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SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This Agreement dated as of February 8, 1994 is entered into by and among
FlexiWare Corporation, a Delaware corporation (the "Company"), and the persons
listed on Exhibit A hereto (the "Purchasers").
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. Sale of the Shares.
1.1 Initial Shares. The Company has authorized the issuance and sale
of up to an aggregate of 1,750,000 shares (the "Initial Shares") of its Series A
Convertible Preferred Stock, $.01 par value per share (the "Series A Preferred
Stock"), at a purchase price of $1.16 per share, to Menlo Ventures VI, L.P.
("Menlo VI") and Menlo Entrepreneurs Fund VI, L.P. ("Entrepreneurs VI") (Menlo
VI and Entrepreneurs VI are sometimes collectively referred to herein as the
"Initial Purchasers") in the respective amounts set forth on Exhibit A hereto.
The designation, rights, preferences and other terms and conditions relating to
the Series A Preferred Stock shall be as set forth in the Certificate of
Amendment attached hereto as Exhibit B (the "Certificate of Amendment"). The
Company has, or before the Closing (as defined below) will have, adopted and
filed the Certificate of Amendment with the Secretary of State of the State of
Delaware.
1.2 Closing. The closing of the sale and purchase of the Initial
Shares (the "Closing") shall take place at the offices of Xxxx and Xxxx, 00
Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 at 12:00 p.m. on February 8, 1994, or
at such other time, date and place as are mutually agreeable to the Company and
special counsel to the Initial Purchasers, but in no event later than February
15, 1994. At the Closing, the Company shall deliver to each of the Initial
Purchasers a certificate for the number of Initial Shares being purchased by
such Initial Purchaser, registered in the name of such Initial Purchaser,
against payment to the Company of the purchase price therefor, by wire transfer,
check, or other method acceptable to the Company. The date of the Closing is
hereinafter referred to as the "Closing Date." If at the Closing any of the
conditions specified in Section 5 shall not have been fulfilled, each of the
Initial Purchasers shall, at his or its election, be relieved of all of his or
its obligations under this Agreement without thereby waiving any other rights he
or it may have by reason of such failure or such non-fulfillment.
1.3 Sale of the Secondary Shares. Subject to the occurrence of a
Second Closing (as defined below) on or prior to March 25, 1994, the Company
shall have authorized the issuance and sale of up to an additional 862,069
shares of Series A Preferred Stock (the "Secondary Shares," and, together with
the Initial Shares, the "Shares"), at a purchase price of $1.16 per share, to
one or more additional
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Purchasers (the "Secondary Purchasers"), reasonably acceptable to the Initial
Purchasers, who enter into this Agreement by executing one or more counterparts
hereof and whose names shall be set forth on addenda to Exhibit A hereto. Each
such addendum shall be executed by the Company and each such Secondary
Purchaser, and a copy of each such addendum shall be delivered to each Initial
Purchaser and each such addendum shall be deemed a part of this Agreement ab
initio. Each Secondary Purchaser shall also execute the agreements set forth in
Section 5.4 below. Initial Purchasers may also become Secondary Purchasers. Such
purchase and sale of Secondary Shares, if any, shall take place at the Second
Closing.
1.4 The Second Closing. In the event Secondary Purchasers agree to
purchase Secondary Shares from the Company as set forth in Section 1.3 above, a
closing of the sale and purchase of the Secondary Shares (the "Second Closing")
shall take place at the offices of Xxxx and Xxxx, 00 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 at such time, date and place as are mutually agreeable to
the Company and special counsel to the Secondary Purchasers, but in no event
later than 45 days after the Closing Date (the "Second Closing Date"). At the
Second Closing, the Company shall deliver to each of the Secondary Purchasers a
certificate for the number of Secondary Shares being purchased by such Secondary
Purchaser, registered in the name of such Secondary Purchaser, against payment
to the Company of the purchase price therefor, by wire transfer, check, or other
method acceptable to the Company. If at the Second Closing any of the conditions
specified in Section 5.8 shall not have been fulfilled, each of the Secondary
Purchasers shall, at his or its election, be relieved of all of his or its
obligations under this Agreement without thereby waiving any other rights he or
it may have by reason of such failure or such non- fulfillment.
1.5 Use of Proceeds. The Company will use the proceeds from the sale
of the Shares for working capital and general corporate purposes.
2. Issuance of a Warrant to the Initial Purchasers. If the Company does
not sell Secondary Shares to Secondary Purchasers on or prior to March 25, 1994,
and in lieu of selling Secondary Shares to any Secondary Purchasers, the Company
shall issue and sell to the Initial Purchasers, and the Initial Purchasers shall
purchase from the Company, for the aggregate consideration of $1.00 (to be paid
pro rata between the Initial Purchasers), warrants (the "Warrants") to purchase
up to an aggregate of 875,000 shares of Series A Preferred Stock at an exercise
price of $1.16 per share in the respective amounts set forth on Exhibit A
hereto. The Warrants shall be substantially in the form attached hereto as
Exhibit C.
