Exhibit 10.18
STATMON TECHNOLOGIES CORP.
NOTE PURCHASE AND SHAREHOLDER RIGHTS AGREEMENT
This Note Purchase and Shareholder Rights Agreement (the "AGREEMENT")
is dated as of November 3rd, 2000 by and among (i) Statmon Technologies Corp., a
Delaware Corporation, with its main office at 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000,
Xxx Xxxxxxx, XX 00000 (the "COMPANY"), (ii) Xxxx Xxxx (the "Purchaser"), and
(iii) the Significant Holders and this Agreement shall be effective as of the
date of execution hereof by the above named parties.
RECITALS
A. In connection with the moneys the Purchaser has advanced and has
agreed to advance the Company (as reflected in Section 2 below),
such advancement made to aid the Company in its initial and ongoing
operating costs, the Parties have agreed to the terms and conditions
described herein; and
B. the Company has agreed to execute the attached Promissory Note
(Exhibit B)("Promissory Note") and the attached Trademark/Patent
Security Agreement (Exhibit C)("Trademark Security Agreement") and
to sell and issue to Purchaser the Shares of Common Stock as
described in Sections 1 and 3.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Purchaser
hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the following respective meanings:
"COMMISSION" means the Securities and Exchange Commission or
any other Federal agency at the time administering the Securities Act.
"COMMON STOCK" means the common stock, $0.00001 par value, of
the Company and any securities which may replace such common stock, due to
reorganization or any other reason.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal rule or statute and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"HOLDER" means the Purchaser and one holding Registrable
Securities, or any person holding Registrable Securities to whom the rights
under this Agreement have been transferred in accordance with Section 5.10
hereof.
"REGISTRABLE SECURITIES" means (i) Shares and (ii) any Common
Stock of the Company issued or issuable in respect of Shares upon any
conversion, stock split, stock dividend, recapitalization, or similar event;
provided, however, that securities shall only be treated as Registrable
Securities if and so long as they have not been registered or sold to or through
a broker or dealer or underwriter in a public distribution or a public
securities transaction.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement by the Commission.
"REGISTRATION EXPENSES" shall mean all expenses, except as
otherwise stated in the definition of "Selling Expenses", incurred by the
Company in complying with Sections 5.1, 5.2 and 5.3 hereof, including without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company and one special
counsel to the selling stockholders (up to a maximum amount of $25,000 per
registration), blue sky fees and expenses, the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
"RESTRICTED SECURITIES" shall mean the securities of the
Company required to bear the legends set forth in Section 4 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal rule or statute and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders and, except as set forth in the definition of
"Registration Expenses", all fees and disbursements of separate counsel for any
Holder.
"Shares" means 250,000 shares of Common Stock issued by the
Company to Purchaser pursuant to Section 3 hereof.
2. MANNER OF PURCHASER CONTRIBUTION.
Purchaser will lend to the Company up to $250,000 for the
purposes detailed on the attached budget (Exhibit D) in the following manner:
Purchaser will wire to the Company, on or about the 30th of September and on the
27th of each month of November and December, 2000, amounts called for by the
attached budget, but in any event not to exceed the category and monthly limits
there listed and less any money previously forwarded during that respective
2
month. Certain sums during a particular month may be needed before the 27th of
said month. In this case, Purchaser will pay for such expenses (again not to
exceed category and monthly limits established in the attached budget) as they
become due and in such manner as he chooses. Also, travel arrangements called
for by said budget will be arranged by a travel agent approved by Purchaser and
travel expenses will be paid by any method chosen by Purchaser. All such
payments will be deducted from that month's contribution as explained above.
3. SHARES ISSUED.
The Company will, promptly following the execution of this
Agreement, issue to Purchaser 250,000 shares of Common Stock (the "Shares")
which Shares shall upon issuance be fully paid and non-assignable. The Company
represents and warrants that on issuance the Shares will represent 6.17% of the
equity securities of the Company, on a fully-diluted basis after giving effect
to the sale and issuance of $4.0 Million of preferred stock of the Company, as
disclosed to the Purchaser by the Company.
4. RESTRICTIVE LEGEND. The Purchaser acknowledges and accepts
that the Shares are being issued to him without registration under federal or
applicable state securities laws, and that the certificates representing the
Shares or any other securities issued in respect of the Shares upon any stock
split, stock dividend, recapitalization, merger, or similar event, shall (unless
otherwise permitted by the provisions below) be stamped or otherwise imprinted
with legends in substantially the following form (in addition to any legends
required by agreement or by applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR
IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. SUCH
SHARES GENERALLY MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION UNLESS THE COMPANY RECEIVES AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
The Purchaser consents to the Company making a notation on its
records and giving instructions to any transfer agent of its capital stock in
order to implement the restrictions on transfer established in this Agreement.
3
5. REGISTRATION.
5.1. REQUESTED REGISTRATION.
(a) Request for Registration. In case the Company
shall receive from Purchaser a written request that the Company effect any
registration with respect to shares of Registrable Securities, the Company will
as soon as practicable, use its best efforts to effect such registration(s) as
part of a firm commitment underwritten public offering with underwriters
reasonably acceptable to the Purchaser and the Company (including, without
limitation, appropriate qualification under applicable state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such request,
within 20 days after the date of such written notice from the Company.
Notwithstanding the foregoing, the Company shall not be obligated to
take any action to effect or complete any such registration pursuant to this
Section 5.1:
(A) Prior to the earlier of (i)
January 1, 2003 and (ii) six months after the effective date of the Company's
first registered public offering of its Common Stock;
(B) Unless the aggregate offering
price of all Registrable Securities sought to be registered by all Holders would
exceed $1,000,000;
(C) During the period starting with
the date thirty (30) days prior to the Company's estimated date of filing of,
and ending on the date six (6) months immediately following the effective date
of, any registration statement pertaining to securities of the Company (other
than a registration of securities in a transaction under Rule 145 promulgated
under the Securities Act or with respect to an employee benefit plan), provided
that the Company is actively employing in good faith all reasonable efforts to
cause such registration statement to become effective;
(D) After the Company has completed
two registrations pursuant to this subparagraph 5.1(a); or
(E) If the Company shall furnish to
the Purchaser a certificate signed by the President of the Company stating that,
because it is necessary for the Company to consummate a pending transaction, in
the good faith judgment of the Board of Directors it would be seriously
detrimental to the Company or its stockholders for a registration statement to
be filed in the near future. In such case, the Company's obligation to use its
best efforts to register, qualify or comply under this Section 5.1(a) shall be
deferred for a period not to exceed 90 days from the date of receipt of the
written request from the Holders, provided that the Company may not exercise
this deferral right more than once per twelve month period.
4
(b) Subject to the foregoing clauses (A) through (E),
the Company shall file a registration statement covering the Registrable
Securities so requested to be registered as soon as practicable after receipt of
the request or requests of the Purchaser.
(c) Underwriting. In the event of a registration
pursuant to Section 5.1, the Company shall advise the Holders as part of the
notice given pursuant to Section 5.2(a)(i) that the right of any Holder to
registration pursuant to Section 5.1 shall be conditioned upon such Holder's
participation in the underwriting arrangements required by this Section 5.1, and
the inclusion of such Holder's Registrable Securities in the underwriting to the
extent requested shall be limited to the extent provided herein.
The Company shall, together with all Holders proposing to distribute
their securities through such underwriting, enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by a majority in interest of the Initiating Holders, but subject to the
Company's reasonable approval. Notwithstanding any other provision of this
Section 5.1, if the managing underwriter advises the Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all holders requesting to be
included in the registration and underwriting and the number of shares of
Registrable Securities that may be included in the registration and underwriting
shall be allocated among all Holders requesting to be included in the
registration and underwriting in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by them at the time of filing
the registration statement. No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration. If any Holder of Registrable Securities
disapproves of the terms of the underwriting, such person may elect to withdraw
therefrom by written notice to the Company. If other selling shareholders who
are not Qualified Holders (hereinafter defined) request registration of
securities in the proposed offering, the Company will reduce or eliminate such
other selling shareholders' securities before any reduction or elimination of
Registrable Securities to be included in such registration. The Term "Qualified
Holders" shall mean (i) the Purchaser or (ii) the Purchaser's successors and
assigns to whom registration rights under this agreement have been assigned or
transferred in accordance with Section 5.10 hereof.
5.2. COMPANY REGISTRATION.
(a) Notice of Registration. If at any time or from
time to time the Company shall determine to register any of its equity
securities, either for its own account or the account of a Holder or other
holders, other than (i) a registration relating solely to employee benefit plans
or (ii) a registration relating solely to a transaction under Rule 145
promulgated under the Securities Act, the Company will:
(i) promptly give to Purchaser and each
other Holder written notice thereof; and
(ii) include in such registration (and any
related qualifications including compliance with Blue Sky laws), and in any
underwriting involved therein, all the
5
Registrable Securities specified in a written request or requests, delivered to
the Company within 20 days after the date of such written notice from the
Company, by any Holder.
(b) Underwriting. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of the written
notice given pursuant to Section 5.2(a)(i). In such event, the right of any
Holder to registration pursuant to Section 5.2 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of Registrable
Securities in the underwriting shall be limited to the extent provided herein.
