Exhibit 10.34
SERIES E PREFERRED
STOCK PURCHASE AGREEMENT
MAY 12, 1999
TABLE OF CONTENTS
Page
1. Purchase and Sale of Stock.........................................................1
1.1 Sale and Issuance of Series E Preferred Stock............................1
1.2 Closing..................................................................1
2. Representations and Warranties of the Company......................................1
2.1 Organization, Good Standing and Qualification............................2
2.2 Capitalization and Voting Rights.........................................2
2.3 Subsidiaries.............................................................3
2.4 Authorization............................................................3
2.5 Valid Issuance of Preferred and Common Stock.............................4
2.6 Governmental Consents....................................................4
2.7 Offering.................................................................4
2.8 Litigation...............................................................4
2.9 Patents and Trademarks...................................................5
2.10 Compliance with Other Instruments.......................................6
2.11 Agreements; Action......................................................7
2.12 Related-Party Transactions..............................................8
2.13 Permits.................................................................8
2.14 Environmental and Safety Laws...........................................8
2.15 Disclosure..............................................................8
2.16 Private Placement Memorandum............................................9
2.17 Registration Rights.....................................................9
2.18 Corporate Documents.....................................................9
2.19 Title to Property and Assets............................................9
2.20 Financial Statements....................................................9
2.21 Changes................................................................10
2.22 Employee Benefit Plans.................................................11
2.23 Tax Returns, Payments and Elections....................................12
2.24 Minute Books...........................................................12
2.25 Labor Agreements and Actions; Employee Compensation....................13
2.26 Brokers................................................................13
2.27 Year 2000..............................................................13
3. Representations and Warranties of the Investors...................................14
3.1 Authorization...........................................................14
3.2 Purchase Entirely for Own Account.......................................14
3.3 Disclosure of Information...............................................15
3.4 Investment Experience...................................................15
3.5 Accredited Investor.....................................................15
3.6 Restricted Securities...................................................15
3.7 Legends.................................................................15
3.8 Further Representations by Foreign Investors............................15
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4. Conditions of Investors'Obligations at Closing....................................16
4.1 Representations and Warranties..........................................16
4.2 Performance.............................................................16
4.3 Compliance Certificate..................................................16
4.4 Qualifications..........................................................16
4.5 Proceedings and Documents...............................................16
4.6 Opinion of Company Counsel..............................................16
4.7 Admission Agreement.....................................................16
4.8 Compliance with Law.....................................................17
4.9 Secretary's Certificate.................................................17
4.10 Concurrent Purchase....................................................17
4.11. Waiver of Existing Rights.............................................17
4.12. Delivery of Stock Certificates........................................17
4.13. Restated Certificate..................................................17
4.14. Board of Directors....................................................17
5. Conditions of the Company's Obligations at Closing................................17
5.1 Representations and Warranties..........................................17
5.2 Payment of Purchase Price...............................................17
5.3 Qualifications..........................................................17
5.4 Admission Agreement.....................................................18
6. Miscellaneous.....................................................................18
6.1 Survival of Warranties..................................................18
6.2 Successors and Assigns..................................................18
6.3 Governing Law...........................................................18
6.4 Counterparts............................................................18
6.5 Titles and Subtitles....................................................18
6.6 Notices.................................................................18
6.7 Expenses................................................................18
6.8 Year 2000 Covenant......................................................19
6.9 Additional Sales of Series E Preferred Stock............................19
6.10 Further Limitations on Disposition.....................................19
6.11 Amendments and Waivers.................................................19
6.12 Severability...........................................................20
6.13 Corporate Securities Law...............................................20
6.14 Aggregation of Stock...................................................20
6.15 Entire Agreement.......................................................20
SCHEDULE A Schedule of Investors
SCHEDULE B Schedule of Exceptions
EXHIBIT A Amended and Restated Certificate of Incorporation
EXHIBIT B Admission Agreement
EXHIBIT C Opinion of Counsel for the Company
EXHIBIT D Private Placement Memorandum
EXHIBIT E Pro Forma Capitalization Table
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LIBERATE TECHNOLOGIES
SERIES E PREFERRED STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 12th day of May
1999, by and among Liberate Technologies, a Delaware corporation (the
"Company"), and the investors severally and not jointly listed on SCHEDULE A
hereto, each of which is herein referred to as an "Investor."
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK.
1.1 SALE AND ISSUANCE OF SERIES E PREFERRED STOCK.
(a) The Company shall adopt and file with the Secretary of
State of Delaware on or before the Closing (as defined below) the Fourth
Amended and Restated Certificate of Incorporation in the form attached hereto
as EXHIBIT A (the "Restated Certificate").
(b) On or prior to the Closing (as defined below), the
Company shall have authorized (i) the sale and issuance to the Investors of
the Series E Preferred Stock and (ii) the reservation and issuance of the
shares of Common Stock to be issued upon conversion of the Series E Preferred
Stock (the "Conversion Shares"). The Series E Preferred Stock and the
Conversion Shares shall have the rights, preferences, privileges and
restrictions set forth in the Restated Certificate.
(c) Subject to the terms and conditions of this Agreement,
each Investor agrees, severally and not jointly, to purchase from the Company
at the Closing and the Company agrees to sell and issue to each Investor at
the Closing, that number of shares of the Company's Series E Preferred Stock
set forth opposite such Investor's name on SCHEDULE A hereto for the purchase
price set forth thereon.
1.2 CLOSING. The purchase and sale of the Series E Preferred
Stock shall take place at the offices of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at
10:00 a.m., on May 12, 1999, or at such other time and place as the Company
and Investors acquiring in the aggregate more than half the shares of Series
E Preferred Stock sold pursuant hereto mutually agree upon orally or in
writing (which time and place are designated as the "Closing"). At the
Closing the Company shall deliver to each Investor a certificate representing
the Series E Preferred Stock that such Investor is purchasing against payment
of the purchase price therefor by check, wire transfer or any combination
thereof.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to each Investor that, except as set forth on
the Schedule of Exceptions (the "Schedule of Exceptions") attached hereto,
which exceptions shall be deemed to be representations and warranties as if
made hereunder:
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2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the
Company and its Subsidiaries (as defined in Section 2.3 below) is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to carry on its business as now conducted and as now
proposed to be conducted, as described in the Private Placement Memorandum
attached hereto as EXHIBIT D (the "Private Placement Memorandum"). Each of
the Company and its Subsidiaries is duly qualified to transact business and
is in good standing in each jurisdiction in which the failure to so qualify
would have a material adverse effect on its business, prospects, financial
condition or properties.
