Exhibit 10.22
NETREON, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
JANUARY 29, 2002
NETREON, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This Series A Preferred Stock Purchase Agreement (the "Agreement") is made
and entered into as of January 29, 2002, by and among Netreon, Inc., a Delaware
corporation (the "Company"), Netreon, Inc., a California corporation (the
"Subsidiary") 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 up to an
aggregate twenty-eight million seven hundred eighty-five thousand seven hundred
fourteen (28,785,714) shares of its Series A Preferred Stock (the "Shares")
pursuant to this Agreement;
Whereas, Purchasers desire to purchase the Shares on the terms and
conditions set forth herein; and
Whereas, the Company desires to issue and sell the Shares to Purchasers on
the terms and conditions set forth herein.
Agreement
Now, Therefore, in consideration of the foregoing recitals and the mutual
promises, representations, warranties, and covenants hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Agreement To Sell And Purchase.
1.1 Authorization of Shares. The Company has authorized (a) the sale
and issuance to Purchasers of the Shares and (b) the issuance of such shares of
Common Stock to be issued upon conversion of the Shares (the "Conversion
Shares"). The Shares and the Conversion Shares have the rights, preferences,
privileges and restrictions set forth in the Amended and Restated Certificate of
Incorporation of the Company, in the form attached hereto as Exhibit B (the
"Restated Charter").
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, the number of Shares set
forth opposite such Purchaser's name on Exhibit A, at a purchase price of
thirty-five cents ($0.35) per share.
1.
2. Closing, Delivery And Payment.
2.1 Closing. The closing of the sale and purchase of the Shares under
this Agreement (the "Closing") shall take place at 1:00 p.m. on the date hereof,
at the offices of ▇▇▇▇▇▇ Godward LLP, Five Palo Alto Square, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇▇▇-▇▇▇▇ or at such other time or place 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 each Purchaser a certificate representing
the number of Shares to be purchased at the Closing by such Purchaser, against
payment of the purchase price therefor by check , promissory note or wire
transfer made payable to the order of the Company.
2.3 Subsequent Sales of Shares. At any time on or before the 120th day
following the Closing, the Company may sell up to the balance of the authorized
shares of Series A Preferred Stock not sold at the Closing to such persons as
may be approved by the Company (the "Additional Purchasers"). All such sales
made at any additional closings (each an "Additional Closing"), (i) shall be
made on the terms and conditions set forth in this Agreement, (ii) the
representations and warranties of the Company set forth in Section 3 hereof (and
the Schedule of Exceptions) shall speak as of the Closing and the Company shall
have no obligation to update any such disclosure, and (iii) the representations
and warranties of the Additional Purchasers in Section 4 hereof shall speak as
of such Additional Closing. This Agreement, including without limitation, the
Schedule of Purchasers, may be amended by the Company without the consent of
Purchasers to include any Additional Purchasers approved by the Company and the
holders of a majority of the Shares purchased at the Closing(s). Any shares of
Series A Preferred Stock sold pursuant to this Section 2.3 shall be deemed to be
"Shares" for all purposes under this Agreement and any Additional Purchasers
thereof shall be deemed to be "Purchasers" for all purposes under this
Agreement. Within 75 days following the Closing, ▇▇▇▇ Au and certain other
investors, in the aggregate, shall have purchased at all the Closings hereunder
at least 5,714,286 shares of Series A Preferred Stock.
3. Representations And Warranties Of The Company.
Except as set forth on a Schedule of Exceptions (the "Schedule of
Exceptions") delivered by the Company to Purchasers at the Closing, the Company
hereby represents and warrants, jointly and severally, to each Purchaser as of
the date of this Agreement as set forth below.
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 Delaware. The Company has all requisite corporate power and
authority to own and operate its properties and assets and to carry on its
business as presently conducted. The Company has all requisite power and
authority to execute and deliver this Agreement and the Investor Rights
Agreement in the form attached hereto as Exhibit C (the "Investor Rights
Agreement"), the Co-Sale Agreement in the form attached hereto as Exhibit D (the
"Co-Sale Agreement"), (collectively, the "Related Agreements"), to issue and
sell the Shares and the Conversion Shares, and to carry out the provisions of
this Agreement, the Related Agreements and the Restated
2.
Charter and to carry on its business as presently conducted. The Company is duly
qualified and 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 properties (both owned and leased) makes such qualification necessary,
except for those jurisdictions in which failure to do so would not have a
material adverse effect on the Company or its business.
3.2 Subsidiaries. The Company does not own or control any equity
security or other interest of any other corporation, limited partnership or
other business entity other than the Subsidiary. At the Closing, all outstanding
shares of capital stock of the Subsidiary will be held by the Company. The
Company is not a participant in any joint venture, partnership or similar
arrangement.
3.3 Capitalization; Voting Rights.
(a) The authorized capital stock of the Company, immediately
prior to the Closing, consists of (i) 70,000,000 shares of Common Stock, par
value $0.001 per share, 5,500,000 shares of which are issued and outstanding,
and (ii) 56,500,000 shares of Preferred Stock, par value $0.001 per share,
36,500,000 shares of which are designated Series A Preferred Stock, none of
which are issued and outstanding.
