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EXHIBIT 10.15
CONTINUUS SOFTWARE CORPORATION
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STOCK PURCHASE AGREEMENT
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MAY 19, 1997
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TABLE OF CONTENTS
PAGE
1. SALE OF STOCK.......................................................................1
1.1 Sale of Stock................................................................1
1.2 Closing Date.................................................................1
1.3 Delivery.....................................................................1
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................2
2.1 Organization and Standing....................................................2
2.2 Corporate Power..............................................................2
2.3 Subsidiaries.................................................................2
2.4 Capitalization...............................................................2
2.5 Authorization................................................................3
2.6 Contracts and Other Commitments..............................................4
2.7 Compliance with Other Instruments, etc.......................................4
2.8 Related-Party Transactions...................................................4
2.9 Litigation, etc..............................................................5
2.10 Registration Rights..........................................................5
2.11 Permits......................................................................5
2.12 Governmental Consent, etc....................................................5
2.13 Returns and Complaints.......................................................5
2.14 Disclosure...................................................................5
2.15 Offering.....................................................................6
2.16 Financial Statements.........................................................6
2.17 Business Plan................................................................6
2.18 Liabilities..................................................................7
2.19 Changes......................................................................7
2.20 Title to Properties and Assets; Liens, etc...................................8
2.21 Patents and Trademarks.......................................................8
2.22 Distribution and Marketing Rights............................................9
2.23 Tax Returns..................................................................9
2.24 Employees....................................................................9
2.25 Proprietary Information and Inventions Agreement............................10
2.26 No Defaults.................................................................10
2.27 Insurance...................................................................10
2.28 Brokers or Finders..........................................................10
2.29 Environmental and Safety Laws...............................................10
2.30 Minute Books................................................................10
2.31 Real Property Holding Corporation...........................................10
i.
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TABLE OF CONTENTS
PAGE
2.32 No Dividends................................................................11
3. INVESTMENT REPRESENTATIONS.........................................................11
3.1 Accredited Investor.........................................................11
3.2 Experience..................................................................11
3.3 Investment..................................................................11
3.4 Rule 144....................................................................11
3.5 No Public Market............................................................12
4. CONDITIONS TO CLOSING OF PURCHASERS................................................12
4.1 Representations and Warranties..............................................12
4.2 Covenants...................................................................12
4.3 No Material Adverse Change..................................................12
4.4 Securities Laws.............................................................12
4.5 Compliance Certificate......................................................12
4.6 Opinion of Counsel..........................................................12
4.7 Amendment to Investors' Rights Agreement....................................12
4.8 Amendment to the Co-Sale Agreement..........................................13
4.9 Proceedings and Documents...................................................13
5. CONDITIONS TO CLOSING OF COMPANY...................................................13
5.1 Representations and Warranties..............................................13
5.2 Covenants...................................................................13
5.3 Securities Laws.............................................................13
6. AFFIRMATIVE COVENANTS OF THE COMPANY...............................................13
6.1 Proprietary Information Agreement...........................................13
7. MISCELLANEOUS......................................................................13
7.1 Governing Law...............................................................13
7.2 Survival....................................................................14
7.3 Successors and Assigns......................................................14
7.4 Entire Agreement............................................................14
7.5 Notices, etc................................................................14
7.6 Expenses....................................................................14
7.7 Counterparts................................................................14
7.8 Severability................................................................14
7.9 Separability................................................................14
ii.
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TABLE OF CONTENTS
PAGE
7.10 California Corporate Securities Law.........................................15
7.11 Approval of Amendments and Waivers..........................................15
iii.
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CONTINUUS SOFTWARE CORPORATION
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "AGREEMENT") is made as of May 19,
1997, by and between Continuus Software Corporation, a California corporation
(the "COMPANY"), with its principal office at 108 Pacifica, 0xx Xxxxx, Xxxxxx,
Xxxxxxxxxx, 00000-0000 and the Purchasers (the "PURCHASERS") listed on the
Schedule of Purchasers attached hereto as Exhibit A (the "SCHEDULE OF
PURCHASERS").