2.2 CAPITALIZATION AND VOTING RIGHTS. The authorized capital of
the Company consists of:
(a) PREFERRED STOCK. 259,749,900 shares of Preferred Stock
(the "Preferred Stock"), of which (i) 84,999,900 shares have been designated
Series A Preferred Stock (the "Series A Preferred Stock"), 84,999,900 of
which are outstanding, (ii) 25,500,000 of which have been designated Series
A-1 Preferred Stock (the "Series A-1 Preferred Stock"), 20,909,090 of which
are outstanding and 4,545,454 of which have been reserved for issuance by the
Company, (iii) 14,000,000 shares have been designated Series B Preferred
Stock (the "Series B Preferred Stock"), 13,924,533 of which are outstanding
and none of which are reserved for issuance, (iv) 42,500,000 shares have been
designated Series C Preferred Stock (the "Series C Preferred Stock"),
35,326,568 of which are outstanding and 6,759,209 of which have been reserved
for issuance by the Company, (v) 53,500,000 of which have been designated
Series C-1 Preferred Stock (the "Series C-1 Preferred Stock"), 11,013,429 of
which are outstanding and 42,085,777 of which have been reserved for issuance
by the Company, (vi) 8,000,000 of which have been designated Series D
Preferred Stock (the "Series D Preferred Stock"), none of which are
outstanding and 8,000,000 of which have been reserved for issuance by the
Company and (vii) 31,250,000 shares have been designated Series E Preferred
Stock (the "Series E Preferred Stock"), none of which will be outstanding
prior to the Closing and up to 31,250,000 of which may be sold pursuant to
this Agreement. The rights, privileges and preferences of the Preferred
Stock are as set forth in the Company's Restated Certificate attached hereto
as EXHIBIT A.
(b) COMMON STOCK. 407,500,000 shares of common stock, of
which (i) 365,000,000 have been designated Series A Common Stock (the "Series
A Common Stock"), 3,429,143 of which are outstanding and 280,528,303 of which
have been reserved for issuance and (ii) 42,500,000 have been designated
Series B Common Stock (the "Series B Common Stock"), none of which are
outstanding and 42,085,777 of which have been reserved for issuance.
(c) The outstanding shares of Common Stock and Preferred
Stock are all duly and validly authorized and issued, fully paid and
nonassessable, and were issued in accordance with the registration or
qualification provisions of the Securities Act of 1933, as amended (the
"Act") and any relevant state securities laws including Blue Sky laws, or
pursuant to valid exemptions therefrom, and in accordance with the other
applicable provisions of the Act and the rules and regulations thereunder,
and Rule 10b-5 under the Securities Exchange Act of 1934, as amended.
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(d) Except for (i) the conversion privileges of the Preferred
Stock and Series B Common Stock, (ii) the rights provided in that certain
Stockholders Agreement, dated August 11, 1997, as amended pursuant to that
certain Admission Agreement dated November 12, 1997 and that certain Waiver
and Amendment No. 1 of Stockholders Agreement dated March 15, 1999 and as
further amended by that certain Admission Agreement of even date herewith
(the "Stockholders Agreement"), (iii) the rights provided in that certain
Put/Call and Voting Agreement dated August 11, 1997, as amended pursuant to
that certain Admission Agreement dated November 12, 1997 and as further
amended by that certain Admission Agreement of even date herewith (the
"Put/Call Agreement"), (iv) currently outstanding options to purchase
6,400,403 shares of Series C Preferred Stock and 18,382,053 shares of Series
A Common Stock granted to employees pursuant to the Company's equity
incentive plans, (v) currently outstanding options to purchase an aggregate
of 13,645,834 shares of Series A Common Stock granted outside of the
Company's equity incentive plans, (vi) currently outstanding options to
purchase 162,916 shares of Series C Preferred Stock granted to vendors
pursuant to the Company's equity incentive plans, (vii) the rights provided
in that certain Convertible Promissory Note Purchase Agreement dated November
12, 1997, and (viii) the rights provided in that certain Convertible Note
Purchase Agreement dated July 23, 1997, there are no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of
first refusal) or agreements for the purchase or acquisition from the Company
of any shares of its capital stock. The Company is not a party or subject to
any agreement or understanding, and, to the Company's knowledge, there is no
agreement or understanding between any persons and/or entities, which affects
or relates to the voting or giving of written consents or proxies with
respect to any of the Company's securities or the voting by a director of the
Company other than the Put/Call Agreement and the Stockholders Agreement.
(e) EXHIBIT E sets forth the outstanding and fully-diluted
capitalization of the Company as of the date hereof immediately prior to the
sale of the Series E Preferred Stock hereunder and on a pro forma basis
assuming the sale and purchase of 31,250,000 shares of Series E Preferred
Stock pursuant to this Agreement.
2.3 SUBSIDIARIES. The Company does not presently own or control,
directly or indirectly, any interest in any other corporation, association,
or other business entity, except for Network Computer, Incorporated Nederland
B.V., which is a wholly-owned subsidiary of the Company (the "Subsidiaries").
The Company is not a participant in any joint venture, partnership or
similar arrangement. The Company itself is a majority owned subsidiary of
Oracle Corporation.
2.4 AUTHORIZATION. The Company has full power and authority to
execute and deliver each of this Agreement and the Admission Agreement of
even date herewith, by and among the Company and the Investors, the form of
which is attached hereto as EXHIBIT B (the "Admission Agreement") and to
perform its obligations under this Agreement, the Admission Agreement, the
Stockholders Agreement and the Put/Call Agreement (collectively, the
"Transaction Agreements"). All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the Admission Agreement, the
performance of all obligations of the Company hereunder and under the other
Transaction Agreements, and the authorization, issuance (or reservation for
issuance), sale and delivery of the Series E Preferred Stock being sold
hereunder
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and the Conversion Shares has been taken or will be taken prior to the
Closing, and this Agreement and the other Transaction Agreements constitute
valid and legally binding obligations of the Company, enforceable in
accordance with their respective terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, (ii) as
limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies, and (iii) to the extent the
indemnification provisions contained in the Stockholders Agreement may be
limited by applicable federal or state securities laws.
2.5 VALID ISSUANCE OF PREFERRED AND COMMON STOCK. The Series E
Preferred Stock that is being purchased by the Investors hereunder, when
issued, sold and delivered in accordance with the terms of this Agreement for
the consideration expressed herein, will be duly and validly issued, fully
paid, and nonassessable, and will be free and clear of all liens, claims,
charges, security interests, pledges or encumbrances of any kind and free of
restrictions on transfer other than restrictions on transfer under this
Agreement and the other Transaction Agreements and under applicable state and
federal securities laws and will possess all of the rights, privileges and
preferences provided therefor in the Restated Certificate. The Conversion
Shares have been duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Restated Certificate, will be duly and
validly issued, fully paid, and nonassessable and will be free and clear of
all liens, claims, charges, security interests, pledges or encumbrances of
any kind and free of restrictions on transfer other than restrictions on
transfer under this Agreement and the other Transaction Agreements and under
applicable state and federal securities laws and will possess all of the
rights and powers provided therefor in the Restated Certificate.
