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EXHIBIT 10.4
ACCELERATED NETWORKS, INC.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
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TABLE OF CONTENTS
Page
I. AUTHORIZATION AND SALE OF SHARES.....................................................1
1.1 Authorization.................................................................1
1.2 Agreement to Purchase and Sell................................................1
II. CLOSING DATE; DELIVERY...............................................................1
2.1 The Closing...................................................................1
2.2 Delivery......................................................................1
III. COMPANY REPRESENTATIONS AND WARRANTIES...............................................2
3.1 Organization and Standing.....................................................2
3.2 Capitalization................................................................2
3.3 Subsidiaries..................................................................3
3.4 Due Authorization.............................................................3
3.5 Valid Issuance of Stock.......................................................3
3.6 Financial Statements; Absence of Changes......................................3
3.7 Title to Properties and Assets................................................4
3.8 Intellectual Property.........................................................4
3.9 Material Contracts and Obligations............................................5
3.10 Litigation....................................................................5
3.11 Governmental Consents.........................................................5
3.12 Third Party Consents..........................................................5
3.13 Compliance with Other Instruments.............................................5
3.14 Disclosure....................................................................6
3.15 Registration Rights...........................................................6
3.16 Tax Matters...................................................................6
3.17 Tax Elections.................................................................6
3.18 Shareholders, Directors and Officers..........................................6
3.19 Employees.....................................................................7
IV. REPRESENTATIONS AND WARRANTIES OF INVESTOR...........................................7
4.1 Due Authorization.............................................................7
4.2 Investigation.................................................................7
4.3 Purchase for Own Account......................................................7
4.4 Exempt from Registration......................................................7
4.5 Economic Risk.................................................................7
4.6 Restricted Securities.........................................................8
4.7 Restrictive Legends...........................................................8
4.8 Further Limitations on Disposition............................................8
4.9 Governmental Consents.........................................................9
4.10 Third Party Consents..........................................................9
V. CONDITIONS TO INVESTORS' OBLIGATIONS AT THE CLOSING..................................9
5.1 Representations and Warranties Correct; Performance of Obligations............9
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5.2 Performance...................................................................9
5.3 Securities Laws...............................................................9
5.4 Amendment to Articles.........................................................9
5.5 Opinion of Company's Counsel..................................................9
5.6 Compliance Certificate.......................................................10
5.7 Proceedings and Documents....................................................10
5.8 Investors' Rights Agreement..................................................10
5.9 Voting Agreement.............................................................10
5.10 Authorizations...............................................................10
5.11 Board of Directors...........................................................10
VI. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING..................................10
6.1 Representations and Warranties...............................................10
6.2 Payment of Purchase Price....................................................10
6.3 Restated Articles Effective..................................................10
6.4 Securities Exemptions........................................................11
6.5 Investors' Rights Agreement..................................................11
6.6 Voting Agreement.............................................................11
VII. MISCELLANEOUS.......................................................................11
7.1 Governing Law................................................................11
7.2 Survival.....................................................................11
7.3 Successors and Assigns.......................................................11
7.4 Entire Agreement.............................................................11
7.5 Notices......................................................................11
7.6 Amendments and Waivers.......................................................12
7.7 Delays or Omissions..........................................................12
7.8 Each Party to Bear Own Costs.................................................12
7.9 Third Parties................................................................12
7.10 Finder's Fees................................................................12
7.11 Titles and Subtitles.........................................................13
7.12 Counterparts.................................................................13
7.13 Severability.................................................................13
7.14 Confidentiality..............................................................13
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SERIES B PREFERRED STOCK PURCHASE AGREEMENT
This Series B Preferred Stock Purchase Agreement ("Agreement") is
made this 15th day of May 1998, by and between (i) Accelerated Networks, Inc., a
California corporation (the "Company"), and each of the investors listed on the
Schedule of Investors attached as Exhibit A hereto (hereinafter referred to
individually as an "Investor" and collectively as the "Investors").
In consideration of the mutual promises, covenants and conditions hereinafter
set forth, the parties hereto agree as follows:
I. AUTHORIZATION AND SALE OF SHARES
1.1 Authorization. As of the Closing (as defined below), the Company will
have authorized the issuance, pursuant to the terms and conditions of this
Agreement, of up to 11,600,000 shares of the Company's Series B Preferred Stock,
$.001 par value, having the rights, preferences, privileges and restrictions set
forth in the Amended and Restated Articles of Incorporation of the Company
attached to this Agreement as Exhibit B (the "Restated Articles").
1.2 Agreement to Purchase and Sell.
(a) The Closing. Subject to the terms and conditions hereof,
at the Closing, the Company will issue and sell to each Investor, and each such
Investor will purchase from the Company, that number of shares of Series B
Preferred Stock set forth opposite such Investor's name on Exhibit A at a price
of $1.25 per share.
