SORRENT, INC. SERIES D PREFERRED STOCK PURCHASE AGREEMENT April 25, 2005
SORRENT, INC.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES D PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of April 25,
2005, by and among Sorrent, Inc., a California corporation (the “Company”), and the purchasers of
the Company’s Series D Preferred Stock (individually, the “Purchaser” and collectively, the
“Purchasers”) identified on the Schedule of Purchasers attached hereto as Exhibit A (the
“Schedule of Purchasers”).
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants herein, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Authorization and Sale of Series D Preferred Stock.
1.1 Authorization of Series D Preferred Stock. The Company has authorized the sale and
issuance to the Purchasers a total of 8,305,642 shares (the “Shares”) of its Series D Preferred
Stock (the “Series D Preferred”) at a per share purchase price of $3.01 (the “Per Share Price”),
having the rights, preferences, privileges and restrictions as set forth in the Amended and
Restated Articles of Incorporation of the Company (the “Restated Articles”), substantially in the
form attached hereto as Exhibit B.
1.2 Sale and Issuance of Series D Preferred. Subject to the terms and conditions hereof, the
Company will issue and sell to each Purchaser, and each Purchaser, severally and not jointly, will
buy from the Company, the number of Shares specified opposite the name of such Purchaser in the
column designated “Number of Shares” at the aggregate purchase price specified opposite the name of
such Purchaser in the column designated “Purchase Price” on the Schedule of Purchasers. The
Company’s agreement with each Purchaser is a separate agreement, and the sale of the Shares to each
Purchaser is a separate sale.
1.3 Use of Proceeds from Sale of Stock. The net proceeds from the sale of the Shares issued
by the Company shall be used for general corporate purposes, including working capital.
2. Closing Date; Delivery.
2.1 Closing.
(a) The initial closing of the purchase and sale of the Shares hereunder (the “Initial
Closing”) shall be held at the offices of Fenwick & West LLP, Silicon Valley Center, 000 Xxxxxxxxxx
Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx 00000, on April 25, 2005, at 10:00 a.m., local time, concurrently
with the execution of this Agreement or at such other date, time and place upon which the Company
and the Purchasers identified underneath the heading Initial Closing on the Schedule of Purchasers
(the “Initial Purchasers”) shall mutually agree. The date of the Initial Closing shall hereinafter
be referred to as the “Initial Closing Date.”
(b) A subsequent closing of the purchase and sale of the Shares hereunder (the “Subsequent
Closing”) shall be held at the offices of Fenwick & West LLP, Silicon Valley Center, 000 Xxxxxxxxxx
Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx 00000, such date, time and place upon which the Company and the
Purchasers purchasing Shares at the Subsequent Closing (the “Subsequent Purchasers”) shall mutually
agree. The date of the Subsequent Closing shall hereinafter be referred to as the “Subsequent
Closing Date”.
The “Closing” shall hereinafter refer to both the Initial Closing and the Subsequent Closing,
and the “Closing Date” shall hereinafter refer to both the Initial Closing Date and the Subsequent
Closing Date.
2.2 Delivery and Payment.
(a) At the Initial Closing, the Company shall deliver to each Initial Purchaser a certificate
or certificates representing the number of Shares set forth opposite the name of such Initial
Purchaser in the column designated “Number of Shares” on the Schedule of Purchasers, against
delivery to the Company by such Initial Purchaser at the Initial Closing of (a) executed
counterparts of this Agreement, the Amended and Restated Investors’ Rights Agreement dated as of
the date hereof by and among the Company and the Investors (as defined therein), including the
Purchasers, the form of which is attached hereto as Exhibit C (the “Investors’ Rights
Agreement”), the Amended and Restated Right of First Refusal and Co-Sale Agreement dated as of the
date hereof by and among the Company, the Shareholders (as defined therein) and the Investors (as
defined therein), including the Purchasers, the form of which is attached hereto as Exhibit
D (the “Co-Sale Agreement”), the Amended and Restated Voting Agreement dated as of the date
hereof by and among the Company, the Shareholders and the Investors (as defined therein), including
the Purchasers, the form of which is attached hereto as Exhibit E (the “Voting Agreement”
and, together with this Agreement, the Investors’ Rights Agreement and the Co-Sale Agreement, the
“Investment Agreements”); and (b) payment of the purchase price therefor, by (i) check payable to
the Company, (ii) wire transfer made pursuant to the Company’s instructions, (iii) cancellation of
indebtedness of the Company to such Initial Purchaser, or (iv) any combination of the foregoing, in
the amount set forth opposite the name of such Initial Purchaser in the column designated “Purchase
Price” on the Schedule of Purchasers.
(b) At the Subsequent Closing, the Company shall deliver to the Subsequent Purchasers a
certificate or certificates representing the number of Shares set forth opposite the name of such
Subsequent Purchaser in the column designated “Number of Shares” on the Schedule of Purchasers,
underneath the heading Subsequent Closing, against delivery to the Company by the Subsequent
Purchaser at the Subsequent Closing of (a) executed counterparts of this Agreement and each of the
Investment Agreements; and (b) payment of the purchase price therefor, by (i) check payable to the
Company, (ii) wire transfer made pursuant to the Company’s instructions, (iii) cancellation of
indebtedness of the Company to the Subsequent Purchasers, or (iv) any combination of the foregoing,
in the amount set forth opposite the name of the Subsequent Purchasers in the column designated
“Purchase Price” on the Schedule of Purchasers, underneath the heading Subsequent Closing.
3. Representations and Warranties of the Company. Except as set forth on Exhibit F
attached hereto (which schedule is referred to from time to time hereinafter as the “Disclosure
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Schedule”), the Company represents and warrants to the Purchasers that the following items are
true and correct immediately prior to the Initial Closing and the Subsequent Closing, provided,
however, that items that speak specifically “as of the Initial Closing” or “as of the Subsequent
Closing” shall be true and correct as of the Initial Closing or the Subsequent Closing, as the case
may be:
3.1 Organization, Good Standing and Qualification. The Company has been duly incorporated and
organized, and is validly existing in good standing, under the laws of the State of California.
The Company is not qualified to conduct business as a foreign corporation in any jurisdiction, and
such qualification is not currently required in any jurisdiction in which the failure to do so
would have a material adverse effect on the Company. The Company has the corporate power and
authority to enter into and perform the Investment Agreements and any other agreement to which the
Company is a party, the execution and delivery of which is contemplated hereby, to sell and issue
the Shares hereunder, to issue the Common Stock of the Company issuable upon conversion of the
Shares (the “Conversion Stock”), and to own and operate its properties and assets and to carry on
its business as currently conducted and as presently proposed to be conducted.
