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EXHIBIT 10.3
ACCELERATED NETWORKS, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
MAY 30, 1997
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SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This Series A Preferred Stock Purchase Agreement ("Agreement") is made this 30th
day of May 1997, by and between (i) Accelerated Networks, Inc., a California
corporation (the "Company"), (ii) New Enterprise Associates VII, L.P., NEA
Presidents Fund, L.P., NEA Ventures 1997, Limited Partnership, U.S. Venture
Partners V, L.P., USVP V International, L.P., 2180 Associates Fund V, L.P. and
USVP V Entrepreneur Partners, L.P. (collectively, the "Primary Investors"),
(iii) ▇▇▇▇▇▇▇ Capital (the "Secondary Investor"), and (iv) each of the other
parties listed on Exhibit A hereto (each of the foregoing parties is hereinafter
referred to individually as an "Investor" and collectively as the "Investors").
In consideration of the mutual promises, covenants and conditions hereinafter
set forth, the parties hereto agree as follows:
1. AUTHORIZATION AND SALE OF SHARES
1.1. Authorization. As of the First Closing (as defined below), the Company
will have authorized the issuance, pursuant to the terms and conditions of this
Agreement, of 11,500,000 shares of the Company's Series A Preferred Stock, $.001
par value, having the rights, preferences, privileges and restrictions set forth
in the Amended and Restated Articles of Incorporation of the Company attached to
this Agreement as Exhibit B (the "Restated Articles").
1.2. Agreement to Purchase and Sell.
(a) First Closing. Subject to the terms and conditions hereof, at the
First Closing, the Company will issue and sell to each Investor listed on
Exhibit A other than the Secondary Investor, and each such Investor agrees to
purchase from the Company, that number of shares of Series A Preferred Stock set
forth opposite such Investor's name on Exhibit A at a price of $0.50 per share.
(b) Second Closing. Subject to the terms and conditions hereof, at the
Second Closing (as defined below), the Secondary Investor will have the option
to purchase from the Company that number of shares of Series A Preferred Stock
set forth opposite such Investor's name on Exhibit A hereto at a price of $0.50
per share; provided that if the Secondary Investor does not purchase from the
Company all of the shares of Series A Preferred Stock set forth opposite such
Investor's name on Exhibit A, then the Primary Investors shall purchase from the
Company on a pro rata basis the number of shares of Series A Preferred Stock not
elected to be purchased by the Secondary Investor at a price of $0.50 per share.
The Company will issue and sell to such Investors that number of shares of
Series A Preferred Stock set forth opposite the Secondary Investor's name on
Exhibit A.
(c) Payment of Purchase Price for Shares. All shares of Series A
Preferred Stock to be sold to the Investors pursuant to this Agreement are
hereinafter referred to collectively as the "Shares." The purchase price for the
Shares shall be paid by each Investor by
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way of check or by delivery of a wire transfer of funds made to the order of the
Company in the amount of such Investor's portion of the aggregate purchase price
for the Shares.
2. CLOSING DATE; DELIVERY
2.1. The Closings. The purchase and sale of the Shares pursuant to
Paragraph 1.2(a) shall be held at the offices of ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
in Newport Beach, California, on May 30, 1997, or at such other time and place
as the Company and the Primary Investors may mutually agree upon (the "First
Closing" or the "Closing"). The Company may, but shall not be obligated to,
accept delivery of funds from Investors (other than Primary Investors) for up to
ten (10) days following the Closing, and such shares shall be deemed to be sold
at the Closing. The purchase and sale of the Shares pursuant to Paragraph 1.2(b)
shall be held at the offices of ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP in Newport
Beach, California, no later than September 30, 1997, or at such other time and
place as the Company and a majority of the Investors purchasing Shares on such
date may mutually agree upon (the "Second Closing").
2.2. Delivery. The Company will deliver to each Investor a certificate
representing the shares to be purchased by such Investor hereunder against
payment of such Investor's portion of the aggregate purchase price for the
Shares by cashier's check or by wire transfer.
3. COMPANY REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to each Investor that, except as
set forth in the Schedule of Exceptions ("Schedule of Exceptions") attached to
this Agreement as Exhibit C (which Schedule of Exceptions shall be deemed to be
representations and warranties to each Investor), the statements in the
following paragraphs of this Section 3 are all true and correct:
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 under such laws. The Company has all
corporate power and authority to own, lease and operate its properties and to
conduct its business as currently conducted and as proposed to be conducted. The
Company is qualified to do business as a foreign corporation in each
jurisdiction in which the conduct of its business requires such qualification
except where failure to be so qualified would have a material adverse effect on
its financial condition, business or operations. The Company has furnished the
Investors with true, correct and complete copies of its Articles of
Incorporation and Bylaws.