(b) Payment of Purchase Price for Shares. All shares of Series
B Preferred Stock to be sold to the Investors pursuant to this Agreement are
hereinafter referred to collectively as the "Shares." The purchase price for the
Shares shall be paid by each Investor by way of check or by delivery of a wire
transfer of funds made to the order of the Company in the amount of such
Investor's portion of the aggregate purchase price for the Shares.
II. CLOSING DATE; DELIVERY
2.1 The Closing. The purchase and sale of the Shares pursuant to Section
1.2(a) shall be held at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP in
Irvine, California, on May 22, 1998, or at such other time and place as the
Company and the Investors acquiring in excess of 5,800,000 Shares may mutually
agree upon (the "Closing"). The Company may, but shall not be obligated to,
accept delivery of funds from Investors (or additional persons who shall be
added to the signature page and shall be deemed to be Investors hereunder) for
up to thirty (30) days following the Closing, or such longer period as may be
approved by the Investors acquiring in excess of 5,800,000 Shares.
2.2 Delivery. The Company will deliver to each Investor a certificate
representing the shares to be purchased by such Investor hereunder against
payment of such Investor's portion of the aggregate purchase price for the
Shares by cashier's check or by wire transfer.
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III. COMPANY REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to each Investor that,
except as set forth in the Schedule of Exceptions ("Schedule of Exceptions")
attached to this Agreement as Exhibit C (which Schedule of Exceptions shall be
deemed to be representations and warranties to each Investor), the statements in
the following paragraphs of this Section 3 are all true and correct:
3.1 Organization and Standing. The Company is a corporation duly
organized and validly existing under, and by virtue of, the laws of the State of
California and is in good standing under such laws. The Company has all
corporate power and authority to own, lease and operate its properties and to
conduct its business as currently conducted and as proposed to be conducted. The
Company is qualified to do business as a foreign corporation in each
jurisdiction in which the conduct of its business requires such qualification
except where failure to be so qualified would have a material adverse effect on
its financial condition, business or operations. The Company has made available
to the Investors true, correct and complete copies of its Articles of
Incorporation and Bylaws.
3.2 Capitalization. Immediately prior to the Closing (and after the
filing of the Restated Articles with the California Secretary of State), the
authorized capital stock of the Company will consist of (i) Forty-Eight Million
Five Hundred Thousand (48,500,000) shares of Common Stock, of which Eight
Million Two Hundred Fifty-Two Thousand (8,252,000) shares are issued and
outstanding, and (ii) Twenty-Three Million One Hundred Thousand (23,100,000)
shares of Preferred Stock, of which (a) Eleven Million Five Hundred Thousand
(11,500,000) shares have been designated Series A Preferred Stock, Eleven
Million Two Hundred Twenty Thousand (11,220,000) of which shares are issued and
outstanding, and (b) Eleven Million Six Hundred Thousand (11,600,000) shares
have been designated Series B Preferred Stock, all of which may be sold to the
Investors pursuant to this Agreement. The Company has reserved up to Eleven
Million Six Hundred Thousand (11,600,000) shares of its Common Stock for
possible issuance upon the conversion of the Shares (the "Conversion Shares").
After the filing of the Restated Articles with the California Secretary of
State, except for (i) the conversion privileges of the Shares and the Company's
Series A Preferred Stock, (ii) the rights provided in the Restated Investors'
Rights Agreement in the form attached hereto as Exhibit D (the "Investors'
Rights Agreement"), and (iii) the 4,500,000 shares of Common Stock authorized
for issuance under the Company's 1997 Stock Option/Stock Issuance Plan (the
"Plan"), of which 1,452,000 shares have been issued pursuant to the exercise of
options and 1,800,720 shares are issuable upon exercise of outstanding options,
there are no options, warrants, conversion privileges or other rights, or
agreements with respect to the issuance thereof, presently outstanding to
purchase any of the capital stock of the Company. All shares are duly
authorized, validly issued, fully paid and nonassessable and have been issued by
the Company in compliance with the registration requirements of securities laws.
Apart from the exceptions noted in this Section 3.2, no shares of the Company's
outstanding capital stock, or stock issuable upon exercise or exchange of any
outstanding options or other stock issuable by the Company, are subject to any
rights of first refusal or other rights to purchase such stock (whether in favor
of the Company or any other person), pursuant to any agreement or commitment of
the Company. Attached to this Agreement as Exhibit E is a complete list of all
outstanding shareholders, option holders and other security holders of the
Company as of immediately prior to the Closing (and after the filing
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of the Restated Articles with the California Secretary of State, other than
option exercises which may occur between the date hereof and the Closing).
