EXHIBIT 10.20
ATRIEVA CORPORATION
SERIES A-1 PREFERRED STOCK PURCHASE AGREEMENT
CONTENTS
SECTION 1. Authorization and Sale of Preferred Shares ...................... 1
1.1 Authorization ................................................... 1
1.2 Sale of Preferred ............................................... 1
SECTION 2. Closing Date; Delivery .......................................... 1
2.1 Closing Date .................................................... 1
2.2 Delivery ........................................................ 2
2.3 Subsequent Rights Offering ...................................... 2
2.4 Subsequent Sales of Shares ...................................... 2
SECTION 3. Representations and Warranties .................................. 3
3.1 Organization and Standing ....................................... 3
3.2 Capitalization .................................................. 3
3.3 Corporate Power; Authorization .................................. 4
3.4 Subsidiaries .................................................... 5
3.5 Validity of Securities .......................................... 5
3.6 Governmental Consents ........................................... 5
3.7 Compliance with Other Instruments and Laws ...................... 6
3.8 Litigation ...................................................... 7
3.9 Proprietary Information; Inventions; Employees and Consultants .. 8
3.10 Patents and Other Intangible Assets ............................. 9
3.11 Financial Statements ............................................ 11
3.12 Absence of Certain Changes ...................................... 11
3.13 Material Contracts and Commitments .............................. 12
3.14 Registration Rights ............................................. 13
3.15 Title to Property and Assets .................................... 13
3.16 Outstanding Indebtedness; Liabilities ........................... 14
3.17 Stockholder Agreements .......................................... 14
3.18 Employee Compensation Plans ..................................... 14
3.19 Labor Union Activities .......................................... 15
3.20 Employee Relations .............................................. 15
3.21 Tax Returns and Audits .......................................... 15
3.22 Disclosure; Business Plan ....................................... 16
3.23 Certain Transactions ............................................ 16
3.24 Environmental Laws and Regulations .............................. 16
3.25 Other Names ..................................................... 17
3.26 Minute Books .................................................... 17
3.27 Insurance Coverage .............................................. 17
SERIES A-1 PREFERRED STOCK PURCHASE AGREEMENT
PAGE i
3.28 Returns and Complaints .......................................... 17
3.29 Qualified Small Business Stock .................................. 17
3.30 No Discrimination ............................................... 18
3.31 Use of Proceeds ................................................. 18
3.32 "Company's Knowledge" ........................................... 18
3.33 Representations and Warranties in Related Documents ............. 18
SECTION 4. Representations and Warranties of the Purchasers; Restrictions
on Transfer Imposed by the Act; and California Corporate
Securities Law .................................................. 18
4.1 Representations and Warranties .................................. 18
4.1.1 Investment ............................................... 18
4.1.2 Accredited Investor ...................................... 19
4.1.3 Power and Authorization .................................. 19
4.1.4 Legal Investment ......................................... 19
4.2 Transfer of Securities .......................................... 20
4.2.1 Legend ................................................... 20
4.2.2 Restrictions on Transfer ................................. 20
4.2.3 Termination of Restrictions and Removal of Legend ........ 21
4.3 Corporate Securities Law ........................................ 21
SECTION 5. Conditions to Obligations of the Purchasers ..................... 22
5.1 Representations and Warranties Correct; Performance of
Obligations ..................................................... 22
5.2 Opinion of Company's Counsel .................................... 22
5.3 Consents and Waivers ............................................ 22
5.4 Legal Investment ................................................ 22
5.5 Restated Certificate ............................................ 22
5.6 Satisfactory Proceedings; Compliance Certificate ................ 23
5.7 Board of Directors .............................................. 23
5.8 Investors Rights Agreement ...................................... 23
5.9 Due Diligence ................................................... 23
5.10 Conversion of Series I Stock and Series II Stock ................ 23
5.11 Reverse Stock Split ............................................. 23
SECTION 6. Conditions to Obligations of the Company ........................ 23
6.1 Representations and Warranties .................................. 24
6.2 Qualifications .................................................. 24
6.3 Legal Investment ................................................ 24
6.4 Conversion ...................................................... 24
SERIES A-1 PREFERRED STOCK PURCHASE AGREEMENT
PAGE ii
6.5 Amended and Restated Warrants to Purchase Series I Stock and
Series II Stock ................................................. 24
SECTION 7. Miscellaneous ................................................... 24
7.1 Waivers and Amendments .......................................... 24
7.2 Governing Law ................................................... 25
7.3 Survival ........................................................ 25
7.4 Successors and Assigns .......................................... 25
7.5 Entire Agreement ................................................ 25
7.6 Notices, Etc .................................................... 26
7.7 Delays or Omissions ............................................. 26
7.8 Severability .................................................... 26
7.9 Construction .................................................... 26
7.10 Counterparts .................................................... 27
7.11 Headings ........................................................ 27
7.12 Plural Terms .................................................... 27
7.13 Survival ........................................................ 27
7.14 Finder's Fee .................................................... 27
7.15 Expenses ........................................................ 28
7.16 Attorney's Fees ................................................. 28
7.17 Further Covenants ............................................... 28
SERIES A-1 PREFERRED STOCK PURCHASE AGREEMENT
PAGE iii
SERIES A-1 PREFERRED STOCK PURCHASE AGREEMENT
SCHEDULES:
1. Schedule of Purchasers
2. Disclosure Schedules
EXHIBITS:
A Restated Certificate of Incorporation
B Second Amended and Restated Investors Rights Agreement
C Opinion of Counsel
SERIES A-1 PREFERRED STOCK PURCHASE AGREEMENT
PAGE iv
ATRIEVA CORPORATION
SERIES A-1 PREFERRED STOCK PURCHASE AGREEMENT
This Series A-1 Preferred Stock Purchase Agreement (this "Agreement"), is
made as of October 29, 1998 by and among Atrieva Corporation, a Delaware
corporation (the "Company"), and the undersigned purchasers (the "Purchasers").
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. Authorization and Sale of Preferred Shares
1.1 Authorization
The Company has duly authorized the sale and issuance of up to 3,000,000
shares of its Series A-1 Convertible Preferred Stock (the "Series A-1 Stock")
having the rights, privileges and preferences set forth in the Company's
Restated Certificate of Incorporation (the "Restated Certificate") in the form
attached hereto as Exhibit A.
---------
1.2 Sale of Preferred
Subject to the terms and conditions hereof, the Company shall issue and
sell to the Purchasers, and each Purchaser agrees, severally, to purchase at the
Closing, from the Company, shares of Series A-1 Stock (collectively, the
"Shares"), at a purchase price of one dollar ($1.00) per share. The amount to
be purchased by each Purchaser and the form of consideration therefor is set
forth in the Schedule of Purchasers attached as Schedule 1. The Purchasers
agree to convert at the Closing, in accordance with Section 1 of the Convertible
Promissory Note(s), held by the Purchasers, the principal amount of such Note(s)
into such number of shares of Series A-1 Stock as specified in Section 1 of the
Notes.
SECTION 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 offices of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 2:00 p.m., October 29, 1998 or at
such other time and place as is mutually agreed to by the parties hereto (the
date of the Closing is hereinafter referred to as the "Closing Date"). The
parties agree that faxed signature pages will be acceptable for the Closing, to
be followed up with original signature pages.