3.2. Capitalization. Immediately prior to the First Closing (and after the
filing of the Restated Articles with the California Secretary of State), the
authorized capital stock of the Company will consist of (i) Forty-eight Million
Five Hundred Thousand (48,500,000) shares of Common Stock, of which Six Million
Eight Hundred Thousand (6,800,000) shares are issued and outstanding, and (ii)
Eleven Million Five Hundred Thousand (11,500,000) shares of Preferred Stock, all
of which shares have been designated Series A Preferred Stock, up to Eleven
Million Two Hundred Thousand (11,200,000) of which shares will be sold to the
Investors pursuant to this Agreement. The Company has reserved Eleven Million
Two Hundred Thousand (11,200,000) shares of its Common Stock for possible
issuance upon the conversion of the Shares (the "Conversion Shares"). After the
filing of the Restated Articles with the California
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Secretary of State, except for (i) the conversion privileges of the Shares, (ii)
the rights provided in Sections 2.4, 2.5 and 2.6 of the Investors' Rights
Agreement in the form attached hereto as Exhibit D (the "Investors' Rights
Agreement"), and (iii) the 2,000,000 shares of Common Stock reserved for
issuance under the Company's 1997 Stock Option/Stock Issuance Plan (the "Plan"),
57,120 shares of which have been issued pursuant to stock option agreements,
there are no options, warrants, conversion privileges or other rights, or
agreements with respect to the issuance thereof, presently outstanding to
purchase any of the capital stock of the Company. All shares are duly
authorized, validly issued, fully paid and nonassessable and have been issued by
the Company in compliance with the registration requirements of securities laws.
Apart from the exceptions noted in this Paragraph 3.2, no shares of the
Company's outstanding capital stock, or stock issuable upon exercise or exchange
of any outstanding options or other stock issuable by the Company, are subject
to any rights of first refusal or other rights to purchase such stock (whether
in favor of the Company or any other person), pursuant to any agreement or
commitment of the Company. Attached to this Agreement as Exhibit E is a complete
list of all outstanding shareholders, option holders and other security holders
of the Company as of immediately prior to the First Closing (and after the
filing of the Restated Articles with the California Secretary of State). No
shareholder has granted a third party an option or other right to purchase the
shares held by such shareholder.
3.3. Subsidiaries. The Company has no subsidiaries and does not presently
own or control, directly or indirectly, any interest in any other corporation,
partnership, trust, joint venture, association, or other entity.
3.4. Due Authorization. All corporate action on the part of the Company,
its officers, directors and shareholders, necessary for the sale and issuance of
the Shares and the Conversion Shares and the performance of the Company's
obligations under this Agreement, the Investor Rights' Agreement and the Voting
Agreement (as defined herein) has been taken or will be taken prior to the First
Closing. This Agreement and the Investor Rights' Agreement are valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, subject, as to enforcement of remedies, to applicable bankruptcy,
insolvency, moratorium, reorganization and similar laws affecting creditors'
rights generally and to general equitable principles. The Shares are not subject
to any preemptive rights or rights of first refusal pursuant to any agreement or
commitment of the Company. To the Company's knowledge, the execution, delivery
and performance by the Company of this Agreement and compliance herewith and the
sale and issuance of the Shares and Common Stock issuable upon conversion of the
Shares will not result in any violation of and will not conflict with, or result
in a breach of any of the terms of, or constitute a default under, any provision
of state or federal law to which the Company is subject, the Company's Articles
of Incorporation or Bylaws, each as amended, or any provision of any mortgage,
indenture, agreement, instrument, judgment, decree, order, rule or regulation or
other restriction to which the Company is a party or by which it is bound, the
breach of or default under which would have a material adverse effect upon the
business or operations of the Company, or result in the creation of any
mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of the Company pursuant to any such term; provided, however, that the
Shares (and the Common Stock issuable upon conversion thereof) may be subject to
restrictions on transfer under state and/or federal securities laws. The shares
of Common Stock issuable upon conversion of the Shares have been duly and
validly reserved and are not subject
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to any preemptive rights or rights of first refusal and, upon issuance, will be
validly issued, fully paid and nonassessable.
3.5. Valid Issuance of Stock. The outstanding capital stock of the Company
and the Shares, when issued, sold and delivered in accordance with the terms of
this Agreement for the consideration provided for herein, will be duly and
validly issued, fully paid and nonassessable and will be free of any liens or
encumbrances created by the Company. The Conversion Shares have been duly and
validly reserved for issuance and are not subject to any preemptive rights or
rights of first refusals, upon issuance in accordance with the terms of the
Restated Articles, will be duly and validly issued, fully paid and
nonassessable.