2.6 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part
of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement, except (i) the filing of the
Restated Certificate with the Secretary of State of Delaware; and (ii) the
filing pursuant to Section 25102(f) of the California Corporate Securities
Law of 1968, as amended, and the rules thereunder, which filing will be
effected within 15 days of the sale of the Series E Preferred Stock
hereunder, or such other post-closing filings as may be required.
2.7 OFFERING. Subject in part to the truth and accuracy of each
Investor's representations set forth in Section 3 of this Agreement, the
offer, sale and issuance of the shares of Series E Preferred Stock as
contemplated by this Agreement are exempt from the registration requirements
of any applicable state and federal securities laws, and neither the Company
nor any authorized agent acting on its behalf will take any action hereafter
that would cause the loss of such exemption.
2.8 LITIGATION. There is no action, suit, proceeding or
investigation pending or, to the Company's or any of its Subsidiaries'
knowledge, currently threatened against the Company or any of its
Subsidiaries that questions the validity of this Agreement or any other
Transaction Agreements or the right of the Company to enter into such
agreements, or to consummate the transactions contemplated hereby or thereby,
or related to the title and ownership of any Intellectual Property (as
defined below in Section 2.9) necessary for its
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business as now conducted and as proposed to be conducted as described in the
Private Placement Memorandum or that might result, either individually or in
the aggregate, in any material adverse changes in the assets, liabilities,
properties, condition, affairs, operating results, prospects or business of
the Company (as such business is now conducted and as it is proposed to be
conducted as described in the Private Placement Memorandum), financially or
otherwise, or any change in the current equity ownership of the Company. The
foregoing includes, without limitation, actions, suits, proceedings or
investigations pending or threatened involving the prior employment of any of
the Company's or any of its Subsidiaries' employees, their use in connection
with the Company's or any of its Subsidiaries' business of any information or
techniques allegedly proprietary to any of their former employers, or their
obligations under any agreements with prior employers. Neither the Company
nor any of its Subsidiaries is a party or subject to and none of the assets
of the Company or any of its Subsidiaries is bound by the provisions of any
order, writ, injunction, judgment or decree of any court or government agency
or instrumentality. There is no action, suit, proceeding or investigation by
the Company or any of its Subsidiaries currently pending or that the Company
intends to initiate.
2.9 PATENTS AND TRADEMARKS.
(a) Each of the Company and its Subsidiaries has sufficient
title and ownership of or licenses to and has the right to bring actions for
infringement of all patents, trademarks, service marks, trade names, trade
dress, copyrights, computer software (including source code and object code),
trade secrets, information, proprietary rights and processes (the
"Intellectual Property") necessary for its and its Subsidiaries' business as
now conducted and as proposed to be conducted as described in the Private
Placement Memorandum without any conflict with or infringement of the rights
of others. Other than licenses or agreements entered into in the ordinary
course of business and arising from the purchase of "off the shelf" or
standard products, there are no outstanding options, licenses or agreements
of any kind relating to the Intellectual Property, nor is the Company or any
of its Subsidiaries as a licensee bound by or a party to any options,
licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information
and other proprietary rights and processes of any other person or entity. To
the Company's and its Subsidiaries' knowledge, no third party is infringing
any Intellectual Property, except for such infringements, if any, as would
not, either individually or in the aggregate, have a material adverse effect
on its business, properties, prospects or financial condition. Neither the
Company nor any of its Subsidiaries has received any communications alleging
that, and neither the Company nor any of its Subsidiaries is otherwise aware
that either the Company or any of its Subsidiaries has violated or, by
conducting its business as proposed, would violate or infringe any of the
Intellectual Property rights of any other person or entity.
(b) The Company is not aware that any of its or its
Subsidiaries' employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of his or her best efforts to promote the interests of
the Company or any of its Subsidiaries or that would conflict with the
Company's or any of its Subsidiaries' business as proposed to be conducted.
Neither the execution nor delivery of this Agreement or the Admission
Agreement, nor the performance of the transactions contemplated hereby or
thereby, nor the carrying on of the Company's or any of its Subsidiaries'
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business by the employees, agents and independent contractors of the Company
or any of its Subsidiaries, nor the conduct of the Company's or any of its
Subsidiaries' business as proposed, will, to the Company's or any of its
Subsidiaries' best knowledge, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which any of such employees, agents
and independent contractors is now obligated. In furtherance, and not in
limitation, of the foregoing, to the Company's best knowledge, at no time
during the conception of or reduction of any of the Company's Intellectual
Property to practice was any developer, inventor or other contributor to such
Intellectual Property operating under any grants from any governmental entity
or agency or private source, performing research sponsored by any
governmental entity or agency or private source or, to its best knowledge,
subject to any employment agreement or invention assignment or nondisclosure
agreement or other obligation with any third party that could materially
adversely affect the Company's rights in such Intellectual Property. The
Company does not believe it is or will be necessary to utilize any
inventions, trade secrets or proprietary information of any of its or its
Subsidiaries' employees made prior to their employment or retention by the
Company or one of its Subsidiaries, except for inventions, trade secrets or
proprietary information that have been assigned to the Company.
2.10 COMPLIANCE WITH OTHER INSTRUMENTS. Each of the Company and
its Subsidiaries has not violated and is not in violation or default in any
respect of any provision of its Restated Certificate or Bylaws, or in any
respect of any instrument, judgment, order, writ, decree, permit or license
of or from any court or any federal, state or local government or
governmental agency or other governmental authority or arbitration authority
(each a "Governmental Authority"), or any mortgage, indenture, obligation,
contract, agreement, bond, debenture, note, other evidence of indebtedness,
deed of trust, loan agreement, lease, judgment, injunction, or any other
instrument each binding upon the Company or any of its Subsidiaries or by
which the Company and its Subsidiaries or any of their respective properties
may be bound or to which it is a party (each, a "Document"), or of any
provision of any federal, state or local statute, rule, regulation or
governmental requirement applicable to the Company or any of its Subsidiaries
the violation or default of which would have a material adverse effect on the
Company's or any of its Subsidiaries' business, including, without
limitation, the Foreign Corrupt Practices Act, the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended, the Export Administration Act
and the Comprehensive Environmental Response, Compensation and Liability Act,
and neither the Company nor any of its Subsidiaries has any liability or
potential liability for any such violations of any affiliates or other third
party. The execution and delivery of this Agreement and the Admission
Agreement and the performance of this Agreement and the other Transaction
Agreements, and the consummation of the transactions contemplated hereby and
thereby will not (a) result in any such violation or be in conflict with or
constitute, with or without the passage of time and giving of notice, a
default under any such Document, (b) result in the termination of, or the
acceleration or cancellation of any obligation under, or give rise to a right
by any party to terminate or amend its obligations under any such Document or
(c) constitute an event that results in the creation of any lien, charge or
encumbrance upon any assets of the Company or any of its Subsidiaries or the
suspension, revocation, impairment, forfeiture, or nonrenewal of any material
permit, license, authorization, or approval applicable to the Company, its
business or operations or any of its assets or properties.