3.3 Subsidiaries. The Company has no subsidiaries and does not presently
own or control, directly or indirectly, any interest in any other corporation,
partnership, trust, joint venture, association, or other entity.
3.4 Due Authorization. All corporate action on the part of the Company,
its officers, directors and shareholders, necessary for the sale and issuance of
the Shares and the Conversion Shares and the performance of the Company's
obligations under this Agreement, the Investor Rights' Agreement and the Voting
Agreement (as defined herein) has been taken or will be taken prior to the
Closing. This Agreement and the Investor Rights' Agreement are valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, subject, as to enforcement of remedies, to applicable bankruptcy,
insolvency, moratorium, reorganization and similar laws affecting creditors'
rights generally and to general equitable principles. The Shares are not subject
to any preemptive rights or rights of first refusal pursuant to any agreement or
commitment of the Company. To the Company's knowledge, the execution, delivery
and performance by the Company of this Agreement and compliance herewith and the
sale and issuance of the Shares and Common Stock issuable upon conversion of the
Shares will not result in any violation of and will not conflict with, or result
in a breach of any of the terms of, or constitute a default under, any provision
of state or federal law to which the Company is subject, the Company's Articles
of Incorporation or Bylaws, each as amended, or any provision of any mortgage,
indenture, agreement, instrument, judgment, decree, order, Rule or regulation or
other restriction to which the Company is a party or by which it is bound, the
breach of or default under which would have a material adverse effect upon the
business or operations of the Company, or result in the creation of any
mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of the Company pursuant to any such term; provided, however, that the
Shares (and the Common Stock issuable upon conversion thereof) may be subject to
restrictions on transfer under state and/or federal securities laws. The shares
of Common Stock issuable upon conversion of the Shares have been duly and
validly reserved and are not subject to any preemptive rights or rights of first
refusal and, upon issuance, will be validly issued, fully paid and
nonassessable.
3.5 Valid Issuance of Stock. The outstanding capital stock of the Company
and the Shares, when issued, sold and delivered in accordance with the terms of
this Agreement for the consideration provided for herein, will be duly and
validly issued, fully paid and nonassessable and will be free of any liens or
encumbrances created by the Company. The Conversion Shares have been duly and
validly reserved for issuance, and not subject to any preemptive rights or
rights of first refusals and upon issuance in accordance with the terms of the
Restated Articles, will be duly and validly issued, fully paid and
nonassessable.
3.6 Financial Statements; Absence of Changes. The Company has made
available to each Investor its unaudited financial statements at December 31,
1997 and for the fiscal year then ended and its unaudited financial statements
at March 31, 1998 (the "Financial Statements"). Except that the Financial
Statements do not contain footnotes and are subject to normal year end
adjustments, the Financial Statements (i) are complete and correct in all
material respects and (ii) accurately set out and describe in all material
respects the financial condition and operating
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results of the Company as of the dates, and for the periods, indicated
therein. Except as set forth in the Financial Statements, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business subsequent to March 31, 1998 and (ii) obligations
under contracts and commitments incurred in the ordinary course of business,
which in both cases, are not material to the financial condition or operating
results of the Company. The audited financial statements, which will be
available following the Closing, will not be different in any material respect
from the Financial Statements as of December 31, 1997 and the fiscal year then
ended. Since March 31, 1998, there has not been (i) any sale, assignment or
transfer of any patents, trademarks, copyrights, trade secrets or other
intangible assets owned by the Company; (ii) any resignation or termination of
employment of any key officer of the Company; (iii) 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; (iv) 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; (v) any declaration, setting aside or payment
or other distribution in respect of any of the Company's capital stock, or any
direct or indirect redemption, purchase or other acquisition of any of such
stock by the Company; or (vi) any other event or condition of any character
which is reasonably likely to materially and adversely affect the assets,
financial condition, properties, operating results or business of the Company.
3.7 Title to Properties and Assets. The Company has good and marketable
title to its properties and assets held in each case subject to no mortgage,
pledge, lien, encumbrance, security interest or charge of any kind, except such
mortgage, pledge, lien, encumbrance, security interest or charge that arises in
the ordinary course of business and does not materially impair the Company's
ownership or use of such property. With respect to the property and assets it
leases, the Company is in compliance with such leases and, to the Company's
knowledge, the Company holds valid leasehold interests in such assets free of
any liens, encumbrances, security interests or claims of any party other than
the lessors of such property and assets.
