UNIT PURCHASE AGREEMENT
This UNIT PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of February 14, 1996 by and among Instant Video Technologies, Inc., a
Delaware corporation (the "Company"), and the parties listed on the Schedule of
Investors attached to this Agreement as Exhibit A (each hereinafter individually
referred to as an "Investor" and collectively referred to as the "Investors").
W I T N E S S E T H:
WHEREAS, the Company desires to sell to the Investors, and the
Investors desire to purchase from the Company, units of investment, each of
which consists of (i) one share of the Company's Series F Convertible Preferred
Stock (the "Series F Stock") and (ii) a warrant to purchase one share of the
Company's Common Stock (a "Warrant") at a warrant exercise price of $1.00 per
share (individually, a "Unit" and collectively, the "Units"), on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. AGREEMENT TO PURCHASE AND SELL STOCK.
1.1 Authorization. As of the Closing (as defined below) the
Company will have authorized the issuance, pursuant to the terms and conditions
of this Agreement, of up to five million (5,000,000) shares of the Company's
Series F Preferred Stock (the "Series F Stock") having the rights, preferences,
privileges and restrictions set forth in the Certificate of Designation of the
Company attached to this Agreement as Exhibit B (the "Certificate"). The Company
reserves the right to amend its Certificate of Incorporation subsequent to the
Closing to eliminate all provisions relating to the Company's authorized shares
of Series A, Series B, Series C and Series D Convertible Preferred Stock, none
of which shares shall then be outstanding, and redesignate the Company's Series
E Convertible Preferred Stock ("Series E Stock") as Series A Preferred Stock and
the Series F Stock as Series B Preferred Stock. Each Investor hereby consents to
such amendment to the Certificate of Incorporation and an amendment to this
Agreement to reflect such changes in the Certificate of Incorporation. In the
event of such redesignation, all references herein to Series E Stock and Series
F Stock shall be deemed to refer to the Company's Series A Convertible Preferred
Stock and Series B Convertible Preferred Stock, respectively.
1.2 Agreement to Purchase and Sell. The Company agrees to sell
to each Investor at the Closing, and each Investor agrees, severally and not
jointly, to purchase from the Company at the Closing, the number of Units set
forth beside such Investor's name
1
on Exhibit A, at a price of $1.00 per Unit. The shares of Series F Stock and the
Warrants purchased and sold pursuant to this Agreement shall be collectively
hereinafter referred to as the "Purchased Securities", and the shares of Common
Stock issuable upon conversion of the shares of Series F Stock and the shares of
Common Stock issuable upon the exercise of any Warrant shall be collectively
hereinafter referred to as the "Common Shares".
2. CLOSING.
2.1 The Closing. The purchase and sale of the Purchased
Securities shall take place at the offices of Xxxx, XxXxxxxxx & Xxxxxxx, LLP,
0000 Xxxx Xxxxxxxx Xxxx, Xxxxx 000, Xxxx Xxxx, Xxxxxxxxxx, at 10:00 a.m. Pacific
Time, on February 14, 1996 or at such other time and place as the Company and
Investors who have agreed to purchase a majority of the Purchased Securities
listed on Exhibit A mutually agree upon (which time and place are referred to in
this Agreement as the "Closing"). At the Closing, the Company will deliver to
each Investor a certificate representing the number shares of Series F Stock,
and a warrant in the form of Exhibit C hereto representing the number of
Warrants, that such Investor has agreed to purchase hereunder as shown on
Exhibit A against delivery to the Company by such Investor of the full purchase
price of such Purchased Securities, paid by (i) a bank certified check payable
to the Company's order, (ii) wire transfer of immediately available funds to the
Company, or (iii) any combination of the foregoing.
2.2 Additional Closing(s).
(a) Conditions of Additional Closing(s). At any time
and from time to time during the period immediately following the Closing and
ending on December 31, 1996, the Company may at one or more additional closings
(each an "Additional Closing"), without obtaining the signature, consent or
permission of any of the Investors, offer and sell to other investors ("New
Investors"), at a price of $1.00 per Unit, (i) up to that number of Units such
that the total number of Units sold by the Company (inclusive of the number of
Units sold at the Closing and at any prior Additional Closings) equals five
million (5,000,000). New Investors may include persons or entities who were
previously Investors under this Agreement. It is the expectation of the parties
that one such Additional Closing will take place for the purchase and sale of up
to an additional 500,000 of Units on or about February 23, 1996 to persons or
entities introduced to the Company by the Investors.
(b) Amendments. The Company and the New Investors
purchasing Units at each Additional Closing will execute counterpart signature
pages to this Agreement, the Registration Rights Agreement (as defined in
Section 5.4) and the Voting Agreement (as defined in Section 5.5), and such New
Investors will, upon delivery to the Company of such signature pages, become
parties to, and bound by, this Agreement, the Registration Rights
2
Agreement and the Voting Agreement, each to the same extent as if they had been
Investors at the Closing. Immediately after each Additional Closing, Exhibit A
to this Agreement will be amended to list the New Investors purchasing Units
hereunder and the number of Units purchased by them under this Agreement at such
Additional Closing. Upon the completion of each Additional Closing as provided
in this Section 2, each New Investor will be deemed to be an "Investor" for all
purposes of this Agreement, the Registration Rights Agreement and the Voting
Agreement. The Company will promptly furnish to each Investor copies of the
amendments to Exhibit A referred to in the preceding sentence.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Investor that the statements in the following
paragraphs of this Section 3 are all true and correct:
3.1 Organization1 Good Standing and Qualification. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own its properties and assets and to carry on its business as now
conducted and as proposed to be conducted. The Company is qualified to do
business as a foreign corporation in each jurisdiction where failure to be so
qualified would have a material adverse effect on its financial condition,
business, prospects or operations.
3.2 Due Authorization. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the
authorization, execution, delivery of, and the performance of all obligations of
the Company under, this Agreement, the Registration Rights Agreement and the
Voting Agreement has been taken or will be taken prior to the Closing and this
Agreement constitutes, and the Registration Rights Agreement and the Voting
Agreement when executed will constitute, valid and legally binding obligations
of the Company, enforceable in accordance with their respective terms, except as
may be limited by (i) applicable bankruptcy, insolvency, reorganization or
other laws of general application relating to or affecting the enforcement of
creditors' rights generally and (ii) the effect of rules of law governing the
availability of equitable remedies.
3.3 Valid Issuance of Purchased Securities. The Purchased
Securities, when issued, sold and delivered in accordance with the terms of this
Agreement for the consideration provided for herein, will be duly and validly
issued, fully paid and nonassessable.
3.4 Capitalization. Immediately prior to the Closing the
capitalization of the Company will consist of the following:
(a) Preferred Stock. A total of 11,938,467.32
3
authorized shares of preferred stock, $.000l par value per share (the "Preferred
Stock"), consisting of 11,966.497 shares designated as Series A Convertible
Preferred Stock, none of which will be issued and outstanding, an aggregate of
6,500.829 shares designated as Series X-x through B-4 Convertible Preferred
Stock, none of which will be issued and outstanding, 20,000 shares designated as
Series C Convertible Preferred Stock, none of which will be issued and
outstanding, 5,900,000 shares designated as Series D Convertible Preferred
Stock, none of which will be issued and outstanding (all such Series A through D
Convertible Preferred Stock having previously either been converted into Common
Stock or contributed back to the Company), 1,000,000 shares designated as Series
E Convertible Preferred Stock, 500,000 of which will be issued and outstanding
and 5,000,000 shares of Series F Stock, none of which will be issued and
outstanding.
(b) Common Stock. A total of 100,000,000 authorized
shares of common stock, no par value per share (the "Common Stock"), of which
4,4644,011 shares will be issued and outstanding.
(c) Options, Warrants, Reserved Shares. Except for
(i) the conversion privileges of the Series E Stock and the Series F Stock, (ii)
the right of first refusal granted to the Investors hereunder, (iii) other
outstanding options, warrants, rights or agreements for the purchase or
acquisition of not in excess of 4,200,000 Common Stock equivalents; there are
not outstanding any options, warrants, rights (including conversion or
preemptive rights) or agreements for the purchase or acquisition from the
Company of any shares of its capital stock or any securities convertible into or
ultimately exchangeable or exercisable for any shares of the Company's capital
stock. Apart from the exceptions noted in this Section 3.2(c), and except for
right of first refusal provided in the Voting Agreement, none of the Company's
outstanding capital stock, or stock issuable upon exercise or exchange of any
outstanding options, warrants or rights, is subject to any rights of first
refusal or other rights to purchase such stock (whether in favor of the Company
or any other person), pursuant to any agreement or commitment of the Company.
3.5 Disclosure. This Agreement, the Exhibits hereto and all
written documents previously provided to the Investors in connection with the
transactions contemplated by this Agreement (when read together) do not contain
any untrue statement of a material fact and do not omit to state a material fact
necessary to make the statements therein or herein not misleading; except that,
with respect to any financial projections submitted to the Investors, the
Company represents and warrants only that such financial projections were
prepared in good faith based on reasonable assumptions that may or may not be
accurate or occur, in which case the Investors could lose all or part of their
investment in the Purchased Securities.
4
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF INVESTORS.
Each Investor hereby represents and warrants to, and agrees with, the Company,
severally and not jointly, that:
4.1 Authorization. All corporate or other action on the part
of such Investor, its officers, directors, partners and/or shareholders
necessary for the authorization, execution, delivery of, and the performance of
all obligations of such Investor under, this Agreement, the Registration Rights
Agreement and the Voting Agreement has been taken or will be taken prior to the
Closing and this Agreement constitutes such Investor's valid and legally binding
obligation, enforceable in accordance with its terms except as may be limited by
(i) applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally and (ii) the effect of rules of law governing the availability of
equitable remedies. Each Investor represents that it has full power and
authority to enter into this Agreement, the Registration Rights Agreement and
the Voting Agreement.
4.2 Purchase for Own Account. The Purchased Shares to be
purchased by such Investor hereunder will be acquired for investment for such
Investor's own account, not as a nominee or agent, and not with a view to the
public resale or distribution thereof within the meaning of the Securities Act
of 1933, as amended (the "1933 Act"), and such Investor has no present intention
of selling, granting any participation in, or otherwise distributing the same.