WHEREAS, the Company has authorized the issuance and sale of (i) up to
1,277,981 shares of its Series E Preferred Stock (the "SHARES") pursuant to this
Agreement having the rights, preferences, privileges and restrictions set forth
in the Amended and Restated Articles of Incorporation of the Company in the form
attached to this Agreement as Exhibit B (the "RESTATED ARTICLES") and (ii)
Warrants (the "WARRANTS") to purchase up to 277,176 shares of Series E Preferred
Stock of the Company (the "WARRANT SHARES") in the form attached as Exhibit C
hereto.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and conditions set forth below, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties to this
Agreement agree as follows:
1. SALE OF STOCK
1.1 SALE OF STOCK. Subject to the terms and conditions hereof, each
Purchaser agrees, severally, to purchase from the Company and the Company agrees
to sell and issue to each Purchaser (i) the number of Shares set forth opposite
such Purchaser's name on the Schedule of Purchasers at a purchase price of $2.10
per Share and (ii) a Warrant to purchase the number of Warrant Shares set forth
opposite each Purchaser's name on the Schedule of Purchasers at a purchase price
of $0.01 per Warrant Share.
1.2 CLOSING DATE. The purchase and sale of the Shares and Warrants
hereunder shall take place at the law offices of Xxxxxx Godward LLP, 0000
Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx 00000. The closing of such
purchase and sale hereunder (the "Closing") shall be held on the date of this
Agreement or at such other time upon which the Company and a majority of the
Purchasers shall agree.
1.3 DELIVERY. At the Closing, the Company will deliver to each Purchaser
a certificate representing the Shares being purchased at the Closing by such
Purchaser and a
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Warrant to purchase the number of Warrant Shares as set forth opposite such
Purchaser's name in the Schedule of Purchasers against payment of the aggregate
purchase price therefor by (i) check payable to the order of the Company, (ii)
wire transfer of immediately available funds and/or (iii) cancellation of
indebtedness, as indicated on the Schedule of Purchasers.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Schedule of Exceptions attached hereto as Exhibit D,
the Company hereby represents and warrants to each Purchaser as follows:
2.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized and validly existing under, and by virtue of, the laws of the State of
California and is in good standing under such laws. The Company has all
requisite corporate power to own and operate its assets and to carry on its
business as presently conducted and as proposed to be conducted. The Company is
not required to qualify to do business as a foreign corporation in any
jurisdiction outside of the State of California.
2.2 CORPORATE POWER. The Company has all requisite legal and corporate
power to execute and deliver this Agreement, the Fifth Amendment to the
Investors' Rights Agreement and the Third Amendment to the Co-Sale Agreement in
substantially the forms attached hereto as Exhibits E and F (this Agreement, the
Fifth Amendment to the Investors' Rights Agreement and the Third Amendment to
the Co-Sale Agreement are hereinafter collectively referred to as the
"Agreements"), to sell and issue the Shares under this Agreement, to issue the
Common Stock issuable upon conversion of the Shares and to issue the Warrant
Shares upon the exercise of the Warrants and to carry out and perform its
obligations under the terms of the Agreements, including all exhibits and
schedules hereto and thereto.
2.3 SUBSIDIARIES. The Company does not own or control, directly or
indirectly, any interest in any other corporation, association or business
entity.
2.4 CAPITALIZATION. Immediately following the Closing, the authorized
capital stock of the Company consists of 40,000,000 shares of Common Stock, of
which 4,136,499 shares will be issued and outstanding immediately following the
Closing, and 20,000,000 shares of Preferred Stock, 6,072,523 which are
designated Series A Preferred Stock, all of which will be issued and outstanding
immediately following the Closing, 1,195,809 of which are designated Series B
Preferred Stock, all of which will be issued and outstanding immediately
following the Closing, 2,132,368 of which are designated Series C Preferred
Stock, 1,980,950 of which will be issued and outstanding immediately following
the Closing, 957,144 of which are designated Series D Preferred Stock, all of
which will be issued and outstanding immediately following the Closing and
2,075,000 of
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which are designated Series E Preferred Stock, 1,277,981 of which will be issued
and outstanding immediately following the Closing. No other shares of capital
stock or other voting securities of the Company are outstanding. All such issued
and outstanding shares have been duly authorized and validly issued and are
fully paid and nonassessable. The Shares have the rights, preferences and
