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EXHIBIT 10.8
ICNT, INC.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES D PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is
entered into as of April 13, 2000, by and among ICNT, Inc., a California
corporation (the "Company"), and each of the undersigned purchasers of Series D
Preferred Stock of the Company (each, a "Purchaser," and collectively, the
"Purchasers") listed on the Schedule of Purchasers attached hereto as Exhibit A.
In consideration for and of the mutual promises, covenants and
conditions hereinafter set forth and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Authorization and Sale of the Shares.
1.1. Authorization; Amended and Restated Articles of
Incorporation. The Company has authorized the issuance and sale pursuant to the
terms and conditions hereof of up to Six Million Two Hundred Sixty Thousand
Eight Hundred Twenty Three (6,260,823) shares of its Series D Preferred Stock
(the "Series D Preferred Shares"), having the rights, preferences, privileges
and restrictions as set forth in the form of Amended and Restated Articles of
Incorporation of the Company (the "Restated Articles") attached hereto as
Exhibit B.
1.2. Issuance and Sale. Subject to the terms and conditions set
forth in this Agreement, each Purchaser agrees, severally and not jointly, to
purchase from the Company, and the Company agrees to sell and issue to each
Purchaser, severally and not jointly, at the Closing the respective number of
Series D Preferred Shares set forth opposite each Purchaser's name on Exhibit A
hereto at a purchase price of $8.52124 per share. The Series D Preferred Shares
will have the rights, preferences, privileges and restrictions set forth in the
Restated Articles.
2. Closing; Delivery.
2.1. Closing. The closing of the purchase and sale of the Series
D Preferred Shares hereunder (the "Closing") shall take place at the offices of
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel to the Company ("K&L"), ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 3:00 p.m. on April 13, 2000 or at
such other date, time and place as the Company and the Purchasers participating
in such closing mutually agree upon, orally or in writing. The date of the
closing of the transactions contemplated in this Agreement is sometimes also
referred to herein as the "Closing Date."
2.2. Delivery. Subject to the terms and conditions set forth in
this Agreement, at the Closing the Company will deliver to each Purchaser a
stock certificate representing the number of Series D Preferred Shares set forth
beside such Purchaser's name on Exhibit A hereto, against delivery by each
Purchaser of payment of the purchase price therefor by check or wire transfer
payable to the Company, by cancellation of outstanding indebtedness of the
Company to such Purchaser, or a combination thereof in the amount specified
opposite such Purchaser's name on Exhibit A hereto. In the event that payment by
a Purchaser is made, in whole or in part, by cancellation of indebtedness, then
such Purchaser shall surrender to the Company for cancellation at the Closing
any evidence of such indebtedness or shall execute an instrument of cancellation
in form and substance acceptable to the Company. In addition, the Company at the
Closing shall deliver to any Purchaser choosing to pay any part of the purchase
price of the
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Series D Preferred Shares by cancellation of indebtedness, a check in the amount
of any interest accrued on such indebtedness through the Closing Date.
3. Representations and Warranties of the Company. Except as set forth on
Exhibit C attached hereto and incorporated herein by reference, the Company
hereby represents and warrants to each Purchaser as follows:
3.1. Organization; Good Standing; Qualification. The Company is a
corporation duly organized and validly existing under, and by virtue of, the
laws of the State of California and is in good standing under such laws. The
Company has the requisite corporate power to own and operate its properties and
assets, and to carry on its business as presently conducted and as proposed to
be conducted. The Company is in good standing and qualified to do business as a
foreign corporation in California and in every other jurisdiction where the
failure to so qualify would have a material adverse impact on the Company's
business, properties, financial condition or results of operations. The Company
has furnished to special counsel to the Purchasers true and complete copies of
its Amended and Restated Articles of Incorporation (the "Restated Articles") and
Bylaws, each as amended to date and presently in effect.
3.2. Corporate Power. The Company has all requisite legal and
corporate power and authority to enter into this Agreement, the Third Restated
Investors Rights Agreement and the Third Restated Shareholders Agreement, and to
sell the Series D Preferred Shares hereunder and to carry out and perform its
obligations under the terms of this Agreement, the Third Restated Investors
Rights Agreement and the Third Restated Shareholders Agreement.
3.3. Subsidiaries. The Company does not control, directly or
indirectly, or have an interest in, any other corporation, association or
business entity.
