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EXHIBIT 10.6
IL FORNAIO (AMERICA) CORPORATION
SERIES F PREFERRED STOCK
PURCHASE AGREEMENT
JANUARY 27, 1993
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TABLE OF CONTENTS
PAGE
1. Authorization and Sale of the Securities............................. 1.
1.1 Authorization of the Securities................................ 1.
1.2 Sale of Securities............................................. 1.
2. Closing Date; Delivery............................................... 1.
2.1 Closing Date................................................... 1.
2.2 Delivery....................................................... 2.
3. Representations and Warranties of the Company........................ 2.
3.1 Organization and Standing...................................... 2.
3.2 Subsidiaries................................................... 2.
3.3 Capitalization................................................. 2.
3.4 Corporate Power; Authorization................................. 3.
3.5 Shares; Conversion Stock....................................... 4.
3.6 Litigation..................................................... 4.
3.7 Financial Statements........................................... 4.
3.8 Material Liabilities........................................... 4.
3.9 Absence of Changes............................................. 4.
3.10 Title.......................................................... 5.
3.11 Tax Returns.................................................... 6.
3.12 Infringements.................................................. 6.
3.13 Contracts, None Burdensome..................................... 6.
3.14 Material Breach................................................ 6.
3.15 Conflict of Interest........................................... 6.
3.16 Representations................................................ 7.
3.17 Intangible Property............................................ 7.
3.18 Employees...................................................... 7.
3.19 Insurance...................................................... 7.
3.20 Registration Rights............................................ 7.
3.21 Securities Laws; Governmental Consent.......................... 8.
3.22 Contracts and Other Commitments................................ 8.
4. Representations and Warranties of Purchasers......................... 8.
4.1 Binding Obligation............................................. 8.
4.2 Investment Experience.......................................... 8.
4.3 Investment Intent.............................................. 8.
4.4 Limitation on Disposition...................................... 9.
4.5 Lack of Public Market.......................................... 9.
4.6 Discussions with Management.................................... 9.
4.7 Confidentiality................................................ 9.
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TABLE OF CONTENTS
(CONTINUED)
PAGE
4.8 Suitability of U.S. Purchasers................................. 9.
4.9 Suitability of Foreign Investors............................... 11.
5. Conditions to Closing................................................ 11.
5.1 Conditions to Purchasers' Obligations.......................... 11.
5.2 Conditions to Obligations of the Company....................... 12.
6. Further Agreements of the Parties.................................... 13.
6.1 Financial Statements........................................... 13.
6.2 Additional Information......................................... 14.
6.3 Assignment of Certain Rights................................... 14.
7. Registration Rights.................................................. 14.
7.1 Restrictions on Transferability................................ 14.
7.2 Certain Definitions............................................ 14.
7.3 Restrictive Legend............................................. 15.
7.4 Notice of Proposed Transfers................................... 17.
7.5 Requested Registration......................................... 17.
7.6 Company Registration........................................... 20.
7.7 Registration on Form S-3....................................... 21.
7.8 Expenses of Registration....................................... 22.
7.9 Registration Procedures........................................ 22.
7.10 Indemnification................................................ 23.
7.11 Information by Holder.......................................... 25.
7.12 Rule 144 Reporting............................................. 25.
7.13 Transfer of Registration Rights................................ 26.
7.14 Standoff Agreement............................................. 26.
7.15 Amendment of Registration Rights............................... 26.
8. Miscellaneous........................................................ 26.
8.1 Waivers and Amendments......................................... 26.
8.2 Governing Law.................................................. 27.
8.3 Survival....................................................... 27.
8.4 Successors and Assigns......................................... 27.
8.5 Entire Agreement............................................... 27.
8.6 Notices, etc................................................... 27.
8.7 Separability of Agreements; Severability of this Agreement..... 27.
8.8 Finder's Fees.................................................. 28.
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TABLE OF CONTENTS
(CONTINUED)
PAGE
8.9 Information Confidential....................................... 28.
8.10 California Corporate Securities Law............................ 28.
8.11 Titles and Subtitles........................................... 29.
8.12 Counterparts................................................... 29.
8.13 Delays or Omissions............................................ 29.
8.14 Understanding Among the Purchasers............................. 29.
8.15 Stock Splits................................................... 29.
8.16 Expenses....................................................... 30.
8.17 Representation of Several Parties by a Single Firm of
Attorneys................................................... 30.
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IL FORNAIO (AMERICA) CORPORATION
SERIES F PREFERRED STOCK
PURCHASE AGREEMENT
This Agreement is made as of January 27, 1993, among Il Fornaio (America)
Corporation, a California corporation (the "Company"), with its executive
offices located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, and the persons and entities listed on the Schedule of Purchasers
attached hereto as EXHIBIT A (the "Purchasers").
1. AUTHORIZATION AND SALE OF THE SECURITIES.
1.1 AUTHORIZATION OF THE SECURITIES. The Company has authorized, or
before the Closing, as defined in paragraph 2.1 hereof, will have authorized,
the issuance and sale of up to an aggregate of 798,164 shares of its Series F
Preferred Stock (collectively the "Series F Preferred Stock") at a purchase
price of $10.25 per share. The Series F Preferred Stock has, or before the
Closing will have, the rights provided for in the Amended and Restated Articles
of Incorporation attached hereto as EXHIBIT B (the "Amended and Restated
Articles").
1.2 SALE OF SECURITIES. Subject to the terms and conditions hereof,
the Company will severally issue and sell to each of the Purchasers, and each
Purchaser will severally purchase from the Company, the number of shares of
Series F Preferred Stock specified opposite such Purchaser's name in column 2 of
the Schedule of Purchasers at the aggregate purchase price set forth in column 3
of the Schedule of Purchasers. The total amount of Series F Preferred Stock sold
to the Purchasers pursuant to this Agreement is hereinafter referred to as the
"Shares." The total amount of Common Stock issuable upon conversion of the
Series F Preferred Stock is hereinafter referred to as the "Conversion Stock."
The Shares and the Conversion Stock are hereinafter collectively referred to as
the "Securities." The purchase price for the Shares may be paid in the form of
cash, cancellation of indebtedness or any combination thereof.
2. CLOSING DATE; DELIVERY.
2.1 CLOSING DATE. The closing of the purchase and sale of the Shares
hereunder (the "Closing") shall be held at the office of ▇▇▇▇▇▇ Godward ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Company, located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., on January 27, 1993, or
at such other time and place as the Company and the Purchasers may mutually
agree (the "Closing Date"). If less than all of the 798,164 shares of Series F
Preferred Stock are sold at the Closing, then, subject to the terms and
conditions of this Agreement, the Company may sell, within twenty one (21) days
of the initial Closing, up to the balance of the unissued 798,164 shares of
Series F Preferred Stock to such persons as the Company may determine at the
same price per share as the Series F Preferred Stock purchased and sold at the
initial Closing. Any such sale shall be upon the same terms and conditions as
those contained herein and purchasers of such shares of Series F Preferred Stock
shall have the rights
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and obligations of a Purchaser hereunder. In the event that there is more than
one Closing, the terms "Closing" and "Closing Date" shall apply to each such
Closing and Closing Date unless otherwise specified.
2.2 DELIVERY. At the Closing, the Company will deliver to each
Purchaser one or more certificates registered in such Purchaser's name,
representing the number of Shares designated in column 2 of the Schedule of
Purchasers to be purchased by such Purchaser from the Company. The Company and
the Purchaser agree that, in connection with the placement of the Shares,
Wertheim ▇▇▇▇▇▇▇▇ & Co. Incorporated (the "Placement Agent") may, in its
discretion, deduct from the purchase price for the Shares at the Closing the
amount of its fees and expenses as Placement Agent.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth in the Schedule of Exceptions to the
representations and warranties of the Company, delivered contemporaneously
herewith (the "Schedule of Exceptions"), the Company represents and warrants to
the Purchasers as follows:
3.1 ORGANIZATION AND STANDING. 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 as a domestic corporation under the laws of
said State. The Company has the requisite corporate power and authority to own
and operate its properties and assets and to carry on its business as presently
conducted. The Company is not qualified to do business as a foreign corporation
in any jurisdiction, and the failure to be so qualified will not have a material
adverse effect on the Company's business as now conducted. The Company has made
available to the Purchasers copies of its Articles of Incorporation (the
"Articles of Incorporation") and Bylaws, each as amended to date ("Bylaws").
Such copies are true, correct and complete and contain all amendments through
the date hereof.
3.2 SUBSIDIARIES. The Company does not presently control, directly
or indirectly, or have an ownership interest in any other corporation,
partnership, business trust, association or other business entity.
3.3 CAPITALIZATION. As of the date hereof, the authorized capital
stock of the Company consists of 15,000,000 shares of Common Stock and 3,000,000
shares of Preferred Stock. As of the date hereof, 1,472,059 shares of Common
Stock, no shares of Series A Preferred Stock, 535,484 shares of Series B
Preferred Stock, 391,340 shares of Series C Preferred Stock, 130,399 shares of
Series D Preferred Stock and 441,099 shares of Series E Preferred Stock are
outstanding. All of the outstanding shares of Common Stock and Preferred Stock
are duly authorized, validly issued, fully paid and nonassessable and have been
offered and sold in compliance with applicable federal and state securities
laws. Each share of Series D Preferred Stock is currently convertible into one
share of Series C Preferred Stock. Each share of Series B, Series C and Series E
Preferred Stock is currently convertible into and, as of the Closing, each share
of Series F Preferred Stock will be convertible into, approximately 1.262 shares
of Common
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Stock. The Company has reserved sufficient shares of Common Stock for conversion
of all authorized Preferred Stock. In addition, 103,680, 126,200 and 300,000
shares of Common Stock have been authorized for issuance upon the exercise of
employee stock options under the 1988 Stock Option Plan, 1991 Incentive Stock
Option Plan, and 1992 Stock Option Plan, respectively, pursuant to which options
to purchase an aggregate of 189,800 shares are outstanding, (c) 100,000 shares
of Common Stock have been authorized for issuance under the Company's 1992
Non-Employee Directors' Stock Option Plan, pursuant to which options to purchase
33,000 shares are outstanding, and (d) 200,000 shares of Common Stock have been
authorized for issuance under the Company's 1992 Employee Stock Purchase Plan,
pursuant to which no rights are outstanding. Except as set forth herein or as
contemplated by this Agreement, no subscription, warrant, option or other right
(including without limitation, preemptive rights or rights of first refusal) to
purchase or acquire any shares of any class of capital stock of the Company or
securities convertible into or exchangeable for such capital stock is authorized
or outstanding. The Company is under no duty to redeem or to repurchase any
shares of any class or series of its capital stock.
Attached to the Schedule of Exceptions is an accurate list of the record
holders of the Company's outstanding Common Stock and Preferred Stock, and of
options and warrants to purchase Common Stock outstanding as of the date of this
Agreement, which list accurately reflects the shares of Common Stock held of
record by employees of the Company that are subject to repurchase by the Company
pursuant to the various stock purchase plans under which they were issued. The
Company has made available to the Purchasers copies of each stock purchase
agreement or stock option plan of the Company under which Common Stock has been
or may be issued, along with copies of the standard forms of all agreements
required under such plans as a condition to issuance of stock or options
thereunder.
3.4 CORPORATE POWER; AUTHORIZATION. The Company has all requisite
corporate power to execute and deliver this Agreement, to sell and issue the
Shares and to carry out and perform all of its obligations hereunder. The
execution, delivery and performance of this Agreement by the Company and the
issuance, sale and delivery of the Shares and the Conversion Stock have been
duly authorized by all requisite corporate action. This Agreement constitutes
the legal, valid and binding obligation of the Company enforceable in accordance
with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization
or similar laws relating to or affecting the enforcement of creditors' rights
and the availability of equitable remedies, and (ii) the enforceability of the
indemnification provisions of Section 7.10 of this Agreement to the extent that
such provisions may be limited by public policy or applicable laws. The
execution, delivery and performance of this Agreement and compliance with the
provisions hereof, and the issuance, sale and delivery of the Shares and the
Conversion Stock by the Company do not materially conflict with, or result in a
material breach or violation of the terms, conditions or provisions of, or
constitute a material default (or an event which, with the giving of notice or
passage of time, or both, would result in a material default) under, or result
in the creation or imposition of any material lien pursuant to the terms of, the
Articles of Incorporation or Bylaws of the Company, or any material statute,
law, rule or regulation, any California or federal order, judgment, decree, or
any material indenture, mortgage, lease or other material agreement or
instrument to which the Company, or any of its properties, is subject.
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3.5 SHARES; CONVERSION STOCK. The Shares, when issued in compliance
with the provisions of this Agreement, will be validly issued, fully paid and
nonassessable, free of all liens and encumbrances, and will have the rights,
preferences and privileges described in the Amended and Restated Articles. The
Conversion Stock presently required for full conversion of the Series F
Preferred Stock issued pursuant to the terms of this Agreement has been duly and
validly reserved for issuance. When the Conversion Stock is issued in accordance
with the terms of the Amended and Restated Articles, it will be validly issued
and outstanding, fully paid and nonassessable and free of any liens or
encumbrances.
3.6 LITIGATION. There is no action, proceeding or investigation
pending or, to the knowledge of the Company, threatened against the Company or
any of its properties or assets which questions the validity of this Agreement
or any action taken or to be taken in connection herewith, or which might result
in any material adverse effect on the financial condition, assets, liabilities,
earnings or business of the Company. No action, suit or proceeding is pending or
threatened by the Company. To the knowledge of the Company, the Company is in
compliance in all material respects with all material laws and regulations
applicable to it, its properties and its business as presently conducted.
3.7 FINANCIAL STATEMENTS. The Company has furnished to each
Purchaser its unaudited balance sheet and income statements as of November 22,
1992 (the "Unaudited Financial Statements") and its audited year end financial
statements as of December 29, 1991 (the "Audited Financial Statements"). The
Unaudited Financial Statements and the Audited Financial Statements are
hereinafter collectively referred to as the "Financial Statements." The
Financial Statements (i) are complete and correct in all material respects, (ii)
are in accordance with the Company's books and records, (iii) present fairly its
financial position as of the dates indicated and the results of its operations
for the periods indicated, and (iv) have been prepared in conformity with
generally accepted accounting principles consistently applied, except that the
Unaudited Financial Statements are not audited, do not include footnotes and do
not reflect year-end adjustments.
3.8 MATERIAL LIABILITIES. The Company has no material liabilities or
obligations, absolute or contingent (individually or in the aggregate), except
(i) the liabilities and obligations set forth in the Unaudited Financial
Statements, (ii) the liabilities and obligations under an Indemnity Agreement
with its president ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), (iii) the liabilities and
obligations which have been incurred subsequent to November 22, 1992 in the
ordinary course of business which have not been, either in any case or in the
aggregate, materially adverse, and (iv) the liabilities and obligations under
various commercial leases and other contracts and arrangements entered into in
the ordinary course of business.