4.3 Disclosure of Information. The Investor has had full
access to all the information that the Investor (or the Investor's advisors)
considers necessary or appropriate to make an informed decision with respect to
the Investor's investment in the Purchased Securities. The Investor acknowledges
that the Company has made available to the Investor and the Investor's advisors
the opportunity to ask questions and examine any document, matter or information
that the Investor considers relevant or appropriate in connection with such
investment 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 any information furnished to the Investor or to
which the Investor had access. To the extent that the Investor has not sought
information regarding any particular matter, the Investor represents that the
Investor had no interest in doing so and that such matters are not material to
the Investor in connection with such investment. The Investor has accepted the
responsibility for conducting the Investor's own investigation and obtaining for
the Investor, from the above sources and other sources, such information as to
the foregoing and all other subjects as the Investor deems relevant or
appropriate in connection with such investment.
5
4.4 Investment Experience. Such Investor understands that the
purchase of the Purchased Securities involves substantial risk. Such Investor
has experience as an investor in securities of companies in the development
stage and acknowledges that such Investor is able to fend for itself, can bear
the economic risk of such Investor's investment in the Purchased Securities and
has such knowledge and experience in financial or business matters that such
Investor is capable of evaluating the merits and risks of this investment in the
Purchased Securities. If not an individual, such Investor also represents that
it has not been organized for the specific purpose of acquiring the Purchased
Securities, or, alternatively, if such Investor has been organized for the
specific purpose of acquiring the Purchased Securities, such Investor has
notified the Company in writing of such fact, and has provided, and shall
provide to the Company prior to the Closing, such additional documents and
information as the Company may reasonably request to confirm compliance by the
Company with applicable federal and state securities laws and regulations.
4.5 Accredited Investor Status. Such Investor is an
"accredited investor" within the meaning of Regulation D promulgated under the
0000 Xxx.
4.6 Restricted Securities. Such Investor understands that the
Purchased Securities are characterized as "restricted securities" under the 1933
Act inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under the 1933 Act and applicable
regulations thereunder such securities may be resold without registration under
the 1933 Act only in certain limited circumstances. In this connection, such
Investor represents that it is familiar with Rule 144 of the U.S. Securities and
Exchange Commission ("SEC"), as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act. Such Investor acknowledges and
agrees that the Company shall be under no obligation to maintain the
registration of the Company's Common Stock under the Securities and Exchange Act
of 1934 and that if such registration is terminated, Rule 144 will not be
available to such Investor for resales of any of the Purchased Securities or the
Common Shares. Such Investor understands that the Company is under no obligation
to register any of the securities sold hereunder except as provided in the
Registration Rights Agreement. Such Investor understands that no public market
now exists for any of the Purchased Securities and it is uncertain whether a
public market will ever exist for the Purchased Securities or the Common Shares.
4.7 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, such Investor further agrees not
to make any disposition of all or any portion of the Purchased Securities or the
Common Shares unless and until:
(a) there is then in effect a registration
6
statement under the 1933 Act covering such proposed disposition and such
disposition is made in accordance with such registration statement; or
(b) (i) such Investor shall have notified the Company
of the proposed disposition and shall have furnished the Company with a
statement of the circumstances surrounding the proposed disposition, and (ii)
such Investor shall have furnished the Company, at the expense of such Investor
or its transferee, with an opinion of counsel, reasonably satisfactory to the
Company, that such disposition will not require registration of such securities
under the 1933 Act.
4.8 Legends. It is understood that the certificates evidencing
the Purchased Securities and the Common Shares will bear the legends set forth
below:
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
(b) Any legend required by the laws of the State of
California, including any legend required by the California Department of
Corporations and Sections 417 and 418 of the California Corporations Code or any
other state securities laws, including legends on certificates evidencing shares
of Series F Stock substantially in the form of the following:
THE SHARES EVIDENCED BY THIS CERTIFICATE:
(1) ARE CONVERTIBLE INTO SHARES OF COMMON STOCK OF THE COMPANY AT THE OPTION OF
THE HOLDER AT ANY TIME PRIOR TO AUTOMATIC CONVERSION THEREOF; (2) AUTOMATICALLY
CONVERT INTO COMMON STOCK OF THE COMPANY IN THE EVENT OF A PUBLIC OFFERING
MEETING CERTAIN REQUIREMENTS OR UPON CERTAIN CONSENTS OF THE HOLDERS OF THE
COMPANY'S PREFERRED STOCK; AND (3) ARE REDEEMABLE; ALL PURSUANT TO AND UPON THE
TERMS AND CONDITIONS SPECIFIED IN THE COMPANY'S CERTIFICATE OF INCORPORATION, A
COPY OF WHICH MAY BE OBTAINED, WITHOUT CHARGE, AT THE COMPANY'S PRINCIPAL
OFFICE.
(c) It is understood that the certificates evidencing
the shares of Common Stock subject to the Voting Agreement will bear the legend
set forth below:
7
THESE SECURITIES ARE SUBJECT TO THE TERMS OF
A VOTING AND RIGHT OF FIRST REFUSAL AGREEMENT, THE TERMS OF WHICH ARE AVAILABLE
FROM THE SECRETARY OF THE COMPANY. SUCH AGREEMENT IS BINDING UPON ANY HOLDER OF
THESE SECURITIES, AND ANY SUCCESSOR OR ASSIGN OF ANY HOLDER OF THESE SECURITIES.
The legend set forth in (a) above shall be removed by the Company from any
certificate evidencing Purchased Securities or Common Shares upon delivery to
the Company of an opinion by counsel, in form and substance reasonably
satisfactory to the Company, that a registration statement under the 1933 Act is
at that time in effect with respect to the legended security or that such
security can be freely transferred in a public sale without such a registration
statement being in effect and that such transfer will not jeopardize the
exemption or exemptions from registration pursuant to which the Company issued
the Purchased Securities or Common Shares.
5. CONDITIONS TO INVESTORS' OBLIGATIONS AT CLOSING. The obligations of
each Investor under Section 2 of this Agreement are subject to the fulfillment
or waiver, on or before the Closing, of each of the following conditions, the
waiver of which shall not be effective against any Investor who does not consent
to such waiver, which consent may be given by written, oral or telephone
communication to the Company, its counsel or to special counsel to the
Investors:
5.1 Representations and Warranties True. Each of the
representations and warranties of the Company contained in Section 3 shall be
true and correct on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of the
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 Closing and
shall have obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein.
5.3 Certificate Effective. The Certificate shall have been
duly filed with and accepted by the Secretary of State of the State of Delaware.
5.4 Registration Rights Agreement. The Company shall have
executed and delivered the Registration Rights Agreement in the form attached to
this Agreement as Exhibit D (the "Registration Rights Agreement").
5.5 Voting Agreement. The Company and the holders of the
Company's Common Stock who are parties to the Voting and Right of First Refusal
Agreement in the form attached to this Agreement
8
as Exhibit E (the "Voting Agreement") shall each have executed and delivered the
Voting Agreement.
6. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations
of the Company to each Investor under this Agreement are subject to the
fulfillment or waiver on or before the Closing of each of the following
conditions by such Investor:
6.1 Representations and Warranties. The representations and
warranties of such Investor contained in Section 4 shall be true and correct on
the date of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
6.2 Payment of Purchase Price. Each Investor shall have
delivered to the Company the purchase price specified for such Investor on
Exhibit A in accordance with the provisions of Section 2.
6.3 Certificate Effective. The Certificate shall have been
duly filed with and accepted by the Secretary of State of the State of Delaware.
6.4 Securities Exemptions. The offer and sale of the Purchased
Securities to the Investors pursuant to this Agreement shall be exempt from the
registration requirements of the 1933 Act, and the registration and/or
qualification requirements of all applicable state securities laws.
6.5 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing and
all documents incident thereto shall be reasonably satisfactory in form and
substance to the Company and to the Company's legal counsel, and the Company
shall have received all such counterpart originals and certified or other copies
of such documents as it may reasonably request.
7. RIGHT OF FIRST REFUSAL.
7.1 General. Each holder of Series F Stock, including each
holder of Common Stock received upon conversion of such holder's Series F Stock
(a "Holder"), has the right of first refusal to purchase such Holder's pro rata
share (as defined below) of all, and not less than all, of any "New Securities"
(as defined in Section 7.2) that the Company may, from time to time, propose to
sell and issue. A Holder's "pro rata share" for purposes of this right of first
refusal is the ratio of the (a) number of shares of Common Stock into which the
shares of the Holder's Series F Stock are convertible, plus the number of shares
of Common Stock held by the Holder that were received upon conversion of such
holder's Series F Stock and received upon exercise of Warrants, to (b) the total
number of shares of Common Stock into which all currently
9
outstanding shares of Series F Stock are convertible, plus the total number of
shares of Common Stock that were issued upon conversion of Series F Stock and
received upon exercise of Warrants.
7.2 New Securities. "New Securities" shall mean any Common
Stock or Preferred Stock of the Company, whether now authorized or not, and
rights, options or warrants to purchase such Common Stock or Preferred Stock,
and securities of any type whatsoever that are, or may become, convertible or
exchangeable into such Common Stock or Preferred Stock; provided, however, that
"New Securities" does not include: (i) shares of the Company's Common Stock (or
related options) issued to employees, officers, directors or consultants of the
Company pursuant to incentive agreements or plans approved by the Board of
Directors of the Company or any other securities issued upon the exercise of any
outstanding option, warrant or other right, (ii) securities issuable upon
conversion of or with respect to Series E or Series F Stock, (iii) shares of the
Company's Common Stock or Preferred Stock issued in connection with any stock
split or stock dividend (iv) securities offered to the public pursuant to a
registration statement filed under the 1933 Act, or (v) securities issued
pursuant to the acquisition of another corporation or entity by the Company by
merger, purchase of substantially all of the assets, or other reorganization
after which the Company owns not less than fifty-one (51%) of the voting power
of such other corporation or fifty-one (51%) of the ownership of such other
entity.