privileges set forth in the Restated Articles. The Company has reserved: (i)
4,650,000 shares of its Common Stock for issuance pursuant to the Company's
Stock Option Plan (the "Option Plan"), 3,355,858 shares of which are subject to
outstanding Incentive Stock Options, 229,000 shares of which are subject to the
Non-Qualified Stock Option Agreements dated March 4, 1994, by and between the
Company and Xxxx Xxx and Xxx Xxxxxxx, and 836,142 shares of which are available
for future grants under the Option Plan, (ii) 1,908,397 shares of Common Stock
issuable upon exercise of outstanding warrants dated December 29, 1994 (the
"1994 Warrants"), and 587,618 shares of Common Stock issuable upon exercise of
outstanding warrants dated May 30, 1996 (the "1996 Warrants," and together with
the 1994 Warrants, the "Common Stock Warrants") and (iii) 42,000 shares of
Series A Preferred Stock, 151,418 shares of Series C Preferred Stock and 781,560
shares of Series E Preferred Stock issuable upon exercise of outstanding
warrants, the Warrant Shares for issuance upon exercise of the Warrants, and
such shares of Common Stock issuable upon the conversion of such Series A
Preferred Stock, Series C Preferred Stock and Series E Preferred Stock and
Warrant Shares (the "Preferred Stock Warrants") (the shares issuable pursuant to
the Option Plan, the Common Stock Warrants, the Warrants and the Preferred Stock
Warrants are hereinafter referred to as the "Reserved Shares"). Except for (i)
the transactions contemplated in the Agreements (ii) the conversion privileges
of the Company's Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock specified
in the Restated Articles and (iii) rights to acquire the Reserved Shares, there
are no options, warrants, conversion privileges or other rights presently
outstanding to purchase or otherwise acquire any authorized but unissued shares
of the Company's capital stock or other securities of the Company.
2.5 AUTHORIZATION. All corporate action on the part of the Company, its
directors and shareholders necessary for the authorization, execution, delivery
and performance of the Agreements by the Company, the authorization, sale,
issuance and delivery of the Shares and the Warrants (and the Common Stock
issuable upon conversion of the Shares or upon exercise of the Warrants) and the
performance of the Company's obligations under the Agreements has been taken or
will be taken prior to the Closing. The Agreements, when executed and delivered
by the Company, will constitute valid and binding obligations of the Company
enforceable in accordance with their terms, subject to laws of general
application relating to bankruptcy, insolvency, the relief of debtors, general
equity principles, and limitations upon rights to indemnity. The Shares, when
issued in compliance with the provisions of this Agreement, will be duly and
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validly issued, fully paid and nonassessable. The Common Stock issuable upon
conversion of the Shares and upon exercise of the Warrants has been duly and
validly reserved and, when issued in compliance with the provisions of this
Agreement or the Warrants, as applicable, will be duly and validly issued, fully
paid and nonassessable; provided, however, that the Shares (and the Common Stock
issuable upon conversion of the Shares or upon the exercise of the Warrants) may
be subject to restrictions on transfer under state and/or federal securities
laws. Neither the Shares nor the Warrants are subject to any preemptive rights,
rights of first refusal or similar rights that have not been waived.
2.6 CONTRACTS AND OTHER COMMITMENTS. The Company does not have any
contract, agreement, lease, commitment, or proposed transaction, written or
oral, absolute or contingent, other than contracts for the purchase of supplies
and services that were entered into in the ordinary course of business and that
do not involve more than $100,000. For the purpose of this paragraph, employment
and consulting contracts, license agreements and any other agreements relating
to the acquisition or disposition of the Company's technology shall not be
considered to be contracts entered into in the ordinary course of business.
2.7 COMPLIANCE WITH OTHER INSTRUMENTS, ETC. The Company is not, and will
not by virtue of entering into and performing the Agreements and the
transactions contemplated thereunder be, in violation of any term of the
Restated Articles or Bylaws or any term or provision of any material mortgage,
indenture, contract, agreement, instrument, judgment or decree to which it is a
party or by which it is bound, and is not, and will not by virtue of entering
into and performing the Agreements and the transactions contemplated thereunder
be, in violation of any order addressed specifically to the Company nor, to the
best of the Company's knowledge, any material order, statute, rule or regulation
applicable to the Company, other than any of the foregoing such violations that
do not, either individually or in the aggregate, have a material adverse effect
on the Company's business as presently conducted or planned to be conducted (a
"Material Adverse Effect").