3.9 ABSENCE OF CHANGES.
Since November 22, 1992, there has not been:
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(a) Any change in the assets, liabilities, financial condition
or operations of the Company except changes in the ordinary course of business
which have not been, either in any case or in the aggregate, materially adverse;
(b) Any material change, except in the ordinary course of
business, in the contingent obligations of the Company by way of guaranty,
endorsement, indemnity, warranty or otherwise;
(c) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties or business of the
Company;
(d) Any forgiveness or compromise by the Company of a material
debt owed to it;
(e) Any loans made by the Company to its employees, officers
or directors other than advances for travel or other business expenses made in
the ordinary course of business;
(f) Any changes in the compensation of the Company's
employees, officers or directors;
(g) Any declaration or payment of any dividend or other
distribution of the assets of the Company;
(h) Any redemption, repurchase, cancellation, grant or
issuance of or other change to, any of the capital stock of the Company or
options to purchase the same;
(i) Any resignation or termination of employment of any key
officer or any key employee of the Company, and the executive officers of the
Company do not know of any impending resignation or termination of employment of
any key officer or key employee;
(j) Any other event or condition of any character which has
materially and adversely affected the Company's business; or
(k) Any agreement or commitment by the Company to do any of
the things described in this Section 3.9.
3.10 TITLE. The Company has good title to its properties and assets.
Such properties and assets are not subject to any liens, mortgages, pledges,
encumbrances or charges of any kind except liens for current taxes and
assessments not delinquent. All leases pursuant to which the Company leases real
or personal property are in good standing and are valid and enforceable in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or
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affecting enforcement of creditors' rights or by limitations on the availability
of equitable remedies. To the Company's knowledge, the Company is not in
material default thereunder.
3.11 TAX RETURNS. The Company has accurately prepared and timely
filed all federal, state and other tax returns which are required to be filed
and has paid all taxes which have become due and payable. The Company has not
been advised (i) that any of its returns, federal, state or other, have been or
are being audited as of the date hereof, or (ii) of any deficiency in assessment
or proposed adjustment to its federal, state or other taxes. The Company has no
knowledge of any proposed tax to be imposed upon its properties or assets for
which there is not an adequate reserve reflected in the Unaudited Financial
Statements.
3.12 INFRINGEMENTS. The Company, to its knowledge, is not infringing
any third party's patent, trademark, trade secret, trade name or copyright and
has not received any notice of any claimed infringement. The Company, to its
knowledge, owns and possesses or is licensed under all patents, patent
applications, licenses, trademarks, service marks, trade names, inventions,
processes or copyrights necessary for the operation of its business as now
conducted.
3.13 CONTRACTS, NONE BURDENSOME. The Company is not a party to any
contract, agreement or instrument or, to its knowledge, subject to any judgment,
order, writ or injunction, which, in the opinion of the Company, is unduly
burdensome and substantially and adversely affects its business, operations or
financial condition and the Company is not presently aware, without conducting
any inquiry, of any contract, agreement or instrument to which it is a party, or
any judgment, order, writ or injunction to which it is subject, which, in the
opinion of the Company, will be unduly burdensome and will substantially and
adversely affect its business, operations or financial condition, as currently
planned or contemplated.
3.14 MATERIAL BREACH. The Company is not in violation or breach of
any of the terms, conditions or provisions of its Articles of Incorporation or
its Bylaws, or in any material respect of any material indenture, mortgage, deed
of trust or other material agreement, instrument, court order, judgment, or
decree to which it is a party. To the best knowledge of the Company, no event or
failure of performance has occurred which, with the passage of time or the
giving of notice, would constitute such a violation by the Company.
3.15 CONFLICT OF INTEREST. The Company and its executive officers
have no interest (other than as holders of securities of a publicly traded
company) either directly or indirectly, in any entity, including, without
limitation thereto, any corporation, partnership, joint venture, proprietorship,
firm, person, licensee, business or association (whether as an employee,
officer, director, shareholder, agent, independent contractor, security holder,
creditor, consultant or otherwise) that presently (i) provides any services, or
designs, produces and/or sells any products or product lines, or engages in any
activity which is the same, similar to or competitive with any activity or
business in which the Company is now engaged or currently intends to become
engaged; (ii) is a supplier, customer, or creditor of the Company, or has an
existing contractual relationship with any of the Company's executive officers;
(iii) has any direct or indirect material interest in any material asset or
property, real or personal, tangible or intangible,
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of the Company or any property, real or personal, tangible or intangible, that
is used in the Company's business. Except as set forth on the Schedule of
Exceptions, no employee, shareholder, officer or director of the Company, or
their spouses or children, is indebted to the Company, nor is the Company
indebted to them.
3.16 REPRESENTATIONS. This Agreement, the Financial Statements, and
any document, statement, certificate or schedule furnished or to be furnished by
the Company pursuant hereto or in connection with transactions contemplated
hereby, when taken as a whole, do not or will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
3.17 INTANGIBLE PROPERTY. The Company has taken all reasonable
security measures to protect the secrecy, confidentiality and value of all
patents, licenses, trademarks, trade names, service marks, copyrights,
proprietary rights, trade secrets, know-how, inventions, designs, processes and
technical data required to conduct its business. The Company, to its knowledge,
has all right, title and interest in and to all intangible property and
technology or is able to obtain on reasonable terms all permits, licenses and
other authority necessary for the conduct of its business as presently conducted
and as proposed to be conducted. The Company has not been notified, and the
Company is not aware, that it or any of its officers or employees have
improperly used or are making improper use of any confidential information or
trade secrets of others, including those of any former employer of an officer or
employee. The Company is not aware of any violation by a third party of any of
its patents, licenses, trademarks, trade names, service marks, copyrights, trade
secrets or other proprietary rights.
3.18 EMPLOYEES. The Company does not have any collective bargaining
agreements with any of its employees and the Company is not aware of any labor
union organizing activity pending or threatened against the Company. To the
Company's knowledge, no employee is obligated under any agreement or judgment
that would conflict with such employee's obligation to use his best efforts to
promote the interests of the Company or would conflict with the Company's
business as conducted or proposed to be conducted. To the Company's knowledge,
no employee is in violation of the terms of any employment agreement,
proprietary information agreement, noncompetition agreement or any other
agreement relating to such employee's relationship with any previous employer.
Except as set forth in this Agreement or in the Schedule of Exceptions, the
Company is not a party to or bound by any currently effective employment
contract, deferred compensation agreement, bonus plan, incentive plan, profit
sharing plan, retirement agreement, or other employee compensation agreement.
3.19 INSURANCE. The Company has fire and casualty insurance policies
with financially sound and reputable insurers, with extended coverage,
sufficient in amount to allow it to replace any of its properties which might be
damaged or destroyed.
3.20 REGISTRATION RIGHTS. Except for the registration rights granted
in paragraph 7 hereof and the registration rights granted to the Other Investors
(as defined in paragraph 7.2
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below) pursuant to the Series B Agreement, the Series C and D Agreement and the
Series E Agreement, the Company is not under any obligation to register any of
its presently outstanding securities or any of its securities which may
hereafter be issued pursuant to the Securities Act of 1933, as amended (the
"Act").
3.21 SECURITIES LAWS; GOVERNMENTAL CONSENT. The offer, sale and
issuance of the Shares and the Conversion Stock as provided in this Agreement,
are and will be exempt from the registration and prospectus delivery
requirements of the Act and are exempt from registration or qualification under
the applicable California state registration or qualification requirements.
Except for the notices required or permitted to be filed after the Closing Date
with the Securities and Exchange Commission and the California Commissioner of
Corporations, which notices the Company will file on a timely basis, no consent,
approval 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, delivery and performance of this Agreement or the offer,
sale or issuance of the Shares and the Conversion Stock, other than such as may
be required under the securities laws of states other than California.
3.22 CONTRACTS AND OTHER COMMITMENTS. Except as set forth in the
Schedule of Exceptions, the Company does not have any contract, agreement,
lease, or other commitment, written or oral, absolute or contingent, other than
(i) contracts for the purchase of supplies and services that were entered into
in the ordinary and usual course of business, that do not involve any of the
Company's officers, directors or affiliates (as that term is defined in Rule 405
under the Act), provided that such contracts do not involve more than $100,000,
and do not extend for more than one year beyond the date hereof, and (ii)
contracts terminable at will by the Company on no more than 30 days' notice
without cost or liability to the Company.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASERS. Each Purchaser, severally
and not jointly, represents and warrants to the Company with respect to his, her
or its purchase of the Securities as follows:
4.1 BINDING OBLIGATION. This Agreement constitutes the Purchaser's
valid and legally binding obligation, enforceable in accordance with its terms.
4.2 INVESTMENT EXPERIENCE. By virtue of its experience in evaluating
and investing in private placement transactions of securities in companies
similar to the Company, the Purchaser has such knowledge and experience in
financial and business matters that the Purchaser is capable of evaluating the
merits and risks of its investment in the Company and has the capacity to
protect its own interests.
4.3 INVESTMENT INTENT. The Purchaser is acquiring the Securities for
investment for its own account and not with a view to, or for resale in
connection with, any distribution thereof, and the Purchaser has no present
intention of selling or distributing the Securities. The Purchaser understands
that the Securities to be purchased have not been registered under the Act
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by reason of a specific exemption from the registration provisions of the Act
that depends upon, among other things, the bona fide nature of the investment
intent as expressed herein.
4.4 LIMITATION ON DISPOSITION. The Purchaser acknowledges that the
Securities must be held indefinitely unless subsequently registered under the
Act, or unless an exemption from such registration is available. If the
Purchaser is a resident of the United States, such Purchaser is aware of the
provisions of Rule 144 promulgated under the Act that permit limited resale of
securities purchased in a private placement subject to the satisfaction of
certain conditions. If the Purchaser is not a resident of the United States,
such Purchaser is aware of the provisions of Regulation S promulgated under the
Act that permit resale of securities purchased in a private placement except to
U.S. persons or for the account or benefit of a U.S. person during the period of
one year after such purchase and thereafter permit limited resale of such
securities to U.S. persons subject to the satisfaction of certain conditions.
4.5 LACK OF PUBLIC MARKET. The Purchaser understands that no public
market now exists for any of the Securities issued by the Company, and that it
is uncertain whether a public market will ever exist for the Securities.
4.6 DISCUSSIONS WITH MANAGEMENT. The Purchaser has had an
opportunity to discuss the Company's business, management, and financial affairs
with the Company's management and to review the Company's facilities and, to the
best of the Purchaser's knowledge, to obtain any additional information
necessary to verify the accuracy of the information provided to the Purchaser.
4.7 CONFIDENTIALITY. The Purchaser agrees that he, she or it will
keep confidential and will not disclose or divulge any confidential, proprietary
or secret information which such Purchaser may obtain from the Company pursuant
to financial statements, reports and other materials submitted by the Company
hereunder, or pursuant to visitation or inspection rights granted hereunder
unless such information is known, or until such information becomes known
(through no act or omission of the Purchaser), to the public or unless the
Company gives its written consent to the Purchaser's release of such
information; except that no such written consent shall be required (and the
Purchaser shall be free to release such information) if such information is to
be provided to the Purchaser's lawyer or accountant, or to an officer, director,
or general partner of a Purchaser, provided that each such person agrees to keep
such information confidential pursuant to the terms of this paragraph 4.7.
4.8 SUITABILITY OF U.S. PURCHASERS. If the Purchaser is a resident
of the United States, and unless otherwise indicated on Exhibit A, Purchaser is
an "accredited investor" as that term is defined in Regulation D promulgated
under the Act by virtue of falling within any of the following categories:
(1) A bank as defined in Section 3(a)(2) of the Act, or a savings
and loan association or other institution as defined in Section 3(a)(5)(A) of
the Act, whether acting in its individual or fiduciary capacity; a broker or
dealer registered pursuant to Section 15 of the
9.
14
Securities Exchange Act of 1934; an insurance company as defined in Section
2(13) of the Act; an investment company registered under the Investment Company
Act of 1940 or a business development company as defined in Section 2(a)(48) of
that Act; a Small Business Investment Company licensed by the United States
Small Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; a plan established and maintained by a state, its
political subdivisions, for the benefit of its employees, if such plan has
assets in excess of $5,000,000; an employee benefit plan within the meaning of
the Employee Retirement Income Security Act of 1974, if the investment decision
is made by a plan fiduciary, as defined in Section 3(21) of that Act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are accredited investors;
(2) A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
(3) An organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the Series F
Shares with total assets in excess of $5,000,000;
(4) A director or executive officer of the Company;
(5) A natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of such person's purchase of the Series F
Shares exceeds $1,000,000;
(6) A natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
(7) A trust, with total assets in excess of $5,000,000 not formed
for the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) of
Regulation D; and
(8) An entity in which all of the equity owners are accredited
investors (as defined above).
As used in this paragraph 4.8, the term "net worth" means the excess of
total assets over total liabilities. In computing net worth for the purpose of
item (5) above, the principal residence of the Purchaser must be valued at cost,
including cost of improvements, or at the recently appraised value by an
institutional lender making a secured loan, net of encumbrances. In determining
joint income, a Purchaser should add to the Purchaser's and spouse's adjusted
gross income any amounts attributable to tax exempt income received, losses
claimed as a limited partner in any limited partnership, deductions claimed for
depletion, contributions to an ▇▇▇,
10.
15
▇▇▇▇▇ or 401(k) retirement plan and alimony payments. In determining individual
income, the investor should exclude any amounts of income attributable to such
Purchaser's spouse or to property owned by such spouse.
4.9 SUITABILITY OF FOREIGN INVESTORS. Each Purchaser who is not a
resident of the United States hereby represents, warrants and agrees that (i)
such Purchaser is not a U.S. Person (as hereinafter defined); (ii) such
Purchaser is not acquiring the Shares for the account or benefit of any U.S.
Person; and (iii) such Purchaser shall not sell or transfer the Shares to, or
for the account or benefit of, a U.S. Person during a period of one year after
the Closing Date. As used herein, "U.S. Person" means a (i) A natural person
resident in the United States; (ii) A partnership or corporation organized or
incorporated under the laws of the United States, or formed under the laws of
any foreign jurisdiction by a U.S. person principally for the purpose of
investing in securities not registered under the Act unless it is owned by
accredited investors (as defined in Rule 501(a) of Regulation D under the Act),
none of which is a natural person, trust or estate; (iii) A trust or estate of
which the trustee or executor, respectively, is a U.S. person, unless, in the
case of a trust or estate that is administered by a professional fiduciary who
is a U.S. person, the trustee or executor, respectively, is not a U.S. person
and has sole or shared investment discretion with respect to the trust or estate
assets and, in the case of an estate, is governed by foreign law and, in the
case of a trust, no beneficiary (or settlor of a revocable trust) is a U.S.
person; (iv) An agency or branch of a foreign entity located in the United
States; (v) A non-discretionary account or similar account (other than a trust
or estate) held by a dealer or other fiduciary for the benefit or account of a
U.S. person; or (vi) A discretionary account or similar account (other than a
trust or estate) held by a dealer or other fiduciary organized, incorporated, or
(if an individual) resident in the United States. As used herein, "United
States" shall include the states, territories, possessions and all areas under
the jurisdiction of the United States of America.
5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO PURCHASERS' OBLIGATIONS. The Purchasers'
obligations to purchase the Shares at the Closing are subject to the
satisfaction, on or prior to the Closing Date, of all of the following
conditions, any of which may be waived in whole or in part by the Purchasers:
(a) The representations and warranties made by the Company in
paragraph 3 hereof shall be true and correct, in all material respects, when
made and, except as otherwise contemplated by this Agreement, on the Closing
Date with the same force and effect as if they had been made on and as of the
Closing Date; the business and assets of the Company shall not have been
adversely affected in any material respect prior to the Closing, and the Company
shall have performed all obligations and conditions herein required to be
performed by it on or prior to the Closing Date.
11.
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(b) The Purchasers shall have received from ▇▇▇▇▇▇ Godward
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Company, an opinion letter addressed to
them, dated the Closing Date, substantially in the form attached hereto as
EXHIBIT C.
