Exhibit 10.9
ELECTRONIC SUBMISSION PUBLISHING SYSTEM, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is made
as of March 5, 1997, between ELECTRONIC SUBMISSION PUBLISHING SYSTEMS, INC., a
Delaware corporation (the "Company"), ADOBE VENTURES L.P., a California limited
partnership and H&Q ESPS INVESTORS L.P., a California limited partnership. Adobe
Ventures L.P. and H&Q ESPS Investors L.P. are sometimes referred to herein
individually as a "Purchaser" and collectively as the "Purchasers." The parties
hereby agree as follows:
1. Authorization and Sale of the Preferred Shares.
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1.1. Authorization; Amendment of the Certificate of Incorporation. The
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Company has authorized the issuance and sale pursuant to the terms and
conditions hereof of up to 4,000,000 shares of its Series A Preferred Stock, par
value $0.001 per share (the "Series A Shares"), having the rights, restrictions,
privileges and preferences as set forth in the Company's Certificate of
Incorporation. The Company shall adopt and file with the Secretary of State of
the State of Delaware on or before the Closing (as defined below) the
Certificate of Amendment of the Certificate of Incorporation attached hereto as
Exhibit A ("Certificate of Amendment").
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1.2. Sale and Issuance of the Series A Shares. Subject to the terms and
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conditions hereof, at the Closing (as defined below) the Company will issue and
sell to each Purchaser and each Purchaser will purchase from the Company the
number of Series A Shares, at a purchase price of $1.00 per share, as specified
opposite such Purchaser's name on Schedule A to this Agreement.
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2. Closing Date; Delivery.
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2.1. Closing Date.
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(a) Purchase and Sale at the Closing. The closing comprising the
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purchase by the Purchasers and sale by the Company of Series A Shares shall be
held at the offices of Fox, Rothschild, O'Brien & Xxxxxxx, Eagleview Corporate
Center, 000 Xxxxxxxxxxxx Xxxxx, Xxxxx, Xxxxxxxxxxxx on March 5, 1997, or at such
other time and place as the Company and the Purchaser may agree in writing. The
closing referred to in this Section 2.1(a) shall be hereinafter referred to as
the "Closing" and the date of the Closing is hereinafter referred to as the
"Closing Date".
2.2. Delivery. Subject to the terms of this Agreement, at the Closing the
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Company will deliver to the Purchaser the certificates representing the Series A
Shares to be purchased by the Purchaser from the Company, against payment of the
purchase price therefor by delivery of a check, payable to the order of the
Company, by wire transfer or by cancellation of indebtedness owed by the Company
to Purchaser, which indebtedness is set forth on Exhibit A.
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3. Representations and Warranties of the Company. The Company hereby
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represents and warrants to each Purchaser that except as set forth on a Schedule
of Exceptions attached hereto as Exhibit B, which exceptions shall be deemed to
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be representations and warranties as if made hereunder:
3.1. Organization and Standing. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to carry on its
businesses as now conducted and as proposed to be conducted. The Company is
qualified or licensed to do business as a foreign corporation in all
jurisdictions where such qualification or licensing is required, except where
the failure to so qualify would not have a material adverse effect upon the
Company.
3.2. Corporate Power. The Company has now, or will have at the Closing
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Date, all requisite corporate power necessary for the authorization, execution
and delivery of this Agreement and the Amendment to Rights Agreement in the form
attached hereto as Exhibit C (the "Rights Amendment"). This Agreement and the
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Rights Amendment are valid and binding obligations of the Company enforceable in
accordance with their terms, except as the same may be limited by bankruptcy,
insolvency, moratorium, and other laws of general application affecting the
enforcement of creditors' rights.
3.3. Subsidiaries. The Company does not control, directly or indirectly,
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any other corporation, association or business entity.
3.4. Capitalization. The authorized capital stock of the Company is
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10,000,000 shares of Common Stock and 6,000,000 shares of Preferred Stock, of
which 6,000,000 shares have been designated Series A Preferred Stock. There are
issued and outstanding 365,400 shares of the Company's Common Stock and
2,000,000 shares of Preferred Stock. All such issued and outstanding shares have
been duly authorized and validly issued, are fully paid and nonassessable, and
were issued in compliance with all applicable state and federal laws concerning
the issuance of securities. Except for (a) the conversion privileges of the
Preferred Stock, (b) options to purchase 1,538,000 shares of Common Stock and
(c) the right of first refusal granted to certain stockholders of the Company
pursuant to that certain Registration Rights Agreement between the Company and
those stockholders dated July 5, 1994, as amended by the Rights Amendment (such
Registration Rights Agreement as amended by the Rights Agreement is herein
referred to as the "Rights Agreement"), there are no outstanding rights
(including conversion or preemptive rights), options, warrants, conversion
rights or agreements 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 between any persons or entities, which affects or
relates to the voting or giving of written consents with respect to any
securities or by any director of the Company.
