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IMPROVENET, INC.
SERIES A PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
DATED JUNE 30, 1997
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TABLE OF CONTENTS
PAGE
SECTION 1. AGREEMENT TO SELL AND PURCHASE..................................................................1
1.1 Authorization of Shares and Warrants............................................................1
1.2 Sale and Purchase...............................................................................1
SECTION 2. CLOSING, DELIVERY AND PAYMENT...................................................................2
2.1 Closing.........................................................................................2
2.2 Delivery........................................................................................2
2.3 Subsequent Sales of Shares......................................................................2
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................2
3.1 Organization, Good Standing and Qualification...................................................2
3.2 Capitalization; Voting Rights...................................................................3
3.3 Authorization; Binding Obligations..............................................................3
3.4 Financial Statements............................................................................3
3.4 Financial Statements TC "3.4 Financial Statements" \l "2".......................................3
3.5 Liabilities.....................................................................................4
3.6 Agreements; Action..............................................................................4
3.7 Obligations to Related Parties..................................................................5
3.8 Changes.........................................................................................5
3.9 Title to Properties and Assets; Liens, etc......................................................6
3.10 Patents and Trademarks..........................................................................6
3.11 Compliance with Other Instruments...............................................................7
3.12 Litigation......................................................................................7
3.13 Tax Returns and Payments........................................................................8
3.14 Employees.......................................................................................8
3.15 Proprietary Information and Inventions Agreements...............................................8
3.16 Obligations of Management.......................................................................8
3.17 Registration Rights.............................................................................8
3.18 Compliance with Laws; Permits...................................................................9
3.19 Environmental and Safety Laws...................................................................9
3.20 Offering Valid..................................................................................9
3.21 Full Disclosure.................................................................................9
i.
TABLE OF CONTENTS
(CONTINUED)
PAGE
3.22 Qualified Small Business.......................................................................10
3.23 Minute Books...................................................................................10
3.24 Insurance......................................................................................10
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS...............................................10
4.1 Requisite Power and Authority..................................................................10
4.2 Investment Representations.....................................................................10
4.3 Transfer Restrictions..........................................................................12
SECTION 5. CONDITIONS TO CLOSING..........................................................................12
5.1 Conditions to Purchasers'Obligations at the Closing............................................12
5.2 Conditions to Obligations of the Company.......................................................14
SECTION 6. MISCELLANEOUS..................................................................................14
6.1 Governing Law..................................................................................14
6.2 Survival.......................................................................................14
6.3 Successors and Assigns.........................................................................15
6.4 Entire Agreement...............................................................................15
6.5 Severability...................................................................................15
6.6 Amendment and Waiver...........................................................................15
6.7 Delays or Omissions............................................................................15
6.8 Notices........................................................................................16
6.9 Expenses.......................................................................................16
6.10 Attorneys'Fees.................................................................................16
6.11 Titles and Subtitles...........................................................................16
6.12 Counterparts...................................................................................16
6.13 Broker's Fees..................................................................................16
6.14 Exculpation Among Purchasers...................................................................16
6.15 Pronouns.......................................................................................17
6.16 California Corporate Securities Law............................................................17
ii.
IMPROVENET, INC.
SERIES A PREFERRED STOCK
AND
WARRANT PURCHASE AGREEMENT
THIS SERIES A PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the
"Agreement") is entered into as of June 30, 1997, by and among IMPROVENET,
INC., a California corporation (the "Company") and each of those persons and
entities, severally and not jointly, whose names are set forth on the
Schedule of Purchasers attached hereto as Exhibit A (which persons and
entities are hereinafter collectively referred to as "Purchasers" and each
individually as a "Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of an (i)
aggregate of one million two hundred fifty thousand (1,250,000) shares of its
Series A Preferred Stock (the "Shares") and (ii) warrants in the form of
Exhibit C to purchase up to an aggregate of one hundred thousand (100,000)
shares of its Series A Preferred Stock (the "Warrants");
WHEREAS, Purchasers desire to purchase the Shares and the Warrants
on the terms and conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares and the
Warrants to Purchasers on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
SECTION 1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION OF SHARES AND WARRANTS. On or prior to the Closing
(as defined in Section 2 below), the Company shall have authorized (i) the
sale and issuance to Purchasers of the Shares and the Warrants (ii) the
issuance of the shares of Series A Preferred Stock to be issued pursuant to
the exercise of the Warrants (the "Warrant Shares"), and (iii) the issuance
of such shares of Common Stock to be issued upon conversion of the Shares and
the Warrant Shares (the "Conversion Shares"). The Shares, the Warrant Shares
and the Conversion Shares shall have the rights, preferences, privileges and
restrictions set forth in the Restated Articles of Incorporation of the
Company, as amended, in the form attached hereto as Exhibit B (the "Restated
Articles"). The Warrants shall be in the form and have the rights set forth
in the form of Warrant Agreement ("Warrant Agreement") attached hereto as
Exhibit C.
1.2 SALE AND PURCHASE. Subject to the terms and conditions hereof,
at the Closing (as hereinafter defined) the Company hereby agrees to issue
and sell to each Purchaser, severally and not jointly, and each Purchaser
agrees to purchase from the Company, severally and not jointly,
1
the number of Shares and Warrants set forth opposite such Purchaser's name on
Exhibit A, at an aggregate purchase price for each Purchaser set forth
opposite such Purchaser's name.
SECTION 2. CLOSING, DELIVERY AND PAYMENT.