(c) The Company shall have obtained all consents, permits and
waivers necessary for consummation of the transactions contemplated by this
Agreement, other than such as may be required under the securities laws of
states other than California. Except for the notices required or permitted to be
filed with the Securities and Exchange Commission and the California
Commissioner of Corporations, which notices the Company will file on a timely
basis, the Company shall have obtained all approvals of any federal or state
governmental authority or regulatory body that are required in connection with
the lawful sale and issuance of the Shares, other than such as may be required
under the securities laws of states other than California.
(d) At the Closing, the purchase of the Shares by the
Purchasers hereunder shall be legally permitted by all laws and regulations to
which the Purchasers or the Company are subject.
(e) The Amended and Restated Articles of Incorporation in
substantially the same form attached as EXHIBIT B shall have been filed with the
Secretary of State of the State of California.
(f) The Company shall have delivered to the Purchasers a
certificate or certificates, executed by the President of the Company, dated the
Closing Date, certifying to the satisfaction of the conditions specified in
subparagraphs (a), (c), (e) and (g) of this paragraph 5.1.
(g) The Purchasers shall have tendered, in the aggregate, at
the Closing, consideration of not less than $3,000,000 (in cash or cancellation
of indebtedness); provided, however, that such consideration may be reduced by
amounts payable to the Placement Agent pursuant to Section 2.2.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to issue and sell the Shares at the Closing is subject to the
satisfaction on or prior to the Closing Date of the following conditions, any of
which may be waived in whole or in part by the Company:
(a) The Company shall have obtained all consents, permits and
waivers necessary or appropriate for consummation of the transactions
contemplated by this Agreement. Except for the notices required or permitted to
be filed after the Closing Date with certain federal and state securities
commissions, the Company shall have obtained all approvals of any federal or
state governmental authority or regulatory body that are required in connection
with the lawful sale and issuance of the Shares.
12.
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(b) At the Closing, the purchase of the Shares by the
Purchasers hereunder shall be legally permitted by all laws and regulations to
which the Purchasers or the Company are subject.
(c) The Amended and Restated Articles of Incorporation in
substantially the form attached as EXHIBIT B shall have been filed with the
Secretary of State of the State of California.
(d) The representations made by the Purchasers in Section 4
hereof shall be true and correct, in all material respects, when made and on the
Closing Date with the same force and effect as if they had been made on and as
of the Closing Date.
6. FURTHER AGREEMENTS OF THE PARTIES.
6.1 FINANCIAL STATEMENTS. Until a Purchaser no longer owns at least
39,865 Shares and/or the Conversion Stock into which such Shares are
convertible, or in the case of Section 6.1(b), 5,000 Shares and/or the
Conversion Stock into which such Shares are convertible or until the closing of
a public offering pursuant to an effective registration statement under the Act,
whichever first occurs, the Company shall furnish to such Purchaser the
following financial statements and reports, such financial statements to be
prepared in accordance with generally accepted accounting principles
consistently applied:
(a) as soon as available, and in any event within 45 days
after the end of each month, an unaudited income statement and balance sheet of
the Company for the portion of such fiscal year ended with the last day of such
month prepared in accordance with generally accepted accounting principles
(except that no footnotes need be provided) and certified by the chief financial
officer of the Company, subject, however, to normal year-end audit adjustments
together with a comparison of such statements to the Company's annual budget
then in effect and approved by the Board of Directors; and
(b) as soon as available, and in any event within 120 days
after the end of each fiscal year of the Company, a balance sheet of the Company
as of the end of such fiscal year, a statement of operations of the Company for
such fiscal year, and a statement of cash flows of the Company for such fiscal
year, all in reasonable detail and stating in comparative form the figures as of
the end of such fiscal year and for the previous fiscal year and accompanied by
an opinion addressed to the Company from independent certified public
accountants of national standing and a copy of such public accountant's
management letter prepared in connection therewith.
In the event that the Company at any time hereafter shall be required, by
law or by generally accepted accounting principles to consolidate its financial
statements with those of a subsidiary corporation, the Company shall thereafter
furnish the financial statements required by this paragraph 6.1 on a
consolidated basis, and the monthly and annual financial statements specified
above shall be furnished with consolidating financial statements.
13.
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6.2 ADDITIONAL INFORMATION. Until a Purchaser no longer owns at
least 100,000 Shares and/or the Conversion Stock into which such Shares are
convertible or until the closing of a public offering pursuant to an effective
registration statement under the Act, whichever first occurs, the Company shall
(i) furnish to such Purchaser such information concerning the Company as such
Purchaser may from time to time reasonably request; (ii) offer such Purchaser
the right to visit the properties of the Company at reasonable times, to
interview management of the Company at their places of employment at reasonable
times, to examine the books of account of the Company and to make copies
therefrom; (iii) furnish such Purchaser, upon request, with a complete and
correct copy of the minutes of proceedings of the shareholders or Board of
Directors, and (iv) allow one representative designated by the Purchaser to
attend all meetings of the Company's Board of Directors in a non-voting,
observer capacity, and in connection therewith give such representative copies
of all notices, minutes, consents and other materials, financial or otherwise,
that it provides to its Board of Directors.
6.3 ASSIGNMENT OF CERTAIN RIGHTS. The rights granted pursuant to
paragraphs 6.1 and 6.2 may not be assigned or otherwise conveyed by any
Purchaser or by any subsequent transferee of any such rights without the prior
written consent of the Company; provided, however, that any Purchaser may
assign, without such consent to its constituent partners, former partners or the
estate of any such partners, other than a competitor of the Company, the rights
granted pursuant to paragraphs 6.1 and 6.2. The number of Shares and/or
Conversion Stock held by a Purchaser and its affiliated investment entities
shall be aggregated in order to determine such Purchaser's rights under this
paragraph 6.
7. REGISTRATION RIGHTS.
7.1 RESTRICTIONS ON TRANSFERABILITY. The Shares and the Conversion
Stock shall not be sold, assigned, transferred or pledged except upon the
conditions specified in this paragraph 7, which conditions are intended to
ensure compliance with the provisions of the Act. Each Purchaser will cause any
proposed purchaser, assignee, transferee, or pledgee of the Shares or such
Conversion Stock held by a Purchaser to agree to take and hold such securities
subject to the provisions and upon the conditions specified in this paragraph 7.
7.2 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Act.
"HOLDER" shall mean any Purchaser holding Registrable
Securities (including Shares) and any person holding Registrable Securities to
whom the rights under this paragraph 7 have been transferred in accordance with
paragraph 7.13.
"INITIATING HOLDERS" shall mean any Holders who in the
aggregate possess more than 40% of the Registrable Securities.
14.
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"OTHER SECURITIES" shall mean (i) any shares of Preferred
Stock issued to the Other Investors and (ii) any common stock issued as a
dividend or other distribution with respect to, or in exchange for, or in
replacement of, the Preferred Stock issued to the Other Investors.
"OTHER INVESTORS" shall mean the existing or future holders of
outstanding Preferred Stock of the Company (other than Series F Preferred Stock)
who purchased said stock pursuant to a stock purchase agreement granting
"demand" or "piggyback" registration rights, or are permitted transferees of
such registration rights under the terms thereof.
"REGISTRABLE SECURITIES" shall mean (i) the Conversion Stock;
and (ii) any Common Stock of the Company issued or issuable in respect of the
Conversion Stock or other securities issued or issuable pursuant to the
conversion of the Shares upon any stock split, stock dividend, recapitalization,
or similar event, or any Common Stock otherwise issued or issuable with respect
to the Shares; provided, however, that shares of Common Stock or other
securities shall only be treated as Registrable Securities if and so long as
they have not been (A) sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction, or (B) sold or are
available for sale in the opinion of counsel to the Company in a transaction
exempt from the registration and prospectus delivery requirements of the Act so
that all transfer restrictions and restrictive legends with respect thereto are
removed upon the consummation of such sale in compliance with any requirements
of such exemption.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Act, and the declaration or ordering of the effectiveness of
such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses, except as
otherwise stated below, incurred by the Company in complying with paragraphs
7.5, 7.6 and 7.7 hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company which
compensation shall be paid in any event by the Company) and the reasonable fees
and expenses of one special counsel for all Holders in the event of the exercise
of a requested registration provided for in Sections 7.5 and 7.7 hereof and in
the event of a Company registration pursuant to Section 7.6 hereof.
"RESTRICTED SECURITIES" shall mean the securities of the
Company required to bear the legend set forth in paragraph 7.3 hereof.
"SELLING EXPENSES" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders.
7.3 RESTRICTIVE LEGEND.
15.
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(a) Each certificate held by a Purchaser that is a resident of
the United States and representing (i) the Shares, (ii) the Conversion Stock and
(iii) any other securities issued in respect of the Shares or the Conversion
Stock upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event, shall (unless otherwise permitted by the
provisions of paragraph 7.4 below) be stamped or otherwise imprinted with a
legend in the following form (in addition to any legend required under
applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO IT (UNLESS SUCH OPINION IS NOT
REQUIRED PURSUANT TO PARAGRAPH 7.4 OF THE AGREEMENT) STATING THAT
SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SAID ACT. COPIES OF THE AGREEMENT COVERING
THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD
OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
(b) Each certificate held by a Purchaser that is not a
resident of the United States and representing (i) the Shares, (ii) the
Conversion Stock and (iii) any other securities issued in respect of the Shares
or the Conversion Stock upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event, shall be stamped or otherwise imprinted
with a legend in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES, OR TO OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS,
UNTIL ONE YEAR AFTER _____________, 1993, EXCEPT IN ACCORDANCE WITH
REGULATION S UNDER THE ACT. TERMS USED ABOVE HAVE THE MEANINGS GIVEN
TO THEM BY REGULATION S.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD IN
CANADA OR TO CANADIAN CITIZENS FOR A PERIOD OF ONE YEAR FROM THEIR
ORIGINAL PURCHASE.
16.
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The Company will not register any transfer of such securities, except transfers
in compliance with Regulation S.
7.4 NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
representing Restricted Securities, by acceptance thereof, agrees to comply in
all respects with the provisions of this paragraph 7.4. Prior to any proposed
sale, assignment, transfer or pledge of any Restricted Securities, unless there
is in effect a registration statement under the Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and (other than in
connection with (i) a transfer not involving a change in beneficial ownership,
(ii) a transaction involving the pro rata distribution of Restricted Securities
by any Purchaser that is a general or limited partnership to any of its
partners, or retired partners, or to the estate of any of its partners or
retired partners, so long as such transaction does not involve the disposition
of such Restricted Securities for value, (iii) a transfer in compliance with
Rule 144, so long as the Company is furnished with evidence of compliance with
such Rule satisfactory to the Company, determined reasonably and in good faith,
(iv) transfers by any holder who is an individual to a trust for the benefit of
such holder or his family, (v) transfers by gift, will or intestate succession
to the spouse, lineal descendants or ancestors of any holder or spouse of a
holder, and (vi) transfers in accordance with the legends set forth in Section
7.3(b) above), shall be accompanied, at such holder's expense, by either (i) an
unqualified written opinion of legal counsel who shall, and whose legal opinion
shall be, reasonably satisfactory to the Company and to the effect that the
proposed transfer of the Restricted Securities may be effected without
registration under the Act, or (ii) a "no action" letter from the Commission to
the effect that the transfer of such securities without registration will not
result in a recommendation by the staff of the Commission that action be taken
with respect thereto, whereupon the holder of such Restricted Securities shall
be entitled to transfer such Restricted Securities in accordance with the terms
of the notice delivered by the holder to the Company. Each certificate
evidencing the Restricted Securities transferred as above provided shall bear,
except if such transfer is made pursuant to Rule 144, the appropriate
restrictive legend(s) set forth in paragraph 7.3 above, except that such
certificate shall not bear such restrictive legend(s) if in the opinion of
counsel for such holder and the Company such legend(s) is not required in order
to establish or preserve compliance with any provision of the Act.
7.5 REQUESTED REGISTRATION.
(a) REQUEST FOR REGISTRATION. In case the Company shall receive from
Initiating Holders a written request that the Company effect any registration,
qualification or compliance with respect to shares of Registrable Securities
having an expected aggregate offering price of at least $5,000,000, the Company
will:
(i) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders and Other Investors; and
17.
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(ii) as soon as practicable, use its best efforts to effect
such registration, qualification or compliance (including, without limitation,
appropriate qualification under applicable blue sky or other state securities
laws of up to fifteen states and appropriate compliance with applicable
regulations issued under the Act and any other governmental requirements or
regulations) as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities or Other Securities of any Holders or Other Investors joining in such
request as are specified in a written request received by the Company within 20
days after receipt of such written notice from the Company;
Provided, however, that the Company shall not be obligated to take any
action to effect any such registration, qualification or compliance pursuant to
this paragraph 7.5:
(A) In any particular jurisdiction in which the
Company would be required to execute a general
consent to service of process in effecting such
registration, qualification or compliance unless
the Company is already subject to service in such
jurisdiction and except as may be required by the
Act;
(B) Prior to six months after the effective date of
the Company's first registered public offering of
its stock;
(C) During the period starting with the date sixty
(60) days prior to the Company's estimated date of
filing of, and ending on the date six (6) months
immediately following the effective date of, any
registration statement pertaining to securities of
the Company (other than a registration of
securities in a Rule 145 transaction or with
respect to an employee benefit plan), provided
that the Company is actively employing in good
faith all reasonable efforts to cause such
registration statement to become effective;
(D) After the Company has effected one such
registration pursuant to this paragraph 7.5(a),
and such registration has been declared or ordered
effective;
(E) If the Company shall furnish to such Holders and
Other Investors a certificate signed by the
President of the Company stating that in the good
faith judgment of the Board of Directors it would
be seriously detrimental to the Company or its
shareholders for a registration statement to be
filed at such time, then the Company's obligation
to use its best efforts to register, qualify or
comply under this
18.
23
paragraph 7.5 shall be deferred for a period not
to exceed 120 days from the date of receipt of
written request from the Initiating Holders;
provided, however, that the Company may not make
such certification more often than once every
twelve (12) months.
Subject to the foregoing clauses (A) through (E), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable, after receipt of the request or requests of
the Initiating Holders and in any event within one hundred twenty (120) days
after receipt of such request.
(b) UNDERWRITING. In the event that a registration pursuant to
paragraph 7.5 is for a registered public offering involving an underwriting, the
Company shall so advise the Holders and Other Investors as part of the notice
given pursuant to paragraph 7.5(a)(i). In such event, the right of any Holder or
Other Investor to registration pursuant to paragraph 7.5 shall be conditioned
upon such Holder's or Other Investor's participation in the underwriting
arrangements required by this paragraph 7.5, and the inclusion of such Holder's
Registrable Securities or Other Investor's Other Securities in the underwriting
to the extent requested shall be limited to the extent provided herein.