All Holders proposing to distribute their securities
through such underwriting shall (together with the Company and the other Holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by the Company. Notwithstanding any other provision of
this Section 5.2, if the managing underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the managing
underwriter may limit the Registrable Securities to be included in such
registration to an amount no less than the lesser of (i) 20% of all shares to be
included in such offering or (ii) 75% of the Registrable Securities that had
been proposed by the Holders to be included in such offering, provided that if
other selling shareholders who are not Qualified Holders (as defined above) have
requested registration of securities in the proposed offering, the Company will
reduce or eliminate such other selling shareholders' securities before any
reduction or elimination of Registrable Securities to be included in such
registration. The Company shall so advise all Holders requesting to be included
in the registration and underwriting and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all the Holders requesting to be included in the registration
and underwriting in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by them at the time of filing the
registration statement. If any Holder disapproves of the terms of any such
underwriting, such person may elect to withdraw therefrom by written notice to
the Company.
(c) Right to Terminate Registration. The Company
shall have the right to terminate or withdraw any registration initiated by it
under this Section 5.2 prior to the effectiveness of such registration whether
or not any Holder has elected to include securities in such registration and
shall give notice to each Holder who has elected to include securities in such
registration as soon as practicable after such termination or withdrawal.
5.3. REGISTRATION ON FORM S-3.
(a) Request for Registration. In case the Company
shall receive from Purchaser a written request that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of shares of the Registrable Securities the aggregate price to
the public of which, net of underwriting discounts and commissions, would exceed
$1,000,000, and the Company is a registrant entitled to use Form S-3 to register
the Registrable Securities for such an offering, the Company shall use its best
efforts to cause such Registrable Securities to be registered for the offering
on such form and to cause such
6
Registrable Securities to be qualified in such jurisdictions as such Holder or
Holders may reasonably request; provided, however, that the Company shall not be
required to effect more than two registrations pursuant to this Section 5.3 in
any twelve (12) month period. If such offer is to be an underwritten offer, the
underwriters must be acceptable to both the Purchaser and the Company. The
Company shall inform the Purchaser and any other Holders of the proposed
registration and offer them upon at least 20 days written notice the opportunity
to participate. In the event the registration is proposed to be part of a firm
commitment underwritten public offering, the substantive provisions of Section
5.1(c) shall be applicable to each such registration initiated under this
Section 5.3.
(b) Notwithstanding the foregoing, the Company shall
not be obligated to take any action pursuant to this Section 5.3:
(i) If the Company, within twenty (20) days
of the receipt of the request of the Purchaser, gives notice of its bona fide
intention to effect the filing of a registration statement with the Commission
within ninety (90) days of receipt of such request (other than with respect to a
registration statement relating to a transaction under Rule 145 promulgated
under the Securities Act, an offering solely to employees or any other
registration which is not appropriate for the registration of Registrable
Securities); or
(ii) During the period starting with the
date thirty (30) days prior to the Company's estimated date of filing of, and
ending on the date six (6) months immediately following the effective date of,
any registration statement pertaining to securities of the Company (other than a
registration of securities in a transaction under Rule 145 promulgated under the
Securities Act or with respect to an employee benefit plan), provided that the
Company is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective.
5.4. SUBSEQUENT REGISTRATION RIGHTS.
(a) Without the consent of any holder of Registrable
Securities hereunder, the Company may grant to any holder of securities of the
Company issued subsequently to the Registrable Securities, registration rights
on a pari passu basis with the rights granted the Purchaser hereunder or rights
which are entirely inferior and subordinate to those granted hereunder.
(b) The Company shall not enter into any agreement
granting any holder or prospective holder of any securities of the Company
registration rights superior to the rights granted the Purchaser.
5.5. EXPENSES OF REGISTRATION. All Registration Expenses
incurred in connection with all registrations pursuant to this Section 5 shall
be borne by the Company. Selling Expenses, other than underwriting discounts and
selling commissions, relating to securities registered on behalf of the
Purchaser (with the limitation that Purchaser is limited to one counsel and a
$10,000 cap will apply to attorneys fees) and all other registration expenses
shall be borne by the Company.
7
5.6. REGISTRATION PROCEDURES. In the case of each registration
effected by the Company pursuant to this Agreement, the Company will keep each
Holder advised in writing as to the initiation of such registration and as to
the completion thereof. The Company will:
(a) prepare and file with the Commission within 90
days after the receipt of request for registration, a registration statement on
any appropriate form under the Securities Act, which form shall be available for
sale of the Registrable Securities in accordance with the intended method or
methods of distribution thereof and use its best efforts to cause such
registration statement to become effective; provided that before filing a
registration statement or prospectus or any amendment or supplements thereto,
including documents incorporated by reference after the initial filing of any
registration statement, the Company will furnish to the Holders of the
Registrable Securities covered by such registration statement (the
"PARTICIPATING HOLDERS") and the underwriters copies of all such documents
provided to be filed, which documents will be subject to the review of such
Holders and underwriters (it being acknowledged that if Holder does not respond
with comments thereto within 10 days, Holder shall be deemed to have approved of
such documents as presented);
(b) prepare and file with the Commission such
amendments and post-effective amendments to the registration statement as may be
necessary to keep such registration statement effective for a reasonable period
not to exceed 180 days; cause the related prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement or supplement to such prospectus;
(c) notify the Participating Holders and the managing
underwriters promptly, and (if requested by any such person) confirm such advice
in writing, of the following: when a prospectus or any prospectus supplement or
post-effective amendment has been filed, and with respect to a registration
statement or any post-effective amendment, when the same has become effective;
of any request by the Commission for amendments or supplements to a registration
statement or related prospectus or for additional information; of the issuance
by the Commission of any stop order suspending the effectiveness of a
registration statement or the initiation of any proceedings for that purpose; of
the receipt by the Company of any notification with respect to the suspension of
the qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; and of the happening of any event that makes any statement of a
material fact made in the registration statement, the prospectus or any
documents incorporated therein by reference untrue or which requires the making
of any changes in the registration statement so that they will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading;
(d) make reasonable efforts to obtain the withdrawal
of any order suspending the effectiveness of a registration statement at the
earliest possible moment;
8
(e) if reasonably requested by the managing
underwriters, promptly incorporate in a prospectus supplement or post-effective
amendment such information as the managing underwriters believe (on advice of
counsel) should be included therein as required by applicable law relating to
such sale of Registrable Securities, including, without limitation, information
with respect to the purchase price being paid for the Registrable Securities by
such underwriters and with respect to any other terms of the underwritten (or
"best-efforts" underwritten) offering; and make all required filings of such
prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment;
(f) furnish to each managing underwriter, without
charge, at least one signed copy of the registration statement and any
post-effective amendment, including financial statements and any schedules, all
documents incorporated therein by reference and all exhibits (including those
incorporated by reference);
(g) deliver to each Participating Holder and the
underwriters without charge, as many copies of the prospectus or prospectuses
(including each preliminary prospectus and any amendment or supplement thereto)
as such persons may reasonably request; the Company consents to the use of such
prospectus and of any amendment or supplement thereto by each of the
Participating Holders and the underwriters in connection with the offering and
sale of the Registrable Securities covered by such prospectus or any amendment
or supplement thereto;
(h) prior to any public offering of the Registrable
Securities, cooperate with the Participating Holders, the underwriters, if any,
and their respective counsel in connection with and use its best efforts to
effect the registration or qualification of such Registrable Securities for
offer and sale under the securities or Blue Sky laws of such jurisdictions
within the United States as any selling Participating Holder or underwriter
reasonably requests in writing, keep each such registration or qualification
effective during the period such registration statement is required to be kept
effective and do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the applicable registration statement; provided that the
Company will not be required to qualify to do business in any jurisdiction where
it is not then so qualified or to take any action which would subject the
Company to general service of process in any jurisdiction where it is not at the
time so subject;
(i) use its best efforts to cause the Registrable
Securities covered by the applicable registration statement to be registered
with or approved by such other governmental agencies or authorities within the
United States as may be necessary to enable the seller or sellers thereof or the
underwriters to consummate the disposition of such Registrable Securities;
(j) as necessary, prepare a supplement or
post-effective amendment to the applicable registration statement or related
prospectus or any documents incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of the
Registrable Securities being sold thereunder, such prospectus will not contain
an untrue
9
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading;
(k) use its best efforts to cause all
Registrable Securities covered by the registration statement to be listed on
each securities exchange, if any, on which similar securities issued by the
Company are then listed;
(l) enter into such agreements (including, an
underwriting agreement) and take all such other action reasonably required in
connection therewith in order to expedite or facilitate the disposition of the
Registrable Securities;
(m) provide a transfer agent and registrar for
the Registrable Securities not later than the effective date of such
registration statement;
(n) make available for inspection by one or more
representatives of the Participating Holders, any underwriter participating in
any disposition pursuant to such registration, and any attorney or accountant
retained by such Participating Holders or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all information
reasonably requested by any such representatives, in connection with such; and
(o) otherwise use its best efforts to comply
with all applicable federal and state regulations; and take such other action as
may be reasonably necessary to or advisable to enable each Participating Holder
and each underwriter to consummate the sale or disposition in such jurisdiction
or jurisdictions in which any such Participating Holder or underwriter shall
have required that the Registrable Securities be sold.