3.5. Authorization.
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(a) Corporate Action. All corporate action on the part of the Company,
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directors and stockholders necessary for the execution and delivery of this and
the Rights Amendment, the sale and issuance of the Series A Shares, the of the
Common Stock issuable upon conversion of the Series A Preferred Stock
performance of
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the Company's obligations hereunder and under the Rights Agreement has been
taken or will be taken prior to the Closing. The Company has duly served an
aggregate of 6,000,000 shares of Common Stock for issuance upon conversion of
the Series A Preferred Stock.
(b) Valid Issuance. The Series A Shares when issued in compliance with the
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provisions of this Agreement, and the shares of Common Stock issued upon
conversion of the Series A Preferred Stock when issued in accordance with the
provisions of the Certificate of Incorporation, will be validly issued, fully
paid and nonassessable and will be free of any liens or encumbrances; provided,
however, that all such shares may be subject to restrictions on transfer under
state and/or federal securities laws as set forth herein, and as may be required
by future changes in such laws. The rights, preferences, privileges and
restrictions of the Series A Preferred Stock are as set forth in the Certificate
of Incorporation.
(c) No Preemptive Rights. Except as set forth in the Rights Agreement, no
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person has any right of first refusal or any preemptive rights in connection
with the issuance of the Series A Shares, the issuance of the Common Stock upon
conversion of the Series A Preferred Stock or any future issuances of securities
by the Company.
3.6. Patents, Trademarks, etc. The Company owns and possesses or is
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licensed under all patents, patent applications, licenses, trademarks, trade
names, brand names, trade secrets, inventions and copyrights employed in the
operation of its business as now conducted and as proposed to be conducted, with
no infringement of or conflict with the rights of others respecting any of the
same. The operation of the Company's business as now conducted or as proposed to
be conducted does not infringe any patent, copyright, trade secret or other
proprietary rights of any third parties. There are no outstanding options,
licenses, or agreements of any kind relating to the foregoing, nor is the
Company bound by or a party to any options, licenses or agreements of any kind
with respect to patents, patent applications, licenses, trademarks, trade names,
brand names, inventions, proprietary rights and copyrights of any other person
or entity. The Company is not obligated to make any payments by way of
royalties, fees or otherwise to any owner, licensor of, or other claimant to any
patent, trademark, trade name, copyright or other intangible asset, with respect
to the use thereof or in connection with the conduct of its business, or
otherwise. The Company has not received any communications alleging that it 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, nor is the Company aware
of any basis for the foregoing. There are no agreements, understandings,
instruments, contracts, judgments, orders, writs of decrees to which the Company
is a party or by which it is bound which involve indemnification by the Company
with respect to infringements of proprietary rights.
3.7. Compliance with Other Instruments, None Burdensome, etc. The Company
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is not in violation of any term of its Certificate of Incorporation or Bylaws,
nor is the Company in violation of or in default in any material respect under
the terms of any mortgage, indenture, contract, agreement, instrument, judgment
or decree, the violation of which would have a material adverse effect on the
Company as a whole, and to the best knowledge of the Company, is not in
violation of any order, statute, rule or regulation applicable to the Company,
the violation of which would have a material adverse effect on the Company. The
execution, delivery and performance of and compliance with this Agreement and
the Rights Amendment
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and the issuance and sale of the Series A Shares will not (a) result in any such
violation, or (b) be in conflict with or constitute a default under any such
term, or (c) 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. To the best knowledge of the Company, there is no such term or any
such order, statute, rule or regulation which adversely affects, or in the
future may materially adversely affect, the business, prospects, condition,
affairs or operations of the Company or any of its properties or assets.