3.4. Capitalization.
(a) Common Stock and Preferred Stock. The authorized
capital stock of the Company consists, or will consist immediately prior to the
Closing of 60,000,000 shares of Common Stock and 32,505,857 shares of Preferred
Stock of which 13,333,334 shares have been designated Series A Preferred Stock
("Series A Stock"), 10,150,490 shares have been designated Series B Preferred
Stock, 2,761,210 shares have been designated Series C Preferred Stock ("Series C
Stock") and 6,260,823 shares have been designated Series D Preferred Stock
("Series D Stock"). The Series D Preferred Stock have the rights, preferences,
privileges and restrictions set forth in the Restated Articles. Immediately
prior to the Closing, there are 12,905,086 shares of Common Stock issued and
outstanding; 13,333,334 shares of Series A Preferred Stock, 10,150,490 shares of
Series B Preferred Stock, 2,761,210 shares of Series C Preferred Stock and no
Series D Preferred Stock issued and outstanding. All such issued and outstanding
shares have been duly authorized and validly issued, are fully paid and
nonassessable and were issued in compliance with all applicable state and
federal laws concerning the issuance of securities.
(b) Options, Warrants, Reserved Shares, Etc. Except as set
forth in this Agreement, the Third Restated Investors Rights Agreement or the
Third Restated Shareholders Agreement, there are no outstanding preemptive or
other rights, plans, options, warrants, conversion rights or agreements for the
purchase or acquisition from the Company of any shares of its capital stock,
except that a sufficient number of shares of Common Stock have
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been duly and validly reserved for issuance upon conversion of the Series D
Preferred Shares (the "Conversion Shares").
3.5. Authorization.
(a) All corporate actions on the part of the Company, its
officers, directors and shareholders necessary for (i) the authorization, sale
and issuance of the Series D Preferred Shares pursuant hereto, (ii) the
authorization and issuance of the Conversion Shares, and (iii) the
authorization, execution, delivery and performance by the Company of this
Agreement, the Third Restated Investors Rights Agreement and the Third Restated
Shareholders Agreement, have been taken or will be taken prior to the Closing
hereunder. This Agreement, the Third Restated Investors Rights Agreement and the
Third Restated Shareholders Agreement, when executed and delivered, will
constitute valid and binding obligations of the Company enforceable against it
in accordance with their terms except (A) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally, and (B) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies.
(b) The Series D Preferred Shares and the Conversion
Shares, when issued in compliance with the provisions of this Agreement and the
Restated Articles, will be duly and validly issued, fully paid and
nonassessable, and will be free of any liens or encumbrances; provided, however,
that the Series D Preferred Shares and the Conversion Shares may be subject to
restrictions on transfer under state and/or federal securities laws, as set
forth herein or in the Third Restated Investors Rights Agreement or Third
Restated Shareholders Agreement or otherwise required by such laws at the time a
transfer is proposed.
3.6. Title to Properties and Assets; Liens, etc. The Company has
good and marketable title to all its properties and assets and good title to all
its leasehold estates, in each case subject to no mortgage, pledge, lien,
encumbrance or charge, other than or resulting from taxes which have not yet
become delinquent and liens and encumbrances which do not in any case materially
detract from the value of the property subject thereto or materially impair the
operations of the Company, and which have not arisen otherwise than in the
ordinary course of business. The Company is not in default of any provision of
any leases pursuant to which it holds its leasehold estates. Except as set forth
in this Agreement, the Company does not use any properties or assets in the
conduct of its business that it does not own or lease.
3.7. Material Contracts. All material agreements and contracts
are valid, binding and in full force and effect with respect to the Company. The
Company is not in breach or default of any provision or term of any such
agreement or commitment and, to the Company's knowledge, no other party to any
such agreements or commitments is in breach or default thereof. The Company is
not bound by any agreement or commitment that places any restriction on the
ability of the Company to conduct its business as presently conducted or as
proposed to be conducted.
3.8. Patents, Trademarks, etc. The Company owns, or has the right
to use, all patents, trademarks, service marks, trade names, copyrights,
licenses, trade secrets or other proprietary rights necessary to its business as
now conducted without conflicting with or infringing upon the right or claimed
right of any person under or with respect to any of the foregoing. There are no
outstanding options, licenses or agreements of any kind relating to the
Company's intellectual property rights, nor is the Company bound by or a party
to any options,
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licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, licenses, trade secrets or other
proprietary rights of any other person or entity. The Company has not received
any communications alleging that the Company has violated or, by conducting its
business as presently conducted or proposed to be conducted, would violate, any
of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity. The Company
is not aware of any violation by a third party of any of the Company's patents,
trademarks, service marks, trade names, copyrights, trade secrets or other
proprietary rights. 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 such employee's
duties to the Company or that would conflict with the Company's business as now
conducted or 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, will, to the
Company's knowledge, conflict with or result in a material 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 is
not utilizing and it will not be necessary for the Company to utilize any
inventions of any of its employees made prior to their employment by the
Company, except for inventions that have been assigned to the Company.