3.8 Intellectual Property. To the Company's knowledge (but without having
conducted any special investigation or patent search), the Company has
sufficient title, license and/or ownership of all patents, trademarks, service
marks, trade names, copyrights, trade secrets, information, proprietary rights
and processes necessary for its business as now conducted without any conflict
with or infringement of the rights of others. Except for the agreements with its
own employees or consultants referenced in Section 3.9 and licensing agreements
entered into by the Company in the ordinary course of its business, there are no
outstanding options, licenses, or agreements of the Company relating to the
foregoing, and the Company is not a party or bound by any options, licenses or
agreements with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and
processes of any other person or entity. Neither the Company, nor to its
knowledge any of its employees, has received any communications alleging that
the Company has violated or, by conducting its business as proposed, would
violate any of the patents, trademarks, service marks, trade names, copyrights
or trade secrets or other proprietary rights of any other person or entity. The
Company warrants that to the actual knowledge of its executive officers, no
employee of the Company is obligated under any contract (including licenses,
covenants or commitments of any
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nature) or other agreement, or subject to any judgment, decree or order of any
court or administrative agency, that would conflict with his obligation to use
his best efforts to promote the interests of the Company or that would conflict
with the Company's business. Reasonable security measures have been taken to
protect the secrecy, confidentiality and value of the proprietary information
referred to in this Section 3.8.
3.9 Material Contracts and Obligations. The Company has made available to
counsel for the Investors all agreements, contracts, leases, licenses,
instruments, commitments, indebtedness, liabilities and other obligations,
written or to the knowledge of the Company, oral, absolute or contingent, to
which the Company is a party or by which it is bound that are (i) material to
the conduct and operations of its business and properties; (ii) involve any of
the officers, consultants, directors, employees or shareholders of the Company;
or (iii) obligate the Company to share, license or develop any product or
technology (except licensing agreements entered into by the Company in the
ordinary course of its business). All employees of the Company have executed a
"Proprietary Information and Inventions Agreement" concerning nondisclosure of
confidential information and assignment of inventions to the Company in a form
previously delivered to counsel for the Investors. For purposes of this Section
3.9, "material" shall mean any agreement, contract, indebtedness, liability or
other obligation committing either party in an amount in excess of $50,000.
3.10 Litigation. There are no actions, proceedings or investigations
pending or, to the Company's knowledge, threatened, against or affecting the
Company or its property, that, either in any case or in the aggregate, might
result in any material adverse change in the business, prospects, condition,
affairs or operations of the Company or in any of its properties or assets, in
any material impairment of the right or ability of the Company to carry on its
business as now conducted and as proposed to be conducted, or in any change in
the current equity ownership of the Company, and none that questions the
validity of this Agreement or any action taken or to be taken in connection
herewith.
3.11 Governmental Consents. Except for filings (if any) required under
federal and state securities laws (including the filing pursuant to Section
25102(f) of the California Corporate Securities Law of 1968, as amended), and
the rules and regulations thereunder, all consents, approvals, orders,
authorizations or registrations, qualifications, designations, declarations or
filings with any federal or state governmental authority on the part of the
Company required in connection with the consummation of the transactions
contemplated herein shall have been obtained prior to and be effective as of the
Closing. Based in part on the representations of the Investors set forth in
Section 4 below, the offer, sale and issuance of the Shares in conformity with
the terms of this Agreement are exempt from the registration and prospectus
delivery requirements of the Securities Act of 1933, as amended (the "Securities
Act") and exempt from qualifications under applicable blue sky laws.
3.12 Third Party Consents. Except as set forth above in Section 3.11,
all third party consents, approvals, orders or authorizations required to be
obtained by the Company in connection with the consummation of the transactions
contemplated herein have been obtained.
3.13 Compliance with Other Instruments. The Company is not in violation,
breach or default of any term of its Articles of Incorporation or Bylaws or, in
any material respect, of any
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term or provision of any mortgage, indenture, contract, agreement or instrument
to which the Company is a party or by which it may be bound, or of any provision
of any foreign or domestic state or federal judgment, decree, order, statute,
Rule or regulation applicable and material to the Company. The execution,
delivery and performance of, and compliance with, this Agreement and the
consummation of the transactions contemplated hereby will not result in any such
violation or default, or be in conflict with or constitute, with or without the
passage of time or the giving of notice or both, (i) a default under the
Company's Articles of Incorporation or Bylaws, or under any agreement or
contract of the Company, (ii) to the Company's knowledge, a violation of any
statutes, laws, regulations or orders, or (iii) an event which results in the
creation of any lien, charge or encumbrance upon any asset of the Company.
3.14 Disclosure. No representation or warranty by the Company in this
Agreement or in any written statement or certificate signed by the President of
the Company furnished pursuant to this Agreement contains or will contain any
untrue statement of a material fact which would cause the statements made herein
or therein in the light of the circumstances to be materially misleading. The
Company believes in good faith that the assumptions made by the Company in
preparing the business plan and any financial projections previously provided to
the Investors were reasonable when made.
3.15 Registration Rights. Except as provided in the Investors' Rights
Agreement, the Company has not granted or agreed to grant any person or entity
any rights (including piggyback registration rights) to have any securities of
the Company registered with the United States Securities and Exchange Commission
("SEC") or any other governmental authority.