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2.11 AGREEMENTS; ACTION.
(a) Except for agreements explicitly contemplated in this
Agreement and by the other Transaction Agreements, there are no agreements,
understandings or proposed transactions between the Company or any of its
Subsidiaries and any of its officers, directors, affiliates, or any affiliate
thereof.
(b) There are no agreements, understandings (oral or
written), instruments, contracts, proposed transactions, judgments, orders,
writs or decrees to which the Company or any of its Subsidiaries or any of
its officers, directors or any Affiliate (as defined in Rule 12b-2 of the
Securities Exchange Act of 1934, as amended ("Affiliate")) thereof is a party
or by which any of them are bound that may involve (i) obligations
(contingent or otherwise) of, or payments to the Company or any of its
Subsidiaries in excess of, $100,000 (other than obligations of, or payments
to, the Company or any of its Subsidiaries arising from purchase or sale
agreements entered into in the ordinary course of business), (ii) the license
of any patent, copyright, trade secret or other proprietary right to or from
the Company or any of its Subsidiaries (other than the license of the
Company's or any of its Subsidiaries' software and products in the ordinary
course of business), or (iii) provisions restricting or affecting the
development, manufacture, sale, license or distribution of the Company's or
any of its Subsidiaries' products or services.
(c) Neither the Company nor any of its Subsidiaries has (i)
declared or paid any dividends or authorized or made any distribution upon or
with respect to any class or series of its capital stock, (ii) incurred any
indebtedness for money borrowed or any other liabilities individually in
excess of $100,000 or, in the case of indebtedness and/or liabilities
individually less than $100,000, in excess of $250,000 in the aggregate,
(iii) made any loans or advances to any person, other than ordinary advances
for travel expenses or (iv) sold, exchanged or otherwise disposed of any of
its assets or rights, other than the sale of its inventory in the ordinary
course of business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including
persons or entities the Company or any of its Subsidiaries has reason to
believe are affiliated therewith) shall be aggregated for the purpose of
meeting the individual minimum dollar amounts of such subsections.
(e) Neither the Company nor any of its Subsidiaries is a
party to or is bound by any contract, agreement or instrument, or subject to
any restriction under its Restated Certificate or Bylaws that adversely
affects its business as now conducted or as proposed to be conducted as
described in the Private Placement Memorandum, or its properties, financial
condition or prospects.
(f) Neither the Company nor any of its Subsidiaries is
engaged, nor has engaged in the past six (6) months, in any discussion (i)
with any representative of any corporation or corporations or other entity
regarding the consolidation or merger of the Company or any of its
Subsidiaries with or into any such corporation or corporations, (ii) with any
corporation, partnership, association or other business entity or any
individual regarding the sale,
7
conveyance or disposition of all or substantially all of the assets of the
Company or any of its Subsidiaries or a transaction or series of related
transactions in which more than fifty percent (50%) of the voting power of
the Company or any of its Subsidiaries is disposed of, or (iii) regarding any
other form of acquisition, liquidation, dissolution or winding up of the
Company.
2.12 RELATED-PARTY TRANSACTIONS. No employee, officer, or director
of the Company or any of its Subsidiaries or member of his or her immediate
family is indebted to the Company or any of its Subsidiaries, nor is the
Company or any of its Subsidiaries indebted (or committed to make loans or
extend or guarantee credit) to any of them. To the Company's or any of its
Subsidiaries' best knowledge, none of such persons has any direct or indirect
ownership interest in any firm or corporation with which the Company or any
of its Subsidiaries is affiliated or with which the Company or any of its
Subsidiaries has a business relationship, or any firm or corporation that
competes with the Company or any of its Subsidiaries, except that employees,
officers, or directors of the Company or any of its Subsidiaries and members
of their immediate families may own stock in publicly traded companies that
may compete with the Company or any of its Subsidiaries; PROVIDED, that no
officer of the Company or any of its Subsidiaries owns more than two percent
(2%) of such stock and such officer or members of such officer's immediate
family are not involved in the management of such companies. Except as set
forth on SCHEDULE 2.12, no shareholder, employee, officer or director of the
Company or any of its Subsidiaries nor any member of the immediate family of
any employee, officer or director of the Company or any of its Subsidiaries
is directly or indirectly interested in any material contract with the
Company or any of its Subsidiaries.
2.13 PERMITS. The Company and its Subsidiaries have all
franchises, permits, licenses, and any similar authority necessary for the
conduct of its business as now being conducted by it, the lack of which could
materially and adversely affect the business, properties, prospects, or
financial condition of the Company or any of its Subsidiaries, and the
Company and its Subsidiaries believe they can obtain, without undue burden or
expense, any similar authority for the conduct of its business as planned to
be conducted. Neither the Company nor any of its Subsidiaries is in default
in any material respect under any of such franchises, permits, licenses, or
other similar authority.
2.14 ENVIRONMENTAL AND SAFETY LAWS. Neither the Company nor any of
its Subsidiaries is in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and to the
Company's knowledge, no material expenditures are or will be required in
order to comply with any such existing statute, law or regulation and no such
expenditures are planned.
2.15 DISCLOSURE. The Company has fully provided each Investor with
all the information that such Investor has requested for deciding whether to
purchase the Series E Preferred Stock and all the information that the
Company believes is reasonably necessary to enable such Investor to make such
decision. Neither this Agreement, the Admission Agreement, nor any other
statements or certificates made or delivered in connection herewith or
therewith contains any untrue statement of a material fact or omits to state
a material fact necessary to make the statements herein or therein not
misleading.
8
2.16 PRIVATE PLACEMENT MEMORANDUM. The Private Placement
Memorandum previously delivered to each Investor has been prepared in good
faith by the Company and does not contain any untrue statement of a material
fact nor does it omit to state a material fact necessary to make the
statements made therein not misleading, except that with respect to
projections contained in the Private Placement Memorandum, the Company
represents only that such projections were prepared in good faith and that
the Company reasonably believes there is a reasonable basis for such
projections.
2.17 REGISTRATION RIGHTS. Except as provided in the Stockholders
Agreement, the Company has not granted or agreed to grant any registration
rights, including piggyback rights, to any person or entity.
2.18 CORPORATE DOCUMENTS. The Board of Directors and the
stockholders of the Company have duly approved and adopted the Restated
Certificate attached hereto as EXHIBIT A. True and correct copies of the
Restated Certificate and Bylaws of the Company are in the form attached as
exhibits to the Secretary's Certificate to be delivered by the Company to the
Investors pursuant to Section 4.9 hereto.