3.9. Compliance with Other Instruments. The Company is not in
violation or default in any respect of any term of the Restated Articles or its
bylaws, as amended, or any judgment, decree or order by which the Company is
bound or to which its properties are subject or, to its knowledge, any statute,
rule, or regulation applicable to the Company which would materially and
adversely affect the business, properties, financial condition and results of
operations of the Company. The execution, delivery and performance of and
compliance with this Agreement, the Third Restated Investors Rights Agreement
and the Third Restated Shareholders Agreement and the transactions contemplated
herein and therein will not result in (a) any such violation and will not be in
conflict with or constitute a material default under any of the foregoing, (b)
the creation of any mortgage, pledge, lien, encumbrance or charge upon any of
the properties or assets of the Company pursuant to any of the foregoing, or (c)
the suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to the Company, its business,
properties, financial condition or results of operations.
3.10. Employees and Consultants. To the Company's knowledge, no
employee or consultant of the Company is in violation of any term of any
employment contract, patent disclosure agreement or any other contract or
agreement relating to the right of any such employee to be employed by the
Company or to serve as a consultant because of the nature of the business
conducted or to be conducted by the Company or for any other reason, and the
continued employment or use by the Company of its present employees and
consultants will not result in any such violations. The Company has no deferred
compensation, pension, profit sharing, bonus, insurance, severance or any other
similar employee benefit plan or obligation or any employment or severance
agreement covering any of its officers or employees. There are no asserted
controversies or labor disputes or union organization activities pending or, to
the knowledge of the Company, threatened, between it and its employees. Each
former and current employee and consultant of the Company has executed an
employee inventions and proprietary rights assignment and confidentiality
agreement with the Company. To the Company's
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knowledge, no employee or consultant is in violation of any such agreement. The
Company has complied in all material respects with all applicable state and
federal equal employment opportunity and other laws related to employment.
3.11. Litigation, etc. There is no action, suit, proceeding or
investigation pending or threatened in writing and delivered to the Company,
against the Company, which, either in any single case or in the aggregate, would
result in any material adverse change in the business, properties, financial
condition, results of operations or prospects of the Company, or in any material
impairment of the right or ability of the Company to carry on its business as
now conducted or as proposed to be conducted, or in any material liability on
the part of the Company, and none which questions the validity of this
Agreement, the Third Restated Investors Rights Agreement or the Third Restated
Shareholders Agreement, or any action taken or to be taken in connection
herewith or therewith, nor, to the Company's knowledge, any basis therefor. The
Company is not a party or subject to any writ, order, decree or judgment, and
there is no action, suit, proceeding or investigation by the Company currently
pending or which the Company intends to initiate.
3.12. Registration Rights. Except as set forth in the Third
Restated Investors Rights Agreement, the Company is not under any obligation to
register any presently outstanding securities, or any securities which may
hereafter be issued, under the Securities Act of 1933, as amended (the
"Securities Act").
3.13. Governmental Consent, etc. No consent, approval,
qualification, order or authorization of, or designation, declaration or filing
with, any governmental authority on the part of the Company is required in
connection with the valid execution and delivery of this Agreement, the Third
Restated Investors Rights Agreement or the Third Restated Shareholders
Agreement, the offer, sale or issuance of the Series D Preferred Shares or the
Conversion Shares, or the consummation of any other transaction contemplated
herein or therein, except the filing of the Restated Articles with the
California Secretary of State and, if required, qualifications or filings under
the Securities Act, the California Corporate Securities Law of 1968, as amended
(the "California Law"), and other applicable state securities laws, which
qualifications or filings, if required, will be obtained or made and will be
effective within the time periods required by law.
3.14. Disclosure. No statement by the Company contained in (i)
this Agreement, including the exhibits and schedules attached hereto, (ii) the
Third Restated Investors Rights Agreement, and (iii) the Third Restated
Shareholders Agreement, contains any untrue statement of a material fact or
omits 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.
3.15. Taxes. The amount shown on the Balance Sheet (as defined in
Section 3.17 hereof) as provision for taxes is sufficient in all material
respects for payment of all accrued and unpaid Federal, state, county, local and
foreign taxes for the period then ended and all prior periods. The Company has
filed or has obtained presently effective extensions with respect to all
Federal, state, county, local and foreign tax returns which are required to be
filed by it, such returns are true and correct in all material respects and all
taxes shown thereon to be due have been timely paid with exceptions not material
to the Company. Federal income tax returns of the Company have not been audited
by the Internal Revenue Service, and no controversy with
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respect to taxes of any type is pending or, to the Company's knowledge,
threatened. Neither the Company nor, to the Company's knowledge, any of its
shareholders has ever filed (a) an election pursuant to Section 1362 of the
Internal Revenue Code of 1986, as amended (the "Code"), that the Company be
taxed as an S Corporation or (b) consent pursuant to Section 341(f) of the Code
relating to collapsible corporations. Since the Balance Sheet Date (as defined
in Section 3.17), the Company has made adequate provisions on its books and
accounts for all taxes, assessments and governmental charges with respect to its
business and operation for such subsequent period. The Company has withheld or
collected from each payment made to its employees all taxes required to be
withheld or collected therefrom, and has paid the same to the proper tax
receiving officers or authorized depositories.
