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EXHIBIT 10.2
XXXXXX.XXX, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
JUNE 21, 1996
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TABLE OF CONTENTS
PAGE
1. Purchase and Sale of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.1 Sale and Issuance of Series A Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
2. Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
2.1 Organization, Good Standing and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
2.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
2.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
2.4 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
2.5 Valid Issuance of Preferred and Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
2.6 Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
2.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
2.8 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
2.9 Patents and Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
2.10 Compliance with Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
2.11 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
2.12 Environmental and Safety Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
2.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
2.14 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
2.15 Title to Property and Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
2.16 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
2.17 Agreements; Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
2.18 Tax Returns and Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
2.19 Shareholder Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
2.20 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
2.21 Qualified Small Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
3. Representations and Warranties of the Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
3.1 Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
3.2 Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
3.3 Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
3.4 No Public Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
3.5 Access to Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
3.6 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
3.7 Accredited Investor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
4. Conditions of Investor's Obligations at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
4.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
4.2 Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
4.3 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
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TABLE OF CONTENTS
(CONTINUED)
PAGE
4.4 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
4.5 Blue Sky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
4.6 Opinion of Company Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
4.7 Investor Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
4.8 Co-Sale Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
5. Conditions of the Company's Obligations at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
5.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
5.2 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
5.3 Blue Sky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
5.4 Investor Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
5.5 Co-Sale Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
5.6 Proceedings and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
6. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
6.1 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
6.2 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
6.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
6.4 Entire Agreement; Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
6.5 Notices, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
6.6 Delays or Omissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
6.7 California Corporate Securities Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
6.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
6.9 Finder's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
6.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
6.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
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TABLE OF CONTENTS
(CONTINUED)
EXHIBITS
Exhibit A Schedule of Investors
Exhibit B Amended and Restated Certificate of Incorporation
Exhibit C Schedule of Exceptions
Exhibit D Investor Rights Agreement
Exhibit E Co-Sale Agreement
Exhibit F Right of First Refusal Agreement
Exhibit G Voting Agreement
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 21st day of June,
1996, by and among XXXXXX.XXX, INC., a Delaware corporation (the "Company"),
with its principal office at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000
and the investors listed on Exhibit A hereto, each of which is herein referred
to as an "Investor."
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Series A Preferred Stock.
(a) The Company shall adopt and file with the
Secretary of State of Delaware on or before the Closing (as defined below) the
Designation of Rights and Preferences of Series A Preferred Stock in the form
attached hereto as Exhibit B (the "Designation").
(b) Subject to the terms and conditions of this
Agreement, each Investor agrees, severally, to purchase at the Closing and the
Company agrees to sell and issue to each Investor at the Closing that number of
shares of the Company's Series A Preferred Stock (the "Series A Preferred") set
forth opposite each Investor's name on Exhibit A hereto for the purchase price
per share of $14.05 as set forth thereon. The shares of Series A Preferred to
be sold pursuant to this Agreement are collectively referred to herein as the
"Shares."
1.2 Closing. The purchase and sale of the Shares shall
take place at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx
Xxxx, Xxxx Xxxx, Xxxxxxxxxx, at 9:30 a.m., on June 21, 1996, or at such other
time and place as the Company and Investors acquiring in the aggregate more
than half the Shares sold pursuant hereto mutually agree upon orally or in
writing (which time and place are designated as the "Closing"). At the Closing
the Company shall deliver to each Investor a certificate or certificates
representing the Series A Preferred that such Investor is purchasing against
payment of the purchase price therefor by check, wire transfer or any
combination thereof.
2. Representations and Warranties of the Company. Except as set
forth in the Schedule of Exceptions attached hereto as Exhibit C, the Company
hereby represents and warrants as follows:
2.1 Organization, Good Standing and Qualification. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to carry on its business as currently conducted. The Company is
duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on its business or properties. True and accurate copies of the
Company's Certificate of
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Incorporation and Bylaws, each as amended and in effect at the Closing, have
been delivered to the special counsel to the Investors.