3.2 Capitalization. The authorized and issued capital stock of the Company will, upon filing
of the Restated Articles, consist of: (i) 68,500,000 shares of Common Stock authorized, of which
14,779,024 shares are issued and outstanding; (ii) 6,940,096 shares of Series A Preferred Stock
authorized, all of which are issued and outstanding, (iii) 8,962,036 shares of Series B Preferred
Stock authorized, of which 8,593,750 are issued and outstanding, (iv) 12,046,016 shares of Series C
Preferred authorized, all of which are issued and outstanding, and (v) 8,600,000 shares of Series D
Preferred authorized, of which no shares are issued and outstanding as of the Initial Closing. All
issued and outstanding shares of Common Stock have been duly authorized and validly issued, and are
fully paid and non-assessable and have been issued in compliance with all applicable state and
federal laws concerning the issuance of securities. The Company has issued and outstanding
warrants to purchase an aggregate of 368,286 shares of Series B Preferred and 60,000 shares of
Common Stock. The Company has adopted and reserved 9,244,922 shares of Common Stock under its
Second Amended and Restated 2001 Stock Option Plan (the “Plan”) as of the date hereof, of which (i)
options to purchase 5,098,698 shares of Common Stock have been granted and are currently
outstanding as of the date hereof and (ii) 2,182,916 shares of Common Stock have been issued under
the Plan and are currently outstanding. The holders of record of the presently issued and
outstanding Common Stock immediately prior to the Closing are set forth in the Disclosure Schedule.
Except as described in this Section 3.2 on the Disclosure Schedule, there are no options, rights,
warrants or convertible securities to purchase or acquire from the Company any of its shares of
capital stock. The rights, preferences, privileges and restrictions of the Common Stock and of the
Preferred Stock are as stated in the Restated Articles. Each outstanding series of Preferred Stock
is convertible into Common Stock on a one-for-one basis as of the date hereof and the consummation
of the transactions contemplated hereunder will not result in any anti-dilution adjustment or other
similar adjustment to the outstanding shares of Preferred Stock. Except as set forth in the
Investors’ Rights Agreement, the Co-Sale Agreement and the Voting Agreement, no holder of shares of
Common Stock or any other security of the Company or any other person is entitled to any preemptive
right, right of first refusal or similar right as a result of the issuance of the securities or
otherwise, or any voting trust, agreement or arrangement among any of the
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holders of voting stock of the Company affecting the exercise of the voting rights of such
stock. Except as set forth on the Schedule of Exceptions, all options granted and Common Stock
issued vest as follows: twenty-five percent (25%) of the shares vest one (1) year following the
vesting commencement date, with the remaining seventy-five percent (75%) vesting in equal monthly
installments over the next three (3) years. No stock plan, stock purchase, stock option or other
agreement or understanding between the Company and any holder of any equity securities or rights to
purchase equity securities provides for acceleration or other changes in the vesting arrangements
of such agreement or understanding. All outstanding shares of Common Stock and Preferred Stock,
and all shares of Common Stock and Preferred Stock issuable upon the exercise or conversion of
outstanding options, warrants or other exercisable or convertible securities are subject to a
market standoff or “lockup” agreement of not less than 180 days following the Company’s initial
public offering.
3.3 Subsidiaries. The Company does not presently own or control, directly or indirectly, any
interest in any other corporation, partnership, trust, joint venture, association or other entity.
3.4 Due Authorization. All corporate action on the part of the Company’s directors and
shareholders necessary for the authorization, execution, delivery of, and the performance of all
obligations of the Company under the Investment Agreements have been taken or will be taken prior
to the Closing, and the Investment Agreements will constitute, valid and legally binding
obligations of the Company, enforceable in accordance with their respective terms, except as may be
limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, or other laws of general application relating to or affecting the enforcement of
creditors’ rights generally, (b) the effect of rules of law governing the availability of specific
performance, injunctive relief, or other equitable remedies, and (c) and other equitable remedies
and limitations of public policy as applied to Section 5.7 of the Investors’ Rights Agreement.
3.5 Valid Issuance of Securities.
(a) The Shares, when issued, sold and delivered in accordance with the terms of this Agreement
for the consideration expressed herein and therein, will be duly and validly issued, fully paid,
and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer
under applicable state and federal securities laws and under the Investment Agreements. The issued
and outstanding shares of the Company’s Common Stock, Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Common Stock issuable upon conversion of the Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock, are duly and validly issued, fully
paid, and nonassessable. The Conversion Stock has been duly and validly reserved for issuance and,
upon issuance, will be duly and validly issued, fully paid, and nonassessable and will be free of
restrictions on transfer other than restrictions on transfer under applicable state and federal
securities laws.
(b) Based in part on the representations made by the Purchasers in Section 4 hereof, the offer
and sale of the Shares in accordance with this Agreement and the issuance of the Conversion Stock
issuable upon conversion of the Shares, are exempt from the registration and
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prospectus delivery requirements of the Securities Act of 1933, as amended (the “Securities
Act”) and applicable state securities laws. The issued and outstanding shares of the Company’s
Common Stock, Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
Common Stock issuable upon conversion of the Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock, were issued and will be issued pursuant to exemptions from the
registration and prospectus delivery requirements of the Securities Act and applicable state
securities laws.
3.6 Governmental Consents. No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or local governmental
authority is required on the part of the Company in order to enable the Company to execute, deliver
and perform its obligations under the Investment Agreements, except for such
qualifications or filings under applicable securities laws as may be required in connection with
the transactions contemplated by this Agreement. All such qualifications and filings will, in the
case of qualifications, be effective on the Initial Closing or the Subsequent Closing, as
appropriate, and will, in the case of filings, be made within the time prescribed by law.
3.7 Litigation. There is no action, suit, proceeding or investigation pending or, to the
Company’s knowledge, currently threatened against the Company that questions the validity of the
Investment Agreements, or the right of the Company to enter into such agreements, or to consummate
the transactions contemplated hereby or thereby, or that might result, either individually or in
the aggregate, in any material adverse changes in the assets, condition or affairs of the Company,
financially or otherwise, when taken as a whole, or any change in the current equity ownership of
the Company. The foregoing includes, without limitation, actions, suits, proceedings or
investigations pending or threatened 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 the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or instrumentality. There is no
action, suit, proceeding or investigation by the Company currently pending or that the Company
intends to initiate.
3.8 Proprietary Information and Inventions Agreement. Each present and former officer,
employee and consultant of the Company has entered into and executed a Proprietary Information and
Inventions Agreement in the form made available to the Purchasers. The Company, after reasonable
investigation, is not aware that any of its officers, employees or consultants is in violation of
the Proprietary Information and Inventions Agreement entered into by such officer, employee or
consultant and the Company, and no such present or former officer, employee or consultant has
excluded works or inventions from such officer’s, employee’s or consultant’s Proprietary
Information and Inventions Agreement. The Company, to the best of its knowledge, does not know of
the impending resignation or termination of any employment of any officer.