(b) Under the Company's 2001 Equity Incentive Plan (the "Plan"),
(i) no shares have been issued pursuant to restricted stock purchase agreements
and/or the exercise of outstanding options, (ii) no options to purchase shares
have been granted and are currently outstanding, and (iii) 6,750,000 shares of
Common Stock remain available for future issuance to officers, directors,
employees and consultants of the Company.
(c) Other than the shares reserved for issuance under the Plan
and except as may be granted pursuant to this Agreement and the Related
Agreements, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal), proxy or
stockholder agreements, or agreements of any kind for the purchase or
acquisition from the Company of any of its securities. All such preemptive
rights have been properly waived or complied with respect to all prior issuances
of capital stock and with respect to the issuance of the Shares and Conversion
Shares.
(d) All issued and outstanding shares of the Company's Common
Stock (i) have been duly authorized and validly issued and are fully paid and
nonassessable, (ii) were issued in compliance with all applicable state and
federal laws concerning the issuance of securities, and (iii) are subject to a
right of first refusal in favor of the Company upon transfer.
(e) The rights, preferences, privileges and restrictions of the
Shares are as stated in the Restated Charter. Each series of Preferred Stock is
convertible into Common Stock on a one-for-one basis as of the date hereof. The
Conversion Shares have been duly and validly reserved for issuance. When issued
in compliance with the provisions of this Agreement and the Restated Charter,
the Shares and the Conversion Shares will be validly issued, fully paid and
nonassessable, and will be free of any liens or encumbrances other than liens
and encumbrances created by or imposed upon Purchasers; provided, however, that
the Shares and the Conversion Shares may be subject to restrictions on transfer
under state and/or federal
3.
securities laws as set forth herein or as otherwise required by such laws at the
time a transfer is proposed.
3.4 Authorization; Binding Obligations. All corporate action on the
part of the Company and its officers, directors and stockholders 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 pursuant hereto and
the Conversion Shares pursuant to the Restated Charter has been taken. 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 (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights, (b) general principles of equity that restrict
the availability of equitable remedies, and (c) to the extent that the
enforceability of the indemnification provisions in the Investor Rights
Agreement may be limited by applicable laws. The sale of the Shares and the
subsequent conversion of the 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.
3.5 Financial Statements and Liabilities. The Company was incorporated
in the State of Delaware on October 24, 2001 and has not commenced operations,
entered into any agreements (other than the issuance of common stock to ▇▇▇▇ Au)
or incurred any liabilities (other than liabilities for legal services incurred
in connection with the formation of the Company and the sale and issuance of the
Shares hereunder).
3.6 Obligations to Related Parties. There are no obligations of the
Company to officers, directors, stockholders, or employees of the Company.
3.7 Compliance with Other Instruments. The Company is not in violation
or default of any term of its Restated Charter or Bylaws. The Company is not in
violation or default 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 or writ. The execution, delivery, and
performance of and compliance with this Agreement, and the Related Agreements,
and the issuance and sale of the Shares pursuant hereto and of the Conversion
Shares pursuant to the Restated Charter, 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 material 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.
3.8 Litigation. There is no action, suit, proceeding or investigation
pending or, to the Company's knowledge, currently threatened in writing 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, or affairs 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
4.
any basis for any of the foregoing. The Company is not a party or to the
Company's knowledge 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.
3.9 Employees. The Company has no employees.
3.10 Registration Rights and Voting 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 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. To
the Company's knowledge, no stockholder of the Company has entered into any
agreement with respect to the voting of equity securities of the Company.
3.11 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, or operations of the Company. No
domestic 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 or the
issuance of the Shares or the Conversion Shares, except such as have 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.
3.12 Offering Valid. Assuming the accuracy of the representations and
warranties of Purchasers contained in Section 5.2 hereof, the offer, sale and
issuance of the Shares and 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
to any person or persons so as to bring the sale of such Shares by the Company
within the registration provisions of the Securities Act or any state securities
laws.
3.13 Corporate Documents. The Restated Charter and Bylaws of the
Company are in the form provided to counsel for the Purchasers. The copy of the
minute books of the Company provided to the Purchasers' counsel contains minutes
of all meetings of directors and stockholders and all actions by written consent
without a meeting by the directors and stockholders since the date of
incorporation of the Company and reflects all actions by the directors (and any
committee of directors) and stockholders of the Company with respect to all
transactions referred to in such minutes accurately in all material respects.
3.14 Full Disclosure. The Company has provided Purchasers with all
information requested by the Purchasers in connection with their decision to
purchase the Shares. To the Company's knowledge, neither this Agreement, the
exhibits hereto, the Related
5.
Agreements nor any other document delivered by the Company to Purchasers or
their attorneys or agents in connection herewith or therewith at the Closing or
with the transactions contemplated hereby or thereby, 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.
4. Representations And Warranties Of The Subsidiary And Peerless Systems
Corporation
Except as set forth on a Schedule of Exceptions (the "Schedule of
Exceptions") delivered by the Company to Purchasers at the Closing, the
Subsidiary and Peerless Systems Corporation hereby represent and warrant,
jointly and severally, to each Purchaser as of the date of this Agreement as set
forth below. For purposes of this section the knowledge of the Subsidiary is
deemed to include the knowledge of Peerless Systems Corporation.