3.6. Liabilities. The Company has no indebtedness for borrowed money that
the Company has directly or indirectly created, incurred, assumed, or
guaranteed, or with respect to which the Company has otherwise become directly
or indirectly liable. The Company has no obligations or liabilities of any kind
whatsoever.
3.7. Title to Properties and Assets. The Company has good and marketable
title to its properties and assets held in each case subject to no mortgage,
pledge, lien, encumbrance, security interest or charge of any kind, except such
mortgage, pledge, lien, encumbrance, security interest or charge that arises in
the ordinary course of business and does not materially impair the Company's
ownership or use of such property. With respect to the property and assets it
leases, the Company is in compliance with such leases and, to the Company's
knowledge, the Company holds valid leasehold interests in such assets free of
any liens, encumbrances, security interests or claims of any party other than
the lessors of such property and assets.
3.8. Intellectual Property. To the Company's knowledge (but without having
conducted any special investigation or patent search), the Company has
sufficient title, license and/or ownership of all patents, trademarks, service
marks, trade names, copyrights, trade secrets, information, proprietary rights
and processes necessary for its business as now conducted without any conflict
with or infringement of the rights of others. Except for the agreements with its
own employees or consultants referenced in paragraph 3.9 and licensing
agreements entered into by the Company in the ordinary course of its business,
there are no outstanding options, licenses, or agreements of the Company
relating to the foregoing, and the Company is not a party or bound by any
options, licenses or agreements with respect to the patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information,
proprietary rights and processes of any other person or entity. Neither the
Company nor any of its employees has received any communications alleging that
the Company has violated or, by conducting its business as proposed, would
violate any of the patents, trademarks, service marks, trade names, copyrights
or trade secrets or other proprietary rights of any other person or entity. The
Company warrants that to its actual knowledge no employee of the Company is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would conflict with his obligation to
use his best efforts to promote the interests of the Company or that would
conflict with the Company's business. Reasonable security measures have been
taken to protect the secrecy, confidentiality and value of the proprietary
information referred to in this Section 3.8.
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3.9. Material Contracts and Obligations. The Company has made available to
counsel for the Investors all agreements, contracts, leases, licenses,
instruments, commitments, indebtedness, liabilities and other obligations
written or oral, absolute or contingent, to which the Company is a party or by
which it is bound that are (i) material to the conduct and operations of its
business and properties; (ii) involve any of the officers, consultants,
directors, employees or shareholders of the Company; or (iii) obligate the
Company to share, license or develop any product or technology (except licensing
agreements entered into by the Company in the ordinary course of its business).
All employees of the Company have executed or will execute prior to the First
Closing a "Proprietary Information and Inventions Agreement" concerning
nondisclosure of confidential information and assignment of inventions to the
Company in a form previously delivered to counsel for the Investors. For
purposes of this Paragraph 3.9, "material" shall mean any agreement, contract,
indebtedness, liability or other obligation having an aggregate value, cost or
amount in excess of $10,000.
3.10. Litigation. There are no actions, proceedings or investigations
pending or, to the Company's knowledge, threatened, against or affecting the
Company or its property, that, either in any case or in the aggregate, might
result in any material adverse change in the business, prospects, condition,
affairs or operations of the Company or in any of its properties or assets, in
any material impairment of the right or ability of the Company to carry on its
business as now conducted and as proposed to be conducted, or in any change in
the current equity ownership of the Company, and none that questions the
validity of this Agreement or any action taken or to be taken in connection
herewith.
3.11. Governmental Consents. Except for filings (if any) required under
federal and state securities laws (including the filing pursuant to Section
25102(f) of the California Corporate Securities Law of 1968, as amended), and
the rules and regulations thereunder, all consents, approvals, orders,
authorizations or registrations, qualifications, designations, declarations or
filings with any federal or state governmental authority on the part of the
Company required in connection with the consummation of the transactions
contemplated herein shall have been obtained prior to and be effective as of the
Closing. Based in part on the representations of the Investors set forth in
Paragraph 4 below, the offer, sale and issuance of the Shares in conformity with
the terms of this Agreement are exempt from the registration and prospectus
delivery requirements of the Securities Act of 1933, as amended (the "Securities
Act") and exempt from qualifications under applicable blue sky laws.
3.12. Third Party Consents. Except as set forth above in Section 3.11, all
third party consents, approvals, orders or authorizations required to be
obtained by the Company in connection with the consummation of the transactions
contemplated herein have been obtained.