3.8. Proprietary Agreements; Employees. Each employee and consultant of the
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Company has executed an agreement regarding confidentiality and proprietary
information, the form of which has been provided to special counsel to the
Purchaser. None of its employees or consultants is in violation thereof and the
Company will use best efforts to prevent such violations. The employees and
consultants of the Company are not 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 his or her best efforts to promote the interests
of the Company or that would conflict with the Company's business as conducted
or as proposed to be conducted or that would prevent any such employee or
consultant from assigning inventions to the Company. Neither the execution nor
delivery of this Agreement or the Rights Amendment, nor the carrying on of the
Company's business as proposed, will conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employees or consultants is now
obligated. The Company does not believe that it is or will be necessary for the
Company to utilize any inventions of any of its employees made prior to their
employment by the Company.
3.9. Litigation, etc. There is no action, proceeding or investigation
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pending against the Company or its officers, directors or stockholders, or to
the best of the Company's knowledge, against employees or consultants of the
Company (or, to the best of the Company's knowledge, any basis therefor or
threat thereof): (1) which might result, either individually or in the
aggregate, in (a) any material adverse change in the business, prospects,
conditions, affairs or operations of the Company or in any of its properties or
assets, or (b) any material impairment of the right or ability of the Company to
carry on its business as now conducted or as proposed to be conducted, or (c)
any material liability on the part of the Company; or (2) which questions the
validity of this Agreement, the Rights Amendment or the Rights Agreement or any
action taken or to be taken in connection herewith, including in each case,
without limitation, actions pending or threatened involving the prior employment
of any of the Company's employees or consultants, the use in connection with the
Company's business of any information or techniques allegedly proprietary to any
of the former employers of such employees or consultants or their obligations
under any agreements with prior employers. The Company is not a party to 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 currently pending or which the
Company currently intends to initiate.
3.10. Governmental Consent, etc. No consent, approval or authorization of
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or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with: (a) the valid execution and
delivery of this Agreement or the Rights Amendment; or (b) the offer, sale or
issuance of the Series A Shares, or the issuance of the
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shares of Common Stock issuable upon conversion of the Series A Preferred Stock
or (c) the obtaining of the consents, permits and waivers specified in
subsection 5.1(b) hereof.
3.11. Offering. In reliance on the representations and warranties of the
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Purchaser in Section 4 hereof, the offer, sale and issuance of the Series A
Shares in conformity with the terms of this Agreement will not result in a
violation of the requirements of Section 5 of the Securities Act of 1933, as
amended (the "Securities Act") or the qualification or registration requirements
of applicable blue sky laws.
3.12. Taxes. The Company has filed all tax returns that are required to
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have been filed with appropriate federal, state, county and local governmental
agencies or instrumentalities, except where the failure to do so would not have
a material adverse effect upon the Company, taken as a whole. The Company has
not elected pursuant to the Internal Revenue Code of 1986, as amended ("Code"),
to be treated as a Subchapter S corporation or a collapsible corporation
pursuant to Section 341(f) or Section 1362(a) of the Code, nor has it made any
other elections pursuant to the Code (other than elections which relate solely
to methods of accounting, depreciation or amortization) which would have a
material 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 paid or established reserves for all income,
franchise and other taxes, assessments, governmental charges, penalties,
interest and fines due and payable by them on or before the Closing.
3.13. Title. The Company owns its property and assets free and clear of all
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liens, mortgages, loans or encumbrances except liens for current taxes, and 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 leased by the Company, the Company is in
compliance with such leases and, to the best of the Company's knowledge, holds
valid leasehold interests free and clear of any liens, claims or encumbrances.
3.14. Material Contracts and Commitments. All of the contracts, mortgages,
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indentures, agreements, instruments and transactions to which the Company is a
party or by which it is bound (including purchase orders to the Company or
placed by the Company) which involve obligations of, or payments to, the Company
in excess of Ten Thousand Dollars ($10,000) and all agreements between the
Company and its officers, directors, consultants and employees are either (i)
attached as exhibits to this Agreement, or (ii) set forth on Exhibit B (the
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"Contracts"), copies of which have been delivered to special counsel to the
Purchaser. All of the Contracts are valid, binding and in full force and effect
in all material respects and enforceable by the Company in accordance with their
respective terms in all material respects, subject to the effect of applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors' rights and rules
or laws concerning equitable remedies. The Company is not in material default
under any of such Contracts.