2.8 RELATED-PARTY TRANSACTIONS. No employee, officer or director of the
Company, or any person that, within 12 months of the date of this Agreement has
been an employee, officer or director of the Company, or any member of the
immediate family of any of the foregoing, is indebted to the Company, nor is the
Company indebted (or committed to make loans or extend or guarantee credit) to
any of them. To the best of the Company's knowledge, none of such persons has
any direct or indirect ownership interest in any firm or corporation with which
the Company is affiliated or with which the Company has a business relationship,
or any firm or corporation that competes with the Company, except shares owned
by such persons constituting less than 2% of the voting securities of a publicly
traded company that competes with the Company. To the best of
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the Company's knowledge, no officer or director or any member of their immediate
families is, directly or indirectly, interested in any material contract with
the Company.
2.9 LITIGATION, ETC. There are no actions, suits, proceedings or
investigations pending against the Company or any of its officers or directors
before any court or governmental agency (nor, to the best of the Company's
knowledge, is there any threat thereof).
2.10 REGISTRATION RIGHTS. Except as set forth in the Fifth Amendment to
the Investors' Rights Agreement, the Company is not under any obligation to
register (as defined in the Fifth Amendment to the Investors' Rights Agreement)
any of its presently outstanding securities or any of its securities that may
hereafter be issued.
2.11 PERMITS. The Company has all franchises, permits, licenses, and any
similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company and
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted. The Company is not
in default or violation in any material respect under any of such franchises,
permits, licenses, or other similar authority, and the execution and delivery of
the Agreements will not result in any such default or violation, with or without
the passage of time or giving of notice or both.
2.12 GOVERNMENTAL CONSENT, ETC. No consent, approval or authorization of
or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of the Agreements, or the offer, sale or issuance of the Shares or the
Warrants (and the Common Stock issuable upon conversion of the Shares or upon
the exercise of the Warrants) or the consummation of any other transaction
contemplated thereby, except the qualification (or taking such action as may be
necessary to secure an exemption from qualification, if available) of the offer
and sale of the Shares or Warrants (and the Common Stock issuable upon
conversion of the Shares or upon the exercise of the Warrants) under the
California Corporate Securities Law, which filing and qualification, if
required, will be accomplished in a timely manner prior to or promptly upon
completion of the Closing.
2.13 RETURNS AND COMPLAINTS. The Company has received no customer or
user complaints concerning alleged defects in its products or proposed products
(or the design thereof) that, if true, would materially adversely affect the
operations or financial condition of the Company.
2.14 DISCLOSURE. The Company has provided the Purchasers with all the
information reasonably available to it without undue expense that the Purchasers
have
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requested for deciding whether to purchase the Shares and the Warrants and
all information that the Company believes is reasonably necessary to enable the
Purchasers to make such decision. To the best of the Company's knowledge after
reasonable investigation, neither this Agreement nor any other written
statements or certificates made or delivered in connection herewith contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements herein or therein not misleading.
2.15 OFFERING. Subject to the accuracy of the representations set forth
in Section 3 hereof, the offer, sale and issuance of the Shares and the Warrants
pursuant to this Agreement and the issuance of the Common Stock to be issued
upon conversion of the Shares and the shares of Common Stock to be issued upon
the exercise of the Warrants constitute transactions exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as amended
(the "Securities Act") and neither the Company nor any authorized agent acting
on its behalf will take any action hereafter that would cause the loss of such
exemption.
2.16 FINANCIAL STATEMENTS. The Company has delivered to the Purchasers
its audited balance sheet and statement of earnings dated as of December 31,
1996 and its unaudited balance sheet dated as of March 31, 1997 (the "Balance
Sheet Date") and related unaudited statements of earnings for the three-month
period then ended (the "Financial Statements"). The Financial Statements have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis and are complete and correct in all material
respects and accurately describe the financial condition of the Company as of
the Balance Sheet Date and results of operations and cash flows for such period;
provided, however, that the Financial Statements are subject to normal year-end
audit adjustments and do not contain footnotes. The Company is not a guarantor
or indemnitor of any indebtedness of any other person, firm, or corporation. The
Company maintains and will continue to maintain a standard system of accounting
established and administered in accordance with generally accepted accounting
principles.
2.17 BUSINESS PLAN. A copy of the Company's March 21, 1997 Business Plan
(the "Business Plan") has previously been delivered to the Purchasers. The
Business Plan was prepared in good faith by the Company and does not, to the
best of the Company's knowledge after reasonable investigation, contain any
untrue statement of a material fact nor does it omit to state a material fact
necessary to make the statements therein not misleading, except that with
respect to projections and expressions of opinion or predictions contained in
the Business Plan, the Company represents only that such projections and
expressions of opinion and predictions were made in good faith and that the
Company believes there is a reasonable basis therefor.