3.9 Status of Proprietary Assets. To the best of its knowledge with respect to patents,
inventions, trademarks, service marks and trade names only, the Company has title and ownership of,
or all necessary rights with respect to, all patents, inventions, trademarks, service marks, trade
names, works of authorship (including software), copyrights, confidential
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information, trade secrets, and other non-patentable proprietary rights and processes that the
Company reasonably believes are necessary for its business as now conducted and as proposed to be
conducted (“Intellectual Property”), and without infringement of any patent rights or infringement
or misappropriation of other intellectual property rights of others. Except as set forth in
Section 3.9 of the Disclosure Schedule, there are no outstanding options, licenses or agreements of
any kind relating to the Intellectual Property, nor is the Company bound by or a party to any
options, licenses or agreements of any kind with respect to the inventions, patents, trademarks,
service marks, trade names, works of authorship (including software), copyrights, trade secrets,
information, proprietary rights or processes of any other person or entity, excluding any licenses
for off-the-shelf software. The Company has not received any communications alleging that the
Company has violated or, by conducting its business as currently conducted and as proposed to be
conducted, would violate any patents, trademarks, service marks, trade names, copyrights or trade
secret rights or other proprietary rights of any other person or entity, nor is the Company aware
of any basis therefor. Set forth in Section 3.9 of the Disclosure Schedule is a list of the
Company’s patents, patent applications, copyrights, copyright applications, trademarks and
trademark applications. The Company, after reasonable investigation, is not aware that any of its
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 his or her duties for the Company or that would
conflict with the Company’s business as currently conducted and as proposed to be conducted.
Neither the execution nor delivery of this 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, to
the Company’s knowledge after reasonable investigation, 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 now 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 or outside the scope of their employment by the Company. The
Company is not subject to any “open source” or “copyleft” obligations or otherwise required to make
any public disclosure or general availability of source code either used or developed by the
Company.
3.10 Compliance with Law and Documents. The Company is not in material violation of: (a) any
term of its Articles of Incorporation, as amended, or Bylaws; (b) any term or provision of any
mortgage, indebtedness, indenture, contract, agreement, instrument, judgment or decree; and (c) any
order, statute, rule or regulation applicable to the Company. The execution, delivery and
performance of the Investment Agreements and the consummation of the transactions contemplated
hereby and thereby will not result in any such violation or default, or be in conflict with or
result in a violation or breach of, with or without the passage of time and the giving of notice,
any judgment, order or decree of any court or arbitrator to which the Company is a party or is
subject, any agreement or contract of the Company, or, to the Company’s knowledge, a violation of
any statute, law, regulation or order, or an event which results in the creation of any lien,
charge or encumbrance upon any asset of the Company.
3.11 Related-Party Transactions. There are no agreements, understandings or proposed
transactions between the Company and any of its employees, officers, directors, affiliates, or any
affiliate thereof. No employee, officer or director of the Company or member of his or her
immediate family is indebted to the Company, nor is the Company indebted (or
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committed to make loans or extend or guarantee credit) to any of them. To the best of the
Company’s knowledge, none of such persons has any direct or indirect ownership in any firm or
corporation with which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation that competes with the Company, except that employees,
officers or directors of the Company and members of their immediate families may own stock in (but
not exceeding two percent of the outstanding capital stock of) any publicly traded company that may
compete with the Company. No employee, officer or director or any member of their immediate
families is, directly or indirectly, interested in any material contract with the Company. The
Company is not a guarantor or indemnitor of any indebtedness of any other person, firm, or
corporation.
3.12 Permits. The Company has obtained all franchises, permits, licenses and any similar
authority necessary for the conduct of its business as now being conducted by it, the lack of which
could materially and adversely affect the business, properties, prospects or financial condition of
the Company and believes it can obtain, without undue burden or expense, any similar authority for
the conduct of its business as planned to be conducted. The Company is not in default in any
material respect under any of such franchises, permits, licenses or other similar authority.
3.13 Registration Rights and Other Shareholder Rights. Except as set forth in the Investors’
Rights Agreement, the Company is not under any obligation to register under the Securities Act any
of its currently outstanding securities or any securities issuable upon exercise or conversion of
its currently outstanding securities nor is the Company obligated to register or qualify any such
securities under the securities laws of any state of the United States. Except for the Voting
Agreement, the Company is not a party to any voting or similar agreements related to the Company’s
securities which are presently outstanding or that may hereafter be issued.
3.14 Title to Property and Assets. The properties and assets the Company owns are owned by
the Company free and clear of all mortgages, deeds of trust, liens, encumbrances and security
interests except for statutory liens for the payment of current taxes that are not yet delinquent
and liens, encumbrances and security interests which arise in the ordinary course of business and
which do not affect material properties and assets of the Company. With respect to the property
and assets it leases, the Company is in compliance with such leases and, to its knowledge, holds a
valid leasehold interest free of any liens, claims or encumbrances.
3.15 Financial Statements. The Company has delivered to each Purchaser its unaudited
financial statements (balance sheet and statements of income and cash flows) as at and for the
twelve-month period ended December 31, 2004, and its unaudited financial statements (balance sheet
and statements of income and cash flows) as at and for the two-month period ended February 28, 2005
(collectively, the “Financial Statements”). The unaudited Financial Statements are complete and
correct in all material respects, and fairly present the financial condition and operating results
of the Company as of February 28, 2005 (the “Statement Date”). The audited Financial Statements
fairly present the financial condition and operating results of the Company as of the dates, and
for the periods, indicated therein and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis
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throughout the periods indicated and with each other. Except as disclosed in the Financial
Statements, the Company is not a guarantor or indemnitor of any indebtedness of any other person,
firm or corporation. The Company maintains and will continue to maintain a standard system of
accounting established and administered in accordance with generally accepted accounting
principles.
3.16 Tax Returns, Payments and Elections. The Company has filed all tax returns and reports
required by law to be filed by the Company. These returns and reports are true and correct in all
material respects. The Company has paid all taxes and other assessments due. The provision for
taxes of the Company is adequate for taxes due or accrued as of the date thereof. The Company has
not elected pursuant to the Internal Revenue Code of 1986, as amended (the “Code”), to be treated
as an S corporation, nor has it made any other elections pursuant to the Code (other than elections
which relate solely to methods of accounting, depreciation or amortization) which would have a
material adverse effect on the Company, its financial condition, its business as presently
conducted or proposed to be conducted or any of its material properties or material assets. The
Company has never had a tax deficiency or tax audit and the Company has made all withholdings or
collections for all taxes, including, without limitation, federal and state income taxes, Federal
Insurance Contribution Act taxes and federal and state unemployment taxes, of its employees. The
Company is not and has not been delinquent in the payment of any tax, assessment or governmental
charge. The Company has never had any tax deficiency proposed or assessed against it and has not
executed any waiver of any statute of limitations on the assessment or collection of any tax or
governmental charge which had a material adverse effect on the financial condition and business
prospect of the Company. None of the Company’s federal income tax returns nor any state income or
franchise tax returns have ever been audited by governmental authorities.
3.17 Absence of Material Liabilities. The Company has no liabilities, obligations or
indebtedness (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to
become due) except: (i) those fully described and listed on the Financial Statements and
Disclosure Schedule; and (ii) those incurred by the Company in the ordinary course of its business
since its inception and which do not in the aggregate exceed fifty thousand dollars ($50,000),
which, in both cases, individually or in the aggregate, are not material to the financial condition
or operating results of the Company.