3. Representations of the Company. Subject to and except as disclosed by
the Company in Exhibit D hereto, the Company hereby represents and warrants to
each of the Purchasers as follows:
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3.1 Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to conduct its business as
presently conducted and as proposed to be conducted by it and to enter into and
perform this Agreement and to carry out the transactions contemplated by this
Agreement. The Company is duly qualified to do business as a foreign corporation
and is in good standing in the State of Connecticut and in every other
jurisdiction in which the failure to so qualify would have a material adverse
effect on the operations or financial condition of the Company. The Company has
furnished to special counsel to the Purchasers true and complete copies of its
Certificate of Incorporation and By-Laws, each as amended to date and presently
in effect.
3.2 Capitalization. The authorized capital stock of the Company on
the date hereof, after filing the Certificate of Amendment with the Secretary of
State of the State of Delaware and after giving effect to a 4900% stock dividend
distributed to holders of Common Stock, but prior to the consummation of the
transactions contemplated by this Agreement, shall consist of 10,000,000 shares
of common stock, $.01 par value per share (the "Common Stock"), of which
5,042,850 shares shall be issued and outstanding, and 2,625,000 shares of
Preferred Stock, $.01 par value per share, of which 2,625,000 shares shall have
been designated as Series A Preferred, none of which shares shall be issued or
outstanding. All of the issued and outstanding shares of Common Stock have been
duly authorized and validly issued and are fully paid and non-assessable. Except
as set forth in Exhibit D hereto or provided in this Agreement, (i) no
subscription, warrant, option, convertible security or other right (contingent
or otherwise) to purchase or acquire any shares of capital stock of the Company
is authorized or outstanding, (ii) the Company has no obligation (contingent or
otherwise) to issue any subscription, warrant, option, convertible security or
other such right or to issue or distribute to holders of any shares of its
capital stock any evidences of indebtedness or assets of the Company, and (iii)
the Company has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any shares of its capital stock or any interest therein or to
pay any dividend or make any other distribution in respect thereof. All of the
issued and outstanding shares of capital stock of the Company have been offered,
issued and sold by the Company in compliance with applicable Federal and state
securities laws.
3.3 Subsidiaries, Etc. The Company has no subsidiaries and does not
own or control, directly or indirectly, any shares of capital stock of any other
corporation or any interest in any partnership, joint venture or other
non-corporate business enterprise.
3.4 Stockholder List and Agreements. Attached as Exhibit E is a true
and complete list of the stockholders of the Company, showing the number of
shares of Common Stock or other securities of the Company held by each
stockholder as of
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the date of this Agreement. Except as provided in this Agreement, there are no
agreements, written or oral, between the Company and any holder of its capital
stock, or, to the best of the Company's knowledge, among any holders of its
capital stock, relating to the acquisition (including without limitation rights
of first refusal or pre-emptive rights), disposition, registration under the
Securities Act of 1933, as amended (the "Securities Act"), or voting of the
capital stock of the Company.
3.5 Issuance of Shares. The issuance, sale and delivery of the
Shares and Warrants, if any, in accordance with this Agreement, and the issuance
and delivery of the shares of Common Stock issuable upon conversion of the
Shares and Warrants, if any, have been, or will be on or prior to the Closing or
the date of issuance of the Warrants, if any (as the case may be), duly
authorized by all necessary corporate action on the part of the Company, and all
such shares have been duly reserved for issuance. The Shares and Warrants, if
any, when so issued, sold and delivered against payment therefor in accordance
with the provisions of this Agreement, and the shares of Common Stock issuable
upon conversion of the Shares and Warrants, if any, when issued upon such
conversion, will be duly and validly issued, fully paid and non-assessable.
3.6 Authority for Agreement. The execution, delivery and performance
by the Company of this Agreement and all other agreements required to be
executed by the Company on or prior to the Closing pursuant to Section 5.4 (the
"Ancillary Agreements"), and the consummation by the Company of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
corporate action. This Agreement and the Ancillary Agreements have been duly
executed and delivered by the Company and, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other laws
relating to or affecting the rights of creditors generally, constitute valid and
binding obligations of the Company enforceable in accordance with their
respective terms. The execution of and performance of the transactions
contemplated by this Agreement and the Ancillary Agreements and compliance with
their provisions by the Company will not violate any provision of law and will
not conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default under, or require a consent or waiver
under, its Certificate of Incorporation or By-Laws (each as amended to date) or
any indenture, lease, agreement or other instrument to which the Company is a
party or by which it or any of its properties is bound, or any decree, judgment,
order, statute, rule or regulation applicable to the Company.