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2.18 LIABILITIES. The Company has no indebtedness for borrowed money
that the Company has directly or indirectly created, incurred, assumed, or
guaranteed, or with respect to which the Company has otherwise become directly
or indirectly liable, other than as reflected in the Financial Statements. The
Company has no material liability or obligation, absolute or contingent, other
than as reflected in the Financial Statements.
2.19 CHANGES. Since the Balance Sheet Date, there has not been:
(a) any change in the assets, liabilities, financial condition,
or operating results of the Company from that reflected in the Financial
Statements, except changes in the ordinary course of business that have not
been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business, properties,
prospects, or financial condition of the Company (as such business is presently
conducted and as it is proposed to be conducted);
(c) any waiver or compromise by the Company of a valuable right
or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the business, properties,
prospects, or financial condition of the Company (as such business is presently
conducted and as it is proposed to be conducted);
(e) to the best of the Company's knowledge, any material change
to a material contract or arrangement by which the Company or any of its assets
is bound or subject;
(f) any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
(g) any sale, assignment, or transfer of any patents, trademarks,
copyrights, trade secrets, or other intangible assets;
(h) any resignation or termination of employment of any key
officer of the Company; and the Company, to the best of its knowledge, does not
know of the impending resignation or termination of employment of any such
officer;
(i) receipt of notice that there has been a loss of, or material
order cancellation by, any major customer of the Company;
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(j) any mortgage, pledge, transfer of a security interest in, or
lien, created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;
(k) any loans or guarantees made by the Company to or for the
benefit of its employees, officers, or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;
(l) to the best of the Company's knowledge, any other event or
condition of any character that might materially and adversely affect the
business, properties, prospects, or financial condition of the Company (as such
business is presently conducted and as it is proposed to be conducted); or
(m) any agreement or commitment by the Company to do any of the
things described in this paragraph 2.19.
2.20 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has good
and marketable title to its properties and assets shown in the Balance Sheet,
and has good title to all of its leasehold interests, in each case subject to no
mortgage, pledge, lien, lease, encumbrance or charge, other than (i) the lien of
current taxes not yet due and payable, and (ii) possible minor liens and
encumbrances that do not in any case materially detract from the value of the
property subject thereto or materially impair the operations of the Company and
which have not arisen otherwise than in the ordinary course of business.
2.21 PATENTS AND TRADEMARKS. The Company has sufficient title and
ownership of all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information, proprietary rights and processes (collectively
"Proprietary Information"), or believes it has the ability to acquire valid
licenses to such Proprietary Information on reasonable terms, as necessary for
its business as now conducted and as proposed to be conducted without any
conflict with or infringement of the rights of others. The Schedule of
Exceptions contains a complete list of patents and pending patent applications
of the Company. There are no outstanding options, licenses, or agreements of any
kind relating to the foregoing, nor is the Company bound by or a party to any
options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of any other person or entity. The
Company is not aware of any impropriety with regard to the granting of any
licenses of Proprietary Information to or from the Company. The Company has not
received any written communications alleging that the Company has violated or
infringed or that the Company would, by conducting its business as proposed,
violate or infringe any of the patents, trademarks, service marks, trade names,
copyrights or trade secrets or other proprietary rights of any other person or
entity. The Company is not aware that any of its employees are obligated under
any
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contract (including licenses, covenants, or commitments of any nature) or
other agreement, or subject to any judgment, decree, or order of any court or
administrative agency, that would interfere with the use of such employee's best
efforts to promote the interests of the Company or that would conflict with the
Company's business as proposed to be conducted. Except pursuant to the terms of
the Employee Nondisclosure Agreements entered into between the Company and its
employees and/or consultants in the form substantially as attached hereto as
Exhibit G (the "Proprietary Information and Inventions Agreement"), there are no
agreements, understandings, instruments, or contracts to which the Company is a
party or by which it is bound that involve the license of any patent, copyright,
trade secret or other similar proprietary right to or from the Company. The
Company does not believe it is or will be necessary to use any inventions of any
of its employees (or persons it currently intends to hire) made prior to their
employment by the Company.
2.22 DISTRIBUTION AND MARKETING RIGHTS. The Company has not granted
rights to develop, produce, distribute, license, market, or sell its products to
any other person and is not bound by any agreement that affects the Company's
exclusive right to develop, produce, distribute, license, market or sell its
products.
