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EXHIBIT 10.17
XXXX.XXX, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This Series A Preferred Stock Purchase Agreement (the "Agreement") is
made as of the 22nd of April, 1999 by and between Xxxx.xxx, Inc., a California
corporation (the "Company") and the investors listed on Exhibit A attached
hereto (each a "Purchaser" and together the "Purchasers").
The parties hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED STOCK.
1.1 SALE AND ISSUANCE OF SERIES A PREFERRED STOCK.
(a) The Company shall adopt and file with the Secretary
of State of the State of California on or before the Closing (as defined below)
the First Amended and Restated Articles of Incorporation in the form attached
hereto as Exhibit B (the "Restated Articles").
(b) Subject to the terms and conditions of this
Agreement, each Purchaser agrees, severally and not jointly, 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 attached hereto at a purchase price of
$1.45 per share. The shares of Series A Preferred Stock issued to the Purchaser
pursuant to this Agreement shall be hereinafter referred to as the "Stock."
1.2 CLOSING; DELIVERY.
(a) The purchase and sale of the Stock shall take place
at the offices of Venture Law Group, 0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx,
Xxxxxxxxxx, at 10:00 a.m., on April 22, 99, 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").
(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 or by cancellation of indebtedness,
or any combination thereof.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Purchaser that, except as set forth on a
Schedule of Exceptions attached hereto as Exhibit C, 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 corporation duly organized, validly existing and in good standing under the
laws of the State of California and has all requisite corporate power and
authority to carry on its business as now
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conducted and as proposed to be conducted in the future. 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, or will consist, immediately prior to the Closing, of:
(a) 7,500,000 shares of Preferred Stock, all of which
shares have been designated Series A Preferred Stock, none of which are issued
and outstanding immediately prior to the Closing. The rights, privileges and
preferences of the Preferred Stock are as stated in the Restated Articles.
(b) 25,000,000 shares of Common Stock, 2,968,860 shares
of which are issued and outstanding immediately prior to the Closing. All of the
outstanding shares of Common Stock have been duly authorized, fully paid and are
nonassessable and issued in compliance with all applicable federal and state
securities laws.
(c) The Company has reserved 3,537,167 shares of Common
Stock for issuance to officers, directors, employees and consultants of the
Company pursuant to its 1999 Stock Plan duly adopted by the Board of Directors
and approved by the Company shareholders (the "Stock Plan"). Of such reserved
shares of Common Stock, 1,157,023 shares have been issued pursuant to restricted
stock purchase agreements, no options to purchase shares have been granted or
are currently outstanding, and 2,380,144 shares of Common Stock remain available
for issuance to officers, directors, employees and consultants pursuant to the
Stock Plan.
(d) Except for (a) the conversion privileges of the
Series A Preferred Stock to be issued pursuant to this Agreement, (b) the Right
of First Offer set forth in Section 2.3 of the Investors Rights Agreement to be
entered into by the Company, Xxxx XxXxxxxx and the Purchasers at the Closing,
and (c) outstanding options issued pursuant to the Stock Plan, 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. The Company is not a party or subject to any agreement or
understanding, and to the best of its knowledge, there is no agreement or
understanding between any persons and/or entities, that 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,
directly or indirectly, any interest in any other corporation, association, or
other business entity. The Company is not a participant in any joint venture,
partnership or similar arrangement.
2.4 AUTHORIZATION. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, the Investors' Rights
Agreement, in the form attached hereto as Exhibit D (the "Investors' Rights
Agreement") and the Right of First Offer and Co-Sale Agreement in the form
attached hereto as Exhibit E (the "Co-Sale Agreement" and collectively with this
Agreement and the Investors' Rights Agreement, the "Agreements"), the
performance of all obligations of the
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Company hereunder and thereunder and the authorization, issuance (or reservation
for issuance), sale and delivery of the Stock and the Common Stock issuable upon
conversion of the Stock (together, the "Securities") has been 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 that is 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 and
subject to the provisions of Section 2.6 below, the Stock will be issued in
compliance with all applicable federal and state securities laws. The Common
Stock issuable upon conversion of the 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
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").