Except as otherwise provided herein, the Company shall have sole control in
connection with the preparation, filing, withdrawal, amendment or supplementing
of each registration statement the selection of underwriters, and the
distribution of any preliminary prospectus included in the registration
statement, and may include within the coverage thereof additional shares of
Common Stock or other securities for its own account or for the account of one
or more of its other security holders. The Company may require that each
Participating Holder furnish in writing to the Company such information required
for the distribution of the Common Stock and such other information as may
otherwise be required by the Securities Act to be included in such registration
statement.
5.7. Indemnification.
(a) The Company will indemnify, defend and hold
harmless each Holder, each of its officers and directors and partners, and each
person controlling such Holder within the meaning of Section 15 of the
Securities Act, with respect to which registration has been effected pursuant to
this Agreement, against all expenses, claims, losses, damages or liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus,
10
offering circular or other document, or any amendment or supplement thereto,
incident to any such registration, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or any violation by the Company of the
Securities Act, the Exchange Act, state securities laws or any rule or
regulation promulgated under such laws applicable to the Company in connection
with any such registration, and the Company will reimburse each such Holder,
each of its officers and directors, and each person controlling such Holder, for
any legal and any other expenses reasonably incurred, as such expenses are
incurred, in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case (i) for amounts paid in settlement without the Company's
consent (which shall not be unreasonably withheld), or (ii) to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission, made
in reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder or controlling person, and
stated to be specifically for use therein; provided, however, that the foregoing
indemnity agreement is subject to the condition that, insofar as it relates to
any such untrue statement, alleged untrue statement, omission or alleged
omission made in a preliminary prospectus on file with the Commission at the
time the registration statement becomes effective or the amended prospectus
filed with the Commission pursuant to Rule 424(b) (the "FINAL PROSPECTUS"), such
indemnity agreement shall not inure to the benefit of any Holder, if due to the
fault of such Holder a copy of the Final Prospectus was not furnished to the
person asserting the loss, liability, claim or damage at or prior to the time
such action is required by the Securities Act, and if the Final Prospectus would
have cured the defect giving rise to the loss, liability, claim or damage.
(b) Each Holder will, if Registrable Securities held
by such Holder are included in the securities as to which such registration is
being effected, indemnify the Company, each of its directors and officers, and
each person who controls the Company within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or any violation by
the Holder of the Securities Act, the Exchange Act, state securities laws or any
rule or regulation promulgated under such laws applicable to the Holder, and
will reimburse the Company, such other Holders, such directors, officers,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred, as such expenses are incurred, in connection with
investigating or defending any such claim, loss, damage, liability or action,
but in the case of the Company or the other Holders or their officers, directors
or controlling persons, only to the extent that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with information furnished to the Company by
such Holder in writing and stated to be specifically for use therein.
Notwithstanding the foregoing, (i) no indemnifying Holder will be liable in any
such case for amounts paid in settlement without such Holder's prior written
consent (which shall not be unreasonably withheld), and (ii) the liability of
each Holder
11
under this subsection 5.7(b) shall be limited to an amount equal to the net
proceeds received by such Holder for the shares sold by such Holder, unless such
liability arises out of or is based on willful misconduct by such Holder.
(c) Each party entitled to indemnification under this
Section 5.7 (the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action and provided further, that the Indemnifying Party shall not
assume the defense for matters as to which there is a conflict of interest or
there are separate and different defenses. No Indemnifying Party, in the defense
of any such claim or litigation, shall, except with the consent of each
Indemnified Party (whose consent shall not be unreasonably withheld), consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) In connection with each registration statement
relating to the disposition of Registrable Securities if the indemnification
provided for in subsection (i) hereof is unavailable to an Indemnified Party
thereunder in respect to any losses, claims, damages or liabilities referred to
therein, then the Company shall in lieu of indemnifying such Indemnified Party,
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities. The amount to be contributed by
the Company hereunder shall be an amount which is in the same proportionate
relationship to the total amount of such losses, claims, damages or liabilities
as the total net proceeds from the offering (before deducting expenses) of the
Registrable Securities bears to the total price to the public (including
underwriters' discounts) for the offering of securities covered by such
registration.
5.8. INFORMATION BY HOLDER. The Holders of Registrable
Securities included in any registration shall furnish to the Company in writing
such information regarding such Holder or Holders, the Registrable Securities
held by them and the distribution proposed by such Holder or Holders as the
Company may request in writing and as shall be required in connection with any
registration referred to in this Agreement.
5.9. RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to use all reasonable efforts to:
12
(a) Make and keep public information available, as
those terms are understood and defined in Rule 144 promulgated under the
Securities Act, at all times after the effective date that the Company becomes
subject to the reporting requirements of the Securities Act or the Exchange Act;
(b) File with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act (at any time after it has become subject to such reporting
requirements); and
(c) So long as a Holder owns any Restricted
Securities, to furnish to the Holder forthwith upon request a written statement
by the Company as to its compliance with the reporting requirements of said Rule
144 promulgated under the Securities Act (at any time after 90 days after the
effective date of the first registration statement filed by the Company for an
offering of its securities to the general public), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company and other information in the possession of or reasonably
obtainable by the Company as the Holder may reasonably request in availing
itself of any rule or regulation of the Commission allowing the Holder to sell
any such securities without registration.
5.10. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register securities granted Holders under Sections 5.1, 5.2 and 5.3
may be assigned to a transferee or assignee in connection with any permitted
transfer or assignment of Registrable Securities by the Purchaser (and by any
other Holder) Holder provided that: (i) such transfer is otherwise effected in
accordance with applicable securities laws and the terms of this Agreement, (ii)
such assignee or transferee acquires (A) at least 25% (as adjusted for stock
splits, stock dividends, stock combinations and the like) of the Registrable
Securities, or (B) all of the Registrable Securities owned by the Holder, (iii)
written notice is promptly given to the Company, and (iv) such transferee agrees
in writing to be bound by the provisions of this Agreement. Notwithstanding the
foregoing, the rights to cause the Company to register securities may be
assigned without compliance with item (ii) above to (x) any constituent partner
(or retired partner), member or shareholder of a Holder which is a partnership,
limited liability company or corporation, or an affiliate (as such term is
defined in Rule 405 of the Securities Act) of such Holder or (y) a family member
or trust for the benefit of a Holder who is an individual, or a trust for the
benefit of a family member of such a Holder or the Holder's estate.
5.11. TERMINATION OF REGISTRATION RIGHTS. The rights granted
pursuant to Sections 5.1, 5.2 and 5.3 of this Agreement shall terminate on the
date that is three years after the effective date of the Company's firm
commitment initial public offering of shares of Common Stock or when Holder can
act under 144(k) in order to sell all of Holder's shares, if earlier.
5.12. SUCCESSORS. The Company shall not be sold to or merge
into another entity unless the entity surviving the sale or merger shall assume
all of the Company's obligations under this Article 5.
6. COVENANTS OF THE COMPANY; The Company hereby covenants and agrees, so
long as there is any remaining balance owed to Purchaser under the Promissory
Note (except as
13
to 6.8 which covenant will remain after the purchaser is paid in full under the
Promissory Note), as follows:
6.1. FINANCIAL INFORMATION.
(a) The Company will provide the following reports to
each Purchaser:
(i) As soon as practicable after the end of
the fiscal year ending December 31, 2000 and each fiscal year thereafter, and in
any event within 90 days after the end of each such fiscal year, consolidated
balance sheets of the Company and its subsidiaries, if any, as of the end of
such fiscal year, and consolidated statements of operations and consolidated
statements of cash flows and stockholders' equity of the Company and its
subsidiaries, if any, for such year, prepared in accordance with generally
accepted accounting principles applied on a consistent basis and setting forth
in each case in comparative form the figures for the previous fiscal year, all
in reasonable detail and audited by independent public accountants of national
standing selected by the Company, and a capitalization table in reasonable
detail for such fiscal year; and
(ii) As soon as practicable after the end of
each month and in any event within 30 days thereafter, a consolidated balance
sheet of the Company and its subsidiaries, if any, as of the end of each month,
and consolidated statements of operations of the Company and its subsidiaries,
if any, for such period and for the current fiscal year to date, prepared in
accordance with generally accepted accounting principles (other than
accompanying notes) applied on a consistent basis, subject to changes resulting
from year-end audit adjustments, in reasonable detail and signed by the
principal financial or accounting officer of the Company.
(b) The Company will provide the following
reports to each Purchaser:
(iii) Prior to the beginning of each fiscal
year, commencing with the fiscal year beginning January 1, 2001, a budget on a
monthly basis as adopted by the Company's Board of Directors for the fiscal
year; and
(iv) Promptly after transmission or
occurrence, and in any event within 10 days thereof, (A) copies of all material
written communications by the Company to its shareholders or the financial
community generally, to its accountants and business consultants, or to
governmental agencies or authorities, (B) copies of reports filed by the Company
or, if the report relates to the Company, by its officers, directors and
representatives with the Commission or any stock exchange, and (C) notice of any
event which may reasonably be expected to have a significant material adverse
effect on the Company's business prospects or financial condition or such
Purchaser's investment in the Company.