3.15. Financial Statements. The Company maintains and will continue to
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maintain a standard system of accounting established and administered in
accordance with generally accepted accounting principles. The Company has
delivered to Purchaser its unaudited balance sheet as of March 31, 1996 and its
statement of operations and statement of cash flows for the year ended March 31,
1996 and its unaudited balance sheet as of January 31, 1997 and its
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statement of operations and statement of cash flows for the ten month period
ended January 31, 1997 (the above financial statements are hereinafter
collectively referred to as the "Financial Statements"). The Financial
Statements fairly set out and describe the financial condition and operating
results of the Company as of the dates, and during the periods, indicated
therein. Except as disclosed in the Financial Statements, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business, and (ii) obligations under contracts and
commitments incurred in the ordinary course of business, which, in both cases,
individually or in the aggregate, are not material to the financial condition or
operating results of the Company.
3.16. Absence of Changes. Since January 31, 1997 (a) the Company has not
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entered into any transaction which was not in the ordinary course of business,
(b) there has been no material adverse change in the condition (financial or
otherwise) of the business, property, assets or liabilities of the Company other
than changes in the ordinary course of its business, none of which, individually
or in the aggregate, has been materially adverse, (c) there has been no damage
to, destruction of or loss of physical property (whether or not covered by
insurance) materially adversely affecting the assets, prospects, financial
condition, operating results, business or operations of the Company, (d) the
Company has not declared or paid any dividend or made any distribution on its
stock, or redeemed, purchased or otherwise acquired any of its stock, (e) the
Company has not materially changed any compensation arrangement or agreement
with any of its key employees or executive officers, or materially changed the
rate of pay of its employees as a group, (f) the Company has not changed or
amended any material contract by which the Company or any of its assets are
bound or subject, except as contemplated by this Agreement, (g) there has been
no resignation or termination of employment of any key officer or employee of
the Company and the Company does not know of any impending resignation or
termination of employment of any such officer or employee that if consummated
would have a material adverse effect on the business of the Company, (h) there
has been no change, except in the ordinary course of business, in the material
contingent obligations of the Company (nor in any contingent obligation of the
Company regarding any director, stockholder or key employee or officer of the
Company) by way of guaranty, endorsement, indemnity, warranty or otherwise, (i)
there have been no loans made by the Company to any of its employees, officers
or directors other than travel advances and other advances made in the ordinary
course of business, (j) there has been no waiver by the Company of a valuable
right or of a material debt owing to it, and (k) there has not been any
satisfaction or discharge of any lien, claims or encumbrance or any payment of
any obligation by the Company, except in the ordinary course of business and
which is not material to the assets, properties, financial condition, operating
results or business of the Company.
3.17. Outstanding Indebtedness. The Company has no indebtedness for
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borrowed money which it has directly or indirectly created, incurred, assumed or
guaranteed, or with respect to which it has otherwise become liable, directly or
indirectly, except as reflected on the Financial Statements.
3.18. Registration Rights. Other than as granted pursuant to the Rights
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Agreement, the Company has not granted or agreed to grant any rights to register
(as that term is defined in the Rights Agreement), including piggyback
registration rights, to any person or entity.
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3.19. Certain Transactions. The Company is not indebted, directly or
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indirectly, to any of its employees, officers, directors or stockholders or to
their spouses or children, in any amount whatsoever; and none of said employees,
officers, directors or, to the best of the Company's knowledge, stockholders, or
any member of their immediate families, are indebted to the Company or 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. To
the best of the Company's knowledge, no such employee, officer, director or
stockholder, or any member of their immediate families, is, directly or
indirectly, interested in any material contract with the Company. The Company is
not guarantor or indemnitor of any indebtedness of any other person, firm or
corporation.
3.20. Corporate Documents; Minute Books. Except for amendments necessary to
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satisfy representations and warranties or conditions contained herein (the form
of which amendments has been approved by the Purchaser), the Certificate of
Incorporation and Bylaws of the Company are in the form previously provided to
special counsel to the Purchaser. The minute books of the Company previously
provided to special counsel to the Purchaser contain a complete summary of all
meetings of directors and stockholders since the time of incorporation of the
Company.
3.21. Employee Benefit Plans. The Company does not have any "employee
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benefit plan" as defined in the Employee Retirement Income Security Act of 1974,
as amended.
3.22. Environmental and Safety Laws. To the best of its knowledge, the
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Company is not in violation of any applicable statute, law, or regulation
relating to the environment or occupational health and safety, and to the best
of its knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law, or regulation.