2.23 TAX RETURNS. The Company has accurately prepared and timely filed
all federal, state and other tax returns which are required to be filed and has
timely paid all taxes covered by such returns which have become due and payable.
The Company has not been advised that any of its returns, federal, state or
other, have been or are being audited as of the date hereof. The Company is not
delinquent in taxes or assessments and has no tax deficiency proposed or
assessed and no waiver of the statute of limitations and assessment or
collections.
2.24 EMPLOYEES. None of the Company's employees belongs to any union or
collective bargaining unit. To the best of its knowledge, the Company has
complied in all material respects with all applicable state and federal equal
opportunity and other laws related to employment. To the best of the Company's
knowledge, no employee of the Company is or will be in violation of any
judgment, decree, or order, or any term of any employment contract, patent
disclosure agreement, or other contract or agreement relating to the
relationship of any such employee with the Company, or any other party because
of the nature of the business conducted or to be conducted by the Company or to
the use by the employee of his best efforts with respect to such business. The
Company is not a party to or bound by any currently effective employment
contract, deferred compensation agreement, bonus plan, incentive plan, profit
sharing plan, retirement agreement, or other employee compensation agreement,
other than with respect to the Option Plan and options granted thereunder. The
Company is not aware that any officer or key employee, or that any group of key
employees, intends to terminate their employment with the
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Company, nor does the Company have a present intention to terminate the
employment of any of the foregoing. Subject to general principles related to
wrongful termination of employees, the employment of each officer and employee
of the Company is terminable at the will of the Company.
2.25 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. Each employee and
officer of and consultant to the Company has executed a Proprietary Information
and Inventions Agreement.
2.26 NO DEFAULTS. The Company has, in all material respects, performed
all material obligations required to be performed by it to date and is not in
default under any of the contracts, loans, notes, mortgages, indentures,
licenses, security agreements, agreements, leases, documents, commitments or
other arrangements to which it is a party or by which it is otherwise bound,
except for such defaults which in the aggregate would not have a Material
Adverse Effect, and no event or condition has occurred which, with the lapse of
time or the giving of notice, or both, would constitute such a default.
2.27 INSURANCE. The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed. The Company has in full force and effect
products liability and errors and omissions insurance in amounts customary for
companies similarly situated.
2.28 BROKERS OR FINDERS. The Company has not incurred, and will not
incur, any liability for brokerage or finders' fees or agents' commissions or
any similar charges in connection with the Agreements.
2.29 ENVIRONMENTAL AND SAFETY LAWS. To the best of its knowledge, the
Company is not in violation of any applicable statute, law, or regulation
relating to the environment or occupational health and safety, and to the best
of its knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law, or regulation.
2.30 MINUTE BOOKS. The copy of the minute books of the Company provided
to the Purchaser's counsel contain minutes of all meetings of directors and
shareholders and all actions by written consent without a meeting by the
directors and shareholders since the date of incorporation and reflect all
actions by the directors (and any committee of directors) and shareholders with
respect to all transactions referred to in such minutes accurately in all
material respects.
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2.31 REAL PROPERTY HOLDING CORPORATION. The Company is not a real
property holding corporation within the meaning of Internal Revenue Code Section
897(c)(2) and any regulations promulgated thereunder.
2.32 NO DIVIDENDS. The Company has never made any declaration, setting
aside for payment or other distribution in respect of any of the Company's
capital stock or any direct or indirect redemption, repurchase or other
acquisition of any of such stock.
3. INVESTMENT REPRESENTATIONS
Each Purchaser hereby represents and warrants to the Company as follows:
3.1 ACCREDITED INVESTOR. Each Purchaser is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act.
3.2 EXPERIENCE. Such Purchaser has, from time to time, evaluated
investments in start-up companies and has, either individually or through the
personal experience of one or more of its current officers or partners,
experience in evaluating and investing in start-up companies. Such Purchaser was
not formed for the purpose of investing in the Company hereunder.
3.3 INVESTMENT. Such Purchaser is acquiring the Shares and the Warrants
(and any Common Stock issuable upon conversion of the Shares or upon the
exercise of the Warrants) for investment for its own account and not with the
view to, or for resale in connection with, any distribution thereof. Such
Purchaser understands that the Shares and the Warrants (and any Common Stock
issuable upon conversion of the Shares or upon the exercise of the Warrants) to
be purchased have not been registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment intent
as expressed herein.
