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ODWALLA, INC.
PREFERRED STOCK CONVERSION AGREEMENT
Dated as of April 24, 2000
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TABLE OF CONTENTS
Page
1. Conversion of Preferred Stock and Cancellation of Warrant..............1
2. Tax Treatment..........................................................2
3. Closing................................................................2
4. Closing Conditions.....................................................2
5. Representations and Warranties of Xxxxxxxxx............................3
5.1 Authorization....................................................3
5.2 Disclosure of Information........................................3
5.3 Status...........................................................3
5.4 Investment Intent; Certain Restrictions..........................4
5.5 Restricted Securities............................................4
6. Representations and Warranties of the Company..........................4
6.1 Authorization....................................................4
6.2 Private Placement................................................5
7. Other Matters..........................................................5
7.1 Limitation on Conversion of Preferred Stock......................5
7.2 Restrictive Legend...............................................5
7.3 California Securities Laws.......................................5
8. Termination............................................................6
8.1 General..........................................................6
8.2 Effect of Termination............................................6
8.3 Exclusivity of Termination Rights................................6
9. Miscellaneous..........................................................6
9.1 Further Assurances...............................................6
9.2 Fees and Expenses................................................6
9.3 Attorneys' Fees..................................................6
9.4 Governing Law; Arbitration.......................................6
9.5 Successors and Assigns...........................................7
9.6 Entire Agreement.................................................7
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Page
9.7 Separability.....................................................7
9.8 Amendments.......................................................7
9.9 Notices..........................................................8
9.10 Publicity and Use of Confidential Information....................8
9.11 Counterparts.....................................................9
9.12 Delays or Omissions; Waivers.....................................9
9.13 Remedies Cumulative; Specific Performance........................9
9.14 Headings........................................................10
9.15 Construction....................................................10
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ODWALLA, INC.
PREFERRED STOCK CONVERSION AGREEMENT
THIS PREFERRED STOCK CONVERSION AGREEMENT (the "Agreement") is entered
into as of April 24, 2000, by and between ODWALLA, INC., a California
corporation (the "Company"), and XXXXXXXXX-XXXXX PARTNERS III, L.P., a
Delaware Limited Partnership ("Xxxxxxxxx").
RECITALS
A. The Company, Orange Acquisition Sub, a Maine corporation and wholly owned
subsidiary of the Company ("Merger Sub"), Fresh Samantha, Inc., a Maine
corporation ("Samantha"), and the other signatories thereto, have entered
into that certain Agreement and Plan of Merger, dated as of February 2,
2000 (the "Merger Agreement"), to effectuate the merger (the "Merger") of
Merger Sub with and into Samantha, with Samantha as the surviving
corporation and wholly owned subsidiary of the Company.
B. Pursuant to that certain Stock and Warrant Purchase Agreement, dated as of
January 29, 1999 (the "Purchase Agreement"), by and between the Company
and Xxxxxxxxx, Xxxxxxxxx purchased (i) 1,000,000 shares of the Company's
Series A Preferred Stock (the "Preferred Stock") convertible into the
Common Stock of the Company (the "Common Stock") on a 1:1 basis, and (ii)
a Warrant, dated as of February 10, 1999, to purchase 75,000 shares of the
Company's Common Stock at $10.00 per share (the "Warrant").
C. Pursuant to the dividend preference of the Preferred Stock, Xxxxxxxxx has
received stock dividends in the amount of 74,666 shares of Preferred
Stock.
D. In connection with the Merger, Xxxxxxxxx and U.S. Equity Partners, L.P.
(and its affiliates) have entered into that certain Stock Purchase
Agreement, dated as of February 12, 2000, pursuant to which Xxxxxxxxx
shall purchase an additional 160,128 shares of Common Stock.
E. Pursuant to the terms of the Merger, the obligation of the parties to
consummate the Merger is subject to, among other things, both the
conversion of the Preferred Stock into Common Stock and the cancellation
of the Warrant.