3.13. Compliance with Other Instruments. The Company is not in violation,
breach or default of any term of its Articles of Incorporation or Bylaws or, in
any material respect, of any term or provision of any mortgage, indenture,
contract, agreement or instrument to which the Company is a party or by which it
may be bound, or of any provision of any foreign or domestic state or federal
judgment, decree, order, statute, rule or regulation applicable and material to
the Company. The execution, delivery and performance of, and compliance with,
this Agreement and the consummation of the transactions contemplated hereby will
not result in any such violation or default, or be in conflict with or
constitute, with or without the passage of time or the
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giving of notice or both, (i) a default under the Company's Articles of
Incorporation or Bylaws, or under any agreement or contract of the Company, (ii)
to the Company's knowledge, a violation of any statutes, laws, regulations or
orders, or (iii) an event which results in the creation of any lien, charge or
encumbrance upon any asset of the Company.
3.14. Disclosure. No representation or warranty by the Company in this
Agreement or in any written statement or certificate signed by the President of
the Company furnished pursuant to this Agreement contains or will contain any
untrue statement of a material fact which would cause the statements made herein
or therein in the light of the circumstances to be materially misleading. The
Company believes in good faith that the assumptions made by the Company in
preparing the business plan and any financial projections previously provided to
the Investors were reasonable when made.
3.15. Registration Rights. Except as provided in the Investors' Rights
Agreement, the Company has not granted or agreed to grant any person or entity
any rights (including piggy-back registration rights) to have any securities of
the Company registered with the United States Securities and Exchange Commission
("SEC") or any other governmental authority.
3.16. Tax Matters. To the Company's knowledge, the Company has no unpaid
federal, state, county or local taxes. There have been no examinations or audits
of any tax returns or reports of the Company by any applicable federal, state or
local governmental agency. The Company has duly filed all federal, state, county
and local tax returns required to have been filed by it and paid all taxes shown
to be due on such returns. There are in effect no waivers of applicable statutes
of limitations with respect to taxes for any year.
3.17. Tax Elections. The Company has not elected pursuant to the Internal
Revenue Code of 1986, as amended (the "Code"), to be treated as a Subchapter S
corporation or collapsible corporation pursuant to Section 1362(a) or Section
341(f) of the Code, nor has it made any other elections pursuant to the Code
(other than elections which relate solely to matters of accounting, depreciation
or amortization) which would have a material affect on the Company, its
financial condition, its business as presently conducted or presently proposed
to be conducted or any of its properties or material assets.
3.18. Shareholders, Directors and Officers. To the Company's knowledge,
none of the officers or directors or significant employees or consultants of the
Company, has, individually or collectively, a material interest in any entity
which is a competitor, customer or supplier of (or has any existing contractual
relationship with) the Company, other than holdings of less than 1% of
publicly-held entities.
3.19. Title of Properties, Liens and Encumbrances. To the Company's
knowledge, the Company has good and marketable title to its properties and
assets and has good title to all its leasehold interests, in each case subject
to no mortgage, pledge, lien, security interest, conditional sale agreement,
encumbrance or charge, except (i) tax, materialmen's or like liens for
obligations not yet due or payable or being contested in good faith by
appropriate proceedings, or (ii) possible minor liens or encumbrances which do
not in any case materially detract from the value of the property subject
thereto or materially impair the operations of the Company and which have not
arisen otherwise then in the ordinary course of business.
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3.20. Employees. To the Company's knowledge, no employee of the Company is
in violation of any term of any employment contract, patent disclosure
agreement, non-competition agreement, or any restrictive covenant to a former
employer relating to the right of any such employee to be employed by the
Company because of the nature of the business conducted or presently proposed to
be conducted by the Company or to the use of trade secrets or proprietary
information of others. There is neither pending nor, to the Company's knowledge,
threatened any actions, suits, proceedings or claims, or to its knowledge any
basis therefor or threat thereof with respect to any contract, agreement,
covenant or obligations referred to in the preceding sentence. The Company does
not have any collective bargaining agreement covering any of its employees. No
employee of the Company has an employment agreement or a severance arrangement
with the Company and such employees are employed on an "at will" basis.
4. REPRESENTATIONS AND WARRANTIES OF INVESTOR
Each Investor represents and warrants to the Company as follows:
4.1. Due Authorization. All corporate action on the part of the Investor,
and its officers, directors, partners and shareholders, necessary for the
purchase of the Shares and the performance of the Investor's obligations under
this Agreement, the Investors' Rights Agreement and the Voting Agreement (as
defined herein) has been taken or will be taken prior to the Closing. This
Agreement and the Investors' Rights Agreement are valid and binding obligations
of the Investor enforceable in accordance with their terms, subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, moratorium,
reorganization and similar laws affecting creditors' rights generally and to
general equitable principles.
