Exhibit 10.6
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is made and
entered into as of August 30, 1999, by and between HYBRID NETWORKS, INC., a
Delaware corporation (the "COMPANY"), and each investor executing this Agreement
as an Investor (each an "INVESTOR" and, collectively, the "INVESTORS").
RECITALS:
A. The Investors desire to purchase from the Company, and the
Company desires to issue and sell to the Investors, subject to the terms and
conditions set forth herein, Debentures (as hereinafter defined) in the face
amount of $7,100,000 convertible into 2,491,228 shares of Common Stock (as
hereinafter defined).
B. The Investors and the Company desire to set forth in this
Agreement the conditions to the issuance and sale of the Debentures (as
hereinafter defined) to the Investors.
NOW, THEREFORE, in consideration of the premises and the agreements
herein set forth, the parties hereto, intending to be legally bound, hereby
agree as follows:
SECTION 1. DEFINITIONS
(a) DEFINED TERMS. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and
recitals, shall, except where the context otherwise requires, have the
following meanings (such meanings to be equally applicable to the singular
and plural forms thereof):
"ACQUIRED SECURITIES" means the Debentures and any Common Stock
issued upon exercise or conversion thereof, and any other securities of any
Person of any kind issued in exchange for or in respect of any such
securities.
"AFFILIATE" has the same meaning as in Rule 12b-2 promulgated under
the Exchange Act.
"AGREEMENT" means this Securities Purchase Agreement as in effect
on the date hereof and as hereafter amended, supplemented, restated or
otherwise modified.
"BUSINESS DAY" means any day which is neither a Saturday or Sunday
nor a legal holiday on which banks are authorized or required to be closed in
New York, New York.
"CLOSING" is defined in Section 2(c).
"CLOSING DATE" is defined in Section 2(c).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" means shares now or hereafter authorized of any
class of common stock of the Company and any other class of capital stock of
the Company, however designated, that has the right (subject to any prior
rights of any class or series of preferred stock) to participate in any
distribution of the assets upon voluntary or involuntary liquidation,
dissolution or winding up of the Company or in the earnings of the Company
without limit as to per share amount, and shall include, without limitation,
the presently authorized 100,000,000 shares of common stock, par value $0.001
per share.
"COMPANY" is defined in the Preamble.
"COMPANY DISCLOSURE LETTER" is defined in Section 3(b)(i).
"DEBENTURES" means the $7,100,000 debentures issued to Investors
pursuant to this Agreement, paying interest in kind at a rate of 4.0% per
annum, and convertible upon the occurrence of certain events into 2,491,228
shares of Common Stock.
"DEBENTURE CERTIFICATES" means the certificates evidencing the
Debentures in the form of EXHIBIT A attached hereto.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time.
"FISCAL QUARTER" means any quarter of a Fiscal Year.
"FISCAL YEAR" means each 12-month accounting period ending December
31 of a calendar year.
"FULLY DILUTED BASIS" includes, without duplication, (i) all shares
of Common Stock outstanding at the time of calculation, (ii) Common Stock
issuable upon exercise of all outstanding warrants, options and other rights
to acquire Common Stock directly or indirectly and (iii) Common Stock
issuable upon conversion of all securities convertible directly or indirectly
into Common Stock.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
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"INVESTOR'S INTEREST" means, with respect to an Investor and as of
the date of determination, the total number of shares of Common Stock (i)
owned, directly or indirectly, by the Investor or any of its Affiliates, (ii)
for which warrants owned, directly or indirectly, by the Investor or any of
its Affiliates may be exercised (after taking into account all applicable
antidilution provisions), assuming all such warrants are exercisable as of
the date of such determination, and (iii) for which Debentures owned,
directly or indirectly, by the InvestoR or any of its Affiliates may be
converted after taking into account all applicable antidilution provisions,
assuming all such Debentures are convertible as of the date of such
determination, expressed as a percentage of the Common Stock on a Fully
Diluted Basis at the time of calculation.
"LAWS" means any judgment, order, decree, statute, law, ordinance,
rule or regulation of any Governmental Authority.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, lien (statutory or other), adverse
claim or other security agreement of any kind or nature whatsoever.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, properties, assets, financial condition, results of operations or
prospects of the Company and the Company Subsidiaries, taken as a whole.
"PERSON" means any natural person, corporation, partnership,
limited liability company, firm, association or any other entity, whether
acting in an individual, fiduciary or other capacity.
"PURCHASE PRICE" is defined in Section 2(b).