6.2. 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 and levies imposed upon the
income, profits, property or business of the Company; provided, however, that
any such tax, assessment, charge or levy need
14
not be paid if the validity thereof shall be contested in good faith by
appropriate proceedings and if the Company shall have set aside on its books
adequate reserves with respect thereto.
6.3. MAINTENANCE OF PROPERTIES AND LEASES. The Company will
keep its properties in good repair, working order and condition, reasonable wear
and tear excepted; and the Company will comply with the material provisions of
all leases to which it is a party under which it occupies property if the breach
of any such lease would have a material and adverse effect on condition,
financial or otherwise, of the Company.
6.4. INSURANCE. The Company will keep its assets 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, and 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.
6.5. KEY PERSON LIFE INSURANCE. The Company has as of the date
hereof or shall within 90 days of the date hereof use its best efforts to obtain
from financially sound and reputable insurers term life insurance on the life of
Xxxxx Xxxxxx in the amount of $1,000,000. The Company will cause to be
maintained such term life insurance until the Obligations are paid in full. Such
policies shall name the Company as loss payee and shall not be cancelable by the
Company without prior approval of the Board of Directors.
6.6. COMPLIANCE WITH REQUIREMENTS OF GOVERNMENTAL AUTHORITIES.
The Company shall duly observe and conform to all valid requirements of
governmental authorities relating to the conduct of its business or to its
assets or properties.
6.7. MAINTENANCE OF CORPORATE EXISTENCE. The Company shall
maintain in full force and effect its corporate existence, rights and franchises
and all licenses and rights in or to the licenses, patents, processes,
trademarks, trade names or copyrights owned or possessed by it and deemed by the
Company to be necessary to the conduct of its business.
6.8. BOARD OF DIRECTORS. The Company shall take all
appropriate actions to fix and maintain a Board of Directors of five persons,
unless the Board shall otherwise determine. The Purchaser, if he desires, shall
be a member of the Board of Directors.
6.9. TRANSACTIONS WITH AFFILIATES. The Company shall not,
without the approval of the Purchaser, engage in any loans, leases, contracts or
other transactions with any director, officer or key employee of the Company, or
any member of such person's immediate family, on terms less favorable than the
Company would obtain in a transaction with an unrelated party, determined by the
Board of Directors.
6.10. USE OF PROCEEDS. The Company shall use the proceeds that
it receives under this Agreement substantially as indicated on the budget
attached hereto (Exhibit D) except with the prior written consent of Purchaser.
15
6.11. LIMITATION ON ISSUANCES OF ADDITIONAL SHARES. Without
the prior written consent of the Purchaser, the Company will not authorize or
issue any shares of its capital stock.
6.12. LIMITATION ON DIVIDENDS AND DISTRIBUTIONS. Without the
prior written consent of the Purchaser, the Company will not (a) declare or pay
any dividends (cash or otherwise) on its Common Stock, (b) otherwise declare any
other type of distributions, or (c) repurchase or redeem any shares of its
stock.
6.13. RESTRICTIONS OF LOANS. Until the Obligations are paid in
full, without the prior written consent of the Purchaser, the Company shall not
(a) make or permit any direct or indirect subsidiary to make loans or advances
of funds whatsoever, even to a wholly-owned subsidiary of the Company, (b) make
loans or advances of funds to any employee, or (c) take or permit any direct or
indirect subsidiary to take any loans whatsoever.
6.14. LIMITATIONS OF GUARANTEES. Without the written consent
of the Purchaser, the Company shall not, and shall not permit any direct or
indirect subsidiary to, guarantee the indebtedness of another person or entity,
other than guaranties of the indebtedness of the Company or a direct or indirect
subsidiary of the Company, if such indebtedness is incurred in the ordinary
course of such subsidiary's business.
6.15. LIMITATION ON MERGER, SALE OF ASSETS. Without the prior
written consent of the Purchaser, the Company shall not merge, and shall not
permit any direct or indirect subsidiary to, merge or consolidate with or into
another entity or sell (or permit any direct or indirect subsidiary to sell) any
of its assets, including but not limited to its technology, outside of the
ordinary course of business.
6.16. LIMITATION ON INVESTMENTS. Until the Obligations are
paid in full, without the written consent of the Purchaser, the Company shall
not own or permit any direct or indirect subsidiary, to own any part of any
third party.
6.17. LIMITATION ON LIENS, MANAGEMENT COMPENSATION AND CAPITAL
EXPENDITURES. Without the Puchaser's written approval, the Company shall not:
(a) Mortgage, pledge, or grant a security interest in
any of the assets of the Company, including but not limited to its technology,
nor permit any subsidiary to do the same in respect of any of its assets; or
(b) Increase compensation to management of the
Company above the levels of compensation as they existed prior to the time of
execution hereof and as represented by the Company to Purchaser (it being
acknowledged by Purchaser that Purchaser will consider in good faith any
reasonable request and any resulting approval, if given, may be made orally for
purposes of this subparagraph 6.17(b) only); or
(c) Make any capital expenditures in excess of those
identified in the Company's budget attached hereto and submitted to the
Purchaser.
16
6.18. TRANSFER OF RIGHTS. The rights granted pursuant to
Section 6.1(a) and (b) may be assigned to any transferee, other than a
competitor or potential competitor of the Company (as reasonably determined by
the Company's Board of Directors) so long as such transferee agrees in writing,
acknowledges and agrees that certain information obtained pursuant to this
Section 6 may be considered nonpublic information and will be maintained in
confidence by such Purchaser or transferee and will not be utilized by such
Purchaser or transferee in connection with purchases or sales of the Company's
securities except in compliance with applicable state and Federal securities
laws.
7. CO-SALE RIGHTS.
(a) Generally. Except as set out in Section 7(c)
hereof, in the event that a major or significant shareholder receives a bona
fide offer from any person or entity to purchase any of his or her Stock, such
shareholder (the "SELLING SHAREHOLDER") shall give notice (the "TRANSFER
NOTICE") to the Purchasers (the "OFFEREE HOLDERS") of his intention to transfer
such shares, describing the number of shares of Significant Holders' Stock
proposed to be transferred (the "OFFERED SHARES"), the percentage that the
Offered Shares are of all such Significant Holders' Stock before giving effect
to the transfer contemplated by the Transfer Notice (the "APPLICABLE
PERCENTAGE"), the identity of the proposed transferee (the "Buyer"), the price
and terms upon which he proposes to make such transfer, the aggregate number of
shares of Conversion Stock then held or issuable upon conversion of all
outstanding shares of Preferred Stock held by all Offeree Holders (such
aggregate number is herein referred to as the "HOLDERS' SHARES"), and the number
of Eligible Shares. As used herein, "ELIGIBLE SHARES" means the product of (x)
the number of Holders' Shares multiplied by (y) the Applicable Percentage. The
Selling Shareholder shall advise the Buyer of the co-sale rights provided by
this Section 7, and inquire of the Buyer whether the Buyer is willing to
purchase a number of shares equal to the sum of the Offered Shares plus the
Eligible Shares, and shall advise the Offeree Holders of the Buyer's response in
the Transfer Notice.
Subject to the provisions of this Section 7, the
Selling Shareholder shall have the right to sell Offered Shares to the Buyer and
the Offeree Holders (as a group) shall have the right to sell Eligible Shares to
the Buyer, each in the ratio that the aggregate number of Holders' Shares bears
to all such Significant Holders' Stock (in each case as determined at the date
of the Transfer Notice), until all shares which the Buyer is willing to purchase
have been purchased from the Holders' Shares and the Eligible Shares according
to the foregoing ratio. By way of example, if the Selling Shareholder owns
60,000 shares of Significant Holders' Stock and the number of Eligible Shares is
48,000, the aforementioned ratio would be 6.0 to 4.8. If the Buyer were willing
to purchase 20,000 shares, the Selling Shareholder would have the right to sell
6.0 shares of Significant Holders' Stock for every 4.8 Eligible Shares that the
Offeree Holders (as a group) have the right to sell, until a total of 20,000
shares are allocated to the Buyer as between the Selling Shareholder and the
Offeree Holders (as a group). If any Offeree Holder elects not to sell any or
all of the Holders' Shares that such Offeree Holder has the right to sell
hereunder, the other Offeree Holders who elect to sell shall have the right to
sell such additional number of Holders' Shares as may be required to sell the
full number of Eligible Shares stated in the Transfer Note. Such additional
Holders' Shares may be sold by each of such other Offeree
17
Holders in accordance with their pro rata share (hereinafter defined).
Within fifteen (15) days after delivery of
the Transfer Notice, each Offeree Holder may elect to sell up to such person's
pro rata share (as defined herein) of the Eligible Shares to be allocated as
described above. An Offeree Holder shall make such election to sell by giving
written notice thereof to the Significant Holder and the Secretary of the
Company. Prior to the sale to the Buyer, each electing Offeree Holder shall
tender to the Secretary of the Company a certificate representing the shares to
be sold, properly endorsed for transfer, with written instructions to transfer
the shares to the transferee described in the Transfer Notice upon receipt of
payment for such shares from such transferee for the benefit of such Offeree
Holder. The Selling Shareholder shall instruct the Buyer to deliver payment for
the shares to be purchased by such transferee to the Secretary of the Company,
who shall transmit such payment to the Selling Shareholder and the Offeree
Holders in payment for the shares sold by each. For the purpose of the rights
set forth in this Section 7(a), the "pro rata share" of an Offeree Holder shall
be equal to the quotient obtained when the number of Holders' Shares held by
such Offeree Holder is divided by the number of Holders' Shares held by all
Offeree Holders at the date of the Transfer Notice.