7.3 Mechanics of Right. In the event that the Company proposes
to undertake an issuance of New Securities, it shall give to each Holder written
notice of its intention, describing the type of New Securities, the price and
the general terms upon which the Company proposes to issue the same. Each Holder
shall have ten (10) days from the date of mailing of any such notice to agree to
purchase such Holder's pro rata share of such New Securities for the price and
upon the general terms specified in the notice by giving written notice to the
Company and stating therein the quantity of New Securities to be purchased. Each
purchasing Holder shall have a right of overallotment such that if any other
Holder fails to exercise such other Holder's right hereunder to purchase such
Holder's pro rata share of New Securities, the purchasing Holder may purchase
the nonpurchasing Holder's unpurchased pro rata share, within five (5) days from
the date such nonpurchasing Holder fails to exercise such Holder's right
hereunder to purchase such nonpurchasing Holder's full pro rata share of New
Securities.
7.4 Failure to Exercise. In the event that the Holders fail to
exercise in full the right of first refusal with respect to all New Securities
within such ten (10) plus five (5) day period (it being the intention of the
parties that unless the right of first refusal is exercised as to all New
Securities, the Company may issue all or any part of the New Securities as
hereinafter
10
provided), the Company shall have 120 days thereafter to sell (or enter into an
agreement pursuant to which the sale of New Securities covered thereby shall be
closed, if at all, within 120 days from the date of said agreement) the New
Securities respecting which the Holder's rights were not exercised, at a price
and upon general terms no more favorable to the purchasers thereof than
specified in the Company's notice to the Holders. In the event that the Company
has not sold the New Securities within such 120-day period (or sold and issued
New Securities in accordance with the foregoing within 120 days from the date of
such agreement), the Company shall not thereafter issue or sell any New
Securities without first offering such New Securities pursuant to this Section
7.
7.5 Termination. The right of first refusal shall terminate
immediately before the closing of the first firmly underwritten public offering
of Common Stock of the Company pursuant to an effective registration statement
under the 1933 Act, covering the offer and sale of Common Stock for the account
of the Company at a price per share of at least $4.00, with an aggregate
offering price for all shares under such registration statement of at least
$3,000,000.
8. MISCELLANEOUS.
8.1 Survival of Warranties. The representations, warranties
and covenants of the Company and the Investors as contained in or made pursuant
to this Agreement shall survive the execution and delivery of this Agreement and
the Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of any of the Investors, their counsel or
the Company, as the case may be.
8.2 Successors and Assigns. 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.
8.3 Governing Law; Forum. This Agreement shall be governed by
and construed under the internal laws of the State of California as applied to
agreement among California residents entered into and to be performed entirely
within California, without reference to principles of conflict of laws or choice
of laws. Each party consents to the jurisdiction and proper venue of the state
and federal courts sitting in the City and County of San Francisco in any action
to enforce the terms hereof.
8.4 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.
11
8.5 Headings. The headings and captions used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules shall, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which are incorporated herein by this reference.
8.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on Exhibit A or, in the case of the Company, at 000
Xxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, or at such other
address as such party may designate by ten (10) days advance written notice to
all other parties.
8.7 Finder's Fees. Other than fees that may be payable by the
Company to Xx. Xxxxxxx Xxxxxxxx (the amount of which may be subject to dispute)
and a 100,000 Unit commission payable to Xxxxxx Xxxxxx which shall in no event
exceed 100,000 options to purchase the Company's Common Stock at $1.00 per
share, each party represents that it neither is nor will be obligated for any
finder's or broker'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 finders' or broker's fee
(and any 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 or broker's fee (and any asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
8.8 Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the Registration
Rights Agreement, the Voting Agreement or the Certificate, the prevailing party
shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
8.9 Amendments and Waivers. Except as specified in Section
2.2, 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 shares of Series F Stock and/or Common Shares
representing at least 66-2/3% of the aggregate number of shares of Common Stock
into which such shares of Series F Stock then are convertible and/or have been
converted (excluding any of such
12
shares that have been sold to the public or pursuant to SEC Rule 144). Any
amendment or waiver effected in accordance with this Section shall be binding
upon each holder of any Purchased Securities and/or Common Shares at the time
outstanding, each future holder of such securities, and the Company; provided,
however, that no condition set forth in Section 5 may be waived with respect to
any Investor who does not consent thereto.
8.10 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision(s) shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
8.12 Entire Agreement. This Agreement, together with all
exhibits and schedules hereto, constitutes the entire understanding and
agreement of the parties with respect to the subject matter hereof and
supersedes all prior understandings and agreements with respect to such matters.
8.13 Further Assurances. From and after the date of this
Agreement, upon the request of any Investor or the Company, the Company and the
Investors shall execute and deliver such instruments, documents or other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.
[remainder of page intentionally left blank]
13
IN WITNESS WHEREOF, the parties hereto have executed this Unit
Purchase Agreement as of the date first above written.
THE COMPANY: THE INVESTORS:
Instant Video Technologies, Inc. Xxxxxx Partners, a California
a Delaware corporation limited partnership
By: _________________________________ By: Xxxxxx Advisors, Inc.,
General Partner
Title: ______________________________
By: _________________________________
Title: ______________________________
Mindful Partners, a
California limited
partnership
By: _________________________________
Xxxxxx Xxxxxx
General Partner
Executed April ___, 1996
_____________________________________
Xxxx Xxxxxxx
Executed ______________________, 1996
Delaware Charter Guaranty and
Trust Company FBO Xxxxxx X.
Xxxxxx XXX Rollover
By: _________________________________
Title: ______________________________
Executed April ___, 1996
_____________________________________
XXXXXX LONDON
Executed June __, 1996
14
LIST OF EXHIBITS
Exhibit A - Schedule of Investors
Exhibit B - Certificate of Designation
Exhibit C - Form of Warrant
Exhibit D - Registration Rights Agreement
Exhibit E - Voting and Right of First Refusal Agreement
EXHIBIT A
Schedule of Investors
Shares of Series F Purchase
Investor Stock Purchased Warrants Price
-------- --------------- -------- -----
Xxxxxx Partners 700,000 700,000 $700,000
Xxx Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Att: ___________________
Mindful Partners 250,000(1) 250,000(1) $250,000(1)
000 Xxxxxxx Xxxxxxx
Xxxxx 0000
Xxxx Xxxxxx, XX 00000
Att: Xxxxxx Xxxxxx
Xxxx Xxxxxxx 200,000 200,000 $200,000
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Delaware Charter Guaranty 75,000 75,000 $ 75,000
Trust Company FBO Xxxxxx X.
Xxxxxx XXX Rollover
c/o Mindful Partners
000 Xxxxxxx Xxxxxxx
Xxxxx 0000
Xxxx Xxxxxx, XX 00000
Att: Stuart Xxxxxx
Xxxxxx London 100,000 100,000 $100,000
c/o Xxxxxxxxxx Xxxx & Co.
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
---------------------
(1) $150,000 of which was invested on or about February 14, 1996, with the
remaining $100,000 invested in April 1996.
EXHIBIT B
CERTIFICATE OF DESIGNATION
Exhibit A
Series F Convertible Preferred Stock
WHEREAS, the Certificate of Incorporation of the Corporation provides for a
class of shares of stock designated "Preferred Stock," and vests in the Board of
Directors the authority to specify the number of shares of Preferred Stock to be
issued, to divide the Preferred Stock into one or more series within any class
thereof, and to fix the number of Shares in such series, and the preferences,
rights and restrictions thereof; and
WHEREAS, the Corporation desires to designate a Series F Convertible Preferred
Stock;
NOW, THEREFORE, be it resolved that there shall be another series of Preferred
Stock of the Corporation designated "Series F Convertible Preferred Stock." The
number of shares of Series F Convertible Preferred Stock shall be 5,000,000. The
powers, designations, preferences and relative, participating, optional or other
special rights of the shares of the Series F Convertible Preferred Stock and the
qualifications, limitations and restrictions of such preferences and rights
shall be as follows:
1. Definitions. For purposes of this Certificate of Designation, the
following definitions will apply:
(a) "Additional Shares of Common Stock" means all shares of Common
Stock issued or deemed issued by the Corporation after the sale of any shares of
Series F Stock, whether or not subsequently reacquired or retired by the
Company, other than (i) shares of Common Stock issued upon conversion of the
Corporation's Series A through F Convertible Preferred Stock; or (ii) shares of
Common Stock (and any related options or warrants therefor) issued to employees,
officers, directors, consultants, contractors, agents or other persons
performing services or for extending credit to the Corporation, issued pursuant
to any stock option plan, stock purchase plan, stock bonus plan, or other plan,
agreement or arrangement approved by the Board.
(b) "Board" means the Board of Directors of the Corporation.
(c) "Common Stock" means the Common Stock of the Corporation.
(d) "Common Stock's Fair Market Value" means the fair market value of a
share of Common Stock, as determined in good faith by the Board for the purpose
of granting stock options or issuing shares to employees of the Corporation or
any subsidiary of the Company as of the applicable date.
(e) "Corporation" means this corporation.
1
(f) "Original Issue Price" means $1.00 per share for the Series F
Stock.
(g) "Series F Stock" means the Series F Convertible Preferred Stock
established hereby.
(h) "Reference Date" means, with respect to the Series F Stock, the
date this Certificate of Designation is filed with the Secretary of State of
Delaware.
2. Dividend Provisions. The holders of outstanding shares of Series F
Stock described herein shall not be entitled to receive any fixed dividends.
3. Liquidation Preference.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holder of each
share of Series F Stock shall be entitled to receive, out of the assets of the
Corporation available for distribution to its stockholders before any payment or
distribution shall be made on the Common Stock, and after any payment or
distribution shall be made on the Series E Convertible Preferred Stock, an
amount per share equal to $1.00, adjusted for any combinations, consolidations,
or stock distributions or dividends with respect to such shares occurring after
the date hereof, and, in addition, an amount equal to all declared but unpaid
dividends on the Series F Stock. If the assets and funds to be distributed among
the holders of the Series F Stock shall be insufficient to permit the payment of
the full aforesaid preferential amount to such holders, then the entire assets
and funds of the Corporation legally available for the distribution to such
holders shall be distributed among the holders of the Series F Stock in
proportion to the aggregate preferential amount of all shares of Series F Stock
held by them. After payment has been made to the holders of the Series F Stock,
the holders of the Common Stock shall be entitled to share ratably in the
remaining assets on the basis of the number of shares of Common Stock held by
them at the time of such liquidation.