PAGE 1
2.2 Delivery
Subject to the terms of this Agreement, at the Closing, the Company will
deliver to each Purchaser a certificate representing the number of Shares being
purchased by such Purchaser, which certificate shall be registered in the name
of such Purchaser, against payment in full by the Purchaser of the purchase
price therefor by check or such other form of payment as set forth on Schedule
1, payable to the order of the Company.
2.3 Subsequent Rights Offering
The Company shall, within a 90-day period after the Closing, conduct a
rights offering to the holders of the Company's Common Stock (as defined below)
(excluding holders who have converted shares pursuant to Section 5.10) (the
"Rights Offering"), which the Company's Board of Directors may in its discretion
limit to a Rights Offering to holders of Common Stock of the Company that the
Company believes qualify as accredited investors pursuant to Rule 501 of
Regulation D promulgated pursuant to the Securities Act of 1933, as amended (the
"Act"). The Rights Offering shall allow the holders of Common Stock to whom the
Rights Offering is made to purchase shares of Series A-1 Stock on the same terms
as provided for in this Agreement. The Purchasers hereby agree to the Rights
Offering, subject to final approval of its structure by VantagePoint Venture
Partners. The purchasers under the Rights Offering shall execute documents
determined appropriate by the Board of Directors of the Company and consistent
with this Agreement. Any shares sold pursuant to the Rights Offering shall be
deemed to be "Series A-1 Stock" and shall be deemed to be "Shares" sold pursuant
to this Agreement, any purchasers thereof shall be deemed to be "Purchasers" for
all purposes under this Agreement, and any such subsequent sale shall be deemed
to occur at a "Closing" and the date of any such Closing shall be deemed to be a
"Closing Date." The Purchasers in the Rights Offering shall become parties to
this Agreement by signing a counterpart signature page hereto. Should any such
sales be made, the Company shall prepare and distribute to the Purchasers a
revised Schedule of Purchasers reflecting such sales.
2.4 Subsequent Sales of Shares
At any time up to 120 days following the Closing, the Company may sell up
to the balance of any shares of Series A-1 Stock not sold at the Closing
authorized under Section 1.1, to such additional investors as may be approved by
the Board of Directors. All such sales shall be made on the terms and
conditions set forth in this Agreement. Any Shares sold pursuant to this
Section 2.4 shall be deemed to be "Series A-1 Stock" and shall be deemed to be
"Shares" sold pursuant to this Agreement, any purchasers thereof shall be deemed
to be "Purchasers" for all
PAGE 2
purposes under this Agreement, and any such subsequent sale shall be deemed to
occur at a "Closing" and the date of any such Closing shall be deemed to be a
"Closing Date." The new purchasers shall become parties to this Agreement by
signing a counterpart signature page hereto. Should any such sales be made, the
Company shall prepare and distribute to the Purchasers a revised Schedule of
Purchasers reflecting such sales.
SECTION 3. Representations and Warranties
The Company hereby represents and warrants to the Purchasers that:
3.1 Organization and Standing
The Company is a corporation duly organized and validly existing under the
laws of the State of Delaware. The Company has all requisite power and
authority to own and operate its properties and assets and to conduct its
business as presently conducted and as proposed to be conducted. The Company is
qualified or licensed and in good standing as a foreign corporation in all
jurisdictions where the nature of its business or property makes such
qualification or licensing necessary and the failure to be so qualified or
licensed could materially adversely affect the business, earnings, prospects,
properties or condition (financial or other) of the Company. Except as set
forth in Schedule 3.1, true, complete and accurate copies of the Company's
Restated Certificate of Incorporation, Bylaws and all amendments to each to date
have been delivered to counsel for the Purchasers and the Company has provided
such counsel with copies of the minutes of all meetings, and all consents in
lieu of meetings, of the Board of Directors and stockholders of the Company that
have occurred since December 31, 1997. Prior to the Closing, the Company shall
have properly filed the Restated Certificate with the Secretary of State of
Delaware and the Restated Certificate, as amended, shall be in full force and
effect.
3.2 Capitalization
(a) The authorized capital stock of the Company at the Closing will
be 300,000,000 shares of common stock, par value $.001 per share ("Common
Stock") and 40,000,000 shares of preferred stock, par value $.001 per share
("Preferred Stock"), 3,000,000 of which shares of Preferred Stock are designated
Series A-1 Stock; of such authorized shares of capital stock of the Company,
48,178.560 shares of Common Stock and 2,000,000 shares of Series A-1 Stock will
be issued and outstanding immediately following the Closing. The Preferred Stock
will have, as of the Closing, the rights, preferences and privileges set forth
in the Restated Certificate.
PAGE 3
(b) All issued and outstanding shares have been, and as of the
Closing Date will be, duly authorized, validly issued, fully paid and
nonassessable, and are and were, and as of the Closing Date will have been,
offered, issued, sold and delivered by the Company in compliance with all
applicable state and federal laws concerning the issuance of securities.
(c) Except as set forth on Schedule 3.2(c), there are no outstanding
rights, subscriptions, calls, options, warrants, preemptive rights, conversion
rights or agreements granted or issued by or binding upon the Company for the
purchase or acquisition (contingent or otherwise) from the Company of any shares
of its capital stock or any other securities, except in accordance with the
terms of this Agreement. Except as set forth in Schedule 3.2(c), the Company is
not subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its capital stock or any security
convertible into or exchangeable for any shares of its capital stock. Except as
set forth in Schedule 3.2(c), no holder of Common Stock or Preferred Stock or
any other security of the Company or any other person or entity is entitled to
any preemptive right, right of first refusal or similar right as a result of the
issuance of the Shares or otherwise, except as set forth therein. Except as set
forth in Schedule 3.2(c), there is no voting trust, agreement or arrangement
among any of the beneficial holders of Common Stock or Preferred Stock of the
Company affecting the exercise of the voting rights of such stock.
(d) Attached as Schedule 3.2(d) is a true and complete list of the
names of the record holders of all of the outstanding Common Stock and Preferred
Stock and of the holders of all outstanding options or other rights to purchase
Common Stock, Preferred Stock, or other securities of the Company. Such list
attached contains a true and complete description of the number of shares held
by each such holder. With respect to each outstanding option, such list sets
forth the date of grant, the number of shares subject thereto, the exercise
price, and vesting schedule. Schedule 3.2(d) also shows the current directors
and officers of the Company.
3.3 Corporate Power; Authorization
The Company has all requisite power and authority to enter into this
Agreement and the other documents and agreements contemplated herein, to sell
the Shares hereunder, and to carry out and perform its obligations under the
terms of this Agreement and the other documents and agreements contemplated
herein. All corporate action on the part of the Company and its officers,
directors and stockholders necessary for the authorization, execution and
delivery of this Agreement and the other documents and agreements contemplated
herein, for the performance of the Company's obligations hereunder, for the
consummation of the transactions contemplated herein, and for the authorization,
issuance and delivery of the Shares
PAGE 4
and the Common Stock issuable upon conversion thereof has been taken or will be
taken prior to the Closing. This Agreement has been duly executed and delivered
by the Company and constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms. As of the
Closing Date, this Agreement and the other documents and agreements contemplated
herein and therein will have been duly executed and delivered by the Company,
and all parties thereto (other than the Purchasers), and will constitute legal,
valid and binding obligations of the Company and such other parties, enforceable
against each of them in accordance with their terms.
3.4 Subsidiaries
The Company does not presently own, of record or beneficially, or control,
directly or indirectly, any capital stock or equity interest in any corporation,
association or business entity. The Company is not, directly or indirectly, a
participant in any joint venture or partnership.