AGREEMENT
The Company and Xxxxxxxxx, intending to be legally bound, agree as
follows:
1. Conversion of Preferred Stock and Cancellation of Warrant.
In consideration of both the conversion of the Preferred Stock into Common
Stock and the cancellation of the Warrant pursuant this Section 1, and subject
to the terms and conditions hereof, the approval of the shareholders of the
Company and the amendment of the Certificate of Determination, filed January 26,
1999, setting forth the preference and rights of the Preferred
1
Stock (the "Certificate"), at the Closing (a) the 1,074,666 shares of Preferred
Stock presently held by Xxxxxxxxx shall be converted into 1,333,333 shares of
Common Stock pursuant to a conversion ratio of 1:1.2407, and (b) the Warrant
shall be cancelled and be of no further force and effect.
2. Tax Treatment.
For tax purposes, the parties hereto acknowledge and agree that the
transactions contemplated by this Agreement (the "Transactions") shall be
treated as a recapitalization in accordance with Section 368(a)(1)(E) of the
Internal Revenue Code of 1986, as amended.
3. Closing
(a) The closing (the "Closing") shall take place at the offices of
Xxxxxxxx & Xxxxxxxx LLP, 000 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, at
10:00 a.m. (Pacific time) contemporaneous with the Merger Closing Date (as
defined below) or on such other date or at such other place or time as the
Company and Xxxxxxxxx may mutually agree (such date is hereinafter referred to
as the "Closing Date").
(b) At the Closing:
(i) Xxxxxxxxx will deliver: (i) the stock certificate(s)
representing the Preferred Stock; (ii) the Warrant, marked "CANCELLED;" and
(iii) any other documents and agreements reasonably requested by the Company to
be delivered at the Closing; and
(ii) the Company shall deliver: (i) certificates representing the
Common Stock to be issued to Xxxxxxxxx pursuant to this Agreement in proper form
for transfer; and (ii) the other documents and agreements required hereunder to
be delivered by the Company at the Closing.
(c) The "Merger Closing Date" shall refer to that date upon which all
of the conditions set forth in Sections 4.1 and 4.2 of the Merger Agreement,
other than the condition requiring the conversion of the Preferred Stock held by
Xxxxxxxxx into Common Stock, are satisfied or waived.
4. Closing Conditions.
Each of the Company's obligation to issue the Common Stock at the Closing,
and Xxxxxxxxx'x obligations to convert the Preferred Stock into Common Stock and
cancel the Warrant at the Closing, are subject to the satisfaction of the
following conditions:
(a) the amendment to the Certificate, substantially in the form
attached hereto as Exhibit A, shall have been accepted for filing by the
Secretary of State of the State of California;
(b) the Merger shall have been consummated pursuant to all of the
material terms and conditions contained in the Merger Agreement, except (i) for
the condition requiring the conversion of the Preferred Stock held by Xxxxxxxxx
into Common Stock, and (ii) with the
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consent of Xxxxxxxxx (which consent shall not be unreasonably withheld), to the
extent (A) any change in the terms and conditions of the Merger Agreement
benefit the Company, or (B) the waiver or non-satisfaction of a condition
contained in the Merger Agreement is for the benefit of the Company; and
(c) neither the consummation nor the performance of the Transactions
will, directly or indirectly (with or without notice or lapse of time),
contravene or conflict with or result in a violation of, or cause a material
adverse effect on the condition (financial or otherwise), assets, liabilities,
obligations, business, properties, prospects or results of operations of the
Company as presently conducted or as proposed to be conducted, together with its
subsidiaries taken as a whole, as a result of, specifically, (i) a change in any
applicable legal requirement after the date of this Agreement or any federal or
state judgment, order, writ, decree, statute or regulation of any court,
regulatory body or administrative agency or other governmental body applicable
to the Company (an "Order") issued after the date of this Agreement, or (ii) any
legal requirement or Order that is proposed after the date of this Agreement by
or before any governmental body.
5. Representations and Warranties of Xxxxxxxxx.
Xxxxxxxxx hereby represents and warrants to the Company that:
5.1 Authorization.
Xxxxxxxxx has full power and authority to enter into this Agreement, and
this Agreement constitutes the valid and legally binding obligation of
Xxxxxxxxx, enforceable against Xxxxxxxxx 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, and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
5.2 Disclosure of Information.
Xxxxxxxxx further represents that it has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the conversion of the Preferred Stock and the business,
properties, prospects and financial condition of the Company.