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement to be entered into by and between the Company, Sprint Corporation
and the Investors on the Closing Date, in form and substance mutually
agreeable to the Company, Sprint Corporation and the Investors.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement, the
Debenture Certificates, the Registration Rights Agreement and any other
agreement executed or delivered at
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the Closing in connection with any of the foregoing to which the Company and
the Investors are parties.
(b) CROSS-REFERENCES. Unless otherwise specified, references in
this Agreement to any Section are references to such Section of this
Agreement, and unless otherwise specified, references in any Section or
definition to any clause or subsection are references to such clause or
subsection of such Section or definition.
SECTION 2. PURCHASE AND SALE OF DEBENTURES; CLOSING.
(a) PURCHASE AND SALE OF DEBENTURES. On the terms and subject
to the conditions set forth in this Agreement, the Company hereby agrees to
issue, sell and deliver to the Investors on the Closing Date, and the
Investors hereby agree to purchase from the Company on the Closing Date, the
Debentures as set forth in SCHEDULE 1 hereto.
(b) PURCHASE PRICES. In consideration for the issuance of the
Debentures, the Investors shall pay to the Company on the Closing Date the
respective purchase prices set forth in Schedule 1 (the "PURCHASE PRICES"),
for an aggregate amount of $7,100,000, by wire transfer of immediately
available funds to a bank account designated by the Company not less than
three Business Days prior to the Closing Date.
(c) CLOSING. Subject to the satisfaction or waiver of the
conditions set forth herein, the closing of the sale and purchase of the
Debentures (the "CLOSING") shall take place concurrently with the closing of
the investment of Sprint Corporation in the Company pursuant to the
Securities Purchase Agreement between Sprint Corporation and the Company
dated in August 1999 (the "SPRINT PURCHASE AGREEMENT"), at the offices of
Fenwick & West, Two Palo Alto Square, Palo Alto, California, provided that
the conditions to closing set forth in Sections 7, 8 and 9 have been
satisfied, or at such other place and time as may be agreed upon by the
Investors and the Company. Investors consent to the Company's execution,
delivery and performance of its obligations under the Sprint Purchase
Agreement.
(d) DELIVERIES AT CLOSING. Subject to the satisfaction or
waiver of the conditions to its obligations set forth herein, at the Closing,
the Company shall execute and deliver to the Investors (or cause to be
delivered to Investors) the following: (i) the Registration Rights Agreement;
(ii) Debenture Certificates representing $7,100,000 face amount of the
Debentures (iii) an opinion of counsel to the Company in form satisfactory to
the Investors; and (iv) such other instruments as may be contemplated by this
Agreement or reasonably requested by the Investors to evidence the
consummation of the transactions contemplated hereby. Subject to the
satisfaction or waiver of the conditions set forth herein, at the Closing,
the Investors shall pay the Purchase Prices to the Company and shall execute
and deliver to the Company the
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following: (i) the Registration Rights Agreement; and (ii) such other
instruments as may be contemplated by this Agreement or reasonably requested
by the Company to evidence the consummation of the transactions contemplated
hereby.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to the Investors as follows (each of the
following representations shall be modified by any specific references to
such representation contained in the Company Disclosure Letter which shall be
delivered as provided in Section 3(b)(i) below and shall be in form and
substance reasonably satisfactory to the Investors):
(a) The Company's representations to Sprint Corporation in the
Sprint Purchase Agreement, as modified by the disclosure letter to be
delivered by the Company to Sprint Corporation pursuant to such agreement,
are true and complete.
(b) AUTHORIZATION; NON-CONTRAVENTION; CONSENTS; ISSUANCE OF
DEBENTURES.