2.19 TITLE TO PROPERTY AND ASSETS. The Company and its
Subsidiaries have good, valid and marketable title to, or a valid leasehold
interest in, all of its property and assets free and clear of all mortgages,
liens, loans and encumbrances, except such encumbrances and liens that arise
in the ordinary course of business and do not materially impair the Company's
or any of its Subsidiaries' ownership or use of such property or assets.
Such properties and assets are, to the Company's knowledge, sufficient to
allow the Company to conduct its business as now conducted and as proposed to
be conducted. With respect to the property and assets it leases, the Company
and its Subsidiaries are in compliance with such leases.
2.20 FINANCIAL STATEMENTS. The Company has delivered to each
Investor its audited consolidated financial statements (balance sheet and
statement of operations, statement of changes in stockholders' equity and
statement of cash flows, including notes thereto) at May 31, 1998 and for the
fiscal year then ended, and its unaudited consolidated financial statements
(balance sheet and statement of operations) as at and for the nine-month
period ended February 28, 1999 (collectively, the "Financial Statements").
The Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated and with each other, except that the unaudited Financial
Statements may not contain all footnotes required by generally accepted
accounting principles. The Financial Statements (i) have been compiled from
and are in accordance with the Company's books and records, (ii) are complete
and correct in all material respects and (iii) fairly present the financial
condition, assets and liabilities and operating results of the Company and
its Subsidiaries as of the dates, and for the periods, indicated therein,
subject in the case of the unaudited Financial Statements to normal year-end
audit adjustments. Except as set forth in the Financial Statements, neither
the Company nor any of its Subsidiaries has any material liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to May 31, 1998 and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected in
the Financial Statements, which, in both cases, individually or in the
aggregate, are not material to the financial condition or operating results
of
9
the Company. Except as disclosed in the Financial Statements, the Company is
not a guarantor or indemnitor of any indebtedness of any other person, firm
or corporation. The Company maintains and will continue to maintain a
standard system of accounting established and administered in accordance with
generally accepted accounting principles. During the two fiscal years ended
1997 and 1998 and the period between May 31, 1998 and the Closing, there has
not been any change in the method of accounting or keeping of books of
account or accounting practices with respect to the Company or its business.
2.21 CHANGES. Since February 28, 1999 there has not been:
(a) any change or changes in the assets, liabilities,
financial condition, operating results, prospects or business of the Company
or any of its Subsidiaries from that reflected in the Financial Statements as
of and for the period ending February 28, 1999, which could reasonably be
expected to materially and adversely affect the assets, properties, financial
condition, operating results, prospects or business of the Company (as such
business is presently conducted and as it is proposed to be conducted);
(b) any damage, destruction or loss, whether or not covered
by insurance, which could reasonably be expected to materially and adversely
affect the assets, properties, financial condition, operating results,
prospects or business of the Company or any of its Subsidiaries (as such
business is presently conducted and as it is proposed to be conducted);
(c) any waiver, cancellation, compromise or release by the
Company or any of its Subsidiaries of a valuable right or of a material debt
owed to it;
(d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company or any of its
Subsidiaries, except in the ordinary course of business and that is not
material to the assets, properties, financial condition, operating results,
prospects or business of the Company (as such business is presently conducted
and as it is proposed to be conducted);
(e) any material change or amendment to a material contract
or arrangement by which the Company or any of its Subsidiaries or any of its
assets or properties is bound or subject;
(f) any change in any compensation arrangement or agreement
with any employee, except changes occurring in the ordinary course of
business in accordance with past practice;
(g) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;
(h) any resignation or termination of employment of any
officer or key employee of the Company or any of its Subsidiaries whose
resignation or termination would have a material adverse effect on the
Company's or any of its Subsidiaries' business or prospects; and neither the
Company nor any of its Subsidiaries knows of the impending resignation or
termination of employment of any such officer or key employee;
10
(i) any change in any of the Company's relations with, or any
loss of or material order cancellation by, any major customer of the Company
or any of its Subsidiaries or, to the Company's knowledge, any threat of any
change in any of its relations with, or any threat of loss of or material
order cancellation by any major customer of the Company or any of its
Subsidiaries, which, individually or in the aggregate, has had, or reasonably
could be expected to have, a material adverse effect on the assets,
properties, financial condition, operating results, prospects or business of
the Company or any of its Subsidiaries (as such business is presently
conducted and as it is proposed to be conducted as described in the Private
Placement Memorandum);
(j) any mortgage, pledge, transfer of a security interest in,
or lien, created, with respect to any of the Company's or any of its
Subsidiaries' material properties or assets, except liens for taxes not yet
due or payable;
(k) any loans or guarantees made by the Company or any of its
Subsidiaries to or for the benefit of its employees, officers or directors,
or any members of their immediate families, other than travel advances and
other advances made in the ordinary course of its business;
(l) any declaration, setting aside or payment or other
distribution in respect of any of the Company's or any of its Subsidiaries'
capital stock, or any direct or indirect redemption, purchase or other
acquisition of any of such stock by the Company or any of its Subsidiaries;
(m) to the Company's or any of its Subsidiaries' knowledge,
any other event or condition of any character that might materially and
adversely affect the assets, properties, financial condition, operating
results, prospects or business of the Company or any of its Subsidiaries (as
such business is presently conducted and as it is proposed to be conducted);
or
(n) any agreement or commitment by the Company to do any of
the things described in this Section 2.21.
2.22 EMPLOYEE BENEFIT PLANS. SCHEDULE 2.22 hereto sets forth a
list of each "employee pension benefit plan" (as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
maintained or contributed to by the Company or any of its Subsidiaries (the
"Retirements Plans"). Neither the Company nor any entity which is treated as
a single employer along with the Company under Section 414(b), (c), (m) or
(o) of the Internal Revenue Code, as amended, (the "Code") maintains or
contributes to, or has ever maintained or contributed to, or been required to
contribute to a multiemployer plan within the definition of Section 3(37) of
ERISA or any plan subject to Title IV of ERISA. SCHEDULE 2.22 hereto sets
forth a list of each "employee welfare benefit plan" (as defined in Section
3(1) of ERISA) and each other employee benefit plan, program, arrangement,
practice or contract, whether formal or informal, maintained by the Company
or any of its Subsidiaries providing benefits or compensation to or on behalf
of employees or former employees of the Company (the "Benefits Plans"). The
Retirement Plans and Benefit Plans are in compliance in all material respects
with the presently applicable provisions of ERISA and the Code, and the
Retirement
11
Plans are qualified under Section 401(a) of the Code. No contributions are
required to be made by the Company or any of its Subsidiaries to any
Retirement Plan and all other liabilities with respect to any Retirement or
Benefit Plan shall have been satisfied prior to or on the Closing Date. Each
of the Company and its Subsidiaries has filed or caused to be filed all
reports required to be filed by it with the Internal Revenue Service or the
Department of Labor under applicable provisions of ERISA and the Code with
respect to each of the Retirement Plans and Benefit Plans. No liability to
the Pension Benefit Guaranty Corporation has been incurred with respect to
any retirement Plan subject to Title IV of ERISA that has not been satisfied
in full.