The Company shall (together with all Holders and other shareholders
proposing to distribute their securities through such underwriting) enter into
an underwriting agreement in customary form with the managing underwriter
selected for such underwriting by the Company, but subject to the reasonable
approval by a majority in interest of the Initiating Holders. Notwithstanding
any other provision of this paragraph 7.5, if the managing underwriter advises
the Initiating Holders in writing that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may limit the
Registrable Securities or Other Securities to be included in such registration;
provided, however, that with respect to any offering involving an underwriting
of Registrable Securities being sold by the Holders pursuant to this paragraph
7.5, then no such limitation shall be made with respect to the shares of such
Holders' Registrable Securities until shares of Other Securities of the Company
to be included in such registration (but for this provision) have been reduced
or excluded. The Company shall so advise all holders of Registrable Securities
and Other Securities, and the number of shares of Registrable Securities and
Other Securities that may be included in the registration and underwriting (in
accordance with the principle of allocation set forth in the preceding sentence)
shall be allocated among all participants thereof (except those Holders and
other shareholders who have indicated to the Company their decision not to
distribute any of their Registrable Securities or Other Securities through such
underwriting) in proportion, as nearly as practicable, to the respective amounts
of Registrable Securities and Other Securities held by such Holders and Other
Investors at the time of filing the registration statement. No Registrable
Securities or Other Securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration. To
facilitate the allocation of shares in accordance with the above provisions, the
Company or the underwriters may round the number of shares allocated to any
Holder or Other Investor to the nearest 100 shares.
19.
24
If any Holder of Registrable Securities or Other Investor disapproves of
the terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the managing underwriter and the Initiating
Holders. The Registrable Securities and/or other securities so withdrawn shall
also be withdrawn from registration, and such Registrable Securities and/or
Other Securities shall not be transferred in a public distribution prior to 90
days after the effective date of such registration, or such other period of time
as the underwriters may require.
7.6 COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION. If at any time or from time to time the
Company shall determine to register any of its securities, either for its own
account or the account of a security holder or holders, other than (i) in
connection with the Company's initial public offering, or (ii) a registration
relating solely to employee benefit plans, or (iii) a registration relating
solely to a Commission Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance) and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within 20 days after receipt of such written notice from the
Company, by any Holder.
(b) UNDERWRITING. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to paragraph 7.6(a)(i). In such event, the right of any Holder to
registration pursuant to paragraph 7.6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this paragraph 7.6, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit the Registrable
Securities or other securities to be included in such registration; provided,
however, that with respect to any offering involving an underwriting of shares
being sold pursuant to the exercise of "demand" registration rights
substantially similar to those provided in Section 7.5 by the holders of any
series of Preferred Stock of the Company other than Series F Preferred Stock,
then no such limitation shall be made with respect to the shares of such other
series of Preferred Stock until all other shares of Preferred Stock of the
Company to be included in such registration, other than pursuant to the exercise
of such demand registration rights, have been reduced or excluded. The Company
shall so advise all Holders and other holders distributing their securities
through such underwriting and the number of shares of Registrable Securities
(included in accordance with the principle of allocation
20.
25
set forth in the preceding sentence) and other securities that may be included
in the registration and underwriting shall be allocated among all Holders and
such other holders in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities and other securities held by such Holders and
such other holders at the time of filing the registration statement. To
facilitate the allocation of shares in accordance with the above provisions, the
Company may round the number of shares allocated to any Holder or holder to the
nearest 100 shares. If any Holder or holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the managing underwriter. Any securities excluded or withdrawn from
such underwriting shall be withdrawn from such registration, and shall not be
transferred in a public distribution prior to 90 days after the effective date
of the registration statement relating thereto, or such other period of time as
the underwriters may require.
(c) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
paragraph 7.6 prior to the effectiveness of such registration whether or not any
Holder has elected to include Registrable Securities in such registration.
7.7 REGISTRATION ON FORM S-3.
(a) If Holders of at least 10% of the Registrable Securities request
that the Company file a registration statement on Form S-3 (or any successor
form to Form S-3) for a public offering of shares of the Registrable Securities
the reasonably anticipated aggregate price to the public of which, net of
underwriting discounts and commissions, would exceed $500,000, and the Company
is a registrant entitled to use Form S-3 to register the Registrable Securities
for such an offering, the Company shall use its best efforts to cause such
Registrable Securities to be registered for the offering on such form and to
cause such Registrable Securities to be qualified in such jurisdictions as the
Holder or Holders may reasonably request; provided, however, that the Company
shall not be required to effect more than one registration pursuant to this
paragraph 7.7 in any twelve month period. The substantive provisions of
paragraph 7.5(b) shall be applicable to each registration initiated under this
paragraph 7.7.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this paragraph 7.7: (i) in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the Act; or (ii) if the
Company, within ten (10) days of the receipt of the request of the initiating
Holders, gives notice of its bona fide intention to effect the filing of a
registration statement with the Commission within ninety (90) days of receipt of
such request (other than with respect to a registration statement relating to a
Rule 145 transaction, an offering solely to employees or any other registration
which is not appropriate for the registration of Registrable Securities)
provided that the Company is actively employing in good faith all reasonable
efforts to cause such registration statement to become effective; or (iii)
during the period starting with the date sixty (60) days prior to the Company's
estimated date of filing of,
21.
26
and ending on the date six (6) months immediately following, the effective date
of any registration statement pertaining to securities of the Company (other
than a registration of securities in a Rule 145 transaction or with respect to
an employee benefit plan), provided that the Company is actively employing in
good faith all reasonable efforts to cause such registration statement to become
effective; or (iv) after the Company has effected two such registrations
pursuant to this paragraph 7.7, and such registration has been declared or
ordered effective; or (v) if the Company shall furnish to such Holder a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its shareholders for registration statements to be filed at such
time, then the Company's obligation to use its best efforts to file a
registration statement shall be deferred for a period not to exceed 90 days from
the receipt of the request to file such registration by such Holder, provided
that the Company may not make such certification more than once every twelve
months.
7.8 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with (i) one registration pursuant to paragraph 7.5, and (ii) all
registrations pursuant to paragraph 7.6 and (iii) two registrations pursuant to
paragraph 7.7 shall be borne by the Company. All Selling Expenses relating to
securities registered on behalf of the Holders, including without limitation
those incurred in connection with registrations pursuant to paragraph 7.7, shall
be borne by the Holders of such securities pro rata on the basis of the number
of shares so registered.
7.9 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this paragraph
7, the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause such
Registration Statement to become and remain effective for at least ninety (90)
days or until the distribution described in the registration statement has been
completed;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement;
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them;
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of up to fifteen states,
22.
27
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering (which each
Holder participating in such underwriting shall also enter into and perform its
obligations under);
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing; and
(g) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this paragraph 7, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this paragraph 7, (i) an opinion,
dated such date, of the counsel representing the Company for the purposes of
such registration, in form and substance as is customarily given to underwriters
in an underwritten public offering to such effects as counsel for the Company
and counsel for the managing underwriter shall agree, addressed to the
underwriters, if any, and, if requested, to the Holders requesting registration
of Registrable Securities and (ii) a letter dated such date, from the
independent accountants of the Company, in form and substance as is customarily
given by independent accountants to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
7.10 INDEMNIFICATION.
(a) The Company will indemnify each Holder, each of its
officers and directors and partners, and each person controlling such Holder
within the meaning of Section 15 of the Act, with respect to which registration,
qualification or compliance has been effected pursuant to this paragraph 7, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Act, against all expenses, claims, losses,
damages or liabilities (or actions in respect thereof) including any of the
foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or any violation by the Company of any
federal, state or common law rule or regulation applicable to the Company in
connection with any such registration, qualification or compliance, and the
Company
23.
28
will reimburse each such Holder, each of its officers and directors, and each
person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder, controlling person or underwriter and stated to be
specifically for use therein.
(b) Each Holder and Other Investor will, if Registrable
Securities and Other Securities held by such Holder and Other Investor are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Act, and each other such
Holder or such Other Investor, each of its officers and directors and each
person controlling such Holder or such Other Investor within the meaning of
Section 15 of the Act, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company, such Holders or such Other Investors, such directors, officers,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder or such Other Investor and stated to be
specifically for use therein. Notwithstanding the foregoing, the liability of
each Holder or Other Investor under this subsection (b) shall be limited in an
amount equal to the public offering price of the shares sold by such Holder or
such Other Investor, unless such liability arises out of or is based on willful
conduct by such Holder or such Other Investor. A Holder or Other Investor will
not be required to enter into any agreement or undertaking in connection with
any registration under this paragraph 7 providing for any indemnification or
contribution on the part of such Holder or such Other Investor greater than the
Holder's or Other Investor's obligations under this paragraph 7.10(b).
(c) Each party entitled to indemnification under this
paragraph 7.10 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved
24.
29
by the Indemnified Party (whose approval shall not unreasonably be withheld) and
the Indemnified Party may participate in such defense at such party's expense;
provided, however, that the Indemnifying Party shall bear the expense of
independent counsel for the Indemnified Party if the Indemnified Party
reasonably determines that representation of both parties by the same counsel
would be inappropriate due to actual or potential conflicts of interest, and
provided further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this paragraph 7 unless the failure to give such notice is materially
prejudicial to an Indemnifying Party's ability to defend such action and
provided further, that the Indemnifying Party shall not assume the defense for
matters as to which there is a conflict of interest or separate and different
defenses. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
7.11 INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this paragraph 7.
7.12 RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Act, at all times after the
effective date that the Company becomes subject to the reporting requirements of
the Act or the Securities Exchange Act of 1934, as amended;
(b) Use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Act and the Securities Exchange Act of 1934, as amended (at any time after it
has become subject to such reporting requirements);
(c) So long as a Purchaser owns any Restricted Securities, to
furnish to the Purchaser forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after 90 days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public) and of the Act and the Securities Exchange Act of 1934 (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as a Purchaser may
25.
30
reasonably request in availing itself of any rule or regulation of the
Commission allowing a Purchaser to sell any such securities without
registration.
7.13 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register securities granted Purchasers under paragraphs 7.5, 7.6 and
7.7 may be assigned to a transferee or assignee in connection with any transfer
or assignment of Registrable Securities by a Purchaser provided that: (i) such
transfer may otherwise be effected in accordance with applicable securities
laws, and (ii) such assignee or transferee acquires at least 39,865 Shares
and/or the Conversion Stock into which the Shares are convertible.
Notwithstanding the foregoing, the rights to cause the Company to register
securities may be assigned, in connection with a distribution by such Purchaser,
to any partner, former partner, or the estate of any such partner without
compliance with item (ii) above, provided written notice thereof is promptly
given to the Company.
7.14 STANDOFF AGREEMENT. Each Holder agrees, in connection with the
Company's initial public offering of the Company's securities that, upon request
of the Company or the underwriters managing any underwritten offering of the
Company's securities, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Common Stock of the
Company (other than those included in the registration) without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed one hundred eighty (180) days) from the
effective date of such registration as may be requested by the underwriters;
provided, that all other Holders of at least one percent (1%) of the Company's
outstanding voting equity securities and all of the officers and directors of
the Company who own stock of the Company also agree to such restrictions.
7.15 AMENDMENT OF REGISTRATION RIGHTS. Without the written consent
of the holders of more than 50% of the then outstanding Registrable Securities
and Other Securities, taken together as a group, the Company shall not amend
this paragraph 7, or enter into any agreement with any holder or prospective
holder of any securities of the Company which either (i) would allow such holder
or prospective holder to include such securities as Registrable Securities under
this Agreement or (ii) does not include provisions substantially similar to
those contained in paragraphs 7.5(b) and 7.6(b) with respect to the allocation
of Registrable Securities and Other Securities in an underwritten public
offering if market factors require limitation on the number of such securities
to be included in such an offering.
8. MISCELLANEOUS.
8.1 WAIVERS AND AMENDMENTS. With the written consent of the record
holders of more than 50% of the Securities then outstanding, the obligations of
the Company and the rights of the holders of the Securities under this Agreement
may be waived (either generally or in a 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 its Board of Directors, may enter into a supplemental agreement
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement;
26.
31
provided, however, that no such waiver or supplemental agreement shall (i)
reduce the aforesaid percentage of Securities, the holders of which are required
to consent to any waiver or supplemental agreement, or (ii) increase any
obligations of the holders of the Securities under this Agreement, without the
consent of the record or beneficial holders of all of the Securities. Upon the
effectuation of each such waiver, consent, agreement, amendment or modification,
the Company shall promptly give written notice thereof to the record holders of
the Securities whose consent thereto in writing was not previously solicited.
Neither this Agreement nor any provisions hereof may be changed, waived,
discharged or terminated orally, but only by a signed statement in writing.
8.2 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.
8.3 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by any Purchaser and
the Closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder as of the date of such certificate or instrument.
8.4 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.
8.5 ENTIRE AGREEMENT. This Agreement (including the exhibits
attached hereto and schedules delivered pursuant hereto) constitutes the
complete, final and exclusive understanding and agreement between the parties
with regard to the subjects hereof.
8.6 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be effective upon receipt and shall be in writing and
may be delivered in person, by telecopy, electronic mail, overnight delivery
service or U.S. mail, in which event it may be mailed by first-class, certified
or registered, postage prepaid, addressed (a) if to a Purchaser, at such
Purchaser's address set forth in the Schedule of Purchasers, or at such other
address as such Purchaser shall have furnished the Company in writing, or, until
any such holder so furnishes an address to the Company, then to and at the
address of the last holder of such shares who has so furnished an address to the
Company, or (b) if to the Company, at its address set forth at the beginning of
this Agreement, or at such other address as the Company shall have furnished to
the Purchasers and each such other holder in writing.
8.7 SEPARABILITY OF AGREEMENTS; SEVERABILITY OF THIS AGREEMENT. The
Company's agreement with each of the Purchasers is a separate agreement and the
sale of the Securities to each of the Purchasers is a separate sale. Unless
otherwise expressly provided herein, the rights of each Purchaser hereunder are
several rights, not rights jointly held with any
27.
32
of the other Purchasers. Any invalidity, illegality or limitation on the
enforceability of the Agreement or any part thereof, by any Purchaser whether
arising by reason of the law of the respective Purchaser's domicile or
otherwise, shall in no way affect or impair the validity, legality or
enforceability of this Agreement with respect to other Purchasers. If any
provision of this Agreement shall be judicially determined to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
8.8 FINDER'S FEES.
(a) The Company (i) represents and warrants that it has
retained no finder or broker other than the Placement Agent 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
commission or compensation in the nature of a finder's fee to any placement
agent, finder or 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, provided, however,
that the Company and the Purchasers acknowledge and agree that the commission
payable to the Placement Agent may be deducted from funds paid to the Company or
wired to an escrow account by the Purchasers in payment of the purchase price
for the Shares.
(b) Each Purchaser (i) represents and warrants that such
Purchaser 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 such Purchaser, or any of his
employees or representatives, are responsible.
8.9 INFORMATION CONFIDENTIAL. Except as otherwise provided in
paragraph 4.7, each Purchaser acknowledges that the information received by it
pursuant hereto is confidential and for its use only, and such Purchaser will
not use such information in violation of the Securities Exchange Act of 1934 or
reproduce, disclose or disseminate such information to any other person, except
in connection with the exercise of rights under this Agreement, unless the
Company has made such information available to the public generally, such
information has otherwise been made generally available through no act or
omission of Purchaser, or such Purchaser is required to disclose such
information by a governmental body.
8.10 CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT MAY NOT HAVE BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM THE
28.
33
QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
8.11 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.
8.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
8.13 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to the Purchasers, 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 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 by a Purchaser of any breach or default under this
Agreement, or any waiver by a Purchaser of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in writing and that all remedies, either under this
Agreement, or by law or otherwise afforded to a Purchaser, shall be cumulative
and not alternative.