2.2 Capitalization. The authorized capital stock of the
Company consists of Twenty Five Million (25,000,000) shares of Common Stock
("Common Stock"), of which Two Million Five Hundred Eighty Nine Thousand Seven
Hundred Eleven (2,589,711) shares are issued and outstanding on the date of
this Agreement and Five Million (5,000,000) shares of Preferred Stock
("Preferred Stock"), of which Five Hundred Sixty Nine Thousand, Three Hundred
and Ninety Six (569,396) are designated as Series A Preferred Stock, and none
of which is issued and outstanding. All such issued and outstanding shares
have been duly authorized and validly issued and are fully paid and
nonassessable. The Company has reserved Five Hundred Sixty Nine Thousand,
Three Hundred Ninety Six (569,396) shares of Common Stock for issuance upon
conversion of the Series A Preferred. The Company has reserved Four Hundred
Fourteen Thousand Six Hundred Thirty-Six (414,636) shares of Common Stock for
issuance upon exercise of options granted and outstanding as of the date of
this Agreement. The Company has reserved Three Hundred Forty-One Thousand Six
Hundred Fifteen (341,615) shares of Common Stock for issuance after the date of
this Agreement to future employees, consultants and directors of the Company.
Other than the shares reserved for issuance described in this paragraph, there
are no outstanding rights, options, warrants, preemptive rights, rights of
first refusal or similar rights for the purchase or acquisition from the
Company of any securities of the Company. All outstanding shares have been
issued in compliance with state and federal securities laws.
2.3 Subsidiaries. The Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
association, or other business entity. The Company is not a participant in any
joint venture, partnership, or similar arrangement.
2.4 Authorization. All corporate action on the part of
the Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, the Investor Rights
Agreement in the form attached hereto as Exhibit D (the "Investor Rights
Agreement"), the Co-Sale Agreement in the form attached hereto as Exhibit E
(the "Co-Sale Agreement"), the Right of First Refusal Agreement in the form
attached hereto as Exhibit F (the "Right of First Refusal Agreement") and the
Voting Agreement in the form attached hereto as Exhibit G (the "Voting
Agreement), the performance of all obligations of the Company hereunder and
thereunder, and the authorization, issuance (or reservation for issuance), sale
and delivery of the Shares being sold hereunder and the Common Stock issuable
upon conversion of the Shares has been taken or will be taken prior to the
Closing, and this Agreement, the Investor Rights Agreement and the Co- Sale
Agreement constitute valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms, subject to: (i)
judicial principles limiting the availability of specific performance,
injunctive relief, and other equitable remedies; (ii) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
generally relating to or affecting creditors' rights; and (iii) limitations on
the enforceability of the indemnification provisions of the Investor Rights
Agreement.
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2.5 Valid Issuance of Preferred and Common Stock. The
shares of Series A Preferred that are being purchased by the Investors
hereunder, when issued, sold and delivered in accordance with the terms of this
Agreement for the consideration expressed herein, will be duly and validly
issued, fully paid, and nonassessable, and will be free of restrictions on
transfer directly or indirectly created by the Company other than restrictions
on transfer under this Agreement, the Investor Rights Agreement, the Right of
First Refusal Agreement and the Co-Sale Agreement and under applicable state
and federal securities laws. The Common Stock issuable upon conversion of the
Series A Preferred purchased under this Agreement has been duly and validly
reserved for issuance and, upon issuance in accordance with the terms of the
Designation, will be duly and validly issued, fully paid, and nonassessable and
will be free of restrictions on transfer directly or indirectly created by the
Company other than restrictions on transfer under this Agreement, the Investor
Rights Agreement, the Right of First Refusal Agreement and the Co-Sale
Agreement and under applicable state and federal securities laws.
2.6 Governmental Consents. No consent, approval, order
or authorization of, or registration, qualification, designation, declaration
or filing with, any federal, state or local governmental authority on the part
of the Company is required in connection with the offer, sale or issuance of
the Shares (and the Common Stock issuable upon conversion of the Shares) or the
consummation of any other transaction contemplated hereby, except for the
following: (i) the filing of the Restated Certificate in the office of the
Secretary of State of the State of Delaware, which shall be filed by the
Company on or prior to the Closing Date; (ii) the filing of such notices as may
be required under the Securities Act of 1933, as amended (the "Securities
Act"); (iii) the filing of a notice of exemption pursuant to Section 25102(f)
of the California Corporate Securities Law of 1968, as amended (the "California
Securities Law"), which shall be filed by the Company promptly following the
Closing; and (iv) the compliance with Washington and any other applicable state
securities laws, which compliance will have occurred within the appropriate
time periods therefor. Based in part on the representations of the Investors
set forth in Section 3 below, the offer, sale and issuance of the Shares in
conformity with the terms of this Agreement are exempt from the registration
requirements of Section 5 of the Securities Act, from the qualification
requirements of Section 25110 of the California Securities Law and from any
similar requirement under Washington securities law.