(i) The Company has the full corporate power and authority
to execute and deliver this Agreement and the other Transaction Documents, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the other Transaction Documents by the Company, the
performance by the Company of its obligations hereunder and thereunder and
the consummation by the Company of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate
action on the part of the Company. This Agreement has been, and each of the
other Transaction Documents will be at the Closing, duly executed and
delivered by the Company, and this Agreement constitutes, and, assuming the
due execution and delivery thereof by the Investor, each of the other
Transaction Documents upon due execution and delivery will constitute, a
valid and binding agreement of the Company enforceable against the Company in
accordance with its respective terms, except as such enforceability may be
affected by bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors rights generally and other than general
equitable principles. Except as set forth in SCHEDULE 3(c) to the disclosure
letter to be delivered by the Company to the Investors within 10 days
following the execution of this Agreement (the "COMPANY DISCLOSURE LETTER"),
the execution, delivery and performance of this Agreement and of the
Transaction Documents by the Company does not and will not, and the
consummation of the transactions contemplated hereby and by the other
Transaction Documents will not, conflict with, or result in any violation of,
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any
obligation or to loss of a benefit or alteration of rights or obligations
under, or result in the creation of any Lien upon any of the properties or
assets of the Company under, (A) the Company's Certificate of Incorporation
or the Company's Bylaws, (B) any loan or credit agreement, note, bond,
mortgage, indenture, reciprocal easement agreement, lease or other agreement,
instrument, permit, concession,
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contract, franchise or license to which the Company is a party or by which
any of its properties or assets is bound or (C) subject to the governmental
filings and other matters referred to in the following sentence, any Laws
applicable to the Company or its properties or assets. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Authority is required by or with respect to the Company in
connection with the execution and delivery of this Agreement and the other
Transaction Documents by the Company or the consummation by the Company of
the transactions contemplated hereby or thereby, except for (A) the filing
with the SEC of a Notice of Sale of Securities on Form D and such reports
under Section 13(a) of the Exchange Act, as may be required in connection
with this Agreement and such transactions and (B) such other consents,
approvals, orders, authorizations, registrations, declarations and filings
(x) as are set forth in SCHEDULE 3(c) to the Company Disclosure Letter or (y)
which, if not obtained or made, would not prevent or delay in any material
respect the consummation of any of the transactions contemplated hereby or by
the other Transaction Documents or otherwise prevent the Company from
performing its obligations under this Agreement or any other Transaction
Document in any material respect or have, individually or in the aggregate, a
Material Adverse Effect.
(ii) Upon delivery to the Investors of Debenture
Certificates evidencing the Debentures in accordance with the terms hereof,
such Debentures will have been validly issued and fully paid and
nonassessable, free and clear of all Liens and the issuance thereof will not
give rise to any preemptive rights or anti-dilution rights, except for such
rights as are set forth on SCHEDULE 3(c)(ii) to the Company Disclosure
Letter. The issuance of the shares of Common Stock upon the conversion of
the Debentures has been duly authorized and, when issued upon conversion of
the Debentures in accordance with the terms thereof, such shares of Common
Stock will have been validly issued and fully paid and nonassessable. The
Company has reserved 2,491,228 shares of Common Stock for issuance upon the
conversion of the Debentures. Except as set forth in the Registration Rights
Agreement and on SCHEDULE 3(c)(ii) to the Company Disclosure Letter, no
Person has the right to demand or any other right to cause the Company to
file any registration statement under the Securities Act relating to any
securities of the Company or any right to participate in any such
registration.
(c) BROKERS. No broker, investment banker or financial advisor
has been used or retained by the Company in connection with the transactions
contemplated hereby and by the other Transaction Documents based upon
arrangements made by or on behalf of the Company.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.
Each Investor represents and warrants to the Company as follows:
(a) ORGANIZATION. Such Investor, if other than a natural
person, is a partnership or limited liability company duly organized, validly
existing and in good standing
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under the laws of its jurisdiction of formation and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted.
(b) AUTHORIZATION. Such Investor has full corporate power and
authority to execute and deliver this Agreement and the other Transaction
Documents, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the other Transaction Documents by the
Investor, the performance by the Investor of its obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary action on the
part of the Investor. This Agreement has been, and each of the other
Transaction Documents will be at the Closing, duly executed and delivered by
the Investor and this Agreement constitutes, and, assuming the due execution
and delivery thereof by the Company, each of the other Transaction Documents
upon due execution and delivery will constitute, the valid and binding
agreement of the Investor, enforceable against the Investor in accordance
with its respective terms, except as such enforceability may be affected by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting creditors rights generally and other than general equitable
principles.