4.2. Investigation. The Investor acknowledges that it has had an
opportunity to discuss the business, affairs and current prospects of the
Company with the Company's officers. The Investor further acknowledges having
had access to information about the Company that it has requested or considers
necessary for purposes of purchasing the Shares.
4.3. Purchase for Own Account. The Shares that the Investor will purchase
hereunder and the Conversion Shares issuable upon conversion of such Shares will
be acquired for such Investor's own account, not as a nominee or agent, and not
with a view to or in connection with the sale or distribution of any part
thereof, and such Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same. If such Investor is one of
the Primary Investors or the Secondary Investor, such Investor is an "accredited
investor" within the meaning of Regulation D of the Securities Act.
4.4. Exempt from Registration. The Investors understand that the Shares and
the Conversion Shares (collectively, the "Securities") will not be registered
under the Securities Act, on the ground that the sale provided for in this
Agreement is exempt from registration under the Securities Act, and that the
reliance of the Company on such exemption is predicated in part on the
Investors' representations set forth in this Agreement.
4.5. Economic Risk. The Investor acknowledges that it is experienced in
evaluating and investing in securities of companies in the development stage and
acknowledges that it is
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able to fend for itself in the transactions contemplated by this Agreement and
has the ability to bear the economic risks of its investment pursuant to this
Agreement.
4.6. Restricted Securities. The Investor understands that the Securities
may not be sold, transferred, or otherwise disposed of without registration
under the Securities Act or an exemption therefrom, and that, in the absence of
an effective registration statement covering the Securities or an available
exemption from registration under the Securities Act, the Securities must be
held indefinitely. In particular, the Investor is aware that the Securities may
not be sold pursuant to Rule 144 promulgated under the Securities Act unless (i)
a public trading market then exists for the Securities, (ii) adequate
information concerning the Company is then available to the public, (iii) such
Investor has held the Securities for the applicable holding period specified in
Rule 144, and (iv) all other terms and conditions of Rule 144 are satisfied.
4.7. Restrictive Legends. It is understood that each certificate
representing (i) the Shares, (ii) the Conversion Shares, and (iii) any other
securities issued in respect of the Shares upon any stock split, stock dividend,
recapitalization, merger or similar event (unless no longer required in the
opinion of counsel for the Company) shall be stamped or otherwise imprinted with
legends substantially in the following forms (in addition to any legend that may
now or hereafter be required by applicable state law):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH
SECURITIES, OR DELIVERY OF AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
OF SUCH SECURITIES THAT SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION
IS IN FULL COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS SET FORTH IN THAT CERTAIN INVESTORS' RIGHTS AGREEMENT DATED AS
OF MAY 30, 1997 AND THAT CERTAIN VOTING AGREEMENT DATED AS OF MAY 30, 1997,
COPIES OF WHICH MAY BE OBTAINED BY ANY SHAREHOLDER, UPON REQUEST AND
WITHOUT CHARGE, AT THE PRINCIPAL OFFICES OF THE CORPORATION."
4.8. Further Limitations on Disposition. Without in any way limiting the
representations set forth above, the Investor further agrees not to make any
disposition of all or any portion of the Shares or Conversion Shares unless and
until the transferee has agreed in writing for the benefit of the Company to be
bound by this Section 4 and the Investors' Rights Agreement; provided, and to
the extent, this Section and such agreement are then applicable, and:
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(a) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(b) (i) Such Investor shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and (ii) if reasonably
requested by the Company, such Investor shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company that such disposition
will not require registration of such shares under the Securities Act. It is
agreed that the Company will not require opinions of counsel from an Investor
for transactions made pursuant to Rule 144 under the Securities Act except in
unusual circumstances.
4.9. Governmental Consents. All consents, approvals, orders, authorizations
or registrations, qualifications, designations, declarations or filings with any
U.S., federal or state governmental authority on the part of the Investor
required in connection with the consummation of the transactions contemplated
herein shall have been obtained prior to and be effective as of the Closing.
4.10. Third Party Consents. All third party consents, approvals, orders or
authorizations required to be obtained by the Investor in connection with the
consummation of the transactions contemplated herein have been obtained.