3.5 Validity of Securities
The Shares, when issued, sold and delivered in accordance with the terms of
this Agreement, will be duly and validly issued, fully paid and nonassessable
and will be free and clear of any preemptive rights, security interests, claims,
liens or encumbrances created by the Company. The Common Stock issuable upon
conversion of the Shares has been, or prior to the Closing will be, duly and
validly reserved and, upon issuance in accordance with the terms of this
Agreement and the Restated Certificate, will be duly and validly issued, fully
paid and nonassessable and will be free and clear of any preemptive rights,
security interests, restrictions on transfer, claims, liens or encumbrances
created other than by the Purchasers and other than restrictions under
applicable and state securities laws.
3.6 Governmental Consents
(a) No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, or notice to any
federal, state or local governmental or public authority or agency on the part
of the Company is or was required for the Company's valid execution, delivery
and performance of this Agreement or the offer, sale or issuance of the Shares
(and the Common Stock issuable upon conversion thereof) or the consummation of
any other transaction contemplated hereby, except for the filing of the Restated
Certificate in the office of the Secretary of State of Delaware, which shall be
filed by the Company prior to the Closing, and, the filing of a notice under
Regulation D under the Act, and the filing of a notice of exemption pursuant to
Section 25102(f) of the California Corporate
PAGE 5
Securities Law of 1968, as amended (the "California Securities Law"), and
applicable filings under Washington and Illinois, and other state securities
laws, all of which shall be filed by the Company immediately following the
Closing. Based in part upon the truth of the representations and warranties of
the Purchasers contained in Section 4 of this Agreement, the offer, sale and
issuance of the Shares (and of the Common Stock issuable upon conversion
thereof) in conformity with the terms of this Agreement are exempt from the
registration requirements of Section 5 of the Act, from the qualification
requirements of Section 25110 of the California Securities Law, and from the
requirements under Washington and Illinois, and other applicable state
securities laws.
(b) The Company has obtained all consents, approvals or
authorizations of, made all declarations or filings with, and given all notices
to, all federal, state or local governmental or public authorities or agencies
which are necessary for the continued conduct by the Company of its business as
now conducted or as proposed to be conducted in which the failure to so obtain,
make or give could materially adversely affect the business, earnings,
prospects, properties or condition (financial or other) of the Company.
3.7 Compliance with Other Instruments and Laws
Except as described in Schedule 3.7:
(a) The Company is not (i) in violation or default of any provision
of its Restated Certificate or Bylaws, each as amended and in effect on the date
hereof and on and as of the Closing Date; or (ii) except as to defaults which
would result in liability or loss to the Company of $10,000 or less, in default
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in, and is not otherwise in default under, (A)
any evidence of indebtedness for any money borrowed or any other evidence of
indebtedness or any instrument or agreement under or pursuant to which any
evidence of indebtedness for money borrowed or other evidence of indebtedness
has been issued, or (B) any other instrument, mortgage, deed of trust, loan,
contract, commitment or obligation to which it is a party or by which it is
bound or any of its properties is affected. The Company has not defaulted on,
nor has it failed to make at the time contemplated, payment of any principal of,
or premium or interest on, any indebtedness of $10,000 or more. Neither the
execution, delivery and performance of and compliance with this Agreement nor
the offer, issuance and sale of the Shares (and the Common Stock issuable upon
conversion thereof) does or will: (i) conflict with or violate the Restated
Certificate or Bylaws of the Company; (ii) conflict with or result in a breach
of any of the terms, conditions or provisions of, or constitute or default
under, or result in the creation of any lien on any of the properties or assets
of the Company pursuant
PAGE 6
to the terms of any instrument or agreement referred to in this Section to which
the Company is a party or by which it is bound; or (iii) require the consent of,
or other action by, any stockholder, trustee or any creditor of, any lessor to
or any investor in, the Company or any other person.
(b) The Company is in full compliance with all laws and ordinances
and all governmental rules and regulations to which it is subject, the violation
of which would result in liability or loss to the Company of more than $10,000.
Based in part upon the representations and warranties of the Purchasers in
Section 4 hereof with respect to an exemption from the registration requirements
of the Act and the qualification requirements of the California Securities Act
of 1968 and the qualification requirements of Washington and Illinois and other
applicable state securities laws, neither the execution, delivery or performance
of this Agreement by the Company nor the offer, issuance, sale or delivery of
the Shares (and the Common Stock issuable upon conversion thereof) does or will
cause the Company to be in violation of any statute, law or ordinance or any
judgment, decree, writ, injunction, order, award or other action of any court or
governmental authority or arbitrator or any order, rule or regulation of any
federal, state, county, municipal or other governmental or public authority or
agency.
(c) The Company is not a party to or bound by (nor is any of its
properties affected by) any contract or agreement, or subject to any order,
writ, injunction or decree or any action of any court or any governmental
department, commission, bureau, board or other administrative agency or
official, or any charter or other corporate or contractual restriction which
materially adversely affects, or in the future could materially adversely
affect, the business, earnings, prospects, properties or conditions (financial
or other) of the Company.
3.8 Litigation
Except as set forth in Schedule 3.8, there is no action, suit, proceeding,
claim or investigation in any court or by or before any other governmental or
public authority or agency or any arbitrator or arbitration panel, pending or,
to the best knowledge of the Company, threatened against or affecting the
Company or any of its properties that, either individually or in the aggregate,
(a) could question the validity or enforceability of this Agreement and the
other agreements and documents contemplated thereby or the right of the Company
to enter into any of them, or to consummate the transactions contemplated hereby
or thereby, or (b) could materially adversely affect the business, earnings,
prospects, properties or condition (financial or other) of the Company, nor is
the Company aware that there is any basis for the foregoing. The foregoing
includes, without limitation, actions pending or threatened (or any basis
therefor known to the Company) involving the prior employment of any
PAGE 7
of the Company's employees, the use in connection with the Company's business of
any information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers. The
Company is not a party or subject to, and none of its assets are bound by, the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality or arbitrator or arbitration panel. Except
as set forth in Schedule 3.8, there is no action, suit, proceeding or
investigation by the Company currently pending or which the Company intends to
initiate.
3.9 Proprietary Information; Inventions; Employees and Consultants
(a) Since its organization, the Company has taken reasonable security
measures to protect the secrecy, confidentiality and value of all intellectual
property and all Inventions (as defined below). Except as set forth in Schedule
3.9(a), since its organization, each of the Company's employees, consultants,
and contractors who, either alone or in concert with others, developed,
invented, discovered, derived, programmed or designed intellectual property or
Inventions (as defined below), or who has knowledge of or access to information
about intellectual property or Inventions, has entered into a written agreement
("Proprietary Information Agreement") with the Company which substantially
provides that (i) this intellectual property, other information and Inventions
are proprietary to the Company and are not to be divulged (except as authorized
by the Company), misused or misappropriated, and (ii) this intellectual
property, other information and Inventions are to be disclosed by such
employees, consultants, and contractors to the Company; in cases where this
intellectual property and Inventions may be subject to rights of a third person,
the Company has secured from said third person unrestricted, perpetual,
irrevocable, royalty-free (except to the extent set forth in Schedule 3.10), and
exclusive license rights thereto. As used herein, "Inventions" means all
inventions, developments and discoveries which during the period of an
employees', consultant's, or contractor's service to the Company he, she or it
makes or conceives of, either solely or jointly with others, that relate to any
subject matter with which his, her, or its work for the Company may be
concerned, or relate to or are connected with the business, products, services
or projects of the Company, or relate to the actual or demonstrably anticipated
research or development of the Company or involve the use of the Company's
funds, time, material, facilities or trade secret information, except as
excluded pursuant to applicable law.
