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EXHIBIT 10.1
ARGONAUT TECHNOLOGIES, INC.
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SERIES D PREFERRED STOCK PURCHASE AGREEMENT
May 21, 1999
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TABLE OF CONTENTS
PAGE
SECTION 1 Authorization and Sale of Series D Preferred Stock............. 1
1.1 Authorization of Series D Preferred Stock...................... 1
1.2 Sale of Series D Preferred Stock............................... 1
SECTION 2 Closing Date; Delivery......................................... 1
2.1 Closing Date................................................... 1
2.2 Delivery....................................................... 1
SECTION 3 Representations and Warranties of the Company.................. 2
3.1 Organization and Standing; Articles and Bylaws................. 2
3.2 Corporate Power................................................ 2
3.3 Subsidiaries................................................... 2
3.4 Capitalization................................................. 2
3.5 Authorization.................................................. 3
3.6 Validity of Shares............................................. 3
3.7 Title to Properties and Assets; Liens, etc..................... 3
3.8 Material Contracts and Commitments............................. 4
3.9 Patents, Trademarks, etc....................................... 4
3.10 Compliance with Other Instruments.............................. 4
3.11 Litigation, etc................................................ 5
3.12 Employees...................................................... 5
3.13 Insurance...................................................... 5
3.14 Registration Rights............................................ 5
3.15 Governmental Consents, etc..................................... 5
3.16 Offering....................................................... 6
3.17 Disclosure..................................................... 6
3.18 Brokers or Finders............................................. 6
3.19 Permits........................................................ 6
3.20 Financial Statements........................................... 6
3.21 Changes........................................................ 7
3.22 Material Liabilities........................................... 8
3.23 Related Party Transactions..................................... 8
3.24 Taxes.......................................................... 9
3.25 Offering of Shares............................................. 9
3.26 No Violations, etc............................................. 9
3.27 Compliance with Laws........................................... ▇▇
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3.28 ERISA.......................................................... 10
3.29 Environmental.................................................. 10
3.30 Foreign Corrupt Practices Act.................................. 11
3.31 Year 2000...................................................... 11
SECTION 4 Representations, Warranties and Covenants of the Purchasers.... 11
4.1 Experience; Risk............................................... 11
4.2 Investment..................................................... 12
4.3 Restricted Securities; Rule 144................................ 12
4.4 No Public Market............................................... 12
4.5 Access to Data................................................. 12
4.6 Authorization.................................................. 12
4.7 Government Consents............................................ 13
4.8 Further Limitations on Disposition............................. 13
4.9 Legends........................................................ 13
SECTION 5 Conditions to Closing of Purchaser............................. 13
5.1 Representations and Warranties Correct......................... 13
5.2 Covenants...................................................... 14
5.3 Opinion of Company's Counsel................................... 14
5.4 Compliance Certificate......................................... 14
5.5 Blue Sky....................................................... 14
5.6 Stockholder Rights Agreement................................... 14
5.7 Restated Certificate of Incorporation.......................... 14
5.8 Management Rights Agreement.................................... 14
5.9 All Proceedings to be Satisfactory............................. 14
5.10 Supporting Documents........................................... 14
5.11 No Litigation Threatened....................................... 15
5.12 Approvals, Waivers and Consents................................ 15
5.13 Stock Certificates............................................. 15
5.14 No Change in Law............................................... 15
SECTION 6 Conditions to Closing of the Company........................... 15
6.1 Representations................................................ 16
6.2 Stockholder Rights Agreement................................... 16
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 7 Covenants of the Company....................................... 16
7.1 Reserve for Conversion Shares.................................. 16
7.2 Corporate Existence............................................ 16
7.3 Properties, Business, Insurance................................ 16
7.4 Inspection, Consultation and Advice............................ 17
7.5 Restrictive Agreements Prohibited.............................. 17
7.6 Transactions with Affiliates................................... 17
7.7 Compliance with Laws........................................... 17
7.8 Keeping of Records and Books of Account........................ 17
7.9 Change in Nature of Business................................... 17
7.10 No "Prohibited Transactions" and Employee Benefits............. 17
7.11 Composition of the Board of Directors.......................... 17
7.12 Directors' Expenses............................................ 18
7.13 Payment of Taxes............................................... 18
SECTION 8 Miscellaneous.................................................. 18
8.1 Governing Law.................................................. 18
8.2 Survival....................................................... 18
8.3 Successors and Assigns......................................... 18
8.4 Entire Agreement; Amendment.................................... 19
8.5 Notices, etc................................................... 19
8.6 Delays or Omissions............................................ 19
8.7 California Corporate Securities Law............................ 19
8.8 Counterparts................................................... 19
8.9 Severability................................................... 20
8.10 Expenses....................................................... 20
Exhibits:
A - Schedules of Purchasers
B - Restated Certificate of Incorporation
C - Schedule of Exceptions
D - Amended Stockholder Rights Agreement
E - Legal Opinion of Company Counsel
F - Management Rights Agreement
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ARGONAUT TECHNOLOGIES, INC.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
This Agreement is made as of May 21, 1999, between Argonaut Technologies,
Inc., a Delaware corporation (the "COMPANY") and the entities listed on Exhibit
A hereto (individually, a "PURCHASER" and, collectively, the "PURCHASER").
SECTION 1
Authorization and Sale of Series D Preferred Stock
1.1 Authorization of Series D Preferred Stock. The Company has authorized
the sale and issuance of up to Two Million Seven Hundred Thousand (2,700,000)
shares of its Series D Preferred Stock (the "SERIES D PREFERRED"), having the
rights, preferences, privileges and restrictions set forth in the Company's
Restated Certificate of Incorporation in the form attached hereto as Exhibit B
(the "RESTATED CERTIFICATE"). The shares of Series D Preferred to be sold
hereunder are collectively referred to as the "SHARES."