(b) Sale After Notice. To the extent the Purchasers
decline to exercise the co-sale right as allowed by this Section, the Selling
Shareholder may, within ninety (90) days after the date on which the Purchasers'
co-sale rights lapsed, transfer some or all of the Significant Holders' Stock
which were the subject of the Transfer Notice at a price and on terms no less
favorable to the transferees than specified in the Transfer Notice. Significant
Holders' Stock transferred in accordance with the provisions of this Section 7
shall no longer be subject to the restrictions on Significant Holders' Stock set
forth in this Section 7. After the expiration of said ninety (90) day period,
the Selling Shareholder shall not transfer any of his Significant Holders' Stock
without first complying with the provisions of Section 7(a).
(c) Exempt Transfers. Any transfer of Significant
Holders' Stock without consideration to a family member of the Significant
Holder or a trust or custodian for the benefit of the Significant Holder or a
family member of the Significant Holder shall not be subject to the provisions
of this Section 7, provided that the transferee agrees in writing to be bound by
the provisions of this Section 7 with respect to any subsequent transfer of such
shares.
(d) Transferability. The rights granted under this
Section 7 may not be assigned except for (i) a transaction involving the
distribution without consideration of shares of Common Stock held by a Purchaser
to its constituent partners (or retired partners), members or shareholders in
proportion to their ownership interests in such holder or (ii) in connection
with a transfer of Preferred Stock and Conversion Stock by the holder whereby
such transferee acquires all of such securities held by the Purchaser.
(e) Termination. The rights of the Purchasers
pursuant to this Section 7 shall not apply to any offering of capital stock made
pursuant to a registration statement and shall terminate and be of no further
force or effect upon the closing of the Company's initial public offering of its
Common Stock pursuant to a registration statement declared effective by the
Commission.
18
(f) Restrictive Legend. Each certificate
representing the stock subject to this co-sale restriction shall be stamped or
otherwise imprinted with a legend in substantially the following form (in
addition to any legends required by agreement or by applicable state securities
laws):
TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO CERTAIN CO-SALE PROVISIONS SET FORTH IN AN
AGREEMENT BETWEEN THE HOLDER, THE ISSUER, AND CERTAIN OTHER
HOLDERS OF STOCK OF THE ISSUER, A COPY OF WHICH MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER.
8. BOARD OF DIRECTORS. Each Significant Holder and each Purchaser
hereby agrees to vote his shares of the Company's voting securities in such a
manner as to effect election as members of the Company's board of directors as
provided for in Section 6.8 hereof.
9. RIGHT TO PARTICIPATE IN FUTURE OFFERINGS.
The Company hereby grants the Purchaser the right to participate in all
future offerings by the Company of its equity securities (including securities
which by their terms are convertible or exchangeable for such equity securities
(hereinafter called "Derivative Securities")), and the Purchaser shall have the
right in connection with any such offering to purchase, for his own account and
on such terms and conditions as are made available to other purchasers of such
equity securities, such number of shares (assuming full conversion and exchange
of all outstanding Derivative Securities) as is necessary to enable the
Purchaser to own 6.17% (or the Appropriate Percentage if greater as defined
below) of the outstanding equity of the Company on any date of determination, on
a fully diluted basis.
Appropriate Percentage is defined as the percentage ownership Purchaser
has just prior to any such future offerings. By way of explanation, the 6.17%
represents Purchasers $250,000 investment compared to the total invested amount
after giving effect to the contemplated $4.0 Million next round investment.
Should the next round contemplated investment bring in less than $4.0 Million,
the Appropriate Percentage would be the greater number as calculated by
Purchaser's investment ($250,000) divided by the total amount invested in the
company after said next round. Purchaser's right to participate in each offering
after the contemplated one mentioned would be to the extent enabling Purchaser
to own the Appropriate Percentage of the Company (as may be recalculated each
time there is a new financing). Should the initial contemplated investment bring
more than $4.0 Million, Purchaser's percentage ownership would necessarily be
less but Purchaser's lowest limit for purposes under this section 9 at any time
is set at 6.17%. Purchaser's right hereunder would not cease in future offerings
if Purchaser elected not to participate in any prior offerings. Notwithstanding
the foregoing, Purchaser's continuing right under this Section 9 will
immediately cease after the completion of an initial public offering.
19
10. AMENDMENT. Except as otherwise provided above, any provision of
this Agreement may be amended or the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the.
11. GOVERNING LAW. This Agreement shall be governed in all respects by
the internal laws of the State of California without regard to conflict of laws
provisions.
12. ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and Agreement among the parties regarding the matters set forth
herein. Except as otherwise expressly 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.
13. 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, or otherwise delivered by facsimile
transmission, by hand or by messenger, addressed:
(a) if to the Purchaser, at Purchaser's address as
set forth in Exhibit A, or at such other address as Purchaser shall have
furnished to the Company with copies to:
Xxxxx Xxxx LLP
Xxx Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxxxx
Fax: (000) 000-0000
And to
Xxxxxxxx Xxxxx
00000 Xxxxxxxxx Xx.
Xxxxxx Xxxxx, XX 00000
(b) if to the Company, to the address as listed in
the opening paragraph or at such other address as the Company shall have
furnished to the Holders, with a copy to:
Xxxxx Xxxxxxxx
Resch, Polster, Xxxxxx & Xxxxxx, LLP
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxxx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
Each such notice or other communication shall for all purposes
of this Agreement be treated as effective or having been given when delivered if
delivered personally, if sent by 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 72 hours after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid.
20
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
16. EFFECTIVE DATE. This Agreement shall be effective upon execution by
both parties ("EFFECTIVE DATE").
21
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
"THE COMPANY"
STATMON TECHNOLOGIES CORP.,
a Delaware corporation
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------
Xxxxxxxx X. Xxxxxx, President
"SIGNIFICANT HOLDERS"
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
By:
-------------------------------
By:
-------------------------------
[Counterpart signature page to Statmon Technologies Corp. Note Purchase and
Shareholder Rights Agreement]
00
"XXX XXXXXXXXX"
/s/ Xxxx Xxxx
-----------------------------------
Xxxx Xxxx
[Counterpart Signature page to Statmon Technologies Corp. Note Purchase and
Shareholder Rights Agreement]
23
EXHIBIT A
(To the Statmon Technologies Corp. Note Purchase and Shareholder Rights
Agreement)
SCHEDULE OF HOLDERS
"THE SIGNIFICANT HOLDERS" SHARES OF COMMON STOCK
------------------------- ----------------------
Xxxxx X. Xxxxxx 1,200,000
Xxxxxxxx X. Xxxxxx 800,000
"THE PURCHASER"
NAME AND ADDRESS PHONE FAX $ COMMITMENT
---------------- ------------ ------------- ------------
Xxxx Xxxx 000-000-0000 $250,000
0000 00xx Xx.
Xxxxx Xxxxxx, XX 00000
EXHIBIT B
(To the Statmon Technologies Corp. Note Purchase and Shareholder Rights
Agreement)
PROMISSORY NOTE
2
PROMISSORY NOTE DUE SEPTEMBER 8, 2001
OR SUCH ACCELERATED DUE DATE AS PROVIDED
FOR IN SECTION 1 HEREIN.
Amount - $250,000 Date: September 8, 2000
Statmon Technologies Corp., a Delaware Corporation (hereinafter called the
"Company"), for value received, hereby promises to pay to Xxxx Xxxx, 0000 00xx
Xxxxxx, Xxxxx Xxxxxx, XX 00000 or registered assigns (the "Payee" or "Holder"),
on the 8th day of September, 2001 (the "Due Date") or such accelerated due date
as described in Section 1 hereof, the principal amount of two hundred and fifty
thousand ($250,000) dollars, plus interest at 10% per annum (computed on the
basis of a 360-day year comprised of 12 thirty day months) from the date hereof
through the Due Date (or through Accelerated Due Date if payment is triggered
pursuant to Paragraph 1 below). Interest will continue to accrue if payment is
not timely made in accordance with the terms of this Note. The principal and
interest hereof is payable by wire transfer pursuant to wire instructions to be
provided by Payee to Company, in lawful currency of the United States of
America.
1. ACCELERATED DUE DATE; MANDATORY PRE-PAYMENT. Anything contained herein
to the contrary notwithstanding, the full principal amount of this Note
and any accrued but unpaid interest shall become due and payable prior
to the Due Date otherwise provided for herein, and shall be and become
due and payable on a date (the "Accelerated Due Date") which is ten (10)
days following the closing of any transaction involving the Company's
issuance of equity or debt securities or any collateralized borrowings
in which the Company shall have received, prior to the Due Date, gross
proceeds of not less than $750,000 (the "Financing Transaction").
2. RESTRICTIONS ON TRANSFER. This Note may not be transferred or assigned
unless a Registration Statement with respect thereto under the
Securities Act of 1933, as amended (the "Act"), is at the time in
effect, or transfer or assignment is in accordance with and pursuant to
an exemption from the registration requirements of the Act and the
transfer or assignment is in compliance with state securities laws.