3.16. Transactions with Principals. No employee, shareholder,
officer or director of the Company or any member of his or her immediate family
is indebted to the Company, nor is the Company indebted (or committed to make
loans or extend or guarantee credit) to any of them other than (a) for payment
of 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 the Stock Option Plan and approved by the Board of Directors).
No officer or director, and, to the Company's knowledge, no other person is,
directly or indirectly, interested in any contract with the Company. No officer
or director, or, to the Company's knowledge, no employee or shareholder of the
Company or any member of any officer's, director's, employee's or stockholder's
immediate family, has any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
material business relationship, or any firm or corporation that competes with
the Company, except that employees, shareholders, officers and directors of the
Company may own stock in publicly traded companies that compete with the
Company.
3.17. Financial Statements. The Company has furnished to each of
the Purchasers a complete and correct copy of the unaudited consolidated balance
sheet (the "Balance Sheet")and statements of income, retained earnings and cash
flows of the Company for the fiscal year ended December 31, 1999 (the "Balance
Sheet Date") (the "Financial Statements"). The Financial Statements are complete
and correct in all material respects and have been prepared in accordance with
generally accepted accounting principles consistently applied, except that notes
do not accompany unaudited Financial Statements. The Financial Statements
present fairly and accurately in all material respects the financial condition
and results of operations of the Company, as at the dates and for the periods
indicated. Since there has been no change in any accounting policies,
principles, methods or practices. Except as set forth in the Financial
Statements, the Company has no liabilities, contingent or otherwise, other than
liabilities, and obligations under contracts and commitments, incurred in the
ordinary course of business that are not required under generally accepted
accounting principles to be reflected in the Financial Statements and which, in
the aggregate, are not material to the financial condition or operating results
of the Company. The Company maintains and will continue to maintain a standard
system of accounting established and administered in accordance with generally
accepted accounting principles. All of the assets of the Company included on the
Balance Sheet are productively used in the conduct of the Company's business.
The Company has not capitalized any of its research and development expenses.
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3.18. Permits. The Company has all franchises, permits, licenses
and any similar authority necessary for the conduct of its business as now being
conducted by it, and, to the knowledge of the Company, the Company can obtain,
without undue burden or expense, any similar authority for the conduct of its
business as planned to be conducted. The Company is not in default under any of
such franchises, permits, licenses or similar authority held by the Company.
3.19. Offering. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4 hereof, the offer, sale and
issuance of the Series D Preferred Shares and the Conversion Shares will be
exempt from the registration requirements of Section 5 of 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.
3.20. Minute Books. The minute books of the Company have been
made available for inspection to counsel for the Purchasers and contain a
summary of all meetings of directors and stockholders since the time of
incorporation and reflect all transactions referred to in such minutes
accurately in all material respects.
3.21. Real Property Holding Corporation. The Company is not a
real property holding corporation within the meaning of Internal Revenue Code
Section 897(c)(2) and any regulations promulgated thereunder.
3.22. Investment Company Act. The Company is not an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
3.23. Environmental and Safety Laws. To the Company's knowledge,
it is not in violation of any applicable statute, law or regulation relating to
the environment or occupational health and safety, and no material expenditures
are or will be required in order to comply with any such existing statute, law
or regulation.
3.24. Guarantees. The Company is not a guarantor or indemnitor of
any indebtedness of any other person.
3.25. Changes. Since the Balance Sheet Date, there has not been:
(a) any change in the assets, liabilities, financial
condition, or operating results of the Company from that reflected in the
Financial Statements, except for changes in the ordinary course of business
which have not been, in the aggregate, materially adverse to the Company;
(b) any damage, destruction, or loss of tangible assets,
whether or not covered by insurance, that materially and adversely affects the
assets, properties, financial condition, operating results, prospects, or
business of the Company as currently conducted;
(c) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business;
(d) any waiver by the Company of a valuable right or of a
material debt owed to it;
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(e) any change or amendment to a material contract or
arrangement by which the Company or any of its assets or properties is bound or
subject, except for changes in the ordinary course of business which have not
been materially adverse to the Company;
(f) any change in any compensation arrangement or
agreement with any employee of the Company;
(g) any transfer of any patent, trademark, copyright,
trade secret or other intangible asset of the Company except in the ordinary
course of business;
(h) any resignation or termination of employment of any
key officer of the Company;
(i) receipt by the Company of written notice that there
has been a loss of, or order cancellation by, any major customer of the Company;
(j) any encumbrance of any material asset of the Company
except liens for taxes not yet due or payable;
(k) any loan or guarantee made by the Company to or for
the benefit of an employee, officer, director, or member of the family of an
employee, officer, or director, other than travel or other advances made in the
ordinary course of business;
(l) any declaration, setting aside, or distribution in
respect of any of the Company's capital stock, or any direct or indirect
redemption, purchase, or other acquisition of any of such stock by the Company;
(m) any other event or condition directly and specifically
affecting the Company of any character that the Company believes could adversely
affect the assets, properties, financial condition, operating results, business
or prospects of the Company (as such business is presently conducted and as it
is proposed to be conducted); or
(n) any agreement or commitment by the Company or to do
any of the things described in this Section 3.25.