2.7 Litigation. There is no action, suit, proceeding or
investigation pending or, to the best of the Company's knowledge, currently
threatened before any court, administrative agency or other governmental body
against the Company which questions the validity of this Agreement, the
Investor Rights Agreement or the Co-Sale Agreement or the right of the Company
to enter into any of them, or to consummate the transactions contemplated
hereby or thereby, or which would be reasonably likely to result, either
individually or in the aggregate, in any material adverse change in the
condition (financial or otherwise), business, property, assets or liabilities
of the Company. The foregoing includes, without limitation, actions, suits,
proceedings or investigations pending or, to the best knowledge of the Company,
threatened (or any basis therefor known to the Company)
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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. The Company is not a party or
subject to, and none of its assets is bound by, the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality which would be reasonably likely to have a material adverse
effect on the Company.
2.8 Employees. Each employee of the Company has executed
a proprietary information agreement, in substantially the form delivered to
special counsel to the Investors. To the best knowledge of the Company, no
officer or key employee is in violation of any prior employee contract or
proprietary information agreement. Each holder of Common Stock of the Company
has entered into a Shareholders Agreement in the form provided to special
counsel to the Investors. The Company is not a party to or bound by any
currently effective employment contract, deferred compensation agreement, bonus
plan, incentive plan, profit sharing plan, retirement agreement or other
employee compensation agreement or arrangement with any collective bargaining
agent. No employees of the Company are represented by any labor union or
covered by any collective bargaining agreement. There is no pending or, to the
best of the Company's knowledge, threatened labor dispute involving the Company
and any group of its employees.
2.9 Patents and Trademarks. The Company has sufficient
title to and ownership of all trade secrets, and, to its knowledge, copyrights,
information, proprietary rights and processes, patents, trademarks, service
marks and trade names necessary for its business as now conducted without any
material conflict with or infringement of the rights of others. There are no
material outstanding options, licenses, or agreements of any kind relating to
the foregoing, nor is the Company bound by or a party to any material options,
licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information,
proprietary rights and processes of any other person or entity. The Company
has not received any written, or to its knowledge, oral communications alleging
that the Company has violated or, by conducting its business as proposed, would
violate any of the patents, trademarks, service marks, trade names, copyrights
or trade secrets or other proprietary rights of any other person or entity. To
the Company's knowledge, none of the Company's employees is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of his or her best
efforts to promote the interests of the Company or that would conflict with the
Company's business as proposed to be conducted. To the Company's knowledge,
neither the execution nor delivery of this Agreement or the Investor Rights
Agreement, nor the carrying on of the Company's business by the employees of
the Company, nor the conduct of the Company's business as proposed, will
conflict with or
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result in a breach of the terms, conditions or provisions of, or constitute a
default under, any contract, covenant or instrument under which any of such
employees is now obligated. The Company covenants that it will not, at any
time, knowingly conduct its business in such a way as to conflict with or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, any contract, covenant or instrument under which any of such
employees is obligated. The Company does not believe it is or will be
necessary to utilize any inventions of any of its employees (or people it
currently intends to hire) made prior to their employment by the Company.
2.10 Compliance with Other lnstruments. The Company is
not in violation or default of any provision of its Certificate of
Incorporation or Bylaws, each as amended and in effect on and as of the
Closing. The Company is not in violation or default of any material provision
of any instrument, mortgage, deed of trust, loan, contract, commitment,
judgment, decree, order or obligation to which it is a party or by which it or
any of its properties or assets are bound which would materially adversely
affect the condition (financial or otherwise), business, property, assets or
liabilities of the Company or, to the best of its knowledge, of any provision
of any federal, state or local statute, rule or governmental regulation which
would materially adversely affect the condition (financial or otherwise),
business, property, assets or liabilities of the Company. The execution,
delivery and performance of and compliance with this Agreement, the Investor
Rights Agreement and the Co-Sale Agreement, and the issuance and sale of the
Shares, will not result in any such violation, be in conflict with or
constitute, with or without the passage of time or giving of notice, a default
under any such provision, require any consent or waiver under any such
provision (other than any consents or waivers that have been obtained), or
result in the creation of any mortgage, pledge, lien, encumbrance or charge
upon any of the properties or assets of the Company pursuant to any such
provision.