3.7 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any governmental authority is required on the part of the Company
in connection with the execution and delivery of this Agreement, the offer,
issuance, sale and delivery of the Shares, or the other transactions to be
consummated at the Closing, as contemplated by this Agreement, except such
filings as shall have been made prior to
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and shall be effective on and as of the Closing. Based on the representations
made by each of the Purchasers in Section 4 of this Agreement, the offer and
sale of the Shares to each of the Purchasers will be in compliance with
applicable Federal and state securities laws.
3.8 Litigation. There is no action, suit or proceeding, or
governmental inquiry or investigation, pending, or, to the best of the Company's
knowledge, any basis therefor or threat thereof, against the Company, which
questions the validity of this Agreement or the right of the Company to enter
into it, or which might result, either individually or in the aggregate, in any
material adverse change in the business, prospects, assets or condition,
financial or otherwise, of the Company, nor is there any litigation pending, or,
to the best of the Company's knowledge, any basis therefor or threat thereof,
against the Company by reason of the proposed activities of the Company, or
negotiations by the Company with possible investors in the Company. In addition
to the foregoing, to the best of the Company's knowledge after reasonable
inquiry, there are no actions, suits, proceedings or investigations pending or
threatened (or any basis therefor known to the Company) involving the prior
employment of any of the Company's employees, their use in connection with the
Company's business of any information or techniques allegedly proprietary to any
of their former employers, or their obligations under any agreements with prior
employers.
3.9 Financial Statements. The Company has furnished to each of the
Purchasers a complete and correct copy of the unaudited balance sheet of the
Company (the "Balance Sheet") as at December 31, 1993 (the "Balance Sheet Date")
and the related statements of operations for the fiscal year ended December 31,
1993, compiled by the Company (collectively, the "Financial Statements"). The
Financial Statements are complete and correct, are in accordance with the books
and records of the Company and present fairly the financial condition and
results of operations of the Company, as at the dates and for the periods
indicated, and have been prepared in accordance with generally accepted
accounting principles consistently applied, except that the Financial Statements
have been prepared for the internal use of management and may not be in
accordance with generally accepted accounting principles because of the absence
of footnotes normally contained therein and are subject to normal year-end audit
adjustments which in the aggregate will not be material.
3.10 Absence of Liabilities. The Company did not have, at the
Balance Sheet Date, any liabilities of any type which in the aggregate exceeded
$10,000, whether absolute or contingent, which were not fully reflected on the
Balance Sheet, and, since the Balance Sheet Date, the Company has not incurred
or otherwise become subject to any such liabilities or obligations except in the
ordinary course of business.
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3.11 Taxes. The amount shown on the Balance Sheet as provision for
taxes is sufficient in all material respects for payment of all accrued and
unpaid Federal, state, county, local and foreign taxes for the period then ended
and all prior periods. The Company has filed or has obtained presently effective
extensions with respect to all Federal, state, county, local and foreign tax
returns which are required to be filed by it, such returns are true and correct
and all taxes shown thereon to be due have been timely paid with exceptions not
material to the Company. Federal income tax returns of the Company have not been
audited by the Internal Revenue Service, and no controversy with respect to
taxes of any type is pending or, to the best of the Company's knowledge,
threatened. The Company has elected pursuant to Section 1362(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), to be treated as a Subchapter S
corporation. Such election will terminate on the Closing Date. The Company has
not elected to be treated as a collapsible corporation pursuant to Section
341(f) of the Code, nor has it made any other elections pursuant to the Code
(other than elections that relate solely to methods of accounting, depreciation
or amortization) that would have a material effect on the Company, its financial
condition, its business as presently conducted or proposed to be conducted or
any of its properties or material assets.
3.12 Property and Assets. The Company has good title to all of its
material properties and assets, including all properties and assets reflected in
the Balance Sheet, except those disposed of since the date thereof in the
ordinary course of business, and none of such properties or assets is subject to
any mortgage, pledge, lien, security interest, lease, charge or encumbrance
other than those the material terms of which are described in the Balance Sheet.
3.13 Intellectual Property. Set forth on Exhibit D is a true and
complete list of all patents, patent applications, trademarks, service marks,
trademark and service xxxx applications, trade names, copyright registrations
and licenses presently used by the Company or necessary for the conduct of the
Company's business as conducted and as proposed to be conducted, as well as any
agreement under which the Company has access to any confidential information
used by the Company in its business (the "Intellectual Property Rights"). The
Company owns, or has the right to use under the agreements or upon the terms
described in Exhibit D, all of the Intellectual Property Rights, and has taken
all actions reasonably necessary to protect the Intellectual Property Rights.