4.1 Organization, Good Standing and Qualification. The Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California. The Subsidiary has all requisite corporate power and
authority to own and operate its properties and assets and to carry on its
business as presently conducted. The Subsidiary has all requisite power and
authority to execute and deliver this Agreement. The Subsidiary is duly
qualified and 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 properties (both owned and leased) makes such qualification necessary,
except for those jurisdictions in which failure to do so would not have a
material adverse effect on the Subsidiary or its business.
4.2 Subsidiaries. The Subsidiary does not own or control any equity
security or other interest of any other corporation, limited partnership or
other business entity. The Subsidiary is not a participant in any joint venture,
partnership or similar arrangement.
4.3 Authorization; Binding Obligations. All corporate action on the
part of the Subsidiary and its officers, directors and stockholders necessary
for the authorization of this Agreement has been taken. The Agreement when
executed and delivered will be a valid and binding obligation of the Subsidiary
enforceable in accordance with its terms, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights, and (b) general
principles of equity that restrict the availability of equitable remedies.
4.4 Financial Statements. The Schedule of Exceptions includes the
Subsidiary's unaudited balance sheet as at October 31, 2001 and unaudited
statement of income and cash flows for the nine months ending October 31, 2001,
(the "Statement Date") (collectively, the "Financial Statements"). The Financial
Statements, have been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
indicated, except as disclosed therein, and present fairly the financial
condition and position of the Subsidiary as of 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 either
individually or in the aggregate), and do not contain all footnotes required
under generally accepted accounting principles.
6.
4.5 Accounts Receivable. The Schedule of Exceptions includes a list of
all accounts receivable of Subsidiary as of the Statement Date ("Accounts
Receivable") along with a range of days then elapsed since invoice. All Accounts
Receivable of Subsidiary arose in the ordinary course of business and are
carried at values determined in accordance with GAAP consistently applied. No
person has any lien on any of such Accounts Receivable and no request or
agreement for deduction or discount has been made with respect to any of such
Accounts Receivable.
4.6 Customers and Suppliers. No customer which individually accounts
for more than 5% of Subsidiary's gross revenues during the 12-month period
preceding the date hereof, and no material supplier of Subsidiary, has cancelled
or otherwise terminated, or made any written threat to Subsidiary to cancel or
otherwise terminate its relationship with Subsidiary, or has at any time on or
after the Statement Date decreased materially its services or supplies to
Subsidiary in the case of any such supplier, or its usage of the services or
products of Subsidiary in the case of such customer, and to Subsidiary's
knowledge, no such supplier or customer intends to cancel or otherwise terminate
its relationship with Subsidiary or to decrease materially its services or
supplies to Subsidiary or its usage of the services or products of Subsidiary,
as the case may be. Subsidiary has not knowingly breached any agreement with, or
engaged in any fraudulent conduct with respect to, any customer or supplier of
Subsidiary.
4.7 No Commitments Regarding Future Products. Subsidiary has made no
sales to customers that are contingent upon providing future enhancements of
existing products, to add features not presently available on existing products
or to otherwise enhance the performance of its existing products (other than
beta or similar arrangements pursuant to which Subsidiary's customers from time
to time test or evaluate products). The products Subsidiary has delivered to
customers substantially comply with published specifications for such products
and Subsidiary has not received material complaints from customers about its
products that remain unresolved. Section 4.7 of the Schedule of Exceptions
accurately sets forth a complete list of products in development (exclusive of
mere enhancements to and additional features for existing products).
4.8 Liabilities. The Subsidiary 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.
4.9 Agreements; Action.
(a) Except for agreements explicitly contemplated hereby there
are no agreements, understandings or proposed transactions between the
Subsidiary and any of its officers, directors, employees, affiliates or any
affiliate thereof.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Subsidiary is a party or to their knowledge by which the Subsidiary is bound
which may involve (i) future obligations (contingent or otherwise) of, or
payments to, the Subsidiary in excess of $10,000 (other than
7.
obligations of, or payments to, the Subsidiary arising from purchase or sale
agreements entered into in the ordinary course of business), or (ii) the
transfer or license of any patent, copyright, trade secret or other proprietary
right to or from the Subsidiary (other than licenses of "off the shelf" or other
standard products or sublicenses of technology in the ordinary course of
business which are currently outstanding and involve future obligations
(contingent or otherwise) of, or payments to, the Subsidiary less than $10,000),
or (iii) provisions granting rights to or restricting the development,
manufacture or distribution of the Subsidiary's products or services, or (iv)
indemnification by the Subsidiary with respect to infringements of proprietary
rights (other than indemnification obligations arising from purchase, sale or
license agreements entered into in the ordinary course of business).
(c) The Subsidiary 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 or guaranteed 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 or as disclosed in the Financial Statements)
individually in excess of $10,000 or, in the case of indebtedness and/or
liabilities individually less than $10,000, in excess of $25,000 in the
aggregate, (iii) made any loans or advances to any person, other than ordinary
advances for travel and other business expenses, or (iv) sold, exchanged or
otherwise disposed of any of its assets or rights, other than the sale of its
inventory and currently outstanding licenses of technology involving future
obligation (contingent or otherwise) in excess of $10,000 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 involving the same person or entity (including persons
or entities the Subsidiary has reason to believe are affiliated therewith) shall
be aggregated for the purpose of meeting the individual minimum dollar amounts
of such subsections.