3.18 Contracts. Except as set forth in this Agreement, and as disclosed in the Disclosure
Schedule, the Company has no currently existing contract, obligation, agreement, plan, arrangement,
commitment or the like (written or oral) of any material nature, including, without limitation, the
following:
(i) employment, bonus, pension, profit sharing, deferred compensation, stock bonus,
retirement, stock option, stock purchase, phantom stock or similar plans, including agreements
evidencing rights to purchase securities of the Company and agreements among the Company’s
shareholders and the Company;
(ii) loan agreements, notes, indentures or instruments relating to or evidencing indebtedness
for borrowed money, or mortgaging, pledging or granting or creating a lien or security interest or
other encumbrance on any of the Company’s property or any
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agreement or instrument evidencing any guaranty by the Company of payment or performance by
any other person;
(iii) agreements with dealers, sales representatives, brokers or other distributors,
advertisers or sales agencies;
(iv) agreements with any labor union or collective bargaining organization or other labor
agreements;
(v) any contract or series of contracts with the same person for the furnishing or purchase of
machinery, equipment, goods or services, including, without limitation, agreements with equipment
lessors, processors, subcontractors, consultants and developers;
(vi) licenses of any patent, copyright, trade secret or other proprietary right to or from the
Company;
(vii) any joint venture contract or arrangement or other agreement involving a sharing of
profits or expenses or pursuant to which the Company has granted rights to manufacture, produce,
assemble, license, market or sell its products to any other person or that affects the Company’s
exclusive rights to develop, manufacture, assemble, distribute and sell its products and services;
(viii) agreements limiting the ability of the Company to compete in any line of business or in
any geographic area or with any person;
(ix) agreements providing for disposition of the business, assets or shares of capital stock
of the Company (other than provided for herein), agreements of merger or consolidation to which the
Company is a party or letters of intent with respect to any of the foregoing;
(x) letters of intent or agreements with respect to the acquisition of the business, assets or
shares of any other business;
(xi) agreements for the purchase of material fixed assets or for the purchase of materials,
supplies or equipment in excess of normal operating requirements;
(xii) agreements granting any preemptive right, right of first refusal or similar right to any
person;
(xiii) agreements obligating the Company to pay any royalty or similar charge for use or
exploitation of any tangible or intangible property;
(xiv) covenants not to compete or other restriction on the Company’s ability to conduct its
business or engage in any other activity; and
(xv) other agreements not made in the ordinary course of business that are material to the
Company; the Company has complied with all the material provisions of all
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said contracts, obligations, agreements, plans, arrangements and commitments set forth in the
Disclosure Schedule and is not in default in any material respect thereunder.
3.19 Minute Books. The minute books of the Company provided to the Purchasers contain a
complete summary of all meetings of directors and shareholders since the time of incorporation and
reflect all transactions referred to in such minutes accurately in all material respects.
3.20 Section 83(b) Elections. To the best of the Company’s knowledge, all individuals who
have purchased unvested shares of the Company’s Common Stock have timely filed elections under
Section 83(b) of the Internal Revenue Code and any analogous provisions of applicable state tax
laws.
3.21 Labor Agreements and Actions; Employee Compensation. The Company is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any written or oral,
express or implied, contract, commitment or arrangement with any labor union, and no labor union
has requested or, to the Company’s knowledge, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or other labor dispute involving the
Company pending, or to the Company’s knowledge, threatened, that could have a material adverse
effect on the assets, properties, financial condition, operating results, or business of the
Company (as such business is presently conducted and as it is proposed to be conducted), nor is the
Company aware of any labor organization activity involving its employees. The Company is not aware
that any officer or key employee, or that any group of key employees, intends to terminate their
employment with the Company, nor does the Company have a present intention to terminate the
employment of any of the foregoing. The employment of each officer and employee of the Company is
terminable at the will of the Company. To its knowledge, the Company has complied in all material
respects with all applicable state and federal equal employment opportunity and other laws related
to employment. 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.
3.22 Obligations of Management. Each officer and key employee of the Company is currently
devoting substantially all of his or her business time to the conduct of the business of the
Company. The Company is not aware that any officer or key employee of the Company is planning to
work less than full time at the Company in the future. No officer or key employee is currently
working or, to the Company’s knowledge, plans to work for a competitive enterprise, whether or not
such officer or key employee is or will be compensated by such enterprise.
3.23 Changes. Since the Statement Date there has not been:
(a) any change in the assets, liabilities, financial condition or operating results of the
Company from that reflected in the Financial Statements, except changes in the ordinary course of
business that have not been and are not reasonably expected to be, in the aggregate, materially
adverse;
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(b) any damage, destruction or loss, whether or not covered by insurance, materially and
adversely affecting the assets, properties, financial condition, operating results, prospects or
business of the Company (as such business is presently conducted and as it is proposed to be
conducted);
(c) any waiver by the Company of a valuable right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim or encumbrance or payment of any
obligation by the Company, except in the ordinary course of business and that is not material to
the assets, properties, financial condition, operating results or business of the Company (as such
business is presently conducted and as it is proposed to be conducted);
(e) any material change or amendment to a material contract or arrangement by which the
Company or any of its assets or properties is bound or subject;
(f) any material change in any compensation arrangement or agreement with any employee,
officer, director or shareholder;
(g) any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or
other intangible assets;
(h) any resignation or termination of employment of any key officer of the Company; and the
Company, to its knowledge, does not know of the impending resignation or termination of employment
of any such officer;
(i) receipt of notice that there has been a loss of, or material order cancellation by, any
major customer of the Company;
(j) any mortgage, pledge, transfer of a security interest in, or lien, created by the Company,
with respect to any of its material properties or assets, except liens for taxes not yet due or
payable;
(k) any loans or guarantees made by the Company to or for the benefit of its employees,
officers or directors, or any members of their immediate families, other than travel advances and
other advances made in the ordinary course of its business;
(l) any declaration, setting aside or payment or other distribution in respect of any of the
Company’s capital stock, or any direct or indirect redemption, purchase or other acquisition of any
of such stock by the Company;
(m) to the Company’s knowledge, any change in any material agreement or other event or
condition of any character that might materially and adversely affect the assets, properties,
financial condition, operating results or business of the Company (as such business is presently
conducted and as it is proposed to be conducted); or
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(n) any agreement or commitment by the Company to do any of the things described in this
Section 3.23.
3.24 Disclosure. The Company has provided the Purchasers with all the information that the
Purchasers have requested for deciding whether to purchase the Shares hereunder and all information
that the Company believes is reasonably necessary to enable the Purchasers to make such a decision.
No representation, warranty or statement by the Company in this Agreement, or any exhibit,
schedule, statement or certificate furnished to the Purchasers pursuant to this Agreement or to be
furnished to the Purchasers at the Initial Closing or the Subsequent Closing, when read as a whole,
contains any untrue statement of a material fact or omits to state a material fact necessary to
make the statements made herein, in light of the circumstances under which they were made, not
misleading, except that with respect to any financial projections delivered to the Purchaser, the
Company represents only that such financial projections were prepared in good faith and the Company
believes there is a reasonable basis for such financial projections.
3.25 Small Business Concern. The Company is a “Small Business Concern” as that term is
defined in the Small Business Investment Act of 1958, as amended, and in the regulations of the
Small Business Administration promulgated thereunder.
