STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 24th day
of September, 1997 by and between ONTRO, INC., a California corporation (the
"Company"), and XXXXX and XXXXX XXXXX ("Investors").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK.
1.1 SALE AND ISSUANCE OF COMMON STOCK. Subject to the terms and
conditions of this Agreement, Investors agree, to acquire at the Closing and the
Company agrees to sell and issue to Investors at the Closing Eleven Thousand
Nine Hundred Forty-Nine (11,949) shares of the Company's Common Stock (the
"Common Stock") for the purchase price of Three Dollars and 13/100 ($3.13) per
share for a total purchase price of Thirty Seven Thousand Four Hundred Dollars
and 37/00 ($37,400.37). Subject to the terms and conditions of this Agreement,
Investors agree to acquire at the Closing and the Company agrees to issue at the
Closing that number of shares of Common Stock set forth above
1.2 CLOSING. The purchase and sale of the Common Stock shall take place
at the offices of Ontro, Inc., 00000 Xxxxxxxxx Xx., #000, Xxxxx, Xxxxxxxxxx,
(the "Closing"). At the Closing the Company shall deliver to Investors a
certificate representing the Common Stock which Investor are purchasing against
delivery to the Company by Investors of the purchase price by confirmed wire
transfer or certified funds. The Closing may take place via the U.S. mail or
other courier service if agreed to by the parties. The Certificate(s) shall be
in the name of Investors or any other designated person or entity of Investors'
choosing.
2. REPRESENTATIONS AND WARRANTIES OF INVESTOR. This Agreement is made
with the Investors in reliance upon Investors' representation and warranties to
the Company, which by Investors' execution of this Agreement Investor hereby
confirms, that:
2.1 AUTHORIZATION. This Agreement constitutes Investors' valid
and legally binding obligation, enforceable in accordance with its terms.
2.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Common Stock to be
received by Investors will be acquired for investment for Investors' own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that Investors have no present intention
of selling, granting any participation in, or otherwise distributing the same.
By executing this Agreement, Investors further represent that Investors do not
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 Common Stock.
2.3 DISCLOSURE OF INFORMATION. Investors believes they have
received all the information they consider necessary or appropriate for deciding
whether to acquire the Common Stock.
Investors further represent they have had an opportunity to ask questions and
receive answers for the Company regarding the Company, its business and the
terms and conditions of the offering of the Common Stock.
2.4 DEVELOPMENT STAGE COMPANY. The Investors recognize the Company
is a development stage Company, that it has an accumulated deficit and a working
capital deficit, has not generated any revenue from operations and is not
expected to generate any revenue from operations for some time and perhaps for
years, and that proposed development expenditures are expected to result in
substantial and increasing losses over at least the next one or more years, and
possibly much longer. Investment in the Company involves substantial risk, and
the Investor can afford the complete loss of its investment. The Investors have
taken full cognizance of and understands all of the risk factors related to the
receipt of the Common Stock.
2.5 CONFIDENTIALITY. Investors hereby represent, warrant and
covenant they shall maintain in confidence, and shall not use or disclose
without the prior written consent of the Company, any information identified as
confidential that is furnished to him by the Company in connection with this
Agreement. This obligation of confidentiality shall not apply, however, to any
information (a) in the public domain through no unauthorized act or failure to
act by Investor, or (b) lawfully disclosed to Investor by a third party who
possessed such information without any obligation of confidentiality. Investors
further covenant they shall return to the Company all tangible materials
containing such information upon request by the Company.
2.6 ADVICE OF PROFESSIONALS. The Investors have carefully
considered and has been advised by the Company to have any material provided by
anyone regarding the Company, including but not limited to this Stock Purchase
Agreement, related documents and the acquisition of the Common Stock reviewed by
their legal counsel prior to acquisition, and to discuss with his professional
tax and financial advisers the suitability of his acquisition of the Common
Stock for their particular tax and financial situation, and have determined the
Common Stock is a suitable investment for them. The Company specifically
disclaims any representations regarding the legal, tax, or financial
consequences of the purchase, other than the representation this is a high risk
transaction.
2.7 FINANCIAL STATUS. All information which the Investors have
provided to the Company concerning the Investors and their financial position,
including but not limited to this Agreement, is correct as of the date hereof,
and if there should be any change in such information prior to their acceptance
as a shareholder of the Company, the Investors will immediately provide such
information to the Company and will promptly send confirmation of such
information to the Company.