3.16 Tax Matters. To the Company's knowledge, the Company has no unpaid
federal, state, county or local taxes. There have been no examinations or audits
of any tax returns or reports of the Company by any applicable federal, state or
local governmental agency. The Company has duly filed all federal, state, county
and local tax returns required to have been filed by it and paid all taxes shown
to be due on such returns. There are in effect no waivers of applicable statutes
of limitations with respect to taxes for any year.
3.17 Tax Elections. The Company has not elected pursuant to the Internal
Revenue Code of 1986, as amended (the "Code"), to be treated as a Subchapter S
corporation or collapsible corporation pursuant to Section 1362(a) or Section
341(f) of the Code, nor has it made any other elections pursuant to the Code
(other than elections which relate solely to matters of accounting, depreciation
or amortization) which would have a material adverse affect on the Company, its
financial condition, its business as presently conducted or presently proposed
to be conducted or any of its properties or material assets.
3.18 Shareholders, Directors and Officers. To the actual knowledge of the
Company's executive officers and without any inquiry of any of the following
individuals, none of the officers or directors or significant employees or
consultants of the Company, has, individually or collectively, a material
interest in any entity which is a competitor, customer or supplier of (or has
any existing contractual relationship with) the Company, other than holdings of
less than 1% of publicly-held entities.
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3.19 Employees. To the Company's knowledge, no employee of the Company is
in violation of any term of any employment contract, patent disclosure
agreement, non-competition agreement, or any restrictive covenant to a former
employer relating to the right of any such employee to be employed by the
Company because of the nature of the business conducted or presently proposed to
be conducted by the Company or to the use of trade secrets or proprietary
information of others. There is neither pending nor, to the Company's knowledge,
threatened any actions, suits, proceedings or claims, or to its knowledge any
basis therefor or threat thereof, with respect to any contract, agreement,
covenant or obligation referred to in the preceding sentence. The Company does
not have any collective bargaining agreement covering any of its employees. No
employee of the Company has an employment agreement or a severance arrangement
with the Company and such employees are employed on an "at will" basis.
IV. REPRESENTATIONS AND WARRANTIES OF INVESTOR
Each Investor represents and warrants to the Company as follows:
4.1 Due Authorization. All corporate action on the part of the Investor,
and its officers, directors, partners and shareholders, necessary for the
purchase of the Shares and the performance of the Investor's obligations under
this Agreement, the Investors' Rights Agreement and the Voting Agreement (as
defined herein) has been taken or will be taken prior to the Closing. This
Agreement and the Investors' Rights Agreement are valid and binding obligations
of the Investor enforceable in accordance with their terms, subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, moratorium,
reorganization and similar laws affecting creditors' rights generally and to
general equitable principles.
4.2 Investigation. The Investor acknowledges that it has had an
opportunity to discuss the business, affairs and current prospects of the,
Company with the Company's officers. The Investor further acknowledges having
had access to information about the Company that it has requested or considers
necessary for purposes of purchasing the Shares.
4.3 Purchase for Own Account. The Shares that the Investor will purchase
hereunder and the Conversion Shares issuable upon conversion of such Shares will
be acquired for such Investor's own account, not as a nominee or agent, and not
with a view to or in connection with the sale or distribution of any part
thereof, and such Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same. The Investor is an
"accredited investor" within the meaning of Regulation D of the Securities Act.
4.4 Exempt from Registration. The Investor understands that the Shares
and the Conversion Shares (collectively, the "Securities") will not be
registered under the Securities Act, on the ground that the sale provided for in
this Agreement is exempt from registration under the Securities Act, and that
the reliance of the Company on such exemption is predicated in part on the
Investors' representations set forth in this Agreement.
4.5 Economic Risk. The Investor acknowledges that it is experienced in
evaluating and investing in securities of companies in the development stage and
acknowledges that it is able to fend for itself in the transactions contemplated
by this Agreement and has the ability to bear the economic risks of its
investment pursuant to this Agreement.
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4.6 Restricted Securities. The Investor understands that the Securities
may not be sold, transferred, or otherwise disposed of without registration
under the Securities Act or an exemption therefrom, and that, in the absence of
an effective registration statement covering the Securities or an available
exemption from registration under the Securities Act, the Securities must be
held indefinitely. In particular, the Investor is aware that the Securities may
not be sold pursuant to Rule 144 promulgated under the Securities Act unless (i)
a public trading market then exists for the Securities, (ii) adequate
information concerning the Company is then available to the public, (iii) such
Investor has held the Securities for the applicable holding period specified in
Rule 144, and (iv) all other terms and conditions of Rule 144 are satisfied.