4. Representations and Warranties of the Purchasers. Each Purchaser hereby severally
represents and warrants to the Company as follows:
4.1 Investment Intent; Blue Sky. The Purchaser is acquiring the Shares and the underlying
Conversion Stock for investment for its own account, not as a nominee or agent, and not with a view
to, or for resale in connection with, any distribution thereof. The Purchaser understands that the
issuance of the Shares and the underlying Conversion Stock has not been, and will not be,
registered under the Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act, the availability of which depends upon, among other things, the
bona fide nature of the Purchaser’s investment intent and the accuracy of the Purchaser’s
representations as expressed herein. The Purchaser’s address set forth on the Schedule of
Purchasers represents the Purchaser’s true and correct state of domicile, upon which the Company
may rely for the purpose of complying with applicable “blue sky” laws.
4.2 Rule 144. The Purchaser acknowledges that the Shares and the underlying Conversion Stock
must be held indefinitely unless subsequently registered under the Securities Act or unless an
exemption from such registration is available. It is aware of the provisions of Rule 144
promulgated under the Securities Act (“Rule 144”) which permit the limited resale of shares
purchased in a private placement subject to the satisfaction of certain conditions, including,
among other things, the existence of a public market for such shares, the availability of certain
current public information about the Company, the resale occurring not less than one (1) year after
a party has purchased and paid for the security to be sold, the sale being effected through a
“brokers transaction” or in a transaction directly with a “market maker,” and the number of shares
being sold during any three (3) month period not exceeding limitations specified in Rule 144.
4.3 No Public Market. The Purchaser understands that no public market now
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exists for any of the securities issued by the Company and that the Company has made no
assurances that a public market will ever exist for the Company’s securities.
4.4 Restrictions on Transfer, Restrictive Legends. The Purchaser understands that the
transfer of the Shares and the Conversion Stock is restricted by applicable state and federal
securities laws and by provisions of the Investors’ Rights Agreement, and that the certificates
representing the Shares and the Conversion Stock will be imprinted with legends substantially in
the form set forth in the Investors’ Rights Agreement.
4.5 Access to Information. The Purchaser has had an opportunity to discuss the Company’s
business, management and financial affairs with the Company’s management and has had the
opportunity to review the Company’s financial statements. The Purchaser has also had an
opportunity to ask questions of officers of the Company, which questions, if asked, were answered
to the Purchaser’s satisfaction. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 3 of this Agreement or the right of the
Purchasers to rely thereon.
4.6 Investment Experience. The Purchaser understands that the purchase of the Shares involves
substantial risk. The Purchaser (a) has experience as an investor in securities of companies in
the development stage and acknowledges that the Purchaser is able to fend for itself or himself,
can bear the economic risk of the Purchaser’s investment in the Shares and has such knowledge and
experience in financial or business matters that the Purchaser is capable of evaluating the merits
and risks of this investment in the Shares and protecting its own interests in connection with this
investment, and/or (b) has a pre-existing personal or business relationship with the Company and
certain of its officers, directors or controlling persons of a nature and duration that enables the
Purchaser to be aware of the character, business acumen and financial circumstances of such
persons.
4.7 Authorization. The Purchaser has the full power and authority to execute, deliver and
perform the Investment Agreements and to purchase and pay for the Shares and the Conversion Stock.
The Investment Agreements, when executed and delivered by the Purchaser, shall constitute valid and
binding obligations of the Purchaser, enforceable in accordance with their terms, subject to laws
of general application relating to bankruptcy, insolvency and the relief of debtors and other laws
of general application affecting the enforcement of creditors’ rights generally, rules of law
governing specific performance, injunctive relief and other equitable remedies and limitations of
public policy as applied to Section 5.7 of the Investors’ Rights Agreement.
4.8 Purchaser Counsel. The Purchaser acknowledges that such Purchaser has had the opportunity
to review the Investment Agreements, the exhibits and the schedules attached hereto and thereto,
and the transactions contemplated by this Agreement, with its own legal counsel.
4.9 Limited Operating History. The Purchaser acknowledges that the Company is a new business
with a limited operating history.
4.10 Accredited Investor. The Purchaser is an “accredited investor” as
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defined by Rule 501(a) of Regulation D under the Securities Act.
5. Conditions to Closing of the Purchasers. Each Purchaser’s obligation to purchase
the Shares is, unless waived by the Purchaser, subject to the fulfillment of the following
conditions as of the Initial Closing Date, in the case of the Initial Purchasers, or the Subsequent
Closing Date, in the case of the Subsequent Purchasers:
5.1 Representations and Warranties Correct. The representations and warranties made by the
Company in Section 3 above shall be true and correct in all respects as of the Initial Closing and
the Subsequent Closing; provided, however, that representations and warranties that speak
specifically “as of the Initial Closing” or “as of the Subsequent Closing” shall be true and
correct as of the Initial Closing or the Subsequent Closing, as the case may be.
5.2 Covenants. All covenants, agreements and conditions contained in this Agreement to be
performed or complied with by the Company on or prior to the Closing Date shall have been performed
or complied with in all respects.
5.3 Blue Sky. The Company shall have obtained all necessary “blue sky” law permits and
qualifications, or shall have the availability of exemptions therefrom, required by any state for
the offer and sale of the Shares and the underlying Conversion Stock.
5.4 Board of Directors. As of the Initial Closing Date, the Board of Directors of the Company
shall be comprised of L. Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxx
Xxxxxxxxx, Xxx Xxxxxxxxx, Xxxxxx Xxxxxxx and Xxxx Xxxx, elected in accordance with the terms of the
Voting Agreement.
5.5 Bylaws. The Bylaws of the Company shall provide that the Board of Directors of the
Company shall consist of eight (8) persons.
5.6 Authorizations. All authorizations, approvals or permits, if any, of any governmental
authority or regulatory body that are required in connection with the lawful issuance and sale of
the Shares pursuant to this Agreement shall have been duly obtained and shall be effective as of
the Closing.
5.7 Restated Articles of Incorporation. The Restated Articles shall have been filed in the
office of the Secretary of State of the State of California prior to the Initial Closing.
5.8 Investors’ Rights Agreement. The Company, the Initial Purchasers and the requisite
parties to the Prior Agreement (as such term is defined therein) shall have executed and delivered
the Investors’ Rights Agreement as of the Initial Closing Date and the Subsequent Purchasers shall
have executed and delivered the Investors’ Rights Agreement as of the Subsequent Closing Date.
5.9 Right of First Refusal and Co-Sale Agreement. The Company, the Initial Purchasers and the
requisite parties to the Prior Agreement (as such term is defined therein) shall have executed and
delivered the Co-Sale Agreement as of the Initial Closing Date and the Subsequent Purchasers shall
have executed and delivered the Co-Sale Agreement as of the Subsequent Closing Date.
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5.10 Voting Agreement. The Company, the Initial Purchasers and the requisite parties to the
Prior Agreement (as such term is defined therein) shall have executed and delivered the Voting
Agreement as of the Initial Closing Date and the Subsequent Purchasers shall have executed and
delivered the Voting Agreement as of the Subsequent Closing Date.
5.11 Legal Opinion. At the Initial Closing, the Initial Purchasers shall have received from
Fenwick & West LLP, legal counsel to the Company, a legal opinion dated as of the Initial Closing
Date, substantially in the form attached hereto as Exhibit G. At the Subsequent Closing,
the Subsequent Purchasers shall have received from Fenwick & West LLP, legal counsel to the
Company, a legal opinion dated as of the Subsequent Closing Date, substantially in the form
attached hereto as Exhibit G.