(b) For purposes of this Section 3, a merger or consolidation of the
Corporation with or into any other corporation or corporations, or the merger of
any other corporation or corporations into the Corporation, or the sale or any
other corporate reorganization, in which shareholders of the Corporation receive
distributions as a result of such consolidation, merger, sale of assets or
reorganization, shall be treated as a liquidation, dissolution or winding up of
the Corporation, unless the stockholders of the Corporation hold more than fifty
percent (50%) of the voting equity securities of the successor or surviving
corporation immediately following such consolidation, merger, sale of assets or
reorganization in which event such consolidation,
2
merger, sale of assets, or reorganization shall not be treated as a liquidation,
dissolution or winding up.
4. Conversion. The holders of the Series F Stock will have the
following conversion rights:
(a) Right to Convert. Each share of Series F Stock will be convertible,
at any time or from time to time at the option of the holder thereof, into fully
paid and nonassessable shares of Common Stock as provided herein.
(b) Conversion Price. Each share of Series F Stock will be convertible
into the number of shares of Common Stock which results from dividing the
conversion price of the Series F Stock that is in effect at the time of
conversion (the "Conversion Price") into the Original Issue Price for such
series of Preferred Stock. The initial Conversion Price for the Series F Stock
will be the Original Issue Price for such series. The Conversion Price will be
subject to adjustment from time to time as provided below.
(c) Mechanics of Conversion. Each holder of Series F Stock who desires
to convert the same into shares of Common Stock will surrender the certificate
or certificates therefor, duly endorsed, at the office of the Corporation or any
transfer agent for the Series F Stock or Common Stock, and will give written
notice to the Corporation at such office that such holder elects to convert the
same and will state therein the number of shares of Series F Stock being
converted. Thereupon the Corporation will promptly issue and deliver at such
office to such holder a certificate or certificates for the number of shares of
Common Stock to which such holder is entitled and will promptly pay in cash any
declared and unpaid dividends on the shares of Series F Stock being converted.
Such conversion will be deemed to have been made immediately prior to the close
of business on the date of such surrender of the certificate representing the
shares of Series F Stock to be converted, and the person entitled to receive the
shares of Common Stock issuable upon such conversion will be treated for all
purposes as the record holder of such shares of Common Stock on such date.
(d) Adjustment for Stock Splits and Combinations. If the Corporation at
any time or from time to time after the Reference Date of the Series F Stock
effects a subdivision of the outstanding Common Stock, the Conversion Price for
such Series F Stock in effect immediately before that subdivision will be
proportionately decreased, and, conversely, if the Corporation at any time or
from time to time after the Reference Date of the Series F Stock combines the
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price for the Series F Stock in effect immediately before the
combination will be proportionately
3
increased. Any adjustment under this Section 4(d) will become effective at the
close of business on the date the subdivision or combination becomes effective.
(e) Adjustment for Common Stock Dividends and Distributions. If the
Corporation at any time or from time to time after the Reference Date makes, or
fixes a record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in additional shares of Common
Stock, in each such event the Conversion Price for the Series F Stock that is
then in effect will be decreased as of the time of such issuance or, in the
event such record date is fixed, as of the close of business on such record
date, by multiplying the Conversion Price then in effect by a fraction (1) the
numerator of which is the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of
business on such record date, and (2) the denominator of which is the total
number of shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date plus the
number of shares of Common Stock issuable in payment of such dividend or
distribution; provided, however, that if such record date is fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the applicable Conversion Price will be recomputed accordingly
as of the close of business on such record date and thereafter the Conversion
Price will be adjusted pursuant to this Section 4(e) to reflect the actual
payment of such dividend or distribution.
(f) Adjustments for Other Dividends and Distributions. If the
Corporation at any time or from time to time after the Reference Date of the
Series F Preferred Stock makes, or fixes a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in securities of the Corporation other than shares of Common Stock, in
each such event provision will be made so that the holders of such series of
Preferred Stock will receive upon conversion thereof, in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation which they would have received had their Preferred Stock been
converted into Common Stock on the date of such event and had they thereafter,
during the period from the date of such event to and including the conversion
date, retained such securities receivable by them as aforesaid during such
period, subject to all other adjustments called for during such period under
this Section 4 with respect to the rights of the holders of the Series F Stock
or with respect to such other securities by their terms.
(g) Adjustment for Reclassification, Exchange and Substitution. If at
any time or from time to time after the Reference Date of the Series F Stock,
the Common Stock issuable upon the conversion of such series of Preferred Stock
is changed into the same or a different number of shares of any class or
4
classes of stock, whether by recapitalization, reclassification or otherwise
(other than a subdivision or combination of shares or stock dividend or a
reorganization, merger, consolidation or sale of assets provided for elsewhere
in this Section 4 or Section 3(b)), then in any such event each holder of such
series of Preferred Stock will have the right thereafter to convert such stock
into the kind and amount of stock and other securities and property receivable
upon such recapitalization, reclassification or other change by holders of the
maximum number of shares of Common Stock into which such shares of Series F
Stock could have been converted immediately prior to such recapitalization,
reclassification or change, all subject to further adjustment as provided herein
or with respect to such other securities or property by the terms thereof.
(h) Reorganizations. If at any time or from time to time after the
Reference Date of the Series F Stock there is a capital reorganization of the
Common Stock (other than a recapitalization, subdivision, combination,
reclassification, exchange or substitution of shares provided for elsewhere in
this Section 4 or in Section 3(b)), as a part of such capital reorganization
provision will be made so that the holders of such series of Preferred Stock
will thereafter be entitled to receive upon conversion of such series of
Preferred Stock the number of shares of stock or other securities or property of
the Company to which a holder of the number of shares of Common Stock
deliverable upon conversion would have been entitled on such capital
reorganization, subject to adjustment in respect of such stock or securities by
the terms thereof. In any such case, appropriate adjustment will be made in the
application of the provisions of this Section 4 with respect to the rights of
the holders of Series F Stock after such capital reorganization to the end that
the provisions of this Section 4 (including adjustment of the Conversion Price
then in effect and the number of shares issuable upon conversion of the
Preferred Stock) will be applicable after that event and be as nearly equivalent
as practicable.
(i) Adjustment to Series F Stock Conversion Price For Sale of Shares
Below Conversion Price.
(A) If at any time or from time to time after the Reference
Date for the Series F Stock, the Corporation issues or sells Additional Shares
of Common Stock, other than as a dividend or other distribution on any class of
stock with a Conversion Price adjustment as provided herein and other than upon
a subdivision or combination of shares of Common Stock with a Conversion Price
adjustment as provided herein, for a consideration per share less than the
then-existing Conversion Price for Series F Stock then, and in each case that
the consideration per share is less than such Conversion Price for Series F
Stock then in effect, such Conversion Price will be reduced, as of the opening
of business on the date of such issue or sale, to a price determined by
multiplying that
5
Conversion Price by a fraction (1) the numerator of which will be the sum of (a)
the number of shares of Common Stock outstanding, immediately prior to such
issue or sale, plus (b) the number of shares of Common Stock that the aggregate
consideration received (or deemed received) by the Corporation for the total
number of Additional Shares of Common Stock so issued (or deemed issued) would
purchase at such Conversion Price, and (2) the denominator of which will be the
sum of (a) the number of shares of Common Stock outstanding immediately prior to
such issue or sale plus (b) the number of such Additional Shares of Common Stock
so issued (or deemed issued).
(B) For the purpose of making any adjustment in the Conversion
Price for the Series F Stock under this Section 4(i), consideration received by
the Corporation for any issue or sale of securities will:
(1) to the extent it consists of cash, be computed at
the net amount of cash received by the Corporation after deduction of any
underwriting or similar commissions, concessions, or compensation paid or
allowed by the Corporation in connection with such issue or sale;
(2) to the extent it consists of property other than
cash, be computed at the fair value of that property as determined in good faith
by the Board; and
(3) if Additional Shares of Common Stock, Convertible
Securities (as hereinafter defined), or rights or options to purchase either
Additional Shares of Common Stock or Convertible Securities are issued or sold
together with other stock or securities or other assets of the Corporation for a
consideration that covers both, be computed as the portion of the consideration
so received that may be reasonably determined in good faith by the Board to be
allocable to such Additional Shares of Common Stock, Convertible Securities or
rights or options.
(C) For the purpose of the adjustment provided in this Section
4(i), if at any time or from time to time after the Reference Date for the
Series F Stock, the Corporation issues any rights or options for the purchase
of, or stock or other securities convertible into, Additional Shares of Common
Stock (such convertible stock or securities hereinafter referred to as
"Convertible Securities") then in each case, if the Effective Price (as
hereinafter defined) of such rights, options, or Convertible Securities is less
than the then-existing Conversion Price for the Series F Stock, the Corporation
will be deemed to have issued at the time of the issuance of such rights or
options or Convertible Securities the maximum number of Additional Shares of
Common Stock issuable upon exercise or conversion thereof and to have received
as consideration for the issuance of such shares an amount equal to the total
amount of the consideration, if any, received by the
6
Corporation for the issuance of such rights or options or Convertible
Securities, plus, in the case of such options or rights, the minimum amounts of
consideration, if any, payable to the Corporation upon full exercise or
conversion of such options or rights. As used in this Section 4(i)(C), the term
"Effective Price" means the quotient determined by dividing the total of all of
such consideration by such maximum number of Additional Shares of Common Stock.
No further adjustment of the Conversion Price for Series F Stock adjusted upon
the issuance of such rights, options, or Convertible Securities will be made as
result of the actual issuance of Additional Shares of Common Stock on the
exercise of any such rights or options or the conversion of any such Convertible
Securities.
If any such rights or options or the conversion privilege
represented by any such Convertible Securities expire without having been
exercised, then the Conversion Price for Series F Stock, adjusted upon the
issuance of such rights, options, or Convertible Securities will be readjusted
to the applicable Conversion Price that would have been in effect had an
adjustment been made on the basis that the only Additional Shares of Common
Stock so issued were the Additional Shares of Common Stock, if any, actually
issued or sold on the exercise of such rights or options or rights of conversion
of such Convertible Securities, and such Additional Shares of Common Stock, if
any, were issued or sold for the consideration actually received by the
Corporation upon such exercise, plus the consideration, if any, actually
received by the Corporation for the granting of all such rights or options,
whether or not exercised, plus the consideration received for issuing or selling
the Convertible Securities actually converted, plus the consideration, if any,
actually received by the Corporation on the conversion of such Convertible
Securities.