2.8 AUTHORITY. If this Stock Purchase Agreement is executed and
delivered on behalf of a partnership, corporation, trust, estate or other
entity, (i) the Investors' execution, delivery and performance of and under this
Stock Purchase Agreement, and all documents ancillary hereto, and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized, and the Investors are duly authorized (a) to execute and deliver
this Stock Purchase Agreement and all other instruments executed and delivered
on behalf of such partnership, corporation, trust, estate or other entity, in
connection with the issuance in its name of the Common Stock; and (b) to acquire
and hold the Common
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Stock, (ii) such entity has not been formed for the specific purpose of
acquiring the Common Stock; and (iii) when executed and delivered by the
Company, will constitute such partnership's, corporation's, trust's, estate's or
other entity's legal, valid and binding obligation enforceable against it in
accordance with its terms.
2.9 RESTRICTED SECURITIES. Investors understand that the shares
of Common Stock they are acquiring are characterized as "restricted securities"
under the federal securities laws inasmuch as they are being acquired from the
Company in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may only be resold without
registration under the Securities Act of 1933, as amended (the "Securities
Act"), in certain limited circumstances. In this connection Investors represent
they are familiar with Securities and Exchange Commission ("SEC") Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act.
2.10 FURTHER LIMITATIONS ON DISPOSITION. Without in any way
limiting the representations set forth above, Investor further agrees not to
make any disposition of all or any portion of the Common Stock unless and until:
(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
(b) (i) Investors 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)
Investors shall have furnished the Company with an opinion of counsel in a form
satisfactory to the Company and its counsel, that such disposition will not
require registration of such shares under the Securities Act.
2.11 LEGENDS. It is understood the certificates evidencing the
Common Stock may bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD
PURSUANT TO RULE 144 OF SUCH ACT."
(b) Any legend required by the laws of the State of
California or other jurisdiction, including any legend required by the
California Department of Corporations and section 417 and 418 of the California
Corporations Code.
2.12 ACCREDITED OR FOREIGN INVESTOR. Investors are accredited
investors as defined in Rule 501(a) of Regulation D, as amended, of the SEC
under the Securities Act.
2.13 FURTHER COVENANTS. Investors further covenant that Investors
will not transfer the Common Stock, in violation of the Securities Act, the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or the
rules of the Commission promulgated thereunder, including Rule 144 under the
Securities Act. Further, Investors agree that, prior to the closing of the
Company's initial public
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offering, Investors will not transfer any of the Common Stock in a public
offering without the Company's prior consent, even if Investors are otherwise
permitted to transfer them pursuant to Rule 144(k).
2.14 RESTRICTION ON TRANSFER. In the event the Company publicly
offers shares of its Common Stock, the Common Stock may not be sold from the
date of the Company's initial public offering of securities for a period ending
six months after the conclusion of such initial public offering. In the event
the Company effects a firmly underwritten initial public offering of its
securities, Investors agree to enter into any "lock up" agreement required by
the Underwriter therein.
2.15 NO REPRESENTATIONS REGARDING FUTURE RESULTS. It never has been
represented, guaranteed or warranted by any broker, the Company, any of the
officers, directors, shareholders, partners, employees, legal counsel, auditor
or agents of the Company or its advisors, or any other persons, whether
expressly or by implication, that the past performance or experience of the
management of the Company, or of any other person, will in any way indicate the
future results of the ownership of the Common Stock or of the Company's
activities.
2.16 ACKNOWLEDGMENT. The Investors acknowledge they understand the
meaning and legal consequences of the representations and warranties contained
in this Agreement, and the Investors hereby agree the Company and each officer,
director, employee, agent, legal counsel and controlling person thereof, past,
present or future, may rely on each such representation and warranty.
2.17 NON TRANSFERABILITY. Neither this Stock Purchase Agreement,
nor any of Investors' interests herein, shall be assignable or transferable by
the Investor in whole or in part except by operation of law.
2.18 NO ADVERTISEMENT. The Investors are not purchasing the Common
Stock as a result of or subsequent to any advertisement, article, notice or
other communication published in any newspaper, magazine or similar media or
broadcast over television or radio, or presented at any seminar, or any
solicitation of a subscription by a person not previously known to the Investor.
