series B Preferred Stock. If other
than an individual, Investor also represents such Investor has not been
organized for the purpose of acquiring the Series B Preferred Stock.
3.6 ACCREDITED INVESTOR. Such Investor represents to the Company that
except as otherwise disclosed to the Company, in writing, prior to such
Investor's execution hereof, such Investor is an Accredited Investor as defined
in Rule 501(a) promulgated under the Securities Act.
3.7 RESTRICTED SECURITIES. Such Investor understands that the Series B
Preferred Stock (and any Common Stock issued on conversion of the Series B
Preferred Stock) may not be sold, transferred, or otherwise disposed of without
registration under the Securities Act or an exemption therefrom, and that in the
absence of an effective registration statement covering the Series B Preferred
Stock and any Common Stock issued on conversion of the Series B Preferred Stock
or an available exemption from registration under the Securities Act, the Series
B Preferred Stock and any Common Stock issued on conversion of the Series B
Preferred Stock must be held indefinitely. In particular, such Investor is aware
that the Series B Preferred Stock (and any Common Stock issued on conversion of
the Series B Preferred Stock) may not be sold pursuant to Rule 144 promulgated
under the Securities Act unless all of the conditions of that Rule are met.
Among the conditions for use of Rule 144 may be the availability of current
information to the public about the Company. Such information is not now
available and the Company has no present plans to make such information
available.
3.8 LEGENDS. To the extent applicable, each certificate or other
document evidencing any of the Series B Preferred Stock and any Common Stock
issued on conversion of the Series B Preferred Stock shall be endorsed with the
legends substantially in the form set forth below:
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(a) The following legend under the Securities Act:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER SUCH ACT, OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER
EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
THAT SUCH REGISTRATION IS NOT REQUIRED."
(b) Any legend imposed or required by the Company's Bylaws, the
Amended and Restated Right of First Refusal and Co-Sale Agreement or applicable
state securities laws.
4. CONDITIONS OF INVESTORS' OBLIGATIONS AT FIRST CLOSING.
The obligations of each Investor purchasing shares at the First Closing
under subparagraph 1.1(b) of this Agreement are subject to the fulfillment on or
before the First Closing of each of the following conditions, the waiver of
which shall not be effective against any such Investor who does not consent in
writing thereto:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in Section 2 shall be true on and as of the First
Closing with the same effect as though such representations and warranties had
been made on and as of the date of the First Closing.
4.2 PERFORMANCE. 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 the First Closing.
4.3 COMPLIANCE CERTIFICATE; SECRETARY'S CERTIFICATE. The President of
the Company shall deliver to each Investor purchasing shares at the First
Closing a certificate certifying that the conditions specified in paragraphs
4.1, 4.2, 4.4 and 4.6 have been fulfilled. The Company shall have delivered a
certificate, executed on behalf of the Company by its Secretary, dated as of the
date of the First Closing, certifying the Board of Directors and stockholder
resolutions approving this Agreement and the other agreements to which the
Company is a party as indicated herein, and the issuance of the Series B
Preferred Stock, the reservation of the underlying Common Stock and certifying
the current versions of the Company's Amended and Restated Certificate of
Incorporation and Bylaws.
4.4 QUALIFICATIONS. All authorizations, approvals, or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with and prior to the lawful issuance and
sale of the Series B Preferred Stock to the Investors purchasing shares at the
First Closing pursuant to this Agreement shall be duly obtained and effective as
of the First Closing.
4.5 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the First Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Investors purchasing shares at the First Closing,
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who shall have received all such counterpart original and certified or other
copies of such documents as they may reasonably request.
4.6 BYLAWS. The Bylaws of the Company shall provide that the size of the
Board of Directors shall be set from five (5) to nine (9) persons, with the
current number being fixed at seven (7) persons.
4.7 AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT. The Company, the
holders of a majority of the Series A Preferred Stock, each Investor purchasing
shares at the First Closing and Xxxx Xxxxx (the "Founder") shall have executed
and delivered the Amended and Restated Investors' Rights Agreement in the form
attached hereto as Exhibit C (the "Amended and Restated Investors' Rights
Agreement").