2.1 CLOSING. The closing of the sale and purchase of the Shares and
the Warrants under this Agreement (the "Closing") shall take place on the
date hereof, or at such other time as the Company and Purchasers may mutually
agree (such date is hereinafter referred to as the "Closing Date").
2.2 DELIVERY. At the Closing, subject to the terms and conditions
hereof, the Company will deliver to the Purchasers certificates representing
the number of Shares and warrant certificates or agreements representing the
Warrants to be purchased at the Closing by each Purchaser, against payment of
the purchase price therefor by check, wire transfer made payable to the order
of the Company, cancellation of indebtedness or any combination of the
foregoing.
2.3 SUBSEQUENT SALES OF SHARES. At any time on or before the 30th
day following the Closing, the Company may sell up to the balance of the
authorized shares of Series A Preferred Stock and Warrants not sold at the
Closing to such persons as may be approved by the Board of Directors of the
Company. All such sales shall be made on the terms and conditions set forth
in this Agreement, including, without limitation, the representations and
warranties by such Purchasers as set forth in Section 4. Any shares of Series
A Preferred Stock and Warrants to purchase Series A Preferred Stock sold
pursuant to this Section 2.3 shall be deemed to be "Shares" and "Warrants",
respectively, for all purposes under this Agreement and any purchasers
thereof shall be deemed to be "Purchasers" for all purposes under this
Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit D, the Company hereby represents and warrants to each Purchaser as
follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California. The Company has all requisite corporate
power and authority to own and operate its properties and assets, to execute
and deliver this Agreement, the Investor Rights Agreement in the form
attached hereto as Exhibit E (the "Investor Rights Agreement"), the Right of
First Refusal and Co-Sale Agreement in the form attached hereto as Exhibit F
(the "Right of First Refusal and Co-Sale Agreement"), the Voting Agreement in
the form attached hereto as Exhibit G (the "Voting Agreement") and the Stock
Restriction Agreements in the forms attached hereto as Exhibit K (the "Stock
Restriction Agreements") (collectively, the "Related Agreements"), to issue
and sell the Shares and Warrants and to issue the Conversion Shares and
Warrant Shares and to carry out the provisions of this Agreement, the Related
Agreements and the Restated Articles and to carry on its business as
presently conducted and as presently proposed to be conducted. The Company is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its
activities and of its
2.
properties (both owned and leased) makes such qualification necessary. The
Company owns no equity securities of any other corporation, limited
partnership or similar entity. The Company is not a participant in any joint
venture, partnership or similar arrangement.
3.2 CAPITALIZATION; VOTING RIGHTS. The authorized capital stock of
the Company, immediately prior to the Closing, will consist of twenty million
(20,000,000) shares of Common Stock, one million three hundred sixty-two
thousand five hundred twenty-one (1,362,521) shares of which are issued and
outstanding and six hundred thousand (600,000) shares of which are reserved
for future issuance to key employees pursuant to the Company's 1996 Stock
Option Plan and one million four hundred thousand (1,400,000) shares of
Preferred Stock, all of which are designated Series A Preferred Stock, none
of which are issued and outstanding. All issued and outstanding shares of the
Company's Common Stock (i) have been duly authorized and validly issued to
the persons listed on Exhibit H hereto, (ii) are fully paid and
nonassessable, and (iii) were issued in compliance with all applicable state
and federal laws concerning the issuance of securities. The rights,
preferences, privileges and restrictions of the Shares are as stated in the
Restated Articles. The Conversion Shares have been duly and validly reserved
for issuance. Other than as set forth on Exhibit H, and except as may be
granted pursuant to the Related Agreements, there are no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of
first refusal), proxy or shareholder agreements, or agreements of any kind
for the purchase or acquisition from the Company of any of its securities.
When issued in compliance with the provisions of this Agreement and the
Restated Articles, the Shares, the Warrant Shares and the Conversion Shares
will be validly issued, fully paid and nonassessable, and will be free of any
liens or encumbrances; PROVIDED, HOWEVER, that the Shares, the Warrant
Shares, the Warrants and the Conversion Shares may be subject to restrictions
on transfer under state and/or federal securities laws as set forth herein or
as otherwise required by such laws at the time a transfer is proposed.
3.3 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the
part of the Company, its officers, directors and shareholders necessary for
the authorization of this Agreement and the Related Agreements, the
performance of all obligations of the Company hereunder and thereunder at the
Closing and the authorization, sale, issuance and delivery of the Shares, the
Warrants and the Warrant Shares pursuant hereto and the Conversion Shares
pursuant to the Restated Articles has been taken or will be taken prior to
the Closing. The Agreement and the Related Agreements, when executed and
delivered, will be valid and binding obligations of the Company enforceable
in accordance with their terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights; (ii) general
principles of equity that restrict the availability of equitable remedies;
and (iii) to the extent that the enforceability of the indemnification
provisions in Section 2.9 of the Investor Rights Agreement may be limited by
applicable laws. The sale of the Shares, the Warrants, the Warrant Shares and
the subsequent conversions of the Shares and the Warrant Shares into
Conversion Shares are not and will not be subject to any preemptive rights or
rights of first refusal that have not been properly waived or complied with.
3.4 FINANCIAL STATEMENTS. The Company has delivered to each
Purchaser (a) its unaudited balance sheet as at December 31, 1996 and (b) its
unaudited balance sheet as at May
3.
31, 1997 (the "Statement Date") and unaudited statement of income for the
five month period ending on the Statement Date (collectively, the "Financial
Statements"), copies of which are attached hereto as Exhibit L. The Financial
Statements, together with the notes thereto, are complete and correct in all
material respects and present fairly the financial condition and position of
the Company as of December 31, 1996 and the Statement Date; provided,
however, that the unaudited financial statements are subject to normal
recurring year-end audit adjustments (which are not expected to be material),
and do not contain all footnotes required under generally accepted accounting
principles.