The business conducted or proposed by the Company does not and will not cause
the Company to infringe or violate any of the patents, trademarks, service
marks, trade names, copyrights, licenses, trade secrets or other intellectual
property rights of any other person or entity. To the best of the Company's
knowledge after reasonable inquiry, the Company is not aware that any employee
is obligated under any contract (including any license, covenant or commitment
of any nature), or subject to any judgment, decree or order of any court or
administrative agency, that would conflict or interfere with (i) the performance
of such employee's duties as an officer, employee or director of the Company,
(ii) the
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use of such employee's best efforts to promote the interests of the Company or
(iii) the Company's business as conducted or proposed to be conducted. To the
best of the Company's knowledge after reasonable inquiry, no other person or
entity (including without limitation any prior employer of any employee of the
Company) has any right to or interest in any inventions, improvements,
discoveries or other confidential information utilized by the Company in its
business.
3.14 Insurance. The Company maintains valid policies of workers'
compensation insurance and of insurance with respect to its properties and
business of the kinds and in the amounts not less than is customarily obtained
by corporations of established reputation engaged in the same or similar
business and similarly situated, including, without limitation, insurance
against loss, damage, fire, theft, public liability and other risks.
3.15 Material Contracts and Obligations. Exhibit D sets forth a list
of all material agreements or commitments of any nature to which the Company is
a party or by which it is bound, including without limitation (a) each agreement
which requires future expenditures by the Company in excess of $10,000 or which
might result in payments to the Company in excess of $10,000 (b) all employment
and consulting agreements, employee benefit, bonus, pension, profit-sharing,
stock option, stock purchase and similar plans and arrangements, and distributor
and sales representative agreements, (c) any agreement with any stockholder,
officer or director of the Company, or any "affiliate" or "associate" of such
persons (as such terms are defined in the rules and regulations promulgated
under the Securities Act), including without limitation any agreement or other
arrangement providing for the furnishing of services by, rental of real or
personal property from, or otherwise requiring payments to, any such person or
entity and (d) any agreement relating to the Intellectual Property Rights. The
Company has delivered to special counsel to the Purchasers copies of such of the
foregoing agreements as such counsel has requested. All of such agreements and
contracts are valid, binding and in full force and effect.
3.16 Compliance. The Company has, in all material respects, complied
with all laws, regulations and orders applicable to its present and proposed
business and has all material permits and licenses required thereby. There is no
term or provision of any mortgage, indenture, contract, agreement or instrument
to which the Company is a party or by which it is bound, or, to the best of the
Company's knowledge after reasonable inquiry, of any provision of any state or
Federal judgment, decree, order, statute, rule or regulation applicable to or
binding upon the Company, which materially adversely affects or, so far as the
Company may now foresee, in the future is reasonably likely to materially
adversely affect, the business, prospects, assets or condition, financial or
otherwise, of the Company. To the best of the Company's knowledge after
reasonable inquiry, no employee of the Company is in violation of any term of
any contract or covenant (either with the Company or
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with another entity) relating to employment, patents, proprietary information
disclosure, non-competition or non-solicitation.
3.17 Absence of Changes. Since the Balance Sheet Date, there has
been no material adverse change in the condition, financial or otherwise, net
worth or results of operations of the Company, other than changes occurring in
the ordinary course of business which changes have not, individually or in the
aggregate, had a materially adverse effect on the business, prospects,
properties or condition, financial or otherwise, of the Company.
3.18 Employees. All employees of the Company have executed and
delivered nondisclosure and assignment of invention agreements, and all of such
agreements are in full force and effect. None of the employees of the Company is
represented by any labor union, and there is no labor strike or other labor
trouble pending with respect to the Company (including, without limitation, any
organizational drive) or, to the best of the Company's knowledge, threatened.
3.19 ERISA. The Company does not have or otherwise contribute to or
participate in any employee benefit plan subject to the Employee Retirement
Income Security Act of 1974.
3.20 Books and Records. The minute books of the Company contain
complete and accurate records of all meetings and other corporate actions of its
stockholders and its Board of Directors and committees thereof. The stock ledger
of the Company is complete and reflects all issuances, transfers, repurchases
and cancellations of shares of capital stock of the Company.
3.21 Disclosures. The Company has fully provided each Purchaser with
all the information that such Purchaser has requested for deciding whether to
purchase the Shares and the Warrants, if any. Neither this Agreement nor any
Exhibit hereto, nor any report, certificate or instrument furnished to any of
the Purchasers or their special counsel in connection with the transactions
contemplated by this Agreement, when read together, contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading. The
Company knows of no information or fact which has or would have a material
adverse effect on the business, prospects, assets or condition, financial or
otherwise, of the Company which has not been disclosed in Exhibit D.
3.22 U.S. Real Property Holding Corporation. The Company is not now
and has never been a "United States Real Property Holding Corporation" as
defined in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service.
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3.23 Related-Party Transactions. No employee, officer, or director
of the Company or member of his or her immediate family is indebted to the
Company, nor is the Company indebted (or committed to make loans or extend or
guarantee credit) to any of them. 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 that employees, officers, or directors of the Company and
members of their immediate families may own stock in publicly traded companies
that may compete with the Company. No member of the immediate family of any
officer or director of the Company is directly or indirectly interested in any
material contract with the Company.