3.4 RULE 144. Such Purchaser acknowledges that the Shares, the Common
Stock into which such shares are convertible and the Common Stock issuable upon
the exercise of the Warrants must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is
available. Such Purchaser is aware of the provisions of Rule 144 promulgated
under the Securities Act which permits limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things the existence of a public market for the shares, the
availability of certain current public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
securities to be sold, the sale being through a "broker's transaction" or in
transactions directly with a "market maker" (as provided by Rule 144(f)) and the
number of shares
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being sold during any three-month period not exceeding specified limitations.
Such Purchaser is aware that the conditions for resale set forth in Rule 144
have not been satisfied and that the Company has no plan to satisfy these
conditions in the foreseeable future.
3.5 NO PUBLIC MARKET. Such Purchaser understands that no public market
now exists for any of the securities of the Company and that it is unlikely that
a public market will ever exist for the Shares or the Warrants (and any Common
Stock issuable upon the conversion of the Shares or upon the exercise of the
Warrants).
4. CONDITIONS TO CLOSING OF PURCHASERS
The Purchasers' obligation to purchase Shares and Warrants at the
Closing is subject to the fulfillment on or prior to the Closing of the
following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in Section 2 shall be true 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.
4.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing shall
have been performed or complied with in all material respects.
4.3 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the Company's financial condition, affairs or prospects
between the date of this Agreement and the Closing Date.
4.4 SECURITIES LAWS. Subject to the completion of any post-closing
securities law filings, the Company shall have obtained all necessary permits
and qualifications, or secured exemptions therefrom, required under the
Securities Act or by any state for the offer and sale of the Shares and Warrants
and the Common Stock issuable upon the conversion of the Shares or upon the
exercise of the Warrants.
4.5 COMPLIANCE CERTIFICATE. The Company shall have delivered on the
Closing Date a certificate signed by an officer of the Company certifying that
the conditions specified in Sections 4.1, 4.2 and 4.3 have been fulfilled.
4.6 OPINION OF COUNSEL. The Purchasers shall have received from Jeffer,
Mangels, Xxxxxx & Xxxxxxx LLP counsel for the Company, an opinion in
substantially the form attached hereto as Exhibit H.
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4.7 AMENDMENT TO INVESTORS' RIGHTS AGREEMENT. The Company shall have
executed and delivered the Fifth Amendment to Investors' Rights Agreement in the
form attached as Exhibit E hereto.
4.8 AMENDMENT TO THE CO-SALE AGREEMENT. Company shall have executed and
delivered the Third Amendment to Co-Sale Agreement in the form attached as
Exhibit F hereto.
4.9 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
Purchasers' counsel, which shall have received all such counterpart original and
certified or other copies of such documents as it may reasonably request.
5. CONDITIONS TO CLOSING OF COMPANY
The Company's obligation to issue and sell Shares and Warrants at the
Closing is subject to the fulfillment of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Purchasers contained in Section 3 shall be true 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 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by Purchasers on or prior to the Closing shall
have been performed or complied with in all respects.
5.3 SECURITIES LAWS. The Company shall have obtained all necessary
permits and qualifications, or secured exemptions therefrom, required under the
Securities Act or by any state for the offer and sale of the Shares and Warrants
(and any Common Stock issuable upon the conversion of the Shares or upon the
exercise of the Warrants).
6. AFFIRMATIVE COVENANTS OF THE COMPANY
6.1 PROPRIETARY INFORMATION AGREEMENT. Each person employed by the
Company in a technical or management position either as an employee or a
consultant, shall, as a condition to the commencement and continuation of their
employment with the Company, execute a Proprietary Information and Inventions
Agreement.
7. MISCELLANEOUS
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7.1 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California as applicable to contracts entered into and performed
entirely within the State of California by California residents.
7.2 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Purchasers and the
closing of the transactions contemplated hereby.
7.3 SUCCESSORS AND ASSIGNS. Except as otherwise 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,
provided, however, that the rights of Purchasers to purchase the Shares shall
not be assignable without the consent of the Company.
7.4 ENTIRE AGREEMENT. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
7.5 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by facsimile or mailed
by registered or certified mail, postage prepaid, or otherwise delivered by hand
or by messenger, addressed (a) if to the Purchasers, one to each Purchaser at
the address set forth on the Schedule of Purchasers, or at such other address as
shall have been furnished to the Company in writing by the Purchasers or (b) if
to the Company, to the address set forth above and addressed to the attention of
the President, or at such other address or addresses as the Company shall have
furnished in writing to the Purchasers. All notices and other communications
mailed pursuant to the provisions of this Section 7.5 shall be deemed delivered
when mailed or sent by facsimile or delivered by hand or messenger.