3.5 LIABILITIES. The Company has no material liabilities and, to the
best of its knowledge, knows of no material contingent liabilities not
disclosed in the Financial Statements, except current liabilities incurred in
the ordinary course of business subsequent to the Statement Date which have
not been, either in any individual case or in the aggregate, materially
adverse and in any event, has no liabilities in the aggregate in excess of
$25,000.
3.6 AGREEMENTS; ACTION.
(a) Except for agreements explicitly contemplated hereby
and agreements between the Company and its employees with respect to the sale
of the Company's Common Stock, there are no agreements, understandings or
proposed transactions between the Company and any of its officers, directors,
affiliates or any affiliate thereof.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to
which the Company is a party or to its knowledge by which it is bound which
may involve (i) obligations (contingent or otherwise) of, or payments to, the
Company in excess of $25,000 in the aggregate (other than obligations of, or
payments to, the Company arising from purchase or sale agreements entered
into in the ordinary course of business), or (ii) the license of any patent,
copyright, trade secret or other proprietary right to or from the Company
(other than licenses arising from the purchase of "off the shelf" or other
standard products), or (iii) provisions restricting or affecting the
development, manufacture or distribution of the Company's products or
services, or (iv) indemnification by the Company with respect to
infringements of proprietary rights (other than indemnification obligations
arising from purchase or sale agreements entered into in the ordinary course
of business).
(c) The Company has not (i) declared or paid any dividends,
or authorized or made any distribution upon or with respect to any class or
series of its capital stock, (ii) incurred any indebtedness for money
borrowed or any other liabilities (other than with respect to dividend
obligations, distributions, indebtedness and other obligations incurred in
the ordinary course of business) individually in excess of $25,000 or, in the
case of indebtedness and/or liabilities individually less than $25,000, in
excess of $50,000 in the aggregate, (iii) made any loans or advances to any
person, other than ordinary advances for travel expenses, or (iv) sold,
exchanged or otherwise disposed of any of its assets or rights, other than
the sale of its inventory in the ordinary course of business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions
4.
involving the same person or entity (including persons or entities the
Company has reason to believe are affiliated therewith) shall be aggregated
for the purpose of meeting the individual minimum dollar amounts of such
subsections.
3.7 OBLIGATIONS TO RELATED PARTIES. There are no obligations of the
Company to officers, directors, shareholders, or employees of the Company
other than (a) for payment of current salary for services rendered, (b)
reimbursement for reasonable expenses incurred on behalf of the Company and
(c) for other standard employee benefits made generally available to all
employees (including stock option agreements outstanding under any stock
option plan approved by the Board of Directors of the Company). None of the
officers, directors or shareholders of the Company, or any members 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, or any
firm or corporation which competes with the Company, except that officers,
directors and/or shareholders of the Company may own stock in publicly traded
companies which may compete with the Company. No officer, director or
shareholder, or any member of their immediate families, is, directly or
indirectly, interested in any material contract with the Company (other than
such contracts as relate to any such person's ownership of capital stock or
other securities of the Company). The Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation.
3.8 CHANGES. Since May 31, 1997, there has not been to the Company's
knowledge:
(a) Any change in the assets, liabilities, financial
condition or operations of the Company, other than changes in the ordinary
course of business, none of which individually or in the aggregate has had or
is expected to have a material adverse effect on such assets, liabilities,
financial condition or operations of the Company;
(b) Any resignation or termination of any key officers of
the Company; and the Company, to the best of its knowledge, does not know of
the impending resignation or termination of employment of any such officer;
(c) Any material change, except in the ordinary course of
business, in the contingent obligations of the Company by way of guaranty,
endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting the properties, business or
prospects or financial condition of the Company;
(e) Any waiver by the Company of a valuable right or of a
material debt owed to it;
(f) direct or indirect loans made by the Company to any
shareholder, employee, officer or director of the Company, other than
advances made in the ordinary course of business;
5.
(g) Any material change in any compensation arrangement or
agreement with any employee, officer, director or shareholder;
(h) Any declaration or payment of any dividend or other
distribution of the assets of the Company;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or
guaranteed by the Company, except those for immaterial amounts and for
current liabilities incurred in the ordinary course of business;
(k) Any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;
(l) Any change in any material agreement to which the
Company is a party or by which it is bound which materially and adversely
affects the business, assets, liabilities, financial condition, operations or
prospects of the Company, including compensation agreements with the
Company's employees; or
(m) Any other event or condition of any character that,
either individually or cumulatively, has materially and adversely affected
the business, assets, liabilities, financial condition, operations or
prospects of the Company.
3.9 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has good
and marketable title to its properties and assets, and good title to its
leasehold estates, in each case subject to no mortgage, pledge, lien, lease,
encumbrance or charge, other than (i) those resulting from taxes which have
not yet become delinquent, (ii) minor liens and encumbrances which do not
materially detract from the value of the property subject thereto or
materially impair the operations of the Company, and (iii) those that have
otherwise arisen in the ordinary course of business. All facilities,
machinery, equipment, fixtures, vehicles and other properties owned, leased
or used by the Company are in good operating condition and repair and are
reasonably fit and usable for the purposes for which they are being used. The
Company is in compliance with all material terms of each lease to which it is
a party or is otherwise bound.