1.2 Sale of Series D Preferred. Subject to the terms and conditions
hereof, on the Closing Date (as defined below) the Company will issue and sell
to each Purchaser, and each Purchaser will purchase severally, and not jointly,
at a purchase price of Five Dollars and Seventy-Five Cents ($5.75) per share
from the Company, the number of shares of Series D Preferred specified opposite
the name of each such Purchaser on Exhibit A.
SECTION 2
Closing Date; Delivery
2.1 Closing Date. The closing of the purchase and sale of shares of the
Series D Preferred hereunder (the "CLOSING") shall be held at the offices of
Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ ("WSGR") on May 21, 1999, or at such other time and place upon which
the Company and the Purchasers shall agree (the date of the Closing is
hereinafter referred to as the "CLOSING DATE").
2.2 Delivery. At the Closing, the Company will issue and deliver to each
Purchaser a stock certificate or certificates in definitive form, registered in
the name of the Purchaser, representing the number of Shares set forth opposite
such Purchaser's name on Exhibit A of this Agreement, as appropriate, against
payment of the purchase price therefor, by check or wire transfer payable to
the Company.
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SECTION 3
Representations and Warranties of the Company
Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit C, the Company hereby represents and warrants to the Purchasers as
follows:
3.1 Organization and Standing; Articles and Bylaws. The Company is a
corporation duly organized and validly existing under, and by virtue of, the
laws of the State of Delaware and is in good standing under such laws. The
Company has all requisite corporate power to own and operate its properties and
assets, and to carry on its business as presently conducted and as proposed to
be conducted. The Company is qualified to do business as a foreign corporation
in any jurisdiction in which failure to qualify would have a material adverse
effect on the Company's business. The Company has furnished Purchasers with
true and complete copies of its Restated Certificate and Bylaws in effect as of
the date hereof.
3.2 Corporate Power. The Company will have prior to the Closing Date all
requisite legal and corporate power to execute, deliver and perform this
Agreement and to amend the Amended Stockholder Rights Agreement in the form
attached hereto as Exhibit D (the "STOCKHOLDER RIGHTS AGREEMENT") to execute,
deliver and perform the Stockholder Rights Agreement, to sell and issue and
deliver the Shares hereunder, to issue and deliver the Common Stock issuable
upon conversion of the Shares and to carry out and perform its obligations
under the terms of this Agreement, the Stockholder Rights Agreement and the
transactions contemplated hereby.
3.3 Subsidiaries. The Company has no subsidiaries or affiliated companies
and does not otherwise own or control, directly or indirectly, or have any
ownership interest in, any other corporation, association, joint venture,
business entity or partnership.
3.4 Capitalization. The authorized capital stock of the Company consists
of 32,200,000 shares of Common Stock and 26,200,000 shares of Preferred Stock,
of which 5,000,000 shares are designated as Series A Preferred Stock, 5,000,000
shares are designated Series A-1 Preferred Stock, 3,000,000 shares are
designated Series B Preferred Stock, 3,000,000 shares are designated Series B-1
Preferred Stock, 1,600,000 shares are designated Series C Preferred Stock,
1,600,000 shares are designated Series C-1 Preferred Stock, 2,700,000 shares
are designated Series D Preferred Stock, and 2,700,000 shares are designated
Series D-1 Preferred Stock. Immediately prior to the Closing, the issued and
outstanding stock of the Company shall consist of 2,337,636 shares of Common
Stock, 4,627,500 shares of Series A Preferred Stock, no shares of Series A-1
Preferred Stock, 2,923,073 shares of Series B Preferred Stock, no shares of
Series B-1 Preferred Stock, 1,180,000 shares of Series C Preferred Stock, no
shares of Series C-1 Preferred Stock, no shares of Series D Preferred Stock,
and no shares of Series D-1 Preferred Stock. There are Warrants outstanding for
the purchase of 50,000 shares of Common Stock and 91,665 shares of Series C
Preferred Stock. All such issued and outstanding shares have been duly
authorized and validly issued, and are fully paid and nonassessable. The
Company has reserved shares of Common stock for issuance upon conversion of
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the Preferred Stock and upon exercise of outstanding Warrants. The Company has
reserved 2,435,308 shares of its Common Stock for issuance to officers,
directors, employees, sales representatives and consultants of the Company
pursuant to the Company's 1995 Incentive Stock Plan. There are Stock Options
outstanding for the purchase of 1,598,122 shares of Common Stock. The Series A
Preferred, Series A-1 Preferred, Series B Preferred, Series B-1 Preferred,
Series C Preferred, Series C-1 Preferred, Series D Preferred, and Series D-1
Preferred shall have the rights, preferences, privileges and restrictions set
forth in the Restated Certificate. Except as referenced herein, there are no
options, warrants, conversion privileges or other rights presently outstanding
to purchase or otherwise acquire any authorized but unissued shares of the
capital stock or other securities of the Company, nor any agreements or
understandings with respect thereto. The Company is not a party or subject to
any agreement or understanding, and, to the Company's knowledge, there is no
agreement or understanding between any persons and/or entities, which affects
or relates to the voting or giving of consents with respect to any security or
by a director of the Company. The Company is under no duty to redeem or
repurchase any shares of any class or series of its capital stock. All of the
outstanding shares of the Company were issued in compliance with all applicable
Federal and state securities laws.
3.5 Authorization. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization,
execution, delivery and performance of this Agreement and the Stockholder
Rights Agreement by the Company, the authorization, sale, issuance and delivery
of the Shares (and the Common Stock issuable upon conversion of the Shares) and
the performance of the Company's obligations hereunder and thereunder has been
taken or will be taken prior to the Closing. This Agreement and the Stockholder
Rights Agreement, when executed and delivered by the Company, shall constitute
the legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies.