8.14 UNDERSTANDING AMONG THE PURCHASERS. The determination by each
of the Purchasers to purchase Shares pursuant to this Agreement has been made by
such Purchaser independently of the other Purchasers, and independently of any
statements or opinions as to the advisability of such purchase or as to the
properties, business, prospects or condition (financial or otherwise) of the
Company which may have been made or given by the other Purchasers or by any
agent or employee of the other Purchasers. In addition, it is acknowledged by
each of the Purchasers that the other Purchasers have not acted as such
Purchaser's agent in connection with making its investment hereunder and that
the other Purchasers will not be acting as such Purchaser's agent in connection
with monitoring such Purchaser's investment hereunder.
8.15 STOCK SPLITS. All references to the number of shares and prices
in this Agreement shall be appropriately adjusted to reflect any stock split,
stock dividend or other change in the capital stock which may be made by the
Company after the Closing Date.
29.
34
8.16 EXPENSES. The Company shall, promptly after being billed
therefor, pay the reasonable legal fees, costs and expenses of one counsel
representing the Purchasers.
8.17 REPRESENTATION OF SEVERAL PARTIES BY A SINGLE FIRM OF
ATTORNEYS. Each Purchaser hereby confirms its consent to Wilson, Sonsini,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ ("WSG&R) acting as special counsel hereunder, as special
counsel to the other Purchasers, and as special counsel to Wertheim ▇▇▇▇▇▇▇▇ &
Co. Incorporated as the Placement Agent. In connection therewith, each Purchaser
consents and understands that (i) WSG&R has acted and is currently acting as
counsel to the Placement Agent and that WSG&R may continue to act as counsel to
the Placement Agent in the future, and (ii) as a result of the representation
referred to in clause (i), the Placement Agent and each, if not all, of the
Purchasers may have interests that differ, and WSG&R may have obtained
confidential information regarding the Placement Agent, or certain Purchasers,
which it is unable to disclose to the Purchasers, or the other Purchasers, as
the case may be.
30.
35
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first written above.
IL FORNAIO (AMERICA) CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, PRESIDENT
31.
36
COUNTERPART SIGNATURE PAGE
I have read and understand the foregoing Series F Preferred Stock Purchase
Agreement of Il Fornaio (America) Corporation dated as of the day and year first
written above and the Schedule of Exceptions to the Corporation's
representations and warranties contained in paragraph 3 thereof delivered
contemporaneously herewith.
-------------------------------
Date: By:
--------------------------- -------------------------------
Number of Shares of
Series F Preferred Stock
Purchase:
-------------
37
EXHIBIT A
Schedule of Purchasers
========================================================================================
SHAREHOLDER NUMBER OF SHARES
----------------------------------------------------------------------------------------
InterWest Partners IV 24,390.00
----------------------------------------------------------------------------------------
FWH Associates 24,390.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ V 14,049.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ Associates 585.00
----------------------------------------------------------------------------------------
Stanislaus Food Products Company 10,796.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 10,000.00
----------------------------------------------------------------------------------------
USI Investments Partners II 10,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 7,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 7,318.00
----------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇ 7,318.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇ Godward ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 3,415.00
& ▇▇▇▇▇
----------------------------------------------------------------------------------------
GC&H Investments 2,926.00
----------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ 4,878.00
----------------------------------------------------------------------------------------
Revocable Trust of ▇▇▇▇▇▇▇ ▇. and 4,878.00
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ 4,879.00
----------------------------------------------------------------------------------------
Nisa Trust, ▇▇▇▇▇ Fargo Bank, 4,879.00
Trustee
----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 3,963.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 2,500.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ 2,500.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇ 2,500.00
----------------------------------------------------------------------------------------
The Zellerbach Living Trust Dated 2,500.00
2/14/91
----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 2,500.00
----------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 2,500.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
1.
38
========================================================================================
SHAREHOLDER NUMBER OF SHARES
----------------------------------------------------------------------------------------
Banca Agricola Montovana 5,000.00
----------------------------------------------------------------------------------------
Banca Popolare di ▇▇▇▇▇ ▇ ▇▇ ▇▇▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
Banca C. Steinhauslin & C. S.p.A. 10,000.00
----------------------------------------------------------------------------------------
Banca Unione Di Credito 5,000.00
----------------------------------------------------------------------------------------
Bank Cantrade, Ormund, ▇▇▇▇▇▇ 5,000.00
S.A.
----------------------------------------------------------------------------------------
Banque Cantonale Vaudoise 15,000.00
----------------------------------------------------------------------------------------
Bank Cantrade A.G. 10,000.00
----------------------------------------------------------------------------------------
Banque Cantrade Lausanne S.A. 10,000.00
----------------------------------------------------------------------------------------
Banque Federative du Credit Mutuel 60,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 10,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
BSI - Banca della Svizzera Italiana 35,000.00
----------------------------------------------------------------------------------------
CCM Banca di Credito Commerciale e Mobiliare S.A. 10,000.00
----------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇ Bank Cust. FBO ▇▇▇▇▇▇ 5,000.00
P.▇▇▇▇▇ ▇▇▇ #8417
----------------------------------------------------------------------------------------
Collingwood Partners 20,000.00
----------------------------------------------------------------------------------------
Confide Finance S.A. 10,000.00
----------------------------------------------------------------------------------------
Courcoux Bouvet 5,000.00
----------------------------------------------------------------------------------------
Credit Suisse 25,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Ttee FBO 5,000.00
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Family Trust
----------------------------------------------------------------------------------------
Dorskind 1982 Trust 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇ Des 20,000.00
Aulnois S.A.
----------------------------------------------------------------------------------------
Fields Trust 5,000.00
----------------------------------------------------------------------------------------
2.
39
========================================================================================
SHAREHOLDER NUMBER OF SHARES
----------------------------------------------------------------------------------------
FSI Corporation 25,000.00
----------------------------------------------------------------------------------------
General Consulting Management, 5,000.00
Inc.
----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 10,000.00
c/f ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 10,000.00
c/f ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------------------------------------------------
Master Trust Pursuant to the 20,000.00
Hewlett-Packard Deferred Profit
Sharing Plan and Supplemental
Pension Plan
----------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ 10,000.00
----------------------------------------------------------------------------------------
Delaware Charter Guarantee & Trust 10,000.00
Company Ttee FBO ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------------------------------------------------------
▇▇▇▇ & ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ c/f ▇▇▇▇,▇▇▇▇▇▇▇▇▇ 5,000.00
and ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
Metallbank GMBH 20,000.00
----------------------------------------------------------------------------------------
Nisa Trust, ▇▇▇▇▇ Fargo Bank, 50,000.00
Trustee
----------------------------------------------------------------------------------------
PASFIN Servizi Finanziari S.p.A. 10,000.00
----------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
3.
40
========================================================================================
SHAREHOLDER NUMBER OF SHARES
----------------------------------------------------------------------------------------
Rainbow Fund 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 10,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇▇ Children's Trust 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇, Ttee of the ▇▇▇▇ 5,000.00
Brandman Revocable Trust Dtd
7-20-87
----------------------------------------------------------------------------------------
Scarlotti, Ltd. 5,000.00
----------------------------------------------------------------------------------------
Vivaldi, Ltd. 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 2,500.00
----------------------------------------------------------------------------------------
BSI - Banca della Svizzera Italiana 15,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 10,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
Platinum Venture Partners I, L.P. 25,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ c/f ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ 5,000.00
and ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ 2,500.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 1,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 1,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇ & Co. 5,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee of the 2,500.00
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Trust
----------------------------------------------------------------------------------------
4.
41
========================================================================================
SHAREHOLDER NUMBER OF SHARES
----------------------------------------------------------------------------------------
OSF International, Inc. and ▇▇▇▇▇▇ 19,810.00
Co., a General Partnership
----------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ 10,000.00
Declaration of Trust
----------------------------------------------------------------------------------------
Banque Cantonale Vaudoise, 10,000.00
Lausanne
----------------------------------------------------------------------------------------
Consulting & Management Services, 10,000.00
Ltd.
----------------------------------------------------------------------------------------
Oak Brook Bank Trustee FBO 5,000.00
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇# 6900 5477 372
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee Under 2,500.00
The ▇.▇. ▇▇▇▇▇▇ Living Trust
Dated December 23, 1995
----------------------------------------------------------------------------------------
Columbia Charitable Foundation 77,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 3,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ & Co. 15,000.00
----------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ & Co. 10,000.00
========================================================================================
5.
42
EXHIBIT B
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
IL FORNAIO (AMERICA) CORPORATION
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇ certify that:
1. They are the President and the Secretary, respectively, of Il Fornaio
(America) Corporation, a California corporation.
2. The articles of incorporation of this corporation are amended and
restated to read in full as follows:
ONE. The name of the Corporation is Il Fornaio (America) Corporation.
TWO. The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of California other than the banking business, the trust
company business or the practice of a profession permitted to be incorporated by
the California Corporations Code.
THREE. (A) The Corporation is authorized to issue two classes of
shares, designated "Common Stock" and "Preferred Stock," respectively. The
number of shares of Common Stock authorized to be issued is 15,000,000 and the
number of shares of Preferred Stock authorized to be issued is 3,500,000.
(B) The Preferred Stock may be divided into such number of
series as the Board of Directors may determine. Subject to the provisions of
paragraph 6, the Board of Directors is authorized to determine and alter the
rights, preferences, privileges and restrictions granted to and imposed upon the
Preferred Stock or any series thereof with respect to any wholly unissued class
or series of Preferred Stock, and to fix the number of shares of any series of
Preferred Stock and the designation of any such series of Preferred Stock. The
Board of Directors, within the limits and restrictions stated in any resolution
or resolutions of the Board of Directors originally fixing the number of shares
constituting any series, may increase or decrease (but not below the number of
shares of such series then outstanding) the number of shares of any series
subsequent to the issue of shares of that series.
1.
43
(C) Five hundred forty-two thousand two hundred twenty-five
(542,225) shares of Preferred Stock are designated as shares of "Series B
Preferred Stock." Five hundred twenty-one thousand seven hundred thirty-nine
(521,739) shares of Preferred Stock are designated as shares of "Series C
Preferred Stock." Five hundred twenty-one thousand seven hundred thirty-nine
(521,739) shares of Preferred Stock are designated as shares of "Series D
Preferred Stock." Four hundred fifty thousand (450,000) Shares of Preferred
Stock are designated as Shares of "Series E Preferred Stock." Eight hundred
twenty-five thousand (825,000) Shares of Preferred Stock are designated as
Shares of "Series F Preferred Stock."
(D) The relative rights, preferences, privileges and
restrictions of the Common Stock, the Series B Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stock, the Series E Preferred Stock and
the Series F Preferred Stock shall be in all respects identical, except for and
subject to the following provisions:
1. DIVIDENDS. Holders of the Series B Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stock, the Series E Preferred Stock and
the Series F Preferred Stock shall be entitled to receive, when and as declared
by the Board of Directors of the Corporation, out of any assets at the time
legally available therefor, any dividends or other distributions paid with
respect to the Common Stock of the Corporation (the "Common Stock") in the same
amount per share as holders of such Common Stock are entitled to receive, for
the number of shares into which each share of Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock or Series F
Preferred Stock is convertible. Dividends on the Series B Preferred Stock, the
Series C Preferred Stock, the Series D Preferred Stock, the Series E Preferred
Stock and the Series F Preferred Stock shall be payable in preference and prior
to any payment of any dividend on the Common Stock of the Corporation. No
dividends (other than those payable solely in Common Stock) shall be paid on the
Common Stock during any fiscal year of the Corporation until all declared
dividends on the Series B Preferred Stock, the Series C Preferred Stock, the
Series D Preferred Stock, the Series E Preferred Stock and the Series F
Preferred Stock are paid or set aside. The right to dividends on shares of the
Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred
Stock, the Series E Preferred Stock and the Series F Preferred Stock shall not
be cumulative, and no right shall accrue to holders of Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock or
Series F Preferred Stock by reason of the fact that dividends on said shares are
not declared in any prior period.
2. LIQUIDATION PREFERENCE.
a. PREFERRED STOCKS.
(1) PREFERENCE. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holders of Series
B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock and Series F Preferred Stock shall be entitled to receive, out
of the assets of the Corporation, whether such assets are capital or surplus of
any nature, prior and in preference to any distribution of any of the assets or
surplus
2.
44
funds of the Corporation to the holders of Common Stock of the Corporation, an
amount equal to $4.6106 per share, $5.75 per share, $5.75 per share, $8.77 per
share and $10.25 per share, respectively, plus a further amount equal to any
dividends declared but unpaid on such shares, and no more. If upon such
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation are insufficient to provide for the full preferential amounts to the
holders of Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock and Series F Preferred Stock, then
those assets of the Corporation available to be distributed to the holders of
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock and Series F Preferred Stock shall be distributed
ratably among the holders of Preferred Stock in accordance with the preferential
amounts due them.
(2) CONSOLIDATION OR MERGER. A consolidation or merger of the
Corporation with or into any other corporation or corporations, or a sale of all
or substantially all of the assets of the Corporation, or a series of related
transactions in which more than 50% of the voting power of the Corporation is
disposed of, shall not be deemed to be a liquidation, dissolution or winding up
within the meaning of this subparagraph 2.a.
b. NONCASH DISTRIBUTIONS. If any of the assets of the Corporation
are to be distributed other than in cash under this paragraph 2 or for any
purpose, then the Board of Directors of the Corporation shall promptly engage
independent competent appraisers to determine the value of the assets to be
distributed to the holders of Preferred Stock or Common Stock. The Corporation
shall, upon receipt of such appraiser's valuation, give prompt written notice to
each holder of shares of Preferred Stock or Common Stock of the appraiser's
valuation.
3. VOTING RIGHTS.
a. COMMON STOCK. Holders of each share of Common Stock shall be
entitled to one vote per share and to vote together as a single class.
b. PREFERRED STOCK. Holders of each share of Series B Preferred
Stock, Series C Preferred Stock, Series E Preferred Stock and Series F Preferred
Stock shall be entitled to that number of votes equal to the number of shares of
Common Stock into which each share of Series B Preferred Stock, Series C
Preferred Stock, Series E Preferred Stock and Series F Preferred Stock could be
converted, respectively, on the record date for the vote or written consent of
shareholders and, except as otherwise required by law, shall have voting rights
and powers equal to the voting rights and powers of the Common Stock. Holders of
each share of Series D Preferred Stock shall not be entitled to voting rights,
except as otherwise required by law. The holder of each share of Series B
Preferred Stock, Series C Preferred Stock, Series E Preferred Stock and Series F
Preferred Stock shall be entitled to notice of any shareholders' meeting in
accordance with the bylaws of the Corporation and shall vote together as a
single class with holders of the Common Stock upon the election of directors and
upon any other matter submitted to a vote of shareholders, except those matters
required by law to be submitted to a class vote and as required under paragraph
6. Fractional votes shall not, however, be permitted and any fractional voting
rights resulting from the above formula (after aggregating all shares of
3.
45
Common Stock into which shares of Series B Preferred Stock, Series C Preferred
Stock, Series E Preferred Stock and Series F Preferred Stock held by each holder
could be converted) shall be rounded to the nearest whole number (with one-half
rounded upward to one).