2.11 Permits. The Company has all franchises, permits,
licenses, and any similar authority necessary for the conduct of its business
as now being conducted by it, the lack of which could reasonably be expected to
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.
2.12 Environmental and Safety Laws. To the best of its
knowledge, the Company is not in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety, and
to the best of its knowledge, no material expenditures are or will be required
in order to comply with any such existing statute, law or regulation,
2.13 Disclosure. No representation, warranty or statement
by the Company in this Agreement, or in any written statement or certificate
furnished to the Investors pursuant to this Agreement, contains any untrue
statement of a material fact or, when taken together, omits to state a material
fact necessary to make the statements made herein or therein, in light of the
circumstances under which they were made, not misleading. However, as to any
projections furnished to the Investors, such projections were prepared in good
faith
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by the Company, but the Company makes no representation or warranty that it
will be able to achieve such projections.
2.14 Registration Rights. Except as provided in the
Investor Rights Agreement, the Company has not granted or agreed to grant any
registration rights, including piggyback rights, to any person or entity.
2.15 Title to Property and Assets. The Company has good
and marketable title to all of its properties and assets free and clear of all
mortgages, liens and encumbrances, except liens for current taxes and
assessments not yet due and possible minor liens and encumbrances which do not,
in any case, in the aggregate, materially detract from the value of the
property subject thereto or materially impair the operations of the Company.
With respect to the property and assets it leases, the Company is in compliance
with such leases and, to the best of its knowledge, holds a valid leasehold
interest free of all liens, claims or encumbrances. The Company's properties
and assets are in good condition and repair in all material respects.
2.16 Financial Statements. The Company has delivered to
the Investors (a) a balance sheet and income statement of the Company as of and
for the fiscal year ended December 31, 1995, and (b) a balance sheet and income
statement of the Company as of and for the three-month period ended March 31,
1996. The foregoing financial statements, all of which are unaudited, are
herein referred to as the "Financial Statements." The balance sheet of the
Company as of March 31, 1996 is herein referred to as the "Company Balance
Sheet." The Financial Statements fairly present, in all material respects, the
financial position and results of operations of the Company as of the dates and
for the periods indicated. The Company has no material liabilities or
obligations which are not reflected or reserved against in the Company Balance
Sheet, except liabilities or obligations incurred since the date of the Company
Balance Sheet in the ordinary course of business.
2.17 Agreements; Action.
(a) Except for agreements described herein and in
the Investor Rights Agreement, there are no agreements, understandings or
proposed transactions between the Company and any of its officers, directors,
affiliates, or any affiliate thereof
(b) There are no agreements, understandings,
instruments, contracts, proposed transactions, judgments, orders, writs or
decrees to which the Company is a party or by which it is bound that may
involve (i) obligations (contingent or otherwise) of, or payments by the
Company in excess of, $50,000, or (ii) the license of any patent, copyright,
trade secret or other proprietary right to or from the Company, or (iii)
provisions restricting or adversely affecting the development, manufacture or
distribution of the Company's products or services or (iv) indemnification by
the Company with respect to infringements of proprietary rights.
(c) The Company has not (i) declared or paid any
dividends or authorized or made any distribution upon or with respect to any
class or series of its capital
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stock, (ii) incurred any indebtedness for money borrowed or any other
liabilities individually in excess of $75,000 or, in the case of indebtedness
and/or liabilities individually less than $75,000, in excess of $150,000 in the
aggregate, (iii) made any loans or advances to any person, other than ordinary
advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of
any of its assets or rights, other than the sale of its inventory in the
ordinary course of business.
(d) For the purposes of subsections (b) and (c)
above, all indebtedness, liabilities, agreements, understandings, instruments,
contracts and proposed transactions involving the same person or entity
(including persons or entities the Company has reason to believe are affiliated
therewith) shall be aggregated for the purpose of meeting the individual
minimum dollar amounts of such subsections.
(e) The Company is not a party to and is not
bound by any contract, agreement or instrument, or subject to any restriction
under its Certificate of Incorporation or its Bylaws that adversely affects its
business as now conducted or as proposed to be conducted, its properties or its
financial condition.
