EXHIBIT 10.24
STAMPMASTER, INC.
SERIES A PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
February 26, 1998
TABLE OF CONTENTS
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Page
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1. Purchase and Sale of Preferred Stock and Warrants......................1
1.1 Sale and Issuance of Series A Preferred Stock and Warrants.......1
1.2 Closing; Delivery................................................1
2. Representations and Warranties of the Company..........................2
2.1 Organization, Good Standing and Qualification....................2
2.2 Capitalization...................................................2
2.3 Subsidiaries.....................................................2
2.4 Authorization....................................................3
2.5 Valid Issuance of Securities.....................................3
2.6 Governmental Consents............................................3
2.7 Litigation.......................................................4
2.8 Intellectual Property............................................4
2.9 Compliance with Other Instruments................................4
2.10 Agreements; Action..............................................5
2.11 Disclosure......................................................5
2.12 No Conflict of Interest.........................................6
2.14 Title to Property and Assets....................................6
2.15 Financial Statements............................................6
2.16 Changes.........................................................7
2.17 Employee Benefit Plans..........................................8
2.18 Tax Returns and Payments........................................8
2.19 Insurance.......................................................8
2.20 Labor Agreements and Actions....................................8
2.21 Confidential Information and Invention Assignment Agreements....8
2.22 Permits.........................................................8
2.23 Corporate Documents.............................................9
2.24 Environmental and Safety Laws...................................9
2.25 Qualified Small Business Stock..................................9
2.26 Offering........................................................9
3. Representations and Warranties of the Purchasers.......................9
3.1 Authorization....................................................9
3.2 Purchase Entirely for Own Account................................9
3.3 Disclosure of Information.......................................10
3.4 Restricted Securities...........................................10
3.5 No Public Market................................................10
3.6 Legends.........................................................10
3.7 Accredited Investor.............................................11
4. Conditions of the Purchasers' Obligations at Closing..................11
4.1 Representations and Warranties..................................11
4.2 Performance.....................................................11
4.3 Compliance Certificate..........................................11
4.4 Qualifications..................................................11
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4.5 Opinion of Company Counsel......................................11
4.6 Board of Directors..............................................11
4.7 Investors' Rights Agreement.....................................11
4.8 Warrant.........................................................12
4.9 Voting Agreement................................................12
4.10 Restated Certificate...........................................12
4.11 Confidential Information and Invention Assignment Agreement....12
4.12 Minimum Investment.............................................12
4.13 Due Diligence..................................................12
4.14 Participation of all Purchasers................................12
4.15 Patent Assignments and License Back............................12
5. Conditions of the Company's Obligations at Closing....................12
5.1 Representations and Warranties..................................12
5.2 Performance.....................................................12
5.3 Qualifications..................................................13
6. Covenants.............................................................13
6.1 Stock Option Vesting............................................13
6.2 Chief Executive Officer Search..................................13
7. Miscellaneous.........................................................13
7.1 Survival of Warranties..........................................13
7.2 Transfer; Successors and Assigns................................13
7.3 Governing Law...................................................13
7.4 Counterparts....................................................13
7.5 Titles and Subtitles............................................14
7.6 Notices.........................................................14
7.7 Finder's Fee....................................................14
7.8 Fees and Expenses...............................................14
7.9 Attorney's Fees.................................................14
7.10 Amendments and Waivers.........................................14
7.11 Severability...................................................14
7.12 Delays or Omissions............................................15
7.13 Entire Agreement...............................................15
7.14 Corporate Securities Law.......................................15
7.15 Confidentiality................................................15
7.16 Exculpation Among Purchasers...................................15
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STAMPMASTER, INC.
SERIES A PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
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This Series A Preferred Stock and Warrant Purchase Agreement (the
"Agreement") is made as of the 26th day of February, 1998 by and between
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StampMaster, Inc., a Delaware corporation (the "Company") and the investors
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listed on Exhibit A attached hereto (each a "Purchaser" and together the
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"Purchasers").
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The parties hereby agree as follows:
1. Purchase and Sale of Preferred Stock and Warrants.
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1.1 Sale and Issuance of Series A Preferred Stock and Warrants.
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(a) The Company shall adopt and file with the Secretary of
State of the State of Delaware on or before the Closing (as defined below) the
First Amended and Restated Certificate of Incorporation in the form attached
hereto as Exhibit B (the "Restated Certificate").
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(b) Subject to the terms and conditions of this Agreement,
each Purchaser agrees to purchase at the Closing and the Company agrees to sell
and issue to each Purchaser at the Closing that number of shares of Series A
Preferred Stock set forth opposite each such Purchaser's name on Exhibit A
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attached hereto at a purchase price of $0.40 per share and a warrant in the form
attached hereto as Exhibit C to purchase that number of shares of Series B
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Preferred Stock indicated with respect to such Purchaser on Exhibit A at a
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purchase price of $0.75 per share of Series B Preferred Stock issuable upon
exercise of the warrant. The shares of Series A Preferred Stock and the warrants
issued to the Purchaser pursuant to this Agreement shall be hereinafter referred
to as the "Stock" and the "Warrants," respectively, and the shares of Series B
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Preferred Stock issuable upon exercise of the Warrants shall be hereinafter
referred to as the "Warrant Stock." The Stock, the Warrants, the Warrant Stock,
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and the Common Stock issuable upon conversion of the Stock and the Warrant Stock
shall be hereinafter referred to as the "Securities."