2.7 OFFERING. Subject in part to the truth and accuracy of each
Purchaser's representations set forth in Section 3 of this Agreement, the offer,
sale and issuance of the Series A Preferred Stock as contemplated by this
Agreement are, to the Company's knowledge, exempt from the registration
requirements of any applicable state and federal securities laws, and neither
the Company nor any authorized agent acting on its behalf will knowingly take
any action hereafter that would cause the loss of such exemption.
2.8 LITIGATION. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company that questions the validity of the 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,
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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. The
foregoing includes, without limitation, actions, suits or proceedings or
investigations pending or threatened involving the prior employment of any of
the Company's employees, their use in connection with the Company's business of
any information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with former employers. The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company or any of its subsidiaries currently pending or which the Company or any
of its subsidiaries intends to initiate.
2.9 INTELLECTUAL PROPERTY. To its knowledge, the Company owns or
possesses sufficient legal rights to all patents, trademarks, service marks,
tradenames, copyrights, trade secrets, licenses, information and proprietary
rights and processes necessary for its business as now conducted and as proposed
to be conducted in the future without any conflict with, or infringement of, the
rights of others and believes it can obtain, on commercially reasonable terms,
any additional rights necessary for the conduct of its business as proposed to
be conducted. 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 as proposed to be conducted. Neither the execution or delivery of the
Agreements, nor the carrying on of the Company's business by the employees of
the Company, nor the conduct of the Company's business as proposed, will, to the
Company's knowledge, 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. The Schedule of Exceptions includes a list of all
patents, copyrights, trademarks and domain names claimed or owned by the Company
and all licenses by the Company of any intellectual property or technology from
third parties.
2.10 COMPLIANCE WITH OTHER INSTRUMENTS.
(a) The Company is not in violation or default of any
provisions of its Restated Articles or 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,
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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.
(b) To its knowledge, 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, permit,
authorization, distribution agreement or other agreement.
2.11 AGREEMENTS; ACTION.
(a) Except for agreements explicitly contemplated by the
Agreements, 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 is a party or by which it is bound
that involve (i) obligations (contingent or otherwise) of, or payments to, the
Company in excess of $15,000, (ii) the license of any patent, copyright, trade
secret or other proprietary right to or from the Company, (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 or services, or
(iv) indemnification by the Company with respect to infringement of proprietary
rights.
(c) The Company has not (i) declared or paid any
dividends, or authorized or made any distribution upon or with respect to any
class or series of its capital stock, (ii) incurred any indebtedness for money
borrowed or incurred any other liabilities individually in excess of $15,000 or,
in the case of indebtedness and/or liabilities individually less than $15,000,
in excess of $50,000 in the aggregate, (iii) made any loans or advances to any
person, other than ordinary advances for travel expenses, or (iv) sold,
exchanged or otherwise disposed of any of its assets or rights, other than the
sale of its inventory in the ordinary course of business.
(d) For purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
(e) The Company is not a party to and is not bound by
any contract, agreement or instrument, or subject to any restriction under its
Restated Articles or Bylaws that, to its knowledge, adversely affects its
business as now conducted and as proposed to be conducted in the future, its
properties or its financial condition.
(f) 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
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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.
2.12 DISCLOSURE. The Company has fully provided the Purchasers
with 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. No representation or
warranty of the Company contained in this Agreement and the exhibits attached
hereto, any certificate furnished or to be furnished to Purchasers at the
Closing, or other information furnished to the Purchasers (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.
2.13 NO CONFLICT OF INTEREST. The Company is not indebted (or
committed to make loans or extend or guarantee credit), directly or indirectly,
to any of its employees, 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. None of the Company's employees, 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 employees, 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.
2.14 RIGHTS OF REGISTRATION AND VOTING RIGHTS. Except as
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, no shareholder of the Company has
entered into any agreements with respect to the voting of capital shares of the
Company.
2.15 TITLE TO PROPERTY AND ASSETS. The Company owns its property
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.