3.23. Insurance. The Company has in full force and effect fire and casualty
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insurance policies, with extended coverage, and insurance against other hazards,
risks and liabilities to persons and property to the extent and in the manner
customary for companies in similar businesses similarly situated.
3.24. Labor Agreements and Actions. The Company is not aware that any
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officer or key employee or consultant intends to terminate his or her employment
with the Company, nor does the Company have a present intention to terminate the
employment of any of the foregoing. Subject to general principles related to
wrongful termination of employees, the employment of each officer and employee
of the Company is terminable at the will of the Company.
3.25. Section 83(b) Elections. To the best of the Company's knowledge, all
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elections and notices required by Section 83(b) of the Internal Revenue Code and
any analogous provisions of applicable state tax laws have been timely filed by
all individuals who have purchased shares of the Company's Common Stock.
3.26. Disclosure. No representation or warranty by the Company in this
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Agreement, or in any document or certificate furnished or to be furnished to the
Purchaser pursuant hereto or in connection with the transactions contemplated
hereby, when taken together, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact
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necessary to make the statements made herein and therein, in the light of the
circumstances under which they were made, not misleading. The Company has fully
provided the Purchaser with all the information which such Purchaser has
requested for deciding whether to purchase the Series A Preferred Stock.
4. Representations and Warranties of Purchasers and Restrictions on Transfer
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Imposed by the Securities Act.
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4.1. Representations and Warranties by the Purchasers. Each Purchaser
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represents and warrants to the Company as follows:
(a) Investment Intent. This Agreement is made with the Purchaser in
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reliance upon such Purchaser's representation to the Company, evidenced by
Purchaser's execution of this Agreement, that Purchaser is acquiring the Series
A Shares and the Common Stock issuable upon conversion of Series A Preferred
Stock (collectively the "Securities") for investment for such Purchaser's own
account, for investment and not with a view to, or for resale in connection
with, any distribution or public offering thereof within the meaning of the
Securities Act. Purchaser has the full right, power and authority to enter into
and perform this Agreement and the Rights Amendment, and this Agreement, the
Rights Amendment and the Rights Agreement constitute valid and binding
obligations upon it.
(b) Series A Shares Not Registered. Purchaser understands and
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acknowledges that the offering of the Series A Shares pursuant to this Agreement
will not be registered under the Securities Act or qualified under applicable
blue sky laws on the grounds that the offering and sale of securities
contemplated by this Agreement are exempt from registration under the Securities
Act and exempt from qualifications available under applicable blue sky laws, and
that the Company's reliance upon such exemptions is predicated upon such
Purchaser's representations set forth in this Agreement. The Purchaser
acknowledges and understands that the Securities must be held indefinitely
unless the Securities are subsequently registered under the Securities Act and
qualified under applicable blue sky laws or an exemption from such registration
and such qualification is available.
(c) No Transfer. Purchaser covenants that in no event will such
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Purchaser dispose of any of the Securities (other than in conjunction with an
effective registration statement for the Securities under the Securities Act or
in compliance with Rule 144 promulgated under the Securities Act) unless and
until (i) such Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a statement of the
circumstances surrounding the proposed disposition, and (ii) if reasonably
requested by the Company, such Purchaser shall have furnished the Company with
an opinion of counsel to the effect that (x) such disposition will not require
registration under the Securities Act and (y) appropriate action necessary for
compliance with the Securities Act and other applicable state, local or foreign
law has been taken. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144.
(d) Permitted Transfers. Notwithstanding the provisions of subsection
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(c) above, no registration statement or opinion of counsel shall be necessary
for a transfer by a Purchaser which is a partnership to a partner of such
partnership or a former partner of such
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partnership who leaves such partnership after the date hereof, or to the estate
of any such partner or former partner or the transfer by gift, will or intestate
succession of any partner to his spouse or lineal descendants or ancestors, if
the transferee agrees in writing to be bound by the terms of this Agreement to
the same extent as if he were an original Purchaser hereunder.
(e) Knowledge and Experience. Purchaser (i) has such knowledge and
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experience in financial and business matters as to be capable of evaluating the
merits and risks of such Purchaser's prospective investment in the Securities;
(ii) has the ability to bear the economic risks of such Purchaser's prospective
investment; (iii) has been furnished with and has had access to such information
as such Purchaser has considered necessary to make a determination as to the
purchase of the Securities together with such additional information as is
necessary to verify the accuracy of the information supplied; (iv) has had all
questions which have been asked by such Purchaser satisfactorily answered by the
Company; and (v) has not been offered the Securities by any form of
advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any such media.