5.12 Indemnification Agreement. The Company and each of the members of the Company’s Board of
Directors shall each have entered into an Indemnification Agreement, substantially in the form
attached hereto as Exhibit H.
5.13 Compliance Certificate. The President of the Company shall have delivered to the
Purchasers at the Closing a certificate stating that the conditions specified in Sections 5.1 and
5.2 have been fulfilled and stating that there shall have been no adverse change in the business,
affairs, operations, properties, assets or condition of the Company since the Statement Date.
5.14 Non-Disclosure Agreements. All current employees and consultants shall have entered into
a standard non-disclosure and assignment of inventions agreements in form and substance reasonably
acceptable to Purchasers.
5.15 Proceedings and Documents. All corporate and other proceedings in connection with the
transactions contemplated at the Closing and all documents incident thereto shall be reasonably
satisfactory in form and substance to Purchasers’ counsel, and the Purchasers shall have received
all such counterpart original and certified or other copies of such documents as they may
reasonably request. This shall include, without limitation, certification by the Company’s
Secretary regarding the Company’s Restated Articles and Bylaws and Board of Director and
shareholder resolutions relating to this transaction.
5.16 Secretary’s Certificate. Purchasers shall have received from the Company’s Secretary, a
certificate having attached thereto (i) the Company’s Restated Articles as in effect at the time of
the Closing, (ii) the Company’s Bylaws as in effect at the time of the Closing, (iii) resolutions
approved by the Board of Directors authorizing the transactions contemplated hereby, (iv)
resolutions approved by the Company’s shareholders authorizing the filing of the Restated Articles,
and (v) good standing certificates (including tax good standing) with respect to the Company from
the applicable authority(ies) in California, dated a recent date before the Closing.
5.17 Macrospace Voting Agreement. The Company and the requisite parties to the Macrospace
Voting Agreement (as such term is defined therein) shall have executed and delivered the Amendment
to the Voting Agreement as of the Initial Closing Date in the form attached hereto as Exhibit
I.
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6. Conditions to Closing of the Company. The Company’s obligation to sell and issue
the Shares is, unless waived in writing by the Company, subject to the fulfillment as of the
Initial Closing Date or the Subsequent Closing Date, as appropriate, of the following conditions:
6.1 Representations and Warranties Correct. The representations made in Section 4 above by
the Purchasers shall be true and correct in all material respects as of the Initial Closing Date or
the Subsequent Closing Date, as appropriate.
6.2 Covenants. All covenants, agreements, and conditions contained in this Agreement to be
performed or complied with by the Initial Purchasers on or prior to the Initial Closing Date or by
the Subsequent Purchasers on or prior to the Subsequent Closing Date.
6.3 Blue Sky. The Company shall have obtained all necessary “blue sky” law permits and
qualifications, or have the availability of exemptions therefrom, required by any state for the
offer and sale of the Shares and the underlying Conversion Stock.
6.4 Legal Matters. All approvals of the Company’s Board of Directors and shareholders
necessary for performance of the transactions contemplated by this Agreement shall have been
obtained, and all material matters of a legal nature which pertain to this Agreement and the
transactions contemplated hereby shall have been reasonably approved by counsel to the Company.
6.5 Payment of Purchase Price. At the Initial Closing Date, each Initial Purchaser shall have
delivered to the Company the purchase price for such Initial Purchaser’s Shares in the amount set
forth opposite such Purchaser’s name on the Schedule of Purchasers, and where the purchase price or
a portion of thereof is to be paid by the cancellation of indebtedness, such Initial Purchaser
shall have delivered the original instrument evidencing such indebtedness. At the Subsequent
Closing Date, each Subsequent Purchaser shall have delivered to the Company the purchase price for
such Subsequent Purchaser’s Shares in the amount set forth opposite such Subsequent Purchaser’s
name on the Schedule of Purchasers, and where the purchase price or a portion of thereof is to be
paid by the cancellation of indebtedness, such Subsequent Purchaser shall have delivered the
original instrument evidencing such indebtedness.
6.6 Restated Articles of Incorporation. The Restated Articles shall have been filed in the
office of the Secretary of State of the State of California.
6.7 Investors’ Rights Agreement. The Company, the Initial Purchasers and the requisite
parties to the Prior Agreement (as such term is defined therein) shall have executed and delivered
the Investors’ Rights Agreement as of the Initial Closing Date and the Subsequent Purchasers shall
have executed and delivered the Investors’ Rights Agreement as of the Subsequent Closing Date.
6.8 Right of First Refusal and Co-Sale Agreement. The Company, the Initial Purchasers and the
requisite parties to the Prior Agreement (as such term is defined therein) shall have executed and
delivered the Co-Sale Agreement as of the Initial Closing Date and the Subsequent Purchasers shall
have executed and delivered the Co-Sale Agreement as of the Subsequent Closing Date.
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6.9 Voting Agreement. The Company, the Initial Purchasers and the requisite parties to the
Prior Agreement (as such term is defined therein) shall have executed and delivered the Voting
Agreement as of the Initial Closing Date and the Subsequent Purchasers shall have executed and
delivered the Voting Agreement as of the Subsequent Closing Date.
6.10 Authorizations. All authorizations, approvals or permits, if any, of any governmental
authority or regulatory body that are required in connection with the lawful issuance and sale of
the Shares pursuant to this Agreement shall have been duly obtained and shall be effective as of
the Closing.
7. Covenants of the Company.
7.1 Vesting of Employee Options. Options granted to employees of the Company after the
Closing Date under the Company’s approved equity incentive plan shall vest, subject to the option
holder’s continued employment with or service to the Company, on terms no more favorable than
twenty-five percent (25%) after twelve (12) months and on an equal monthly basis over the
subsequent thirty-six (36) months or on an equal annual basis over the subsequent three (3) years,
as approved by the Company’s Board of Directors. Any unvested shares acquired by employees shall
be subject to a repurchase option by the Company exercisable at the original purchase price of such
options (the “Repurchase Option”). The Repurchase Option shall provide that upon termination of
the employment of the shareholder, with or without cause, the Company or its assignee (to the
extent permissible under applicable securities law qualification) may repurchase such unvested
shares at the lesser of the original purchase price of any shares subject to the Repurchase Option
or the fair market value of any such shares.
7.2 Prompt Payment of Taxes, etc. The Company will promptly pay and discharge, or cause to be
paid and discharged, when due and payable, all lawful taxes, assessments and governmental charges
or levies imposed upon the income, profits, property or business of the Company or any subsidiary;
provided, however, that any such tax, assessment, charge or levy need not be paid if the validity
thereof shall currently be contested in good faith by appropriate proceedings and if the Company
shall have set aside on its books adequate reserves with respect thereto, and provided further,
that the Company will pay all such taxes, assessments, charges or levies forthwith upon the
commencement of proceedings to foreclose any lien which may have attached as security therefor.