4.7 Restrictive Legends. It is understood that each certificate
representing (i) the Shares, (ii) the Conversion Shares, and (iii) any other
securities issued in respect of the Shares upon any stock split, stock dividend,
recapitalization, merger or similar event (unless no longer required in the
opinion of counsel for the Company) shall be stamped or otherwise imprinted with
legends substantially in the following forms (in addition to any legend that may
now or hereafter be required by applicable state law):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. THEY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO SUCH SECURITIES, OR DELIVERY OF AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER OF SUCH SECURITIES THAT SUCH OFFER, SALE,
TRANSFER, PLEDGE OR HYPOTHECATION IS IN FULL COMPLIANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS SET FORTH IN THAT CERTAIN RESTATED INVESTORS' RIGHTS
AGREEMENT DATED AS OF JUNE 1, 1998 AND THAT CERTAIN VOTING AGREEMENT
DATED AS OF JUNE 1, 1998 COPIES OF WHICH MAY BE OBTAINED BY THE HOLDER,
UPON REQUEST AND WITHOUT CHARGE, AT THE PRINCIPAL OFFICES OF THE
CORPORATION."
4.8 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, the Investor further agrees not to make any
disposition of all or any portion of the Shares or Conversion Shares unless and
until the transferee has agreed in writing for the benefit of the Company to be
bound by this Section 4, the Investors' Rights Agreement and, potentially, the
Voting Agreement; provided, and to the extent, this Section and such agreement
are then applicable, and:
(a) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
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(b) (i) Such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, such Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel from an Investor for transactions made pursuant to Rule 144 under the
Securities Act except in unusual circumstances.
4.9 Governmental Consents. All consents, approvals, orders,
authorizations or registrations, qualifications, designations, declarations or
filings with any U.S., federal or state governmental authority on the part of
the Investor required in connection with the consummation of the transactions
contemplated herein shall have been obtained prior to and be effective as of the
Closing.
4.10 Third Party Consents. All third party consents, approvals, orders or
authorizations required to be obtained by the Investor in connection with the
consummation of the transactions contemplated herein have been obtained.
V. CONDITIONS TO INVESTORS' OBLIGATIONS AT THE CLOSING
The obligation of the Investors to purchase the Shares at the
Closing is subject to the fulfillment to the satisfaction of the Investors on or
prior to the Closing of the following conditions:
5.1 Representations and Warranties Correct; Performance of Obligations.
The representations and warranties made by the Company in Section 3 hereof shall
be true and correct when made, and shall be true and correct as of the Closing
with the same force and effect as if they had been made on and as of said date,
subject to changes contemplated by this Agreement.
5.2 Performance. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing and
shall have obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein.
5.3 Securities Laws. The offer and sale of the Shares to the Investors
pursuant to this Agreement shall be exempt from the registration requirements of
the Securities Act and the registration and/or qualification requirements of all
applicable state securities laws.
5.4 Amendment to Articles. The Restated Articles shall have been duly
adopted by the Company by all necessary corporate action of its Board of
Directors and shareholders and shall have been duly filed with and accepted by
the California Secretary of State.
5.5 Opinion of Company's Counsel. The Investors shall have received from
counsel to the Company, an opinion, in substantially the form attached hereto as
Exhibit F addressed to the Investors, dated the date of Closing.
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5.6 Compliance Certificate. At the Closing there shall have been
delivered to the Investors a certificate, dated as of such date of Closing,
signed by the Company's President certifying that the conditions specified in
Sections 5.1 and 5.2 of this Agreement have been fulfilled.
5.7 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be satisfactory in
substance and form to the Investors, and the Investors shall have received all
such counterpart originals or certified or other copies of such documents as the
Investors may reasonably request.
5.8 Investors' Rights Agreement. The required parties shall have executed
the Investors' Rights Agreement and such agreement shall be in full force and
effect.
5.9 Voting Agreement. The required parties shall have executed the Voting
Agreement in the form attached hereto as Exhibit G (the "Voting Agreement") and
such agreement shall be in full force and effect.
5.10 Authorizations. All authorizations, approvals or permits, if any, of
any governmental or regulatory body that are required in connection with the
lawful issuance and sales of the Shares pursuant to this Agreement shall have
been duly obtained and shall be effective on and as of the Closing.
5.11 Board of Directors. At the Closing, the Company's Board of Directors
shall be set at seven (7) members. Members of the Board shall be Xxxxxx
Xxxxxxxx, Brig. Gen. X.X. Xxxxxxx, USAF (Ret.), Xxxxx Xxxxxx, Xxxxx Xxxxxx,
Xxxxxx Xxxxxxx, Xxxxxxxx Xxxxxx and one vacancy.