4. CONVERSION.
a. SERIES B PREFERRED STOCK AND SERIES C PREFERRED STOCK. Each share
of Series B Preferred Stock and Series C Preferred Stock shall be convertible as
follows:
(1) AUTOMATIC CONVERSION. Each share of Series B Preferred
Stock and Series C Preferred Stock shall automatically be converted into 1.262
shares of Common Stock (adjusted from one (1) share of Common Stock effective
March 23, 1992), subject to adjustments as provided in subparagraph 4.a(3)
below, as of the close of business on the day next preceding the day on which
the first, if any, of the following occurs:
(a) PUBLIC OFFERING. The closing of a firm commitment
public offering pursuant to a registration statement under the Securities Act of
1933, as amended, covering the offer and sale of Common Stock the aggregate
gross proceeds of which equal or exceed $7,500,000 filed with the Securities and
Exchange Commission or any successor agency or body performing similar functions
(hereinafter referred to as a "Public Offering"); or"
(b) ACQUISITION. The consummation of (i) any merger or
consolidation between the Corporation and any other corporation which is not
prior to that time an affiliate of the Corporation or (ii) the sale, lease or
exchange of all or substantially all of the assets of the Corporation to or with
any person where either one of the following conditions is met (such
transactions described in clauses (i) and (ii) above being hereinafter
collectively referred to as "Acquisitions"):
(A) such conversion to Common Stock is approved by
a vote of the majority of all outstanding shares of Preferred Stock voting on an
as-converted basis in accordance with paragraph 3.b. above; or
(B) the fair market value of Common Stock
(appropriately adjusted for subdivisions and combinations of shares of Common
Stock), as determined by the Board of Directors, into which the Series B
Preferred Stock and Series C Preferred Stock is to be converted is at least
$12.10 per share (adjusted from $15.27 effective March 23, 1992) and shall be
subject to adjustment from time to time for subdivisions and combinations of
shares of Common Stock.
For purposes of subparagraph 4.a(l) (b) the term
"person" shall include any individual, corporation, partnership, association or
other entity, and the term "affiliate" shall have the meaning given in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934 as in effect on December 15, 1989. The Board of Directors
4.
46
shall have the power and duty to determine conclusively whether any conditions
set forth in this subparagraph 4.a have been satisfied.
(c) CONVERSION MECHANICS. A holder of shares of Series B
Preferred Stock or Series C Preferred Stock whose shares have been converted
shall deliver the certificate(s) representing such shares to the Corporation or
its duly authorized agent (or if such certificates have been lost, stolen or
destroyed, such holder shall execute an agreement satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it in
connection with such conversion) specifying the place where the Common Stock
issued in conversion shall be sent. The endorsement of the share certificate
shall be in form satisfactory to the Corporation or such agent, as the case may
be. The conversion shall be deemed to have occurred (whether or not certificates
representing such shares are surrendered or indemnity agreements with respect to
such shares are executed) as of the close of business on the day next preceding
the day on which the first, if any, of the events set forth in subparagraphs
4.a(l) (a) or 4.a(l) (b) occurs, and all of the holders' rights with respect to
such shares of Series B Preferred Stock and Series C Preferred Stock shall cease
as of such date.
(2) OPTIONAL CONVERSION.
(a) CONVERSION RATIO. Each share of Series B Preferred
Stock and Series C Preferred Stock shall, subject to adjustments as provided in
subparagraph 4.a(3) below, be convertible into 1.262 shares of Common Stock
(adjusted from one (1) share of Common Stock effective March 23, 1992) at the
option of the holder thereof, at any time.
(b) CONVERSION MECHANICS. A holder of shares of Series B
Preferred Stock or Series C Preferred Stock desiring to convert such shares
shall deliver to the Corporation or its duly authorized agent the certificate(s)
representing such shares (or if such certificates have been lost, stolen or
destroyed, such holder shall execute an agreement satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it in
connection with such conversion) accompanied by a written request to convert
specifying the number of shares to be converted, the place where the Common
Stock issued in conversion thereof shall be sent, and the name or names in which
such holder wishes the certificate or certificates for Common Stock to be
issued. The endorsement of the share certificate and the request to convert
shall be in form satisfactory to the Corporation or such agent, as the case may
be. Such conversion shall be deemed to have occurred as of the close of business
on the day next preceding the date of such delivery of such shares of Series B
Preferred Stock or Series C Preferred Stock to be converted. The person or
persons entitled to receive the Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder or holders of such Common Stock
as of said date.
(3) ADJUSTMENTS. If the Corporation shall at any time
subdivide the outstanding shares of Common Stock, or shall issue as a dividend
on shares of Common Stock other shares of Common Stock, the number of shares
into which each share of Series B Preferred Stock and Series C Preferred Stock
is convertible immediately prior to such subdivision or the issuance of such
dividend shall be proportionately increased; and in case the Corporation shall
at
5.
47
any time combine the outstanding shares of Common Stock, the number of shares
into which each share of Series B Preferred Stock and Series C Preferred Stock
is convertible immediately prior to such combination shall be proportionately
decreased, effective at the close of business on the date of such subdivision,
dividend or combination, as the case may be.
(4) RESERVATION OF SHARES, ETC.
(a) RESERVATION OF SHARES. The Corporation shall at all
times reserve and keep available, out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion of the Series B
Preferred Stock and the Series C Preferred Stock, the full number of shares of
Common Stock deliverable upon conversion of all shares of Series B Preferred
Stock and Series C Preferred Stock from time to time outstanding and the full
number of shares of Common Stock deliverable upon conversion of all shares of
Series C Preferred Stock that may potentially be outstanding as a result of the
future conversion of all shares of Series D Preferred Stock from time to time
outstanding into such shares of Series C Preferred Stock. The Corporation shall
from time to time, in accordance with the laws of the State of California,
increase the authorized amount of its shares of Common Stock if at any time the
authorized number of shares of Common Stock remaining unissued shall not be
sufficient to permit the conversion of all of the shares of Series B Preferred
Stock and Series C Preferred Stock at the time outstanding.
(b) CANCELLATION OF SHARES OF SERIES. All certificates
evidencing Series B Preferred Stock and Series C Preferred Stock surrendered for
conversion shall be appropriately canceled on the books of the Corporation, and
the shares so converted shall be restored to the status of authorized but
unissued Preferred Stock of the Corporation.
(c) BOARD DETERMINATION. The Board of Directors shall
have the power and the duty to determine conclusively whether any conditions set
forth in this subparagraph 4.a have been satisfied.
b. SERIES D PREFERRED STOCK. Each share of Series D Preferred Stock
shall be convertible as follows:
(1) AUTOMATIC CONVERSION. Immediately prior to the automatic
conversion of shares of Series C Preferred Stock pursuant to subparagraph 4.a(l)
above, each share of Series D Preferred Stock shall automatically be converted
into one (1) share of Series C Preferred Stock, subject to adjustment as
provided in subparagraph 4.b(3) below, as of the close of business on the day
next preceding the day on which the first, if any, of the following occurs:
(a) PUBLIC OFFERING. The closing of a Public Offering as
defined in subparagraph 4.a(1)(a) above; or
(b) ACQUISITION. The consummation of an Acquisition as
defined in subparagraph 4.a(1)(b) above.
6.
48
(c) CONVERSION MECHANICS. A holder of shares of Series D
Preferred Stock whose shares have been converted shall deliver the
certificate(s) representing such shares to the Corporation or its duly
authorized agent (or if such certificates have been lost, stolen or destroyed,
such holder shall execute an agreement satisfactory to the Corporation to
indemnify the Corporation from any loss incurred by it in connection with such
conversion) specifying the place where the Series C Preferred Stock issued in
conversion thereof shall be sent. The endorsement of the share certificate shall
be in form satisfactory to the Corporation or such agent, as the case may be.
The conversion shall be deemed to have occurred (whether or not certificates
representing such shares are surrendered or indemnity agreements with respect to
such shares are executed) immediately prior to the close of business on the day
next preceding the day on which the first, if any, of the events set forth in
subparagraphs 4.a(1)(a) or 4.a(1)(b) occurs, and all of the holders' rights with
respect to such shares of Series D Preferred Stock shall cease as of such date.
(2) OPTIONAL CONVERSION.
(a) CONVERSION RATIO. Each share of Series D Preferred
Stock shall, unless prohibited by law or regulation and subject to adjustments
as provided in subparagraph 4.b(3) below, be convertible into one (1) share of
Series C Preferred Stock at the option of the holder thereof, at any time.
(b) CONVERSION MECHANICS. A holder of shares of Series D
Preferred Stock desiring to convert such shares shall deliver to the Corporation
or its duly authorized agent the certificate(s) representing such shares (or if
such certificates have been lost, stolen or destroyed, such holder shall execute
an agreement satisfactory to the Corporation to indemnify the Corporation from
any loss incurred by it in connection with such conversion) accompanied by a
written request to convert specifying the number of shares to be converted, the
place where the Series C Preferred Stock issued in conversion thereof shall be
sent, and the name or names in which such holder wishes the certificate or
certificates for Series C Preferred Stock to be issued. The endorsement of the
share certificate and the request to convert shall be in form satisfactory to
the Corporation or such agent, as the case may be. Such conversion shall be
deemed to have occurred as of the close of business on the day next preceding
the date of such delivery of such shares of Series D Preferred Stock to be
converted. The person or persons entitled to receive the Series C Preferred
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such Series C Preferred Stock as of said date.
(3) ADJUSTMENTS.
(a) NO ADJUSTMENT UPON CHANGE IN COMMON STOCK. The
shares of Series D Preferred Stock are convertible into shares of Series C
Preferred Stock, which shares of Series C Preferred Stock are subject to
adjustment pursuant to, and upon the events described in, subparagraph 4.a(3).
Therefore, upon such events, it is unnecessary to provide for, and the
Corporation shall not make, any further direct adjustment of the number of
shares of Series C Preferred Stock into which the Series D Preferred Stock is
convertible.
7.
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(b) ADJUSTMENT UPON CHANGE IN SERIES C PREFERRED STOCK.
In the event of any stock split, stock dividend or other recapitalization that
affects the Series C Preferred Stock without similarly affecting the Common
Stock so as to trigger an adjustment pursuant to subparagraph 4.a(3), the number
of shares of Series C Preferred Stock into which each share of Series D
Preferred Stock is convertible immediately prior to such event shall be
equitably adjusted, effective at the close of business on the date of such
event.
(4) RESERVATION OF SHARES, ETC.
(a) RESERVATION OF SHARES. The Corporation shall at all
times reserve and keep available, out of its authorized but unissued shares of
Series C Preferred Stock, solely for the purpose of effecting the conversion of
the Series D Preferred Stock, the full number of shares of Series C Preferred
Stock deliverable upon conversion of all shares of Series D Preferred Stock from
time to time outstanding. The Corporation shall from time to time, in accordance
with the laws of the State of California, increase the authorized amount of its
shares of Series C Preferred Stock (and, consequently, its shares of Common
Stock) if at any time the authorized number of shares of Series C Preferred
Stock (and, consequently, its Common Stock) remaining unissued shall not be
sufficient to permit the conversion of all of the shares of Series D Preferred
Stock at the time outstanding.
(b) CANCELLATION OF SHARES OF SERIES. All certificates
evidencing Series D Preferred Stock surrendered for conversion shall be
appropriately canceled on the books of the Corporation, and the shares so
converted shall be restored to the status of authorized but unissued Preferred
Stock of the Corporation.
(c) BOARD DETERMINATION. The Board of Directors shall
have the power and the duty to determine conclusively whether any conditions set
forth in this subparagraph 4.b have been satisfied.
c. SERIES E AND SERIES F PREFERRED STOCK. Each share of Series E
Preferred Stock and Series F Preferred Stock shall be convertible as follows:
(1) AUTOMATIC CONVERSION. Each share of Series E Preferred
Stock and Series F Preferred Stock, respectively, shall automatically be
converted into such number of fully paid and nonassessable shares of Common
Stock as is determined by dividing $8.77 and $10.25, respectively, by the Series
E Conversion Price and Series F Conversion Price, respectively, determined as
hereinafter provided, in effect at the time of conversion, as of the close of
business on the day next preceding the day on which the first, if any, of the
following occurs:
(a) PUBLIC OFFERING. The closing of a Public Offering as
defined in subparagraph 4.a(1)(a) above; or
(b) ACQUISITION. The consummation of an Acquisition as
defined in subparagraph 4.a(l)(b) above.
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(c) CONVERSION PRICE. The price at which shares of
Common Stock shall be deliverable upon conversion of the Series E Preferred
Stock (the "Series E Conversion Price") shall initially be $6.949287 per share
(adjusted from $8.77 per share effective March 23, 1992). The price at which
shares of Common Stock shall be deliverable upon conversion of the Series F
Preferred Stock (the "Series F Conversion Price") shall initially be $8.122029
per share.
(d) CONVERSION MECHANICS. A holder of shares of Series E
Preferred Stock or Series F Preferred Stock whose shares have been converted
shall deliver the certificate(s) representing such shares to the Corporation or
its duly authorized agent (or if such certificates have been lost, stolen or
destroyed, such holder shall execute an agreement satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it in
connection with such conversion) specifying the place where the Common Stock
issued in conversion shall be sent. The endorsement of the share certificate
shall be in form satisfactory to the Corporation or such agent, as the case may
be. The conversion shall be deemed to have occurred (whether or not certificates
representing such shares are surrendered or indemnity agreements with respect to
such shares are executed) as of the close of business on the day next preceding
the day on which the first, if any, of the events set forth in subparagraphs
4.c(l)(a) or 4.c(l)(b) occurs, and all of the holders' rights with respect to
such shares of Series E Preferred Stock or Series F Preferred Stock, as
appropriate, shall cease as of such date.
(2) OPTIONAL CONVERSION.
(a) CONVERSION. Each share of Series E Preferred Stock
or Series F Preferred Stock, as appropriate, shall be convertible, at the option
of the holder thereof, at any time into shares of Common Stock at the then
effective Series E Conversion Price or Series F Conversion Price, as
appropriate.
(b) CONVERSION MECHANICS. A holder of shares of Series E
Preferred Stock or Series F Preferred Stock desiring to convert such shares
shall deliver to the Corporation or its duly authorized agent the certificate(s)
representing such shares (or if such certificates have been lost, stolen or
destroyed, such holder shall execute an agreement satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it in
connection with such conversion) accompanied by a written request to convert
specifying the number of shares to be converted, the place where the Common
Stock issued in conversion thereof shall be sent, and the name or names in which
such holder wishes the certificate or certificates for Common Stock to be
issued. The endorsement of the share certificate and the request to convert
shall be in form satisfactory to the Corporation or such agent, as the case may
be. Such conversion shall be deemed to have occurred as of the close of business
on the day next preceding the date of such delivery of such shares of Series E
Preferred Stock or Series F Preferred Stock, as appropriate, to be converted.
The person or persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such Common Stock as of said date.
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(3) ADJUSTMENTS TO SERIES E CONVERSION PRICE OR SERIES F
CONVERSION PRICE FOR CERTAIN DILUTING ISSUES.
(a) SPECIAL DEFINITIONS. For purposes of this
subparagraph 4.c, the following definitions shall apply:
(i) "OPTIONS" shall mean rights, options or
warrants to subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities (defined below).
(ii) "ORIGINAL ISSUE DATE" shall mean the date on
which a share of Series E Preferred Stock or Series F Preferred Stock, as
applicable, was first issued.
(iii) "CONVERTIBLE SECURITIES" shall mean any
evidences of indebtedness, shares (other than Common Stock, Series B Preferred
Stock, Series C Preferred Stock, Series E Preferred Stock and Series F Preferred
Stock) or other securities convertible into or exchangeable for Common Stock.