2.23 TAX RETURNS, PAYMENTS AND ELECTIONS. Each of the Company and
its Subsidiaries has filed on a timely basis all tax returns and reports
(including information returns and reports) as required by law. These
returns and reports are true and correct in all material respects except to
the extent that a reserve has been reflected on the Financial Statements in
accordance with generally accepted accounting principles. Each of the
Company and its Subsidiaries has paid all taxes and other assessments due,
except those contested by it in good faith that are listed in the Schedule of
Exceptions and except to the extent that a reserve has been reflected on the
Financial Statements in accordance with generally accepted accounting
principles. The provision for taxes of the Company as shown in the Financial
Statements is adequate for taxes due or accrued as of the date thereof. The
Company has not elected pursuant to the Code, to be treated as a Subchapter S
corporation or a 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 that relate solely to methods of accounting,
depreciation or amortization) that would have a material effect on the
Company, its financial condition, assets, properties, operating results,
prospects or its business as presently conducted or proposed to be conducted
or any of its properties or material assets. Neither the Company nor any of
its Subsidiaries has ever had any tax deficiency proposed or assessed against
it and has not executed any waiver of any statute of limitations on the
assessment or collection of any tax or governmental charge. None of the
Company's federal income tax returns and none of its state income or
franchise tax or sales or use tax returns has ever been audited by
governmental authorities and neither the Company nor any of its Subsidiaries
is in dispute with any tax authorities. Since May 31, 1998, the date of the
audited Financial Statements, neither the Company nor any of its Subsidiaries
has incurred any taxes, assessments or governmental charges other than in the
ordinary course of business and the Company has made adequate provisions on
its books of account for all taxes, assessments and governmental charges with
respect to its business, properties and operations for such period. Each of
the Company and its Subsidiaries have withheld or collected from each payment
made to each of its employees, the amount of all taxes (including, but not
limited to, federal income taxes, Federal Insurance Contribution Act taxes
and Federal Unemployment Tax Act taxes) required to be withheld or collected
therefrom, and has paid the same to the proper tax receiving officers or
authorized depositories. Neither the Company nor any Subsidiary is a party
to any tax sharing agreement with a party who is not a subsidiary. Neither
the Company nor any Subsidiary is liable for any taxes of another person that
is not a subsidiary.
2.24 MINUTE BOOKS. The minute books of the Company that have been
made available to the Investors contain a complete summary of all meetings of
directors and stockholders since the time of incorporation and reflect all
transactions referred to in such minutes accurately in all material respects.
12
2.25 LABOR AGREEMENTS AND ACTIONS; EMPLOYEE COMPENSATION. Neither
the Company nor any of its Subsidiaries is bound by or subject to (and none
of its assets or properties is bound by or subject to) any written or oral,
express or implied, contract, commitment or arrangement with any labor union
or employee association, and no labor union or employee association has
requested or, to the Company's or its Subsidiaries' knowledge, has sought to
represent any of the employees, representatives or agents of the Company or
its Subsidiaries. There is no strike or other labor dispute involving the
Company pending, or to the Company's or its Subsidiaries' knowledge,
threatened, that could have a material adverse effect on the assets,
properties, financial condition, operating results, prospects or business of
the Company (as such business is presently conducted and as it is proposed to
be conducted), nor is the Company or its Subsidiaries aware of any labor
organization activity involving its or its Subsidiaries' employees. Neither
the Company nor its Subsidiaries are aware that any officer or key employee,
or that any group of key employees, intends to terminate their employment
with the Company or its Subsidiaries, nor does the Company or its
Subsidiaries have a present intention to terminate the employment of any of
the foregoing. The employment of each officer and employee of the Company
and its Subsidiaries is terminable at the will of the Company or its
Subsidiaries. The Company and its Subsidiaries have complied in all material
respects with all applicable state and federal equal employment opportunity
and other laws related to employment. SCHEDULE 2.25 lists each employment
contract, deferred compensation agreement, bonus plan, incentive plan, profit
sharing plan, retirement agreement, pension, stock, stock option, other
equity-based compensation, savings, bonus, incentive compensation, and other
employee benefit plans, arrangements, contracts, policies or practices
whether written or unwritten, qualified or unqualified, funded or unfunded or
other employee compensation agreement to which the Company or its
Subsidiaries are a party or bound. Each employee of the Company and its
Subsidiaries has executed a proprietary information and inventions agreement
substantially in the form previously provided to the Investors.
2.26 BROKERS. Neither the Company nor its Subsidiaries have any
contract, arrangement or understanding with any broker, finder, investment
banker, financial advisor or similar agent with respect to the transactions
contemplated by this Agreement.
2.27 YEAR 2000.
(a) For purposes of this Agreement, "Year 2000 Compliant"
means that the applicable software, hardware and firmware product (each, a
"Computer System"), including without limitation, embedded microcontrollers
and the Company's software products currently under development will
correctly differentiate between years in different centuries and will
accurately process date/time data, including, but not limited to, recording,
storing, processing, comparing, sequencing, calculating and presenting from,
into and between the twentieth and twenty-first centuries, including leap
year calculations, and will accurately process any information dependent on
or relating to such dates without loss of functionality, data integrity or
performance.
(b) The Company has conducted an inventory of the Computer
Systems and other computer-based systems used in the Company's business to
determine whether such systems are Year 2000 Compliant. The Company is in
the process of upgrading such Computer Systems that are not Year 2000
Compliant, including without limitation, its
13
accounting systems, to ensure that such systems are Year 2000 Compliant prior
to December 31, 1999 or such earlier date on which the applicable Computer
Systems may shut down or produce incorrect calculations or otherwise
malfunction without becoming totally inoperable and is not aware of any
events or circumstances that would delay or preclude the upgrading and
implementation of such upgrades prior to December 31, 1999 or such earlier
date on which the applicable Computer Systems may shut down or produce
incorrect calculations or otherwise malfunction without becoming totally
inoperable. The Company does not account for the costs incurred by it of
upgrading its internal Computer Systems to be Year 2000 Compliant separately
from the costs of upgrading its internal Computer Systems generally.
However, the costs of upgrading its internal Computer Systems to be Year 2000
Compliant will not be material.