(f) Not Organized to Purchase. Purchaser has not been organized for
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the purpose of purchasing the Securities.
4.2. Legends. Each certificate representing the Securities may be endorsed
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with the following legends:
(a) Federal Legend. THE SECURITIES REPRESENTED BY THIS CERTIFICATE
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HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") AND ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER
THE ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE
DISTRIBUTED EXCEPT (i) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SHARES UNDER THE ACT OR (ii) IN COMPLIANCE WITH RULE 144, OR (iii)
PURSUANT TO AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION OR COMPLIANCE IS NOT REQUIRED AS TO SAID SALE, OFFER OR
DISTRIBUTION.
(b) Other Legends. Any other legends required by applicable state blue
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sky laws.
The Company need not register a transfer of legended Securities, and may also
instruct its transfer agent not to register the transfer of the Securities,
unless the conditions specified in each of the foregoing legends are satisfied.
4.3. Removal of Legend and Transfer Restrictions. Any legend endorsed on a
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certificate pursuant to subsection 4.2(a) and the stop transfer instructions
with respect to such legended Securities shall be removed, and the Company shall
issue a certificate without such legend to the holder of such Securities if such
Securities are registered under the Securities Act and a prospectus meeting the
requirements of Section 10 of the Securities Act is available or if such holder
satisfies the requirements of Rule 144(k) and, where reasonably deemed necessary
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by the Company, provides the Company with an opinion of counsel for such holder
of the Securities to the effect that (i) such holder, meets the requirements of
Rule 144(k) or (ii) a public sale, transfer or assignment of such Securities may
be made without registration.
5. Conditions to Closing.
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5.1. Conditions to Purchasers' Obligations. The obligation of the Purchaser
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to purchase the Series A Shares at the Closing is subject to the fulfillment to
its satisfaction, on or prior to the Closing Date, of the following conditions,
any of which may be waived by Purchaser:
(a) Representations and Warranties Correct; Performance of
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Obligations. The representations and warranties made by the Company in Section 3
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hereof shall be true and correct when made, and shall be true and correct in all
material respects on the Closing Date with the same force and effect as if they
had been made on and as of said date. The Company's business and assets shall
not have been adversely affected in any material way prior to the Closing Date.
The Company shall have performed in all material respects all obligations and
conditions herein required to be performed or observed by it on or prior to the
Closing Date.
(b) Consents and Waivers. The Company shall have obtained in a timely
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fashion any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by this Agreement and the Rights
Agreement, as amended by the Rights Amendment.
(c) Filing of the Certificate of Amendment of the Certificate of
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Incorporation. The Certificate of Amendment shall have been filed with the
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Division of Corporations for the State of Delaware.
(d) Compliance Certificate. The Company shall have delivered a
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Certificate, executed by the President of the Company, dated the Closing Date,
certifying to the fulfillment of the conditions specified in subsections (a),
(b) and (c) of this section 5.1.
(e) Secretary Certificate. The Company shall have delivered a
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Certificate, executed by the Secretary of the Company, dated the Closing Date,
certifying the Board of Directors and stockholders resolutions approving this
Agreement and the issuance of the Series A Shares and certifying the current
versions of the Certificate of Incorporation and Bylaws of the Company.
(f) Opinion of Counsel. The Purchaser shall have received an opinion
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from Fox, Rothschild, O'Brien & Xxxxxxx, the Company's counsel, satisfactory in
form to special counsel for the Purchaser.
5.2. Conditions to Obligations of the Company. The Company's obligation to
----------------------------------------
sell and issue the Series A Shares at the Closing is subject to the fulfillment
to the satisfaction of the Company on or prior to the respective Closing Date of
the following conditions, any of which may be waived by the Company:
10
(a) Representations and Warranties Correct. The representations and
--------------------------------------
warranties made by the Purchaser in Section 4 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date with the same force
and effect as if they had been made on and as of said date.
(b) Conditions Fulfilled. The conditions set forth in subsections (b)
--------------------
and (c) of Section 5.1 shall have been fulfilled.