(b) Except as set forth in Schedule 3.9(b), the Company is not aware
that any of the Company's employees or consultants is or will be in violation of
his or her Proprietary Information Agreement, and the Company shall use its best
efforts to prevent any such violation. Except as set forth in Schedule 3.9(b),
the Company is not
PAGE 8
aware that any of the Company's employees or consultants 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 or her obligation to use his
or her best efforts to promote the interests of the Company. Neither the
execution nor delivery of this Agreement and the agreements contemplated
thereby, nor the carrying on of the Company's business by its employees and
consultants, nor the conduct of its business as proposed, will conflict with or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, any contract, covenant or instrument known to the Company under
which any of such employees or consultants is now obligated. The Company does
not believe it is or will be necessary to utilize any inventions, copyrights, or
other intellectual property of any of its employees or consultants (or people it
currently intends to hire) made or owned prior to their employment with or
engagement by the Company or that it is or will be necessary to utilize any
other assets or rights of any of its employees or consultants (or people it
currently intends to hire) made or owned prior to their employment with or
engagement by the Company, in violation of any limitations or restrictions to
which any such employee or consultant is a party or to which any of such assets
or rights may be subject.
(c) The form(s) of Proprietary Information Agreement signed by each
employee and consultant of the Company is contained as Schedule 3.9(c).
3.10 Patents and Other Intangible Assets
(a) Schedule 3.10(a) summarizes all patents, patent applications,
trademarks, copyrights and other intellectual property of the Company with a
description of their scope.
(b) Except as set forth in Schedule 3.10(b), the Company (i) owns or
has the right to use, free and clear of all liens, claims and restrictions, all
patents, patent applications, trademarks, service marks, trade names,
inventions, trade secrets, copyrights, licenses and rights with respect to the
foregoing, used in or necessary for the conduct of its business as now conducted
or proposed to be conducted, (ii) is not infringing upon or otherwise acting
adversely to the right or claimed right of any person or entity under or with
respect to any patent, trademark, service ▇▇▇▇, trade name, invention, trade
secret, copyright, license or other intellectual property or right with respect
with respect thereto, and (iii) is not obligated or under any liability
whatsoever to make any payments by way of royalties, fees or otherwise to any
owner or licensee of, or other claimant to, any patent, trademark, service ▇▇▇▇,
trade name, invention, trade secret, or copyright with respect to the use
thereof or in connection with the conduct of its business or otherwise.
PAGE 9
(c) Except as set forth in Schedule 3.10(c), the Company owns and has
the unrestricted right to use all product rights, manufacturing rights, trade
secrets, including know-how, negative know-how, formulas, patterns,
compilations, programs, devices, methods, techniques, processes, inventions,
designs, computer programs and technical data and all information that derives
independent economic value, actual or potential, from not being generally known
or known by competitors and which the Company has taken reasonable steps to
maintain in secret (all of the foregoing of which are collectively referred to
herein as "intellectual property") required for the development, manufacture,
operation, and sale of all products and services sold or proposed to be sold by
the Company, free and clear of any right, lien or claim of others, including
without limitation former employers of its employees, consultants and
contractors and current employers of employees, consultants and contractors
where such employees, consultants or contractors are also employed or under
contract with another person; provided, however, that the possibility exists
that other persons or entities, completely independently of the Company or its
employees, consultants, or contractors could have developed trade secrets or
items of technical information similar or identical to those of the Company.
Except as set forth in Schedule 3.10(c), the Company has no actual knowledge of
any such development of similar or identical trade secrets or technical
information by others.
(d) Except as set forth in Schedule 3.10(d), the Company has not
sold, transferred, assigned, licensed or subjected to any lien, security
interest, or other encumbrance, any intellectual property, trade secret, know-
how, invention, design, process, computer program or technical data, or any
interest therein, necessary or useful for the development, manufacture, use,
operation or sale of any product or service presently under development or
manufactured, sold or rendered by the Company.
(e) Except as set forth in Schedule 3.10(e), no director, officer,
employee, agent or stockholder of the Company owns or has any right in the
intellectual property of the Company, or any patents, trademarks, service marks,
trade names, copyrights, licenses or rights with respect to the foregoing, or
any inventions, developments or discoveries used in or necessary for the conduct
of the Company's business as now conducted or as proposed to be conducted.
(f) Except as set forth in Schedule 3.10(f), the Company has no
actual knowledge of any facts or has not received any communication alleging or
stating that the Company or any contractor, consultant or employee has violated
or infringed, or by conducting business as proposed, would violate or infringe,
any patent, trademark, service ▇▇▇▇, trade name, copyright, trade secret,
proprietary right, process or other intellectual property of any other person or
entity; the Company has no knowledge of any impediment with respect to any
employee, consultant, or
PAGE 10
contractor who performs or is to perform services of any kind for the Company
that would interfere with such person's ability to promote the business of the
Company or would conflict with the business or proposed Company business.
(g) Neither the execution nor delivery of this Agreement and the
agreements contemplated thereby, nor the carrying on of the Company's business
by its employees, consultants, and contractors nor the conduct of its business
as proposed, will conflict with or result in a breach of the terms, conditions
or provisions of, or constitute a default under, any contract, covenant or
instrument known to the Company under which any of such employees, consultants
or contractors is now obligated.
(h) The Company has not granted any license to use its proprietary
information or intellectual property, except as listed in Schedule 3.10(h).
Except as set forth in Schedule 3.10(h), the Company has not granted to any
other person or entity rights to license, market or sell its proposed products
or services and the Company is not bound by any agreement that affects the
Company's exclusive right to develop, license, market or sell its products or
services.
3.11 Financial Statements
The Company has delivered to the Purchasers complete and accurate copies of
its unaudited balance sheet as at June 30, 1998 (the "Balance Sheet") and its
unaudited statements of operations for the twelve (12) month period therein
specified and the audited balance sheet as at June 30, 1997 and its audited
statements of operations and of cash flows for the twelve-month periods
specified therein (all such financial statements and balance sheets being
referred to herein collectively as the "Financial Statements"), which audited
financials have been certified by Ernst & Young LLP. The Financial Statements
are true, complete, and correct and have been prepared in accordance with
generally accepted accounting principles (subject to normal and customary year-
end adjustments that are not material for any unaudited statements and except
that the unaudited statements do not include footnotes) applied on a consistent
basis throughout the periods indicated. The Financial Statements present
fairly, completely and accurately the financial condition of the Company as of
the respective dates and for the periods indicated. The Company does not have
any obligation or a liability, individually or in the aggregate, in excess of
$25,000, required to be disclosed on a balance sheet prepared in accordance with
generally accepted accounting principles that is not disclosed by the Financial
Statements.