(c) All software licensed or sublicensed by the Company
(whether or not developed, manufactured or otherwise produced by the Company)
to third parties is Year 2000 Compliant; provided, however, that except as
otherwise provided in this Section 2.27, the Company makes no representation
or warranty as to whether any Computer Systems that interact with such
software are Year 2000 Compliant. The Company has run tests on the hardware
manufactured by the Company's OEM licensees to determine whether the
Company's products running on such hardware are Year 2000 Compliant, and to
the Company's best knowledge, the operation of the Company's products on such
hardware is or will be Year 2000 Compliant prior to December 31, 1999 or such
earlier date on which the applicable Computer Systems may shut down or
produce incorrect calculations or otherwise malfunction without becoming
totally inoperable. The parties hereto acknowledge that the Company has not
developed nor manufactured the hardware to be used with or to operate and run
the Company's products, nor does the Company sell any hardware or have any
current plans to develop any hardware.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each
Investor, as to itself, severally and not jointly, hereby represents and
warrants that:
3.1 AUTHORIZATION. Such Investor has full power and authority to
enter into this Agreement and the Admission Agreement, and each such
Agreement constitutes its valid and legally binding obligation, enforceable
in accordance with its terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies and (iii) to the extent the indemnification
provisions contained in the Stockholders Agreement may be limited by
applicable federal or state securities laws or public policy.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
with such Investor in reliance upon such Investor's representation to the
Company, which by such Investor's execution of this Agreement such Investor
hereby confirms, that the Series E Preferred Stock to be received by such
Investor and the Conversion Shares (collectively, the "Securities") will be
acquired for investment for such Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and that such Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, such Investor further represents that such Investor does not have
any contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Securities.
14
3.3 DISCLOSURE OF INFORMATION. Such Investor represents that it
has received the Private Placement Memorandum and the Company's financial
model and projections. Such Investor further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the offering of the Series E Preferred Stock and
the business, properties, prospects and financial condition of the Company.
The foregoing, however, does not limit or modify the representations and
warranties of the Company in Section 2 of this Agreement or the right of the
Investors to rely thereon.
3.4 INVESTMENT EXPERIENCE. Such Investor acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and
has such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Series E
Preferred Stock. If other than an individual, Investor also represents it
has not been organized for the purpose of acquiring the Series E Preferred
Stock.
3.5 ACCREDITED INVESTOR. Such Investor is an "accredited
investor" within the meaning of Securities and Exchange Commission ("SEC")
Rule 501 of Regulation D, as presently in effect.
3.6 RESTRICTED SECURITIES. Such Investor understands that the
Securities it is purchasing are characterized as "restricted securities"
under the federal securities laws inasmuch as they are being acquired from
the Company in a transaction not involving a public offering and that under
such laws and applicable regulations such securities may be resold without
registration under the Act, only in certain limited circumstances. In this
connection, such Investor represents that it is familiar with SEC Rule 144,
as presently in effect, and understands the resale limitations imposed
thereby and by the Act.
3.7 LEGENDS. It is understood that the certificates evidencing
the Securities may bear one or all of the following legends:
(a) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or unless
sold pursuant to Rule 144 of such Act."
(b) "The securities represented by this certificate are
subject to certain of the terms and conditions of a certain Put/Call and
Voting Agreement and a certain Stockholders Agreement. Copies of such
agreements are on file at the principal office of the Company."
(c) Any legend required by the laws of the State of
California, including any legend required by the California Department of
Corporations and Sections 417 and 418 of the California Corporations Code.
3.8 FURTHER REPRESENTATIONS BY FOREIGN INVESTORS. If an Investor
is not a United States person, such Investor hereby represents that he or she
has satisfied himself or herself as to the full observance of the laws of his
or her jurisdiction by such Investor in connection with any invitation to
subscribe for the Securities or any use of this Agreement,
15
including (i) the legal requirements within his jurisdiction for the purchase
of the Securities by such Investor, (ii) any foreign exchange restrictions
applicable to such purchase, (iii) any governmental or other consents that
may need to be obtained by such Investor, and (iv) the income tax and other
tax consequences to such Investor, if any, that may be relevant to the
purchase, holding, redemption, sale, or transfer of the Securities. Such
Investor's subscription and payment for the Securities will not violate any
applicable securities or other laws of his or her jurisdiction.
4. CONDITIONS OF INVESTORS' OBLIGATIONS AT CLOSING. The
obligations of each Investor under subsection 1.1(c) of this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions, the waiver of which shall not be effective against any Investor
who does not consent thereto:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 shall be true on and as of
the Closing with the same effect as though such representations and
warranties had been made on and as of the date of such Closing.
4.2 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.
4.3 COMPLIANCE CERTIFICATE. The President of the Company shall
deliver to each Investor at the Closing a certificate stating that the
conditions specified in Sections 4.1 and 4.2 have been fulfilled and stating
that there shall have been no adverse change in the business, affairs,
operations, properties, prospects, assets or condition of the Company since
the date of the Financial Statements.
4.4 QUALIFICATIONS. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and
sale of the Securities pursuant to this Agreement shall be duly obtained and
effective as of the Closing.
4.5 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
and all documents incident thereto, including all necessary or appropriate
consents, permits and waivers, shall be reasonably satisfactory in form and
substance to counsel for each Investor, and they shall have received all such
counterpart original and certified or other copies of such documents as they
may reasonably request.
4.6 OPINION OF COMPANY COUNSEL. Each Investor shall have received
from ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, counsel
for the Company, an opinion, dated as of the Closing, in the form attached
hereto as EXHIBIT C.
4.7 ADMISSION AGREEMENT. The Admission Agreement, in the form
attached as EXHIBIT B, shall be executed by all applicable parties and the
appropriate approvals for amending the Put/Call and the Stockholders
Agreement shall have been obtained.
16
4.8 COMPLIANCE WITH LAW. No law, regulation, order or injunction
of any court or governmental authority of competent jurisdiction shall be in
effect which prohibits the consummation of the transactions contemplated
hereby.
4.9 SECRETARY'S CERTIFICATE. Each Investor shall have received a
certificate executed by the Company's Secretary and attaching the Company's
Restated Certificate and Bylaws as exhibits.
4.10 CONCURRENT PURCHASE. All other Investors shall have
concurrently purchased the amount of Series E Preferred Stock to be purchased
by them pursuant to this Agreement.
4.11 WAIVER OF EXISTING RIGHTS. On or before the Closing, any
preemptive rights, rights of first refusal and other rights (including but
not limited to, the right to receive notice of the transaction or the
transactions contemplated by this Agreement and the Admission Agreement) of
the parties to the Stockholders Agreement and the Put/Call Agreement shall
have been waived as and to the extent such rights apply to the issuance and
sale of the Securities hereunder and the other transactions contemplated
hereby and by the Admission Agreement.
4.12 DELIVERY OF STOCK CERTIFICATES. The Company shall have
delivered to such Investor the stock certificate specified for such Investor
in Section 1.1(c).
4.13 RESTATED CERTIFICATE. The Restated Certificate shall have
been duly approved and adopted by the Board of Directors and stockholders of
the Company and shall have been duly filed with and accepted by the Secretary
of State of the State of Delaware and shall be in full force and effect under
the Delaware General Corporation Law.