(c) ABSENCE OF RESTRICTIONS AND CONFLICTS. The execution,
delivery and performance of this Agreement and of the Transaction Documents
by the Investor do not and will not, and the consummation of the transactions
contemplated hereby and by the other Transaction Documents will not, conflict
with, or result in any violation of, or default (with or without notice or
lapse of time, or both) under or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a benefit or
alteration of rights or obligations under, or result in the creation of any
Lien upon any of the properties or assets of the Investor under, (A) the
articles of incorporation or Bylaws of the Investor, (B) any loan or credit
agreement, note, bond, mortgage, indenture, reciprocal easement agreement,
lease or other agreement, instrument, permit, concession, contract, franchise
or license to which the Investor is a party or by which any of its assets are
bound, or (C) subject to the governmental filings and other matters referred
to in the following sentence, any Laws applicable to the Investor or its
properties or assets, other than, in the case of clause (B) or (C), any such
conflicts, violations, defaults, rights or Liens that neither individually
nor in the aggregate would prevent or delay in any material respect the
consummation of any of the transactions contemplated hereby or by the other
Transaction Documents. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority is
required by or with respect to the Investor in connection with the execution
and delivery of this Agreement and the other Transaction Documents by the
Investor or the consummation by the Investor of the transactions contemplated
hereby or thereby, except for (A) the filing with the SEC of such reports
under Section 13(a) of the Exchange Act, as may be required in connection
with this Agreement and such transactions, and (B) such other consents,
approvals, orders, authorizations, registrations,
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declarations and filings which, if not obtained or made, would not prevent or
delay in any material respect the consummation of any of the transactions
contemplated hereby or by the other Transaction Documents or otherwise
prevent the Company from performing its obligations under this Agreement or
any other Transaction Document in any material respect or have, individually
or in the aggregate, a material adverse effect on the business, assets,
financial condition, results of operations or prospects of the Investor.
(d) BROKERS. No financial advisor has been used or retained by
the Investor in connection with the transactions contemplated hereby and by
the other Transaction Documents based upon arrangements made by or on behalf
of the Investor.
SECTION 5. COVENANTS.
(a) PRE-CLOSING ACCESS TO INFORMATION. The Company shall afford
to the Investors and to the officers, employees, accountants, counsel,
financial advisors and other representatives of the Investors, reasonable
access during normal business hours during the period prior to the Closing
Date to all their respective properties, books, contracts, commitments,
personnel and records and, during such period, the Company shall furnish
promptly to the Investors (i) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (ii) all other
information concerning its business, properties and personnel as the
Investors may reasonably request, which information the Investors agree to
keep confidential.
(b) POST-CLOSING ACCESS TO BUSINESS INFORMATION. Commencing on
the date hereof and for so long as an Investor's Interest is at least 10%,
the Company shall furnish to such Investor such information regarding the
Company as is furnished to the members of the Board of Directors of the
Company and shall continue to provide the Investors with the access and
information rights specified in Section 5(a).
(c) PUBLIC COMPANY INFORMATION. So long as the Company is
subject to the periodic reporting requirements of the Exchange Act and for so
long as an Investor's Interest is at least 5%, the Company covenants to such
Investor that the Company will:
(i) file with the SEC on or before the required date all
regular or periodic reports required pursuant to the Exchange Act;
and
(ii) use its reasonable commercial efforts to make
publicly available information concerning the Company sufficient to
allow the Investor to dispose of all or a portion of the Acquired
Securities and any Common Stock owned by the
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Investor pursuant to Rule 144 (or any successor provision)
promulgated by the SEC under the Securities Act.
(d) PRIVATE COMPANY INFORMATION. If the Company shall cease to be
subject to the periodic reporting requirements of the Exchange Act and for so
long as an Investor's Interest is at least 5%, the Company will furnish, or will
cause to be furnished, to the Investor copies of the following financial
statements, reports and information:
(i) promptly when available and in any event within 90
days after the close of each Fiscal Year, a consolidated balance
sheet at the close of such Fiscal Year, and related consolidated
statements of operations, stockholders' equity and cash flows for
such Fiscal Year, of the Company (with comparable information at
the close of and for the prior Fiscal Year), certified (in the case
of consolidated statements) without qualification by Xxxx + Co. or
any nationally recognized independent public accountants; and
(ii) promptly when available and in any event within 45
days after the close of each Fiscal Quarter, consolidated balance
sheets at the close of such Fiscal Quarter, and consolidated
statements of operations, stockholders' equity and cash flows for
such Fiscal Quarter and for the period commencing at the close of
the previous Fiscal Year and ending with the close of such Fiscal
Quarter, of the Company (with comparable information at the close
of and for the corresponding Fiscal Quarter of the prior Fiscal
Year and for the corresponding portion of such prior Fiscal Year),
certified by the chief financial or executive officer of the
Company.
(e) INCONSISTENT AGREEMENTS. The Company will not take any
action which would (i) impair or adversely affect the right of the Investors
to convert the Debentures or exercise any rights of the Investors pursuant to
the Transaction Documents, or (ii) breach any of the covenants or agreements
of the Company in the Transaction Documents.