4.8 AMENDED AND RESTATED RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT.
The Company, each Investor purchasing shares at the First Closing and Xxxx Xxxxx
shall have executed and delivered the Amended and Restated Right of First
Refusal and Co-Sale Agreement in the form attached hereto as Exhibit D (the
"Amended and Restated Right of First Refusal and Co-Sale Agreement").
4.9 RESTATED CERTIFICATE. The Company shall have filed the Restated
Certificate, in the form attached hereto as Exhibit A, with the Delaware
Secretary of State.
4.10 OPINION OF COMPANY COUNSEL. The Investors purchasing shares at the
First Closing shall have received from Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, a
Professional Corporation, counsel to the Company, an opinion dated as of the
date of the First Closing, in the form attached hereto as Exhibit E.
4.11 WARRANT TO PURCHASE COMMON STOCK. The Company shall have executed
and delivered to each Investor purchasing shares at the First Closing a warrant
to purchase common stock of the Company in the form attached hereto as Exhibit
F.
4.12 SETTLEMENT AGREEMENT. The settlement agreement dated February 11,
2000 among Xxxxx Xxxxx, the Company and the other parties thereto in the form
provided to special counsel to the Investors, shall have been executed and
delivered by all parties thereto.
5. CONDITIONS OF INVESTORS' OBLIGATIONS AT SECOND CLOSING.
The obligations of each Investor purchasing shares at the Second Closing
under subparagraph 1.1(b) of this Agreement are subject to the fulfillment on or
before the Second Closing of each of the following conditions, the waiver of
which shall not be effective against any such Investor who does not consent in
writing thereto:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in Section 2 shall be true on and as of the Second
Closing with the same effect as though such representations and warranties had
been made on and as of the date of the Second Closing.
5.2 PERFORMANCE. 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 the Second Closing.
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5.3 COMPLIANCE CERTIFICATE; SECRETARY'S CERTIFICATE. The President of
the Company shall deliver to each Investor purchasing shares at the Second
Closing a certificate certifying that the conditions specified in paragraphs
5.1, 5.2, 5.4, 5.6 and 5.11 have been fulfilled. The Company shall have
delivered a certificate, executed on behalf of the Company by its Secretary,
dated as of the date of the Second Closing, certifying the Board of Directors
and stockholder resolutions approving this Agreement and the other agreements to
which the Company is a party as indicated herein, and the issuance of the Series
B Preferred Stock, the reservation of the underlying Common Stock and certifying
the current versions of the Company's Amended and Restated Certificate of
Incorporation and Bylaws.
5.4 QUALIFICATIONS. All authorizations, approvals, or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with and prior to the lawful issuance and
sale of the Series B Preferred Stock pursuant to this Agreement (in addition to
those referenced in Section 5.12 below) shall be duly obtained and effective as
of the Second Closing.
5.5 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Second Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Investors purchasing shares at the Second Closing, who shall
have received all such counterpart original and certified or other copies of
such documents as they may reasonably request.
5.6 BOARD OF DIRECTORS. Effective as of the Second Closing, the
directors of the Company shall be Xxxx Xxxxx, Xxxxx Xxxxxxxx, Xxxx Xxxxxx, Xxxxx
Xxxx, Xxxxxxx Xxxxxx, Xxxxx Xxxxx and a designee of Xxxxxxx Capital.
5.7 AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT. The Company, the
holders of a majority of the Series A Preferred Stock and each Investor
purchasing shares at the Second Closing (the "Founder") shall have executed and
delivered the Amended and Restated Investors' Rights Agreement in the form
attached hereto as Exhibit C (the "Amended and Restated Investors' Rights
Agreement").
5.8 AMENDED AND RESTATED RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT.
The Company and each Investor purchasing shares at the Second Closing shall have
executed and delivered the Amended and Restated Right of First Refusal and
Co-Sale Agreement in the form attached hereto as Exhibit D (the "Amended and
Restated Right of First Refusal and Co-Sale Agreement").
5.9 OPINION OF COMPANY COUNSEL. The Investors purchasing shares at the
Second Closing shall have received from Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, a
Professional Corporation, counsel to the Company, an opinion dated as of the
date of the Second Closing, in the form attached hereto as Exhibit E.