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1.2 Closing; Delivery.
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(a) The purchase and sale of the Stock and the Warrants
shall take place at the offices of Venture Law Group, 0000 Xxxx Xxxx Xxxx, Xxxxx
Xxxx, Xxxxxxxxxx, at 9:00 a.m., on February 26, 1998, or at such other time and
place as the Company and the Purchasers mutually agree upon, orally or in
writing (which time and place are designated as the "Closing").
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(b) At the Closing, the Company shall deliver to each
Purchaser a certificate representing the Stock being purchased thereby against
payment of the purchase price therefor by check payable to the Company or by
wire transfer to the Company's bank account.
2. Representations and Warranties of the Company. The Company hereby
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represents and warrants to each Purchaser that, except as set forth on a
Schedule of Exceptions attached hereto as Exhibit D, which exceptions shall be
deemed to be representations and warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted and proposed to be conducted. The Company
is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure so to qualify would have a material adverse
effect on its business or properties.
2.2 Capitalization. The authorized capital of the Company consists,
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or will consist, immediately prior to the Closing, of:
(a) 10,000,000 shares of Preferred Stock, of which 3,800,000
shares have been designated Series A Preferred Stock, none of which are issued
and outstanding immediately prior to the Closing and 6,200,000 shares have been
designated Series B Preferred Stock, none of which are issued and outstanding.
The Company has reserved 6,020,000 shares of Series B Preferred Stock for
issuance upon exercise of the Warrants.
(b) 20,000,000 shares of Common Stock, 3,265,000 shares of
which are issued and outstanding immediately prior to the Closing. All of the
outstanding shares of Common Stock have been duly and validly authorized, fully
paid and are nonassessable and issued in compliance with all applicable federal
and state securities laws.
(c) The Company has reserved 3,235,000 shares of Common Stock
for issuance to officers, directors, employees and consultants of the Company
pursuant to the 1998 Stock Plan adopted by the Board of Directors (the "Stock
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Plan").
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(d) The outstanding shares of Common Stock are owned by the
stockholders and in the amounts specified on Exhibit H.
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(e) Except for (i) the Warrants, (ii) conversion privileges
of the Preferred Stock, (iii) outstanding options issued pursuant to the Stock
Plan, and (iv) rights of first offer set forth in the Investors' Rights
Agreement (as defined below), there are no outstanding options, warrants, rights
(including conversion or preemptive rights and rights of first refusal or
similar rights) or agreements, orally or in writing, for the purchase or
acquisition from the Company of any shares of its capital stock. Except for the
Voting Agreement, substantially in the form attached hereto as Exhibit F (the
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"Voting Agreement") the Company is not a party or subject to any agreement or
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understanding, and there is no agreement or understanding between any person
and/or entities, which affects or relates to the voting or giving of written
consents with respect to any security or by a director of the Company.
2.3 Subsidiaries. The Company does not currently own or control,
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directly or indirectly, any interest in any other corporation, association, or
other business entity.
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2.4 Authorization. All corporate action on the part of the Company,
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its officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the Investors' Rights Agreement, in
the form attached hereto as Exhibit E (the "Investors' Rights Agreement"), the
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Voting Agreement and collectively with this Agreement, the "Agreements"), the
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performance of all obligations of the Company hereunder and thereunder and the
authorization, issuance, sale and delivery of the Stock and the Common Stock
issuable upon conversion of the Stock (together, the "Securities") has been
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taken or will be taken prior to the Closing, and the Agreements, when executed
and delivered by the Company, shall constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and other laws of general
application affecting enforcement of creditors' rights generally, as limited by
laws relating to the availability of specific performance, injunctive relief, or
other equitable remedies, or (ii) to the extent the indemnification provisions
contained in the Investors' Rights Agreement may be limited by applicable
federal or state securities laws.
2.5 Valid Issuance of Securities. The Stock and the Warrants that
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are being issued to the Purchasers hereunder, when issued, sold and delivered in
accordance with the terms hereof for the consideration expressed herein, will be
duly and validly issued, fully paid and nonassessable and free of restrictions
on transfer other than restrictions on transfer under this Agreement, the
Investors' Rights Agreement and applicable state and federal securities laws.