(iv) "ADDITIONAL SHARES OF COMMON STOCK" shall
mean all shares of Common Stock issued (or, pursuant to subparagraph 4.c(3)(c)
deemed to be issued) by the Corporation after the Original Issue Date, other
than shares of Common Stock issued or issuable:
(A) upon conversion of shares of Series B
Preferred Stock, Series C Preferred Stock, Series E Preferred Stock or Series F
Preferred Stock.
(B) to officers, directors or employees of,
or consultants to, the Corporation pursuant to a stock grant, option plan or
purchase plan or other employee stock incentive program (collectively, the
"Plans") approved by the Board of Directors;
(C) as a dividend or distribution on Series
B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock or Series F Preferred Stock;
(D) by way of dividend or other distribution
on shares of Common Stock excluded from the definition of Additional Shares of
Common Stock by the foregoing clauses (A), (B) and (C) or on shares of Common
Stock so excluded.
(b) NO ADJUSTMENT OF CONVERSION PRICE. No adjustment in
the Series E Conversion Price or Series F Conversion Price, respectively, of a
particular share of Series E Preferred Stock or Series F Preferred Stock,
respectively, shall be made in respect of the issuance of Additional Shares of
Common Stock unless the consideration per share for an Additional Share of
Common Stock issued or deemed to be issued by the Corporation is less than the
Series E Conversion Price or Series F Conversion Price, as appropriate, in
effect on the date
10.
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of, and immediately prior to such issue, for such share of Series E Preferred
Stock or Series F Preferred Stock.
(c) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK.
(i) OPTIONS AND CONVERTIBLE SECURITIES. In the
event the Corporation at any time or from time to time after the Original Issue
Date shall issue any Options or Convertible Securities or shall fix a record
date for the determination of holders of any class of securities entitled to
receive any such Options or Convertible Securities, then the maximum number of
shares (as set forth in the instrument relating thereto without regard to any
provisions contained therein for a subsequent adjustment of such number) of
Common Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date, provided that
Additional Shares of Common Stock shall not be deemed to have been issued unless
the consideration per share (determined pursuant to subparagraph 4.c(3)(e)
hereof) of such Additional Shares of Common Stock would be less than the Series
E Conversion Price or Series F Conversion Price, as appropriate, in effect on
the date of and immediately prior to such issue, or such record date, as the
case may be, and provided further, that in any such case in which Additional
Shares of Common Stock are deemed to be issued:
(A) no further adjustment in the Series E
Conversion Price or Series F Conversion Price, as appropriate, shall be made
upon the subsequent issue of Convertible Securities or shares of Common Stock
upon the exercise of such Options or conversion or exchange of such Convertible
Securities;
(B) if such Options or Convertible
Securities by their terms provide, with the passage of time or otherwise, for
any increase or decrease in the consideration payable to the Corporation, or
decrease or increase in the number of shares of Common Stock issuable upon the
exercise, conversion or exchange thereof, the Series E Conversion Price or the
Series F Conversion Price, as appropriate, computed upon the original issue
thereof (or upon the occurrence of a record date with respect thereto) and any
subsequent adjustments based thereon, shall, upon any such increase or decrease
becoming effective, be recomputed to reflect such increase or decrease insofar
as it affects such Options or the rights of conversion or exchange under such
Convertible Securities (provided, however, that no such adjustment of the Series
E Conversion Price or the Series F Conversion Price shall affect Common Stock
previously issued upon conversion of the Series E Preferred Stock or the Series
F Preferred Stock, as appropriate);
(C) upon the expiration of any such Options
or any rights of conversion or exchange under such Convertible Securities which
shall not have been exercised, the Series E Conversion Price or the Series F
Conversion Price, as appropriate, computed upon the original issue thereof (or
upon the occurrence of a record date with respect
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53
thereto) and any subsequent adjustments based thereon, shall, upon such
expiration, be recomputed as if:
(1) in the case of Convertible
Securities or Options for Common Stock, the only Additional Shares of Common
Stock issued were the shares of Common Stock, if any, actually issued upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities and the consideration received therefor was the consideration
actually received by the Corporation for the issue of all such Options, whether
or not exercised, plus the consideration actually received by the Corporation
upon such exercise, or for the issue of all such Convertible Securities which
were actually converted or exchanged, plus the additional consideration, if any,
actually received by the Corporation upon such conversion or exchange, and
(2) in the case of Options for
Convertible Securities, the only Convertible Securities, if any, actually issued
upon the exercise thereof were issued at the time of issue of such Options, and
the consideration received by the Corporation for the Additional Shares of
Common Stock deemed to have been then issued was the consideration actually
received by the Corporation for the issue of all such Options, whether or not
exercised, plus the consideration deemed to have been received by the
Corporation (determined pursuant to subparagraph 4.c(3) (e)) upon the issue of
the Convertible Securities with respect to which such Options were actually
exercised;
(D) no readjustment pursuant to clause (B)
or (C) above shall have the effect of increasing the Series E Conversion Price
or the Series F Conversion Price to an amount which exceeds the lower of (i) the
Series E Conversion Price or the Series F Conversion Price, as appropriate, on
the original adjustment date, or (ii) the Series E Conversion Price or the
Series F Conversion Price, as appropriate, that would have resulted from any
issuance of Additional Shares of Common Stock between the original adjustment
date and such readjustment date.
(d) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON STOCK. In the event this Corporation shall issue
Additional Shares of Common Stock (including Additional Shares of Common Stock
deemed to be issued pursuant to subparagraph 4.c(3)(c)) without consideration or
for a consideration per share less than the Series E Conversion Price or the
Series F Conversion Price, as appropriate, in effect on the date of and
immediately prior to such issue, then and in such event, the Series E Conversion
Price or the Series F Conversion Price, as appropriate, shall be reduced,
concurrently with such issue, to a price determined by multiplying the Series E
Conversion Price or the Series F Conversion Price, as appropriate, by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issue plus the number of shares of Common
Stock which the aggregate consideration received by the Corporation for the
total number of Additional Shares of Common Stock so issued would purchase at
the Series E Conversion Price or the Series F Conversion Price, as appropriate;
and the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issue plus the number
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of such Additional Shares of Common Stock so issued; provided, however, the
Series E Conversion Price or the Series F Conversion Price shall in no event be
less than $4.56 per share (which was adjusted from $5.75 effective March 23,
1992) (as adjusted for stock splits, combinations and similar events) and
provided further that, for the purposes of this subparagraph 4.c(3)(d) all
shares of Common Stock issuable upon conversion of all outstanding Series E
Preferred Stock or Series F Preferred Stock, as appropriate, and all outstanding
Convertible Securities, and upon exercise of all outstanding Options bearing an
exercise price which is lower than the price at which the Additional Shares of
Common Stock were issued (or deemed to be issued), shall be deemed to be
outstanding, and immediately after any Additional Shares of Common Stock are
deemed issued pursuant to subparagraph 4.c(3)(c) such Additional Shares of
Common Stock shall be deemed to be outstanding.
(e) DETERMINATION OF CONSIDERATION. For purposes of this
paragraph 4.c(3) the consideration received by the Corporation for the issue of
any Additional Shares of Common Stock shall be computed as follows:
(1) CASH AND PROPERTY. Such consideration shall:
(A) insofar as it consists of cash, be
computed at the aggregate amount of cash received by the Corporation excluding
amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other
than cash, be computed at the fair value thereof at the time of such issue, as
determined by the Board of Directors in the good faith exercise of its
reasonable business judgment; and
(C) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board of Directors.
(2) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to subparagraph 4.c(3)(c)(i),
relating to Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration) payable to the Corporation upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities by
13.
55
(y) the maximum number of shares of Common
Stock (as set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(f) ADJUSTMENTS TO SERIES E CONVERSION PRICE AND SERIES
F CONVERSION PRICE FOR STOCK DIVIDENDS AND FOR COMBINATIONS OR SUBDIVISIONS OF
COMMON STOCK. In the event that this Corporation at any time or from time to
time after the Original Issue Date shall declare or pay, without consideration,
any dividend on the Common Stock payable in Common Stock or in any right to
acquire Common Stock for no consideration, or shall effect a subdivision of the
outstanding shares of Common Stock into a greater number of shares of Common
Stock (by stock split, reclassification or otherwise than by payment of a
dividend in Common Stock or in any right to acquire Common Stock) or in the
event the outstanding shares of Common Stock shall be combined or consolidated
by reclassification or otherwise, into a lesser number of shares of Common
Stock, then the Series E Conversion Price and the Series F Conversion Price for
any series of Preferred Stock in effect immediately prior to such event shall,
concurrently with the effectiveness of such event, be proportionately decreased
or increased, as appropriate. In the event that this Corporation shall declare
or pay, without consideration, any dividend on the Common Stock payable in any
right to acquire Common Stock for no consideration, then the Corporation shall
be deemed to have made a dividend payable in Common Stock in an amount of shares
equal to the maximum number of shares issuable upon exercise of such rights to
acquire Common Stock.
(g) ADJUSTMENTS FOR RECLASSIFICATION AND REORGANIZATION.
If the Common Stock issuable upon conversion of the Series E Preferred Stock and
the Series F Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a subdivision or
combination of shares provided for in subparagraph 4.c(3)(f) above), the Series
E Conversion Price and the Series F Conversion Price, as appropriate, then in
effect shall, concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted so that the Series E Preferred
Stock and the Series F Preferred Stock, as appropriate, shall be convertible
into, in lieu of the number of shares of Common Stock which the holders would
otherwise have been entitled to receive, a number of shares of Common Stock that
would have been subject to receipt by the holders upon conversion of the Series
E Preferred Stock and the Series F Preferred Stock, as appropriate, immediately
before that change.
(4) NO IMPAIRMENT. The Corporation will not, by amendment of
its Articles of Incorporation or through any reorganization, transfer of assets,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation but will at all times in good
faith assist in the carrying out of all the provisions of this paragraph 4.c and
in the taking of all such action as may be necessary or appropriate in order to
protect the conversion rights of the holders of the Series E Preferred Stock and
the Series F Preferred Stock against impairment.
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(5) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Series E Conversion Price or the Series F
Conversion Price pursuant to this paragraph 4.c, the Corporation, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to each holder of Series E Preferred Stock or
Series F Preferred Stock, as appropriate, a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series E Preferred Stock or Series F
Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, (ii) the
Series E Conversion Price or the Series F Conversion Price, as appropriate, at
the time in effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be received upon the
conversion of Series E Preferred Stock or the Series F Preferred Stock, as
appropriate.
(6) RESERVATION OF SHARES, ETC.
(a) RESERVATION OF SHARES. The Corporation shall at all
times reserve and keep available, out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion of the Series E
Preferred Stock and the Series F Preferred Stock, the full number of shares of
Common Stock deliverable upon conversion of all shares of Series E Preferred
Stock and Series F Preferred Stock from time to time outstanding. The
Corporation shall from time to time, in accordance with the laws of the State of
California, increase the authorized amount of its shares of Common Stock if at
any time the authorized number of shares of Common Stock remaining unissued
shall not be sufficient to permit the conversion of all of the shares of Series
E Preferred Stock and Series F Preferred Stock at the time outstanding.
(b) CANCELLATION OF SHARES OF SERIES. Series E Preferred
Stock and Series F Preferred Stock surrendered for conversion shall be
appropriately canceled on the books of the Corporation, and the shares so
converted shall be restored to the status of authorized but unissued Preferred
Stock of the Corporation.
(c) BOARD DETERMINATION. The Board of Directors shall
have the power and the duty to determine conclusively whether any conditions set
forth in this paragraph 4.c have been satisfied.
5. NOTICES.
a. EVENTS. If:
(1) There shall occur any subdivision or combination of
outstanding shares of Common Stock or a dividend in Common Stock thereon; or
15.
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(2) There shall occur a voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation; or
(3) There shall occur any determination by the Board of
Directors to proceed with a Public Offering or an Acquisition;
then, and in each such case, the Corporation shall cause to be mailed to the
holders of record of the outstanding Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and Series F
Preferred Stock at least fifteen days prior to the date hereinafter specified, a
notice stating the date (i) which has been set as the record date for the
purpose of such subdivision, combination or dividend, or (ii) on which such
dissolution, liquidation, or winding up, Public Offering or Acquisition is to
take place or, if earlier, which is the record date as of which holders of
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock or Common Stock of record
shall be entitled to participate in such transactions.
b. TRANSFER TAXES. The Corporation shall initially pay any and all
issue and other taxes that may be payable in respect of any transfer involved in
the issuance or delivery of shares of Common Stock or Series C Preferred Stock,
on conversion of shares of Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock
in a name, other than that in which the shares of Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock or
Series F Preferred Stock so converted or redeemed were registered, and no such
issuance or delivery shall be made unless and until the person requesting such
issuance has reimbursed the Corporation in the amount of any such tax, or has
established to the satisfaction of the Corporation that such tax has been paid.
6. PROTECTIVE PROVISIONS. In addition to any vote that may be required by
law, so long as any of the Series B Preferred Stock, Series C Preferred Stock,
Series E Preferred Stock or Series F Preferred Stock shall be outstanding, the
Corporation shall not, without obtaining the approval (by vote or written
consent, as provided by law) of the holders of more than 50% of the then
outstanding shares of each such series of Preferred Stock ("Series B Approval,"
"Series C Approval," "Series E Approval," and "Series F Approval," respectively)
as indicated below:
a. subject to Series B Approval, alter or change the rights,
preferences or privileges of the Series B Preferred Stock; subject to Series C
Approval, alter or change the rights, preferences or privileges of the Series C
Preferred Stock; subject to Series E Approval, alter or change the rights,
preferences or privileges of the Series E Preferred Stock; or, subject to Series
F Approval, alter or change the rights, preferences or privileges of the Series
F Preferred Stock;
b. subject to Series B Approval, increase the authorized number of
shares of Series B Preferred Stock; subject to Series C Approval, increase the
authorized number of shares of Series C Preferred Stock; subject to Series E
Approval, increase the authorized number of
16.
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shares of the Series E Preferred Stock; or, subject to Series F Approval,
increase the authorized number of shares of the Series F Preferred Stock;
c. subject to Series B Approval, create any new class or series of
shares having preferences over Series B Preferred Stock as to dividends or
assets; subject to Series C Approval, create any new class or series of shares
having preferences over Series C Preferred Stock as to dividends or assets;
subject to Series E Approval, create any new class or series of shares having
preferences over Series E Preferred Stock as to dividends or assets; or, subject
to Series F Approval, create any new class or series of shares having
preferences over Series F Preferred Stock as to dividends or assets;
d. subject to Series B Approval, Series C Approval, Series E
Approval and Series F Approval effect any sale or otherwise dispose of all or
substantially all of its assets or consolidate with or merge with any other
corporation or entity, or permit any other corporation or entity to consolidate
or merge with it, except that any subsidiary of the Corporation may merge into
any other subsidiary or into the Corporation;
e. subject to Series B Approval, Series C Approval, Series E
Approval and Series F Approval, effect any reclassification or recapitalization
in any of the Corporation's outstanding capital stock;
f. subject to Series C Approval, Series E Approval and Series F
Approval, create any new class or series of Preferred Stock; provided, however,
that (subject to subparagraph 6.c above) the Corporation may create such new
class or series of Preferred Stock upon obtaining the approval by the
shareholders of the Corporation as defined by Section 153 of the Corporations
Code; or
g. subject to the prior approval of the holders of more than 50% of
the then outstanding shares of Preferred Stock voting together as a single class
on an as-converted basis in accordance with paragraph 3.b, issue any shares for
consideration of less than $4.56 per share (which was adjusted from $5.75
effective March 23, 1992) (appropriately adjusted for all subdivisions and
combinations of Common Stock) provided, however, that the Corporation may issue
shares of Common Stock pursuant to any present or future stock option, stock
purchase, bonus, savings, investment or other stock incentive programs for the
benefit of the employees of the Corporation or any subsidiary of the Corporation
as may be approved by the Board of Directors of the Corporation.