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2.16 BALANCE SHEET. The Company has delivered to each Purchaser
that has requested a copy its unaudited balance sheet as of March 31, 1999 (the
"Balance Sheet"). The Balance Sheet has been prepared in accordance with
generally accepted accounting principles and fairly presents the financial
condition of the Company as of the date indicated therein, subject to normal
year-end audit adjustments. Except as set forth in the Balance Sheet, the
Company has no material liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent to March 31,
1999 that are not material, individually or in the aggregate, 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 Balance Sheet, which, in both cases, individually or in the
aggregate are not material to the financial condition of the Company. Except as
disclosed to the Purchasers, the Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation. The Company maintains and
will continue to maintain a standard system of accounting established and
administered in accordance with generally accepted accounting principles.
2.17 EMPLOYEE BENEFIT PLANS. The Company does not have any
Employee Benefit Plan as defined in the Employee Retirement Income Security Act
of 1974.
2.18 LABOR AGREEMENTS AND ACTIONS. The Company is not bound by
or subject to (and none of its assets or properties is bound by or subject to)
any written or oral, express or implied, contract, commitment or arrangement
with any labor union, and no labor union has requested or, to the 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 (as is presently conducted and as
it is proposed to be conducted), nor is the Company aware of any labor
organization activity involving its employees. The Company is not aware that any
officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company, nor does the Company have the
present intention to terminate the employment of any of the foregoing. The
employment of each officer and employee of the Company is terminable at the will
of the Company. To its knowledge, the Company has complied in all material
respects with all applicable state and federal equal employment opportunity laws
and with other laws related to employment. The Company is not a party to or
bound by any currently effective employment contract, deferred compensation
agreement, bonus plan, incentive plan, profit sharing plan, retirement agreement
or other employee compensation agreement.
2.19 CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AND
EMPLOYEE STOCK PURCHASE AGREEMENTS. Each employee, consultant and officer of the
Company has executed agreements with the Company regarding confidentiality and
proprietary information and any stock purchases 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.
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2.20 PERMITS. The Company has all 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 condition of the Company. The Company believes it can obtain,
without undue burden or expense, any similar authority for the conduct of its
business as planned to be conducted. The Company is not in default in any
material respect under any of such franchises, permits, licenses or other
similar authority.
2.21 CORPORATE DOCUMENTS. The Restated Articles and Bylaws of
the 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.
2.22 QUALIFIED SMALL BUSINESS STOCK. As of the Closing: (i) the
Company will not have made any purchases of its own stock during the one-year
period proceeding the Closing having an aggregate value exceeding 5% of the
aggregate value of all its stock as of the beginning of such period and (ii) the
Company's aggregate gross assets, as defined by Code Section 1202(d)(2), at no
time between October 7, 1998, and through the Closing have exceeded or will
exceed $50 million, taking into account the assets of any corporations required
to be aggregated with the Company in accordance with Code Section 1202(d)(3).
2.23 MANUFACTURING AND MARKETING RIGHTS. The Company has not
granted exclusive rights to manufacture, produce, assemble, license, market, or
sell its products or services to any other person and is not bound by any
agreement that affects the Company's exclusive right to develop, manufacture,
assemble, distribute, market or sell its products or services.
2.24 TAX RETURNS, PAYMENTS AND ELECTIONS. The Company has filed
all tax returns and reports (including information 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. The Company
has not elected pursuant to the Code to be treated as a Subchapter S corporation
or a 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 that relate solely to methods of accounting, depreciation or
amortization) that would have a material adverse effect on the Company, its
financial condition, its business as presently conducted or proposed to be
conducted or any of its properties or material assets. The Company has never had
any tax deficiency proposed or assessed against it and has not executed any
waiver of any statute of limitations on the assessment or collection of any tax
or governmental charge. None of the Company's federal income tax returns and
none of its state income or franchise tax or sales or use tax returns has ever
been audited by governmental authorities. Since the date of the Balance Sheet,
the Company has not incurred any taxes, assessments or governmental charges
other than in the ordinary course of business and the Company has made adequate
provisions on its books of account for all taxes, assessments and governmental
charges with
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respect to its business, properties and operations for such period. The Company
has withheld or collected from each payment made to each of its employees, the
amount of all taxes (including, but not limited to, federal income taxes,
Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes)
required to be withheld or collected therefrom, and has paid the same to the
proper tax receiving officers or authorized depositories.