(D) For the purpose of the adjustment provided in this Section
4(i), if at any time or from time to time after the Reference Date for the
Series F Stock, the Corporation issues any rights or options for Convertible
Securities, then, in each such case, if the Effective Price thereof is less than
the then current Conversion Price for Series F Stock, the Corporation will be
deemed to have issued at the time of the issuance of such rights or options the
maximum number of Additional Shares of Common Stock issuable upon conversion of
the total amount of Convertible Securities covered by such rights or options and
to have received as consideration for the issuance of such Additional Shares of
Common Stock an amount equal to the amount of consideration, if any, received by
the Corporation for the issuance of such rights or options, plus the minimum
amount consideration, if any, payable to the Corporation upon the full exercise
of such rights or options plus the minimum amount of consideration, if any,
payable to the Corporation upon the full conversion of such Convertible
Securities. As used in this Section 4(i)(D), the term "Effective Price" means
the quotient determined by dividing the total amount
7
of such consideration by such maximum number of Additional Shares of Common
Stock. No further adjustment of the Conversion Price for Series F Stock,
adjusted upon the issuance of such rights or options will be made as a result of
the actual issuance of the Convertible Securities upon the exercise of such
rights or options or upon the actual issuance of Additional Shares of Common
Stock upon the conversion of such Convertible Securities. The provisions of
Section 4(i)(C) hereof for the readjustment of the Conversion Price for Series
F Stock upon the expiration of rights or options or the rights of conversion of
Convertible Securities will apply equally to the rights, options and Convertible
Securities referred to in this Section 4(i)(D).
(j) Accountants' Certificate of Adjustment. In each case of an
adjustment or readjustment of any Conversion Price for the number of shares of
Common Stock or other securities issuable upon conversion of the Preferred
Stock, the Corporation, at its expense, upon the written request of a holder of
Preferred Stock for which the Conversion Price has been so adjusted, will cause
independent public accountants of recognized standing selected by the
Corporation (who may be the independent public accountants then auditing the
books of the Corporation) to compute such adjustment or readjustment in
accordance with the provisions hereof and prepare a certificate showing such
adjustment or readjustment, and will mail such certificate, by first class mail,
postage prepaid, to such registered holder of the Preferred Stock, and to all
other holders of the same series of Preferred Stock, at the holders' address as
shown in the Corporation's books. The certificate will set forth such adjustment
or readjustment, showing in reasonable detail the facts upon which such
adjustment or readjustment is based, including a statement of the Conversion
Price at the time in effect and the type and amount, if any, of other property
which at the time would be received upon conversion of the relevant Preferred
Stock.
(k) Notices of Record Date. Upon (i) any taking by the Corporation of a
record of the holders of any Series F Stock for the purpose of determining the
holders thereof who are entitled to receive any dividend or other distribution,
or (ii) any capital reorganization of the Corporation, any reclassification or
recapitalization of the capital stock of the Corporation, any merger or
consolidation of the Corporation with or into any other corporation, or any
transfer of all or substantially all the assets of the Company to any other
person or any voluntary or involuntary dissolution, liquidation or winding up of
the Corporation, the Corporation will mail to each holder of Series F Stock at
least thirty (30) days prior to the record date specified therein a notice
specifying (1) the date on which any such record is to be taken for the purpose
of such dividend or distribution and a description of such dividend or
distribution, (2) the date on which any such reorganization, reclassification,
transfer, consolidation, merger, dissolution, liquidation or winding up is
expected to
8
become effective, and (3) the date, if any, that is to be fixed as to when the
holders of record of Common Stock (or other securities) will be entitled to
exchange their shares of Common Stock (or other securities) for securities or
other property deliverable upon such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding up; provided that
such 30-day notice may be waived by the written consent of the holders of at
least a majority of the then outstanding Series F Stock and such waiver if
obtained automatically will be binding upon all holders of Series F Stock.
(1) Automatic Conversion.
(i) Subject to the provisions of Section 4(l)(iii) hereof,
each share of Series F Stock will be converted automatically into shares of
Common Stock based on the then effective Conversion Price for such share, upon
the earlier of (A) the closing of a firmly underwritten public offering pursuant
to an effective registration statement under the Securities Act of 1933, as
amended (a "Registration Statement") covering the offer and sale of Common Stock
for the account of the Corporation at a price per share of at least $4.00, with
an aggregate offering price for all shares under such Registration Statement of
at least $3,000,000.00, (B) at such time as less than 20% of the Series F Stock
issued pursuant to the Corporation's initial offering of up to 4,000,000 shares
of Series F Stock remains outstanding or (C) upon the voluntary consent of a
majority of the voting power of the then outstanding shares of such Series F
Stock.
(ii) Automatic conversion under Section 4(l)(i) hereof will be
conditioned upon payment by the Corporation of all declared and unpaid dividends
on the outstanding Series F Stock to be converted and including the date of such
conversion, payable either in cash or, at the option of the Corporation, Common
Stock (valued at the Common Stock's Fair Market Value), or both.
(iii) Upon the occurrence of any of the events specified in
Section 4(l)(i) hereof, the outstanding shares of the Series F Stock will be
converted automatically without any further action by the holders of such shares
and whether or not the certificates representing such shares are surrendered to
the Corporation or its transfer agent; provided, however, that the Corporation
will not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon such conversion unless the certificates evidencing such
shares of Series F Stock are either delivered to the Corporation or its transfer
agent as provided below, or the holder notifies the Corporation or its transfer
agent that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection with such certificates. Upon the occurrence of
such automatic conversion of the Series F Stock, the holders of the Series F
Stock will
9
surrender the certificates representing such shares at the office of the
Corporation or any transfer agent for the Series F Stock or Common Stock.
Thereupon, there will be issued and delivered to such holder promptly at such
office and in its name as shown on such surrendered certificate or certificates,
a certificate or certificates for the number of shares of Common Stock into
which the shares of Series F Stock surrendered were convertible on the date on
which such automatic conversion occurred.
(m) Fractional Shares. No fractional shares of Common Stock will be
issued upon conversion of Series F Stock. In lieu of any fractional share to
which the holder would otherwise be entitled, the Corporation will pay cash
equal to the product of such fraction multiplied by the Common Stock's Fair
Market Value on the date of conversion.
(n) Reservation of Stock Issuable Upon Conversion. The Corporation will
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series F Stock, such number of its shares of Common Stock as
will from time to time be sufficient to effect the conversion of all outstanding
shares of the Series F Stock. If at any time the number of authorized but
unissued shares of Common Stock will not be sufficient to effect the conversion
of all then outstanding shares of the Series F Stock, the Corporation will take
such corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as will be sufficient for such purpose.
(o) Notices. Any notice required by the provisions of this Section 4 to
be given to or by the holders of shares of the Series F Stock will be deemed
given upon the earlier of actual receipt or seventy-two (72) hours after the
same has been deposited in the United States mail, by certified or registered
mail, return receipt requested, postage prepaid, and addressed to each holder of
record at the address of such holder appearing on the books of the Corporation,
or to the Corporation as to notices from holders.
(p) Payment of Taxes. The Corporation will pay all taxes (other than
taxes based upon income) and other governmental charges that may be imposed with
respect to the issue or delivery of shares of Common Stock upon conversion of
shares of Series F Stock, including without limitation any tax or other charge
imposed in connection with any transfer involved in the issue and delivery of
shares of Common Stock in a name other than that in which the shares of Series F
Stock so converted were registered.
(q) No Impairment. The Corporation will not amend its Articles of
Incorporation or participate in any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, for the purpose
10
of avoiding or seeking to avoid the observance or performance of any of the
terms to be observed or performed hereunder by the Corporation, but will at all
times in good faith assist in carrying out all such action as may be reasonably
necessary or appropriate in order to protect the conversion rights of the
holders of the Series F Stock against dilution or other impairment.
5. Voting Rights. Each share of Series F Stock shall entitle the holder
to one (1) vote and with respect to each such vote a holder of shares of Series
F Stock shall have full voting rights and powers equal to the voting rights and
powers of a holder of shares of Common Stock, share for share, and shall be
entitled to notice of any shareholders' meeting in accordance with the Bylaws of
the Corporation, and shall be entitled to vote with holders of Common Stock
together as a single class.
6. Redemption Provisions. Commencing on February 26, 1996 and
continuing through November 26, 1996, any shares of Series F Stock which have
not been converted into Common Stock may be redeemed by the Corporation upon the
payment of $1.25 per share to the holder thereof after giving 30 days written
notice.
7. Status of Converted or Reacquired Stock. In case any shares of
Series F Convertible Preferred Stock shall be converted pursuant to Section 4
hereof, or redeemed pursuant to Section 6 hereof, the shares so converted or
redeemed shall cease to be a part of the authorized capital stock of the
Corporation.
8. Restrictions and Limitations. So long as any shares of Series F
Stock remain outstanding, the consent of the holders of a majority of the Series
F Stock then outstanding, voting as a series, will be required with respect to
any action that:
(a) involves any merger, reorganization or sale by the Corporation of
all or substantially all of its assets, or
(b) involves the issuance of Additional Shares of Common Stock or
Convertible Securities.
11
EXHIBIT C
FORM OF WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
THE SECURITIES LAWS OF CERTAIN STATES. SUCH SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THE SECURITIES MAY REQUIRE AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A UNIT PURCHASE AGREEMENT, A
COPY OF WHICH CAN BE OBTAINED UPON REQUEST FROM THE SECRETARY OF THE CORPORATION
AT ITS PRINCIPAL OFFICES. THE RESTRICTIONS CONTAINED IN SUCH AGREEMENT ARE
BINDING ON TRANSFEREES OF THESE SECURITIES.
INSTANT VIDEO TECHNOLOGIES, INC.