4.10 Obligations to Related Parties. There are no obligations of the
Subsidiary to officers, directors, stockholders, or employees of the Subsidiary
other than (a) for payment of salary for services rendered, (b) reimbursement
for reasonable business expenses incurred by employees or directors on behalf of
the Subsidiary 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 Subsidiary or
Peerless Systems Corporation).
4.11 Changes. Since the Statement Date, there has not been to the
Subsidiary's knowledge (other than pursuant to or in connection with this
Agreement and the Related Agreements):
(a) Any change in the assets, liabilities, financial condition or
operations of the Subsidiary from that reflected in the Financial Statements,
other than changes in the ordinary course of business, none of which
individually or in the aggregate has had a material adverse effect on such
assets, liabilities, financial condition or operations of the Subsidiary;
8.
(b) Any resignation or termination of any officer, key employee
or group of employees of the Subsidiary;
(c) Any material change, except in the ordinary course of
business, in the contingent obligations of the Subsidiary 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
financial condition of the Subsidiary;
(e) Any waiver by the Subsidiary of a valuable right or of a
material debt owed to it;
(f) Any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder of the Subsidiary;
(g) Any labor organization activity related to the Subsidiary;
(h) Any sale, assignment or transfer by the Subsidiary of any
patents, trademarks, copyrights, trade secrets or other intangible assets;
(i) Any change in any material agreement to which the Subsidiary
is a party or by which it is bound which materially and adversely affects the
business, assets, liabilities, financial condition or operations of the
Subsidiary;
(j) Any other event or condition of any character that, either
individually or cumulatively, has materially and adversely affected the
business, assets, liabilities, financial condition or operations of the
Subsidiary; or
(k) Any arrangement or commitment by the Subsidiary to do any of
the acts described in subsection (a) through (j) above.
4.12 Title to Properties and Assets; Liens, Etc. The Subsidiary has
good and marketable title to its owned properties and assets, including such
properties and assets reflected in the most recent balance sheet included in the
Financial Statements, and good title to its leasehold estates, in each case
subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than
(a) those resulting from taxes which have not yet become delinquent, (b) minor
liens and encumbrances which do not materially detract from the value of the
property subject thereto or materially impair the operations of the Subsidiary,
and (c) those that have otherwise arisen in the ordinary course of business. The
Subsidiary is in compliance with all material terms of each lease to which it is
a party or is otherwise bound.
4.13 Intellectual Property.
(a) The Subsidiary owns or possesses sufficient legal rights in
all trademarks, service marks, trade names, copyrights, trade secrets and to its
knowledge, patents, necessary to conduct its business as now conducted, without
any infringement, or with respect to
9.
patents, known infringement, of the rights of others. There are no outstanding
options, licenses or agreements of any kind relating to the foregoing
proprietary rights to which the Subsidiary is a party, nor is the Subsidiary
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.
(b) The Subsidiary has not received any communications alleging
that it has violated or, by conducting its business as currently conducted would
violate any of the patents, trademarks, service marks, trade names, copyrights
or trade secrets or other proprietary rights or processes of any other person or
entity, nor is the Subsidiary aware of any basis therefor.
(c) The Subsidiary 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 Subsidiary or that would conflict with the Subsidiary's business as
currently conducted. Each employee, officer and consultant of the Subsidiary has
executed a proprietary information and inventions agreement in the form(s) as
delivered to the counsel for the Purchasers. The Subsidiary is not aware that
any of its employees or consultants is in violation thereof. No employee,
officer or consultant of the Subsidiary has excluded works or inventions made
prior to his or her employment with the Subsidiary from his or her assignment of
inventions pursuant to such employee, officer or consultant's proprietary
information and inventions agreement. The Subsidiary does not believe it is or
will be necessary in the conduct of its business as presently conducted to
utilize any inventions, trade secrets or proprietary information of any of its
employees made prior to their employment by the Subsidiary, except for
inventions, trade secrets or proprietary information that have been assigned to
the Subsidiary and which are disclosed in the Schedule of Exceptions hereto.
(d) The Subsidiary is not subject to any "open source" or
"copyleft" obligations or otherwise required to make any public disclosure or
general availability of source code either used or developed by the Subsidiary.
4.14 Compliance with Other Instruments. The Subsidiary is not in
violation or default of any term of its charter or bylaws. The Subsidiary is not
in violation or default 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 or writ other than any such violation that
would not have a material adverse effect on the Subsidiary. The execution,
delivery, and performance of and compliance with this Agreement, 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 material 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 Subsidiary or the
suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to the Subsidiary, its business or
operations or any of its assets or properties except as any of the foregoing
that would not, individually or the aggregate,
10.
have a material adverse effect on the Subsidiary. To its knowledge, the
Subsidiary has avoided every condition, and has not performed any act, the
occurrence of which would result in the Subsidiary's loss of any material right
granted under any license, distribution agreement or other agreement required to
be disclosed on the Schedule of Exceptions.