6. Affirmative Covenants of the Company. The Company hereby covenants and
------------------------------------
agrees as follows:
6.1. Financial Information. Until the first to occur of (i) the date on
---------------------
which the Company is required to file a report pursuant to Section 13(a) of the
Securities Exchange Act of 1934 (the "Exchange Act"), by reason of the Company
having registered any of its securities pursuant to Section 12(g) of the
Exchange Act or (ii) quotations for the Common Stock of the Company are reported
by the automated quotations system operated by the National Association of
Securities Dealers, Inc. or by an equivalent quotations system or (iii) shares
of the Common Stock of the Company are listed on a national securities exchange
registered under Section 6 of the Exchange Act, the Company will furnish to the
Purchaser:
(a) so long as such Purchaser or its affiliates own any of the Series
A Shares or Common Stock issued upon conversion of the Series A Shares, as soon
as practicable after the end of each fiscal year, and in any event within 90
days thereafter, consolidated balance sheets of the Company and its
subsidiaries, if any, as at the end of such fiscal year, and consolidated
statements of operations and consolidated statements of cash flow of the Company
and its subsidiaries, if any, for such year, prepared in accordance with
generally accepted accounting principles, all in reasonable detail and certified
by independent public accountants of recognized national standing selected by
the Company; and
(b) so long as the Purchaser continues to hold at least 100,000 shares
of the Company's Series A Preferred Stock (as adjusted for stock splits,
combinations, dividends, distributions or recapitalizations), as soon as
practicable after the end of each month and in any event within 15 days
thereafter, consolidated balance sheets of the Company and its subsidiaries, if
any, as of the end of such month and consolidated statements of income and cash
flow statements, for such month and for the current fiscal year to date,
prepared in accordance with generally accepted accounting principles (except for
required footnotes), all in reasonable detail and signed, subject to changes
resulting from year-end audit adjustments, by the principal financial officer or
chief executive officer of the Company; and
(c) at such time as the Purchaser or its affiliates are no longer
entitled to receive information under Section 6.1(b) above and so long as such
Purchaser or its affiliates own any of the Series A Shares or Common Stock
issued upon conversion of the Series A Shares, as soon as practicable after the
end of each fiscal quarter, and in any event within 45 days thereafter,
consolidated balance sheets of the Company and its subsidiaries, if any, as at
the end of such fiscal quarter, and consolidated statements of operations and
consolidated statements of cash flow of the Company and its subsidiaries, if
any, for such quarter, prepared in accordance with generally accepted accounting
principles (except for required footnotes), all in reasonable
11
detail and signed, subject to changes resulting from year-end audit adjustments,
by the principal financial officer or chief executive officer of the Company;
and
(d) so long as the Purchaser continues to hold at least 100,000 shares
of the Company's Series A Preferred Stock (as adjusted for stock splits,
combinations, dividends, distributions or recapitalizations), as soon as
practicable and in any event no later than sixty (60) days before the end of the
fiscal year, an annual budget (consisting of projected income statements and
projected cash flow statements reported on a monthly basis) for the subsequent
fiscal year.
6.2. Conflicts of Interests. The Company shall use its best efforts to
----------------------
ensure that the Company's employees and consultants, during the term of their
employment with the Company, do not engage in activities which would result in a
conflict of interest with the Company. The Company's obligations hereunder
include, but are not limited to, requiring that the Company's employees devote
their primary productive time, ability and attention to the business of the
Company (provided, however, the Company's employees may engage in other
professional activity if such activity does not materially interfere with their
obligations to the Company), requiring that the Company's employees and
consultants enter into agreements regarding proprietary information and
confidentiality.
6.3. Proprietary Agreements. The Company will use its best efforts to
----------------------
prevent any employee or consultant from violating the confidentiality and
proprietary information agreement entered into between the Company and each of
its employees.
6.4. Future Stock Issuances. After July 5, 1994, the Company has not and in
----------------------
the future will not issue more than 3,634,600 shares of Common Stock (or grant
any options, warrants or other rights to purchase the same) to employees,
officers, directors and consultants without unanimous vote of the Company's
Board of Directors. The Company will not issue any shares of Common Stock (or
grant any options, warrants or other rights to purchase the same) to any
employee, officer, director or consultant except pursuant to agreements which
provide for vesting over a period of at least forty-eighty (48) months (with the
initial vesting date to occur after twelve (12) months) and a right of first
refusal in favor of the Company in the event of any proposed transfer unless
such issuance or grant is approved by unanimous vote of the Company's Board of
Directors. The Company, Adobe Ventures L.P. and H&Q ESPS Investors L.P. agree to
terminate Section 6.4 of that certain Series A Preferred Stock Purchase
Agreement dated July 5, 1994.