5.3 Status.
(a) Xxxxxxxxx is an "accredited investor" as that term is defined in
Rule 501(a) of Regulation D of the Securities Act.
(b) Xxxxxxxxx, by reason of its business and financial experience has
such knowledge, sophistication and experience in financial and business matters
and in making investment decisions of this type that it is capable of (i)
evaluating the merits and risks of an investment in the Common Stock of the
Company and making an informed investment decision, (ii) protecting its own
interest, and (iii) bearing the economic risk of such investment for an
indefinite period of time.
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5.4 Investment Intent; Certain Restrictions.
(a) Xxxxxxxxx is acquiring the Common Stock for investment for its own
account, not as a nominee or agent and not with the view to, or any intention
of, a resale or distribution thereof, in whole or in part, or the grant of any
participation therein. Xxxxxxxxx understands that the Common Stock has not been,
and will not be, registered under the Securities Act or state securities laws by
reason of specific exemptions from the registration provisions of the Securities
Act and applicable state securities laws that depend upon, among other things,
the bona fide nature of Xxxxxxxxx'x investment intent and the accuracy of
Xxxxxxxxx'x representations as set forth in this Section 5. Xxxxxxxxx has not
been formed for the specific purpose of acquiring the Common Stock. Xxxxxxxxx
further understands that, other than pursuant to that certain Shareholders'
Rights Agreement, to be entered into on the Merger Closing Date by and among the
Company, Xxxxxxxxx and the other signatories thereto, the Company shall have no
obligation to register the Common Stock under the Securities Act or any state
securities laws or to take any action that would make available any exemption
from the registration requirements of such laws. Xxxxxxxxx hereby acknowledges
that because of the restrictions on transfer and assignment of the Common Stock,
Xxxxxxxxx may have to bear the economic risk of the investment in the Common
Stock for an indefinite period of time.
(b) Xxxxxxxxx will observe and comply with the Securities Act and the
rules and regulations promulgated thereunder, as now in effect and as from time
to time amended, in connection with any offer, sale, pledge, transfer or other
disposition of the Common Stock.
5.5 Restricted Securities.
Xxxxxxxxx understands that the shares of Common Stock issuable by the
Company upon conversion of the Preferred Stock are characterized as "restricted
securities" under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be resold
without registration under the Securities Act only in certain limited
circumstances. In this connection, Xxxxxxxxx represents that it is familiar with
Rule 144, as presently in effect, and understands the resale limitations imposed
hereby and by the Securities Act.
6. Representations and Warranties of the Company.
The Company hereby represents and warrants to Xxxxxxxxx that:
6.1 Authorization.
The Company has full power and authority to enter into this Agreement, and
this Agreement constitutes the valid and legally binding obligation of the
Company, enforceable against the Company 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, and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
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6.2 Private Placement.
The offer, sale and issuance of the Common Stock upon conversion of the
Preferred Stock as contemplated by this Agreement is exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act") and state securities "blue sky" laws, and neither the Company
nor any authorized agent acting on its behalf will take any action hereafter
that would cause the loss of such exemptions.
7. Other Matters.
7.1 Limitation on Conversion of Preferred Stock.
The parties hereto agree and understand that they are entering into
this Agreement in connection with the Merger, and therefore Xxxxxxxxx covenants
and agrees that, notwithstanding the acceptance by the Secretary of State of the
State of California of the aforementioned amendment to the Certificate,
Xxxxxxxxx shall only convert the Preferred Stock at the higher conversion ratio
contained in such amendment pursuant to the terms of this Agreement in
connection with the consummation of the Merger.
7.2 Restrictive Legend.
All certificates representing the Common Stock deliverable to
Xxxxxxxxx pursuant to this Agreement, and any certificates subsequently issued
with respect thereto or in substitution therefor, shall bear the following
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS PURSUANT TO THE TERMS
SPECIFIED IN THAT CERTAIN SHAREHOLDERS' RIGHTS AGREEMENT, DATED AS OF
APRIL __, 2000. COPIES OF SUCH AGREEMENTS MAY BE OBTAINED FROM ODWALLA,
INC. WITHOUT CHARGE, BY THE HOLDER OF THIS CERTIFICATE UPON WRITTEN
REQUEST THEREFOR.