3.24 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 the
Company 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 in any material respect under any of such franchises,
permits, licenses, or other similar authority.
3.25 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.
3.26 Manufacturing and Marketing Rights. The Company has not granted
rights to manufacture, produce, assemble, 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, manufacture, assemble, distribute, market or sell
its products.
3.27 Registration Rights. Except as provided in the Registration
Rights Agreement, the Company has not granted or agreed to grant any
registration rights, including piggyback rights, to any person or entity.
3.28 Status as Qualified Small Business. On the Closing Date, the
Company will be a "qualified small business" as defined in Section 1202(d) of
the Code, and so long as the Initial Shares are held by an Initial Purchaser (or
a transferee in whose hands the Initial Shares are eligible to qualify as
"qualified small business stock" as defined in Section 1202(c) of the Code), the
Company will:
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(a) use its best efforts to cause the Initial Shares to
qualify as qualified small business stock, provided that nothing herein shall
restrict or prevent the Company's Board of Directors from carrying out its
fiduciary obligations to act in the Company's best interests at all times, and
provided further that the Company's best efforts undertakings hereunder shall
terminate on the seventh anniversary of the Closing Date; and
(b) submit such reports to the Internal Revenue Service and to
the Initial Purchasers as may be required pursuant to Section 1202(d)(1)(C) of
the Code; and
(c) retain, until the applicable statute of limitations
(including any extensions) has expired, copies of all tax returns, supporting
work schedules and other records or information which may be relevant to such
tax returns for all tax periods before and after the Closing and shall not
destroy or otherwise dispose of any such records without first providing the
Initial Purchasers with a reasonable opportunity to review and copy the same.
The Company shall keep the original copies of the records at its facilities in
Connecticut and elsewhere, if applicable, and, at the Initial Purchasers'
expense, shall provide copies of the records to each Initial Purchaser upon such
Initial Purchaser's request. Neither the furnishing of any information pursuant
to this Section 3.28 nor any investigation by the Initial Purchasers of the
Company shall affect the Initial Purchasers' rights to rely on the
representations, warranties, agreements and covenants made by the Company
elsewhere in this Agreement.
4. Representations of the Purchasers. Each of the Purchasers severally
represents and warrants to the Company as follows:
4.1 Accredited Investor. Such Purchaser is an "accredited investor"
within the meaning of Rule 501 under the Securities Act of 1933, as amended.
4.2 Investment. Such Purchaser is acquiring the Shares, and the
shares of Common Stock into which the Shares may be converted, for his or its
own account for investment and not with a view to, or for sale in connection
with, any distribution thereof, nor with any present intention of distributing
or selling the same; and, except as contemplated by this Agreement and the
Exhibits hereto, such Purchaser has no present or contemplated agreement,
undertaking, arrangement, obligation, indebtedness or commitment providing for
the disposition thereof.
4.3 Authority. Such Purchaser has full power and authority to enter
into and to perform this Agreement in accordance with its terms. Any Purchaser
which is a corporation, partnership or trust represents that it has not been
organized, reorganized or recapitalized specifically for the purpose of
investing in the Company.
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4.4 Experience. Such Purchaser has carefully reviewed the
representations concerning the Company contained in this Agreement and has made
detailed inquiry concerning the Company, its business and its personnel; the
officers of the Company have made available to such Purchaser any and all
written information which he or it has requested and have answered to such
Purchaser's satisfaction all inquiries made by such Purchaser; and such
Purchaser has sufficient knowledge and experience in investing in companies
similar to the Company so as to be able to evaluate the risks and merits of its
investment in the Company and is able financially to bear the risks thereof. The
foregoing, however, does not limit or modify the representations and warranties
of the Company in Section 3 of this Agreement or the right of the Purchasers to
rely thereon.
5. Conditions to the Obligations of the Purchasers. The obligation of each
of the Initial Purchasers to purchase Initial Shares at the Closing is subject
to the fulfillment, or the waiver by such Initial Purchaser, of each of the
following conditions on or before the Closing:
5.1 Accuracy of Representations and Warranties. Each representation
and warranty contained in Section 3 shall be true on and as of the Closing Date
with the same effect as though such representation and warranty had been made on
and as of that date.
5.2 Performance. The Company shall have performed and complied with
all agreements and conditions contained in this Agreement required to be
performed or complied with by the Company prior to or at the Closing.
5.3 Opinion of Counsel. Each Initial Purchaser shall have received
an opinion from Xxxx and Xxxx, counsel for the Company, dated the Closing Date,
addressed to the Initial Purchasers, substantially in the form attached hereto
as Exhibit F.