PAGE 11
3.12 Absence of Certain Changes
Except as set forth in Schedule 3.12, since December 31, 1997 (a) the
Company has not entered into any transaction which was not in the ordinary
course of its business; (b) there has been no material adverse change in the
business, earnings, prospects, properties or condition (financial or other) of
the Company; (c) there has been no damage to, destruction of or loss of any of
the properties or assets of the Company (whether or not covered by insurance)
materially adversely affecting the business, earnings, prospects, properties or
condition (financial or other) of the Company; (d) the Company has not declared
or paid any dividend or made any distribution on its capital stock, redeemed,
purchased or otherwise acquired any of its capital stock, granted any options to
purchase shares of its capital stock, or issued any shares of its capital stock;
(e) the Company has not received notice that there has been a cancellation of an
order for its services or a loss of a customer of the Company, the cancellation
or loss of which could materially adversely affect the business, earnings,
prospects, properties or condition (financial or other) of the Company; (f)
there has been no resignation or termination of employment of any key officer or
key employee of the Company and the Company does not know of the impending
resignation or termination of employment of any key officer or key employee of
the Company in either case; (g) there has been no labor dispute involving the
Company or any of its employees; (h) there has been no material change in the
contingent obligations of the Company by way of guaranty, endorsement,
indemnity, warranty or otherwise; (i) there have been no loans made by the
Company to its employees, officers or directors, other than travel advances and
other advances made in the ordinary course of business; (j) there has been no
waiver or compromise by the Company of a valuable right or of a debt owed to it
or amendment or change to any material contract or arrangement of the Company;
(k) there has been no sale, assignment, or transfer of any patents, trademarks,
copyrights, trade secrets other intangible assets; (l) there has been no
extraordinary increase in the compensation of any of the Company's employees,
officers or directors and there has been no increase in the compensation of any
such employees, officers or directors who earn compensation at an annual rate of
more than $40,000; (m) there has been no agreement or commitment by the Company
to do or perform any of the acts described in this Section 3.12 or (n) there has
been no other event or condition of any character which might reasonably be
expected either to materially adversely affect the business, earnings,
prospects, properties or condition (financial or other) of the Company or
liabilities of the Company or to impair the ability of the Company to conduct
the business now being or proposed to be conducted by it.
PAGE 12
3.13 Material Contracts and Commitments
(a) Except as set forth in Schedule 3.13, the Company has no
currently existing contract, obligation, agreement, plan, arrangement,
commitment or the like (written or oral) of a material nature (the "Contracts"),
including, without limitation, the following: (1) loans, notes, indentures, or
instruments relating to or evidencing indebtedness for borrowed money, or
mortgages, pledges, liens, security interests or other encumbrances on any of
the Company's property or any agreement or instrument evidencing any guaranty by
the Company of payment or performance by any other person; (2) employment, bonus
or consulting agreements, pension, profit sharing, deferred compensation, stock
bonus, retirement, stock option, stock purchase, phantom stock or similar plans,
including agreements evidencing rights to purchase securities of the Company and
agreements among stockholders and the Company; (3) agreements with dealers,
sales representatives, brokers or other distributors, jobbers, advertisers or
sales agencies; (4) agreements with any labor union or collective bargaining
organization or other similar labor agreements; (5) any contract or series of
contracts with the same person for the furnishing or purchase of machinery,
equipment, goods or services, including without limitation agreements with
processors and subcontractors; (6) any indenture, agreement or other document
(including private placement brochures) relating to the sale or repurchase of
securities; (7) any joint venture contract or arrangement or other agreement
involving a sharing of profits or expenses to which the Company is a party; (8)
agreements and purchase orders with customers; (9) agreements limiting the
freedom of the Company to compete in any line of business or in any geographic
area or with any person; (10) agreements providing for disposition of the
business, assets or shares of the Company, agreements of merger or consolidation
to which the Company is a party or letters of intent with respect to the
foregoing; (11) agreements involving or letters of intent with respect to the
acquisition of the business, assets or shares of any other business; (12)
license agreements; and (13) powers of attorney.
(b) The Company has provided the Purchasers or other representatives
with either copies of or access to all of the Contracts. Each of the Contracts
is valid, binding and in full force and effect in all material respects and
enforceable by the Company in accordance with its terms. The Company is not in
default under, or otherwise in violation of the terms of, any of the Contracts
in any material respect. To the best of the Company's, knowledge, no other
party to any of the Contracts is in default thereunder or otherwise in violation
of the terms thereof, in any material respect.
PAGE 13
3.14 Registration Rights
Except as disclosed in Schedule 3.14, the Company has not granted or agreed
to grant any rights relating to the registration of its securities under
applicable federal and state securities laws, including but not limited to
demand or piggy-back registration rights.
3.15 Title to Property and Assets
Except as set forth in Schedule 3.15, the Company has good and marketable
title to its properties and assets (including but not limited to its
intellectual property and other intangible assets Schedule 3.10) (except for
assets and properties having aggregate value of less than $10,000) free and
clear of all mortgages, security interests, claims, liens and encumbrances,
except liens for current taxes and assessments not yet due. The Company owns or
leases all properties and assets necessary to the operation of its business as
now conducted. With respect to the property and assets it leases, the Company
has the right to, and does, enjoy peaceful and undisturbed possession under all
leases under which it is leasing property. Except as set forth in Schedule
3.15, all such leases are in full force and effect, and the Company is in
compliance with such leases and holds a valid leasehold interest free of all
security interests, liens, claims or encumbrances. The Company's tangible
properties and assets are in good condition and repair, except for hidden
defects where the defects cause $10,000 or less of damage and except for
ordinary wear and tear.
3.16 Outstanding Indebtedness; Liabilities
Except as set forth in Schedule 3.16, the Company has no indebtedness for
borrowed money which 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, except as shown on the Balance Sheet. Except as
set forth in Schedule 3.16, the Company has no liabilities or obligations,
absolute or contingent, which are not shown or provided for in the Balance
Sheet, (1) except liabilities or obligations which are less than $25,000 in the
aggregate, or (2) those incurred after the date of the Balance Sheet in the
ordinary course of business, (3) normal contractual obligations under the
Contracts set forth in Schedule 3.13.
3.17 Stockholder Agreements
Except as set forth in Schedule 3.17, there are no voting trusts or other
agreements or arrangements which grant rights with respect to any shares of the
Company's capital stock or which in any way affect any stockholder's ability or
right to freely alienate or vote such shares.
PAGE 14
3.18 Employee Compensation Plans
Except as set forth in Schedule 3.18, 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. The Company does not maintain any
"employee benefit plan" (as such term is defined by the Employee Retirement
Income Security Act of 1974). Counsel for the Purchasers has been provided with
copies of such plans, if any, and any agreements arising therefrom to which the
Company currently is a party.
3.19 Labor Union Activities
The Company is not engaged in any unfair labor practice which could
adversely affect the business, earnings, prospects, properties or condition
(financial or other) of the Company. There are (a) no unfair labor practice
complaint pending or, to the best knowledge of the Company threatened against
the Company or before the National Labor Relations Board which could adversely
affect the business, earnings, prospects, properties or condition (financial or
other) of the Company and no grievance or arbitration proceeding arising out of
or under a collective bargaining agreement is so pending or threatened; (b) no
strike, labor dispute, slow down or stoppage pending or, to the best knowledge
of the Company, threatened against the Company; and (c) no union representation
question existing with respect to the employees of the Company and no union
organizing activities taking place with respect to the Company.
3.20 Employee Relations
To the best of the Company's knowledge, its relations with its employees
are good.