2.25 SECTION 83(b) ELECTIONS. To the best of the Company's
knowledge, all individuals who have purchased unvested shares of the Company's
Common Stock have timely filed elections under Section 83(b) of the Code and any
analogous provisions of applicable state tax laws.
2.26 BROKERS. The Company has no contract, arrangement or
understanding with any broker, finder or similar agent with respect to the
transactions contemplated by this Agreement.
2.27 INSURANCE. The Company has in full force and effect fire
and 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.
2.28 YEAR 2000. To the Company's knowledge, each hardware and
software product used by the Company in its business (collectively, the
"Software") will accurately process date data (including, but not limited to,
calculating, comparing and sequencing) from, into and between the twentieth and
twenty-first centuries, including, without limitation, leap year calculations,
without a decrease in the functionality of the Software. To the Company's
knowledge, the Software is designed to be used prior to, during and after the
calendar year 2000 A.D. and will operate during each such time period without
error relating to date data, specifically including any error relating to, or
the product of, date data which represents or references different centuries or
more than one century. Without limiting the generality of the foregoing, to the
Company's knowledge, the Software (a) will not abnormally end or provide invalid
or incorrect results as a result of date data, specifically including date data
which represents or references different centuries or more than one century, (b)
has been designed to ensure year 2000 compatibility, including, but not limited
to, date data century recognition, calculations which accommodate same century
and multi-century formulas and date values, and date data interface values that
reflect the century, and (c) includes "Year 2000 Capabilities," meaning that the
Software (i) will manage and manipulate data involving dates, including single
century formulas and multi-century formulas, and will not cause an abnormally
ending scenario within the application or generate incorrect values or invalid
results involving such dates, (ii) provides that all date-related user interface
functionalities and data fields include the indication of century, and (iii)
provides that all date-related data interface functionalities include the
indication of century.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby represents and warrants to the Company that:
3.1 AUTHORIZATION. Such Purchaser has full power and authority
to enter into the Agreements. The Agreements, when executed and delivered by the
Purchaser, will constitute
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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, and (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 the Purchaser in reliance upon the Purchaser's representation to the
Company, which by the 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 participations 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 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 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. The
foregoing, however, does not limit or modify the representations and warranties
of the Company in Section 2 of this Agreement or the right of the investors to
rely thereon.
3.4 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.
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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 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 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, and stating
that there shall have been no adverse change in the business, affairs,
prospects, operations, properties, assets or condition of the Company since the
date of the Balance Sheet.
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
12
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 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing and
all documents incident thereto shall be reasonably satisfactory in form and
substance to Purchasers' special counsel, which shall have received all such
counterpart original and certified or other copies of such documents as it has
reasonably requested. This may include, without limitation, good standing
certificates and certification by the Company's Secretary regarding the
Company's Restated Articles and Bylaws and Board of Director and shareholder
resolutions relating to this transaction.
4.6 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 F.
4.7 BYLAWS. The Bylaws of the Company shall provide that the
Board of Directors of the Company shall consist of four (4) persons, which
number shall not be changed by an amendment to the Restated Articles or the
Bylaws without consent of holders of two-thirds (2/3rds) of the Preferred Stock.
4.8 BOARD OF DIRECTORS. As of the Closing, the Board shall be
comprised of four (4) directors: Xxxx XxXxxxxx, one representative to be
designated by Hummer Winblad Venture Partners, one director to be designated by
Xxxxxx.xxx, Inc. ("Xxxxxx.xxx"), and the Company's Chief Executive Officer.
4.9 INVESTORS' RIGHTS AGREEMENT. The Company, each Purchaser and
Xxxx XxXxxxxx shall have executed and delivered the Investors' Rights Agreement
in substantially the form attached as Exhibit D.
4.10 RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT. The Company,
each Purchaser, and all holders of more than 100,000 shares of the Company's
Common Stock shall have executed and delivered the Right of First Refusal and
Co-Sale Agreement in substantially the form attached as Exhibit E.
4.11 RESTATED ARTICLES. The Company shall have filed the
Restated Articles with the Secretary of State of California on or prior to the
Closing Date, which shall continue to be in full force and effect as of the
Closing Date.