Based in part upon the representations of the Purchasers in this Agreement, the
Stock and Warrants will be issued in compliance with all applicable federal and
state securities laws. The Warrant Stock has been duly and validly reserved for
issuance, and upon issuance in accordance with the terms of the Warrants and the
Restated Certificate, shall be duly and validly issued, fully paid and
nonassessable and free of restrictions on transfer other than restrictions on
transfer under this Agreement, the Investors' Rights Agreement and applicable
federal and state securities laws and will be issued in compliance with all
applicable federal and state securities laws. The Common Stock issuable upon
conversion of the Stock and the Warrant Stock has been duly and validly reserved
for issuance, and upon issuance in accordance with the terms of the Restated
Articles, shall be duly and validly issued, fully paid and nonassessable and
free of restrictions on transfer other than restrictions on transfer under this
Agreement, the Investors' Rights Agreement and applicable federal and state
securities laws and will be issued in compliance with all applicable federal and
state securities laws.
2.6 Governmental Consents. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for filings pursuant to Section 25102(f)
of the California Corporate Securities Law of 1968, as amended, and the rules
thereunder, other applicable state securities laws and Regulation D of the
Securities Act of 1933, as amended (the "Securities Act"), which filing will be
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effected within fifteen (15) days after the sale of the Stock.
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2.7 Litigation. There is no action, suit, proceeding or
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investigation pending or, to the Company's knowledge, currently threatened
against the Company or any of its subsidiaries that questions the validity of
the Agreements or the right of the Company to enter into them, or to consummate
the transactions contemplated hereby or thereby, or that might result, either
individually or in the aggregate, in any material adverse changes in the assets,
condition or affairs of the Company, financially or otherwise, or any change in
the current equity ownership of the Company, nor is the Company aware that there
is any basis for the foregoing. Neither the Company nor any of its subsidiaries
is a party or subject to the provisions of any order, writ, injunction, judgment
or decree of any court or government agency or instrumentality. There is no
action, suit, proceeding or investigation by the Company or any of its
subsidiaries currently pending or which the Company or any of its subsidiaries
intends to initiate.
2.8 Intellectual Property. The Company owns or possesses sufficient
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legal rights to all patents, trademarks, service marks, tradenames, copyrights,
trade secrets, licenses, information and proprietary rights and processes
necessary for its business without any conflict with, or infringement of, the
rights of others. The Company has not received any communications alleging that
the Company has violated or, by conducting its business, would violate any of
the patents, trademarks, service marks, tradenames, copyrights, trade secrets or
other proprietary rights or processes of any other person or entity. The Company
is not aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with the use of such employee's best efforts to
promote the interest of the Company or that would conflict with the Company's
business. Neither the execution or delivery of this Agreement, nor the carrying
on of the Company's business by the employees of the Company, nor the conduct of
the Company's business as proposed, will conflict with or result in a breach of
the terms, conditions, or provisions of, or constitute a default under, any
contract, covenant or instrument under which any such employee is now obligated.
The Company does not believe it is or will be necessary to use any inventions of
any of its employees (or persons it currently intends to hire) made prior to
their employment by the Company.
2.9 Compliance with Other Instruments.
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(a) The Company is not in violation or default of any
provisions of its Restated Certificate, Bylaws or of any instrument, judgment,
order, writ, decree or contract to which it is a party or by which it is bound
or, to its knowledge, of any provision of federal or state statute, rule or
regulation applicable to the Company. The execution, delivery and performance of
the Agreements and the consummation of the transactions contemplated hereby or
thereby will not result in any such violation or be in conflict with or
constitute, with or without the passage of time and giving of notice, either a
default under any such provision, instrument, judgment, order, writ, decree or
contract or an event which results in the creation of any lien, charge or
encumbrance upon any assets of the Company.
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(b) The Company has avoided every condition, and has not
performed any act, the occurrence of which would result in the Company's loss of
any right granted under any license, distribution agreement or other agreement.
2.10 Agreements; Action.
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(a) There are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, affiliates,
or any affiliate thereof.
(b) Except for agreements explicitly contemplated by the
Agreements, there are no agreements, understandings, instruments, contracts or
proposed transactions to which the Company or any of its subsidiaries is a party
or by which it is bound that involve (i) obligations (contingent or otherwise)
of, or payments to, the Company or any of its subsidiaries in excess of,
$25,000, (ii) the license of any patent, copyright, trade secret or other
proprietary right to or from the Company or any of its subsidiaries, or (iii)
the grant of rights to manufacture, produce, assemble, license, market, or sell
its products to any other person or affect the Company's exclusive right to
develop, manufacture, assemble, distribute, market or sell its products.
(c) Neither the Company nor any of its subsidiaries has (i)
declared or paid any dividends, or authorized or made any distribution upon or
with respect to any class or series of its capital stock, (ii) incurred any
indebtedness for money borrowed or incurred any other liabilities individually
in excess of $25,000 or in excess of $100,000 in the aggregate, (iii) made any
loans or advances to any person, other than ordinary advances for travel
expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or
rights, other than the sale of its inventory in the ordinary course of business.
(d) The Company has not engaged in the past three (3) months
in any discussion (i) with any representative of any corporation or corporations
regarding the merger of the Company with or into any such corporation or
corporations, (ii) with any representative of any corporation, partnership,
association or other business entity or any individual regarding the sale,
conveyance or disposition of all or substantially all of the assets of the
Company or a transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the Company would be disposed of, or
(iii) regarding any other form of liquidation, dissolution or winding up of the
Company.