5.10 WARRANT TO PURCHASE COMMON STOCK. The Company shall have executed
and delivered to each Investor purchasing shares at the Second Closing a warrant
to purchase common stock of the Company in the form attached hereto as Exhibit
F.
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5.11 SETTLEMENT AGREEMENT. The settlement agreement dated February 11,
2000 among Xxxxx Xxxxx, the Company and the other parties thereto in the form
provided to special counsel to the Investors, shall have been executed and
delivered by all parties thereto.
5.12 XXXX-XXXXX-XXXXXX FILING. If any Investor's purchase of shares at
the Second Closing is subject to the filing requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, such filings
shall have been made and the waiting period with respect thereto shall have
expired or been terminated. The Company and any such Investor shall make such
filings as soon as practicable following the date hereof, and shall use their
commercially reasonable best efforts to cause early termination of any waiting
period under such Act.
5.13 SATISFACTION OF OTHER CONDITIONS. The conditions set forth in
Sections 4.6, 4.9 and 4.12 above shall have been fulfilled by the Company.
6. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT EACH CLOSING.
The obligations of the Company to each Investor under this Agreement are
subject to the fulfillment on or before the Closing applicable to such Investor
of each of the following conditions by that Investor.
6.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of each Investor contained in Section 3 shall be true on and as of the Closing
applicable to such Investor with the same effect as though such representations
and warranties had been made on and as of the date of such Closing.
6.2 QUALIFICATIONS. All authorizations, approvals, or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with and prior to the lawful issuance and
sale of the Series B Preferred Stock pursuant to this Agreement shall be duly
obtained and effective as of such Closing.
6.3 PURCHASE OF SHARES. The Company shall have received payment for all
of the shares of Series B Preferred Stock being sold at such Closing pursuant to
this Agreement.
6.4 AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT. The Company, the
holders of Series A Preferred Stock, each Investor purchasing shares at such
Closing and the Founder shall have executed and delivered the Amended and
Restated Investors' Rights Agreement in the form attached hereto as Exhibit C.
6.5 AMENDED AND RESTATED RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT.
The Company, holders of a majority of the shares of Series A Preferred Stock,
each Investor purchasing shares at such Closing and the Founder shall have
executed and delivered the Amended and Restated Right of First Refusal and
Co-Sale Agreement in the form attached hereto as Exhibit D.
6.6 XXXX-XXXXX-XXXXXX FILING. If any Investor's purchase of shares at
the Second Closing is subject to the filing requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, such filings
shall have been made and the waiting period with respect thereto shall have
expired or been terminated. The Company and any such Investor shall make such
filings as soon as practicable following the date hereof, and shall use their
commercially reasonable best efforts to cause early termination of any waiting
period under such Act.
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7. MISCELLANEOUS.
7.1 ENTIRE AGREEMENT. This Agreement, the Amended and Restated
Investors' Rights Agreement, and the Amended and Restated Right of First Refusal
and Co-Sale Agreement constitute the entire agreements among the parties with
respect to the subject matter hereof and no party shall be liable or bound to
any other party in any manner by any warranties, representations, or covenants
except as specifically set forth herein or therein.
7.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
permitted transferees of any shares of Series B Preferred Stock sold hereunder
or any Common Stock issued upon conversion thereof). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
7.3 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
7.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.6 NOTICES. Unless otherwise provided, all notices and other
communications required or permitted under this Agreement shall be in writing
and shall be mailed by United States first-class mail, postage prepaid, sent by
facsimile or delivered personally by hand or by a courier addressed to the party
to be notified at the address or facsimile number indicated for such person on
Schedule A attached hereto, or at such other address or facsimile number as such
party may designate by ten (10) days' advance written notice to the other
parties hereto. All such notices and other written communications shall be
effective on the date of mailing, confirmed facsimile transfer or delivery.