2.18 Tax Returns and Audits. The Company has accurately
prepared all United States income tax returns and all state and municipal tax
returns required to be filed by it, if any, has paid all taxes, assessments,
fees and charges when and as due under such returns and has made adequate
provision for the payment of all other taxes, assessments, fees and charges
shown on such returns or on assessments received by the Company, where, if not
paid or filed or prepared correctly, would not have a material adverse effect
on the Company. To the best of the Company's knowledge, no deficiency
assessment or proposed adjustment of the Company's United States income tax or
state or municipal taxes is pending.
2.19 Shareholder Agreements. Except for agreements
contemplated hereby of even date herewith, there are no agreements, other than
agreements, true and complete copies of which the Company has provided to
special counsel to the Investors, between the Company and any of the Company's
shareholders, or to the best knowledge of the Company, among any of the
Company's shareholders, which in any way affect any shareholder's ability or
right freely to alienate or vote such shares (except restrictions designed to
provide compliance with securities laws).
2.20 Brokers or Finders. The Company has not agreed to
incur, directly or indirectly, any liability for brokerage or finders' fees,
agents' commissions or other similar charges in connection with this Agreement
or any of the transactions contemplated hereby.
2.21 Qualified Small Business. As of the Closing (without
reference to any time after the Closing), the Company is a "qualified small
business," as such term is defined in Section 1202 of the Internal Revenue Code
of 1986, as amended.
3. Representations and Warranties of the Investors. Each
Investor hereby represents and warrants that:
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3.1 Experience. Such Investor is experienced in
evaluating start-up companies such as the Company, is able to fend for itself
in transactions such as the one contemplated by this Agreement, has such
knowledge and experience in financial and business matters that such Investor
is capable of evaluating the merits and risks of such Investor's prospective
investment in the Company, and has the ability to bear the economic risks of
the investment.
3.2 Investment. Such Investor is acquiring the Shares
(and the Common Stock issuable upon conversion of the Shares) for investment
for such Investor's own account and not with the view to, or for resale in
connection with, any distribution thereof. Such Investor understands that the
Shares (and the Common Stock issuable upon conversion of the Shares) have not
been registered under the Securities Act by reason of a specific exemption from
the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment intent as expressed
herein. Such Investor further represents that it does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or
grant participation to any third person with respect to any of the Shares (or
any Common Stock acquired upon conversion thereof). Such Investor understands
and acknowledges that the offering of the Shares pursuant to this Agreement
will not, and any issuance of Common Stock on conversion may not, be registered
under the Securities Act on the ground that the sale provided for in this
Agreement and the issuance of securities hereunder is exempt from the
registration requirements of the Securities Act.
3.3 Rule 144. Such Investor acknowledges that the Shares
(and the Common Stock issuable upon conversion of the Shares) must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. Such Investor is aware of the
provisions of Rule 144 promulgated under the Securities Act which permit
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions. Such Investor covenants that, in the
absence of an effective registration statement covering the stock in question,
such Investor will sell, transfer, or otherwise dispose of the Shares (and any
Common Stock issued on conversion thereof) only in a manner consistent with
such Investor's representations and covenants set forth in this Section 3. In
connection therewith, such Investor acknowledges that the Company will make a
notation on its stock books regarding the restrictions on transfers set forth
in this Section 3 and will transfer securities on the books of the Company only
to the extent not inconsistent therewith.
3.4 No Public Market. Such Investor understands that no
public market now exists for any of the securities issued by the Company, and
that it is unlikely that a public market will ever exist for the Shares (or the
Common Stock issuable upon conversion of the Shares).
3.5 Access to Data. Such Investor has received and
reviewed information about the Company and has had an opportunity to discuss
the Company's business, management and financial affairs with its management
and to review the Company's facilities.
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Such Investor understands that such discussions, as well as any written
information issued by the Company, were intended to describe the aspects of the
Company's business and prospects which the Company believes to be material, but
were not necessarily a thorough or exhaustive description. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section 2 of this Agreement or the right of the Investors to rely
thereon.
3.6 Authorization. This Agreement when executed and
delivered by such Investor will constitute a valid and legally binding
obligation of the Investor, enforceable in accordance with its terms, subject
to: (i) judicial principles respecting election of remedies or limiting the
availability of specific performance, injunctive relief, and other equitable
remedies; (ii) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect generally relating to or affecting
creditors' rights; and (iii) limitations on the enforceability of the
indemnification provisions of the Investor Rights Agreement.