3. BINDING EFFECT. The Company agrees that the provisions of this Note
shall bind and shall inure to the benefit of the parties hereto and
their successors and assigns. Company agrees that the rights granted to
the Holder pursuant to this Note shall accrue to any endorsee of this
Note who is lawfully in possession of this Note.
4. AMENDMENT AND WAIVER. The terms of this Note may not be modified or
amended unless such modification or amendment is in writing and signed
by the Holder. No delay or omission on the part of the Holder in
exercising any right or remedy to enforce this Note shall operate as a
waiver of such right or remedy under this Note. No waiver by Holder of
any right or remedy shall be effective unless in writing and signed
by the Holder, and no such waiver on one or more occasions shall be
construed as a waiver on any other occasion. The Company waives any
right it has to a jury trial and waives presentment, notice and protest
and all other demands and notices in connection with the delivery,
acceptance, performance, default or
1 of 2
enforcement of this Note and agrees to any extension of the time of
payment or other indulgence permitted by the Holder and to the addition
or release of any other party or person primarily or secondarily liable
for the payment of this Note.
5. INTEREST. Ten percent (10%) APR as stated above and payable in full at
time of repayment. Interest on any amount not paid which due will accrue
interest at the rate of 15% per annum, from the date due through the
date of payment.
6. COMMUNICATIONS. All notices and other communications provided for
hereunder or under the Notes shall be in writing, and, if to Holder,
shall be delivered or mailed by certified mail addressed to you at your
address as shown above or as you may otherwise designate to the Company
in writing and, if to the Company, shall be delivered or mailed by
certified mail to the Company at 000 X. Xxxxxx Xxxxx, Xxxxx 000, Xxx
Xxxxxxx, XX 00000 or to such other address as the Company may designate
to Holder in writing. Alt such notices shall be deemed given when
received.
7. COSTS AND RIGHTS. The Company promises to pay the Holder all costs
(including but not limited to reasonable attorneys' fees and costs)
incurred by the Holder of this Note in collecting any amounts due
hereunder, whether or not litigation is commenced. The Company agrees
that the Holder shall have the rights and remedies available to a
creditors under, and that this Note shall be construed in accordance
with, the laws of the State of California without reference to the
choice of law principles thereof.
8. CALIFORNIA LAW AND JURISDICTION. This Note shall be construed in
accordance with and governed by the laws of the State of California
without regard to principles of conflicts of law. The Company consents
to the personal jurisdiction of the state or federal courts located in
Los Angeles, California for proceedings in respect of this Note.
9. HEADINGS. The headings of the sections of this Note are inserted for
convenience only and do not affect the meaning of such section.
IN WITNESS WHEREOF, STATMON TECHNOLOGIES CORP. has caused this Note to be signed
in its corporate name by a duly authorized officer and to be dated the date and
year first above written.
STATMON TECHNOLOGIES CORP.
/s/ Xxxxxxxx X. Xxxxxx
----------------------------
Xxxxxxxx X. Xxxxxx
Chief Executive Officer
2 of 2
EXHIBIT C
(To the Statmon Technologies Corp. Note Purchase and Shareholder Rights
Agreement)
TRADEMARK/PATENT SECURITY AGREEMENT
3
TRADEMARK SECURITY AGREEMENT
THIS AGREEMENT ("Agreement") is made this 3rd day of November, 2000
between Statmon Technologies Corp., a Delaware Corporation having its principal
place of business at 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxx Xxxxxxx, XX 00000
(the "Company"), and Xxxx Xxxx, 0000 00xx Xx., Xxxxx Xxxxxx XX 00000 (together
with his successors and assigns, "Lender").
WITNESSETH
WHEREAS, the Company desires to obtain loans from Lender pursuant to a
Note Purchase and Shareholder Rights Agreement and Promissory Note dated of even
date herewith, by and between the Company and Lender (hereinafter referred to,
together with all riders, exhibits, schedules and amendments thereto, as the
"Note Purchase Agreement"); and
WHEREAS, Lender is willing to make loans to the Company as specified in
the Note Agreement, provided the Company executes this Agreement;
NOW, THEREFORE, in consideration of moneys lent under the Note Purchase
Agreement, other valuable consideration including the promises made in the Note
Purchase Agreement, and Ten Dollars ($10.00), the receipt and sufficiency of
which is acknowledged by the Company, the Company agrees with Lender as follows:
1. Unless otherwise defined herein, all capitalized terms used herein
shall have the meanings ascribed to them in the Note Purchase Agreement.
2. To secure the payment of all amounts owed under the Note Purchase
Agreement (such amounts owed hereinafter referred to as "Obligations"), the
Company hereby grants to Lender a continuing security interest in and lien upon
all of the right, title and interest of the Company in the following property,
whether now owned or existing or hereafter acquired (collectively, the
"Collateral");
a. all trademarks, trade names, trademark registrations, and
trademark applications, and all renewals thereof, patents, patent applications
and patent registrations and copyrights, copyright applications and copyright
registrations, including, without limitation, all those listed on Schedule A
attached hereto and made a part hereof (as the same may be amended from time to
time), together with all such named items which are hereafter adopted or
acquired by the Company, including without limitation all New Marks (as defined
below), as well as the goodwill of the Company's business connected with and
symbolized by such named items and all rights corresponding thereto throughout
the world (hereinafter collectively referred to as the "Marks");
b. all income, royalties, damages, and payments now or
hereafter due or payable with respect to the Marks, including, without
limitation, damages and payments for past or future infringements thereof; and
c. all Proceeds of the foregoing. "Proceeds" shall have the
meaning assigned to it under Section 9-306 of the Code (as defined below).
3. The Company represents and warrants to Lender that:
a. each of the registrations for the Marks as shown on
Schedule A is subsisting and has not been adjudged invalid or unenforceable.
b. upon filing of this Agreement in the United States Patent
and Trademark office (hereinafter "USPTO") against each U.S. Trademark
registration and pending application, and the filing of UCC-1 Financing
Statement in compliance with the Uniform Commercial Code ("Code") as in effect
in the State(s) of California covering all general intangibles now owned or
hereafter acquired by the Company, Lender will have legal, valid and perfected
lien upon and security interest in the Collateral (other than foreign trademark
registrations and trademark applications), enforceable against the Company and
all third persons in accordance with its terms;
c. the Company is not aware of any claim that the use of any
of the Marks does or may violate the rights of any third person; and
d. the Company has the unqualified right to enter into this
Agreement and to perform its terms.
4. The Term of this Agreement will be from the date of execution
through the date the Obligations are paid in full to Lender by Company pursuant
to the Note Purchase Agreement, dated of even date herewith, (the "Term"), at
which time the rights granted herein will lapse and Lender will cooperate with
Company in releasing Lender's security interests in the Marks by signing and
delivering any document or taking any act necessary to effect the intention of
this Agreement (all at Company expense).
5. The Company covenants and agrees with Lender that:
a. The Company owns all beneficial and ownership rights, title
and interest in and to all of the Marks, including without limitation all
applications and registrations listed on Schedule A, and the rights conferred by
those applications and registrations.
b. Except for the interests of licenses under Permitted
Licenses (as hereinafter defined), the Company is and will remain the sole and
exclusive owner, of the entire right, title and interest in and to the
Collateral, and will keep the same, unless with the prior written consent of
Lender, free and clear of any liens, charges, claims, rights and encumbrances,
including, without limitation, pledges, assignments, licenses, registered user
agreements and covenants by the Company not to xxx third persons;
c. The Company will maintain the quality of the products
associated with the Marks, at a level at least consistent with or better than
the quality at the time of this Agreement, and will provide Lender at Lender's
request quarterly with a certificate to that effect, executed by an officer of
the Company;
d. The Company will not lower the quality of the products
associated with the Marks without Lender's prior written consent;
e. The Company has used, and will continue to use for the
duration of this Agreement, required statutory notice in connection with its use
of the Marks; and
7
f. The Company shall not abandon any of the Marks without
Lender's prior written consent, including, without limitation, by failure to
file an affidavit of use with the USPTO during the sixth year of a United States
registration as required by law. Company will not do any act, or omit to do any
act, whereby the Marks or any registration or application appurtenant thereto,
may become abandoned, invalidated, unenforceable, avoided, avoidable, or will
otherwise diminish in value, and shall notify Lender immediately if it knows of
any reason or has reason to know of any ground under which this result may
occur. The Company shall take appropriate action at its expense to halt any
known material infringement of the Marks and shall properly exercise its duty to
properly control its licensees in connection with any Permitted Licenses.
6. The Company hereby grants to Lender and Lender's employees and
agents, the right to visit upon reasonable advance notice (which in no event
will exceed two business days) the Company's plants and facilities which
manufacture, inspect or store products sold under any of the Marks and to
inspect the products and quality control records relating thereto at reasonable
times during regular business hours provided that no more than four Lender
representatives may be present during any The Company shall do any and all
acts reasonably required by Lender to ensure the Company's compliance with
paragraph 5(c) of this Agreement.