3.10 PATENTS AND TRADEMARKS. To the best of its knowledge, the
Company owns or possesses sufficient legal rights to all patents, trademarks,
service marks, trade names, copyrights, trade secrets, information and other
proprietary rights and processes necessary for its business as now conducted
and as proposed to be conducted, without any known infringement of the rights
of others. 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 the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information and other proprietary rights and processes of any other person or
entity other than such licenses or agreements arising from the purchase of
"off the shelf" or standard products. The Company has not received any
communications alleging that the Company has violated or, by conducting its
business as proposed, would violate any of
6.
the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity. The
Company is not aware that any of its employees is obligated under any
contract (including licenses, covenants or commitments of any nature) or
other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with their duties to the Company
or that would conflict with the Company's business as proposed to be
conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company's business by the employees of the Company, nor
the conduct of the Company's business as proposed, will, to the Company's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any employee is now obligated. The Company does not
believe it is or will be necessary to utilize any inventions, trade secrets
or proprietary information of any of its employees made prior to their
employment by the Company, except for inventions, trade secrets or
proprietary information that have been assigned to the Company.
3.11 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of any term of its Restated Articles or Bylaws, or of
any provision of any mortgage, indenture, contract, agreement, instrument or
contract to which it is party or by which it is bound or of any judgment,
decree, order, writ or, to its knowledge, any statute, rule or regulation
applicable to the Company which would materially and adversely affect the
business, assets, liabilities, financial condition, operations or prospects
of the Company. The execution, delivery, and performance of and compliance
with this Agreement, and the Related Agreements, and the issuance and sale of
the Shares, the Warrants and the Warrant Shares and of the Conversion Shares
pursuant to the Restated Articles, will not, with or without the passage of
time or giving of notice, result in any such material violation, or be in
conflict with or constitute a default under any such term, or result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Company or the suspension, revocation,
impairment, forfeiture or nonrenewal of any permit license, authorization or
approval applicable to the Company, its business or operations or any of its
assets or properties.
3.12 LITIGATION. There is no action, suit, proceeding or
investigation pending or to the Company's knowledge currently threatened
against the Company that questions the validity of this Agreement, or the
Related Agreements or the right of the Company to enter into any of such
agreements, or to consummate the transactions contemplated hereby or thereby,
or which might result, either individually or in the aggregate, in any
material adverse change in the assets, condition, affairs or prospects of the
Company, financially or otherwise, or any change in the current equity
ownership of the Company, nor is the Company aware that there is any basis
for the foregoing. The foregoing includes, without limitation, actions
pending or threatened (or any basis therefor known to the Company) involving
the prior employment of any of the Company's employees, their use in
connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers. The Company is not a party or
subject to the provisions of any order, writ, injunction, judgment or decree
of any court or government agency or instrumentality. There is no action,
suit, proceeding or investigation by the Company currently pending or which
the Company intends to initiate.
7.
3.13 TAX RETURNS AND PAYMENTS. The Company has timely filed all tax
returns (federal, state and local) required to be filed by it. All taxes
shown to be due and payable on such returns, any assessments imposed, and to
the Company's knowledge all other taxes due and payable by the Company on or
before the Closing have been paid or will be paid prior to the time they
become delinquent. The Company has not been advised (i) that any of its
returns, federal, state or other, have been or are being audited as of the
date hereof, or (ii) of any deficiency in assessment or proposed judgment to
its federal, state or other taxes. The Company has no knowledge of any
liability of any tax to be imposed upon its properties or assets as of the
date of this Agreement that is not adequately provided for.
3.14 EMPLOYEES. The Company has no collective bargaining agreements
with any of its employees. There is no labor union organizing activity
pending or, to the Company's knowledge, threatened with respect to the
Company. No employee has any agreement or contract, written or verbal,
regarding his employment. The Company is not a party to or bound by any
currently effective employment contract, deferred compensation arrangement,
bonus plan, incentive plan, profit sharing plan, retirement agreement or
other employee compensation plan or agreement. To the Company's knowledge, no
employee of the Company, nor any consultant with whom the Company has
contracted, is in violation of any term of any employment contract,
proprietary information agreement or any other agreement relating to the
right of any such individual to be employed by, or to contract with, the
Company because of the nature of the business to be conducted by the Company;
and to the Company's knowledge the continued employment by the Company of its
present employees, and the performance of the Company's contracts with its
independent contractors, will not result in any such violation. The Company
has not received any notice alleging that any such violation has occurred. No
employee of the Company has been granted the right to continued employment by
the Company or to any material compensation following termination of
employment with the Company. The Company is not aware that any officer or key
employee, or that any group of key employees, intends to terminate their
employment with the Company, nor does the Company have a present intention to
terminate the employment of any officer, key employee or group of key
employees.
3.15 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each former
and current employee, officer and consultant of the Company has executed a
Proprietary Information and Inventions Agreement in the form of Exhibit I
attached hereto. No current employee, officer or consultant of the Company
has excluded works or inventions made prior to his or her employment with the
Company from his or her assignment of inventions pursuant to such employee,
officer or consultant's Proprietary Information and Inventions Agreement.
3.16 OBLIGATIONS OF MANAGEMENT. Each officer of the Company is
currently devoting one hundred percent (100%) of his business time to the
conduct of the business of the Company. The Company is not aware of any
officer or key employee of the Company planning to work less than full time
at the Company in the future.
3.17 REGISTRATION RIGHTS. Except as required pursuant to the
Investor Rights Agreement, the Company is presently not under any obligation,
and has not granted any rights, to
8.
register (as defined in Section 1.1 of the Investor Rights Agreement) any of
the Company's presently outstanding securities or any of its securities that
may hereafter be issued.