3.7 Accredited Investor. Such Investor acknowledges that
it is an "accredited investor" as defined in Rule 501 of Regulation D as
promulgated by the Securities and Exchange Commission under the Securities Act
and shall submit to the Company such further assurances of such status as may
be reasonably requested by the Company. For state securities law purposes, the
principal address of the Investor is that set forth on Exhibit A.
4. Conditions of Investor's Obligations at Closing. The
obligations of each Investor under subsection 1.1(b) of this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions, the waiver of which shall not be effective against any Investor who
does not consent in writing thereto:
4.1 Representations and Warranties. The representations
and warranties of the Company contained in Section 2 shall be true on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of the date of such Closing.
4.2 Performance. The Company shall have performed and
complied with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.
4.3 Compliance Certificate. The President of the Company
shall deliver to each Investor at the Closing a certificate stating that the
conditions specified in Sections 4.1 and 4.2 have been fulfilled and stating
that there shall have been no adverse change in the business, affairs,
prospects, operations, properties, assets or condition of the Company since the
date of this Agreement.
4.4 Board of Directors. Effective upon the Closing, the
directors of the Company shall be Messrs. Xxxxxxx X. Xxxxx, Xxx X. Xxxxxx, and
L. Xxxx Xxxxx.
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4.5 Blue Sky. The Company shall have obtained all
necessary permits and qualifications, if any, or secured an exemption
therefrom, required by any state or country prior to the offer and sale of the
Shares.
4.6 Opinion of Company Counsel. Each Investor shall have
received from Perkins, Coie, counsel for the Company, an opinion, dated as of
the Closing, reasonably satisfactory to the Investors and their counsel.
4.7 Investor Rights Agreement. The Company and each
Investor and Xxxxxxx X. Xxxxx shall have entered into the Investor Rights
Agreement.
4.8 Co-Sale Agreement. The Company and each Investor and
Xxxxxxx X. Xxxxx shall have entered into the Co-Sale Agreement.
5. Conditions of the Company's Obligations at Closing. The
obligations of the Company to each Investor under this Agreement are subject to
the fulfillment on or before the Closing of each of the following conditions by
that Investor:
5.1 Representations and Warranties. The representations
and warranties of the Investor contained in Section 3 shall be true on and as
of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
5.2 Payment of Purchase Price. The Investor shall have
delivered the purchase price specified in Section 1.2 against delivery of the
Shares set forth in the Schedule of Investors attached hereto as Exhibit A by
the Company to such Investor.
5.3 Blue Sky. The Company shall have obtained all
necessary permits and qualifications, if any, or secured an exemption
therefrom, required by any state or country for the offer and sale of the
Shares.
5.4 Investor Rights Agreement. Each of the Investors and
Xxxxxxx X. Xxxxx shall have executed the Investor Rights Agreement on or prior
to the date of the Closing.
5.5 Co-Sale Agreement. Each of the Investors and Xxxxxxx
X. Xxxxx shall have executed the Co-Sale Agreement on or prior to the date of
the Closing.
5.6 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
hereby, and all documents and instruments incident to these transactions, shall
be reasonably satisfactory in substance to the Company and its counsel.
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6. Miscellaneous.
6.1 Governing Law. This Agreement shall be governed in
all respects by the laws of the State of Washington, without regard to any
provisions thereof relating to conflicts of laws among different jurisdictions.
6.2 Survival. The representations, warranties, covenants
and agreements made herein shall survive any investigation made by any Investor
and the closing of the transactions contemplated hereby for a period of three
(3) years, whereupon they shall cease and be of no further force and effect.
All statements as to factual matters contained in any certificate or exhibit
delivered by or on behalf of the Company pursuant hereto shall be deemed to be
the representations and warranties of the Company hereunder as of such date of
such certificate or exhibit.
6.3 Successors and Assigns. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto; provided, however, that the rights of an Investor to purchase
Shares shall not be assignable without the consent of the Company.
6.4 Entire Agreement; Amendment. This Agreement and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement among the parties with regard to the subjects
hereof and thereof. Neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated other than by a written instrument signed by
the party against whom enforcement of any such amendment, waiver, discharge or
termination is sought; provided, however, that holders of a majority of the
outstanding Shares (whether or not converted) may waive or amend, on behalf of
all Investors and other holders of Shares, any provisions hereof benefitting
the Investors so long as the effect thereof will be that all such Investors and
other holders of Shares will be treated equally.