3.6 Validity of Shares. The Shares, when issued, sold and delivered in
compliance with the provisions of this Agreement, will be duly and validly
issued and will be fully paid and non-assessable and free and clear of all liens
and encumbrances, and the Common Stock issuable upon conversion of the Shares
has been duly and validly reserved and, when issued and delivered in compliance
with the provisions of the Restated Certificate will be duly and validly issued
and will be fully paid and nonassessable and free and clear of all liens and
encumbrances and restrictions on transfer other than as set forth in this
Agreement and the Stockholder Rights Agreement, provided, however, that the
Shares (and the Common Stock issuable upon conversion of the Shares) may be
subject to restrictions on transfer under state and/or federal securities laws.
Except as set forth herein or in the Stockholder Rights Agreement, there are no
outstanding rights of first refusal or preemptive rights applicable to the
Shares or the Common Stock issuable upon conversion of the Shares.
3.7 Title to Properties and Assets; Liens, etc. The Company has good and
marketable title to all its properties and assets, and is in compliance with
the lease of all material properties leased by it, in each case subject to no
mortgage, pledge, lien, lease, encumbrance or charge, other
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than the lien of current taxes not yet due and payable. The Company is not in
default under or in breach of any provision of its leases, and the Company
holds valid leasehold interests in the properties which it leases. No event has
occurred and is continuing which, with due notice or lapse of time or both,
would constitute a default or event of default by the Company under any such
lease or agreement or, to the Company's knowledge, by any party thereto. The
Company's properties and assets are in good condition and repair, ordinary wear
and tear excepted, in all material respects.
3.8 Material Contracts and Commitments. Exhibit C sets forth a list of
all agreements, contracts, indebtedness, liabilities, and other obligations to
which the Company is a party or by which it or its assets are bound that (a)
are material to the conduct and operations of its business and properties; (b)
involve in excess of $10,000 aggregating similar agreements or obligations to
the same party; (c) involve to the Company's knowledge any of the officers,
consultants, directors, employees, or stockholders of the Company or any
members of the immediate family of the foregoing; or (d) obligate the Company
to share, license, or develop any product. Copies of such agreements and
contracts and documentation evidencing such liabilities and other obligations
have been made available by the Company to the Purchasers.
3.9 Patents, Trademarks, etc. To the knowledge of the Company, the Company
owns or has valid right to use all patents, trademarks, service marks, trade
names, copyrights, trade secrets, information, proprietary rights and processes
necessary for its business as now conducted, and as proposed to be conducted,
without conflict with or infringement of the rights of others. The Company has
not received any communications alleging that the Company has violated or, by
conducting its business as proposed, would violate, the proprietary or
intellectual property rights of any other person or entity. To the Company's
knowledge, there is no violation or infringement by a third party of any of the
Company's patents, licenses, trademarks, service marks, trade names,
copyrights, trade secrets or other proprietary rights.
3.10 Compliance with Other Instruments. The Company is not in violation of
any term of its Restated Certificate or Bylaws, or in any material respect of
any term or provision of any mortgage, indenture, contract, agreement,
instrument, judgment or decree, and to its knowledge is not in violation of any
order, statute, rule or regulation applicable to the Company. No want or
failure of performance has occurred which, with the passage of time or giving
of notice, would constitute such a material violation. The execution, delivery
and performance of and compliance with this Agreement and the Stockholder
Rights Agreement and the issuance and delivery of the Shares (and the Common
Stock issuable upon conversion of the Shares), have not resulted and will not
result in any violation of, or conflict with, or constitute a default under any
of the foregoing, or result in the creation of any mortgage, pledge, lien,
restriction, encumbrance or charge upon any of the properties or assets of the
Company; and there is no such violation or default which materially and
adversely affects the business of the Company or any of its properties or
assets.
3.11 Litigation, etc. There are no (i) actions, suits, claims, proceedings
or investigations pending or, to the Company's knowledge, threatened against or
affecting the Company or its properties before any court or governmental
agency, (ii) arbitration proceeding relating to the
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Company pending under collective bargaining agreements or otherwise or (iii)
governmental inquiry pending or, to the Company's knowledge, threatened against
or affecting the Company, which, either in any case or in the aggregate, might
result in any material adverse change in the business, prospects, financial
condition, affairs, operations or equity ownership of the Company or any of
its properties or assets, or in 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 in any material liability on the part of the Company, and none
which questions the validity of this Agreement, the Stockholder Rights
Agreement or any action taken or to be taken in connection herewith or
therewith. The Company is not a party or subject to the provisions of any court
or governmental agency or instrumentality. There is no action, suit,
proceeding, or investigation by the Company currently pending or that the
Company intends to initiate. The Company is not in default with respect to any
order, writ, injunction or decree known to or served upon the Company of any
court or of any Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign.
3.12 Employees. To the Company's knowledge, no employee of the Company is
or will be in violation of any judgment, decree or order of any court or
administrative agency, or any term of any employment contract or any other
contract (including without limitation any covenant not to compete) or
agreement relating to the relationship of any such employee with the Company or
any other party because of the nature of the business conducted or to be
conducted by the Company or to the utilization by the employee of such
employee's reasonable efforts with respect to such business. The Company does
not have any collective bargaining agreements covering any of its employees. To
the Company's knowledge after due inquiry, the Company is not using any
inventions of any of its employees, consultants or officers made before their
employment by the Company. To the Company's knowledge, no employee, consultant
or officer has taken, removed, or made use of any proprietary documentation,
manuals, products, materials, or any other tangible items from the employee's
previous employers relating to the Company's business.