5.4 Ancillary Agreements.
(a) The Stockholders' Voting Agreement attached hereto as
Exhibit G (the "Stockholders' Voting Agreement") shall have been executed and
delivered by the Company, by each of the Initial Purchasers and by each of the
Founders (as defined therein). All such action shall have been taken as may be
necessary to elect a Board of Directors of the Company, effective upon the
Closing, in accordance with the Stockholders' Voting Agreement.
(b) The Registration Rights Agreement attached hereto as
Exhibit H (the "Registration Rights Agreement") shall have been executed and
delivered by the Company and each of the Initial Purchasers.
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(c) The Right of First Refusal and Co-Sale Agreement attached
hereto as Exhibit I shall have been executed and delivered by each of the
Initial Purchasers and the other parties named therein.
(d) The Participation Agreement attached hereto as Exhibit J
shall have been executed and delivered by the Company and each of the Initial
Purchasers.
5.5 Certificates and Documents. The Company shall have delivered to
special counsel to the Initial Purchasers:
(a) The Certificate of Incorporation of the Company, as amended and in
effect as of the Closing Date (including the Certificate of Amendment),
certified by the Secretary of State of the State of Delaware;
(b) Certificates, as of the most recent practicable dates, as to the
corporate good standing of the Company issued by the Secretary of State of the
State of Delaware and the Secretary of the State of the State of Connecticut;
(c) By-laws of the Company, certified by its Secretary or Assistant
Secretary as of the Closing Date; and
(d) Resolutions of the Board of Directors of the Company, authorizing and
approving all matters in connection with this Agreement and the transactions
contemplated hereby, certified by the Secretary or Assistant Secretary of the
Company as of the Closing Date.
5.6 Compliance Certificate. The Company shall have delivered to the
Initial Purchasers a certificate, executed by the Chairman of the Company, dated
the Closing Date, certifying to the fulfillment of the conditions specified in
Sections 5.1, 5.2, 5.4 and 5.5 of this Agreement.
5.7 Other Matters. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to the Initial Purchasers and their special counsel, and the
Initial Purchasers and their special counsel shall have received all such
counterpart originals or certified or other copies of such documents as they may
reasonably request.
5.8 Conditions Precedent to Second Closing. The obligation of the
Secondary Purchasers to purchase and pay for the Secondary Shares to be
purchased at a Second Closing, if any, is subject to (a) the delivery to each
Secondary Purchaser of a certificate, dated the Second Closing Date, signed by
the Chairman of the Company, to the effect that (i) other than as disclosed in a
schedule, which shall be
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reasonably satisfactory to the Secondary Purchasers, attached to such
certificate or as contemplated by this Agreement, the representations and
warranties of the Company contained herein were true and correct when made and
are true and correct in all material respects on and as of the Second Closing
Date (it being understood that, in the latter case, any reference to the Closing
contained in Section 3 shall be deemed to be a reference to the Second Closing)
and (ii) the Company has performed and complied in all material respects with
all covenants, agreements and conditions contained in this Agreement required to
be performed or complied with by it on or prior to the date of the Second
Closing (it being understood that any reference to the Initial Purchasers or
Closing contained in Section 5 shall be deemed to be a reference to the
Secondary Purchasers and Second Closing, respectively), and (b) the delivery to
each Secondary Purchaser of an opinion, dated the date of the Second Closing
Date, of Xxxx and Xxxx to the same effect as the opinion referred to in Section
5.3 of this Agreement. The Secondary Purchasers may, in their sole discretion,
waive any of the foregoing conditions.
6. Condition to the Obligations of the Company. The obligations of the
Company under Section 1.2 of this Agreement are subject to fulfillment, or the
waiver, of the following condition on or before the Closing (or the Second
Closing, as the case may be):
6.1 Accuracy of Representations and Warranties. The representations
and warranties of the Purchasers contained in Section 4 shall be true on and as
of the Closing Date (or the Second Closing Date, as the case may be) with the
same effect as though such representations and warranties had been made on and
as of that date.
7. Covenants of the Company.
7.1 Financial Statements and Other Information.
(a) The Company shall deliver to each Major Purchaser (as
defined in paragraph (c) below):
(i) as soon as available, but in any event within 30 days after
commencement of each new fiscal year, a business plan and projected financial
statements for the upcoming fiscal year, in reasonable detail and broken down on
a monthly basis; and
(ii) within 20 days after the end of each month, an unaudited balance
sheet of the Company as at the end of such month and unaudited statements of
income and of cash flows of the Company for such month and for the current
fiscal year to the end of such month, setting forth in comparative form (x) the
Company's projected financial statements for the corresponding periods for the
current fiscal year and (y)
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the Company's financial statements for the corresponding periods for the prior
fiscal year.
(b) Beginning with the Company's 1994 fiscal year, the Company
shall have an audit performed by a nationally recognized accounting firm.