7.6 EXPENSES. Each party to this Agreement shall bear its own expenses
and legal fees incurred by it with respect to this Agreement and all related
transactions and agreements; provided, however, that upon the Closing, the
Company will pay the reasonable fees and expenses of counsel to the Purchasers
incurred in connection with the financing described herein not to exceed
$15,000.
7.7 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be enforceable against the party actually executing such
counterpart, and which together shall constitute one instrument.
7.8 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no
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such severability shall be effective if it materially changes the economic
benefit of this Agreement to any party.
7.9 SEPARABILITY. Any invalidity, illegality, or limitation of the
enforceability with respect to any Purchaser of any one or more of the
provisions of this Agreement, or any part thereof, whether arising by reason of
the law of any such Purchaser's domicile or otherwise, shall in no way affect or
impair the validity, legality, or enforceability of this Agreement with respect
to other Purchasers. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired.
7.10 CALIFORNIA CORPORATE SECURITIES LAW. The sale of the securities
which are the subject of this Agreement has not been qualified with the
Commissioner of corporations of the state of California, and the issuance of
such securities or the payment or receipt of any part of the consideration
therefor prior to such qualification, if required by law, is unlawful. The
rights of all parties to this agreement are expressly conditioned upon such
qualification being obtained, if required by law.
7.11 APPROVAL OF AMENDMENTS AND WAIVERS. Any term of this agreement may
be amended or terminated and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with the written consent of the Company and the holders of a
majority of the outstanding Shares purchased and sold hereunder (including the
Common Stock issued upon conversion of the Shares), excluding from the
determination of such a majority (both in determining the total number of such
shares outstanding and the number of such shares consenting or not consenting)
all shares previously disposed of by the Purchasers or their transferees
pursuant to one or more registration statements under the Securities Act or
pursuant to Rule 144 thereunder. Any amendment, termination or waiver effected
in accordance with this section shall be binding upon each holder of any
securities issued pursuant to this Agreement (including securities into which
such securities have been converted or exchanged), each future holder of any or
all such securities and the Company.
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The foregoing Agreement is hereby executed as of the date first above
written.
THE COMPANY:
CONTINUUS SOFTWARE CORPORATION
By: /s/ Xxxx Xxxxxx
-----------------------------
Title: Vice President, Finance
--------------------------
THE PURCHASERS:
NORWEST EQUITY PARTNERS V,
A MINNESOTA LIMITED PARTNERSHIP
By: Itasca Partners II
General Partner
By: /s/ Xxxxx X. Xxxx
------------------------------
Xxxxx X. Xxxx, Partner
ACCEL IV L.P.
By: Accel IV Associates L.P.
Its General Partner
By: /s/ X. Xxxxxx Sednaoui
----------------------------------
General Partner
ACCEL KEIRETSU L.P.
By: Accel Partners & Co., Inc.
Its General Partners
By: /s/ X. Xxxxxx Sednaoui
-------------------------------------
Its: Chief Financial Officer
-------------------------------------
[Signature Page to Stock Purchase Agreement]
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ACCEL INVESTORS `95 L.P.
By: /s/ X. Xxxxxx Sednaoui
--------------------------------------
General Partner
XXXXXXX X. XXXXXXXXX PARTNERS
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------
General Partner
ADVANCED TECHNOLOGY VENTURES III, L.P.
By: /s/ Xxx X. Xxxxxxx
--------------------------------------
Xxx X. Xxxxxxx, General Partner
BRENTWOOD ASSOCIATES VI, L.P.
By: BRENTWOOD VI VENTURES L.P.
its General Partner
By: /s/ G. Xxxxxxxx Xxxxx
--------------------------------------
G. Xxxxxxxx Xxxxx, General Partner
COMDISCO, INC.
By:/s/ Xxxx X. Xxxxxx
--------------------------------------
Xxxx Xxxxxx, Assistant Vice President
[Signature Page to Stock Purchase Agreement]
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/s/ X. Xxxxxxx XxXxxx
--------------------------------------
X. XXXXXXX XXXXXX
--------------------------------------
XXXX XXXXXX
[Signature Page to Stock Purchase Agreement]