3.13 Insurance. The Company has in full force and effect fire, casualty
and liability insurance policies with recognized insurers with such coverages
as are sufficient in amount to allow replacement of the tangible properties of
the Company that might be damaged or destroyed.
3.14 Registration Rights. Except as contemplated by the Stockholder Rights
Agreement, the Company is not under any obligation to register any of its
presently outstanding securities or any of its securities that may hereafter be
issued.
3.15 Governmental Consents, etc. No consent, approval, order or
authorization of or designation, declaration or filing with any state or
federal governmental authority or any other third party on the part of the
Company is required in connection with the valid execution and delivery of this
Agreement, or the offer, sale or issuance of the Shares (and the Common Stock
issuable upon conversion of the Shares), or the consummation of any other
transaction contemplated hereby, except (a) filing of the Restated Certificate
in the office of the Secretary of State of the State of Delaware, and (b)
qualification (or taking such action as may be necessary to secure an exemption
from qualifi-
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cation, if available) under the California Corporate Securities Law and other
applicable Blue Sky laws, of the offer and sale of the Shares (and the Common
Stock issuable upon conversion of the Shares), which filing and qualification,
if required, will be accomplished in a timely manner, prior to or promptly upon
completion of the Closing.
3.16 Offering. Based in part upon the accuracy of the Purchaser's
representations in Section 4 hereof, the offer, sale and issuance of the Shares
to be issued in conformity with the terms of this Agreement (and the issuance
of the Common Stock to be issued upon conversion of the Shares) constitute
transactions exempt from the registration requirements of Section 5 of the
Securities Act of 1933, as amended (the "SECURITIES ACT").
3.17 Disclosure. No statement by the Company contained in this Agreement
and the exhibits attached hereto, or in any certificate furnished or to be
furnished to the Purchasers pursuant hereto, when taken as a whole, contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements contained
herein or therein not misleading in light of circumstances under which they
were made.
3.18 Brokers or Finders. The Company has not incurred, and will not
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
3.19 Permits. The Company has all franchises, permits, licenses, and any
similar authority necessary for the conduct of its business as now being
conducted, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company, and 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.
3.20 Financial Statements. The Company has delivered to the Purchasers
its audited financial statements (balance sheet and profit and loss statement)
as of December 31, 1996, 1997 and 1998 and its unaudited financial statements
(balance sheet and profit and loss statement) for the three month period ended
March 31, 1999 (the "FINANCIAL STATEMENTS"). The Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated and with each other,
except that such unaudited Financial Statements may not contain all footnotes
required by generally accepted accounting principles. The Financial Statements
fairly present the financial condition and operating results of the Company as
of the dates, and for the periods, indicated therein, except that such
unaudited Financial Statements are subject to normal non-material year-end
audit adjustments. Except as set forth in the Financial Statements, 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 and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted
accounting principles to be reflected in the Financial Statements, which, in
both cases, individually or in the aggregate are not material to the financial
condition or operating results
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of the Company. Except as disclosed in the Financial Statements, 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.
3.21 Changes. Since March 31, 1999, there has not been:
(a) any change in the assets, liabilities, financial condition or
operating results of the Company from that reflected in the
Financial Statements, except changes in the ordinary course of
business that have not been, in the aggregate, materially
adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business,
properties, prospects, or financial condition of the Company (as
such business is presently conducted and as it is proposed to be
conducted);
(c) any waiver or compromise by the Company of a valuable right or of
a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or encumbrance
or payment of any obligation by the Company, except in the
ordinary course of business and that is not material to the
business, properties, prospects or financial condition of the
Company (as such business is presently conducted and as it is
proposed to be conducted);
(e) any material change to a contract or agreement by which the
Company or any of its assets is bound or subject;
(f) any material change in any compensation arrangement or agreement
with any employee, officer, director or stockholder;
(g) any termination, cancellation or material change with respect to
any material sales or distribution agreement;
(h) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(i) any resignation or termination of employment of any key officer
of the Company; and the Company, to the best of its knowledge,
does not know of any impending resignation or termination of
employment of any such officers;
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(j) receipt of notice that there has been a loss of, or material
order cancellation by, any material customer of the Company;
(k) any mortgage, pledge, transfer of a security interest in, or
lien, created by the Company, with respect to any of its material
properties or assets, except liens for taxes not yet due or
payable;
(l) any loans or guarantees made by the Company to or for the benefit
of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances
made in the ordinary course of its business;
(m) any declaration, setting aside or payment or other distribution
in respect to any of the Company's capital stock, or any direct
or indirect redemption, purchase, or other acquisition of any of
such stock by the Company;
(n) to the best of the Company's knowledge, any other event or
condition of any character that might materially and adversely
affect the business, properties, prospects or financial condition
of the Company (as such business is presently conducted and as it
is proposed to be conducted);
(o) any arrangement or commitment by the Company to do any of the
things described in this Section 3.21; or
(p) any issuance of any stock, warrant, bond, note or other corporate
security of the Company other than stock options issued in the
ordinary course of business.
3.22 Material Liabilities. Except as set forth in the Financial
Statements, the Company has no material liability or obligation, absolute or
contingent (individually or in the aggregate), except (i) obligations and
liabilities incurred after the date of incorporation in the ordinary course of
business that are not material, individually or in the aggregate and (ii)
obligations under contracts made in the ordinary course of business that would
not be required to be reflected in Financial Statements prepared in accordance
with generally accepted accounting principles and which are not material.