3.26. No Other Agreements Relating to Voting or Transfer. Except
as contemplated by the Restated Articles, the Founder's Stock Agreement dated
July 16, 1999 between the Company and ▇▇▇▇▇ ▇▇▇▇▇, the Third Restated
Shareholders Agreement and in the Stock Plan, there are no agreements or
understandings involving the Company, any of its directors, or to the Company's
knowledge, any shareholder of the Company, that (a) concerns voting the
securities of the Company or (b) restricts the transfer of securities of the
Company (except for restrictions intended to comply with applicable securities
laws).
3.27. List of Shareholders and Optionees. Attached hereto as
Exhibit D is a true and complete list of all owners, of record and to the
Company's knowledge beneficially, of the Company's securities and holders of
rights to acquire the Company's securities (including capital stock options to
purchase capital stock of the Company and warrants to purchase capital stock of
the Company) indicating the name of each holder, the number, class, and type and
series of securities held by each holder and any rights the Company has to
repurchase such securities.
3.28. Section 83(b) Elections. All elections notices permitted by
Section 83(b) of the Internal Revenue Code have been timely filed by all
employees who have purchased
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shares of the Company's Common Stock under agreements that provide for the
vesting of such shares.
3.29. Qualified Small Business Stock. As of the Closing: (i) the
Company will be an eligible corporation as defined in Section 1202(e)(4) of the
Code, (ii) the Company will not have made any purchases of its own stock during
the one-year period preceding the Closing having an aggregate value exceeding 5%
of the aggregate value of all its stock as of the beginning of such period and
(iii) the Company's aggregate gross assets, as defined by Code Section
1202(d)(2), at no time between the date the Company was incorporated and through
the Closing have exceeded or will exceed $50 million, taking into account the
assets of any corporations required to be aggregated with the Company in
accordance with Code Section 1202(d)(3).
4. Representations and Warranties of Purchasers and Restrictions on
Transfer Imposed by the Securities Act and California Law.
4.1. Representations and Warranties by Each Purchaser. Each
Purchaser, severally and not jointly, hereby represents and warrants to the
Company as follows:
(a) The Series D Preferred Shares and the Conversion
Shares issuable upon conversion thereof are being acquired for the Purchaser's
own account, for investment and not with a view to, or for resale in connection
with, any distribution or public offering thereof within the meaning of the
Securities Act or the California Law.
(b) The Purchaser understands that the Series D Preferred
Shares and the Conversion Shares have not been registered under the Securities
Act by reason of their issuance in a transaction exempt from the registration
and prospectus delivery requirements of the Securities Act pursuant to Section
4(2) thereof, that the Company has no present intention of registering the
Series D Preferred Shares or the Conversion Shares, that the Series D Preferred
Shares and the Conversion Shares must be held by the Purchaser indefinitely, and
that the Purchaser must therefore bear the economic risk of such investment
indefinitely, unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from registration. The Purchaser further understands
that the Series D Preferred Shares and the Conversion Shares have not been
qualified under the California Law by reason of their issuance in a transaction
exempt from the qualification requirements of the California Law pursuant to
Section 25102(f) thereof, which exemption depends upon, among other things, the
bona fide nature of the Purchaser's investment intent expressed above.
(c) During the negotiation of the transactions
contemplated herein, the Purchaser and its representatives and legal counsel
have been afforded full and free access to corporate books, financial
statements, records, contracts, documents, and other information concerning the
Company and to its offices and facilities, have been afforded an opportunity to
ask such questions of the Company's officers, employees, agents, accountants and
representatives concerning the Company's business, operations, financial
condition, assets, liabilities and other relevant matters as they have deemed
necessary or desirable, and have been given all such information as has been
requested, in order to evaluate the merits and risks of the prospective
investments contemplated herein. The foregoing does not limit or modify the
representations or warranties of the Company in Section 3 hereof or the rights
of the Purchaser to rely thereon.