VI. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING
The obligations of the Company under this Agreement are subject
to the fulfillment at or before the Closing of the following conditions:
6.1 Representations and Warranties. The representations and warranties of
each Investor contained in Section 4 hereof shall be true as of the Closing with
the same force and effect as if they had been made on and as of said date,
subject to changes contemplated by this Agreement.
6.2 Payment of Purchase Price. The Investors shall have delivered to the
Company the aggregate purchase price for the Shares as set forth in Section 1.2
hereof, unless the period for delivery of the Purchase Price is extended by the
Company pursuant to Section 2.1 hereof, in which case the Company may effect
multiple closings.
6.3 Restated Articles Effective. The Restated Articles shall have been
duly adopted by the Company by all necessary corporate action of its Board of
Directors and shareholders, and shall have been duly filed with and accepted by
the California Secretary of State.
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6.4 Securities Exemptions. The offer and sale of the Shares to the
Investors pursuant to this Agreement shall be exempt from the registration
requirements of the Securities Act, and the registration and/or qualification
requirements of all applicable state securities laws.
6.5 Investors' Rights Agreement. The required parties shall have executed
the Investors' Rights Agreement and such agreement shall be in full force and
effect.
6.6 Voting Agreement. The required parties shall have executed the Voting
Agreement and such agreement shall be in full force and effect.
VII. MISCELLANEOUS
7.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California, without
regard to the conflict of law provisions thereof. The parties hereto agree to
submit to the jurisdiction of the federal and state courts of the State of
California with respect to the breach or interpretation of this Agreement or the
enforcement of any and all rights, duties, liabilities, obligations, powers, and
other relations between the parties arising under this Agreement.
7.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any party hereto and the
closing of the transactions contemplated hereby for a period of two (2) years
from the Closing.
7.3 Successors and Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the respective successors and assigns of the parties hereto.
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.
7.4 Entire Agreement. This Agreement and the other documents and
agreements delivered pursuant hereto constitute the entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
7.5 Notices. Except as otherwise provided, all notices and other
communications required or permitted hereunder shall be in writing, shall be
effective when given, and shall in any event be deemed to be given upon receipt
or, if earlier, (i) five (5) days after deposit with the U.S. postal service or
other applicable postal service, if delivered by first class mail, postage
prepaid, (ii) upon delivery, if delivered by hand, (iii) one (1) business day
after the day of deposit with Federal Express or similar overnight courier,
freight prepaid, if delivered by overnight courier or (iv) one (1) business day
after the day of facsimile transmission, if delivered by facsimile transmission
with copy by first class mail, postage prepaid, and shall be addressed, (a) if
to an Investor, at such Investor's address set forth below its signature, or at
such other address as such Investor shall have furnished the Company in writing,
or (b) if to the Company, at its address as set forth below, or at such other
address as the Company shall have furnished to each Investor in writing.
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7.6 Amendments and Waivers. This Agreement and any term hereof may be
amended, waived, discharged or terminated by a written instrument signed by the
Company and holders of sixty-six and sixty-six hundredths percent (66.66%) or
more of the shares of Common Stock issued or issuable upon conversion of the
Series B Preferred Stock issued under this Agreement. In no event shall the
obligation of any Investor to purchase shares hereunder be increased, except
upon the written consent of such Investor.
7.7 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to the Company or to the Investors upon a breach or
default of any party hereto under this Agreement shall impair any such right,
power or remedy of the Company or the Investors, nor shall it be construed to be
a waiver of any such breach or default, or an acquiescence therein, or of any
similar breach or default thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of the Company or the Investors of
a breach or default under this Agreement, or any waiver on the part of the
Company or the Investors 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 the Company or the Investors, shall be cumulative and not
alternative.
7.8 Each Party to Bear Own Costs. Except as otherwise provided in Section
7.10, each of the parties shall pay all costs and expenses incurred or to be
incurred by it in negotiating and preparing this Agreement and in closing and
carrying out the transactions contemplated by this Agreement. Notwithstanding
the foregoing, promptly after the Closing (and only if the Closing is
consummated), the Company shall reimburse the Investors purchasing shares at the
Closing up to $15,000 for the reasonable fees and expenses of one special
counsel to the Investors.
7.9 Third Parties. Nothing in this Agreement, whether express or implied,
is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third person to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action against any party to this Agreement.
7.10 Finder's Fees.
(a) The Company hereby agrees to indemnify and to hold the
Investors harmless of and from any liability for commission or compensation in
the nature of a finder's fee of any broker or other person or firm (and the
costs and expenses of defending against such liability or asserted liability)
for which the Company, or any of its employees or representatives, is
responsible.
(b) Each Investor hereby agrees to indemnify and to hold the
Company harmless of and from any liability for any commission or compensation in
the nature of a finder's fee to any broker or other person or firm (and the
costs and expenses of defending against such liability or asserted liability)
for which such Investor, or any of its employees or representatives, is
responsible.