4.12 CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AND
EMPLOYEE STOCK PURCHASE AGREEMENTS. The Company and each of its employees and
consultants shall have entered into the Company's standard form Confidential
Information and Invention Assignment Agreement, in substantially the form
provided to the Purchasers' legal counsel. Each holder of Common Stock of the
Company shall have entered into an Employee Stock Purchase Agreement, in
substantially the form provided to the Purchasers' legal counsel.
13
4.13 VOTING AGREEMENT. The Company, each Purchaser, Xxxx
XxXxxxxx, and Xxxxx Xxxxxxxxxx shall have executed and delivered the Voting
Agreement in substantially the form attached hereto as Exhibit G.
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.
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. MISCELLANEOUS.
6.1 SURVIVAL OF WARRANTIES. Unless otherwise set forth in this
Agreement, the warranties, representations and covenants 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, and shall in no way be affected by any investigation
of the subject matter thereof made by or on behalf of the Purchasers or the
Company.
6.2 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 (including transferees of any
securities). Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
6.3 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.
6.4 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.
14
6.5 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.
6.6 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, and
(a) if to the Company, with a copy to:
Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
(b) if to the Purchasers (other than Xxxxxx.xxx), with a copy to:
Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
or (c) if to Xxxxxx.xxx, with a copy to:
Xxxxxxx Coie LLP
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
6.7 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
15
(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.
6.8 FEES AND EXPENSES. Upon the Closing, the Company shall pay
the reasonable fees and expenses of Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx
& Xxxxxxxxx, LLP, the counsel for Hummer Winblad Venture Partners and its
affiliated funds, incurred with respect to this Agreement, the documents
referred to herein and the transactions contemplated hereby and thereby,
provided such fees and expenses do not exceed $15,000. The remaining Purchasers
shall pay their own legal fees and expenses incurred with respect to the
foregoing.
6.9 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.
6.10 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
the holders of at least two-thirds (2/3rds) of the Common Stock issued or
issuable upon conversion of the Stock. Any amendment or waiver effected in
accordance with this Section 6.10 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.
6.11 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.
6.12 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.
6.13 ENTIRE AGREEMENT. This Agreement, and the documents
referred to herein constitute the entire agreement between the parties hereto
pertaining to the subject matter
16
hereof, and any and all other written or oral agreements relating to the subject
matter hereof existing between the parties hereto are expressly canceled.
6.14 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.
6.15 CONFIDENTIALITY. Each party hereto agrees 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 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, provided however, that Hummer Winblad
Venture Partners III, L.P. and Hummer Winblad Technology Fund III, L.P. may
distribute information concerning the Company to their respective limited
partners. The provisions of this Section 6.15 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.
6.16 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.
6.17 WAIVER OF CONFLICTS. Each party to this Agreement
acknowledges that Venture Law Group, counsel for the Company, has in the past
performed and may continue to perform legal services for certain of the
Purchasers in matters unrelated to the transactions described in this Agreement,
including the representation of such Purchasers in venture capital financings
and other matters. Accordingly, each party to this Agreement hereby (a)
acknowledges that they have had an opportunity to ask for information relevant
to this disclosure; and (b) gives its informed consent to Venture Law Group's
representation of certain of the Purchasers in such unrelated matters and to
Venture Law Group's representation of the Company in connection with this
Agreement and the transactions contemplated hereby.
17
6.18 AGGREGATION OF STOCK. All shares of stock held or acquired
by affiliated entities or persons hereunder shall be aggregated together for the
purpose of determining the availability of rights under this Agreement.
The parties have executed this Series A Preferred Stock Purchase
Agreement as of the date first written above.
COMPANY:
XXXX.XXX, INC.
By: /s/ Xxxx XxXxxxxx
---------------------------------
Name: Xxxx XxXxxxxx
-------------------------------
(print)
Title:
------------------------------
Address: 00 X. Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
PURCHASERS:
Xxxxxx.xxx Inc.
------------------------------------
(Print Name of Purchaser)
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxx
-------------------------------
(print)
Title: Treasurer
------------------------------
Address: 0000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Hummer Winblad Venture
Partners III, L.P.