3.23 Related Party Transactions. No employee, officer, or director of the
Company or member of his or her immediate family is indebted to the Company,
nor is the Company indebted (or committed to make loans or extend or guarantee
credit) to any of them. To the Company's knowledge, none of such persons has
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 that competes with the Company, except
that employees, officers, or directors of the Company and members of their
immediate families may own stock in
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publicly traded companies that may compete with the Company. No member of the
immediate family of any officer or director of the Company is directly or
indirectly interested in any material contract with the Company.
3.24 Taxes. The Company has filed all tax returns and reports required to
be filed by it, such returns and reports were true, correct and complete, and
the Company has paid all taxes shown to be due by such returns and reports as
well as all other taxes, assessments and governmental charges which have become
due or payable (together with any interest, penalties, additions to tax and
additional amounts with respect thereto), including without limitation all
taxes which the Company is obligated to withhold from amounts owing to
employees, creditors and third parties. The Company has not requested any
extension of time within which to file any tax return or report which return or
report has not been filed. The reserves for taxes in the Financial Statements
are sufficient for the payment of all unpaid taxes (whether or not currently
disputed) which are or may be incurred with respect to the period (or portions
thereof) ended on the date of the Financial Statements and for all years and
periods ended prior thereto. The Federal income tax returns of the Company have
never been audited by the Internal Revenue Service ("IRS") or any other taxing
authority. No (i) deficiency assessment with respect to, (ii) proposed
adjustment of or (iii) examination or other administrative or court proceeding
with respect to, the Company's taxes is pending or, to the best of the Company's
knowledge, threatened. To the best of the Company's knowledge, no state of
facts exists or has existed which would constitute grounds for the assessment
of any liability for taxes with respect to periods which have not been audited
by the IRS or other taxing authority. There is no tax lien outstanding against
the assets, properties or business of the Company. Neither the Company nor any
of its stockholders has ever filed (a) an election pursuant to Section 1362 of
the Internal Revenue Code of 1986, as amended (the "Code"), that the Company be
taxed as an S corporation or (b) consent pursuant to section 341(f) of the
Code, relating to collapsible corporations.
3.25 Offering of Shares. Neither the Company nor any person authorized or
employed by the Company as agent, broker, dealer or otherwise in connection
with the offering or sale of the Shares or any security of the Company similar
to the Shares has offered the Shares or any such similar security for sale to,
or solicited any offer to buy the Shares or any such similar security from, or
otherwise approached or negotiated with respect thereto with, any person or
persons, and neither the Company nor any person acting on its behalf has taken
or will take any other action (including, without limitation, any offer,
issuance or sale of any security of the Company under circumstances which might
require the integration of such security with the Shares under the Securities
Act or the rules and regulations of the Commission thereunder), in either case
so as to subject the offering, issuance or sale of the Shares to the
registration provisions of the Securities Act.
3.26 No Violation, etc. The Company is not (i) in violation of its
Restated Certificate or by-laws, or other organizational documents, or of any
law, ordinance, administrative or governmental rule or regulation applicable to
the Company or of any decree of any court of governmental agency or body having
jurisdiction over the Company, except for such violations that would not have a
material adverse effect, or (ii) in default in the performance of any
obligation or agreement contained in any bond, debenture, note or any other
evidence of indebtedness or in any
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material agreement, indenture, lease or other instrument to which the Company is
party or by which it or any of its properties may be bound, except for such
defaults that would not, individually or in the aggregate, have a material
adverse effect and no event has occurred, and no condition or state of facts
exists of which the Company is aware, which, with the passage of time or the
giving of notice or both, would constitute such a material default.
3.27 Compliance with Laws. The Company has complied in all material
respects with all applicable statutes, regulations, orders, ordinances and other
laws of the United States of America, all state, local and foreign governments
and any other governmental bodies and authorities, and agencies of any of the
foregoing to which they are subject and any undertakings of the Company to any
of the foregoing, to the extent that non compliance would have a material
adverse effect on the Company. The Company has not received any notice to the
effect that, or otherwise been advised that, it is not in compliance with any
such statutes, regulations and orders, ordinances, other laws or undertakings.
Without having conducted any specific research or investigation, to the
Company's knowledge, there is not presently pending any proceeding, hearing or
investigation with respect to the adoption of amendments or modifications to
existing laws or ordinances, regulations or restrictions with respect to such
matters which, if adopted, would materially adversely affect the Company.
3.28 ERISA. Neither the Company nor any ERISA Affiliate maintains,
contributes or has any liability (contingent or otherwise) with respect to a
plan (including a Multiemployer Plan) subject to Title IV of ERISA or Section
412 of the Code. All employee benefit plans and arrangements (regardless of
whether such plans or arrangements are covered by ERISA) maintained by or
contributed to by the Company or any ERISA Affiliate are in material compliance
with all applicable law, including any reporting requirements. The Company does
not have any liability (contingent or otherwise) with respect to retiree or
retiree death benefits. Neither the Company nor any other person, including any
fiduciary, has engaged in any transaction, prohibited by Section 4975 of the
Code or Section 406 of ERISA which could subject the Company, or any entity that
the Company has an obligation to indemnify, to any tax or penalty imposed under
Section 4975 of the Code or Section 502 of ERISA. The transactions contemplated
by this Agreement will not involve any transactions prohibited by Section 406 of
ERISA or in Section 4975 of the Code.
For purposes of this Section and Section 7.9, (a) "ERISA" shall mean the
Employee Retirement Income Security Act of 1974, as amended from time to time;
(b) "ERISA Affiliate" shall mean any entity required to be aggregated with the
Company or any subsidiary under Sections 414(b), (c), (m) or (o) of the Code;
and (c) "Multiemployer Plan" shall mean a plan which is a Multiemployer Plan as
defined in Section 4001(a)(3) of ERISA.