FOUR. The liability of the directors of the Corporation for monetary
damages shall be eliminated to the fullest extent permissible under California
law. The Corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the Corporations Code) for breach of duty to the
Corporation and its stockholders through bylaw provisions or through agreements
with the agents, or both, in excess of the indemnification otherwise permitted
by Section 317 of the Corporations Code, subject to the limits on such excess
indemnification set forth in Section 204 of the Corporations Code.
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* * * * *
3. The foregoing amendment and restatement of articles of incorporation
has been duly approved by the Board of Directors.
4. The foregoing amendment and restatement of articles of incorporation
has been duly approved by the required vote of shareholders in accordance with
Sections 902 and 903 of the Corporations Code. The corporation has two classes
of shares outstanding and there are four series of the class of Preferred Stock.
The number of outstanding shares of each such class and series is 1,472,059
shares of Common Stock, 535,484 shares of Series B Preferred Stock, 391,340
shares of Series C Preferred Stock, 130,399 shares of the non-voting Series D
Preferred Stock, and 441,099 shares of Series E Preferred Stock, for a total
number of outstanding voting shares of the corporation (on an as-converted
basis) of 3,198,378. The Common Stock of the corporation is entitled to vote as
a class, the Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock of the corporation are entitled to
vote together as a class, the Series B Preferred Stock, Series C Preferred Stock
and Series E Preferred Stock are each entitled to vote separately as a series,
and all the outstanding voting shares are entitled to vote together, with
respect to the amendment and restatement of articles of incorporation set forth
herein. The percentage vote required for the approval of the amendment and
restatement set forth herein was more than 50% of each class of outstanding
shares entitled to vote, more than 50% of all the outstanding shares and more
than 50% of the Series B Preferred Stock, Series C Preferred Stock and Series E
Preferred Stock, each voting as a separate series. The number of shares of
outstanding stock, the number of shares of each class of outstanding
18.
60
stock and the number of shares of each of the Series B Preferred Stock, Series C
Preferred Stock and Series E Preferred Stock voting in favor of the amendment
and restatement equaled or exceeded the vote required.
19.
61
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
Date:______________________ _____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
President
_____________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇,
Secretary
20.
62
EXHIBIT C
January 27, 1993
Series F Preferred Stock
Investors Listed on the
Attached Schedule I
RE: IL FORNAIO (AMERICA) CORPORATION SERIES F PREFERRED STOCK FINANCING.
Ladies and Gentlemen:
We have acted as counsel for Il Fornaio (America) Corporation, a California
corporation (the "Company"), in connection with the issuance and sale of 730,664
shares of the Company's Series F Preferred Stock (the "Shares"), to the
Purchasers under the Series F Preferred Stock Purchase Agreement dated as of
January 27, 1993 (the "Agreement"). We are rendering this opinion pursuant to
Section 5.1(b) of the Agreement. Except as otherwise defined herein, capitalized
terms used herein have the respective meanings given to them in the Agreement.
In connection with this opinion, we have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Agreement by the various parties and originals or copies
certified to our satisfaction, of such records, documents, certificates,
opinions, memoranda and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. Where we render
an opinion "to the best of our knowledge" or concerning an item "known to us" or
our opinion otherwise refers to our knowledge, it is based solely upon (i) an
inquiry of attorneys within this firm who perform legal services for the
Company, (ii) receipt of a certificate executed by an officer of the Company
covering such matters, and (iii) such other investigation, if any, that we
specifically set forth herein.
In rendering this opinion, we have assumed: the genuineness and authenticity of
all signatures on original documents; the authenticity of all documents
submitted to us as originals; the conformity to originals of all documents
submitted to us as copies; the accuracy, completeness and authenticity of
certificates of public officials; and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
by the Company of the Agreement), where authorization, execution and delivery
are prerequisites to the effectiveness of such documents. We have also assumed:
that all individuals executing and delivering documents had the legal capacity
to so execute and deliver; that you have received all documents you were to
receive under the Agreement; that the Agreement is an obligation binding upon
you;
63
Series F Preferred Stock Investors
Listed on the Attached Schedule I
January 27, 1993
Page 2
if you are a corporation or other entity, that you have filed any required
California franchise or income tax returns and have paid any required California
franchise or income taxes; and that there are no extrinsic agreements or
understandings among the parties to the Agreement that would modify or interpret
the terms of the Agreement or the respective rights or obligations of the
parties thereunder.
Our opinion is expressed only with respect to the federal laws of the United
States of America and the laws of the State of California. We express no opinion
as to whether the laws of any particular jurisdiction apply, and no opinion to
the extent that the laws of any jurisdiction other than those identified above
are applicable to the subject matter hereof. We are not rendering any opinion as
to compliance with any antifraud law, rule or regulation relating to securities,
or to the sale or issuance thereof.
With regard to our opinion in paragraph 4 below, we have examined and relied
upon a certificate executed by an officer of the Company, to the effect that the
consideration for all outstanding shares of capital stock of the Company was
received by the Company in accordance with the provisions of the applicable
Board of Directors resolutions and any plan or agreement relating to the
issuance of such shares, and we have undertaken no independent verification with
respect thereto.
With regard to our opinion in paragraph 4 below, we express no opinion (a) with
respect to the 80,895 shares of Common Stock and Series A Preferred Stock listed
on Attachment A to the Schedule of Exceptions attached to the Agreement (the
"Schedule of Exceptions"), as to whether such shares are outstanding, duly
authorized, validly issued, fully paid or nonassessable as a result of the
effect of the absence from the Company's records of documentation of waiver or
satisfaction of certain preemptive rights as specified in the Schedule of
Exceptions attached to the Agreement, or (b) the effect of the failure of the
stock records of the Company to include executed assignments with respect to
75,922 shares of Common Stock.
On the basis of the foregoing, in reliance thereon and with the foregoing
qualifications, we are of the opinion that:
1. The Company has been duly incorporated and is a validly existing corporation
in good standing under the laws of the State of California.
64
Series F Preferred Stock Investors
Listed on the Attached Schedule I
January 27, 1993
Page 3
2. The Company has the requisite corporate power to own or lease its property
and assets and to conduct its business as it is currently being conducted and,
to the best of our knowledge, is qualified as a foreign corporation to do
business and is in good standing in each jurisdiction in the United States in
which the ownership of its property or the conduct of its business requires such
qualification and where any statutory fines or penalties or any corporate
disability imposed for the failure to qualify would materially and adversely
affect the Company, its assets, financial condition or operations.
3. The Agreement has been duly and validly authorized, executed and delivered by
the Company and constitutes a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, except as rights
to indemnity in Sections 7.10 and 8.8 of the Agreement may be limited by
applicable laws and except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar
laws affecting creditors' rights, and subject to general equity principles and
to limitations on availability of equitable relief, including specific
performance.
4. The Company's authorized capital stock consists of 15,000,000 shares of
Common Stock, without par value, of which 1,472,059 shares are issued and
outstanding, and (b) 3,500,000 shares of Preferred Stock, without par value, of
which (i) no shares are designated Series A Preferred Stock, (ii) 542,225 shares
have been designated Series B Preferred Stock, 535,484 of which shares are
issued and outstanding, (iii) 521,739 shares have been designated Series C
Preferred Stock, 391,340 of which shares are issued and outstanding, (iv)
521,739 shares have been designated Series D Preferred Stock, 130,399 of which
shares are issued and outstanding, (v) 450,000 shares have been designated
Series E Preferred Stock, 441,099 of which shares are issued and outstanding,
and (vi) 825,000 shares have been designated Series F Preferred Stock, none of
which shares are issued and outstanding (excluding the shares issued under the
Agreement). The rights, preferences and privileges of the Series B, Series C,
Series D, Series E and Series F Preferred Stock are as stated in the Company's
Amended and Restated Articles of Incorporation. The outstanding shares of Common
Stock and Preferred Stock have been duly authorized and validly issued, and are
fully paid and nonassessable. The Shares have been duly authorized, and upon
issuance and delivery against payment therefor in accordance with the terms of
the Agreement, the Shares will be validly issued, outstanding, fully paid and
nonassessable. The shares of Common Stock issuable upon conversion of the Shares
have been duly authorized and, upon issuance and delivery against payment
65
Series F Preferred Stock Investors
Listed on the Attached Schedule I
January 27, 1993
Page 4
therefor in accordance with the terms of the Shares, will be validly issued,
outstanding, fully paid and nonassessable. To the best of our knowledge, except
as disclosed in the Schedule of Exceptions, there are no options, warrants,
conversion privileges, preemptive rights or other rights presently outstanding
to purchase any of the authorized but unissued capital stock of the Company,
other than (i) the conversion privileges of the Series B, Series C, Series D,
and Series E Preferred Stock, (ii) rights created in connection with the
transactions contemplated by the Agreement, (iii) 103,680, 126,200 and 300,000
shares of Common Stock authorized for issuance upon the exercise of employee
stock options under the 1988 Stock Option Plan, 1991 Incentive Stock Option Plan
and 1992 Stock Option Plan, respectively, (iv) 100,000 shares of Common Stock
authorized for issuance under the Company's 1992 Non-Employee Directors' Stock
Option Plan and (v) 200,000 shares of Common Stock authorized for issuance under
the Company's 1992 Employee Stock Purchase Plan.
5. The execution and delivery of the Agreement by the Company and the issuance
of the Shares pursuant thereto do not violate any provision of the Company's
Amended and Restated Articles of Incorporation or Bylaws, and do not constitute
a material default under the provisions of any material agreement known to us to
which the Company is a party or by which it is bound.
6. To the best of our knowledge, except as disclosed in the Schedule of
Exceptions attached to the Agreement, there is no action, proceeding or
investigation pending or overtly threatened against the Company before any court
or administrative agency that questions the validity of the Agreement or might
result, either individually or in the aggregate, in any material adverse change
in the assets, financial condition, or operations of the Company.
7. All consents, approvals, authorizations, or orders of, and filings,
registrations, and qualifications with any regulatory authority or governmental
body in the United States required for the consummation by the Company of the
transactions contemplated by the Agreement, have been made or obtained, except
(a) for the filing of a Notice of Transaction Pursuant To Section 25102(f) of
the California Corporate Securities Law of 1968 and any applicable filings
required under the securities laws of other states and (b) for the filing of an
amendment to a Form D pursuant to Securities and Exchange Commission Regulation
D.
8. The offer and sale of the Shares (and the Common Stock issuable upon
conversion thereof) is exempt from the registration requirements of the
Securities Act
66
Series F Preferred Stock Investors
Listed on the Attached Schedule I
January 27, 1993
Page 5
of 1933, as amended, subject to the timely filing of a Form D pursuant to
Securities and Exchange Commission Regulation D and the qualification
requirements of the California Corporate Securities Law of 1968, subject to the
timely filing of a Notice of Transaction Pursuant To Section 25102(f).
This opinion is intended solely for your benefit and is not to be made available
to or be relied upon by any other person, firm, or entity without our prior
written consent.
Very truly yours,
▇▇▇▇▇▇ GODWARD ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
By ______________________
▇▇▇▇ ▇. ▇▇▇▇▇
67
SCHEDULE I
Il Fornaio (America) Corporation
Series F Preferred Stock Investors
68
SCHEDULE OF PREFERRED STOCK PURCHASE AGREEMENTS
This schedule sets forth a list of the Company's Preferred Stock Purchase
Agreements that are substantially identical in all material respects to the
Series F Stock Purchase Agreement filed as Exhibit 10.6. The material details
in which such documents differ from the Series F Preferred Stock Purchase
Agreement are set forth in the table below:
-----------------------------------------------------------------------------------------------------
MARKET
SCHEDULE OF NUMBER OF PER SHARE STAND-OFF
PURCHASE AGREEMENT DATE PURCHASERS SHARES PRICE PERIOD
-----------------------------------------------------------------------------------------------------
Series B Preferred Stock 3/20/87 See Exhibit A 542,225 $4.6106 120 days
Purchase Agreement attached
-----------------------------------------------------------------------------------------------------
Series C & D Preferred 1/19/88 See Exhibit B 391,340/Series C $5.75 120 days
Stock Purchase attached 130,399/Series D
Agreement
-----------------------------------------------------------------------------------------------------
Series E Preferred Stock 1/30/90 See Exhibit C 434,762 $8.77 120 days
Purchase Agreement attached
-----------------------------------------------------------------------------------------------------
1.
69
EXHIBIT A
SCHEDULE OF PURCHASERS
NUMBER OF AMOUNT OF
NAME SHARES PURCHASED CONSIDERATION
------------------------------------ ------------------ -------------------
W. ▇▇▇▇▇▇ ▇▇▇▇▇▇ 82,610 $380,881.67
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 72,217 332,963.70
▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ 1,022 4,712.03
Matrix Partners, L.P. 119,293 550,012.31
InterWest Partners 120,729 556,633.13
Warburg, ▇▇▇▇▇▇ Associates, L.P. 119,293 550,012.31
FWH Associates, a California Limited 10,845 50,001.96
Partnership
▇. ▇▇▇▇▇▇▇ ▇▇▇ 400 1,844.24
▇▇▇▇ ▇▇▇▇▇▇ 120 553.27
▇▇▇▇▇ ▇▇▇▇▇▇▇ 241 1,111.15
▇▇▇▇▇▇ ▇▇▇▇▇▇ 431 1,987.17
To Be Sold 15,024 69,269.65
---------- -------------
542,225 $2,499,982.59
========== =============
1.
70
EXHIBIT B
SCHEDULE OF PURCHASERS
NUMBER OF SHARES PURCHASED
----------------------------------
AMOUNT OF
NAME SERIES C SERIES D CONSIDERATION
----------------------------- ---------------- ------------- --------------
▇▇▇▇▇ Fargo Capital Markets 43,515 130,399 $1,000,005.50
▇▇▇▇▇▇▇▇ V 173,914 -- 1,000,005.50
InterWest Partners II 104,379 -- 600,179.25
InterWest Entrepreneurs 5,494 -- 31,590.50
Matrix Partners 57,971 -- 333,333.25
FWH Associates 5,652 -- 32,499.00
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 130 -- 747.50
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 250 -- 1,437.50
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 35 -- 201.25
--------- --------- -------------
391,340 130,399 $2,999,999.25
========= ========= =============
1.
71
EXHIBIT C
SCHEDULE OF PURCHASERS
NUMBER OF SHARES OF AMOUNT OF
NAME SERIES E PREFERRED STOCK CONSIDERATION
---------------------------------------------------------- --------------------
Sequoia Capital Growth Fund 214,368 $1,880,007.36
Sequoia Technology Partners III 13,683 119,999.91
InterWest Partners II 57,013 500,004.01
FWH Associates 49,131 430,878.87
▇▇▇▇▇▇ Family Trust 5,702 50,006.54
Four ▇▇▇▇▇▇ Trust 28,507 250,006.39
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 11,403 100,004.31
Stanislaus Parnters 35,000 306,950.00
▇▇▇▇▇▇ ▇. ▇▇▇▇ 11,403 100,004.31
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 8,552 75,001.04
-------- -------------
TOTAL 434,762 3,812,862.74
1.