(f) CERTAIN ACTIONS. Subject to the terms and conditions herein
provided, each of the parties will use its reasonable commercial efforts to
cooperate with the other party (i) to, secure all necessary consents,
approvals, authorizations and exemptions from all third parties, including,
without limitation, all Governmental Authorities, in connection with and to
effectuate the transactions contemplated hereby and by the other Transaction
Documents and (ii) to take, or cause to be taken, all other action and do, or
cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated hereby and by the
other Transaction Documents, including, without limitation, the execution of
each Transaction Document and all other certificates and instruments
contemplated hereby and
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thereby. If, at any time after the Closing Date, any further action is
necessary or desirable to carry out the purpose of this Agreement, the proper
officers and directors of the Company and the Investors shall take all such
necessary action.
SECTION 6. RESTRICTIONS ON TRANSFER.
(a) RULE 144 INFORMATION. Upon the request of an Investor, the
Company shall promptly supply to the Investor or its prospective transferees
all information regarding the Company required to be delivered in connection
with a transfer pursuant to Rule 144 or Rule 144A of the rules and
regulations promulgated by the SEC under the Securities Act.
(b) RULE 144(k) SALES. If any Acquired Securities are or become
eligible for sale pursuant to Rule 144(k), the Company, upon the request of
holders of any such Acquired Securities, shall remove the Securities Legend
from the certificates for such Acquired Securities.
(c) LEGEND. Each certificate for Acquired Securities shall be
imprinted with a legend (the "Securities Legend") in substantially the
following form or in such other form as the Company may reasonably use:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
SAID SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
FROM THE REGISTRATION PROVISIONS OF SAID ACT OR
LAWS."
If the holders of Acquired Securities deliver to the Company
an opinion of counsel that no subsequent transfer of Acquired Securities
shall require registration under the Securities Act, the Company shall
promptly upon such contemplated transfer deliver new certificates for such
Acquired Securities which do not bear the Securities Legend.
SECTION 7. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The
respective obligations of each party to effect the transactions contemplated
hereby shall be subject to the fulfillment at or prior to the Closing of each
of the following conditions:
(a) INJUNCTION. As of the Closing, there shall be no effective
injunction, writ or preliminary restraining order or any order of any nature
issued by a court or governmental
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agency of competent jurisdiction to the effect that the purchase and sale of
the Debentures contemplated hereby may not be consummated as herein provided,
no proceeding or lawsuit shall have been commenced by any governmental or
regulatory agency for the purpose of obtaining any such injunction, writ or
preliminary restraining order and no written notice shall have been received
from any such agency indicating an intent to restrain, prevent, materially
delay or restructure the transactions contemplated by this Agreement.
(b) REGULATORY APPROVALS. The Investors and the Company shall
have obtained the approval of all Governmental Authorities (or all applicable
waiting periods shall have expired) necessary for the consummation of the
acquisition by the Investors of the Debentures, as contemplated under this
Agreement.
(c) SPRINT CORPORATION INVESTMENT. Concurrently with (or prior
to) the Closing, the closing shall occur (or shall have occurred) under the
Sprint Purchase Agreement.
(d) REGISTRATION RIGHTS AGREEMENT. Each of the Investors and
the Company shall have executed and delivered the Registration Rights
Agreement.
SECTION 8. CONDITIONS TO OBLIGATIONS OF THE INVESTORS. The
obligations of the Investors to effect the transactions contemplated hereby
shall be subject to the fulfillment at or prior to the Closing of each of the
following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in Section 3 of this Agreement shall be
true and correct in all material respects as of the date of this Agreement
and as of the Closing Date as though made on and (except for representations
and warranties given as of a specified date) as of the Closing Date.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company
shall have performed in all material respects all covenants and agreements
required to be performed by it on or prior to the Closing under this
Agreement.
(c) CERTIFICATES. The Company shall have furnished the
Investors with a certificate of the Company, executed on its behalf by its
appropriate officers as to compliance with the conditions set forth in
Sections 8(a) and (b).
(d) DEBENTURE CERTIFICATES. Concurrently with the Closing, the
Company shall deliver to the Investors Debenture Certificates registered in
the Investors' respective names evidencing the Debentures.
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(e) NO MATERIAL ADVERSE CHANGE. There shall not have occurred
(nor shall the Investors have become aware of ) any material adverse change
in the business, assets, results of operations, financial condition or
prospects of the Company or material physical loss or damage to any of the
properties or assets (whether or not covered by insurance) of the Company
which adversely affects or impairs the business now being conducted by the
Company, and the Investors shall have received a certificate of the Company,
signed on its behalf by an executive officer of the Company and dated the
Closing Date, to such effect.