6.5. Inspection. The Company shall permit the Purchaser, at the Purchaser's
----------
expense, to visit and inspect the Company's properties, to examine its books of
account and records and to discuss the Company's affairs, finances and accounts
with its officers, all at such reasonable times as may be requested by the
Purchaser; provided, however, that the Company shall not be obligated pursuant
to this Section 6.5 to provide access to any information which it reasonably
considers to be a trade secret or similar confidential information.
12
7. Miscellaneous.
-------------
7.1. Governing Law. This Agreement shall be governed in all respects by the
-------------
laws of the State of Delaware as such laws are applied to agreements between
Delaware residents entered into and to be performed entirely within Delaware.
7.2. Survival. The representations, warranties, covenants and agreements
--------
made herein shall survive the Closing of the transactions contemplated hereby,
notwithstanding any investigation made by the Purchaser. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder as of the date of such certificate or instrument.
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
successors, assigns, heirs, executors and administrators of the parties hereto.
7.4. Entire Agreement. This Agreement and the other documents delivered
----------------
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof and they
supersede, merge and render void every other prior written and/or oral
understanding or agreement among or between the parties hereto.
7.5. Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be delivered personally,
mailed by first class mail, postage prepaid, or delivered by courier or
overnight delivery, addressed (a) if to a Purchaser, at such Purchaser's address
set forth in the Schedule of Purchasers, or at such other address as such
Purchaser shall have furnished to the Company in writing or (b) if to the
Company, at 0000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxxxxxxx, XX 00000, or at
such other address as the Company shall have furnished to the Purchaser in
writing. Notices that are mailed shall be deemed received five (5) days after
deposit in the United States mail.
7.6. Severability. In case any provision of this Agreement shall be found
------------
by a court of law to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not in any way be affected or impaired thereby.
7.7. Finder's Fees and Other Fees.
----------------------------
(a) The Company (i) represents and warrants that it has retained no
finder or broker in connection with the transactions contemplated by this
Agreement and, (ii) hereby agrees to indemnify and to hold Purchasers harmless
from and against any liability for 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 the
Company, or any of its employees or representatives, is responsible.
(b) Each Purchaser (i) represents and warrants that it has retained no
finder or broker in connection with the transactions contemplated by this
Agreement and (ii) hereby agrees to indemnify and to hold the Company harmless
from and against any liability for any
13
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 Purchaser, or any of its employees or
representatives, are responsible.
7.8. Expenses. The Company and the Purchasers shall each bear their own
--------
expenses and legal fees in connection with the consummation of this transaction;
provided, however, that the Company will pay the reasonable fees, up to $10,000,
of special counsel for the Purchasers, together with disbursements and expenses
incurred by special counsel.
7.9. 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.
7.10. 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.
7.11. Delays or Omissions. No delay or omission to exercise any right,
-------------------
power or remedy accruing to the Company or to any holder of any securities
issued or to be issued hereunder shall impair any such right, power or remedy of
the Company or such holder, nor shall it be construed to be a waiver of any
breach or default under this Agreement, or an acquiescence therein, or of or in
any similar breach or default thereafter occurring; nor shall any delay or
omission to exercise any right, power or remedy or any waiver of any single
breach or default be deemed a waiver of any other right, power or remedy or
breach or default theretofore or thereafter occurring. All remedies, either
under this Agreement, or by law otherwise afforded to the Company or any holder,
shall be cumulative and not alternative.
14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
ELECTRONIC SUBMISSION
PUBLISHING SYSTEMS, INC.
By: /s/ Xxxxxxxx Xxxxxxx
----------------------------
Xxxxxxxx Xxxxxxx,
President
PURCHASERS:
ADOBE VENTURES L.P.
By: it general partner,
H&Q Adobe Ventures Management L.P.,
By: its general partner,
H&Q Adobe Ventures Management Corp.,
By: /s/ Xxxxxx Xxxxxxxxxxxx
---------------------------------
Title: Attorney-in-Fact
------------------------------
H&Q ESPS INVESTORS L.P.
By: /s/ Xxxxxx Xxxxxxxxxxxx
---------------------------------
Title: Attorney-in-Fact
------------------------------
15