3.29 Environmental.
(a) The Company is in compliance in all material respects with all
Environmental Laws and has obtained all environmental licenses, permits,
approvals, registrations and authorizations (federal, state and local) material
to the Company's business.
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(b) No governmental or private action, suit or proceeding to enforce
or impose liability under any Environmental Law is pending or, to the Company's
knowledge, threatened against the Company and, to the Company's knowledge, no
lien has been created on any real property owned or leased by the Company
relating to the Company's business, under any Environmental Laws.
3.30 Foreign Corrupt Practices Act. The Company has not made nor taken
any action which would cause the Company to be in violation of the Foreign
Corrupt Practices Act of 1977, as amended, and any rules and regulations
thereunder. There is not now, nor has there ever been, any employment of or
beneficial ownership of the Company by any governmental or political official
in any country in the world.
3.31 Year 2000. The Company's current products are "Year 2000 Compliant,"
where "Year 2000 Compliant" means that such products have been designed and
tested so that, when used in accordance with their associated documentation,
are capable upon installation of accurately processing, providing and/or
receiving (i) date-related data from, into and between the Twentieth (20th) and
Twenty-First (21st) centuries, or (ii) date-related data in connection with any
valid date in the Twentieth (20th) and Twenty-First (21st) centuries; provided
that all other products used in combination in any way with the Company's
current products properly exchange date-related data with them. The Company has
commenced efforts to ensure that the information technology systems and
non-information technology systems used by the Company will function properly
beyond 1999. The Company has made inquiries to its key third-party vendors and
providers as to the status of their Year 2000 efforts, and has not uncovered
any problems that would adversely affect the operation of the products or that
are likely to materially disrupt or harm the day-to-day functioning of the
business or operations of the Company.
SECTION 4
Representations, Warranties and Covenants of the Purchasers
Each of the Purchasers hereby represents, warrants and covenants,
severally and not jointly, to the Company with respect to the purchase of the
Shares as follows:
4.1 Experience; Risk. The Purchaser has such knowledge and experience in
financial and business matters that such Purchaser is capable of evaluating the
merits and risks of the purchase of the Shares pursuant to this Agreement and
of protecting the Purchaser's interests in connection therewith. The Purchaser
has the ability to bear the economic risk of the investment, including complete
loss of the investment. The Purchaser is experienced in evaluating and
investing in new companies such as the Company.
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4.2 Investment. The Purchaser is acquiring the Shares for investment for
its own account, not as a nominee or agent, and not with a view to, or for
resale in connection with, any distribution thereof, and the Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the same. The Purchaser understands that the Shares to be purchased
have not been 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 such Purchaser's representations as expressed herein.
4.3 Restricted Securities; Rule 144. The Purchaser understands that the
Shares and the shares of Common Stock issuable upon conversion of the Shares,
will be "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 the Shares may be
resold without registration under the Securities Act only in certain limited
circumstances. The Purchaser acknowledges that the Shares must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. The Purchaser is aware of the
provisions of Rule 144 promulgated under the Securities Act which permit limited
resale of shares purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things, the existence of a public
market for the shares, the availability of certain current public information
about the Company, the resale occurring not less than one year after a party has
purchased and paid for the Security to be sold, the sale being effected through
a "broker's transaction" or in transactions directly with a "market maker" (as
provided by Rule 144(f)) and the number of shares being sold during any
three-month period not exceeding specified limitations.
4.4 No Public Market. The Purchaser understands that no public market now
exists for any of the securities issued by the Company and that there is no
assurance that a public market will ever exist for the Shares.
4.5 Access to Data. The Purchaser has had an opportunity to discuss the
Company's business, management and financial affairs with the Company's
management and the opportunity to review the Company's facilities and has
received all information requested from the Company regarding the investment in
the Company.
4.6 Authorization. The Purchaser represents that it has the full right,
power and authority to enter into and perform the Purchaser's obligations under
this Agreement and the Stockholder Rights Agreement, and this Agreement and the
Stockholder Rights Agreement when executed and delivered by the Purchaser will
constitute legal, valid and binding obligations of the Purchaser, enforceable in
accordance with their respective terms, subject to the laws of general
application relating to bankruptcy, insolvency and the relief of debtors, rules
of law governing specific performance, injunctive relief or other equitable
remedies.
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4.7 Government Consents. No consent, approval or authorization of or
designation, declaration or filing with any state, federal, or foreign
governmental authority on the part of the Purchaser is required in connection
with the valid execution and delivery of this Agreement by the Purchaser, and
the consummation by the Purchaser of the transactions contemplated hereby.
4.8 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, the Purchaser further agrees not to make any
disposition of all or any portion of the Shares 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) The Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a statement of the
proposed disposition, and if reasonably requested by the Company, such
Purchaser shall have furnished the Company with an opinion of counsel,
reasonably satisfactory to the Company, that such disposition will not require
registration under the Securities Act.
4.9 Legends. It is understood that each certificate representing the
Shares, and the shares of Common Stock issuable upon conversion of the Shares,
and any securities issued in respect thereof or exchange therefor shall bear
legends in the following forms (in addition to any legend required under
applicable state securities laws):
"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 THAT SUCH REGISTRATION IS NOT REQUIRED."
SECTION 5
Conditions to Closing of Purchaser
The Purchasers' obligation to purchase the Shares at the Closing is, at
the option of the Purchasers, subject to the fulfillment on or prior to the
Closing Date of the following conditions:
5.1 Representations and Warranties Correct. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct in
all material respects when made (except those representations and warranties
qualified by materiality, which shall be true and correct in all
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respects), and shall be true and correct on the Closing Date in all material
respects with the same force and effect as if they had been made on and as of
said date.
5.2 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all respects.