(f) OPINIONS OF COUNSEL TO THE COMPANY. The Investors shall
have received an opinion of Fenwick & West, counsel to the Company, dated the
Closing Date, in form and substance reasonably acceptable to the Investors.
(g) DIRECTORS AND OFFICERS INSURANCE. The Company shall have
obtained and paid for directors and officers insurance that is reasonably
satisfactory to the Sprint Corporation.
(h) OTHER DOCUMENTS. All agreements, certificates, opinions and
other documents delivered by the Company to the Investors hereunder shall be
in form and substance satisfactory to counsel for the Investors.
SECTION 9. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to effect the transactions contemplated hereby
shall be subject to the fulfillment at or prior to the Closing of each of the
following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investors set forth in Section 4 of this Agreement shall be
true and correct in all material respects as of the date of this Agreement
and as of the Closing Date as though made on and (except for representations
and warranties given as of a specified date) as of the Closing Date.
(b) PERFORMANCE OF OBLIGATIONS OF THE INVESTORS. The Investors
shall have performed in all material respects all covenants and agreements
required to be performed by it on or prior to the Closing under this
Agreement.
(c) PAYMENT. Each Investor shall pay the Purchase Price for the
Debentures purchased by such Investor (as set forth in Schedule 1) by
delivering to the Company (i) a wire transfer of immediately available funds
to an account to be designated by the Company by notice given to the
Investors not later than three Business Days prior to the Closing or (ii) not
later than three Business Days prior to the Closing a check in immediately
available money market funds or other good funds.
SECTION 10. INDEMNIFICATION.
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(a) The Company shall defend and indemnify each Investor and
hold such Investor harmless from and against any and all claims, losses,
liabilities, damages, costs (including, without limitation, court costs) and
expenses (including, without limitation, reasonable attorneys' fees)
(collectively, "Costs") which the Investor or its Subsidiaries or Affiliates,
any of their respective officers, directors, employees, agents or
representatives or any of the heirs, executors, successors or assigns of any
of the foregoing (collectively, the "INVESTOR INDEMNIFIED PARTIES") incurs as
a result of, or with respect to, any inaccuracy in or breach of any
representation, warranty, covenant or agreement by or on behalf of the
Company contained in this Agreement, any Transaction Document or contained in
any certificate, agreement or document of the Company delivered to the
Investor in connection with the consummation of the transactions contemplated
hereby.
(b) The Company shall only be liable under Section 10(a) for
Costs incurred by the Investor Indemnified Parties to the extent any such
Costs exceed, in the aggregate, $500,000.
(c) In the event that any Investor Indemnified Party shall
receive written notice of any claim or proceeding against a Investor
Indemnified Party that, if successful, might result in a claim under this
Section 10(a) by a Investor Indemnified Party, the Investor Indemnified Party
shall give the Company written notice of such claim or proceeding and shall
permit the Company to participate in the defense of such claim or proceeding
by counsel of the Company's own choosing and at the expense of the Company;
PROVIDED that, if the defendants in any such action include both the Investor
Indemnified Party and the Company and the Investor Indemnified Party shall
have reasonably concluded that there may be reasonable defenses available to
it which are different from or additional to those available to the Company,
or if the interests of the Investor Indemnified Party reasonably may be
deemed to conflict with the interests of the Company, the Investor
Indemnified Parties shall collectively have the right to select a single
separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with counsel to the Company (but
the Investor Indemnified Party shall have no right to settle or compromise
any such claim, action or proceeding), and the expenses and fees of such
separate counsel and other expenses incurred by the Investor Indemnified
Party in relation to such participation shall constitute Costs subject to
indemnity by the Company. Upon written request of the Investor, the Company
shall assume the carriage of the defense of any such claim or proceeding.
(d) The Company's obligations under this Section 10 shall expire
on the earlier of the fourth anniversary of the date hereof or, with respect
to any specific claim of a Investor Indemnified Party, upon the expiration of
the applicable statute of limitations with respect to such claim.