7. Through the end of the Term as defined above, the Company shall not
sell the Marks, grant or assign any security or other interest in any of the
Marks, or enter into any license agreement with respect to any of the Marks
other than Permitted Licenses unless the proceeds thereof are used in whole or
in part to pay in full the Obligations. As used herein, the term "Permitted
Licenses" shall mean and include such licenses as the company shall enter into
which are on a commercially reasonable and an arms length basis subject to
Lender's security interest or which Lender may hereafter approve in writing in
its sole discretion. The Company shall give to Lender written notice within
fifteen (15) days of the Company's entering into a Permitted License, the Marks
to be the subject of such license, and the terms of such license, and shall
provide Lender with a copy of the duly executed license agreement promptly after
execution thereof by the Company and the licensee.
8. If, before the end of the Term, the Company shall obtain rights to
any new trademarks, trade names, copyrights, or patents or any applications or
registrations thereto, whether registered or at common law, or become the owner
of or entitled to the benefit of any such applications or registration
(collectively, the "New Marks"), the provisions of paragraph 2 hereof shall
automatically apply to such New Marks and such New Marks shall automatically
become included in the definition of Marks. The Company shall give Lender prompt
notice of any application to register any New Xxxx, or the acquisition of any
registration for any New Xxxx in the United States or worldwide, in writing, but
in no event later than sixty (60) days after the filing of the application or
the acquisition of the registration of such New Xxxx; and shall periodically
update Schedule A and provide a copy to the Lender of any applications or for
registration of New Marks in the United States or elsewhere in the world.
9. The Company authorizes Lender to modify this Agreement by amending
Schedule A to include any future trademarks and trademark applications which are
or become Marks under Paragraph 2 or Paragraph 8 hereof.
10. The Company agrees to execute and deliver to Lender such further
papers and to do such other acts as may be reasonably necessary and proper to
accomplish the purposes of this Agreement, including without limitation, in
order to perfect or continue the perfection of Lender's security interest in all
of the Collateral. At any time and from time to time, upon the written request
of Lender, Company will promptly and duly, execute and deliver any and all such
further instruments and documents and take such further action as Lender may
reasonably deem desirable in obtaining the full benefits of this Agreement and
of the rights and powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the Code with respect
to the liens and security interests granted hereby. Company also hereby
authorizes Lender to file any such financing or continuation statement without
the signature of the Company to the extent permitted by applicable law. If any
amount payable under or in connection with any of the Collateral shall be or
become evidenced by any promissory note or other instrument, such note or
instrument shall be promptly pledged to Lender hereunder, duly endorsed in a
manner reasonably satisfactory to Lender.
11. Upon or after the occurrence of an Event of Default, Lender shall
have, in addition to all other rights and remedies given it by this Agreement
and the Note Purchase Agreement, all rights and remedies under applicable law
and all rights and remedies of a secured party under the Uniform Commercial Code
as adopted and then in force in the State of California. Without limiting the
generality of the foregoing, Lender may immediately, without notice or demand,
each of which the Company hereby waives, collect directly any payments due the
Company in respect of the Collateral, including without limitation the right of
the Lender under any Permitted Licenses, to file any claim or to take any other
action or proceeding in any court of law or equity or otherwise deemed
appropriate by Lender for the purpose of collecting any and all such moneys due
under any Permitted License, whenever payable. Additionally, the Lender pursuant
to the Code may sell at public or private sale or otherwise realize from time to
time upon all or any of the Collateral. Upon the occurrence and continuance of
an Event of Default the Lender may also (A) commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to enforce any
other right in respect of any Collateral; (B) defend any suit, action or
proceeding described above and, in connection therewith, to give such discharges
or releases as Lender may deem appropriate; and (D) generally to sell, transfer,
pledge, make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though Lender were the absolute owner
thereof for all purposes, and to do, at Lender's option all acts and things
which Lender deems reasonable and necessary to protect, preserve or realize upon
the Collateral and Lender's
security interest therein, in order to effect the intent of this Agreement, all
as fully and effectively as Company might do. The Company hereby agrees that
fifteen (15) days written notice to the Company of any public or private sale or
other disposition of any of the Collateral shall be reasonable notice; provided,
however, that no notice shall be required hereunder if not otherwise required by
applicable law. At any such sale or disposition, Lender may to the extent
permitted by law, purchase the whole or any part of the Collateral sold, free
from any right of redemption on the part of the Company, which right the Company
hereby waives and releases. After deducting from the proceeds of such sale or
other disposition of the Collateral all reasonable costs and expenses incurred
by Lender in enforcing its rights hereunder (including, without limitation, all
brokers' fees, auctioneers' fees and reasonable attorneys' fees actually
incurred), Lender shall apply the remainder of such proceeds to the Obligations
in such order and manner as Lender in its sole discretion may determine. All
payments received by Company under or in connection with any of the Collateral
shall be held by Company in trust for Lender, shall be segregated from other
funds of Company and shall forthwith upon receipt by Company, be turned over to
Lender, in the same form as received by Company (duly indorsed by Company to
Lender, if required) and such payments so received by Lender (whether from
Company or otherwise) may, in the sole discretion of Lender, be held by Lender
as collateral security for, and/or then or at any time thereafter applied in
whole or in part by Lender against all or any part of, the Obligations in such
order as Lender shall elect. Any remainder of the proceeds after payment in full
of the Obligations shall be paid over to the Company. If any deficiency shall
arise, the Company and each guarantor of the Obligations shall remain jointly
and severally liable to Lender therefore.
12. The Company hereby irrevocably makes, constitutes and appoints
Lender and any officer or agent of Lender as Lender may select, with full power
of substitution, as the Company's true and lawful attorney-in-fact, with full
power to do any or all of the following if an Event of Default shall occur and
be continuing: to endorse the Company's name on all applications, documents,
papers and instruments necessary for Lender to use the Marks, or to grant or
issue any exclusive or nonexclusive license under the Trademarks to any other
person or entity, or to assign, pledge, convey or otherwise transfer title in or
dispose of the Collateral to any other person or entity. The Company hereby
ratifies all that such attorney shall lawfully do or cause to be done by virtue
hereof. This power of attorney shall be irrevocable until all of the Obligations
shall have been satisfied in full. The powers conferred on Lender hereunder are
solely to protect its interests in the Collateral and shall not impose any duty
upon it to exercise any such powers. Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers and
neither it nor any of its officers, directors, employees or agents shall be
responsible to Company for any act or failure to act, except for its own willful
misconduct.
13. Any and all fees, costs and expenses, of whatever kind or nature,
including attorneys' fees and legal expenses, actually incurred by Lender in
connection with the filing or recording of any documents (including all taxes in
connection therewith) in public offices, the payment or discharge of any taxes,
counsel fees, maintenance fees, encumbrances or otherwise protecting,
maintaining, or preserving the Collateral, or in defending or prosecuting any
actions or proceedings arising out of or related to the
Collateral, shall be borne and paid by the Company (it being the intent of the
Company and Lender that the Company shall be responsible for the payment of all
sums, fees, costs and expenses, including, without limitation, all governmental
fees with respect to the Marks) or, if paid by Lender, shall be paid by the
Company promptly on demand by Lender and until so paid shall be added to the
principal amount of the Obligations and shall bear interest at the rate per
annum in effect from time to time under the Promissory Note attached to the Note
Purchase Agreement. The Company assumes all responsibility and liability arising
from the use of the Marks, and Company hereby indemnifies, will defend and will
hold Lender harmless from and against any claim, suit, loss, damage or expense
(including reasonable attorneys' fees) arising out of Company's operations of
its business from the use of the Marks.
14. The Company shall use its best efforts to detect any infringers of
the Marks and shall notify Lender in writing of infringements detected. The
Company shall have the duty, through counsel reasonably acceptable to Lender, to
prosecute diligently any trademark application of the Marks pending as of the
date of this Agreement or thereafter until the Obligations shall have been paid
in full, to make application for registration in the USPTO or equivalent
governmental office outside the United States of registrable but unregistered
Marks in such jurisdictions, for such goods and services, and at such times as
the Company deems necessary in its reasonable business judgment, to file and
prosecute opposition and cancellation proceedings as are deemed reasonable and
necessary in the Company's reasonable business judgment, to file and prosecute
lawsuits to enforce the Marks as are deemed reasonable and necessary in the
Company's reasonable business judgment, and to do any and all acts which are
deemed necessary or desirable by Lender to preserve and maintain all rights in
the Marks. Any expenses incurred in connection with such applications or
proceedings shall be borne by the Company.
15. Lender shall have the right, but shall in no way be obligated, to
defend any suit or counterclaim in its own name in order to defend the Marks and
any license hereunder, in which event the Company shall, at the request of
Lender, do any and all lawful acts and execute any and all proper documents
required by Lender in aid of such defense and the Company shall promptly, upon
demand, reimburse and indemnify Lender for all costs and expenses incurred by
Lender in the exercise of its rights under this paragraph 15.
16. If the Company fails to comply with any of its obligations
hereunder, to the extent permitted by applicable law, Lender may do so in the
Company's name or in Lender's name, but at the Company's expense, and the
Company agrees to reimburse Lender in full for all expenses, including
reasonable attorneys' fees incurred by Lender in prosecuting, defending or
maintaining the Marks or Lender's interest therein pursuant to this Agreement.