5.3 Opinion of Company's Counsel. The Purchasers shall have received from
Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel to the Company, an opinion
addressed to the Purchasers, dated the Closing Date, substantially in the form
of Exhibit E attached hereto.
5.4 Compliance Certificate. The Company shall have delivered to the
Purchasers a certificate executed by the President of the Company, dated the
Closing Date and certifying to the fulfillment of the conditions specified in
Sections 5.1 and 5.2 of this Agreement.
5.5 Blue Sky. The Company shall have obtained all necessary Blue Sky law
permits and qualifications, or secured an exemption therefrom, required by any
state for the offer and sale of the Shares, and the Common Stock issuable upon
conversion of the Shares.
5.6 Stockholder Rights Agreement. The Company, each Purchaser and holders
of a majority of the Registrable Securities (as defined in the Stockholder
Rights Agreement) shall have executed and delivered the Stockholder Rights
Agreement.
5.7 Restated Certificate of Incorporation. The Restated Certificate shall
have been filed and be effective with the Secretary of State of the State of
Delaware.
5.8 Management Rights Agreement. The Company shall have delivered to
▇▇▇▇▇▇▇▇ Ventures executed copies of the Management Rights Agreement attached
hereto as Exhibit F.
5.9 All Proceedings to be Satisfactory. All corporate and other
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Purchasers and their counsel, and the
Purchasers and their counsel shall have received all such counterpart originals
or certified or other copies of such documents as they reasonably may request.
5.10 Supporting Documents. The Purchasers and their counsel shall have
received copies of the following documents:
(i) (A) the Restated Certificate and (B) a Certificate of said
Secretary dated as of a recent date as to the due incorporation and good
standing of the Company and listing all documents of the Company on file with
said Secretary;
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(ii) a certificate of the Secretary or an Assistant Secretary of the
Company dated the Closing Date and certifying: (A) that attached thereto is a
true and complete copy of the By-laws of the Company as in effect on the date of
such certification; (B) that attached thereto is a true and complete copy of
all resolutions adopted by the Board of Directors or the stockholders of the
Company authorizing the execution, delivery and performance of this Agreement
and the Stockholder Rights Agreement, the issuance, sale and delivery of the
Shares, and that all such resolutions are in full force and effect and are all
the resolutions adopted in connection with the transactions contemplated by
this Agreement and the Stockholder Rights Agreement; and (C) to the incumbency
and specimen signature of each officer of the Company executing this Agreement,
the Stockholder Rights Agreement, the stock certificates representing the
Shares and any certificate or instrument furnished pursuant hereto, and a
certification by another officer of the Company as to the incumbency and
signature of the officer signing the certificate referred to in this clause
(ii); and
(iii) such additional supporting documents and other information with
respect to the operations and affairs of the Company as the Purchasers or their
counsel may reasonably request.
5.11 No Litigation Threatened. No action, suit or other proceeding shall
be pending before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated by this Agreement, or seeking to obtain substantial damages in
respect thereof, or involving a claim that consummation thereof would result in
the violation of any law, decree or regulation of any governmental authority
having appropriate jurisdiction.
5.12 Approvals, Waivers and Consents. The Company shall have obtained all
necessary and required approvals, waivers and consents from (a) stockholders of
the Company; (b) foreign and domestic (whether federal, state or local)
governmental or regulatory bodies or agencies; and (c) lessors or other third
parties pursuant to leases, mortgages, contracts, agreements, permits or
licenses necessary for the performance of the Company's obligations hereunder.
5.13 Stock Certificates. The Company shall have delivered to each
Purchaser certificates evidencing the Shares, free and clear of any liens or
encumbrances.
5.14 No Change in Law. There shall not have been any action, or any
statute enacted, by any government or agency thereof which would render the
parties unable to consummate the transactions contemplated herein or make the
transactions contemplated herein illegal, or prohibit or restrict the
consummation of the transactions contemplated herein.
SECTION 6
Conditions to Closing of the Company
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The Company's obligation to sell and issue the Shares at the Closing is, at
the option of the Company, subject to the fulfillment of the following
conditions:
6.1 Representations. The representations made by the Purchasers in
Section 4 hereof shall be true and correct in all material respects when made
(except those representations and warranties qualified by materiality, which
shall be true and correct in all respects), and shall be true and correct on the
Closing Date in all material respects with the same force and effect as if they
had been made on and as of said date.
6.2 Stockholder Rights Agreement. The Company, each Purchaser and holders
of a majority of the Registrable Securities (as defined in the Stockholder
Rights Agreement) shall have executed and delivered the Stockholder Rights
Agreement.
SECTION 7
Covenants of the Company
The Company covenants and agrees with each of the Purchasers that so long
as any of the Shares is outstanding:
7.1 Reserve for Conversion Shares. The Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock,
for the purpose of effecting the conversion of the Shares and otherwise
complying with the terms of this Agreement, such number of its duly authorized
shares of Common Stock as shall be sufficient to effect the conversion of the
Shares and the shares of Series D-1 Preferred Stock from time to time
outstanding or otherwise to comply with the terms of this Agreement. If at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of the Shares or otherwise to comply with
the terms of this Agreement, the Company will forthwith take such corporate
action as may be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purposes.
The Company will obtain any authorization, consent, approval or other action by
or make any filing with any court or administrative body that may be required
under applicable state securities laws in connection with the issuance of shares
of Common Stock upon conversion of the Shares.
7.2 Corporate Existence. The Company shall maintain its corporate
existence, rights and franchises in full force and effect.
7.3 Properties, Business, Insurance. The Company shall maintain as to its
properties, and business, with financially sound and reputable insurers,
insurance against such casualties and contingencies and of such types and in
such amounts as is customary for companies similarly situated, which insurance
shall be deemed by the Company to be sufficient. The Company shall not
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cause or permit any assignment or change in beneficiary and shall not borrow
against any such policy.