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(d) The Purchaser and its representatives have been solely
responsible for the Purchaser's own "due diligence" investigation of the Company
and the Company's management and business, for its own analysis of the merits
and risks of this investment, and for its own analysis of the fairness and
desirability of the terms of the investment. In taking any action or performing
any role relative to the arranging of the proposed investment, the Purchaser has
acted solely in its own interest, and none of the Purchasers (or any of their
agents or employees) has acted as an agent of the Company or any other
Purchaser. The Purchaser has such knowledge and experience in financial and
business matters that the Purchaser is capable of evaluating the merits and
risks of the purchase of the Series D Preferred Shares pursuant to the terms of
this Agreement and of protecting Purchaser's interests in connection therewith.
(e) The Purchaser has the full right, power and authority
to enter into and perform the Purchaser's obligations under this Agreement, the
Third Restated Investors Rights Agreement and the Third Restated Shareholders
Agreement, and this Agreement, the Third Restated Investors Rights Agreement and
the Third Restated Shareholders Agreement constitute valid and binding
obligations of the Purchaser enforceable in accordance with their terms except
(A) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors' rights
generally, and (B) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
(f) No consent, approval or authorization of, or
designation, declaration or filing with, any governmental authority on the part
of the Purchaser is required in connection with the valid execution and delivery
of this Agreement, the Third Restated Investors Rights Agreement or the Third
Restated Shareholders Agreement.
(g) Purchaser is an "accredited investor" as defined in
Rule 501 pursuant to the Securities Act.
4.2. Legend. Each certificate representing the Series D Preferred
Shares or the Conversion Shares may be endorsed with the following legends:
(a) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE TRANSFER IS
MADE IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT OR THE COMPANY
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT.
The Company need not register a transfer of any Series D Preferred Shares or
Conversion Shares, and may also instruct its transfer agent not to register the
transfer of the Series D Preferred Shares or Conversion Shares, unless the
conditions specified in the foregoing legends are satisfied.
4.3. Removal of Legend and Transfer Restrictions. Any legend
endorsed on a certificate pursuant to Subsection 4.2(a) and the stop transfer
instructions with respect to such
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Series D Preferred Shares or Conversion Shares shall be removed, and the Company
shall issue a certificate without such legend to the holder thereof if (i) such
Series D Preferred Shares or Conversion Shares are registered under the
Securities Act and a prospectus meeting the requirements of Section 10 of the
Securities Act is available, (ii) such legend may be properly removed under the
terms of Rule 144 promulgated under the Securities Act or (iii) such holder
provides the Company with an opinion of counsel for such holder, reasonably
satisfactory to legal counsel for the Company, to the effect that a sale,
transfer or assignment of such Series D Preferred Shares or Conversion Shares
may be made without registration. Notwithstanding the foregoing, no such
registration statement or opinion of counsel shall be necessary for a transfer
by a Purchaser to an affiliate or to the Purchaser's family members or trust for
the benefit of an individual Purchaser and his or her family members; provided,
however, that in any such instance the transferee will be subject to the terms
of this Agreement to the same extent as if he, she or it were an original
Purchaser hereunder. For the purposes of this Subsection 4.3, an "affiliate"
shall mean any officer, director, partner (including the principals of any
general partner) or shareholder of a Purchaser or any person or entity that
directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with a Purchaser.
4.4. Tax Consequences. Purchaser has reviewed with its own tax
advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. Purchaser
understands that Purchaser (and not the Company) shall be responsible for
Purchaser's own tax liability that may arise as a result of this investment or
the transactions contemplated by this Agreement.
5. Conditions to Closing.
5.1. Conditions to Obligations of the Purchasers. The obligation
of each Purchaser to purchase Series D Preferred Shares at the Closing is
subject to the fulfillment on or prior to the Closing Date of the following
conditions, any of which may be waived by the Purchasers participating in that
Closing pursuant to the terms of subsection 6.2 hereof:
(a) Accuracy of Representations and Warranties;
Performance of Obligations. The representations and warranties made by the
Company in Section 3 above shall be true and correct when made, and shall be
true and correct in all material respects on the Closing Date with the same
force and effect as if they had been made on and as of said date; the Company's
business and assets shall not have been adversely affected in any material way
prior to the Closing Date; 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 Date.
(b) Consents and Waivers. The Company shall have obtained
any and all consents (including all governmental or regulatory consents,
approvals or authorizations required in connection with the valid execution and
delivery of this Agreement, the Third Restated Investors Rights Agreement and
the Third Restated Shareholders Agreement), permits and waivers necessary or
appropriate for consummation of the transactions contemplated in this Agreement,
the Third Restated Investors Rights Agreement and the Third Restated
Shareholders Agreement.
(c) Legal Investment. At the time of the Closing, the
purchase of the Series D Preferred Shares by the Purchasers hereunder shall be
legally permitted by all laws and regulations to which the Purchasers and the
Company are subject.