7.3 California Securities Laws.
THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS NOT
BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA
AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL,
UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100,
25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO
THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED,
UNLESS THE SALE IS SO EXEMPT.
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8. Termination.
8.1 General.
This Agreement may be terminated prior to Closing by the mutual consent of
the Company and Xxxxxxxxx.
8.2 Effect of Termination.
If this Agreement is terminated pursuant to Section 8.1, all further
obligations of the parties under this Agreement shall terminate provided,
further, that Sections 9.2, 9.3, 9.4, 9.9 and 9.10 shall survive the termination
of this Agreement.
8.3 Exclusivity of Termination Rights.
Except to the extent termination occurs due to the bad faith of the other
party, the termination rights and obligations provided in this Section 8 shall
be deemed to be exclusive. The parties shall not have any other or further
liabilities to or with respect to one another by reason of this Agreement or its
termination.
9. Miscellaneous.
9.1 Further Assurances.
Each party hereto shall execute and/or cause to be delivered to each other
party hereto such instruments and other documents, and shall take such other
actions, as such other party may reasonably request (prior to, at or after the
Closing) for the purpose of carrying out or evidencing any of the Transactions.
9.2 Fees and Expenses.
The Company shall bear the reasonable costs and expenses with respect to
the negotiation, execution and delivery of this Agreement and in connection with
the Transactions, including any transfer, recording or similar taxes levied as a
result of the consummation of the Transactions.
9.3 Attorneys' Fees.
If any legal action or other legal proceeding (including arbitration)
relating to the Transactions or the enforcement of any provision of any of this
Agreement is brought against any party hereto, the person presiding over such
action or other proceeding may award reasonable attorneys' fees, costs and
disbursements to the prevailing party (in addition to any other relief to which
the prevailing party may be entitled).
9.4 Governing Law; Arbitration.
(a) This Agreement is to be construed in accordance with and governed
by the laws of the State of California (as permitted by Section 1646.5 of the
California Civil Code or
6
any similar successor provision), without giving effect to any choice of law
rule that would cause the application of the laws of any jurisdiction other than
the State of California to the rights and duties of the parties.
(b) Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration administered by
the American Arbitration Association in accordance with its then existing
Commercial Arbitration rules and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The
arbitrator shall be appointed by mutual agreement of the Company and Xxxxxxxxx
involved in such controversy or claim, but, if the Company and Xxxxxxxxx fail to
agree, the arbitrator shall be appointed by the American Arbitration Association
in accordance with its then existing rules. The place of the arbitration shall
be San Francisco, California and the governing law shall be the laws of the
State of California in accordance with Section 9.4(a) of this Agreement.
9.5 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 and shall inure to the
benefit of and be enforceable by each person who shall be a holder from time to
time of the Common Stock to be issued pursuant to this Agreement. None of the
parties hereto may assign any of its or their rights or obligations hereunder to
any other party (by contract, operation of law or otherwise) without the prior
written consent of the other, which consent shall not be unreasonably withheld,
and any attempted assignment in violation thereof shall be void and of no
effect.
9.6 Entire Agreement.
This Agreement constitutes the full and entire understanding and agreement
among the parties thereto with regard to the subjects hereof and supersede all
prior agreements and understandings among or between any of the parties relating
to the subject matter hereof and thereof.
9.7 Separability.
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby, unless such
provision is material to the terms of this Agreement, in which case the Company
and Xxxxxxxxx shall in good faith agree upon such amendments as are necessary to
restore the original intent and arrangement between the parties.
9.8 Amendments.
This Agreement may be amended or modified only upon the written consent of
the Company and Xxxxxxxxx. Any amendment or modification effected pursuant to
this Section 9.8 shall be binding upon the Company and Xxxxxxxxx.
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9.9 Notices.
Any notice or other communication required or permitted to be delivered to
any party under this Agreement shall be in writing and shall be deemed properly
delivered and given (a) on the date delivered or given, when delivered or given
by hand or by telecopier during business hours, (b) one business day after being
delivered or given by courier or next-day express delivery service, or (c) two
business days after being delivered or give by registered mail to the address
set forth beneath the name of such party below (or to such other address or
telecopier number as such party shall have specified in a written notice given
to the other parties hereto):
if to the Company:
Odwalla, Inc.