3.21 Tax Returns and Audits
Except as set forth in Schedule 3.21, the Company has duly prepared and
timely filed all United States income tax returns and all state and municipal
tax returns required to be filed by it and has paid or made adequate provision
for the payment of all taxes, assessments, fees and charges shown on such
returns or on other assessments or charges received by the Company. Except as
set forth in Schedule 3.21, no federal or state income or sales tax returns of
the Company have been audited. Except as set forth in Schedule 3.21, no
deficiency assessment or proposed adjustment of the Company's United States
income tax or state or municipal taxes is pending. Except as set forth in
Schedule 3.21, no extensions of the time for the assessment of deficiencies have
been granted to the Company. The Company is not a party to or bound by or
PAGE 15
obligated under any tax sharing or similar agreement. There are no liens on any
properties or assets of the Company imposed or arising as a result of the
delinquent payment or the non-payment of any tax, assessment, fee or other
governmental charge. The charges, accruals and reserves, if any, on the books of
the Company in respect of federal, state and local corporate franchise and
income taxes for all fiscal periods to date are adequate in accordance with
generally accepted accounting principles, and the Company does not know of any
additional unpaid assessments for such periods or of any basis therefor. There
are no applicable taxes, fees or other governmental charges payable by the
Company in connection with the execution and delivery of this Agreement or the
offer, issuance, sale and delivery of the Shares (and the Common Stock issuable
upon conversion thereof).
3.22 Disclosure; Business Plan
No representation, warranty or statement by the Company in this Agreement
or in any written statement or certificate furnished or to be furnished to the
Purchasers pursuant to this Agreement (including all exhibits and schedules
hereto and any other agreements or documents delivered on the Closing or any
Financial Statements referred to in Section 3.11 hereof) contains or will
contain any untrue statement of a material fact or, when taken together, omits
or will omit to state a material fact necessary to make the statements made
herein or therein, in light of the circumstances under which they were made, not
misleading. There is no fact known to the Company that has not been disclosed
to the Purchasers in writing that (1) materially adversely affects or could
materially adversely affect the business, earnings, prospects, properties or
condition (financial or other) of the Company or (2) adversely affects or could
adversely affect the ability of the Company to perform its obligations under
this Agreement.
3.23 Certain Transactions
Except as set forth in Schedule 3.23, the Company is not indebted, either
directly or indirectly, to any of its officers, directors or holders of Common
Stock or to their respective spouses, children or other family members; none of
such officers, directors and holders of capital stock or any members of their
families are indebted to the Company or, to the best of the Company's knowledge,
have any direct or indirect ownership interest in any firm or corporation with
which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation which competes with the Company. No
officer, director or holder of any of the Company's capital stock or to the best
of the Company's knowledge, any member of their immediate families is, directly
or indirectly, interested in any contract with the Company. The Company is not
a guarantor or indemnitor of any indebtedness of any other person, firm or
corporation.
PAGE 16
3.24 Environmental Laws and Regulations
The Company has met, and continues to meet, all applicable local, state and
federal environmental laws and regulations, and has disposed of its waste
products and effluents and/or has caused others to dispose of the waste products
and effluents of the Company, if any, in accordance with all applicable state,
local, federal and national environmental laws and regulations and in such a
manner that no harm has resulted or will result to any of its employees or
properties or to any other persons or entities or their properties.
3.25 Other Names
Other than the name Atrieva Corporation, XactData Services, Inc., XactData
International and XactLabs Corporation, the business conducted by the Company
prior to the date hereof has not been conducted under any corporate, trade or
fictitious name.
3.26 Minute Books
The minute books of the Company provided to the Purchasers contain all
resolutions adopted by directors and stockholders since the incorporation of the
Company and fairly and accurately reflect, in all material respects, all matters
and transactions referred to in such minutes or written consents.
3.27 Insurance Coverage
Except as set forth in Schedule 3.27, there is in full force and effect one
or more policies of insurance issued by insurers of recognized responsibility
insuring the Company and its properties and business against such losses and
risks, and in such amounts, as are customary in the case of corporations engaged
in the same or similar business and similarly situated. The Company has not
been refused any insurance coverage sought or applied for, and the Company has
no reason to believe that it will be unable to renew its existing insurance
coverage as and when the same shall expire upon terms at least as favorable as
those presently in effect, other than possible increases in premiums that do not
result from any act or omission of the Company. Such insurance is summarized in
Schedule 3.27.
3.28 Returns and Complaints
Except as set forth in Section 3.28, the Company has received no customer
complaints concerning its products and/or services, nor has it had any of its
products returned by a purchaser or distributor thereof, other than minor non-
recurring warranty problems or minor complaints and returns in the ordinary
course of business.
PAGE 17
3.29 Qualified Small Business Stock
The Shares will constitute "qualified small business stock" within the
meaning of Section 1202 of the Internal Revenue Code of 1986, as amended, as of
the date of issuance. The Company will use its reasonable best efforts to
comply with the reporting and recordkeeping requirements of Section 1202 and any
regulations promulgated thereunder.
3.30 No Discrimination
The Company has not and does not in any manner or form discriminate, ▇▇▇▇▇▇
discrimination or permit discrimination against any person, whether as to race,
sex, religion, or other legally protected classes of persons.
3.31 Use of Proceeds
The Company shall use the proceeds from the sale of the Shares for working
capital and general corporate purposes.
3.32 "Company's Knowledge"
As used in this Section 3, the terms "to the best of the Company's
knowledge," "to the best knowledge of the Company," "known to the Company" or
similar phrases shall mean the best knowledge of the Company, its officers and
directors, after careful consideration of the matters set forth in the
representation that is so qualified and a diligent review of all files,
documents, agreements and other materials in such person's possession or subject
to his or her control.
3.33 Representations and Warranties in Related Documents
The representations and warranties by the Company, contained in the Second
Amended and Restated Investors Rights Agreement in the form attached as Exhibit
B (the "Amended and Restated Investors Rights Agreement"), and in any document,
certificate or instrument delivered pursuant to this Agreement are true and
correct and the Purchasers shall be entitled to rely on such representations and
warranties as if they were made to the Purchasers in this Agreement as of the
Closing Date.
SECTION 4. Representations and Warranties of the Purchasers; Restrictions on
Transfer Imposed by the Act; and California Corporate Securities Law
4.1 Representations and Warranties
Each Purchaser hereby represents and warrants to the Company as follows:
PAGE 18
4.1.1 Investment
(i) The Purchaser acknowledges that the Shares have not been
registered under the Act or qualified under the California Securities Law
or registered or qualified under any other state securities laws on the
ground that no distribution or public offering of the Shares is to be
effected, and that in this connection the Company is relying in part on the
representations of the Purchaser set forth in this Section 4;
(ii) The Purchaser further acknowledges that no public market now
exists for any of the securities issued by the Company and that a public
market may never exist for the Shares and the Common Stock issuable upon
conversion thereof;
(iii) The Purchaser is purchasing the Shares for its own account
(or the account of its parent, subsidiaries or affiliates) and not as
nominee or agent for any other person; and
(iv) By reason of its business or financial experience, the
Purchaser has the capacity to protect its own interests in connection with
the transactions contemplated hereunder, is able to bear the risks of an
investment in the Company, and at the present time could afford a complete
loss of such investment.
4.1.2 Accredited Investor
The Purchaser represents that it is an Accredited Investor (as such term is
defined in Rule 501 of Regulation D promulgated under the Act) and is acquiring
the Shares for its own account and not with a view to, or for sale in connection
with, any distribution thereof in a manner contrary to Section 5 of the Act or
of the California Securities Law and Rules and Regulations of the California
Commissioner of Corporations thereunder or of any other applicable state
securities laws or regulations.