17. No course of dealing between the Company and Lender, nor any
failure to exercise, nor any delay in exercising, on the part of Lender, any
right, power or privilege hereunder or under the Note Purchase Agreement shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
18. All of Lender's rights and remedies with respect to the Collateral,
whether established hereby or by the Note Purchase Agreement, or by any other
agreements or by law shall be cumulative and may be exercised singularly or
concurrently.
19. The provisions of this Agreement are severable, and if any clause
or provision is held invalid and unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
clause or provision, or part thereof, in such jurisdiction, and shall not in any
manner affect such clause or provision in any other jurisdiction, or any other
clause or provision of this Agreement in any jurisdiction.
20. Any notice to Lender shall be deemed to have been duly given five
days from when deposited in the mail, first class, postage prepaid, addressed to
Lender at the address listed in the opening paragraph or other address given to
the Company by Lender. Any notice to Company hereunder shall be deemed to have
been duly given 5 days from when deposited in the mail, first class postage
prepaid, addressed to Company at the address specified in the introductory
paragraph of this Agreement.
21. This Agreement is subject to modification only by a writing signed
by the parties hereto except as provided in paragraph 9 hereof.
22. The benefits and burdens of this Agreement shall inure to the
benefit of and be binding upon the successors and assigns of Lender and upon the
successors of the Company. The Company shall not assign its rights or delegate
its duties hereunder without the prior written consent of Lender.
23. Time is of the essence of this Agreement. No person or entity,
other than the parties hereto, shall be deemed to be a beneficiary hereof or
have the right to enforce any of the provisions of this Agreement.
24. This Agreement has been negotiated executed and delivered at and
shall be deemed to have been made in California. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
California and Company agrees to submit to the jurisdiction of the courts of
California.
THE UNITED STATES OF AMERICA
[SEAL]
CERTIFICATE OF REGISTRATION
PRINCIPAL REGISTER
THE XXXX SHOWN IN THIS CERTIFICATE HAS BEEN REGISTERED IN THE UNITED
STATES PATENT AND TRADEMARK OFFICE TO THE NAMED REGISTRANT.
THE RECORDS OF THE UNITED STATES PATENT AND TRADEMARK OFFICE SLOW THAT
AN APPLICATION FOR REGISTRATION OF THE XXXX SHOWN IN THIS CERTIFICATE WAS FILED
IN THE OFFICE; THAT THE APPLICATION WAS EXAMINED AND DETERMINED TO BE IN
COMPLIANCE WITH THE REQUIREMENTS OF THE LAW AND WITH THE REGULATIONS PRESCRIBED
BY THE COMMISSIONER OF PATENTS AND TRADEMARKS; AND THAT THE APPLICANT IS
ENTITLED TO REGISTRATION OF THE XXXX UNDER THE TRADEMARK ACT OF 1946, AS AMENDED
A COPY OF THE XXXX AND PERTINENT DATA FROM THE APPLICATION ARE PART OF
THIS CERTIFICATE.
THIS REGISTRATION SHALL REMAIN IN FORCE FOR TEN (10) YEARS, UNLESS
TERMINATED EARLIER AS PROVIDED BY LAW, AND SUBJECT TO COMPLIANCE WITH THE
PROVISIONS OF SECTION 8 OF THE TRADEMARK ACT OF 1946, AS AMENDED.
/s/ Q. Xxxx Xxxxxxxxx
COMMISSIONER OF PATENTS AND TRADEMARKS
INT. CL.: 9
PRIOR U.S. CLS.: 21, 23, 26, 00 XXX 00
Xxx. Xx. 0,000,000
XXXXXX XXXXXX PATENT AND TRADEMARK OFFICE REGISTERED MAR. 14, 2000
--------------------------------------------------------------------------------
TRADEMARK
PRINCIPAL REGISTER
STATMON
STATMON DEVELOPMENTS PTY. LIMITED COMPUTER NETWORK OR BY MEANS OF A
(AUSTRALIA CORPORATION) COMPACT DISK. IN CLASS 9 (U.S. CLS.
00 XXXXXX XXXXXX 21, 23, 26, 36 AND 38).
XXXX XXXX, XXX XXXXX XXXXX 0000,
XXXXXXXXX FIRST USE 6-22-1998; IN
COMMERCE 6-22-1998.
FOR: COMPUTER SOFTWARE FOR USE
IN MONITORING THE EQUIPMENT STATUS SER. NO.75-520,161, FILED
OF BROADCASTER TRANSMITTER SITES 7-16-1998.
THAT MAY BE DOWNLOADED FROM A GLOBAL
XXXXXXXXX X. XXXXXX, EXAMINING
ATTORNEY
[SEAL]
Certificate of registration
AUSTRALIA of trade xxxx
Xx. 000000
Xxxxxxxxxxxx Xxxxx Xxxxx Xxx 0000
of Australia
I, XXXX XXXXXX, Registrar of Trade Marks, hereby certify-
that the trade xxxx represented on this certificate has been registered as a
Trade Xxxx, No. 766927 in the Register of Trade Marks for a period of ten years
commencing 9 July 1998 and that Statmon Developments Pty Ltd of 00 Xxxxxx Xxxxxx
XXXX XXXX XXX 0000 XXXXXXXXX has been entered in the Register of Trade Marks as
the owner of the trade xxxx.
The trade xxxx is registered for the following goods and/or services:
Data processing equipment and computers being goods in class 9
THE SCHEDULE
STATMON
GIVEN UNDER MY HAND AND THE SEAL OF THE
TRADE MARKS OFFICE ON 14 MAY 1999
[COMMONWEALTH OF AUSTRALIA
TRADE MARKS OFFICE /s/ XXXX XXXXXX
SEAL]
XXXX XXXXXX
REGISTRAR OF TRADE MARKS
IN WITNESS the execution hereof under seal on the day and year first above
written.
Statmon Technologies Corp.
A Delaware Corporation
/s/ Xxxxxxxx X. Xxxxxx
-----------------------------
Xxxxxxxx X. Xxxxxx
Chief Executive Officer
/s/ Xxxx Xxxx
-----------------------------
Xxxx Xxxx
EXHIBIT D
(To the Statmon Technologies Corp. Note Purchase and Shareholder Rights
Agreement)
BUDGET
4
STATMON TECHNOLOGIES CORP.
USE OF PROCEEDS
September October November
---------- ---------- ----------
Total Budget Budget Budget
---------- -------------------------------------------
Software MSDN Universal Subscription 2,499.00 2,499.00 0.00 0.00
DevPartner Studio 1,249.00 1,249.00 0.00 0.00
Measurement Studio 995.00 995.00 0.00 0.00
IPWorks ActiveX Edition 345.00 345.00 0.00 0.00
Windows 2000 Professional 289.95 289.95 0.00 0.00
MallMax 599.00 599.00 0.00 0.00
Quickbooks Pro 199.00 199.00 0.00 0.00
---------- -------------------------------------------
6,175.95 6,175.95 0.00 0.00
HARDWARE Pocket PC (x4) 2,400.00 2,400.00 0.00 0.00
Videquip Units (x10) 7,500.00 7,500.00 0.00 0.00
Notebooks (x4) 14,000.00 14,000.00 0.00 0.00
Xerox Phaser 850 Color Printer 2,499.00 2,499.00 0.00 0.00
Development Machine (x2) 5,000.00 5,000.00 0.00 0.00
Misc 0.00 0.00 0.00 0.00
Web Server 2,000.00 2,000.00 0.00 0.00
---------- -------------------------------------------
33,399.00 33,399.00 0.00 0.00
PAYABLES Videquip Units (x10) 7,390.50 7,390.50 0.00 0.00
Triad 5,000.00 5,000.00 0.00 0.00
Pacific DataCom 800.00 800.00 0.00 0.00
Westwood Computers 200.00 200.00 0.00 0.00
---------- -------------------------------------------
13,390.50 13,390.50 0.00 0.00
SALES/MARKETING
Airfare (10 flights/mth.) 15,000.00 5,000.00 5,000.00 5,000.00
Meals, Hotel, Rental Car 7,000.00 2,500.00 2,500.00 2,000.00
Business development 3,000.00 1,000.00 1,000.00 1,000.00
Sales Collaterals/Stationary 8,000.00 8,000.00 0.00 0.00
Publicity 4,000.00 1,500.00 1,500.00 1,000.00
Marketing (shipping/mailers) 10,000.00 3,500.00 3,500.00 3,000.00
Telephone 6,000.00 2,000.00 2,000.00 2,000.00
---------- -------------------------------------------
53,000.00 23,500.00 15,500.00 14,000.00
MISC Short-Term Loan Repayment 25,000.00 25,000.00 0.00 0.00
Offering Legal Fees 50,000.00 30,000.00 20,000.00 0.00
Audit/Accounting 20,000.00 0.00 20,000.00 0.00
Travel/Accomodation/Ent 30,000.00 10,000.00 10,000.00 10,000.00
---------- -------------------------------------------
125,000.00 65,000.00 50,000.00 10,000.00
Working Capital 18,000.00 6,000.00 6,000.00 6,000.00
---------- -------------------------------------------
TOTAL 248,965.45 147,465.45 71,500.00 30,000.00
========== ===========================================