2.11 Disclosure. The Company has fully provided the Purchasers with
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all the information that the Purchasers have requested for deciding whether to
acquire the Stock and all information that the Company believes is reasonably
necessary to enable the Purchasers to make such a decision, including certain of
the Company's projections describing its proposed business (collectively, the
"Business Plan"). To the Company's knowledge, no representation or warranty of
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the Company contained in this Agreement and the exhibits attached hereto, any
certificate furnished or to be furnished to Purchasers at the Closing, or the
Business Plan (when read together) contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made. To the extent the Business Plan was prepared by
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management of the Company, the Business Plan and the financial and other
projections contained in the Business Plan were prepared in good faith (with the
exception of information prepared by third party sources and identified as such
in the Business Plan and to which the Company makes no representation except
that it has no basis to believe such sections are inaccurate); however, the
Company does not warrant that it will achieve such projections.
2.12 No Conflict of Interest. The Company is not indebted, directly
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or indirectly, to any of its officers or directors or to their respective
spouses or children, in any amount whatsoever other than in connection with
expenses or advances of expenses incurred in the ordinary course of business or
relocation expenses of employees which amount does not in the aggregate exceed
$35,000. None of the Company's officers or directors, or any members of their
immediate families, are, directly or indirectly, indebted to the Company (other
than in connection with purchases of the Company's stock) or to the Company's
knowledge have any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
business relationship, or any firm or corporation which competes with the
Company except that officers, directors and/or shareholders of the Company may
own stock in (but not exceeding two percent of the outstanding capital stock of)
any publicly traded company that may compete with the Company. To the Company's
knowledge, none of the Company's officers or directors or any members of their
immediate families are, directly or indirectly, interested in any material
contract with the Company. The Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
2.13 Rights of Registration and Voting Rights. Except as
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contemplated in the Investors' Rights Agreement, the Company has not granted or
agreed to grant any registration rights, including piggyback rights, to any
person or entity. To the Company's knowledge, except as contemplated in the
Voting Agreement, no stockholder of the Company has entered into any agreements
with respect to the voting of capital shares of the Company.
2.14 Title to Property and Assets. The Company owns its property
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and assets free and clear of all mortgages, liens, loans and encumbrances,
except such encumbrances and liens which arise in the ordinary course of
business and do not materially impair the Company's ownership or use of such
property or assets. With respect to the property and assets it leases, the
Company is in compliance with such leases and, to its knowledge, holds a valid
leasehold interest free of any liens, claims or encumbrances.
2.15 Financial Statements. The Company has made available to each
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Purchaser its unaudited financial statements (including balance sheet and income
statement) as of January 31, 1998 and for the period then ended (collectively,
the "Financial Statements"). The Financial Statements have been prepared in
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accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated, except that the unaudited Financial
Statements may not contain all footnotes required by generally accepted
accounting principles. The Financial Statements fairly present the financial
condition and operating results of the Company as of the dates, and for the
periods, indicated therein, subject to normal year-end audit adjustments.
Except as set forth in the Financial Statements, the Company
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has no material liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to January 31, 1998 and
(ii) obligations under contracts and commitments incurred in the ordinary course
of business and not required under generally accepted accounting principles to
be reflected in the Financial Statements, which, in both cases, individually or
in the aggregate are not material to the financial condition or operating
results of the Company.
2.16 Changes. Since January 31, 1998 there has not been:
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(a) any change in the assets, liabilities, financial
condition or operating results of the Company from that reflected in the
Financial Statements, except changes in the ordinary course of business that
have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting the business, properties,
prospects, or financial condition of the Company;
(c) any waiver or compromise by the Company of a valuable
right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the business, properties,
prospects or financial condition of the Company;
(e) any material change to a material contract or agreement
by which the Company or any of its assets is bound or subject;
(f) any material change in any compensation arrangement or
agreement with any employee, officer, director or shareholder;
(g) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;
(h) any resignation or termination of employment of any
officer or key employee of the Company; and the Company, is not aware of any
impending resignation or termination of employment of any such officer or key
employee;
(i) any mortgage, pledge, transfer of a security interest in,
or lien, created by the Company, with respect to any of its material properties
or assets, except liens for taxes not yet due or payable;
(j) any loans or guarantees made by the Company to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;
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(k) any declaration, setting aside or payment or other
distribution in respect to any of the Company's capital stock, or any direct or
indirect redemption, purchase, or other acquisition of any of such stock by the
Company;
(l) to the Company's knowledge, any other event or condition
of any character that might materially and adversely affect the business,
properties, prospects or financial condition of the Company; or
(m) any arrangement or commitment by the Company to do any of
the things described in this Section 2.16.
2.17 Employee Benefit Plans. The Company does not have any
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Employee Benefit Plan as defined in the Employee Retirement Income Security Act
of 1974.
2.18 Tax Returns and Payments. The Company has filed all tax
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returns and reports as required by law. These returns and reports are true and
correct in all material respects. The Company has paid all taxes and other
assessments due.