WARRANT TO PURCHASE SHARES OF
COMMON STOCK
(Void after February 26, 1997)
This certifies that ________________________________________________
(the "Purchaser"), for value received, is entitled to purchase from INSTANT
VIDEO TECHNOLOGIES, INC., a Delaware corporation (the "Company"), the number of
shares of fully paid and nonassessable shares of Common Stock, no par value, of
the Company ("Common Stock") calculated in accordance with paragraph 1 below, at
the price per share designated in paragraph 1 below (the "Warrant Price"), at or
before 5:00 P.M. (Pacific Standard Time) on February 26, 1997 upon surrender to
the Company at its principal offices of this Warrant properly endorsed with the
Form of Subscription attached hereto duly filled in and signed and upon payment
in cash or by bank cashier's or certified check of the Warrant Price for the
number of shares as to which this Warrant is exercised.
This Warrant is issued pursuant to that certain Unit Purchase Agreement
(the "Agreement") dated as of February 14, 1996 between the Company, the
Purchaser and certain additional investors. The holder of this Warrant is
subject to certain restrictions set forth in the Agreement.
1
This Warrant is subject to the following additional terms and
conditions:
1. The exercise price per share payable upon exercise of this Warrant,
as adjusted from time to time pursuant to paragraph 7 below, shall be $1.00 per
share. The number of shares of Common Stock as to which this Warrant is
initially exercisable shall be equal to the number of shares of the Company's
Series F Convertible Preferred Stock purchased by the Purchaser pursuant to the
Agreement.
2. The purchase rights represented by this Warrant are exercisable at
the option of the holder of record hereof, either as an entirety, or from time
to time for any part of the shares of Common Stock (but not for a fraction of a
share) which may be purchased hereunder. In case of a purchase of less than all
the shares which many be purchased under this Warrant, the Company shall cancel
this Warrant and execute and deliver a new Warrant or Warrants of like tenor for
the balance of the shares purchasable under the Warrant surrendered upon such
purchase.
3. The Company agrees at all times to reserve a sufficient number of
shares of authorized but unissued Common Stock, when and as required for the
purpose of complying with the terms of this Warrant.
4. Nothing contained in this Warrant shall be construed as conferring
upon the holder hereof or any other person the right to vote or to consent or to
receive notice as a stockholder in respect of meetings of shareholders for the
election of directors of the Company or any other matters or any rights
whatsoever as a shareholder of the Company; and no dividends or interest shall
be payable or accrued in respect of this Warrant or the interest represented
hereby or the shares purchasable hereunder until, and only to the extent that,
this Warrant shall have been exercised.
5. This Warrant, with or without similar Warrants, when surrendered
properly endorsed at the principal offices of the Company may be exchanged for
another Warrant or Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of shares of
Common Stock of the company.
6. This Warrant is transferable on the books of the Company at its
principal office by the above named holder of record in person or by duly
authorized attorney, upon surrender of this Warrant properly endorsed. The
Company may treat the holder of record of this Warrant as the absolute owner
hereof for all purposes and shall not be affected by any notice to the contrary.
7. In the event of changes in the outstanding Common Stock of the
Company by reason of stock dividends, split-ups,
2
recapitalizations, reclassifications, mergers, consolidations, combinations or
exchanges of shares, separations, reorganizations, liquidations, or the like,
the number and class of shares available under the Warrant in the aggregate and
the Warrant Price shall be correspondingly adjusted by the Board of Directors of
the Company. The adjustment shall be such as will give the holder of the Warrant
on exercise for the same aggregate Warrant Price the total number, class and
kind of shares as such holder would have owned had the Warrant been exercised
prior to the event and had such holder continued to hold such shares until after
the event requiring adjustment.
8. No fractional share shall be issued upon exercise of this Warrant.
The Company shall, in lieu of issuing any fractional share, pay the holder
entitled to such fraction a sum in cash equal to the fair market value of such
fraction on the date of exercise (as determined in good faith by the Board of
Directors of the Company).
9. Notwithstanding any provision hereof to the contrary, no exercise of
this Warrant will be made unless such exercise can be made under exemptions from
registration or qualification of such exercise under applicable securities laws
without the creation of any offering memorandum prescribed by such laws unless
at the time of such exercise, the Company already has completed such a
memorandum and such exercise would be exempt from registration and qualification
by, among other things, delivery of such memorandum to the Purchaser.
10. This Warrant and any and all shares of Common Stock issued upon
exercise of this Warrant will be transferable on the books of the Company, by
the holder hereof in person or by duly authorized attorney, subject to any
restrictions upon and requirements for any such transfer imposed by applicable
federal or state securities laws. This Warrant is issued in connection with, and
in reliance upon the representations of the original holder contained in, an
investment representation letter of even date herewith by the original holder
hereof. It will be further condition to any transfer of this Warrant that the
transferor (if any portion of this Warrant is retained) and the transferee will
receive and accept now Warrants, of like tenor and date, executed by the
Company, for the portion so transferred and for any portion retained, and will
surrender this Warrant to the Company along with any documents requested by the
Company to establish compliance with securities laws applicable to such
transfer.
11. Any terms of this Warrant may be amended and the observance of any
term of this Warrant 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 outstanding Warrants.
3
12. This Warrant is issued in and shall be governed by the laws of the
State of California.
IN WITNESS WHEREOF the Company has caused this warrant to be duly
executed by its officers thereunto duly authorized this day of February, 1996.
INSTANT VIDEO TECHNOLOGIES, INC.
By /S/ Xxxx X. Xxxxxxxx
-----------------------------------
Xxxx X. Xxxxxxxx,
President
ATTEST:
/S/
-----------------------------------
Secretary
4
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To_________________________
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, ______________ (____________________)1 shares of Common
Stock of INSTANT VIDEO TECHNOLOGIES, INC. (the "Company") and herewith makes
payment of__________________ DOLLARS ($__________) therefor, and requests that
the certificates for such shares be issued in the name of, and delivered to,
_______________________________, whose address is ______________________________
_________________________________________________________________________.
The undersigned represents that he or she is acquiring such Common
Stock for his or her own account for investment and not with a view to or for
sale in connection with any distribution thereof (subject, however, to any
requirement of law that the disposition thereof shall at all times be within his
or her control.)
The undersigned agrees that he or she will not make any disposition of
all or any portion of the Common Stock unless and until there is then in effect
a Registration Statement under the Act covering such proposed disposition and
such disposition is made in accordance with said Registration Statement; or the
undersigned shall have notified the Company of the proposed disposition and
shall have furnished the Company with (i) a detailed statement of the
circumstances surrounding the proposed disposition, and (ii) an opinion of the
undersigned's own counsel to the effect that such disposition will not require
registration of such shares under the Act, which opinion shall have been
concurred in by counsel for the Company.
DATED: __________________________
_____________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
Address: _____________________________________
_____________________________________
_____________________________________
[footnotes on next page]
1
----------------------
1) Insert here the number of shares called for on the face of the Warrant (or,
in the case of a partial exercise, the portion thereof as to which the Warrant
is being exercised), in either case without making any adjustment for additional
Common Stock or any other stock or other securities or property or cash which,
pursuant to the adjustment provisions of the Warrant, may be deliverable upon
exercise.
2) This representation is applicable only if, on the date this subscription is
effected, the Common Stock shall not be registered under the Securities Act of
1933, as amended.
2
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made effective
as of February 14, 1996 by and among Instant Video Technologies, Inc., a
Delaware corporation (the "Company") and the persons identified on Exhibit A
attached hereto (the "Investors").
RECITALS
WHEREAS, the Investors have agreed to purchase from the Company shares
of the Company's Series F Convertible Preferred Stock ("Series F Stock") and
warrants to purchase shares of Common Stock of the Company at a warrant exercise
price of $1.00 per share ("Warrants") pursuant to a Unit Purchase Agreement of
even date herewith (the "Unit Purchase Agreement");
WHEREAS, the obligations of the Company and the Shareholders under the
Unit Purchase Agreement are conditioned on, among other things, the execution
and delivery by the parties of this Agreement, which grants registration rights
to the Investors;
NOW, THEREFORE, in consideration of the promises and covenants
contained herein, the parties hereto agree as follows:
1. Definitions. For purposes of this Section:
(a) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or ordering
of effectiveness of such registration statement or document.
(b) The term "Registrable Securities" means (1) the shares of
Common Stock issued and/or issuable upon conversion of the Series F Stock, (2)
the shares of Common Stock issued and/or issuable upon exercise of the Warrants
and (3) any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, such securities.
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock which
are Registrable Securities and (1) are then issued and outstanding or (2) are
issuable pursuant to then exercisable options, warrants or convertible
securities.
(d) The term "Holder" means (i) any person owning of record
Registrable Securities that have not been sold to the public and have not been
sold otherwise than in compliance with Section 8 hereof or (ii) any assignee of
record of such Registrable Securities in accordance with Section 8 hereof;
provided, however,
1
that for purposes of this Agreement, a record holder of securities convertible
into such Registrable Securities shall be treated as the Holder of such
Registrable Securities; and provided, further, that the Company shall in no
event be obligated to register such securities, and that Holders of Registrable
Securities will not be required to convert such securities into Common Stock in
order to exercise registration rights granted hereunder, until immediately
before the closing of the offering to which the registration relates.
(f) The term "Form S-3" means such form under the Securities
Act as is in effect on the date hereof or any successor registration form under
the Securities Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.
(g) The term "SEC" or "Commission" means the Securities and
Exchange Commission.
(h) The term "Securities Act" means the Securities Act of
1933, as amended.
2. Piggyback Registrations. The Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to filing any
registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans and corporate reorganizations), and will afford each such Holder an
opportunity to include in such registration statement all or part of such
Registrable Securities held by such Holder. Each Holder desiring to include in
any such registration statement all or any part of the Registrable Securities
held by it shall, within twenty (20) days after the giving of the above
described notice by the Company, so notify the Company in writing, which notice
shall state the number of shares the Holder desires to include and the intended
method of disposition of the Registrable Securities by such Holder. If a Holder
decides not to include all of its Registrable Securities in any registration
statement filed by the Company, such Holder shall nevertheless continue to have
the right to include any Registrable Securities in any subsequent registration
statement or registration statements as may be filed by the Company with respect
to offerings of its securities, all upon the terms and conditions set forth
herein.