5. CONDITIONS TO INVESTORS' OBLIGATIONS AT THE CLOSING
The obligation of the Investors to purchase the Shares at the Closing is
subject to the fulfillment to the satisfaction of the Investors on or prior to
the Closing of the following conditions:
5.1. Representations and Warranties Correct; Performance of Obligations.
The representations and warranties made by the Company in Section 3 hereof shall
be true and correct when made, and shall be true and correct as of the Closing
with the same force and effect as if they had been made on and as of said date,
subject to changes contemplated by this Agreement.
5.2. Performance. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing and
shall have obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein.
5.3. Securities Laws. The offer and sale of the Shares to the Investors
pursuant to this Agreement shall be exempt from the registration requirements of
the Securities Act and the registration and/or qualification requirements of all
applicable state securities laws.
5.4. Amendment to Articles. The Restated Articles shall have been duly
adopted by the Company by all necessary corporate action of its Board of
Directors and shareholders and shall have been duly filed with and accepted by
the California Secretary of State.
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5.5. Opinion of Company's Counsel. The Investors shall have received from
counsel to the Company, an opinion, in the form attached hereto as Exhibit F,
addressed to the Investors, dated the date of Closing.
5.6. Compliance Certificate. At the Closing there shall have been delivered
to the Investors a certificate, dated as of such date of Closing, signed by the
Company's President certifying that the conditions specified in Paragraphs 5.1
and 5.2 of this Agreement have been fulfilled.
5.7. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be satisfactory in
substance and form to the Investors, and the Investors shall have received all
such counterpart originals or certified or other copies of such documents as the
Investors may reasonably request.
5.8. Investors' Rights Agreement. The required parties shall have executed
the Investors' Rights Agreement and such agreement shall be in full force and
effect.
5.9. Voting Agreement. The required parties shall have executed the Voting
Agreement in the form attached hereto as Exhibit G (the "Voting Agreement") and
such agreement shall be in full force and effect.
5.10. Amendment to Founders' Agreements. The Founder/Employee Shareholder
Agreements for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ shall have been amended in the
form attached hereto as Exhibit H and Exhibit I, respectively.
5.11. Authorizations. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body that are required in connection
with the lawful issuance and sales of the Shares pursuant to this Agreement
shall have been duly obtained and shall be effective on and as of the Closing.
5.12. Board of Directors. At the Closing, the Company's Board shall be set
at five (5) members. Members of the Board shall be ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Brig. Gen.
▇.▇. ▇▇▇▇▇▇▇, USAF (Ret.), ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and one vacancy.
6. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING
The obligations of the Company under this Agreement are subject to the
fulfillment at or before the Closing of the following conditions:
6.1. Representations and Warranties. The representations and warranties of
each Investor contained in Section 4 hereof shall be true as of the Closing with
the same force and effect as if they had been made on and as of said date,
subject to changes contemplated by this Agreement.
6.2. Payment of Purchase Price. The Investors shall have delivered to the
Company the aggregate purchase price for the Shares as set forth in Section 1.2
hereof.
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6.3. Restated Articles Effective. The Restated Articles shall have been
duly adopted by the Company by all necessary corporate action of its Board of
Directors and shareholders, and shall have been duly filed with and accepted by
the California Secretary of State.
6.4. Securities Exemptions. The offer and sale of the Shares to the
Investors pursuant to this Agreement shall be exempt from the registration
requirements of the Securities Act, and the registration and/or qualification
requirements of all applicable state securities laws.
6.5. Investors' Rights Agreement. The required parties shall have executed
the Investors' Rights Agreement and such agreement shall be in full force and
effect.
6.6. Voting Agreement. The required parties shall have executed the Voting
Agreement and such agreement shall be in full force and effect.
7. MISCELLANEOUS
7.1. Governing Law. This Agreement shall be governed in all respects by the
laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California, without
regard to the conflict of law provisions thereof. The parties hereto agree to
submit to the jurisdiction of the federal and state courts of the State of
California with respect to the breach or interpretation of this Agreement or the
enforcement of any and all rights, duties, liabilities, obligations, powers, and
other relations between the parties arising under this Agreement.
7.2. Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any party hereto and the
closing of the transactions contemplated hereby for a period of two (2) years
from the First Closing.