000 Xxxxx Xxxx Xxxx
Xxxx Xxxx Xxx, XX 00000
Attention: D. Xxxxxxx X. Xxxxxxxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
if to Xxxxxxxxx-Xxxxx Partners:
Xxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Telecopier: (000) 000-0000
with copies to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx
Telecopier: (000) 000-0000
9.10 Publicity and Use of Confidential Information.
(a) Notwithstanding anything to the contrary contained in any agreement
among the parties hereto, the Company shall have the right to disclose the terms
of this Agreement through the use of printed offering materials or otherwise or
as otherwise required by applicable legal requirements, in connection with the
preparation of a proxy statement (the "Proxy
8
Statement") in connection with the solicitation by the Board of Directors of the
Company of the affirmative vote of a majority of the outstanding Common Stock
and Preferred Stock to approve the Merger and related matters.
(b) Neither Xxxxxxxxx, on the one hand, nor the Company, on the other
hand, shall issue or disseminate any press release or other publicity concerning
any of the Transactions, or permit any press release or other publicity
concerning any of the Transactions to be issued or otherwise disseminated on its
behalf without the prior written consent of Xxxxxxxxx, in the case of the
Company, or the Company, in the case of Xxxxxxxxx; provided, however, that the
Company and Xxxxxxxxx may disclose or disseminate such information as required
by any applicable law or rule to which the Company or the Xxxxxxxxx are subject,
including the Securities Exchange Act of 1934, as amended, and the rules of the
National Association of Securities Dealers.
9.11 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.
9.12 Delays or Omissions; Waivers.
(a) No failure on the part of any person to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any person
in exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise or waiver of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No person shall be deemed to have waived any claim arising out of
this Agreement, or any power, right, privilege or remedy under this Agreement,
unless the waiver of such claim, power, right, privilege or remedy is expressly
set forth in a written instrument duly executed and delivered on behalf of such
person; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
9.13 Remedies Cumulative; Specific Performance.
(a) All remedies, either under this Agreement or by law or otherwise
afforded to the parties hereto, shall be cumulative and not alternative.
(b) Each of the parties hereto agrees that if the conditions to such
party's obligation to consummate the Transactions have been satisfied as set
forth in Section 4, as the case may be, and such party nonetheless refuses to
consummate the Transactions, then the other party shall be entitled (in addition
to any other remedy that may be available to it) to (i) a decree or order of
specific performance or mandamus to enforce the observance and performance of
such obligation to consummate the Transactions, and (ii) an injunction
restraining such non-performance.
9
9.14 Headings.
The headings contained in this Agreement are for convenience of reference
only, shall not be deemed to be a part of this Agreement and shall not be
referred to in connection with the construction or interpretation of this
Agreement.
9.15 Construction.
(a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include the
masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including," and
variations thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise specified, all references in this Agreement to
"Sections" are intended to refer to Sections of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this PREFERRED STOCK
CONVERSION AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY: ODWALLA, INC.,
a California corporation
By: /s/ D. Xxxxxxx X. Xxxxxxxxxx
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Name: D. Xxxxxxx X. Xxxxxxxxxx
Title: Chief Executive Officer
XXXXXXXXX-XXXXX PARTNERS III, L.P.,
By Its General Partner:
Xxxxxxxxx-Xxxxx Managing Partner III, L.L.C.
a Delaware limited liability company
By: /s/ Xxxxx Xxxxx
--------------------------------------
Name: Xxxxx Xxxxx
Title: Authorized Person
[SIGNATURE PAGE TO PREFERRED STOCK CONVERSION AGREEMENT]
Exhibit A
[STATE OF CALIFORNIA LOGO]
[SEAL OF THE OFFICE OF
THE SECRETARY OF STATE]
SECRETARY OF STATE
I, XXXX XXXXX, Secretary of State of the State of California, hereby
certify:
That the attached transcript of 3 page(s) has been compared with the
record on file in this office, of which it purports to be a copy, and that it is
full, true and correct.
IN WITNESS HEREOF, I execute this
certificate and affix the Great Seal of
the State of California this day of
[GREAT SEAL OF THE
STATE OF CALIFORNIA] APR 27 2000
---------------------------------
/s/ Xxxx Xxxxx
Secretary of State