2.19 Insurance. The Company has in full force and effect fire and
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casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed.
2.20 Labor Agreements and Actions. The Company is not bound by or
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subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the knowledge of the
Company, has sought to represent any of the employees, representatives or agents
of the Company. There is no strike or other labor dispute involving the Company
pending, or to the knowledge of the Company threatened, which could have a
material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company, nor is the Company aware of any
labor organization activity involving its employees. The employment of each
officer and employee of the Company is terminable at the will of the Company.
To its knowledge, the Company has complied in all material respects with all
applicable state and federal equal employment opportunity laws and with other
laws related to employment.
2.21 Confidential Information and Invention Assignment Agreements.
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Each employee, consultant and officer of the Company has executed an agreement
with the Company regarding confidentiality and proprietary information
substantially in the form or forms delivered to the counsel for the Purchasers.
The Company is not aware that any of its employees or consultants is in
violation thereof, and the Company will use its best efforts to prevent any such
violation.
2.22 Permits. The Company and each of its subsidiaries has all
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franchises, permits, licenses and any similar authority necessary for the
conduct of its business, the lack of which could materially and adversely affect
the business, properties, prospects, or financial
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condition of the Company. The Company is not in default in any material respect
under any of such franchises, permits, licenses or other similar authority.
2.23 Corporate Documents. The Restated Certificate and Bylaws of the
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Company are in the form provided to counsel for the Purchasers. The copy of the
minute books of the Company provided to the Purchasers' counsel contains minutes
of all meetings of directors and shareholders and all actions by written consent
without a meeting by the directors and shareholders since the date of
incorporation and reflects all actions by the directors (and any committee of
directors) and shareholders with respect to all transactions referred to in such
minutes accurately in all material respects.
2.24 Environmental and Safety Laws. The Company is not in violation
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of any applicable statute, law or regulation relating to the environment or
occupational health and safety, and to its knowledge, no material expenditures
are or will be required in order to comply with any such existing statute, law
or regulation.
2.25 Qualified Small Business Stock. The Company, together with its
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affiliates, (a) is, and at the Closing will be, a "Small Business," as such term
is defined in 13 C.F.R. (S) 107.700, and (b) is in compliance with all
applicable size standards set forth in 13 C.F.R. (S) 121.30(c). The Company is
not presently engaged in, and shall not be engaged in any activities for which a
small business investment company (an "SBIC") is prohibited from providing funds
under 13 C.F.R. (S) 107.720, nor shall the Company use the proceeds from the
sale of Series A Preferred Stock or the Warrants (or the proceeds from the
exercise of such Warrants) for any purpose for which an SBIC is prohibited from
providing funds under 13 C.F.R. (S) 107.720.
2.26 Offering. The offer, sale and issuance of the Securities as
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contemplated by this Agreement are exempt from the registration requirements of
the Securities Act, and neither the Company nor any authorized agent acting on
its behalf will take any action hereafter that would cause the loss of such
exemption.
3. Representations and Warranties of the Purchasers. Each Purchaser
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hereby represents and warrants to the Company that:
3.1 Authorization. Such Purchaser has full power and authority to
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enter into this Agreement. The Agreements, when executed and delivered by the
Purchaser, will constitute valid and legally binding obligations of the
Purchaser, enforceable in accordance with their terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and any other laws of general application affecting enforcement of
creditors' rights generally, and as limited by laws relating to the availability
of a specific performance, injunctive relief, or other equitable remedies, or
(b) to the extent the indemnification provisions contained in the Investors'
Rights Agreement may be limited by applicable federal or state securities laws.
3.2 Purchase Entirely for Own Account. This Agreement is made with
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the Purchaser in reliance upon the Purchaser's representation to the Company,
which by the
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Purchaser's execution of this Agreement the Purchaser hereby confirms, that the
Securities to be acquired by the Purchaser will be acquired for investment for
the Purchaser's own account, not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof, and that the Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, the Purchaser further
represents that the Purchaser does not presently have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
Securities. The Purchaser has not been formed for the specific purpose of
acquiring the Securities.
3.3 Disclosure of Information. The Purchaser has had an opportunity
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to discuss the Company's business, management, financial affairs and the terms
and conditions of the offering of the Stock with the Company's management and
has had an opportunity to review the Company's facilities. The Purchaser
understands that such discussions, as well as the Business Plan and any other
written information delivered by the Company to the Purchaser, were intended to
describe the aspects of the Company's business which it believes to be material.
3.4 Restricted Securities. The Purchaser understands that the
---------------------
Securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Purchaser's representations as
expressed herein. The Purchaser understands that the Securities are "restricted
securities" under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Purchaser must hold the Securities indefinitely
unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and
qualification requirements is available. The Purchaser acknowledges that the
Company has no obligation to register or qualify the Securities for resale
except as set forth in the Investors' Rights Agreement. The Purchaser further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Securities,
and on requirements relating to the Company which are outside of the Purchaser's
control, and which the Company is under no obligation and may not be able to
satisfy.