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(d) Opinion of Company's Counsel. The Purchasers shall
have received from ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP and ▇▇▇▇▇▇ ▇. ▇▇▇▇, a professional
corporation, counsel for the Company, an opinion, dated the Closing Date, in
form and content reasonably satisfactory to Purchasers and their special
counsel.
(e) Restated Articles. The Restated Articles shall have
been filed with the California Secretary of State.
(f) Third Restated Shareholders Agreement. The Company,
the Founder (as defined in this Agreement), the holders of shares of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock and each
Purchaser shall have executed and delivered the Third Restated Shareholders
Agreement in the form attached hereto as Exhibit E (the "Third Restated
Shareholders Agreement").
(g) Third Restated Investors Rights Agreement. The
Company, the holders of Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock and each Purchaser shall have executed and delivered
the Third Restated Investors Rights Agreement in the form attached hereto as
Exhibit F (the "Third Restated Investors Rights Agreement.")
(h) Compliance Certificate. The Company shall have
delivered to the Purchasers a certificate, executed by the President of the
Company, dated as of the Closing Date, certifying to the fulfillment of the
conditions specified in subsections (a) of this subsection 5.1.
5.2. Conditions to Obligations of the Company. The Company's
obligation to sell and issue the Series D Preferred Shares at the Closing is
subject to the fulfillment on or prior to the Closing Date of the following
conditions, any of which may be waived by the Company:
(a) Accuracy of Representations and Warranties. The
representations and warranties made by each Purchaser in Section 4 hereof shall
be true and correct in all material respects when made, and shall be true and
correct on the Closing Date with the same force and effect as if they had been
made on and as of said date.
(b) Incorporation of Conditions. The conditions set forth
in subsections (b), (c) and (e) of subsection 5.1 above shall have been
fulfilled.
6. Miscellaneous.
6.1. Indemnification. The Company will indemnify and defend each
Purchaser and each of its officers, directors and partners, and each person
controlling such Purchaser, against all claims, losses, expenses, damages and
liabilities (or actions in respect thereto) arising out of any breach by the
Company of this Agreement, the Third Restated Investors Rights Agreement or the
Third Restated Shareholders Agreement; provided, however, that the indemnity
agreement contained in this subsection 6.1 shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld).
6.2. Waivers and Amendments. With the written consent of the
Company and the record or beneficial holders of at least sixty percent (60%) of
the Series D Preferred Shares issued pursuant to this Agreement (including any
Conversion Shares, shares issued in exchange for the Series D Preferred Shares
or Conversion Shares and as adjusted for stock dividends, stock splits,
recapitalization and the like), the obligations of the Company and the rights of
the holders of the Series D Preferred Shares under this Agreement may be waived
(either generally or in a
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particular instance, either retroactively or prospectively and, either for a
specified period of time or indefinitely), and with the same consent the
Company, when authorized by resolution of the Board of Directors, may enter into
a supplementary agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement;
provided, however, that no such waiver or supplemental agreement shall reduce
the aforesaid percentage of Series D Preferred Shares, the holders of which are
required to consent to any waiver or supplemental agreement without the consent
of the record or beneficial holders of all of the Series D Preferred Shares; and
provided further, however, that if such supplementary agreement increases the
rights of the Series D Preferred Shares, the consent of the Company shall mean
the approval of the Company's Board of Directors including ▇▇▇▇▇ ▇▇▇▇▇. Upon the
effectuation of each such waiver, consent or agreement of amendment or
modification, the Company shall promptly give written notice thereof to the
record holders of the Series D Preferred Shares who have not previously
consented thereto in writing. Neither this Agreement nor any provision hereof
may be changed, waived, discharged or terminated orally, but only by a statement
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, except to the extent provided in this
subsection 6.2.
6.3. 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 to be performed
entirely within California.
6.4. California Corporate Securities Law. THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS AN EXEMPTION FROM SUCH
QUALIFICATION IS AVAILABLE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, OR SUCH EXEMPTION
BEING AVAILABLE.
6.5. Survival. The representations, warranties, covenants and
agreements made herein shall survive the execution of this Agreement and the
Closing of the transactions contemplated herein for a period of three (3) years.
6.6. 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. The Company may not assign this Agreement.