4.1.3 Power and Authorization
The Purchaser has all requisite power and authority to enter into this
Agreement and the other documents and agreements contemplated herein, to
purchase the Shares hereunder, and to carry out and perform its obligations
under the terms of this Agreement and the other documents and agreements
contemplated herein. This Agreement has been duly executed and delivered by the
Purchaser and constitutes a legal, valid, and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms.
PAGE 19
4.1.4 Legal Investment
The acquisition and retention of the Shares by the Purchaser does not
violate any governmental law, rule or regulation binding on Purchaser.
4.2 Transfer of Securities
None of the Shares shall be transferable except upon the conditions
specified in this Section 4.2, which conditions are intended to insure
compliance with the provisions of the Act and applicable state securities laws
in respect to the transfer of such Shares.
4.2.1 Legend
Unless and until otherwise permitted by this Section 4.2, each certificate
or other document evidencing any of the Shares shall be endorsed with a legend
substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR QUALIFIED OR
REGISTERED UNDER ANY STATE SECURITIES LAWS. THEY HAVE BEEN ACQUIRED BY THE
SHAREHOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED, OR OTHERWISE
DISPOSED OF UNLESS (1) COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT AND QUALIFIED OR REGISTERED UNDER APPLICABLE STATE SECURITIES LAWS, (2) IN
COMPLIANCE WITH RULE 144 or RULE 144A UNDER THE ACT, OR (3) THE CORPORATION HAS
BEEN FURNISHED WITH AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY
ACCEPTABLE TO THE CORPORATION TO THE EFFECT THAT NO REGISTRATION AND
QUALIFICATION IS REQUIRED."
4.2.2 Restrictions on Transfer
None of the Shares shall be transferred (other than transfers to a parent,
subsidiary, or other affiliate of a holder of the Shares), and the Company shall
not be required to register any such transfer, unless and until one of the
following events shall have occurred:
(i) The Company shall have received an opinion of counsel, in form
and substance reasonably acceptable to the Company and its counsel, or
other evidence reasonably acceptable to the Company, stating that the
contemplated transfer is exempt from registration under the Act as then in
effect, the Rules
PAGE 20
and Regulations of the Securities and Exchange Commission (the
"Commission") thereunder, and applicable state securities laws. Within five
business days after delivery to the Company and its counsel of such opinion
or evidence, the Company either shall deliver to the proposed transferor a
statement to the effect that such opinion or evidence is not satisfactory
in the reasonable opinion of its counsel (and shall specify in detail the
legal analysis supporting for any such conclusion) or shall authorize the
Company's transfer agent to make the requested transfer;
(ii) The Company shall have been furnished with a letter from the
Commission in response to a written request in form and substance
acceptable to counsel for the Company setting forth all of the facts and
circumstances surrounding the contemplated transfer, stating that the
Commission will take no action with regard to the contemplated transfer;
(iii) The Shares are transferred pursuant to a registration
statement which has been filed with the Commission and has become effective
and are qualified or registered under the applicable state securities laws;
or
(iv) The Shares are transferred pursuant to and in accordance with
Rule 144 or Rule 144A promulgated by the Commission under the Act.
4.2.3 Termination of Restrictions and Removal of Legend
The restrictions on transfer imposed by this Section 4.2 shall cease and
terminate as to the Shares, when (i) such securities shall have been effectively
registered under the Act and sold by the holder thereof in accordance with such
registration, (ii) an acceptable opinion or other evidence as described in
Section 4.2.(b)(i) or a "no action" letter described in Section 4.2.(b)(ii)
states that future transfers of such securities by the transferor or the
contemplated transferee would be exempt from registration under the Act, or
(iii) such securities may be sold under and in accordance with Rule 144(k)
promulgated by the Commission under the Act. When the restrictions on transfer
contained in this Section 4.2 have terminated as provided above, the holder of
the securities as to which such restrictions shall have terminated or the
transferee of such holder shall be entitled to receive promptly from the
Company, without expense to him, and upon surrender of existing certificates,
new certificates not bearing the legend set forth in Section 4.2(a) hereof.
4.3 Corporate Securities Law
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT
BEEN QUALIFIED WITH THE COMMISSIONER OF
PAGE 21
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM 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.
SECTION 5. Conditions to Obligations of the Purchasers
The obligation of the Purchasers to purchase the Shares at the Closing is
subject to the fulfillment to its satisfaction on or prior to the Closing Date
of each of the following conditions, unless waived in writing by the Purchasers:
5.1 Representations and Warranties Correct; Performance of Obligations
The representations and warranties made by the Company in Section 3 hereof
shall be true, correct and complete in all respects when made, and shall be
true, correct and complete in all respects on the Closing Date with the same
force and effect as if they had been made on and as of the Closing Date. The
Company shall have performed or complied with all covenants, agreements and
conditions contained in this Agreement required to be performed or complied with
by the Company on or prior to the Closing Date.
5.2 Opinion of Company's Counsel
The Purchasers shall have received from ▇▇▇▇▇▇▇ Coie LLP, counsel to the
Company, opinions, dated the Closing Date, in substantially the form attached
hereto as Exhibit C.
---------
5.3 Consents and Waivers
The Company shall have obtained any and all consents, permits and waivers
and made all filings necessary or appropriate for consummation of the
transactions contemplated by this Agreement.
5.4 Legal Investment
At the time of the Closing, the purchase of the Shares by the Purchasers
hereunder shall be legally permitted by all laws and regulations to which the
Purchasers and the Company are subject.
PAGE 22
5.5 Restated Certificate
The Restated Certificate shall have been properly filed with the Secretary
of State of the State of Delaware and the same shall be in full force and
effect.
5.6 Satisfactory Proceedings; Compliance Certificate
All corporate and legal proceedings taken by the Company in connection with
the transactions contemplated by this Agreement and all documents relating to
such transactions, shall be satisfactory to the Purchasers and to its counsel.
The Company shall have delivered to the Purchasers a certificate, executed on
behalf of the Company by the President and the Secretary of the Company, dated
the Closing Date, certifying to the fulfillment of the conditions specified in
subsections 5.1, 5.3 and 5.5.
5.7 Board of Directors
The Bylaws of the Company shall provide that the Board of Directors shall
consist of five persons, unless otherwise approved by the Board of the Company.
5.8 Investors Rights Agreement
The Company shall have executed the Second Amended and Restated Investors
Rights Agreement.
5.9 Due Diligence
The Purchasers shall have completed and be satisfied with its due diligence
investigation into the Company, in the Purchasers' sole discretion.
5.10 Conversion of Series I Stock and Series II Stock
All outstanding shares of the Company's Series I Convertible Preferred
Stock (the "Series I Stock") and Series II Convertible Preferred Stock (the
"Series II Stock") shall have been converted to Common Stock.
5.11 Reverse Stock Split
The Company shall have declared a 1,000-for-1 reverse stock split (the
"Reverse Stock Split") of the Common Stock and amended its Restated Certificate
of Incorporation to implement the Reverse Stock Split.
PAGE 23
SECTION 6. Conditions to Obligations of the Company
The Company's obligation to issue, sell and deliver the Shares at the
Closing is subject to the fulfillment to its satisfaction on or prior to the
Closing Date of each of the following conditions, unless waived by the Company.
6.1 Representations and Warranties
The representations and warranties made by the Purchasers in Section 4
hereof shall be true and correct when made, and shall be true and correct on the
Closing Date with the same force and effect as if they had been made on and as
of the Closing Date.
6.2 Qualifications
The Commissioner of Corporations of the State of California shall have
issued a permit qualifying the offer and sale of the Shares and the underlying
Common Stock to the Purchasers pursuant to this Agreement, or such offer and
sale shall be exempt from such qualification under the California Securities
Law.