13
SECTION 11. TERMINATION. This Agreement may be terminated at
any time prior to the Closing (the "Termination Date"):
(i) in writing by mutual agreement of the Investors and
the Company;
(ii) by written notice from the Company to the Investors,
if the conditions set forth in Sections 7 and 9 hereof shall not
have been complied with or performed and such noncompliance or
nonperformance shall not have been cured or eliminated (or by its
nature cannot be cured or eliminated) by the Investors on or before
September 1, 1999, provided that the Company is not then in
material default under the Agreement;
(iii) by written notice from the Investors to the Company,
if the conditions set forth in Sections 7 and 8 hereof shall not
have been complied with or performed and such noncompliance or
nonperformance shall not have been cured or eliminated (or by its
nature cannot be cured or eliminated) by the Company on or before
September 15, 1999, provided that the Investors are not then in
material default under the Agreement; and
(iv) by written notice from the Investors to the Company
if the Company has not delivered to Investors within 10 days
following the execution of this Agreement the Company Disclosure
Letter in form and substance satisfactory to Investors in their
sole discretion.
In the event of the termination of this Agreement, this Agreement shall
have no further effect, except for Sections 12, 13 and 20, which shall remain
in effect, and there shall be not liability on the part of any party hereto,
provided that nothing herein shall relieve any party from liability for any
willful breach hereof.
SECTION 12. NOTICES. All notices, consents, approvals,
agreements and other communications provided hereunder shall be in writing
and delivered personally, by nationally recognized overnight courier or by
telecopy and shall be sufficiently given to the Investors and the Company if
addressed or delivered to them at the following addresses:
If to the Investors: To their respective addresses and
facsimile numbers set forth on the
signature pages hereof
14
If to the Company: Hybrid Networks, Inc.
0000 Xxxxxxxxx Xxxxx Xxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to: Fenwick & Xxxx
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
or at such other address as any party may designate to any other party by
written notice. All such notices and communications shall be deemed to have
been duly given: (i) at the time delivered by hand, if personally delivered,
(ii) when received, if sent by overnight courier and (iii) when transmission
is verified, if telecopied.
SECTION 13. COSTS AND EXPENSES. Each party shall pay the fees
and expenses incurred by it in connection with the negotiation, preparation,
execution, and delivery of this Agreement and the related agreements and
other documents.
SECTION 14. SUCCESSORS AND ASSIGNS. All the covenants and
provisions of this Agreement by or for the benefit of the Company or the
Investors shall bind and inure to the benefit of their respective successors
and permitted assigns, including those by operation of law, merger or
consolidation. Each Investor may assign any or all of its rights and
obligations hereunder to any of its Affiliates so long as the Investor
remains jointly and severally liable for its obligations hereunder.
SECTION 15. SURVIVAL OF REPRESENTATIONS. Except as specifically
provided herein, all representations, warranties, covenants and agreements
made by the parties in this Agreement and pursuant to the terms hereof shall
survive indefinitely, notwithstanding any investigation heretofore or
hereafter made by any of them or on behalf of any of them.
SECTION 16. GOVERNING LAW. This Agreement shall be deemed to be
a contract made under the laws of the State of Delaware and for all purposes
shall be construed in accordance with the internal laws of said state.
15
SECTION 17. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any Person other than the Company and
the Investors any legal or equitable right, remedy or claim under this
Agreement; this Agreement shall be for the sole and exclusive benefit of the
Company and the Investors.
SECTION 18. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each such counterpart shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
one and the same instrument.
SECTION 19. AMENDMENTS; WAIVER. No provision of this Agreement
may be amended or waived except by an instrument in writing signed by the
party sought to be bound. No failure or delay by any party in exercising any
right or remedy hereunder shall operate as a waiver thereof, nor shall a
waiver of a particular right or remedy on one occasion be deemed a waiver of
any other right or remedy or a waiver of the same right or remedy on any
subsequent occasion.
SECTION 20. JURISDICTION. Each of the parties hereto hereby
agrees that any legal action or proceeding against such party with respect to
this Agreement or any of the Transaction Documents may be brought in the
courts of the State of Delaware or of the United States of America for the
District of Delaware as the other party may elect, and, by execution and
delivery hereof, such party accepts and consents for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the
aforesaid courts and agrees that such jurisdiction shall be exclusive, unless
waived by the other party in writing, with respect to any action or
proceeding brought by such party against the other party. Each of the
parties hereto irrevocably consents to the service of process out of any of
the aforementioned courts in any such action or proceeding by the mailing of
the copies thereof by certified mail, return receipt requested, postage
prepaid, to it at its address set forth herein, such service to become
effective upon the earlier of (i) the date ten calendar days after such
mailing and (ii) any earlier date permitted by applicable law.