6.7. Entire Agreement. This Agreement, the exhibits to this
Agreement, the Third Restated Investors Rights Agreement and the Third Restated
Shareholders Agreement constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
6.8. Notices, etc. All notices and other communications required
or permitted hereunder shall be in writing and shall be sent via facsimile,
overnight courier service or mailed by certified or registered mail, postage
prepaid, return receipt requested, addressed or sent (a) if to a Purchaser, at
the address or facsimile number of the Purchaser set forth below such party's
name on Exhibit A hereto, or at such other address or number as the Purchaser
shall have
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furnished to the Company in writing, or (b) if to the Company, at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, or at such
other address or number as the Company shall have furnished to the Purchasers in
writing. All notices shall be effective upon (i) delivery if sent by facsimile
(with a confirming receipt); (ii) delivery if delivered in person or sent by
overnight courier service or (iii) three (3) days after deposit in the U.S.
mail, registered or certified, with postage prepaid and properly addressed
according to this Subsection 6.8.
6.9. Severability. In case any provision of this Agreement shall
be declared invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
6.10. Finder's Fees.
(a) The Company (i) represents and warrants that it has
retained no finder or broker in connection with the transactions contemplated by
this Agreement and (ii) hereby agrees to indemnify and to hold the Purchasers
harmless of and from any liability for any commission or compensation in the
nature of a finder's fee to any broker or other person or firm (and the costs
and expenses of defending against such liability or asserted liability) for
which the Company, or any of its employees or representatives, are responsible.
(b) Each Purchaser (i) represents and warrants that it has
retained no finder or broker in connection with the transactions contemplated by
this Agreement and (ii) hereby agrees to indemnify and to hold the Company and
the other Purchasers harmless of and from any liability for any commission or
compensation in the nature of a finder's fee to any broker or other person or
firm (and the costs and expenses of defending against such liability or asserted
liability) for which it, or any of its employees or representatives, are
responsible.
6.11. Expenses. The Company and each Purchaser shall each bear
its respective expenses and legal fees incurred with respect to this Agreement
and the transactions contemplated herein.
6.12. Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
6.13. 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.
6.14. Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any Purchaser, upon any breach or default of
the Company under this Agreement, shall impair any such right, power or remedy,
nor shall it be construed to be a waiver of any such breach or default, or any
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. It is
further agreed that any waiver, permit, consent or approval of any kind or
character on a Purchaser's part of any breach or default under this Agreement,
or any waiver on a Purchaser's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing and that all remedies, either under this
Agreement, or by law or otherwise afforded to a Purchaser, shall be cumulative
and not alternative.
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IN WITNESS WHEREOF, the parties have executed this Series D Preferred
Stock Purchase Agreement as of the day and year first above written.
"COMPANY"
ICNT, INC.,
a California corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive Officer
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
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PURCHASER'S COUNTERPART SIGNATURE PAGE
ICNT, INC.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
Crosspoint Venture Partners 1999
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇▇▇▇, General Partners
Spectrum Equity Investors III, L.P.
By: Spectrum Equity Associates III, L.P.
Its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, General Partner
SEI III Entrepreneurs' Fund, L.P.
By: SEI III Entrepreneurs' LLC
Its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Managing Member
Spectrum III Investment Managers' Fund, L.P.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, General Partner
17
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PURCHASER'S COUNTERPART SIGNATURE PAGE
ICNT, INC.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
Efficient Networks, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Title: Vice President
-----------------------------------
Polycom
By: /s/ ▇▇▇▇▇▇▇ ▇. Kouhry
--------------------------------------
Title: Chief Financial Officer
-----------------------------------
Winstar Communications
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Title: Senior Vice President
-----------------------------------
idealab! Capital Partners II-A, LP
By its General Partner,
idealab! Capital Management II, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Title: Managing Member
-----------------------------------
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PURCHASER'S COUNTERPART SIGNATURE PAGE
ICNT, INC.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
idealab! Capital Partners II-B, LP
By its General Partner,
idealab! Capital Management II, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, Managing Member
idealab! Capital Principals Fund, LP
By its General Partner,
idealab! Capital Management II, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, Managing Member
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Equity Funding, Inc.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Title: Vice President
-----------------------------------
Big Basin Partners, L.P.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, General Partner
19
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PURCHASER'S COUNTERPART SIGNATURE PAGE
ICNT, INC.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
BS-METALS B2B Acquisition Corp.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Title: Chief Executive Officer
-----------------------------------
Cabletron Systems, Inc.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Title: Vice President
-----------------------------------
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EXHIBIT A
SCHEDULE OF PURCHASERS
21
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EXHIBIT B
ICNT, INC.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
FORM OF AMENDED AND RESTATED ARTICLES OF INCORPORATION
22
23
EXHIBIT C
ICNT, INC.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
SCHEDULE OF EXCEPTIONS
23
24
EXHIBIT D
ICNT, INC.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
LIST OF SHAREHOLDERS AND OPTIONEES
24
25
EXHIBIT E
ICNT, INC.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
FORM OF THIRD RESTATED SHAREHOLDERS AGREEMENT
25
26
EXHIBIT F
ICNT, Inc.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
FORM OF THIRD RESTATED INVESTORS RIGHTS AGREEMENT
26