3.18 COMPLIANCE WITH LAWS; PERMITS. To its knowledge, the Company is
not in violation of any applicable statute, rule, regulation, order or
restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of
its properties which violation would materially and adversely affect the
business, assets, liabilities, financial condition, operations or prospects
of the Company. No governmental orders, permissions, consents, approvals or
authorizations are required to be obtained and no registrations or
declarations are required to be filed in connection with the execution and
delivery of this Agreement and the issuance of the Shares, Warrants, Warrant
Shares or the Conversion Shares, except such as has been duly and validly
obtained or filed, or with respect to any filings that must be made after the
Closing, as will be filed in a timely manner. The Company has all franchises,
permits, licenses and any similar authority necessary for the conduct of its
business as now being conducted by it, the lack of which could materially and
adversely affect the business, properties, prospects or financial condition
of the Company and believes it can obtain, without undue burden or expense,
any similar authority for the conduct of its business as planned to be
conducted.
3.19 ENVIRONMENTAL AND SAFETY LAWS. To its knowledge, the Company is
not in violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and to its knowledge, no
material expenditures are or will be required in order to comply with any
such existing statute, law or regulation.
3.20 OFFERING VALID. Assuming the accuracy of the representations
and warranties of the Purchasers contained in Section 4.2 hereof, the offer,
sale and issuance of the Shares and the Warrants, the sale and issuance of
the Warrant Shares upon exercise of the Warrants and the issuance of the
Conversion Shares will be exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act") and will have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all
applicable state securities laws. Neither the Company nor any agent on its
behalf has solicited or will solicit any offers to sell or has offered to
sell or will offer to sell all or any part of the Shares, the Warrants or the
Warrant Shares to any person or persons so as to bring the sale of such
Shares, the Warrants or the Warrant Shares by the Company within the
registration provisions of the Securities Act or any state securities laws.
3.21 FULL DISCLOSURE. The Company's business plan dated November
1996, as amended, (the "Business Plan"), this Agreement, the Exhibits hereto,
the Related Agreements and all other documents delivered by the Company to
Purchasers or their attorneys or agents in connection herewith or therewith
or with the transactions contemplated hereby or thereby, do not contain any
untrue statement of a material fact nor, to the Company's knowledge, omit to
state a material fact necessary in order to make the statements contained
herein or therein not misleading. Notwithstanding the foregoing, the Business
Plan provided to each of the Purchasers was prepared by the management of the
Company in a good faith effort to describe the Company's proposed business
and products and the markets therefore. The assumptions applied
9.
in preparing the Business Plan appeared reasonable to management as of the
date thereof; however, there is no assurance that these assumptions will
prove to be valid or that the objectives set forth in the Business Plan will
be achieved. To the Company's knowledge, there are no facts regarding the
Company which (individually or in the aggregate) materially adversely affect
the business, assets, liabilities, financial condition, prospects or
operations of the Company that have not been set forth in the Agreement, the
Exhibits hereto, the Related Agreements or in other documents delivered to
Purchasers or their attorneys or agents in connection herewith.
3.22 QUALIFIED SMALL BUSINESS. The Company represents and warrants
to the Purchasers that, to the best of its knowledge, the Shares should
qualify as "Qualified Small Business Stock" as defined in Section 1202(c) of
the Internal Revenue Code of 1986, as amended (the "Code"), as of the date
hereof.
3.23 MINUTE BOOKS. The minute books of the Company provided to the
Purchasers or their counsel contain a complete summary of all meetings of
directors and shareholders since the time of incorporation and correctly
reflect all issuances of stock or other equity rights in the Company.
3.24 INSURANCE. The Company has or will obtain promptly following
Closing fire and casualty insurance policies with coverage customary for
companies similarly situated to the Company.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser hereby represents and warrants to the Company as
follows (it being agreed that such representations and warranties do not in
any way limit or effect the Purchasers' right to rely upon, and enforce any
breach of, the representations and warranties of the Company set forth in
this Agreement):
4.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary power
and authority under all applicable provisions of law to execute and deliver
this Agreement and the Related Agreements and to carry out their provisions.
All action on Purchaser's part required for the lawful execution and delivery
of this Agreement and the Related Agreements have been or will be effectively
taken prior to the Closing. Upon their execution and delivery, this Agreement
and the Related Agreements will be valid and binding obligations of
Purchaser, enforceable in accordance with their terms, except (i) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
laws of general application affecting enforcement of creditors' rights, (ii)
general principles of equity that restrict the availability of equitable
remedies, and (iii) to the extent that the enforceability of the
indemnification provisions of Section 2.9 of the Investor Rights Agreement
may be limited by applicable laws.
4.2 INVESTMENT REPRESENTATIONS. Purchaser understands that neither
the Shares, the Warrants, the Warrant Shares nor the Conversion Shares have
been registered under the Securities Act. Purchaser also understands that the
Shares and the Warrants are being offered and sold pursuant to an exemption
from registration contained in the Securities Act based in part
10.
upon Purchaser's representations contained in the Agreement. Purchaser hereby
represents and warrants as follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser has
substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to the Company so that it is
capable of evaluating the merits and risks of its investment in the Company
and has the capacity to protect its own interests. Purchaser must bear the
economic risk of this investment indefinitely unless the Shares, the Warrants
and the Warrant Shares (or the Conversion Shares) are registered pursuant to
the Securities Act, or an exemption from registration is available. Purchaser
understands that the Company has no present intention of registering the
Shares, the Warrants, the Warrant Shares, the Conversion Shares or any shares
of its Common Stock. Purchaser also understands that there is no assurance
that any exemption from registration under the Securities Act will be
available and that, even if available, such exemption may not allow Purchaser
to transfer all or any portion of the Shares, the Warrants, the Warrant
Shares, or the Conversion Shares under the circumstances, in the amounts or
at the times Purchaser might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the
Shares, the Warrants, the Warrant Shares and the Conversion Shares for
Purchaser's own account for investment only, and not with a view towards
their distribution.