2.19 EXPERIENCE OF INVESTOR. The Investors and/or their purchaser
representative currently have such knowledge and experience in finance, tax,
securities, investments and other business matters so as to be able to protect
the Investors' interests in connection with the purchase of the Common Stock.
The Investors' investment in the Company hereunder is not material when compared
to his total financial capacity. Investors are investors in securities of
companies in the development stage.
2.20 SURVIVAL. The foregoing representations and warranties shall
be true and accurate as of the date of the acceptance hereof by the Company and
shall survive the execution and delivery of this Stock Purchase Agreement and
the issuance of the Common Stock thereafter.
2.21 INDEMNIFICATION. The Investors shall indemnify and hold
harmless the Company and/or any of its officers, employees, directors or control
persons of any such entity who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of or
arising from any actual or alleged misrepresentation or misstatement of facts or
omission to represent or state facts made by the Investor to the Company
concerning itself or its financial position in connection with the offering,
sale or issuance of the Common Stock to the Investor which is not remedied by
timely notice to the Company as provided
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above, against losses, liabilities and expenses for which the Company or any of
its respective officers, employees, agents, directors, legal counsel or control
persons of any such entity which have not otherwise been reimbursed (including
attorneys' fees, judgments, fines and amounts paid in settlement) as actually
and reasonably incurred by such person or entity in connection with such action,
suit or proceeding.
2.22 DUE EXECUTION. The Investors agree to execute this Stock
Purchase Agreement in full and acknowledges the receipt and acceptance by the
Company of such stock purchase agreement shall be a condition precedent to the
issuance of the Common Stock.
3. CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE SHARES OF
COMMON STOCK WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
SUCH COMMON STOCK OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF COMMON
STOCK IS EXEMPT FROM QUALIFICATION BY SECTIONS 25100, 25102 OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS
SO EXEMPT.
4. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations
of the Company to Investor under this Agreement are subject to the fulfillment
on or before the Closing of each of the following conditions by Investor:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investors contained in Section 2 hereof shall be true 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.
4.2 PAYMENT OF PURCHASE PRICE. The purchase price specified in
Section 1.1 shall have been delivered to the Company.
4.3 CALIFORNIA QUALIFICATION. The offer and sale to Investor of
the Common Stock shall be exempt from qualification under the California
Corporate Securities Law of 1968, as amended.
5. MISCELLANEOUS.
5.1 SURVIVAL OF WARRANTIES. The warranties, representations and
covenants of Investors contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing.
5.2 SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding of the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assignees any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
5.3 GOVERNING LAW AND VENUE. This Agreement shall be governed by
and construed under the laws of the State of California, irrespective of its
choice of law principles. The parties agree this
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Agreement is entered into in and to be performed in, and venue for any action in
connection with this Agreement or the Common Stock shall be in an appropriate
court located in San Diego County, California.
5.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.5 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.
5.6 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or, if sent
by telex or telecopier, upon receipt of the correct answer back, forty-eight
(48) hours after deposit with the United States Post Office, by registered or
certified mail, or upon deposit with a recognized overnight air courier who
requires a signature from recipient, in each case postage prepaid and addressed
to the party to be notified at the address indicated for such party on the
signature page hereof, or at such other address as such party may designate by
10 days' advance written notice to the other parties.
5.7 FINDERS' FEE. Each party represents that it neither is nor
will be obligated for any finders' fee or commission in connection with this
transaction. Investor agrees to indemnify and hold harmless the Company from
any liability for any other commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which Investor is responsible.
The Company agrees to indemnify and hold harmless Investors from any
liability for any other commission or compensation in the nature of a finders'
fee (and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
5.8 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in particular instance and whether retroactively or prospectively),
only with the written consent of the Company and Investor.
5.9 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ONTRO, INC.
a California corporation
/s/ Xxxxx X. Xxxxxxx
---------------------------------
Xxxxx X. Xxxxxxx, President
00000 Xxxxxxxxx Xx., #000
Xxxxx, XX 00000
WITH COPY TO:
Xxxxxx Xxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
INVESTORS:
/s/ Xxxxx Xxxxx
---------------------------------
XXXXX XXXXX
0000 Xxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
/s/ Xxxxx Xxxxx
---------------------------------
XXXXX XXXXX
0000 Xxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