------------------------------------
(Print Name of Purchaser)
By: /s/ Xxxx Xxxxxx
---------------------------------
SIGNATURE PAGE TO PURCHASE AGREEMENT
18
Name: Xxxx Xxxxxx
---------------------------------
(print)
Title: Partner
------------------------------
Address:
Hummr Winblad Technology Fund,
III, L.P.
------------------------------------
(Print Name of Purchaser)
By: /s/ Xxxx Xxxxxx
---------------------------------
Name: Xxxx Xxxxxx
-------------------------------
(print)
Title: Partner
------------------------------
Address:
Xxxx XxXxxxxx
------------------------------------
(Print Name of Purchaser)
By: /s/ Xxxx XxXxxxxx
---------------------------------
Name: Xxxx XxXxxxxx
-------------------------------
(print)
Title:
------------------------------
Address: 0000 X. Xxxxxxxxx Xx.
Xxxxxxxx, XX 00000
VLG Investments 1999
------------------------------------
(Print Name of Purchaser)
By: /s/ Xxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
-------------------------------
(print)
Title: Managing Partner
------------------------------
Address:
19
CNA Trust, TTEE, FBO Venture Law
Group 401(k),
Xxxx X. Xxxxxxxx
------------------------------------
(Print Name of Purchaser)
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxx
-------------------------------
(print)
Title:
------------------------------
Address:
Xxxx X. Xxx Xxxxxx
------------------------------------
(Print Name of Purchaser)
By: /s/ Xxxx Xxx Xxxxxx
---------------------------------
Name:
---------------------------------
(print)
Title:
------------------------------
Address:
------------------------------------
(Print Name of Purchaser)
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxxx
-------------------------------
(print)
Title:
------------------------------
Address: c/o Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
20
EXHIBITS
Exhibit A - Schedule of Purchasers
Exhibit B - Form of First Amended and Restated Articles of Incorporation
Exhibit C - Schedule of Exceptions to Representations and Warranties
Exhibit D - Form of Investors' Rights Agreement
Exhibit E - Form of Right of First Refusal and Co-Sale Agreement
Exhibit F - Form of Legal Opinion of Venture Law Group
Exhibit G - Form of Voting Agreement
21
EXHIBIT A
SCHEDULE OF PURCHASERS
Number of Shares
Name/Address/Tel/Fax of Series A Purchase Price
-------------------- ----------- --------------
Xxxxxx.xxx, Inc. 4,401,716 $6,382,488.20
0000 0xx Xxxxxx, Xxxxx 0
Xxxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attn: General Counsel
Hummer Winblad Venture 2,389,503 $3,464,779.35
Partners III, L.P.1
0 Xxxxx Xxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attn: Xxxx Xxxxxx
Hummer Winblad Technology 2 125,763 $ 182,356.35
Fund III, L.P.
0 Xxxxx Xxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attn: Xxxx Xxxxxx
Xxxx XxXxxxxx 275,863 $ 400,001.35
00 X. Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
VLG Investments 1999 17,241 $ 24,999.45
Venture Law Group
--------
1 Payment includes conversion of $380,000 principal amount and $1,743.17 accrued
interest from Promissory Notes (canceled as of the Closing) that were originally
issued by the Company to Hummer Winblad Venture Partners III, L.P. on March 10,
1999 and March 19, 1999.
2 Payment includes conversion of $20,000 principal amount and $91.58 accrued
interest from Promissory Notes (canceled as of the Closing) that were originally
issued by the Company to Hummer Winblad Technology Fund III, L.P. on March 10,
1999 and March 19, 1999.
22
Number of Shares
Name/Address/Tel/Fax of Series A Purchase Price
-------------------- ----------- --------------
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attn: Xxxxx X. Xxxxxx
CNA Trust, TTEE, FBO Venture Law Group 12,413 $ 17,998.85
401(k), Xxxx X. Xxxxxxxx
Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Xxxx Xxx Xxxxxx 3,449 $ 5,001.05
Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Xxxxxxx Xxxxxxxx 1,380 $ 2,001.00
Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
-2-