(c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser
represents that by reason of its, or of its management's, business or
financial experience, Purchaser has the capacity to protect its own interests
in connection with the transactions contemplated in this Agreement, and the
Related Agreements. Further, Purchaser is aware of no publication of any
advertisement in connection with the transactions contemplated in the
Agreement.
(d) ACCREDITED INVESTOR. Purchaser represents that it is an
accredited investor within the meaning of Regulation D under the Securities
Act.
(e) COMPANY INFORMATION. Purchaser has received and read
the Financial Statements and Business Plan and has had an opportunity to
discuss the Company's business, management and financial affairs with
directors, officers and management of the Company and has had the opportunity
to review the Company's operations and facilities. Purchaser has also had the
opportunity to ask questions of and receive answers from, the Company and its
management regarding the terms and conditions of this investment.
(f) RULE 144. Purchaser acknowledges and agrees that the
Shares, the Warrants, and, if issued, the Conversion Shares and the Warrant
Shares must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
Purchaser has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act, which permits limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things: 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 through an unsolicited "broker's transaction" or in
transactions directly with a market maker (as
11.
said term is defined under the Securities Exchange Act of 1934, as amended)
and the number of shares being sold during any three-month period not
exceeding specified limitations.
(g) RESIDENCE. If the Purchaser is an individual, then the
Purchaser resides in the state or province identified in the address of the
Purchaser set forth on Exhibit A; if the Purchaser is a partnership,
corporation, limited liability company or other entity, then the office or
offices of the Purchaser in which its investment decision was made is located
at the address or addresses of the Purchaser set forth on Exhibit A.
4.3 TRANSFER RESTRICTIONS. Each Purchaser acknowledges and agrees
that the Shares, the Warrants and, if issued, the Conversion Shares and the
Warrant Shares are subject to restrictions on transfer as set forth in the
Investor Rights Agreement.
SECTION 5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING.
Purchasers' obligations to purchase the Shares and the Warrants at the
Closing are subject to the satisfaction, at or prior to the Closing, of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in
Section 3 hereof shall be true and correct in all material respects as of the
Closing Date with the same force and effect as if they had been made as of
the Closing Date, and the Company shall have performed all obligations and
conditions herein required to be performed or observed by it on or prior to
the Closing.
(b) LEGAL INVESTMENT. On the Closing Date, the sale and
issuance of the Shares and the Warrants and the proposed issuance of the
Conversion Shares and the Warrant Shares shall be legally permitted by all
laws and regulations to which Purchasers and the Company are subject.
(c) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate
for consummation of the transactions contemplated by the Agreement and the
Related Agreements (except for such as may be properly obtained subsequent to
the Closing).
(d) FILING OF RESTATED ARTICLES. The Restated Articles
shall have been filed with the Secretary of State of the State of California.
(e) CORPORATE DOCUMENTS. The Company shall have delivered
to Purchasers or their counsel, copies of all corporate documents of the
Company as Purchasers shall reasonably request.
(f) RESERVATION OF WARRANT SHARES. The Warrant Shares
issuable upon exercise of the Warrants shall have been duly authorized and
reserved for issuance upon such conversion.
12.
(g) RESERVATION OF CONVERSION SHARES. The Conversion Shares
issuable upon conversion of the Shares and the Warrant Shares shall have been
duly authorized and reserved for issuance upon such conversion.
(h) COMPLIANCE CERTIFICATE. The Company shall have
delivered to Purchasers a Compliance Certificate, executed by the President
of the Company, dated the date of the Closing, to the effect that the
conditions specified in subsections (a), (c), (d) and (f) of this Section 5.1
have been satisfied.
(i) INVESTOR RIGHTS AGREEMENT. An Investor Rights Agreement
substantially in the form attached hereto as Exhibit E shall have been
executed and delivered by the parties thereto.
(j) RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT. The Right
of First Refusal and Co-Sale Agreement substantially in the form attached
hereto as Exhibit F shall have been executed and delivered by the parties
thereto. The stock certificates representing the shares subject to the Right
of First Refusal and Co-Sale Agreement shall have been delivered to the
Secretary of the Company and shall have had appropriate legends placed upon
them to reflect the restrictions on transfer set forth on the Right of First
Refusal and Co-Sale Agreement.
(k) VOTING AGREEMENT. A Voting Agreement substantially in
the form attached hereto as Exhibit G shall have been executed and delivered
by the parties thereto.
(l) BOARD OF DIRECTORS. Upon the Closing, the authorized
size of the Board of Directors of the Company shall be three (3) members and
the Board shall consist of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and one vacancy.
(m) LEGAL OPINION. The Purchasers shall have received from
legal counsel to the Company an opinion addressed to them, dated as of the
Closing Date, in substantially the form attached hereto as Exhibit J.
(n) STOCK RESTRICTIONS AGREEMENTS. The Company shall have
entered into a Stock Restriction Agreement with each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
▇▇▇ ▇▇▇▇▇▇▇ in substantially the form attached hereto as Exhibit K.