7.4 Inspection, Consultation and Advice. The Company shall permit each
Purchaser and such persons as it may designate, at such Purchaser's expense, to
visit and inspect any of the properties of the Company, discuss the affairs,
finances and accounts of the Company with its officers, employees and public
accountants (and the Company hereby authorizes said accountants to discuss with
such Purchaser and such designees such affairs, finances and accounts), and
consult with and advise the management of the Company as to its affairs,
finances and accounts, all at reasonable times and upon reasonable notice.
7.5 Restrictive Agreements Prohibited. The Company shall not become a
party to any agreement which by its terms restricts the Company's performance
of this Agreement, the Stockholder Rights Agreement or the Restated Certificate.
7.6 Transactions with Affiliates. Except for transactions contemplated by
this Agreement or as otherwise approved by the Board of Directors, the Company
shall not enter into any material transaction with any director, officer,
employee or holder of more than 5% of the outstanding capital stock of any
class or series of capital stock of the Company, member of the family of any
such person, or any corporation, partnership, trust or other entity in which
any such person, or member of the family of any such person, is a director,
officer, trustee, partner or holder of more than 5% of the outstanding capital
stock thereof, except for transactions on customary terms related to such
person's employment.
7.7 Compliance with Laws. The Company shall comply with all applicable
laws, rules, regulations and orders, noncompliance with which could materially
adversely affect its business or condition, financial or otherwise.
7.8 Keeping of Records and Books of Account. The Company shall keep
adequate records and books of account, in which complete entries will be made
in accordance with generally accepted accounting principles consistently
applied, reflecting all financial transactions of the Company, and in which,
for each fiscal year, all proper reserves for depreciation, depletion,
obsolescence, amortization, taxes, bad debts and other purposes in connection
with its business shall be made.
7.9 Change in Nature of Business. The Company shall not, without approval
of the Board of Directors, make any material change in the nature of its
business as set forth in the Business Plan.
7.10 No "Prohibited Transactions" and Employee Benefits. Neither the
Company nor any ERISA Affiliate shall incur any material liability in connection
with any plan (including a Multiemployer Plan) subject to Title IV of ERISA or
Section 412 of the Code. The Company shall not incur any liability with respect
to retiree medical or retiree death benefits. All employee benefit
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plans and arrangements (regardless of whether such plan or arrangements are
covered by ERISA) maintained by or contributed to by the Company or any ERISA
Affiliate shall be maintained in material compliance with all applicable laws,
including any reporting requirements. With respect to any plan maintained by or
contributed to by the Company, the Company shall not fail to make any
contribution due under the terms of such plans or as required by law. The
Company shall not engage in any transaction prohibited by Section 406 of ERISA
or Section 4975 of the Code, which could subject the Company, or any entity that
the Company has an obligation to indemnify, to any tax or penalty imposed under
Section 4975 of the Code, or Section 502 of ERISA.
7.11 Composition of the Board of Directors. Immediately after the Closing
Date, the Company shall use its best efforts to cause one nominee to be
designated by holders of the Series D Preferred to be elected to the Board of
Directors.
7.12 Directors' Expenses. The Company shall reimburse the reasonable
expenses incurred by any non-employee member of the Company's Board of
Directors in connection with the performance of such person's duties as a
Director, including reasonable expenses associated with attending meetings of
the Board of Directors, in accordance with the Company's standard travel policy.
7.13 Payment of Taxes. The Company shall pay and discharge, and cause each
subsidiary to pay and discharge, all taxes, assessments and governmental
charges or levies upon it or upon its income, profits or business, or upon any
properties belonging to it, prior to the date on which penalties attach thereto,
and any lawful claim which, if unpaid, might become a lien or charge upon
any properties of the Company or any subsidiary.
SECTION 8
Miscellaneous
8.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of California as applied to contracts made and to be
fully performed entirely within that state between residents of that state.
8.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Purchaser and the
closing of the transactions contemplated hereby.
8.3 Successors and Assigns. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
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8.4 Entire Agreement Amendment. 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.
This Agreement or any term hereof may be amended, waived, discharged or
terminated solely by a written instrument signed by the Company and the holders
of at least two-thirds (66 2/3%) of the Common Stock issued or issuable upon
conversion of the Shares held by the Purchasers.
8.5 Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by
messenger, addressed (a) if to any Purchaser, at the address set forth beneath
such Purchaser's name on Exhibit A hereto or at such other address as shall
have furnished to the Company upon not less than 10 days notice in writing, or
(b) if to the Company, at the address of its principal office and addressed to
the attention of the President and with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇ or at such other address as the Company shall have
furnished to the Purchasers upon not less than ten (10) days notice in writing.
8.6 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accuring to any holder of any Shares, upon any breach or
default of the Company under this Agreement, shall impair any such right, power
or remedy of such holder 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 party of any holder of any breach or default under this
Agreement, or any waiver on the part of any holder 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 holder, shall be
cumulative and not alternative.
8.7 California 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 SUCH SECURITIES
OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO
SUCH 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 SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
8.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
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8.9 Severability. In the event that any provision of this Agreement
becomes or its declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.
8.10 Expenses. Each party hereto will pay its own expenses in connection
with the transaction contemplated hereby, whether or not such transaction shall
be consummated, provided, however, that upon consummation of such transaction,
the Company shall pay the reasonable fees and disbursements of ▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, LLP, counsel to the Purchasers in connection with such transaction,
and shall reimburse the reasonable due diligence expenses incurred by the
Purchasers.
[SIGNATURE PAGES FOLLOW]
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