7.3 Insurance. The Company will keep its assets and those of its subsidiaries, if any, which
are of an insurable character insured by financially sound and reputable insurers against loss or
damage by fire, explosion and other risks customarily insured against by companies in the Company’s
line of business, in amounts reasonably sufficient to allow it to replace any of its properties
which might be damaged or destroyed. The Company will maintain with financially sound and
reputable insurers, insurance against other hazards and risks and liability to persons and property
to the extent and in the manner customary for companies in similar businesses similarly situated.
7.4 Accounts and Records. The Company will keep true records and books of account in which
full, true and correct entries will be made of all dealings or transactions in
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relation to its business and affairs in accordance with generally accepted accounting
principles applied on a consistent basis.
7.5 Subsequent Sales. Each of the Subsequent Purchasers, if any, shall be either (i) Time
Warner, Inc., or any of its affiliates, subsidiaries, or designees, (ii) Fox Entertainment Group,
Inc., or any of its affiliates, subsidiaries, or designees, or (iii) any other purchaser reasonably
approved by the holders of more than sixty-five percent (65%) of the Shares sold at the Initial
Closing. After the Subsequent Closing, the Company shall not sell or issue any shares of Series D
Preferred other than in a sale or issuance to the Purchasers, made pro rata in proportion to the
number of Shares purchased hereunder by the Purchasers, or pursuant to an amendment to this
Agreement, provided such amendment is approved by the holders of more than seventy-two percent
(72%) of the Shares sold under this Agreement or such number of shares of Conversion Stock, or any
combination thereof.
7.6 Termination of Covenants. The covenants of the Company set forth in above in this Section
7 shall terminate in all respects on the date of the closing of a firm commitment underwritten
initial public offering pursuant to an effective registration statement under the Securities Act,
covering the offer and sale of the Company’s Common Stock, or at such time as the Company is
required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, whichever shall occur first.
8. Miscellaneous.
8.1 Survival of Warranties. The warranties, representations and covenants of the Company and
Purchasers contained in or made pursuant to this Agreement shall survive the execution and delivery
of this Agreement and the Closing and shall in no way be affected by any investigation of the
subject matter thereof made by or on behalf of the Purchasers or the Company.
8.2 Successors and Assigns. Except as otherwise provided herein, the terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties (including transferees of any securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or liabilities under or by
reason of this Agreement, except as expressly provided in this Agreement.
8.3 Finder’s Fee. Each party represents that it neither is nor will be obligated for any
finders’ fee or commission in connection with this transaction. Each Purchaser agrees to indemnify
and to hold harmless the Company from any liability for any commission or compensation in the
nature of a finders’ fee (and the costs and expenses of defending against such liability or
asserted liability) for which such Purchaser or any of its officers, partners, employees, or
representatives is responsible.
The Company agrees to indemnify and hold harmless each Purchaser from any liability for any
commission or compensation in the nature of a finders’ fee (and the costs and expenses of defending
against such liability or asserted liability) for which the Company or any of its officers,
employees or representatives is responsible.
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8.4 Governing Law. This Agreement shall be governed in all respects by the laws of the State
of California as such laws are applied to agreements between or among California residents entered
into and to be performed entirely within California.
8.5 Entire Agreement; Amendment. This Agreement (including all exhibits hereto), the
Investors’ Rights Agreement, the Co-Sale Agreement, the Voting Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof. This Agreement and any term hereof may be
amended, waived, discharged or terminated by a written instrument signed by the Company and holders
of more than seventy-two percent (72%) of the Shares sold under this Agreement or such number of
shares of Conversion Stock, or any combination thereof.
8.6 Notices, etc. All notices and other communications required or permitted hereunder shall
be effective upon receipt, shall be in writing and shall be mailed by registered or certified mail,
postage prepaid, or otherwise delivered by facsimile transmission, by hand or by messenger,
addressed:
(a) if to a Purchaser, to the address or fax number listed after such Purchaser’s name on the
Schedule of Purchasers attached hereto as Exhibit A or at such other address as such
Purchaser shall have furnished to the Company, with a copy to:
Pillsbury Xxxxxxxx Xxxx Xxxxxxx LLP
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000-0000
Attn: Xxxxxxx Xxxxxxx Xxxxxx, Esq.
Fax: (000) 000-0000
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000-0000
Attn: Xxxxxxx Xxxxxxx Xxxxxx, Esq.
Fax: (000) 000-0000
| (b) | if to the Company, to: |
Sorrent, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: President
Fax: (000) 000-0000
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: President
Fax: (000) 000-0000
or at such other address as the Company shall have furnished to the Purchasers, with a copy to:
Fenwick & West LLP
Silicon Valley Center
000 Xxxxxxxxxx Xx.
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
Silicon Valley Center
000 Xxxxxxxxxx Xx.
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
Each such notice or other communication shall for all purposes of this Agreement be treated as
effective or having been given when received if delivered personally or by messenger, if sent by
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facsimile, the first business day after the date of confirmation that the facsimile has been
successfully transmitted to the facsimile number for the party notified, or, if sent by mail, at
the earlier of its receipt or seventy-two (72) hours after the same has been deposited in a
regularly maintained receptacle for deposit of United States mail, addressed and mailed as
aforesaid.
8.7 Delays or Omissions. Except as expressly provided herein, no delay or omission to
exercise any right, power or remedy accruing to any party hereto upon any breach or default of
another party hereto under this Agreement shall impair any such right, power or remedy of such
party, nor shall it be construed to be a waiver of any such breach or default or an acquiescence
therein, or of 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 party of any breach or default under this Agreement, or any waiver on the part of any party
hereto, 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. All remedies, either under
this Agreement or by law or otherwise afforded to any party hereto, shall be alternative and not
cumulative.
8.8 Rights; Severability. Unless otherwise expressly provided herein, the rights of each
Purchaser hereunder are several rights and are not rights jointly held with any of the other
Purchasers.
8.9 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 CORPORATIONS CODE OF THE
STATE OF CALIFORNIA. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
8.10 Expenses. At the Initial Closing, the Company will pay the reasonable fees and expenses,
including legal fees, incurred by Granite Global Ventures II L.P. in connection with this
Agreement, up to a maximum of $35,000, subject to the delivery of invoices therefor.
8.11 Attorneys’ Fees. If any legal action is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorney’s fees, costs and
necessary disbursements in addition to any other relief to which such party may be entitled.
8.12 Severability. In the event any provision of this Agreement becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue
in full force and effect, with such provision being replaced with an enforceable provision closest
in intent and economic effect to the severed provision; provided, however, that
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no such severability shall be effective if it materially changes the economic benefit of any
party to this Agreement.
8.13 Titles and Subtitles. The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this Agreement.
8.14 Conflicts of Interest. Each Purchaser and the Company is aware that Fenwick & West LLP
(“F&W”) may have an investment in certain of the Purchasers or may have previously performed and
may continue to perform certain legal services for certain of the Purchasers in matters unrelated
to F&W’s representation of the Company. In connection with its Purchaser representation, F&W may
have obtained confidential information of such Purchasers that could be material to F&W’s
representation of the Company in connection with negotiation, execution and performance of this
Agreement. By signing this Agreement, each Purchaser and the Company hereby acknowledges that the
terms of this Agreement were negotiated between the Purchasers and the Company and are fair and
reasonable and waives any potential conflict of interest arising out of such representation or such
possession of confidential information. Each Purchaser and the Company further represents that it
has had the opportunity to be, or has been, represented by independent counsel in giving the
waivers contained in this Section 8.14.