(a) Underwriting. If the registration statement under which
the Company gives notice under this Section 2 is for an underwritten offering,
the Company shall so advise the Holders of Registrable Securities. In such
event, the right of any such Holder to be included in a registration pursuant to
this Section 2
2
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their Registrable
Securities through such underwriting shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting. Notwithstanding any other provision of this Agreement, if the
underwriter determines in good faith that marketing factors require a limitation
of the number of shares to be underwritten, the number of shares that may be
included in the underwriting shall be allocated, first, to the Company and
second, to the Holders on a pro rata basis based on the total number of
Registrable Securities held by the Holders. No such reduction shall reduce the
securities being offered by the Company for its own account to be included in
the registration and underwriting. If any Holder disapproves of the terms of any
such underwriting, such Holder may elect to withdraw therefrom by written notice
to the Company and the underwriter, delivered at least five (5) days prior to
the effective date of the registration statement. Any Registrable Securities
excluded or withdrawn from such underwriting shall be withdrawn from the
registration.
(b) Registration Expenses. The Company shall bear all fees and
expenses incurred in connection with all registrations under this Section 2
(including but not limited to all registration and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company and
reasonable fees and disbursements of a single special counsel representing all
or a majority of the participating Holders), except that each participating
Holder shall bear its proportionate share of all amounts payable to underwriters
or brokers in connection with such offering for fees and commissions.
3. Form S-3 Registration. In case the Company shall receive from any
Holder or Holders of Registrable Securities representing more than twenty-five
percent (25%) of the then outstanding Common Stock equivalents of the Company a
written request or requests that the Company effect a registration on Form S-3
and any related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders of Registrable
Securities; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any other Holder or Holders
joining in
3
such request as are specified in a written request given within twenty (20) days
after the giving of such written notice by the Company; provided, however, that
the Company shall not be obligated to effect any such registration,
qualification or compliance pursuant to this Section 3: (1) if Form S-3 is not
available for such offering by the Holders; (2) if the Holders, together with
the holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public (net of discounts and commissions)
of less than $500,000; (3) if the Company shall furnish to the Holders a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its shareholders for such Form S-3 Registration
to be effected at such time, in which event the Company shall have the right to
defer the filing of the Form S-3 registration statement once during any twelve
month period for a period of not more than one hundred twenty (120) days after
receipt of the request of the Holder or Holders under this Section 3; (4) if the
Company has, within the twelve (12) month period preceding the date of such
request, already effected two registrations on Form 5-3 for the Holders pursuant
to this Section 3; or (5) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance.
(c) All expenses incurred in connection with any registration
requested pursuant to this Section 3 shall be borne by the Holders in proportion
to the number of Registrable Securities owned by the Holders included in such
registration at the time it goes effective.
4. Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to ninety (90) days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
4
(c) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Furnish, at the request of any Holder requesting
registration of Registrable Securities on the date that such Registrable
Securities are delivered to the underwriters for sale, if such securities are
being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated as of such date, of
the counsel representing the Company for the purposes of such registration, in
form and substance as is customarily given to underwriters in an underwritten
public offering and reasonably satisfactory to a majority in interest of the
Holders requesting registration, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities and (ii) a letter
dated as of such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering and
reasonably satisfactory to a majority in interest of the Holders requesting
registration of Registrable Securities, addressed to the underwriters, if any,
and to the Holders requesting such registration.
5
5. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Sections 2, 3, or 4
that the selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to effect the registration
of their Registrable Securities.
6. Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Agreement.
7. Indemnification. In the event any Registrable Securities are
included in a registration statement under Sections 2 or 3:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the partners, officers and directors of each
Holder, any underwriter (as defined in the Securities Act) for such Holder and
each person, if any, who controls such Holder or underwriter within the meaning
of the Securities Act or the Securities Exchange Act of 1934, as amended, (the
"Exchange Act"), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act, the Exchange
Act or other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
state securities law in connection with the offering covered by such
registration statement; and the Company will reimburse each such Holder,
partner, officer or director, underwriter or controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this subsection 8(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be liable in
any such case for any such loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a Violation that occurs in
reliance
6
upon and in conformity with written information furnished expressly for use in
connection with such registration by such Holder, partner, officer, director,
underwriter or controlling person of such Holder.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter
and any other Holder selling securities under such registration statement or any
of such other Holder's partners, directors or officers or any person who
controls such Holder, against any losses, claims, damages or liabilities (joint
or several) to which the Company or any such director, officer, controlling
person, underwriter or other such Holder, partner or director, officer or
controlling person of such other Holder may become subject under the Securities
Act, the Exchange Act or other federal or state law, insofar as such losses
claims, damages or liabilities (or actions in respect thereto) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and each such Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other Holder, partner, officer, director or
controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this Section 7(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld; provided further, that in no event shall any
indemnity under this Section 7(b) exceed the gross proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests
7
between such indemnified party and any other party represented by such counsel
in such proceeding. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
7, but the omission so to deliver written notice to the indemnifying party will
not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 7.
(d) The foregoing indemnity agreements of the Company and
Holders are subject to the condition that, insofar as they relate to any
Violation made in a preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the SEC at the time the registration statement
in question becomes effective or the amended prospectus filed with the SEC
pursuant to SEC Rule 424(b) (the "Final Prospectus"), such indemnity agreement
shall not inure to the benefit of any person if a copy of the Final Prospectus
was furnished to the person asserting the loss, liability, claim or damage at or
prior to the time such action is required by the Securities Act.
(e) The obligations of the Company and Holders under this
Section 7 shall survive the completion of any offering of Registrable Securities
in a registration statement, and otherwise.
8. Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities pursuant to this Agreement may be assigned by
a Holder to a transferee or assignee of Registrable Securities provided,
however, that no such transferee or assignee shall be entitled to registration
rights under this Agreement unless (i) immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act; and (ii) such assignment is approved by the
Company, which approval will not be unreasonably withheld. The Company shall be,
within a reasonable time after such transfer, furnished with written notice of
the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned. Notwithstanding
the foregoing, rights to cause the Company to register securities may be
assigned to any constituent partner of a Holder without Company approval and
without regard to any minimum amount of Registrable Securities.
9. "Market Stand-Off" Agreement. Each Holder hereby agrees that it
shall not, to the extent requested by the Company or an underwriter of Common
Stock (or other securities) of the Company, sell or otherwise transfer or
dispose of any Registrable Securities (other than to donees who agree to be
similarly bound) for up to ninety (90) days following the effective date of a
registration statement of the Company filed under the Securities Act; provided,
however, that:
8
(a) such agreement shall be applicable only to the first next
such registration statement of the Company which covers securities to be sold on
its behalf to the public in an underwritten offering; and
(b) all officers and directors of the Company and all other
persons with registration rights (whether or not pursuant to this Agreement)
enter into similar agreements.
In order to enforce the foregoing covenant, the Company may
impose stop transfer instructions with respect to the Registrable Securities of
each Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
10. Amendment of Registration Rights. Any provision of this Agreement
may be amended and the observance thereof 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 Registrable
Securities. Any amendment or waiver effected in accordance with this Section
shall be binding upon each Holder and the Company. By acceptance of any benefits
under this Agreement, Holders of Registrable Securities hereby agree to be bound
by the provisions hereunder.
11. Governing Law. This Agreement and the legal relations between the
parties arising hereunder shall be governed by and interpreted in accordance
with the laws of the State of California excluding that body of law relating to
conflicts of laws. The parties hereto agree to submit to the jurisdiction of the
federal and state courts of the State of California sitting in the City and
County of San Francisco with respect to the breach or interpretation of this
Agreement or the enforcement of any and all rights, duties, liabilities,
obligations, powers, and other relations between the parties arising under this
Agreement.
12. Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties regarding rights to registration
and the other subject matter hereof. 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.
13. Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery to the party to be notified or five (5) days after
deposit with the United States mail, by registered or certified mail, postage
prepaid, addressed (a) if to an Investor, at such Investor's address as set
forth on Exhibit A, or at such other address as such Investor shall have
9
furnished to the Company in writing in accordance with this Section 14, (b) if
to any other holder of any securities or any Common Stock issued upon conversion
of Preferred Stock, at such address as such holder shall have furnished the
Company in writing in accordance with this Section 14, or, until any such holder
so furnishes an address to the Company, then to and at the address of the last
holder thereof who has so furnished an address to the Company, or (c) if to the
Company, at its principal office.
14. 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.
IN WITNESS WHEREOF, the undersigned have executed this Registration
Rights Agreement as of the date set forth above.
THE COMPANY: THE INVESTORS:
Instant Video Technologies, Inc. Xxxxxx Partners, a California
a Delaware corporation limited partnership
By: _________________________________ By: Xxxxxx Advisors, Inc.,
Its: General Partner
Title: ______________________________
By: _________________________________
Title: ______________________________
Mindful Partners, a California
limited partnership
By: /S/ Xxxxxx Xxxxxx
---------------------------------
Xxxxxx Xxxxxx
General Partner
Executed: _____________________, 1996
/S/ Xxxx Xxxxxxx
-------------------------------------
Xxxx Xxxxxxx
Executed: _____________________, 1996
Delaware Charter Guaranty and
Trust Company FBO Xxxxxx X.
Xxxxxx XXX Rollover
By: _________________________________
Title: ______________________________
Executed: _____________________, 1996
10
REGISTRATION RIGHTS AGREEMENT SIGNATURE PAGE (cont'd)
/S/ Xxxxxx London
-------------------------------------
XXXXXX LONDON
Executed June ____, 1996
11
EXHIBIT A
INVESTORS
Xxxxxx Partners, a California limited partnership
address: Xxx Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Mindful Partners, a California limited partnership
address: 000 Xxxxxxx Xxxxxxx, Xxxxx 0000
Xxxx Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Xxxx Xxxxxxx
address: 000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Delaware Charter Guaranty Trust Company FBO Xxxxxx X. Xxxxxx XXX
Rollover
address: c/o Mindful Partners
000 Xxxxxxx Xxxxxxx
Xxxxx 0000
Xxxx Xxxxxx, XX 00000
Att: Stuart Xxxxxx
Xxxxxx London
c/o Xxxxxxxxxx Xxxx & Co.