4.15 Litigation. There is no action, suit, proceeding or investigation
pending or, to the Subsidiary's knowledge, currently threatened in writing
against the Subsidiary that questions the validity of this Agreement or the
right of the Subsidiary to enter into this Agreement, or to consummate the
transactions contemplated hereby, or which might result, either individually or
in the aggregate, in any material adverse change in the assets, condition, or
affairs of the Subsidiary, financially or otherwise, or any change in the
current equity ownership of the Subsidiary, nor is the Subsidiary aware that
there is any basis for any of the foregoing. The foregoing includes, without
limitation, actions pending or, to the Subsidiary's knowledge, threatened in
writing involving the prior employment of any of the Subsidiary's employees,
their use in connection with the Subsidiary'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 Subsidiary is not a
party, or to the Subsidiary's knowledge, 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
Subsidiary currently pending or which the Subsidiary intends to initiate.
4.16 Tax Returns and Payments. The Subsidiary has 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
Subsidiary's knowledge all other taxes due and payable by the Subsidiary on or
before the Closing, have been paid or will be paid prior to the time they become
delinquent. The Subsidiary has no knowledge of any liability of any tax to be
imposed upon its properties or assets as of the date of this Agreement for which
adequate provision is not made in the Financial Statements.
4.17 Employees. The Subsidiary does not have any collective bargaining
agreements with any of its employees. To the Subsidiary's knowledge, there is no
labor union organizing activity pending or threatened with respect to the
Subsidiary. To the Subsidiary's knowledge, no employee of the Subsidiary, nor
any consultant with whom the Subsidiary 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 Subsidiary; and to the Subsidiary's knowledge the continued
employment by the Subsidiary of its present employees, and the performance of
the Subsidiary's contracts with its independent contractors, will not result in
any such violation. The Subsidiary has not received any notice alleging that any
such violation has occurred. No employee of the Subsidiary has been granted the
right to continued employment by the Subsidiary or to any material compensation
following termination of employment with the Subsidiary. The Subsidiary is not
aware that any officer, key employee or group of employees intends to terminate
his, her or their employment with the Subsidiary, nor does the Subsidiary have a
present intention to terminate the employment of any officer, key employee or
group of employees. There are no actions pending, or to the Subsidiary's
knowledge, currently threatened, by any former or current employee concerning
such person's employment by the
11.
Subsidiary. The Subsidiary have complied in all material respects with all
applicable state and federal equal employment opportunity laws and with other
laws related to employment.
4.18 Compliance with Laws; Permits. To its knowledge, the Subsidiary
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, or operations of the Subsidiary. The
Subsidiary 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 or
financial condition of the Subsidiary and believes it can obtain, without undue
burden or expense, any similar authority for the conduct of its business as
planned to be conducted in the Business Plan.
4.19 Environmental and Safety Laws. To its knowledge, the Subsidiary
is not in violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, the violation of which would
materially and adversely affect the business, properties or financial condition
of the Subsidiary.
4.20 Corporate Documents. The charter and bylaws of the Subsidiary are
in the form provided to counsel for the Purchasers. The copy of the minute books
of the Subsidiary provided to the Purchasers' counsel contains minutes of all
meetings of directors and stockholders and all actions by written consent
without a meeting by the directors and stockholders since September 1, 2000 and
reflects all actions by the directors (and any committee of directors) and
stockholders of the Subsidiary with respect to all transactions referred to in
such minutes accurately in all material respects.
4.21 Full Disclosure. The Subsidiary has provided Purchasers with all
information requested by the Purchasers in connection with their decision to
purchase the Shares. To the Subsidiary's knowledge, this Agreement, the exhibits
hereto, the Related Agreements and any other documents delivered by the
Subsidiary to Purchasers or their attorneys or agents in connection herewith or
therewith at the Closing or with the transactions contemplated hereby or
thereby, taken as a whole, do not contain any untrue statement of a material
fact nor, to the Subsidiary's knowledge, omit to state a material fact necessary
in order to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made. Notwithstanding the
foregoing, no representation or warranty is made by Peerless or the Subsidiary
with respect to the Business Plan dated August of 2001.
5. Representations And Warranties Of Purchasers.
Each Purchaser hereby represents and warrants to the Company,
severally and not jointly, as follows (provided that such representations and
warranties do not lessen or obviate the representations and warranties of the
Company set forth in this Agreement):
5.1 Requisite Power and Authority. Purchaser has all necessary power
and authority to execute and deliver this Agreement and the Related Agreements
and to carry out
12.
their provisions. All action on Purchaser's part required for the lawful
execution and delivery of this Agreement and the Related Agreements has been
taken. 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 (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights, (b) as limited by general principles
of equity that restrict the availability of equitable remedies, and (c) to the
extent that the enforceability of the indemnification provisions of the Investor
Rights Agreement may be limited by applicable laws.
5.2 Investment Representations. Purchaser understands that neither the
Shares nor the Conversion Shares have been registered under the Securities Act.
Purchaser also understands that the Shares are being offered and sold pursuant
to an exemption from registration contained in the Securities Act based in part
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 (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 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 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 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 and the Subsidiary's business, management and financial affairs with
directors, officers and management of the Company and the Subsidiary and has had
the opportunity to review the Company and the Subsidiary's operations and
facilities. Purchaser has also had the opportunity
13.
to ask questions of and receive answers from, the Company, the Subsidiary and
their management regarding the terms and conditions of this investment.