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7.11 Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
7.12 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.
7.13 Severability. Should any provision of this Agreement be determined
to be illegal or unenforceable, such determination shall not affect the
remaining provisions of this Agreement.
7.14 Confidentiality. The parties hereto agree that, except with the
prior written permission of the other party, 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 said party has been
or shall become privy by reason of this Agreement, discussions or negotiations
relating to this Agreement, or the performance of its obligations hereunder.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year hereinabove first written.
THE COMPANY
ACCELERATED NETWORKS, INC.
/s/ XXXXXX XXXXXXXX
-----------------------------------------------
Xxxxxx Xxxxxxxx
President
Address: 0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
THE INVESTORS
ONSET VENTURES
By: /s/ XXX XXXXXXX
-------------------------------------------
Name:
Title:
Address: 0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
XXXXXXX XXXXXXX & XXXXXXXX LLP
By: /s/ XXXXXX XXXXX
-------------------------------------------
Address: Xxxxx Xxxxxx Xxxxx
Xxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
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NEW ENTERPRISE ASSOCIATES VII, Limited Partnership
By: NEA Partners VII, Limited Partnership
Its: General Partner
By: /s/ XXXXX XXXXXX
-------------------------------------------
Name:
Title:
Address: 0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
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U.S. VENTURE PARTNERS V, L.P.
USVP V INTERNATIONAL, L.P.
2180 ASSOCIATES FUND V, L.P.
USVP V ENTREPRENEUR PARTNERS, L.P.
By: Presidio Management Group V, L.L.C.
By: /s/ XXXXXXX X. MOVER
-------------------------------------------
Name:
Title:
Address: 0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
WINDWARD VENTURES, L.P.
By: Windward Ventures Management, L.P.
Its: General Partner
By: /s/ XXXXX XXXXX
-------------------------------------------
Name: Xxxxx Xxxxx
Title: General Partner
Address: 00000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
XXXXXXX, XXXXXXX & XXXXXXXX LLP
By: /s/ XXXXXX X. XXXXX
-------------------------------------------
Name: Xxxxxx X. Xxxxx
Address: Xxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
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XXXXXXXX X. XXXXXXX, XX.
By: /s/ XXXXXXXXX X. XXXXXXX, XX.
---------------------------------
Address: 00 Xxxxxxxxxx Xxxxx
Xxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
21
XXXXX XXXXXXX
By: /s/ XXXXX XXXXXXX
-----------------------------------
Address: C-1/6 Raksha Xxxxx
Co-Op Housing Society
Xxxxx Xxxx Xxxx, Xxxxxxxx Xxxx
Xxxx 000000, Xxxxx
22
XXXXX X. XXXXXX
By: /s/ XXXXX X. XXXXXX
--------------------------------------
Xxxxx X. Xxxxxx
Address: 00000 Xxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
23
RAJESH XXXXX
By: /s/ RAJESH XXXXX
--------------------------------------
Rajesh Xxxxx
Address: 000 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
XXXXXX XXXXXXX
By: /s/ RHARAT XXXXXXX
--------------------------------------
Rharat Xxxxxxx
Address: C-1/6 Raksha Xxxxx
Co-Op Housing Society
Xxxxx Xxxx Xxxx, Xxxxxxxx Xxxx
Xxxx 000000, Xxxxx
XXX XXXXXXXXX
By: /s/ XXX XXXXXXXXX
--------------------------------------
Xxx Xxxxxxxxx
Address: 0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
24
RAJESH XXXXX
By:
--------------------------------------
Rajesh Xxxxx
Address: 000 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
XXXXXX XXXXXXX
By: /s/ RHARAT XXXXXXX
--------------------------------------
Rharat Xxxxxxx
Address: C-1/6 Raksha Xxxxx
Co-Op Housing Society
Xxxxx Xxxx Xxxx, Xxxxxxxx Xxxx
Xxxx 000000, Xxxxx
XXX XXXXXXXXX
By:
--------------------------------------
Xxx Xxxxxxxxx
Address: 0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
25
RAJESH XXXXX
By: /S/ RAJESH XXXXX
--------------------------------------
Rajesh Xxxxx
Address: 000 Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000
XXXXXX XXXXXXX
By: /s/ RHARAT XXXXXXX
--------------------------------------
Rharat Xxxxxxx
Address: C-1/6 Raksha Xxxxx
Co-Op Housing Society
Xxxxx Xxxx Xxxx, Xxxxxxxx Xxxx
Xxxx 000000, Xxxxx
XXX XXXXXXXXX
By:
--------------------------------------
Xxx Xxxxxxxxx
Address: 0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
26
STANFORD UNIVERSITY
By: /s/ X. X. XXXXXX
--------------------------------------
X. X. Xxxxxx
Address: 0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