3.5 No Public Market. The Purchaser understands that no public
----------------
market now exists for any of the securities issued by the Company, and that the
Company has made no assurances that a public market will ever exist for the
Securities.
3.6 Legends. The Purchaser understands that the Securities, and any
-------
securities issued in respect of or exchange for the Securities, may bear one or
all of the following legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR
-10-
DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933."
(b) Any legend set forth in the other Agreements.
(c) Any legend required by the Blue Sky laws of any state to
the extent such laws are applicable to the shares represented by the certificate
so legended.
3.7 Accredited Investor. The Purchaser is an accredited investor as
-------------------
defined in Rule 501(a) of Regulation D promulgated under the Securities Act as
presently in effect.
4. Conditions of the Purchasers' Obligations at Closing. The obligations
----------------------------------------------------
of each Purchaser to the Company under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
4.1 Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in Section 2 shall be true and correct in
all material respects on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the date of the
Closing.
4.2 Performance. The Company shall have performed and complied with
-----------
all covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.
4.3 Compliance Certificate. The President of the Company shall
----------------------
deliver to the Purchasers at the Closing a certificate certifying that the
conditions specified in Sections 4.1 and 4.2 have been fulfilled.
4.4 Qualifications. All authorizations, approvals or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Stock pursuant to this Agreement shall be obtained and effective as of the
Closing.
4.5 Opinion of Company Counsel. The Purchasers shall have received
--------------------------
from Venture Law Group, counsel for the Company, an opinion, dated as of the
Closing, in substantially the form of Exhibit G.
---------
4.6 Board of Directors. As of the Closing, the Board shall be
------------------
comprised of Xxxxx Xxxxxx, Xxx Xxxxxxxx, Xxx Xxxxxx, Xxxxx Xxxxxxxxx, Xxxx Xxxxx
and one vacancy.
4.7 Investors' Rights Agreement. The Company, each Purchaser and
---------------------------
Founder shall have executed and delivered the Investors' Rights Agreement in
substantially the form attached as Exhibit E.
---------
-11-
4.8 Warrant. The Company shall have executed and delivered a Series
-------
B Preferred Stock Purchase Warrant to each of the Purchasers substantially in
the form attached as Exhibit F.
---------
4.9 Voting Agreement. The Company, each Purchaser and Founder shall
----------------
have executed and delivered the Voting Agreement in substantially the form
attached as Exhibit G.
---------
4.10 Restated Certificate. The Company shall have filed the Restated
--------------------
Certificate with the Secretary of State of Delaware on or prior to the Closing
Date, which shall continue to be in full force and effect as of the Closing
Date.
4.11 Confidential Information and Invention Asignment Agreement. The
----------------------------------------------------------
Company and each of its employees shall have entered into the Company's standard
form Confidential Information and Invention Assignment Agreement, in
substantially the form provided to the Purchasers.
4.12 Minimum Investment. The Company shall have agreed to issue and
------------------
sell to the Purchasers and the Purchasers shall have agreed to purchase at least
3,750,000 shares of Series A Preferred Stock.
4.13 Due Diligence. The Purchasers shall, in their sole discretion
-------------
have completed their legal, intellectual property and financial due diligence
and the results of such due diligence shall, in the sole discretion of the
Purchasers, be acceptable to the Purchasers and their legal counsel. The
Schedule of Exceptions delivered to the Purchasers by the Company shall contain
no exception deemed unacceptable by the Purchasers in their sole discretion.
4.14 Participation of all Purchasers. Each Purchaser identified on
-------------------------------
Exhibit A shall have invested to the extent specified in such exhibit.
4.15 Patent Assignments and License Back. The patent assignments and
-----------------------------------
license back identified on Exhibit I shall have been performed to the
satisfaction of the Purchasers and their legal counsel and shall be binding on
the parties thereto.
5. Conditions of the Company's Obligations at Closing. The obligations
--------------------------------------------------
of the Company to each Purchaser under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
5.1 Representations and Warranties. The representations and
------------------------------
warranties of each Purchaser contained in Section 3 shall be true and correct in
all material respects on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the Closing.
5.2 Performance. All covenants, agreements and conditions
-----------
contained in this Agreement to be performed by the Purchasers on or prior to the
Closing shall have been performed or complied with in all material respects.
-12-
5.3 Qualifications. All authorizations, approvals or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Stock pursuant to this Agreement shall be obtained and effective as of the
Closing.
6. Covenants
---------
6.1 Stock Option Vesting. Unless otherwise agreed to by the
--------------------
Company's Board of Directors, any and all stock options granted by the Company
to any employee or consultant shall vest in equal monthly installments over a
four year period, provided, however, that the first year of such vesting may be
consolidated into a single annual installment.
6.2 Chief Executive Officer Search. The Company will initiate a
------------------------------
search for a new Chief Executive Officer once the Purchasers have invested an
aggregate of $600,000 for Series B Preferred Stock of the Company.