(f) Rule 144. Purchaser acknowledges and agrees that the Shares,
and, if issued, the Conversion Shares are "restricted securities" as defined in
Rule 144 promulgated under the Securities Act as in effect from time to time and
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, 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 following the required holding period under Rule 144 and the number of
shares being sold during any three-month period not exceeding specified
limitations.
(g) Residence. If Purchaser is an individual, then Purchaser
resides in the state or province identified in the address of Purchaser set
forth on Exhibit A; if Purchaser is a partnership, corporation, limited
liability company or other entity, then the office or offices of Purchaser in
which its investment decision was made is located at the address or addresses of
Purchaser set forth on Exhibit A.
(h) Foreign Investors. If Purchaser is not a United States person
(as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as
amended), Purchaser hereby represents that it has satisfied itself as to the
full observance of the laws of its jurisdiction in connection with any
invitation to subscribe for the Shares or any use of this Agreement, including
(i) the legal requirements within its jurisdiction for the purchase of the
Shares, (ii) any foreign exchange restrictions applicable to such purchase,
(iii) any government or other consents that may need to be obtained, and (iv)
the income tax and other tax consequences, if any, that may be relevant to the
purchase, holding, redemption, sale or transfer of the Shares. Purchaser's
subscription and payment for and continued beneficial ownership of the Shares
will not violate any applicable securities or other laws of Purchaser's
jurisdiction.
5.3 Transfer Restrictions. Each Purchaser acknowledges and agrees that
the Shares and, if issued, the Conversion Shares are subject to restrictions on
transfer as set forth in the Investor Rights Agreement.
6. Conditions To Closing.
6.1 Conditions to Purchasers' Obligations at the Closing. Purchasers'
obligations to purchase the Shares at the Closing are subject to the
satisfaction, at or prior to the Closing Date, of the following conditions:
(a) Representations and Warranties of the Company 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
14.
have performed all obligations and conditions herein required to be performed or
observed by it on or prior to the Closing.
(b) Representations and Warranties of Subsidiary True. The
representations and warranties made by the Subsidiary in Section 4 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.
(c) Representations and Warranties of Peerless Systems
Corporation True. The representations and warranties made by Peerless Systems
Corporation in Section 4 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; provided that in all Additional Closings; such
representations and warranties shall be true and correct as of the date of this
Agreement.
(d) Legal Investment. On the Closing Date, the sale and issuance
of the Shares and the proposed issuance of the Conversion Shares shall be
legally permitted by all laws and regulations to which Purchasers and the
Company are subject.
(e) 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).
(f) Filing of Restated Charter. The Restated Charter shall have
been filed with the Secretary of State of the State of Delaware and shall
continue to be in full force and effect as of the Closing Date.
(g) 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.
(h) Reservation of Conversion Shares. The Conversion Shares
issuable upon conversion of the Shares shall have been duly authorized and
reserved for issuance upon such conversion.
(i) Company Compliance Certificate. The Company shall have
delivered to Purchasers a Compliance Certificate, executed by the President of
the Company, dated the Closing Date, to the effect that the conditions specified
in subsections (a), (e), (f) and (h) of this Section 6.1 have been satisfied.
(j) Subsidiary Compliance Certificate. The Subsidiary shall have
delivered to Purchasers a Compliance Certificate, executed by the President of
the Subsidiary, dated the Closing Date, to the effect that the conditions
specified in subsection (b) of this Section 6.1 have been satisfied.
(k) Peerless Systems Corporation Compliance Certificate. Peerless
Systems Corporation shall have delivered to Purchasers a Compliance Certificate,
executed by
15.
the President of Peerless Systems Corporation, dated the Closing Date, to the
effect that the conditions specified in subsection (c) of this Section 5.1 have
been satisfied.
(l) Secretary's Certificate. Purchasers shall have received from
the Company's Secretary, a certificate having attached thereto (i) the Company's
Certificate of Incorporation as in effect at the time of the Closing, (ii) the
Company's Bylaws as in effect at the time of the Closing, (iii) resolutions
approved by the Board of Directors authorizing the transactions contemplated
hereby, and (iv) resolutions approved by the Company's stockholders authorizing
the filing of the Restated Charter.
(m) Investor Rights Agreement. The Investor Rights Agreement
substantially in the form attached hereto as Exhibit C shall have been executed
and delivered by the parties thereto.
(n) Co-Sale Agreement. The Co-Sale Agreement substantially in the
form attached hereto as Exhibit D shall have been executed and delivered by the
parties thereto. The stock certificates representing the outstanding shares
subject to the 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 Co-Sale Agreement.
(o) Board of Directors. Upon the Closing, the authorized size of
the Board of Directors of the Company shall be five (5) members.
(p) Legal Opinion. 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 E.
(q) Indemnification Agreements. Indemnification Agreements in
form and substance satisfactory to counsel to the Purchasers shall have been
executed and delivered by the Company and each director of the Company and each
Purchaser.
(r) Minimum Purchase. As of the first Closing hereunder, at least
$2,000,000 of Shares shall be purchased by the Purchasers and the Series A
Preferred Stock and Common Stock Contribution Agreement by and between the
Company and Peerless System Corporation shall have been concurrently executed
and delivered.