(o) VICE PRESIDENT OF MARKETING. The Company shall have
hired a Vice President of Marketing who is reasonably acceptable to Alta
California Partners, L.P.
(p) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
hereby and all documents and instruments incident to such transactions shall
be reasonably satisfactory in substance and form to the Purchasers and their
special counsel, and the Purchasers and their special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
13.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to issue and sell the Shares and the Warrants at each Closing is
subject to the satisfaction, on or prior to the Closing, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties made by those Purchasers acquiring Shares and
the Warrants in Section 4 hereof shall be true and correct in all material
respects at the date of the Closing, with the same force and effect as if
they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. Such Purchasers shall have
performed and complied with all agreements and conditions herein required to
be performed or complied with by such Purchasers on or before the Closing.
(c) FILING OF RESTATED ARTICLES. The Restated Articles
shall have been filed with the Secretary of State of the State of California.
(d) INVESTOR RIGHTS AGREEMENT. An Investor Rights Agreement
substantially in the form attached hereto as Exhibit E shall have been
executed and delivered by the Purchasers.
(e) RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT. A Right
of First Refusal and Co-Sale Agreement substantially in the form attached
hereto as Exhibit F shall have been executed and delivered by the parties
thereto. The stock certificates representing the shares subject to the Right
of First Refusal and Co-Sale Agreement shall have been delivered to the
Secretary of the Company and shall have had appropriate legends placed upon
them to reflect the restrictions on transfer set forth on the Right of First
Refusal and Co-Sale Agreement.
(f) VOTING AGREEMENT. A Voting Agreement substantially in
the form attached hereto as Exhibit G shall have been executed and delivered
by the parties thereto.
(g) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate
for consummation of the transactions contemplated by the Agreement and the
Related Agreements (except for such as may be properly obtained subsequent to
the Closing).
SECTION 6. MISCELLANEOUS.
6.1 GOVERNING LAW. This Agreement shall be governed in all respects
by the laws of the State of California as such laws are applied to agreements
between California residents entered into and performed entirely in
California.
6.2 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. All statements as to
factual matters contained in any certificate or other instrument delivered by
or on behalf of the Company pursuant hereto in connection with the
14.
transactions contemplated hereby shall be deemed to be representations
and warranties by the Company hereunder solely as of the date of such
certificate or instrument.
6.3 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 and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares, the Warrants, the Warrant Shares
and the Conversion Shares from time to time.
6.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, the Related Agreements 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 no party shall be liable or
bound to any other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein and therein.
6.5 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
6.6 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the
written consent of the Company and holders of at least sixty-six and
two-thirds percent (66-2/3%) of the Shares (treated as if converted and
including any Conversion Shares into which the Shares have been converted
that have not been sold to the public).
(b) The obligations of the Company and the rights of the
holders of the Shares and the Conversion Shares under the Agreement may be
waived only with the written consent of the holders of at least sixty-six and
two-thirds percent (66-2/3%) of the Shares (treated as if converted and
including any Conversion Shares into which the Shares have been converted
that have not been sold to the public).
6.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, the Related
Agreements or the Restated Articles, shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default
or noncompliance, or any acquiescence therein, or of or in any similar
breach, default or noncompliance thereafter occurring. It is further agreed
that any waiver, permit, consent or approval of any kind or character on any
Purchaser's part of any breach, default or noncompliance under this
Agreement, the Related Agreements or under the Restated Articles or any
waiver on such party's part of any provisions or conditions of the Agreement,
the Related Agreements, or the Restated Articles must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, the Related Agreements, the Restated
Articles, by law, or otherwise afforded to any party, shall be cumulative and
not alternative.
15.
6.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to
the party to be notified; (ii) when sent by confirmed telex or facsimile if
sent during normal business hours of the recipient, if not, then on the next
business day; (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (iv) one (1)
day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt. All communications
shall be sent to the Company at the address as set forth on the signature
page hereof and to Purchaser at the address set forth on Exhibit A attached
hereto or at such other address as the Company or Purchaser may designate by
ten (10) days advance written notice to the other parties hereto.
6.9 EXPENSES. The Company shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance
of the Agreement. The Company shall, at the Closing, reimburse the reasonable
fees of and expenses of special counsel for the Purchasers, not to exceed
$12,000, and shall reimburse such special counsel for reasonable expenses
incurred in connection with the negotiation, execution, delivery and
performance of this Agreement.
6.10 ATTORNEYS' FEES. In the event that any dispute among the
parties to this Agreement should result in litigation, the prevailing party
in such dispute shall be entitled to recover from the losing party all fees,
costs and expenses of enforcing any right of such prevailing party under or
with respect to this Agreement, including without limitation, such reasonable
fees and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
6.11 TITLES AND SUBTITLES. The titles of the sections and
subsections of the Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
6.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
6.13 BROKER'S FEES. Each party hereto represents and warrants that
no agent, broker, investment banker, person or firm acting on behalf of or
under the authority of such party hereto is or will be entitled to any
broker's or finder's fee or any other commission directly or indirectly in
connection with the transactions contemplated herein. Each party hereto
further agrees to indemnify each other party for any claims, losses or
expenses incurred by such other party as a result of the representation in
this Section 6.13 being untrue.
6.14 EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges that
it is not relying upon any person, firm, or corporation, other than the
Company and its officers and directors, in making its investment or decision
to invest in the Company. Each Purchaser agrees that no Purchaser nor the
respective controlling persons, officers, directors, partners, agents, or
employees of any Purchaser shall be liable for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the
Shares and Conversion Shares.
16.