(c) For purposes of this Agreement, the term "Major Purchaser"
shall mean a Purchaser purchasing not less than 250,000 Shares. For purposes of
determining the number of Shares held by a Purchaser, the foregoing numbers
shall be adjusted for any stock splits, stock dividends, recapitalizations or
similar events. Notwithstanding the foregoing, the Shares shall not include
Shares which have been converted into Common Stock or Shares sold or distributed
to persons other than the original Purchasers (including without limitation
Shares acquired by affiliates, shareholders or partners of Purchasers).
7.2 Key Man Insurance. For a period of five years after the Closing
Date, the Company shall maintain term life insurance upon the lives of Xxxxxx X.
Xxxxx and Xxxxx X. Xxxxxxx in the amount of $1,000,000 each, with the proceeds
payable to the Company.
7.3 Nondisclosure Agreements. The Company shall require all persons
now or hereafter employed by the Company to maintain or enter into nondisclosure
and assignment of inventions agreements in such form as may be approved by the
Board of Directors of the Company.
7.4 Expenses of Directors. The Company shall promptly reimburse in
full each director of the Company who is not an employee of the Company and who
was elected as a director solely or in part by the holders of Series A Preferred
Stock for all of his reasonable out-of-pocket expenses incurred (a) in attending
each meeting of the Board of Directors of the Company or any committee thereof
and (b) subject to the prior approval of the Board of Directors of the Company,
when otherwise acting on behalf of the Company.
7.5 Reservation of Common Stock. The Company shall reserve and
maintain a sufficient number of shares of Common Stock for issuance upon
conversion of all of the outstanding Shares.
7.6 Director and Officer Liability Insurance. The Company shall use
its best efforts to obtain and keep director and officer liability insurance in
the minimum amount of $1,000,000; provided, however, that such coverage is
available at commercially reasonable rates. Such coverage shall be kept in place
so long as any representative of the Purchasers serves on the Company's Board of
Directors.
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7.7 Termination of Covenants. The covenants of the Company contained
in this Section 7 shall terminate, and be of no further force or effect, upon
the effective date of a registration statement filed by the Company under the
Securities Act covering the Company's first public offering of Common Stock,
resulting in gross proceeds to the Company of at least $10,000,000.
8. Transfer of Shares.
8.1 Restricted Shares. "Restricted Shares" means (i) the Shares,
(ii) the shares of Common Stock issued or issuable upon conversion of the
Shares, (iii) any shares of capital stock of the Company acquired by the
Purchasers pursuant to the Right of First Refusal Agreement, and (iv) any other
shares of capital stock of the Company issued in respect of such shares (as a
result of stock splits, stock dividends, reclassifications, recapitalizations,
or similar events); provided, however, that shares of Common Stock which are
Restricted Shares shall cease to be Restricted Shares (i) upon any sale pursuant
to the Registration Rights Agreement, Section 4(1) of the Securities Act or Rule
144 under the Securities Act or (ii) at such time as they become eligible for
sale under Rule 144(k) under the Securities Act.
8.2 Requirements for Transfer.
(a) Restricted Shares shall not be sold or transferred unless
either (i) they first shall have been registered under the Securities Act, or
(ii) the Company first shall have been furnished with an opinion of legal
counsel, reasonably satisfactory to the Company, to the effect that such sale or
transfer is exempt from the registration requirements of the Securities Act.
(b) Notwithstanding the foregoing, no registration or opinion
of counsel shall be required for (i) a transfer by a Purchaser which is a
partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner, if the transferee agrees in writing to be subject to
the terms of this Section 8 to the same extent as if he were an original
Purchaser hereunder, or (ii) a transfer made in accordance with Rule 144 under
the Securities Act.
8.3 Legend. Each certificate representing Restricted Shares shall
bear a legend substantially in the following form:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended, and may not be offered, sold or
otherwise transferred, pledged or hypothecated unless and until such
shares are registered under such Act or an opinion of counsel satisfactory
to the Company is obtained to the effect that such registration is not
required."
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The foregoing legend shall be removed from the certificates representing
any Restricted Shares, at the request of the holder thereof, at such time as
they become eligible for resale pursuant to Rule 144(k) under the Securities
Act.
9. Miscellaneous.
9.1 Successors and Assigns. Unless otherwise provided herein, this
Agreement, and the rights and obligations of each Purchaser hereunder, may be
assigned by such Purchaser to any person or entity to which Shares are
transferred by such Purchaser, and such transferee shall be deemed a "Purchaser"
for purposes of this Agreement; provided that the transferee provides written
notice of such assignment to the Company.
9.2 Confidentiality.
(a) All disclosures of technology, ideas, formulas, processes,
inventions and other technical, financial, business and customer information
("Information") made to the Purchasers will be deemed non-confidential unless
specifically designated at the time of disclosure as including Information which
is confidential to the Company. Such confidential Information will contain an
appropriate legend identifying the Information as confidential. If such
disclosure is made other than in writing, it shall be identified at the time of
disclosure as being confidential and shall be confirmed in a writing within 20
days following such disclosure. The writing will specifically recite that which
is confidential in sufficient detail to allow the Purchasers to identify that
Information deemed to be confidential.