7.3. Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
respective successors and assigns of the parties hereto. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
7.4. Entire Agreement. This Agreement and the other documents and
agreements delivered pursuant hereto constitute the entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
7.5. Notices. Except as otherwise provided, all notices and other
communications required or permitted hereunder shall be in writing, shall be
effective when given, and shall in any event be deemed to be given upon receipt
or, if earlier, (i) five (5) days after deposit with the U.S. postal service or
other applicable postal service, if delivered by first class mail, postage
prepaid, (ii) upon delivery, if delivered by hand, (iii) one (1) business day
after the day of deposit with Federal Express or similar overnight courier,
freight prepaid, if delivered by overnight courier or (iv) one (1) business day
after the day of facsimile transmission, if delivered by facsimile transmission
with copy by first class mail, postage prepaid, and shall be addressed, (a) if
to an Investor, at such Investor's address set forth below its signature, or at
such other address
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as such Investor shall have furnished the Company in writing, or (b) if to the
Company, at its address as set forth below, or at such other address as the
Company shall have furnished to each Investor in writing.
7.6. Amendments and Waivers. This Agreement and any term hereof may be
amended, waived, discharged or terminated by a written instrument signed by the
Company and holders of sixty-six and sixty-six hundredths percent (66.66%) or
more of the shares of common stock issued or issuable upon conversion of the
Series A Preferred Stock issued under this Agreement. In no event shall the
obligation of any Investor to purchase shares hereunder be increased, except
upon the written consent of such Investor.
7.7. Delays or Omissions. No delay or omission to exercise any right, power
or remedy accruing to the Company or to the Investors upon a breach or default
of any party hereto under this Agreement shall impair any such right, power or
remedy of the Company or the Investors, nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of any similar
breach or default thereafter occurring. Any waiver, permit, consent or approval
of any kind or character on the part of the Company or the Investors of a breach
or default under this Agreement, or any waiver on the part of the Company or the
Investors of any provisions or conditions of this Agreement, must be in writing
and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to the Company or the Investors, shall be cumulative and not
alternative.
7.8. Each Party to Bear Own Costs. Except as otherwise provided in Section
7.10, each of the parties shall pay all costs and expenses incurred or to be
incurred by it in negotiating and preparing this Agreement and in closing and
carrying out the transactions contemplated by this Agreement. Notwithstanding
the foregoing, promptly after the First Closing (and only if the First Closing
is consummated), the Company shall reimburse the Investors purchasing shares at
the First Closing up to $15,000 for the reasonable fees and expenses of one
special counsel to the Investors.
7.9. Third Parties. Nothing in this Agreement, whether express or implied,
is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third person to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action against any party to this Agreement.
7.10. Finder's Fees.
(a) The Company hereby agrees to indemnify and to hold the Investors
harmless of and from any liability for commission or compensation in the nature
of a finder's fee of any broker or other person or firm (and the costs and
expenses of defending against such liability or asserted liability) for which
the Company, or any of its employees or representatives, is responsible.
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(b) Each Investor hereby agrees to indemnify and to hold the Company
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 Investor, or any of its employees or representatives, is responsible.
7.11. 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.
7.12. 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.
7.13. Severability. Should any provision of this Agreement be determined to
be illegal or unenforceable, such determination shall not affect the remaining
provisions of this Agreement.
7.14. Confidentiality. The parties hereto agree that, except with the prior
written permission of the other party, it shall at all times keep confidential
and not divulge, furnish, or make accessible to anyone any confidential
information, knowledge, or data concerning or relating to the business or
financial affairs of the other parties to which said party has been or shall
become privy by reason of this Agreement, discussions or negotiations relating
to this Agreement, or the performance of its obligations hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year hereinabove first written.
THE COMPANY:
ACCELERATED NETWORKS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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THE INVESTORS:
-------------
NEW ENTERPRISE ASSOCIATES VII,
Limited Partnership
By: NEA Partners VII, Limited Partnership
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name & Title:
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
NEA PRESIDENTS FUND, L.P.
By: NEA General Partners, L.P.
Its: General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name & Title:
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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NEA VENTURES 1997, LIMITED PARTNERSHIP
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name & Title:
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
U.S. VENTURE PARTNERS V, L.P.
USVP V INTERNATIONAL, L.P.
2180 ASSOCIATES FUND V, L.P.
USVP V ENTREPRENEUR PARTNERS, L.P.
By: Presidio Management Group V, L.L.C.
By: /s/ ▇▇▇▇ Heal
-------------------------------------
Name & Title:
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ CAPITAL
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------------
▇▇▇ ▇▇▇▇
Address:
DEFTA PARTNERS
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇, Partner
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Address: ▇▇▇▇▇▇▇▇▇▇-▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
STANFORD UNIVERSITY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name & Title:
Address: Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇ D'AMOUR
/s/ ▇▇▇▇ D'Amour
-----------------------------------------------
▇▇▇▇ D'Amour
Address: D'Amour & Associates
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ (UAE)
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UNITED MISSOURI BANK OF KANSAS CITY
SUCCESSOR TRUSTEE FOR
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
RETIREMENT SAVINGS TRUST, F.B.O.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Asst. V.P.