SECTION 21. SPECIFIC PERFORMANCE. Each of the parties hereto
recognizes that the rights of the parties under this Agreement and the other
Transaction Documents are unique and, accordingly, the parties shall, in
addition to such other remedies as may be available to any of them at law or
in equity, have the right to enforce their rights hereunder and thereunder by
actions for injunctive relief and specific performance to the extent
permitted by law. Each of the parties hereto agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement or any of the other
Transaction Documents and hereby agrees to waive in any action for specific
performance the defense that a remedy at law would be adequate. This
Agreement is not intended to limit or abridge any rights of the parties which
may exist apart from this Agreement.
16
SECTION 22. CONFIDENTIALITY. Each of the Company and the
Investors shall hold, and shall use reasonable efforts to cause its and its
respective Subsidiaries, officers, employees, accountants, counsel, financial
advisors and other representatives to hold, any proprietary or confidential
information in strict confidence and shall not use such information for any
purpose other than the purpose for which such information was furnished.
SECTION 23. ENTIRE AGREEMENT. The parties hereto agree that
this Agreement and the other Transaction Documents constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings between them as to such
subject matter; and there are no restrictions, agreements, arrangements, oral
or written, between any or all of the parties relating to the subject matter
hereof which are not fully expressed or referred to herein or therein.
SECTION 24. SEVERABILITY. If any provision of this Agreement
shall be held or deemed to be, or shall in fact be, invalid, inoperative or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the
conflict of any provision with any constitution, statute, rule or public
policy, or for any other reason, such circumstances shall not have the effect
of rendering the provision or provisions in question, invalid, inoperative or
unenforceable in any other jurisdiction or in any other case or circumstance
or of rendering any other provision or provisions herein contained invalid,
inoperative or unenforceable to the extent that such other provisions are not
themselves actually in conflict with such constitution, statute, rule or
public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative or unenforceable
provision had never been contained herein and such provision reformed so that
it would be valid, operative and enforceable to the maximum extent permitted
in such jurisdiction or in such case.
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of
the day and year first above written.
HYBRID NETWORKS, INC.
By: /s/ Xxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Chairman and CEO
LIST OF EXHIBITS
Schedule 1 - Purchases by the Investors
Exhibit A - Debenture Certificate
18
INVESTOR SIGNATURE PAGE
INVESTOR
Accel VII L.P.
By: Accel VII Associates L.L.C
Its General Partner
By: /s/ X. Xxxxxx Sednaoui
-------------------------------------
Managing Member
Name of the person signing for the
Investor:
X. Xxxxxx Sednaoui
Investor's address:
X. Xxxxxx Sednaoui
c/o Accel Partners
Xxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Investor' Facsimile No.:
(000) 000-0000
INVESTOR SIGNATURE PAGE
INVESTOR
Accel IV L.P.
By: Accel IV Associates L.L.C
Its General Partner
By: /s/ X. Xxxxxx Sednaoui
--------------------------------------
Managing Member
Name of the person signing for the
Investor:
X. Xxxxxx Sednaoui
Investor's address:
X. Xxxxxx Sednaoui
c/o Accel Partners
Xxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Investor' Facsimile No.:
(000) 000-0000
INVESTOR SIGNATURE PAGE
INVESTOR
Name: Xxxx Xxxxxx
------------------------------------
By: /s/ Xxxx Xxxxxx
--------------------------------------
Name of the person signing for the
Investor:
------------------------------------
Title of the person signing for the
Investor:
------------------------------------
Investor's address:
00 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Investor' Facsimile No.:
(000) 000-0000
INVESTOR SIGNATURE PAGE
INVESTOR
Name: OSCCO III, L.P.
------------------------------------
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------
Name of the person signing for the
Investor:
Xxxxxxx X. Xxxxxxx
Title of the person signing for the
Investor:
General Partner
Investor's address:
00 Xxxx Xxxx
Xxxxxxx Xxxxxx, XX 00000
Investor' Facsimile No.:
(000) 000-0000
SCHEDULE 1
PURCHASES BY THE INVESTORS
Shares Issuable Upon
Purchase Price Amount of Debenture Exercise of Debentures
-------------- ------------------- ----------------------
Accel VII, L.P. * $5,000,000 $5,000,000 1,754,386
Accel IV, L.P. * 600,000 600,000 210,526
Oscco Ventures 750,000 750,000 263,158
Xxxx Xxxxxx 750,000 750,000 263,158
-------------- ------------------- ----------------------
$7,100,000 $7,100,000 2,491,228
-------------- ------------------- ----------------------
-------------- ------------------- ----------------------
---------------------
* Accel VII, L.P., Accel IV, L.P and their affiliates may reallocate among
themselves their investment in the Debentures, as long as their aggregate
investment is $5,600,000.