(b) Each Purchaser agrees to use the same care and discretion
to avoid disclosure, publication or dissemination of received confidential
Information as that Purchaser employs with respect to similar information of its
own which it does not desire to publish, disclose or disseminate; provided,
however, that a Purchaser may disclose such Information (i) to its attorneys,
accountants, consultants, and other professionals to the extent necessary to
obtain their services in connection with the Purchaser's investment in the
Company, (ii) to any prospective purchaser of any Shares from such Purchaser as
long as such prospective purchaser agrees in writing to be bound by the
provisions of this Section, (iii) to any affiliate of such Purchaser or to a
Partner, shareholder or subsidiary of such Purchaser or (iv) in response to a
valid judicial or governmental order or if necessary to establish rights under
this Agreement. Moreover, the obligations of confidentiality contained in this
Section will not apply to any Information that: (i) is already in the possession
of, or is independently developed by, the Purchasers, (ii) is or becomes
publicly available without breach of this Section, (iii) is rightly received
from a third party or (iv) the Company makes available to other parties without
restriction.
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9.3 Survival of Representations and Warranties. All agreements,
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the closing of the transactions contemplated
hereby.
9.4 Expenses. The Company shall pay the reasonable costs and
expenses of Xxxxxxx, Xxxxxxx and Xxxxxxxx, special counsel to the Purchasers, in
connection with the preparation of this Agreement and the other agreement
contemplated hereby and the closing of the transactions contemplated hereby, up
to a maximum of $10,000. Notwithstanding the foregoing, in the event that the
transactions contemplated by this Agreement do not close for any reason, each
party shall be responsible for its own legal costs incurred.
9.5 Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be delivered
by hand or mailed by first class certified or registered mail, return receipt
requested, postage prepaid:
If to the Company, at Xxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxx 00000,
Attention: Chairman, or at such other address or addresses as may have been
furnished in writing by the Company to the Purchasers, with a copy to Xxxx X. X.
Xxxxx, III, Esq., Xxxx and Xxxx, 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000;
If to a Purchaser, at his or its address set forth on Exhibit A, or at
such other address or addresses as may have been furnished to the Company in
writing by such Purchaser, with a copy to Xxxxxx Xxxxxxxx, Esq., Xxxxxxx,
Xxxxxxx & Xxxxxxxx, Two Embarcadero Place, 0000 Xxxx Xxxx, Xxxx Xxxx, XX 00000.
Notices provided in accordance with this Section 9.5 shall be deemed
delivered upon personal delivery or two business days after deposit in the mail.
9.6 Brokers. The Company and each Purchaser (i) represents and
warrants to the other parties hereto that he or it has retained no finder or
broker in connection with the transactions contemplated by this Agreement, and
(ii) will indemnify and save the other parties harmless from and against any and
all claims, liabilities or obligations with respect to brokerage or finders'
fees or commissions, or consulting fees in connection with the transactions
contemplated by this Agreement asserted by any person on the basis of any
statement or representation alleged to have been made by such indemnifying
party.
9.7 Entire Agreement. This Agreement and the Ancillary Agreements
embody the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter.
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9.8 Amendments and Waivers. Except as otherwise expressly set forth
in this Agreement, 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), with the written consent of
the Company and the holders of at least 51% of the shares of Common Stock issued
or issuable upon conversion of the Shares. Any amendment or waiver effected in
accordance with this Section 9.8 shall be binding upon each holder of any Shares
(including shares of Common Stock into which such Shares have been converted),
each future holder of all such securities and the Company. No waivers of or
exceptions to any term, condition or provision of this Agreement, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
9.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be one and the same document.
9.10 Section Headings. The section headings are for the convenience
of the parties and in no way alter, modify, amend, limit, or restrict the
contractual obligations of the parties.
9.11 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
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9.12 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
EXECUTED as of the date first above written.
COMPANY:
FlexiWare Corporation
By: /s/Xxxxxx Xxxxx
--------------------------------
Title: CEO
INITIAL PURCHASERS:
Menlo Ventures VI, L.P.
By: MV Management VI, L.P.,
its General Partner
By: /s/Xxxxxx Xxxxx
--------------------------------
General Partner
Menlo Entrepreneurs Fund VI, L.P.
By: MV Management VI, L.P.,
its General Partner
By: /s/Xxxxxx Xxxxx
--------------------------------
General Partner
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EXHIBIT A
Schedule of Initial Purchasers
Initial
Shares Purchase Warrant
Name and Address Purchased Price Shares
---------------- --------- ------- ------
Menlo Ventures VI, L.P. 1,724,138 $2,000,000.08 861,875
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Menlo Entrepreneurs
Fund VI, L.P.
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000 25,862 $29,999.92 13,125
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