6.15 PRONOUNS. All pronouns contained herein, and any variations
thereof, shall be deemed to refer to the masculine, feminine or neutral,
singular or plural, as to the identity of the parties hereto may require.
6.16 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 OR IN THE ABSENCE OF AN EXEMPTION FROM
SUCH QUALIFICATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH CONSIDERATION BY
THE COMPANY, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION FROM SUCH
QUALIFICATION BEING AVAILABLE
[THIS SPACE INTENTIONALLY LEFT BLANK]
17.
IN WITNESS WHEREOF, the parties hereto have executed the SERIES A
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT as of the date set forth in
the first paragraph hereof.
COMPANY: PURCHASERS:
IMPROVENET, INC. -----------------------------------
[Print Name of Purchaser]
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ All Series A Investors
-------------------------------------- --------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Title:
-----------------------------
EXHIBIT A
SCHEDULE OF PURCHASERS
SHARES OF PURCHASE PURCHASE AGGREGATE
SERIES A PRICE FOR PRICE FOR PURCHASE
NAME AND ADDRESS PREFERRED WARRANTS SHARES WARRANTS PRICE
------------------------------------- ------------ ------------ -------------- ------------- ----------------
Alta California Partners, L.P. 977,660 78,213 $976,877.87 $782.13 $977,660
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Alta Embarcadero Partners, LLC 22,340 1,787 $22,322.13 $17.87 $22,340
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ 50,000 4,000 $49,960.00 $40.00 $50,000
Burr, Egan, Deleage & Co.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 25,000 2,000 $24,980.00 $20.00 $25,000
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
& Company, LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
GC&H Investments 20,000 1,600 $19,984.00 $16.00 $20,000
▇▇▇▇▇▇ Godward LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. 50,000 4,000 $49,960.00 $40.00 $50,000
▇▇▇▇▇, Trustees for the ▇▇▇▇▇ ▇.
▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Family Trust Dated ▇/▇/▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ and 25,000 2,000 $24,980.00 $20.00 $25,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 25,000 2,000 $24,980.00 $20.00 $25,000
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ and 10,000 800 $9,992 $8.00 $10,000
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
1,205,000 96,400 $1,204,036.00 $964.00 $1,205,000.00
SERIES A PREFERRED STOCK AND
WARRANT PURCHASE AGREEMENT
INDEX OF EXHIBITS
Schedule of Purchasers............................................Exhibit A
Restated Articles.................................................Exhibit B
Form of Warrant ..................................................Exhibit C
Schedule of Exceptions............................................Exhibit D
Investor Rights Agreement.........................................Exhibit E
Right of First Refusal and Co-Sale Agreement......................Exhibit F
Voting Agreement..................................................Exhibit G
List of Shareholders and Optionholders............................Exhibit H
Proprietary Information and Inventions Agreement..................Exhibit I
Form of Legal Opinion ............................................Exhibit J
Stock Restriction Agreement.......................................Exhibit K
Financial Statements..............................................Exhibit L
i.
EXHIBIT H
LIST OF SHAREHOLDERS AND OPTIONHOLDERS
----------------------------------------------------------------------------------------------------------- --------------
SHAREHOLDERS SHARES
----------------------------------------------------------------------------------------------------------- --------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 60,000
----------------------------------------------------------------------------------------------------------- --------------
▇▇▇▇▇ Family Trust dtd 8/8/86 10,000
----------------------------------------------------------------------------------------------------------- --------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 40,000
----------------------------------------------------------------------------------------------------------- --------------
▇▇▇ ▇▇▇▇▇▇▇▇ 2,600
----------------------------------------------------------------------------------------------------------- --------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ & ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, TTEES for the ▇▇▇▇▇ S & ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Family Trust DTD 5/4/84 60,293
----------------------------------------------------------------------------------------------------------- --------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 40,000
----------------------------------------------------------------------------------------------------------- --------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 35,800
----------------------------------------------------------------------------------------------------------- --------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ 10,000
----------------------------------------------------------------------------------------------------------- --------------
▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, TTEES for the ▇▇▇▇▇ Trust DTD 9/1/77 25,000
----------------------------------------------------------------------------------------------------------- --------------
▇▇▇▇▇▇ Trust Agreement DTD 9/9/93 70,740
----------------------------------------------------------------------------------------------------------- --------------
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 20,000
----------------------------------------------------------------------------------------------------------- --------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ 20,000
----------------------------------------------------------------------------------------------------------- --------------
PaineWebber, as Custodian for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇ Rollover 25,000
----------------------------------------------------------------------------------------------------------- --------------
▇▇▇▇▇▇▇ ▇. ▇▇▇ 20,000
----------------------------------------------------------------------------------------------------------- --------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, TTEES URTA 8/9/78, as amended 266,088
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▇▇▇ ▇▇▇▇▇▇▇ 200,000
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 25,000
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▇▇▇▇▇▇▇ ▇. & ▇▇▇▇▇▇ ▇▇▇▇▇▇, TTEES of the ▇▇▇▇▇▇ Living Trust DTD 9/23/93 20,000
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 200,000
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▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ II & ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 25,000
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▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ II 110,000
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Weil Family Trust 1980 45,000
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▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 12,000
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ 20,000
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1,362,521
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OPTIONHOLDERS SHARES
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 20,000
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▇▇▇ ▇▇▇▇▇▇▇ 20,000
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▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 30,000
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▇▇▇▇▇ ▇▇▇▇▇ 2,500
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▇▇▇▇▇ ▇▇▇▇▇▇ 2,500
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 2,000
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▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ II 1,500
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