------------------------------------
Name & Title:
Address: Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
United Missouri Bank
P.O. Box 419692
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ INVESTMENT COMPANY V, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
General Partner
Address: Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
Two Embarcadero Place
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Address: ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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TABLE OF CONTENTS
Page
----
1. AUTHORIZATION AND SALE OF SHARES.........................................................................1
1.1. Authorization...................................................................................1
1.2. Agreement to Purchase and Sell..................................................................1
2. CLOSING DATE; DELIVERY...................................................................................2
2.1. The Closings....................................................................................2
2.2. Delivery........................................................................................2
3. COMPANY REPRESENTATIONS AND WARRANTIES...................................................................2
3.1. Organization and Standing.......................................................................2
3.2. Capitalization..................................................................................2
3.3. Subsidiaries....................................................................................3
3.4. Due Authorization...............................................................................3
3.5. Valid Issuance of Stock.........................................................................4
3.6. Liabilities.....................................................................................4
3.7. Title to Properties and Assets..................................................................4
3.8. Intellectual Property...........................................................................4
3.9. Material Contracts and Obligations..............................................................5
3.10. Litigation......................................................................................5
3.11. Governmental Consents...........................................................................5
3.12. Third Party Consents............................................................................5
3.13. Compliance with Other Instruments...............................................................5
3.14. Disclosure......................................................................................6
3.15. Registration Rights.............................................................................6
3.16. Tax Matters.....................................................................................6
3.17. Tax Elections...................................................................................6
3.18. Shareholders, Directors and Officers............................................................6
3.19. Title of Properties, Liens and Encumbrances.....................................................6
3.20. Employees.......................................................................................7
4. REPRESENTATIONS AND WARRANTIES OF INVESTOR...............................................................7
4.1. Due Authorization...............................................................................7
4.2. Investigation...................................................................................7
4.3. Purchase for Own Account........................................................................7
4.4. Exempt from Registration........................................................................7
4.5. Economic Risk...................................................................................7
4.6. Restricted Securities...........................................................................8
4.7. Restrictive Legends.............................................................................8
4.8. Further Limitations on Disposition..............................................................8
4.9. Governmental Consents...........................................................................9
4.10. Third Party Consents............................................................................9
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Page
----
5. CONDITIONS TO INVESTORS' OBLIGATIONS AT THE CLOSING......................................................9
5.1. Representations and Warranties Correct; Performance of Obligations..............................9
5.2. Performance.....................................................................................9
5.3. Securities Laws.................................................................................9
5.4. Amendment to Articles...........................................................................9
5.5. Opinion of Company's Counsel...................................................................10
5.6. Compliance Certificate.........................................................................10
5.7. Proceedings and Documents......................................................................10
5.8. Investors' Rights Agreement....................................................................10
5.9. Voting Agreement...............................................................................10
5.10. Amendment to Founders' Agreements..............................................................10
5.11. Authorizations.................................................................................10
5.12. Board of Directors.............................................................................10
6. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING......................................................10
6.1. Representations and Warranties.................................................................10
6.2. Payment of Purchase Price......................................................................10
6.3. Restated Articles Effective....................................................................11
6.4. Securities Exemptions..........................................................................11
6.5. Investors' Rights Agreement....................................................................11
6.6. Voting Agreement...............................................................................11
7. MISCELLANEOUS...........................................................................................11
7.1. Governing Law..................................................................................11
7.2. Survival.......................................................................................11
7.3. Successors and Assigns.........................................................................11
7.4. Entire Agreement...............................................................................11
7.5. Notices........................................................................................11
7.6. Amendments and Waivers.........................................................................12
7.7. Delays or Omissions............................................................................12
7.8. Each Party to Bear Own Costs...................................................................12
7.9. Third Parties..................................................................................12
7.10. Finder's Fees..................................................................................12
7.11. Titles and Subtitles...........................................................................13
7.12. Counterparts...................................................................................13
7.13. Severability...................................................................................13
7.14. Confidentiality................................................................................13
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EXHIBITS
--------
Exhibit A - List of Investors/Shares to Be Purchased
Exhibit B - Amended and Restated Articles of Incorporation
Exhibit C - Schedule of Exceptions
Exhibit D - Investors' Rights Agreement
Exhibit E - List of Security Holders
Exhibit F - Form of Opinion of Company Counsel
Exhibit G - Voting Agreement
Exhibit H - First Amendment to ▇▇▇▇▇▇▇▇ Agreement
Exhibit I - First Amendment to Munj Agreement
iii