8.15 Counterparts. This Agreement may be executed in any number of counterparts, each of
which shall be an original, and all of which together shall constitute one instrument.
8.16 Exculpation Among Purchasers. Each Purchaser acknowledges that it is not relying upon
any person, firm, or corporation, other than the Company and its officers and directors, in making
its investment or decision to invest in the Company. Each Purchaser agrees that no Purchaser nor
the respective controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable to any other Purchaser for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the Shares and Conversion Stock.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this agreement as of the day and year set forth
in the heading hereof.
| SORRENT, INC. | ||||||
| By: | /s/ L. Xxxxxxx Xxxxxxx | |||||
| Its: | President and Chief Executive Officer | |||||
| Address: | 0000 Xxxxxxx Xxxxx, Xxxxx 000 | |||||
| Xxx Xxxxx, XX 00000 |
SIGNATURE PAGE TO SERIES D PURCHASE AGREEMENT
| PURCHASERS: | ||||||
| GRANITE GLOBAL VENTURES II L.P. | ||||||
| By: | Granite Global Ventures II L.L.C. | |||||
| Its: | General Partner | |||||
| By: | /s/ Hany Nada | |||||
| Name: | Hany Nada | |||||
| Its: | Managing Director | |||||
| Address: | c/o Granite Global Ventures | |||||
| 0000 Xxxx Xxxx Xxxx | ||||||
| Xxxxx 000 | ||||||
| Xxxxx Xxxx, XX 00000 | ||||||
| Fax: | (000) 000-0000 |
| GGV II ENTREPRENEURS FUND L.P. | ||||||
| By: | Granite Global Ventures II L.L.C. | |||||
| Its: | General Partner | |||||
| By: | /s/ Hany Nada | |||||
| Name: | Hany Nada | |||||
| Its: | Managing Director | |||||
| Address: | c/o Granite Global Ventures | |||||
| 0000 Xxxx Xxxx Xxxx | ||||||
| Xxxxx 000 | ||||||
| Xxxxx Xxxx, XX 00000 | ||||||
| Fax: | (000) 000-0000 |
SIGNATURE PAGE TO SERIES D PURCHASE AGREEMENT
| NEW ENTERPRISE ASSOCIATES 10, L.P. | ||||||
| By: | NEA Partners 10, L.P. | |||||
| Its: | General Partner | |||||
| By: | /s/ Xxxxxx X. Xxxxxxx III | |||||
| Address: | 0000 Xxxx Xxxx Xxxx | |||||
| Xxxxx Xxxx, XX 00000 | ||||||
| Attn: Xxxxxxx Xxxxx | ||||||
| Fax: | (000) 000-0000 |
SIGNATURE PAGE TO SERIES D PURCHASE AGREEMENT
| BAVP, L.P. | ||||||
| By: | BA Venture Partners VI, LLC | |||||
| Its: | General Partner | |||||
| By: | /s/ Xxxxxx Xxxxxxx | |||||
| Name: | Xxxxxx Xxxxxxx | |||||
| Its: | Member | |||||
| Address: | 000 Xxxxx Xxxx, Xxxxx 000 | |||||
| Xxxxxx Xxxx, XX 00000 | ||||||
| Attn: Xxxxxx Xxxxxxx | ||||||
| Fax: | (000) 000-0000 | |||||
SIGNATURE
PAGE TO SERIES D PURCHASE AGREEMENT
| SIENNA LIMITED PARTNERSHIP III, L.P. | ||||||
| By: | Sienna Associates III, L.L.C. | |||||
| Its: | General Partner | |||||
| By: | /s/ Xxxxxx X. Xxxxx | |||||
| Address: | 0000 Xxxxxxxxx Xxx, Xxxxx 000 | |||||
| Xxxxxxxxx, XX 00000 | ||||||
| Attn: Xxxxxx Xxxxx | ||||||
| Fax: | (000) 000-0000 |
SIGNATURE PAGE TO SERIES D PURCHASE AGREEMENT
| JAFCO AMERICA TECHNOLOGY FUND III, LP | ||||||
| JAFCO AMERICA TECHNOLOGY CAYMAN FUND III, LP | ||||||
| JAFCO USIT FUND III, LP | ||||||
| JAFCO AMERICA TECHNOLOGY AFFILIATES FUND III, LP | ||||||
| By: | /s/ Xxxxx X. Xxxxxxxxx | |||||
| Managing Member | ||||||
| JAV Management Associates III, L.L.C. | ||||||
| Its General Partner | ||||||
| Address: | 000 Xxxxxxxx Xxxxxx Xxx Xxxxx | |||||
| Xxxx Xxxx, XX 00000 | ||||||
| Attn: Xxx Xxxxxxxxx | ||||||
| Fax: | (000) 000-0000 |
| GLOBESPAN CAPITAL PARTNERS IV, L.P. | ||||||
| GCP IV AFFILIATES FUND, L.P. | ||||||
| JAFCO GLOBESPAN USIT IV, L.P. | ||||||
| By: | Globespan Management Associates IV, L.P., its | |||||
| sole General Partner | ||||||
| By: | Globespan Management Associates IV, LLC, its | |||||
| sole General Partner | ||||||
| By: | /s/ Xxxxx X. Xxxxxxxxx | |||||
| Member | ||||||
| Address: | 000 Xxxxxxxx Xxxxxx Xxx Xxxxx | |||||
| Xxxx Xxxx, XX 00000 | ||||||
| Attn: Xxx Xxxxxxxxx | ||||||
| Fax: | (000) 000-0000 |
SIGNATURE PAGE TO SERIES D PURCHASE AGREEMENT
| GLOBESPAN CAPITAL PARTNERS (CAYMAN) IV, L.P. | ||||||
| By: | Globespan Management Associates (Cayman) IV, | |||||
| L.P., its sole General Partner | ||||||
| By: | Globespan Management Associates IV, LLC, its | |||||
| sole General Partner | ||||||
| By: | /s/ Xxxxx X. Xxxxxxxxx | |||||
| Member | ||||||
| Address: | 000 Xxxxxxxx Xxxxxx Xxx Xxxxx | |||||
| Xxxx Xxxx, XX 00000 | ||||||
| Attn: Xxx Xxxxxxxxx | ||||||
| Fax: | (000) 000-0000 |
| GLOBESPAN CAPITAL PARTNERS IV GmbH & Co. KG | ||||||
| By: | Globespan Management Associates IV, GmbH | |||||
| its General Partner | ||||||
| By: | /s/ Xxxxx X. Xxxxxxxxx | |||||
| Name: | Xxxxx X. Xxxxxxxxx | |||||
| Title: | Managing Director | |||||
| Address: | 000 Xxxxxxxx Xxxxxx Xxx Xxxxx | |||||
| Xxxx Xxxx, XX 00000 | ||||||
| Attn: Xxx Xxxxxxxxx | ||||||
| Fax: | (000) 000-0000 |
SIGNATURE PAGE TO SERIES D PURCHASE AGREEMENT