7. Miscellaneous.
-------------
7.1 Survival of Warranties. Unless otherwise set forth in this
----------------------
Agreement, the warranties and representations of the Company and the Purchasers
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Closing for a period of one (1) year
following the Closing, except for the the warranties and representations in
Section 2.8 which shall survive the execution and delivery of this Agreement and
the Closing for a period of three (3) years following the Closing. Except for
the covenants set forth in Section 2.25 which shall survive indefinitely, the
covenants set forth in this Agreement shall survive until the consummation of an
initial public offering of the Company's common stock or the merger, acquisition
or sale of substantially all of the assets of the Company in which the
stockholders of the Company immediately prior to such event do not own a
majority of the outstanding shares of the surviving corporation.
7.2 Transfer; Successors and Assigns. The terms and conditions of
--------------------------------
this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.3 Governing Law. This Agreement and all acts and transactions
-------------
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
7.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
-13-
7.5 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.6 Notices. Any notice required or permitted by this Agreement
-------
shall be in writing and shall be deemed sufficient upon delivery, when delivered
personally or by overnight courier or sent by telegram or fax, or forty-eight
(48) hours after being deposited in the U.S. mail, as certified or registered
mail, with postage prepaid, addressed to the party to be notified at such
party's address as set forth on the signature page or Exhibit A hereto, or as
---------
subsequently modified by written notice.
7.7 Finder's Fee. Each party represents that it neither is nor will
------------
be obligated for any finder's fee or commission in connection with this
transaction. Each Purchaser agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which each Purchaser or any of its officers, employees,
or representatives is responsible. The Company agrees to indemnify and hold
harmless each Purchaser from any liability for any commission or compensation in
the nature of a finder's fee (and the costs and expenses of defending against
such liability or asserted liability) for which the Company or any of its
officers, employees or representatives is responsible.
7.8 Fees and Expenses. Each party shall be responsible for any fees
-----------------
or expenses, incurred by it with respect to this Agreement, the documents
referred to herein and the transactions contemplated hereby and thereby except
that the Company shall pay the fees and costs of patent counsel to the
Purchasers and Xxxxxxx, Xxxxxxx & Xxxxxxxx incurred in connection with the
transactions contemplated by this Agreement which together shall not exceed
$20,000.
7.9 Attorney's Fees. If any action at law or in equity (including
---------------
arbitration) is necessary to enforce or interpret the terms of any of the
Agreements, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
7.10 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended or waived only with the written consent of the Company and the holders
of at least a majority of the Common Stock issued or issuable upon conversion of
the Stock. Any amendment or waiver effected in accordance with this Section
7.10 shall be binding upon the Purchasers and each transferee of the Stock (or
the Common Stock issuable upon conversion thereof), each future holder of all
such securities, and the Company.
7.11 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
-14-
7.12 Delays or Omissions. No delay or omission to exercise any
-------------------
right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such non-breaching or non-defaulting party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
7.13 Entire Agreement. This Agreement, and the documents referred to
----------------
herein constitute the entire agreement between the parties hereto pertaining to
the subject matter hereof, and any and all other written or oral agreements
relating to the subject matter hereof existing between the parties hereto are
expressly canceled.
7.14 Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE
------------------------
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
7.15 Confidentiality. Each party hereto agrees that, except with the
---------------
prior written permission of the other parties hereto, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone any
confidential information, knowledge or data concerning or relating to the
business or financial affairs of the other parties to which such party has been
or shall become privy by reason of this Agreement, discussions or negotiations
relating to this Agreement, the performance of its obligations hereunder or the
ownership of Stock purchased hereunder. The provisions of this Section 7.15
shall be in addition to, and not in substitution for, the provisions of any
separate nondisclosure agreement executed by the parties hereto with respect to
the transactions contemplated hereby.
7.16 Exculpation Among Purchasers. Each Purchaser acknowledges that
----------------------------
it is not relying upon any person, firm or corporation, other than the Company
and its officers and directors, in making its investment or decision to invest
in the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable to any other Purchaser for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the
purchase of the Securities.
-15-
[Signature Pages Follow]
-16-
The parties have executed this Series A Preferred Stock and Warrant
Purchase Agreement as of the date first written above.
COMPANY:
STAMPMASTER, INC.
By:______________________________________
Xxxxx Xxxxxx, President
Address: 0000 Xxxx Xxxxxxxx Xxxx Xxxx.,
Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
SIGNATURE PAGE TO PURCHASE AGREEMENT
The parties have executed this Series A Preferred Stock and Warrant
Purchase Agreement as of the date first written above.
PURCHASERS:
BRENTWOOD ASSOCIATES VIII L.P.
By: Brentwood VIII Ventures, LLC
Its General Partner
By:___________________________________
Managing Member
Address: 00000 Xxxxx Xxxxxx Xxxx.,
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
BRENTWOOD AFFILIATES FUND
L.P.
By: Brentwood VII Ventures, L.P.
Its General Partner
By:___________________________________
General Partner
Address: 00000 Xxxxx Xxxxxx Xxxx.,
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
SIGNATURE PAGE TO PURCHASE AGREEMENT
The parties have executed this Series A Preferred Stock and Warrant
Purchase Agreement as of the date first written above.