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
EXHIBIT E
VOTING AND RIGHT OF FIRST REFUSAL AGREEMENT
VOTING AND RIGHT OF FIRST REFUSAL AGREEMENT
This VOTING AND RIGHT OF FIRST REFUSAL AGREEMENT is entered into as of
the 14th day of February, 1996 by the undersigned shareholders (the
"Shareholders") of Instant Video Technologies, Inc., a Delaware corporation (the
"Company"), the Company, and the persons listed on Exhibit A and their
successors in interest (the "Investors"), for the express benefit of the
Investors.
Recitals
A. As of the date hereof, the Investors are purchasing units of
investment ("Units"), each of which consists of (i) one share of the Company's
Series F Preferred Stock ("Series F Stock") and (ii) a warrant to purchase one
share of the Company's Common Stock ("Common Stock") at a warrant exercise price
of $1.00 per share, pursuant to that certain Unit Purchase Agreement between the
Company and the Investors dated as of the date hereof (the "Purchase
Agreement"). Additional purchasers of Units may execute this Agreement as
"Investors", whereupon such purchasers will be included within the term
"Investors" as used herein.
B. The Company has a seven member Board of Directors (the "Board").
C. It is a condition to the investment by the Investors under the
Purchase Agreement that the on-going composition of the Board of Directors of
the Company be established in an agreed upon manner.
D. It is also a condition to the investment by the Investors that they
be granted a Right of First Refusal to purchase any shares of Common Stock that
are offered for sale by the Shareholders.
E. This Agreement is being made by the various Shareholders as
additional consideration for the investment by the Investors, and with the
acknowledgement of the Shareholders that the Investors are relying hereon in
making their investments.
NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Each Investor will vote all shares of capital stock of the Company
(whether Preferred, Common or otherwise) that such Investor may own, control or
have the power to vote from time to time, and, to the extent additional votes
are necessary, each Shareholder will vote a pro rata number of shares of such
capital stock (based on the ratio that the number of shares owned by such
Shareholder bears to the total number of shares owned by all Shareholders) that
such Shareholder may own, control or have the power to vote from time to time,
in such a manner as will ensure
1
the election of two (2) directors to the Board nominated by Investors holding a
majority of the shares of Series F Stock and/or Common Stock then held by all
Investors (the "Majority Investors").
2. Within five (5) days after receipt of notice of any meeting of
shareholders of the Company at which directors are to be elected, the Majority
Investors shall submit to the Company and to the other Investors the names of
the Investors' nominees for director and such additional information regarding
such nominees as the Company may reasonably request.
3. In the event of any resignation, removal or death of a director
nominated or elected in the manner specified in paragraph 1, above, each
Shareholder and Investor will take such action as is necessary to replace such
director with a person nominated in the manner specified in paragraph 1 which
caused the election of such director.
4. The Shareholders, the Company and the Investors will not take any
action to cause the removal of a director nominated or elected in the manner
specified in paragraph 1 without the approval of the persons who had the right
to cause such nomination as provided in paragraph 1, except where such director
has committed criminal acts, has acted in a grossly improper or negligent manner
or has committed acts in bad faith.
5. The Shareholders and Investors will take such actions as the
Majority Investors reasonably may request or as otherwise may reasonably be
required in order to effectuate the nomination and election of directors as
provided in paragraph 1.
6. This Agreement will apply to votes on the election of directors to
the Board, whether such votes involve cumulative voting or otherwise.
7. Each of the parties agree to use its best efforts to cause the
persons selected in the manner described in paragraph 1 to be nominated for
election to the Board.
8. (a) During the twelve (12) month period following the second closing
of the sale of Units by the Company (or following the first closing of such sale
in the absence of any additional closings after the first closing), each
Investor has the right of first refusal to purchase such Investor's pro rata
share (as defined below) of all, and not less than all, of any shares of Common
Stock that any Shareholder may, from time to time, propose to sell and issue. An
Investor's "pro rata share" for purposes of this right of first refusal is the
ratio of the (a) number of shares of Common Stock into which the shares of the
Company's Series F Convertible Preferred Stock ("Series F Stock") then held
2
by such Investor are convertible, plus the number of shares of Common Stock held
by the Investor that were received upon conversion of the Investor's Series F
Stock and received upon exercise of the warrants issued to the Investor
concurrently with the issuance of Series F Stock ("Warrants"), to (b) the total
number of shares of Common Stock into which outstanding shares of Series F Stock
held by all Investors are convertible, plus the total number of shares of Common
Stock that were issued to Investors upon conversion of Series F Stock and
received upon exercise of Warrants.
(b) In the event that a Shareholder proposes to sell shares of
Common Stock, such Shareholder shall give to each Investor written notice of the
Shareholder's intention, describing the price and the general terms upon which
the Shareholder proposes to sell the same. Each Investor shall have ten (10)
days from the date of mailing of any such notice to agree to purchase such
Investor's pro rata share of such shares of Common Stock for the price and upon
the general terms specified in the notice by giving written notice to the
Shareholder and stating therein the quantity of such shares to be purchased.
Each purchasing Investor shall have a right of overallotment such that if any
other Investor fails to exercise such other Investor's right hereunder to
purchase such Investor's pro rata share of such shares, the purchasing Investor
may purchase the nonpurchasing Investor's unpurchased pro rata share, within
five (5) days from the date such nonpurchasing Investor fails to exercise such
Investor's right hereunder to purchase such nonpurchasing Investor's full pro
rata share of such shares of Common Stock.
(c) In the event that the Investors fail to exercise in full
the right of first refusal with respect to all shares of Common Stock being
offered for sale by a Shareholder within such ten (10) plus five (5) day period
(it being the intention of the parties that unless the right of first refusal is
exercised as to all such shares, the Shareholder may sell all or any portion of
such shares as hereinafter provided), the Shareholder shall have 120 days
thereafter to sell (or enter into an agreement pursuant to which the sale of
such shares covered thereby shall be closed, if at all, within 120 days from the
date of said agreement) all or any portion of such shares of Common Stock
respecting which the Investors' rights were not fully exercised, at a price and
upon general terms no more favorable to the purchasers thereof than specified in
the Shareholder's notice to the Investors. In the event that the Shareholder has
not sold the shares of Common Stock within such 120-day period (or sold such
shares in accordance with the foregoing within 120 days from the date of such
agreement), the Shareholder shall not thereafter sell any shares of Common Stock
without first offering such shares pursuant to this Section 8.
9. Each Shareholder and Investor represents that it has full power and
authority to vote the shares of stock of which it is
3
the beneficial holder on the books and records of the Company, and that it will
not alienate such power and authority separate and apart from the transfer of
beneficial ownership. Each of the Shareholders and Investors acknowledges and
agrees that this Agreement is intended to bind the successors and assigns of
such person, and accordingly that:
(a) such person will not transfer any shares of stock in the
Company or warrants, options or other rights to purchase or acquire shares of
stock in the Company (collectively, "Rights") without obtaining the transferee's
written agreement to the terms hereof; and
(b) such person will deliver to the Company the certificates
representing his shares of stock in the Company or Rights in order that the
Company may place thereon the following restrictive legend:
THESE SECURITIES ARE SUBJECT TO THE TERMS OF A VOTING AND RIGHT OF
FIRST REFUSAL AGREEMENT, THE TERMS OF WHICH ARE AVAILABLE FROM THE
SECRETARY OF THE COMPANY. SUCH VOTING AND RIGHT OF FIRST REFUSAL
AGREEMENT IS BINDING UPON ANY HOLDER OF THESE SECURITIES, AND ANY
SUCCESSOR OR ASSIGN OF ANY HOLDER OF THESE SECURITIES.
10. The Company agrees to promptly effect the legending of securities
as provided in paragraph 9(b), above.
11. Each Shareholder, each Investor and the Company acknowledge that
damages would be an insufficient remedy in the event of the breach hereof, and
hereby consents to any entry of equitable relief in the event of a breach
hereof. Each party consents to the jurisdiction and proper venue of any state or
federal court sitting in the City and County of San Francisco in any action to
enforce the terms hereof.
12. This Agreement may not be amended without the consent of a majority
in interest of the Shareholders, the Company and the Majority Investors.
13. This Agreement will terminate once there are fewer than 50% of the
greatest number of shares of Series F Stock previously outstanding, other than
by reason of a reverse stock split.
14. Each Shareholder and the Company acknowledge that the Investors are
intended third party beneficiaries of this Agreement.
15. The Company will cause each Shareholder to have notice of all
information necessary to effect the provisions of this Agreement.
4
16. This Agreement may be executed in multiple counterparts, each of
which will be an original hereof. This Agreement will be governed by the
substantive laws of the State of California.
17. Each party to this Agreement agrees not to take any action, or in
any way encourage, condone, solicit, or support any action, that would have the
effect of producing a Board composed other than as specified in paragraph 1, but
rather to take all actions necessary to encourage and promote such Board
composition.
[remainder of page intentionally left blank]
5
THIS VOTING AND RIGHT OF FIRST REFUSAL AGREEMENT has been executed as of the
date above written.
THE COMPANY: SHAREHOLDERS:
Instant Video Technologies, Inc.
By: _____________________________ ________________________________
[signature]
Its: ____________________________
________________________________
[print name]
INVESTORS: ________________________________
[signature]
Xxxxxx Partners, a California
limited partnership ________________________________
[print name]
By: Xxxxxx Advisors, Inc.,
General Partner
________________________________
[signature]
By: /s/
-------------------------- ________________________________
[print name]
Title: __________________________
________________________________
Mindful Partners, a California [signature]
limited partnership
________________________________
[print name]
By: /s/ Xxxxxx Xxxxxx
------------------------------
Xxxxxx Xxxxxx
General Partner
/s/ Xxxx Xxxxxxx
---------------------------------
Xxxx Xxxxxxx
Delaware Charter Guaranty and Trust Company
FBO Xxxxxx X. Xxxxxx XXX Rollover
By: ___________________________
Its: _________________________
Executed April ___, 1996
/s/ Xxxxxx London
---------------------------------
XXXXXX LONDON
Executed June __ , 1996
6
EXHIBIT A
INVESTORS
Xxxxxx Partners
Mindful Partners
Xxxx Xxxxxxx
Delaware Charter Guaranty and Trust Company
FBO Xxxxxx X. Xxxxxx XXX Rollover
Xxxxxx London