Notwithstanding the foregoing, all notices and other communications to Intel
Corporation ("Intel") shall be sent to the following address:
Intel Corporation
0000 Xxxxxxx Xxxxxxx Xxxx.
Mail Stop XX0-00
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: M&A Portfolio Manager
Fax Number: (000) 000-0000
With copies to:
Intel Corporation
0000 Xxxxxxx Xxxxxxx Xxxx.
Xxxxx Xxxxx, Xxxxxxxxxx 00000
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Attn: General Counsel
Fax Number: (000) 000-0000
7.7 FINDER'S FEES. Except as set forth on Schedule 7.7, each party
represents that it neither is nor will be obligated for any finder's fee or
commission in connection with this transaction. Each Investor agrees to
indemnify and to hold harmless the Company from any liability for any commission
or compensation in the nature of a finder's fee (and the cost and expenses of
defending against such liability or asserted liability) for which the Investor
or any of its officers, partners, employees, or representatives is responsible.
The Company agrees to indemnify and hold harmless each Investor from any
liability for any commission or compensation in the nature of a finder's fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees, or
representatives is responsible.
7.8 EXPENSES. The Company and each Investor shall pay all costs and
expenses that it incurs with respect to the negotiation, execution, delivery,
and performance of this Agreement; provided, however, that the Company will pay
the reasonable, documented fees and disbursements up to an aggregate of $40,000
of special legal counsel and certain outside consultants for the Investors in
connection with this transaction.
7.9 ATTORNEYS' FEES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the Amended and Restated
Investors' Rights Agreement, the Amended and Restated Right of First Refusal and
Co-Sale Agreement or the Restated Certificate, the prevailing party shall be
entitled to reasonable attorneys' fees, costs, and disbursements in addition to
any other relief to which such party may be entitled.
7.10 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this 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 holders of a majority of the
Common Stock not previously sold to the public that is issued or issuable upon
conversion of the Series B Preferred Stock, voting as a single class. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any securities purchased under this Agreement at the time
outstanding (including securities into which such securities have been
converted), each future holder of all such securities, and the Company.
Notwithstanding anything herein to the contrary, no amendment or waiver to any
of the following sections or provisions of this Agreement shall be effective
without the written consent of Intel: (i) Section 7.12 and (ii) any other
provision or section of this Agreement that specifically mentions Intel.
7.11 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
7.12 DISPUTE RESOLUTION. If there arises a dispute between any party to
this Agreement, including, without limitation Intel, and any other party to this
Agreement regarding this Agreement, those parties agree to negotiate in good
faith to resolve the dispute between them regarding this Agreement. If the
negotiations do not resolve the dispute to the reasonable satisfaction of both
parties, then each party shall nominate one partner, member or senior officer of
the rank of Vice President or higher as its representative. These
representatives shall, within thirty (30) days of a written request by either
party to call such a meeting, meet in person and alone (except for one
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assistant for each party) and shall attempt in good faith to resolve the
dispute. If the disputes cannot be resolved by such senior managers in such
meeting, the parties agree that they shall, if requested in writing by either
party, meet within thirty (30) days after such written notification for one day
with an impartial mediator and consider dispute resolution alternatives other
than litigation. If any alternative method of dispute resolution is not agreed
upon within thirty (30) days after the one day mediation, either party may begin
litigation proceedings. This procedure shall be a prerequisite before taking any
additional action hereunder.
7.13 INFORMATION CONFIDENTIAL.
(a) Disclosure of Terms. The terms and conditions of this
Agreement, the Amended and Restated Investors' Rights Agreement, the Amended and
Restated Right of First Refusal and Co-sale Agreement and any other agreement to
which the Investors are parties, the execution and delivery of which is
contemplated hereby (collectively, the "Financing Terms"), including their
existence, shall be considered confidential information and shall not be
disclosed by any party hereto to any third party except in accordance with the
provisions set forth below.
(b) Press Releases, Etc. Within sixty (60) days of the closing of
the transaction contemplated by the Financing Terms, the Company may issue a
press release in the form provided by Intel disclosing that Intel has invested
in the Company; provided that the release does not disclose any of the Financing
Terms and the final form of the press release is approved in advance in writing
by Intel which approval shall not be unreasonably withheld. No other
announcement regarding Intel in a press release, conference, advertisement,
announcement, professional or trade publication, mass marketing materials or
otherwise to the general public may be made without such Intel's prior written
consent.