6.5 Notices, Etc. All notices and other communications
required or permitted hereunder shall be in writing and shall be mailed by
registered or certified mail, postage prepaid, return receipt requested, or
otherwise delivered by hand or by messenger, addressed (a) if to an Investor,
at such Investor's address set forth on Exhibit A, or at such other address as
such Investor shall have furnished to the Company in writing, or (b) if to any
other holder of any Shares, at such address as such holder shall have furnished
the Company in writing, or, until any such holder so furnishes an address to
the Company, then to and at the address of the last holder of such Shares who
has so furnished an address to the Company, or (c) if to the Company, at its
address set forth on the first page of this Agreement addressed to the
attention of the Corporate Secretary, or at such other address as the Company
shall have furnished to the Investors. If notice is provided by mail, notice
shall be deemed to be given three (3) business days after proper deposit in the
U. S. Mail.
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6.6 Delays or Omissions. No delay or omission to
exercise any right, power or remedy accruing to any holder of any Shares upon
any breach or default of the Company under this Agreement shall impair any such
right, power or remedy of such holder, nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval
of any kind or character on the part of any holder of any breach or default
under this Agreement, or any waiver on the part of any holder of any provisions
or conditions of this Agreement, must be in writing and shall be effective only
to the extent specifically set forth in such writing or as provided in this
Agreement. All remedies, either under this Agreement or by law or otherwise
afforded to any holder, shall be cumulative and not alternative.
6.7 California Corporate Securities Law. THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES
IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE
IS SO EXEMPT.
6.8 Expenses. The Company and each Investor shall bear
their own expenses and legal fees incurred on its behalf with respect to this
Agreement and the transactions contemplated hereby; provided, however, that the
Company shall pay, promptly after the Closing, the reasonable, itemized legal
fees and expenses of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx ("WSGR"), special counsel
to the Investors, up to an aggregate maximum of $15,000.
6.9 Finder's Fee. The Company and the Investors shall
each indemnify and hold the other harmless from any liability for any
commission or compensation in the nature of a finder's fee (including the
costs, expenses and legal fees of defending against such liability) for which
the Company or the Investors, or any of their respective partners, employees,
or representatives, as the case may be, is responsible.
6.10 Counterparts. This Agreement may be executed in any
number of counterparts, each of which may be executed by less than all
Investors, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
6.11 Severability. In the event that any provision of
this Agreement becomes or is declared by a court of competent jurisdiction to
be illegal, unenforceable or
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void, this Agreement shall continue in full force and effect without said
provision; provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any party.
(This space intentionally left blank.)
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXXXX.XXX, INC.
By: Xxxx X. Xxxxx
----------------------------------
Xxxxxxx X. Xxxxx, President and
Chief Executive Officer
[SIGNATURE PAGE FOR SERIES A PREFERRED STOCK PURCHASE AGREEMENT]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
INVESTORS:
KLEINER, PERKINS, XXXXXXXX &
XXXXX VIII
By: L. Xxxx Xxxxx
-------------------------------------
General Partner of KPCB VIII
Associates, the General Partner of
Kleiner, Perkins, Xxxxxxxx & Xxxxx VIII
KPCB INFORMATION SCIENCES
ZAIBATSU FUND II
By: L. Xxxx Xxxxx
-------------------------------------
General Partner of KPCB VIII
Associates, the General Partner of
Kleiner, Perkins, Xxxxxxxx & Xxxxx VIII
[SIGNATURE PAGE FOR SERIES A PREFERRED STOCK PURCHASE AGREEMENT]
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EXHIBIT A
SCHEDULE OF INVESTORS
NO. OF
SHARES OF AGGREGATE PURCHASE
SERIES A PRICE OF SERIES A
INVESTOR PURCHASED PURCHASED
---------------------------------------- --------- ------------------
Kleiner, Perkins, Xxxxxxxx & Xxxxx, VIII 555,161 $7,800,012.05
0000 Xxxx Xxxx Xxxx ------- -------------
Xxxxx Xxxx, XX 00000
KPCB Information Sciences Zaibatsu Fund II 14,235 $ 200,001.75
0000 Xxxx Xxxx Xxxx ------- -------------
Xxxxx Xxxx, XX 00000
TOTAL: 569,396 $8,000,013.80
------- -------------
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