PURCHASERS:
SBIC PARTNERS, L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
By: Xxxxxxx Xxxxxxx & Xxxxx, X.X.,
General Partner
By: Xxxxxxx Xxxxxxx & Xxxxx Venture Co.,
General Partner
By:___________________________________
Xxxxxxx X. Xxxxx
Office of the President
By: SL-SBIC Partners, L.P.,
General Partner
By: FW-SBIC, Inc.,
General Partner
By:__________________________________
Xxxxx Xxxxxxxx
Chairman
SIGNATURE PAGE TO PURCHASE AGREEMENT
The parties have executed this Series A Preferred Stock and Warrant
Purchase Agreement as of the date first written above.
PURCHASERS:
ENTERPRISE PARTNERS IV, L.P.
By: Enterprise Management Partners IV,
Its General Partner
By:______________________________
Xxxxxxx X. Xxxxxx, General Partner
Address: 0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Venture
Partner
ENTERPRISE PARTNERS IV ASSOCIATES, L.P.
By: Enterprise Management Partners, IV,
Its General Partner
By:____________________________________
Xxxxxxx X. Xxxxxx, General Partner
Address: 0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Venture
Partner
SIGNATURE PAGE TO PURCHASE AGREEMENT
The parties have executed this Series A Preferred Stock and Warrant
Purchase Agreement as of the date first written above.
PURCHASERS:
VLG INVESTMENTS 1998
By:_________________________________
Xxxx X. Xxxxxxxxx, Director
Address: 0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
XXXX X. XXXXXXXX
____________________________________
Address: 0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
SIGNATURE PAGE TO PURCHASE AGREEMENT
EXHIBITS
--------
Exhibit A - Schedule of Purchasers
Exhibit B - Form of Amended and Restated Certificate of Incorporation
Exhibit C - Form of Warrant
Exhibit D - Schedule of Exceptions to Representations and Warranties
Exhibit E - Form of Investors' Rights Agreement
Exhibit F - Form of Voting Agreement
Exhibit G - Form of Legal Opinion of Venture Law Group
Exhibit H Schedule of Stockholders
Exhibit I Patent Assignment and License
EXHIBIT A
---------
SCHEDULE OF PURCHASERS
SERIES A SERIES A WARRANTS
PREFERRED INVESTMENT FOR SERIES B
PURCHASERS STOCK PREFERRED
STOCK
-------------------------- --------------------- ----------------- --------------------
Brentwood Associates 1,200,000 $ 480,000* 1,920,000
VIII, L.P.
Brentwood Affiliates 50,000 $ 20,000 80,000
Fund, L.P.
SBIC Partners, L.P. 1,250,000 $ 500,000* 2,000,000
Enterprise Partners IV, 1,150,000 $ 460,000* 1,840,000
L.P.
Enterprise Partners IV 100,000 $ 40,000 160,000
and Associates, L.P.
VLG Investments 1998 10,000 $ 4,000 16,000
Xxxx X. Xxxxxxxx 2,500 $ 1,000 4,000
----------------------- -------------------------------------------------
3,762,500 $1,505,000 6,020,000
*Seventy thousand dollars ($70,000) shall be in the form of cancellation of
principal indebtedness under a Promissory Note to the Company dated January 20,
1998.
EXHIBIT B
---------
FORM OF AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
EXHIBIT C
---------
FORM OF WARRANT
EXHIBIT D
---------
SCHEDULE OF EXCEPTIONS TO
REPRESENTATIONS AND WARRANTIES
EXHIBIT E
---------
FORM OF INVESTORS' RIGHTS AGREEMENT
EXHIBIT F
---------
FORM OF VOTING AGREEMENT
EXHIBIT G
---------
FORM OF LEGAL OPINION
OF
VENTURE LAW GROUP
EXHIBIT H
---------
SCHEDULE OF STOCKHOLDERS
SCHEDULE OF STOCKHOLDERS
Name Number of Shares Class of Stock
---------------------------------------------------------------------------
Xxxxx Xxxxxx 1,448,397 Common
Xxxxx Xxxxxx 626,307 Common
Xxxxx X.X. XxXxxxxxx 282,662 Common
Xxxxxxx X. Xxxxx 282,662 Common
Xxx X. Xxxxxxxxx 282,662 Common
Xxxxxx Xxxxxxxxxx 202,776 Common
Xxxxxx X. Xxxxxxx 32,500 Common
Xxxx Xxxxxx 28,877 Common
Xxxxxxx Xxx 28,877 Common
Xxxxxxx Xxxxxxxxxxxx 10,140 Common
Xxxxxx Agaram 10,140 Common
Xxxxxxxx Xxxxxxxxx 7,000 Common
Xxxxxx Xxxxxx 7,000 Common
Xxxx Xxxxxxxx 3,000 Common
VLG Investments 1998 12,000 Common
TOTAL 3,265,000 Common
---------
EXHIBIT I
---------
PATENT ASSIGNMENT AND LICENSE