(c) Permitted Disclosures. Notwithstanding the foregoing, (i) any
party may disclose any of the Financing Terms to its current or bona fide
prospective investors, employees, investment bankers, lenders, accountants and
attorneys, in each case only where such persons or entities are under
appropriate nondisclosure obligations whether by written agreement, position of
trust or confidence, fiduciary duty, or otherwise; (ii) any party may disclose
(other than in a press release or other public announcement described in
subsection (b)) solely the fact that the Investors are investors in the Company
to any third parties without the requirement for the consent of any other party
or nondisclosure obligations; and (iii) Intel may disclose its investment in the
Company and the Financing Terms to third parties or to the public at its sole
discretion and, if it does so, the other parties hereto shall have the right to
disclose to third parties any such information disclosed in a press release or
other public announcement by Intel.
(d) Legally Compelled Disclosure. In the event that any party is
requested or becomes legally compelled (including without limitation, pursuant
to securities laws and regulations) to disclose the existence of this Agreement,
the Amended and Restated Investors' Rights Agreement, the Amended and Restated
Right of First Refusal and Co-Sale Agreement and any other agreement to which
the Investors are parties, the execution and delivery of which is contemplated
hereby, or any of the Financing Terms hereof in contravention of the provisions
of this Section 7.13, such party (the "Disclosing Party") shall provide the
other parties (the "Non-Disclosing Parties") with prompt written notice of that
fact so that the appropriate party may seek (with the cooperation and reasonable
efforts of the other parties) a protective order, confidential treatment or
other appropriate remedy. In such event, the Disclosing Party shall furnish only
that portion of the information which is legally
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required and shall exercise reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded such information to the extent
reasonably requested by any Non-Disclosing Party.
(e) Other Information. 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 any of the parties hereto with respect to
the transactions contemplated hereby. Additional disclosures and exchange of
confidential information between the Company and Intel (including without
limitation, any exchanges of information with any Intel board observer) shall be
governed by the terms of the Corporate Non-Disclosure Agreement No. 5710225,
dated May 4, 1999, executed by the Company and Intel, and any Confidential
Information Transmittal Records ("CITR") provided in connection therewith.
(f) All notices under this Section 7.13 shall be made pursuant to
Section 7.6 of this Agreement.
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SIGNATURE PAGE TO FLASHCOM, INC. STOCK PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
FLASHCOM, INC.
By: /s/ XXXXXXX XXXXXX
----------------------------------------
Xxxxxxx Xxxxxx, President and
Chief Operating Officer
INVESTORS:
Investor Name:
------------------------------
Signed:
-------------------------------------
Print Name:
---------------------------------
Its:
----------------------------------------
[The Agreement contains counterpart
signature pages for each investor appearing
in Schedule A hereto]
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SCHEDULE A
INVESTORS
NAME AND ADDRESSES OF INVESTORS NO. SHARES OF SERIES B
IN SERIES B PREFERRED STOCK PREFERRED PURCHASED PURCHASE PRICE
---------------------------------------------------------------------------------------------------
FIRST CLOSING
The New Economy Fund 1,522,070 $10,000,000
c/o Capital Research and Management Company
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
SMALLCAP World Fund, Inc. 1,484,018 9,750,000
c/o Capital Research and Management Company
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
American Variable Insurance Series Global 38,052 250,000
Small Capitalization Fund
c/o Capital Research and Management Company
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Blueprint Ventures Emerging Communications 1,225,800 8,053,507
Fund I, L.P.
Xxxxxxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxxxx
X.X. Xxxxxxxxx, Towbin Private Equity 456,621 3,000,000
Partners II, L.P.
c/o X.X. Xxxxxxxxx Towbin
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxx
Intel Corporation 552,548 3,630,242
0000 Xxxxxxx Xxxxxxx Xxxx.
Mail Stop XX0-00
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: M&A Portfolio Manager
With copies to:
Intel Corporation
0000 Xxxxxxx Xxxxxxx Xxxx.
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: General Counsel
1
22
NAME AND ADDRESSES OF INVESTORS NO. SHARES OF SERIES B
IN SERIES B PREFERRED STOCK PREFERRED PURCHASED PURCHASE PRICE
---------------------------------------------------------------------------------------------------
BancBoston Capital Inc. 456,621 3,000,000
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx
Xxxxxxx High Yield Partners, L.P. 456,621 3,000,000
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxxxx
Kohlberg, Kravis, Xxxxxxx & Co. 350,076 2,300,000
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx
The Raptor Global Portfolio Ltd. 454,642 2,987,000
c/o Tudor Investment Corporation
00 Xxxxx Xxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxx Xxxxxx
Altar Rock Fund, L.P. 1,979 13,000
c/o Tudor Investment Corporation
00 Xxxxx Xxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxx Xxxxxx
Comdisco, Inc. 129,376 850,000
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Venture Group
TW Trust 38,052 250,002
0000 Xxxxxx Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx Xxxxx
CVT Management LLC 30,441 200,000
0000 Xxxxxxxx Xxxxxxx
Xx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxx
2
23
NAME AND ADDRESSES OF INVESTORS NO. SHARES OF SERIES B
IN SERIES B PREFERRED STOCK PREFERRED PURCHASED PURCHASE PRICE
---------------------------------------------------------------------------------------------------
Internet Investor LLC, Series 8 30,441 199,997
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxxxx X. Xxxxxxx
Xxxxxx Xxxx-Xxxx and 30,441 200,000
Xxxxx Xxxx-Omid, Trustees,
Nour-Omid Family Trust
0000 Xxxxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Xxxx Xxxxxx 30,441 200,000
000 Xxxxx Xxxxxxxxx, #00X
Xx Xxxxx, Xxxxxxxxxx 00000
BridgeWest, LLC 76,104 500,000
c/o Xxxxx Xxxxx
0000 Xx Xxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Xxxxx Xxxxxx 76,104 500,000
00000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Blackcross 76,104 500,000
000 Xxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx
Xxxx Xxxxxxxxx 15,221 100,000
00000 Xxxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Remington Industries 30,441 200,000
0000 XxXxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx
Xxxxx Xxxxx 30,441 200,000
0000 Xxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Xxxxx Xxxxxx 30,441 200,000
00000 Xxxxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
3
24
NAME AND ADDRESSES OF INVESTORS NO. SHARES OF SERIES B
IN SERIES B PREFERRED STOCK PREFERRED PURCHASED PURCHASE PRICE
---------------------------------------------------------------------------------------------------
SECOND CLOSING
Xxxxxxx Capital II L.P. 3,003,417 19,732,450
c/o Behrman Capital
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
With copies to:
Xxxxxxx Capital
0 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx
Strategic Entrepreneur Fund II L.P. 40,723 267,550
c/o Behrman Capital
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx
With copies to:
Xxxxxxx Capital
0 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx
Communication Ventures III, L.P. 850,256 5,586,180
000 Xxxxxxxx Xxxxxx, Xxx. 000
Xxxx Xxxx, Xxxxxxxxxx 00000
Communication Ventures III CEO & 42,513 279,308
Entrepreneurs Fund
000 Xxxxxxxx Xxxxxx, Xxx. 000
Xxxx Xxxx, Xxxxxxxxxx 00000
Xxxxxxxx IX 863,990 5,676,416
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Xxxxxxxx Associates Fund IV 45,473 298,760
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Flash Trust 308,220 2,025,005
c/x Xxxxxxxx Funds
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
4
25
NAME AND ADDRESSES OF INVESTORS NO. SHARES OF SERIES B
IN SERIES B PREFERRED STOCK PREFERRED PURCHASED PURCHASE PRICE
---------------------------------------------------------------------------------------------------
SYCR Investment Partnership 2000 39,052 256,570
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
SYCR Investment Fund II, LLC 7,610 50,000
000 Xxxxxxx Xxxxxx Xx., Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
TOTAL: 12,824,351 $84,255,987
5
26
EXHIBIT A
RESTATED CERTIFICATE
A-1
27
EXHIBIT B
SCHEDULE OF EXCEPTIONS
B-1
28
EXHIBIT C
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
C-1
29
EXHIBIT D
AMENDED AND RESTATED RIGHT OF FIRST REFUSAL
AND CO-SALE AGREEMENT
D-1
30
EXHIBIT E
FORM OF OPINION OF COMPANY COUNSEL
E-1
31
EXHIBIT F
FORM OF WARRANT
F-1