(s) 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 Purchasers and their special
counsel, and 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. Such documents may include good standing certificates.
6.2 Conditions to Obligations of the Company. The Company's obligation
to issue and sell the Shares at each Closing is subject to the satisfaction, on
or prior to such Closing, of the following conditions:
16.
(a) Representations and Warranties True. The representations and
warranties in Section 5 and Section 6 made by those Purchasers acquiring Shares
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 Charter. The Restated Charter shall have
been filed with the Secretary of State of the State of Delaware.
(d) Investor Rights Agreement. The Investor Rights Agreement
substantially in the form attached hereto as Exhibit C shall have been executed
and delivered by Purchasers.
(e) Co-Sale Agreement. The Co-Sale Agreement substantially in the
form attached hereto as Exhibit D shall have been executed and delivered by the
parties thereto.
(f) 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).
7. Miscellaneous.
7.1 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.
7.2 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 for a period of eighteen
(18) months following the Closing. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company, the Subsidiary or Peerless Systems Corporation pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company, the Subsidiary or Peerless
Systems Corporation, as the case may be, hereunder solely as of the date of such
certificate or instrument.
7.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares from time to time.
7.4 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
17.
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.
7.5 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.
7.6 Amendment and Waiver.
(a) Except as otherwise provided for in Section 2.3, this
Agreement may be amended or modified only upon the written consent of the
Company and holders of at least a majority of the then outstanding Shares
(treated as if converted and including any Conversion Shares into which the then
outstanding Shares have been converted that have not been sold to the public),
provided however, that Section 4 may only be amended or modified with the
written consent of the Subsidiary and Peerless Systems Corporation.
(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 a majority of the then
outstanding Shares (treated as if converted and including any Conversion Shares
into which the then outstanding Shares have been converted that have not been
sold to the public).
7.7 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 Charter, 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 Charter or any waiver on such party's part of
any provisions or conditions of the Agreement, the Related Agreements, or the
Restated Charter 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 Charter, by law, or otherwise
afforded to any party, shall be cumulative and not alternative.
7.8 Waiver of Conflicts. Each party to this Agreement acknowledges
that ▇▇▇▇▇▇ Godward LLP ("▇▇▇▇▇▇ Godward"), outside general counsel to the
Company, has in the past performed and is or may now or in the future represent
one or more Purchasers or their affiliates in matters unrelated to the
transactions contemplated by this Agreement (the "Financing"), including
representation of such Purchasers or their affiliates in matters of a similar
nature to the Financing. The applicable rules of professional conduct require
that Cooley Godward inform the parties hereunder of this representation and
obtain their consent. Cooley has served as outside general counsel to the
Company and has negotiated the terms of the Financing solely on behalf of the
Company. It is the belief of ▇▇▇▇▇▇ Godward that these terms and conditions
represent an arm's length transaction between the Company and Purchasers.
Purchasers have been represented by independent legal counsel regarding the
terms of the
18.
Financing. The Company and each Purchaser hereby (a) acknowledge that they have
had an opportunity to ask for and have obtained information relevant to such
representation, including disclosure of the reasonably foreseeable adverse
consequences of such representation; (b) acknowledge that with respect to the
Financing, ▇▇▇▇▇▇ Godward has represented solely the Company, and not any
Purchaser or any stockholder, director or employee of the Company or any
Purchaser; and (c) gives its informed consent to ▇▇▇▇▇▇ Godward's representation
of the Company in the Financing.
The Company acknowledges that ▇▇▇▇▇▇ Godward has an investment partnership
composed of partners and senior associates of Cooley Godward, GC&H Investments
("GCHI"), that will be participating in the transactions contemplated herein and
▇▇▇▇▇▇ Godward is general counsel to GCHI, although it has not acted as GCHI's
counsel in connection with the transactions contemplated pursuant to this
Agreement (the "Financing"). As such, the Company acknowledges that GCHI could
be considered to have interests adverse to the Company. The applicable rules of
professional conduct require that before GCHI can participate in the Financing
and purchase Shares from the Company (i) the terms of the transaction are fully
and fairly disclosed, (ii) the Company is given the right to seek advice of an
independent attorney, and (iii) the Company consents to the terms of the
transaction. Cooley has served as outside general counsel to the Company and has
negotiated the terms of the Financing solely on behalf of the Company. It is the
belief of Cooley Godward that these terms and conditions represent an arm's
length transaction between the Company and the other Purchasers. GCHI has not
obtained any term unique to its investment and will participate in the Financing
on terms not more favorable than other Purchasers. The Company acknowledges (i)
disclosure to it of the transaction with GCHI and (ii) that it has had a
reasonable opportunity to consult independent counsel prior to the participation
by GCHI in the Financing. The Company hereby agrees that (i) ▇▇▇▇▇▇ Godward may
act as the Company's counsel in connection with the Financing, (ii) GCHI may
participate in the Financing, and (iii) ▇▇▇▇▇▇ Godward may continue to act as
general counsel for the Company and to GCHI in other matters.