6.3 Legal Investment
At the time of the Closing, the purchase of the Shares by the Purchasers
hereunder shall be legally permitted by all laws and regulations to which the
Purchasers and the Company are subject.
6.4 Conversion
All outstanding shares of Series I Stock and Series II Stock shall have
been converted to Common Stock. All of the holders of the Company's Convertible
Promissory Notes (the "Notes") shall have delivered for cancellation by the
Company the Notes as consideration for the purchase of such Shares.
6.5 Amended and Restated Warrants to Purchase Series I Stock and Series
II Stock
All outstanding warrants to purchase Series I Stock and Series II Stock
(the "Preferred Warrants") shall have been amended and restated such that the
Preferred Warrants will be convertible into Common Stock.
PAGE 24
SECTION 7. Miscellaneous
7.1 Waivers and Amendments
With the written consent of the record or beneficial holders of more than
51% of the combined number of outstanding Shares (treated as if converted), the
obligations of the Company and the rights of the holders of the Shares 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 supplementary agreement
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement. Upon the effectuation of
each such waiver, consent, agreement of amendment or modification, the Company
promptly shall give written notice thereof to the record holders of the Shares.
This Agreement or any provision hereof may not be changed, waived, discharged or
terminated orally, but only by a statement in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, except to the extent provided in this Section 7.1.
7.2 Governing Law
This Agreement shall be governed in all respects by the laws of the State
of California.
7.3 Survival
The representations, warranties, covenants and agreements made herein shall
survive the execution of this Agreement and the Closing of the transactions
contemplated hereby, notwithstanding any investigation made by the Purchasers.
All statements as to factual matters contained in any certificate, exhibit or
other instrument delivered by or on behalf of the Company or the Founder
pursuant hereto or in connection with the transactions contemplated hereby shall
be deemed to be the representations and warranties of the Company, as of the
date of such certificate or instrument.
7.4 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.
PAGE 25
7.5 Entire Agreement
This Agreement and the other documents delivered pursuant hereto
(including, without limitation, the Second Amended and Restated Investors Rights
Agreement) constitute and contain the full and entire understanding and
agreement between and among the parties with regard to the subjects hereof and
thereof, and supersede any prior or contemporaneous understandings,
representations, warranties, promises, agreements, conditions, negotiations,
correspondence, communications, and term sheets (oral or written) between or
among the parties. The parties acknowledge that they have not relied, in
entering into this Agreement or the other documents and agreements delivered
pursuant hereto, upon any understandings, representations, warranties, promises,
agreements or conditions not specifically set forth herein.
7.6 Notices, Etc
All notices and other communications required or permitted hereunder shall
be in writing and shall be deemed effectively given, upon personal delivery upon
confirmation of receipt if given by facsimile, upon the next business day if
given, by overnight commercial delivery service, or upon the seventh day
following mailing by registered air mail, postage prepaid, addressed (a) if to
the Purchasers, at the address set forth in the Schedule of Purchasers or at
such address as it shall have thereafter furnished to the Company in writing,
(b) if to the Company, at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: President, or at such other address as the Company shall have
furnished to the Purchasers in writing, or (c) if to any other holder of any
Shares or of Common Stock issued upon conversion of Shares, at such address as
such holder shall have furnished to the Company in writing, or, until such
holder so furnishes an address to the Company, then to and at the address of the
last holder of such Shares or shares who so furnished an address to the Company.
In addition, any notice delivered to an address outside the United States shall
be duplicated by counterpart fax notice.
7.7 Delays or Omissions
No delay or omission to exercise any right, power or remedy accruing to any
holder of any securities issued or sold or to be issued or sold hereunder, upon
any breach or default of the Company under this Agreement, shall impair any such
right, power or remedy of such holder nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or in any similar
breach or default thereafter occurring, nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. All remedies, either under this Agreement or by law or
otherwise afforded to any holder, shall be cumulative and not alternative.
PAGE 26
7.8 Severability
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, it shall, to the extent possible, be modified in such manner as
to be valid, legal, and enforceable but so as to most nearly retain the intent
of the parties, and if such modification is not possible, such provision shall
be severed from this Agreement, and in either case the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
7.9 Construction
The titles and subtitles of this Agreement are intended for reference and
shall not by themselves determine the construction or interpretation of this
Agreement. This Agreement and its provisions contained therein and the exhibits
hereto shall not be construed or interpreted for or against any party to this
Agreement because said party drafted or caused the party's legal representative
to draft any of its provisions.
7.10 Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
7.11 Headings
Headings in this Agreement and the other Agreements are for convenience of
reference only and are not a part of the substance hereof or thereof.
7.12 Plural Terms
All terms defined in this Agreement or the other agreements contemplated
hereby in the singular form shall have comparable meanings when used in the
plural form and vice versa.
---- -----
7.13 Survival
All representations and warranties of the parties contained herein, or in
any schedule, document, statement, certificate or other instrument referred to
herein as delivered by or on behalf of any party in connection with the
transactions contemplated hereby shall survive the execution and delivery of
this Agreement, any investigation by or on behalf of any party and the
termination or completion of the transactions contemplated hereby.
PAGE 27
7.14 Finder's Fee
Each party represents that it neither is nor will be obligated for any
finders' fee or commission in connection with this transaction. Each Purchaser
agrees to indemnify and to hold harmless the Company from any liability for any
commission or compensation in the nature of a finders' fee (and the costs and
expenses of defending against such liability or asserted liability) for which
such Purchaser or any of its officers, partners, employees, or representatives
is responsible.
The Company agrees to indemnify and hold harmless each Purchaser from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses or defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
7.15 Expenses
Irrespective of whether the Closing is effected, the Company shall pay all
costs and expenses that it incurs with respect to the negotiations, execution,
delivery and performance of this Agreement. If the Closing is effected, the
Company shall, at the Closing, by wire transfer and as a condition of the
Closing, reimburse the fees of one special counsel for VantagePoint Venture
Partners 1996 and the out of pocket expenses of such counsel. Counsel for
VantagePoint Venture Partners 1996 is solely counsel for such entity, and not
for any other Purchasers.
7.16 Attorney's Fees
In the event that any dispute among the parties to this Agreement should
result in a legal proceeding, the prevailing party shall be entitled to recover
from the other party(ies) to such dispute, all fees, costs and expenses of
enforcing any right under or with respect to this Agreement, including without
limitation, fees and expenses of attorneys and accountants, which shall include,
without limitation, all fees, costs and expenses of appeals.
7.16 Further Covenants
The Company agrees to reserve a number of shares of Common Stock equal to
approximately 20% of the outstanding shares of the post-financing Common Stock
(on a fully-diluted basis) for reservation and issuance in connection with
employee Common Stock options.
PAGE 28
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
themselves or by their respective representatives thereunto duly authorized as
of the day and year first above written.
The Company:
ATRIEVA CORPORATION
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chief Executive
Officer and President
Purchasers:
VANTAGEPOINT VENTURE PARTNERS 1996
By: VantagePoint Associates LLC,
its General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Title: Managing Member
------------------------
BATTERY VENTURES III, L.P.
By: Battery Partners III, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Title: General Partner
------------------------
PAGE 29
AMOCO CORPORATION MASTER TRUST FOR
EMPLOYEES PENSION PLANS
By: _____________________________
Name: _______________________
Title: ______________________
/s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
PAGE 30