7.9 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed electronic mail or facsimile if
sent during normal business hours of the recipient, if not, then on the next
business day, in either case, if confirmed by contemporaneous dispatch of notice
pursuant to clauses (a), (c) or (d) of this section, (c) five (5) days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (d) 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 corporate offices of the
Company and to each Purchaser at the address set forth on Exhibit A attached
hereto or at such other address or electronic mail address as the Company or
Purchaser may designate by ten (10) days advance written notice to the other
parties hereto.
7.10 Expenses. Each party shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
the Agreement.
7.11 Attorneys' Fees. In the event that any suit or action is
instituted to enforce any provision in this Agreement, 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
19.
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.
7.12 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.
7.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7.14 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 8.14 being untrue.
7.15 Exculpation Among Purchasers. Each Purchaser acknowledges that it
is not relying upon any person, firm, or corporation, other than the Company and
its officers and directors, in making its investment or decision to invest in
the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable to any other Purchaser for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the
Shares and Conversion Shares.
7.16 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.
7.17 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.
20.
In Witness Whereof, the parties hereto have executed the Series A Preferred
Stock Purchase Agreement as of the date set forth in the first paragraph hereof.
COMPANY: PURCHASER(S):
Netreon, Inc. ▇▇▇▇ Au
By: /s/ ▇▇▇▇ Au /s/ ▇▇▇▇ Au
------------------------------------- -----------------------------
▇▇▇▇ Au
President and Chief Executive Officer
SUBSIDIARY:
Netreon, Inc.
By: /s/ ▇▇▇▇ Au
----------------------------------
▇▇▇▇ Au
Vice President and General Manager
PEERLESS:
Peerless Systems Corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ for
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
President and Chief Executive Officer
Series A Preferred Stock Purchase Agreemnet
Signature Page
Global World Technologies LTD
By: /s/ ▇.▇. ▇▇▇▇
-------------------------
Printed Name: Tit Wing Poon
Title: Director
Series A Preferred Stock Purchase Agreemnet
Signature Page
▇▇▇▇ Lung ▇▇▇▇
/s/ ▇▇▇▇ Lung Tong
-------------------------
Series A Preferred Stock Purchase Agreemnet
Signature Page
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------
Series A Preferred Stock Purchase Agreemnet
Signature Page
Table Of Contents
Page
1. Agreement To Sell And Purchase....................................1
1.1 Authorization of Shares..................................1
1.2 Sale and Purchase........................................1
2. Closing, Delivery And Payment.....................................2
2.1 Closing..................................................2
2.2 Delivery.................................................2
2.3 Subsequent Sales of Shares...............................2
3. Representations And Warranties Of The Company.....................2
3.1 Organization, Good Standing and Qualification............2
3.2 Subsidiaries.............................................3
3.3 Capitalization; Voting Rights............................3
3.4 Authorization; Binding Obligations.......................4
3.5 Financial Statements and Liabilities.....................4
3.6 Obligations to Related Parties...........................4
3.7 Compliance with Other Instruments........................4
3.8 Litigation...............................................4
3.9 Employees................................................5
3.10 Registration Rights and Voting Rights....................5
3.11 Compliance with Laws; Permits............................5
3.12 Offering Valid...........................................5
3.13 Corporate Documents......................................5
3.14 Full Disclosure..........................................5
4. Representations And Warranties Of The Subsidiary and Peerless
Systems Corporation...............................................6
4.1 Organization, Good Standing and Qualification............6
4.2 Subsidiaries.............................................6
4.3 Authorization; Binding Obligations.......................6
4.4 Financial Statements.....................................6
4.5 Accounts Receivable......................................7
4.6 Customers and Suppliers..................................7
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4.7 No Commitments Regarding Future Products.................7
4.8 Liabilities..............................................7
4.9 Agreements; Action.......................................7
4.10 Obligations to Related Parties...........................8
4.11 Changes..................................................8
4.12 Title to Properties and Assets; Liens, Etc...............9
4.13 Intellectual Property....................................9
4.14 Compliance with Other Instruments.......................10
4.15 Litigation..............................................11
4.16 Tax Returns and Payments................................11
4.17 Employees...............................................11
4.18 Compliance with Laws; Permits...........................12
4.19 Environmental and Safety Laws...........................12
4.20 Corporate Documents.....................................12
4.21 Full Disclosure.........................................12
5. Representations and Warranties Of Purchasers.....................12
5.1 Requisite Power and Authority...........................12
5.2 Investment Representations..............................13
5.3 Transfer Restrictions...................................14
6. Conditions To Closing............................................14
6.1 Conditions to Purchasers' Obligations at the Closing....14
6.2 Conditions to Obligations of the Company................16
7. Miscellaneous....................................................17
7.1 Governing Law...........................................17
7.2 Survival................................................17
7.3 Successors and Assigns..................................17
7.4 Entire Agreement........................................17
7.5 Severability............................................18
7.6 Amendment and Waiver....................................18
7.7 Delays or Omissions.....................................18
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7.8 Waiver of Conflicts.....................................18
7.9 Notices.................................................19
7.10 Expenses................................................19
7.11 Attorneys' Fees.........................................19
7.12 Titles and Subtitles....................................20
7.13 Counterparts............................................20
7.14 Broker's Fees...........................................20
7.15 Exculpation Among Purchasers............................20
7.16 Pronouns................................................20
7.17 California Corporate Securities Law.....................20
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