4.14 BOARD OF DIRECTORS. The directors of the Company shall be
Messrs. Barksdale, Corfield, Ellison, Henley, ▇▇▇▇▇▇▇▇ and Roux.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligations of the Company to each Investor under this Agreement are subject
to the fulfillment on or before the Closing of each of the following
conditions by that Investor:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each of the Investors contained in Section 3 shall be true on
and as of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
5.2 PAYMENT OF PURCHASE PRICE. The Investor shall have delivered
the purchase price specified in Section 1.1(c).
5.3 QUALIFICATIONS. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and
sale of the Securities pursuant to this Agreement shall be duly obtained and
effective as of the Closing.
17
5.4 ADMISSION AGREEMENT. The Admission Agreement, in the form
attached as EXHIBIT B, shall be executed by all applicable parties and all
approvals for amending the Put/Call and the Stockholders Agreement shall have
been obtained.
6. MISCELLANEOUS.
6.1 SURVIVAL OF WARRANTIES. The warranties, representations and
covenants of the Company and Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investors or the Company.
6.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and
be binding upon the respective successors and assigns of the parties
(including transferees of any Securities). 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.
6.3 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
6.4 COUNTERPARTS. This Agreement may be executed by facsimile in
two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
6.5 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.6 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other
address as such party may designate by ten (10) days' advance written notice
to the other parties.
6.7 EXPENSES. Irrespective of whether the Closing is effected,
the Company shall pay all costs and expenses that it incurs with respect to
the negotiation, execution, delivery and performance of this Agreement. If
the Closing is effected, the Company shall, at the Closing, reimburse the
reasonable fees and expenses of LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, special
counsel for certain of the Investors, not to exceed $25,000. If any action
at law or in equity is necessary to enforce or interpret the terms of this
Agreement, the Admission Agreement or the Restated Certificate, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party
may be entitled.
18
6.8 YEAR 2000 COVENANT. The Company covenants and agrees that it
will use commercially reasonable efforts to assure that its business,
financial condition and results of operations are not materially adversely
affected by Computer Systems that are not Year 2000 Compliant. The Company
further covenants that it will continue to use commercially reasonable
efforts to ensure that its software products are Year 2000 Compliant,
including tests on hardware manufactured by the Company's OEM licensees to
determine whether the Company's products running on such hardware are Year
2000 Compliant.
6.9 ADDITIONAL SALES OF SERIES E PREFERRED STOCK. The Company
covenants and agrees that it will not issue or sell shares of its Series E
Preferred Stock other than pursuant to this Agreement without the prior
written consent or agreement of at least a majority of the then outstanding
shares of Series E Preferred Stock.
6.10 FURTHER LIMITATIONS ON DISPOSITION. Without in any way
limiting the representations made by the Investors in Section 3 above, each
such Investor agrees not to make any disposition of all or any portion of the
Securities unless and until the transferee has agreed in writing for the
benefit of the Company to be bound by Section 3 of this Agreement, this
Section 6.10 and the Admission Agreement provided and to the extent this
Section and such agreement are then applicable, and:
(a) There is then in effect a Registration Statement under
the 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
securities under the Act. It is agreed that the Company will not require
opinions of counsel for transactions made pursuant to Rule 144 except in
unusual circumstances.
(c) Notwithstanding the provisions of Paragraphs (a) and (b)
above, no such registration statement or opinion of counsel shall be
necessary for a transfer by an Investor (i) that is a partnership to a
partner of such partnership or a retired partner of such partnership who
retires after the date hereof, or to the estate of any such partner or
retired partner or the transfer by gift, will or intestate succession of any
partner to his or her spouse or to the siblings, lineal descendants or
ancestors of such partner or his or her spouse or (ii) that is a corporation
to any wholly-owned or majority-owned subsidiary or Affiliate of such
Investor, if the transferee agrees in writing to be subject to the terms
hereof to the same extent as if it, he or she were an original Investor
hereunder.
6.11 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders
of eighty-one percent (81%) of the Common Stock issued or issuable upon
conversion of the Series E Preferred Stock (excluding shares of Series E
Preferred Stock
19
held by Oracle Corporation or its Affiliates). Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder
of any securities purchased under this Agreement at the time outstanding
(including securities into which such securities are convertible), each
future holder of all such securities, and the Company.
6.12 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
6.13 CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES THAT ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES
OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION 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.
6.14 AGGREGATION OF STOCK. All shares of the Preferred Stock held
or acquired by affiliated entities or persons shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
6.15 ENTIRE AGREEMENT. This Agreement and the documents referred
to herein constitute the entire agreement among the parties and no party
shall be liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
20
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
COMPANY:
LIBERATE TECHNOLOGIES
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO NETWORK COMPUTER, INC.
SERIES E PREFERRED STOCK PURCHASE AGREEMENT
INVESTORS:
COMCAST CORPORATION
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇ COMMUNICATIONS, INC.
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
GENERAL INSTRUMENT CORPORATION
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
LUCENT TECHNOLOGIES INC.
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
MARUBENI CORPORATION
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address: ▇-▇-▇, ▇▇▇▇▇▇▇▇▇ ▇-▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇▇▇
MEDIAONE INTERACTIVE SERVICES, INC.
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ COMMUNICATIONS INC.
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ COMMUNICATIONS, INC.
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address: ▇▇▇-▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
ACCESS TECHNOLOGY PARTNERS
By: ACCESS TECHNOLOGY MANAGEMENT, L.L.C
Its: General Partner
By: H&Q VENTURE MANAGEMENT, L.L.C
Its: Managing Member
By:
--------------------------------------
Its:
--------------------------------------
Address:
--------------------------------------------
--------------------------------------------
ACCESS TECHNOLOGY PARTNERS BROKERS FUND, L.P.
By: H&Q VENTURE MANAGEMENT, L.L.C
Its: General Partner
By:
--------------------------------------
Its:
--------------------------------------
Address:
--------------------------------------------
--------------------------------------------
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ CALIFORNIA
By:
--------------------------------------
Its:
--------------------------------------
Address:
--------------------------------------------
--------------------------------------------
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ EMPLOYEE VENTURE
FUND, ▇.▇. ▇▇
By: H&Q VENTURE MANAGEMENT, L.L.C
Its: General Partner
By:
--------------------------------------
Its:
--------------------------------------
Address:
--------------------------------------------
--------------------------------------------
SUN MICROSYSTEMS, INC.
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address: ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
Mail Stop PAL1-S21
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
WIND RIVER SYSTEMS, INC.
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
INVESTORS:
---------------------------------------------
(Name of Investor as it should appear on the
Series E Preferred Stock Certificate)
By:
-----------------------------------------
Print Name:
---------------------------------
Title:
--------------------------------------
Address:
--------------------------------------------
--------------------------------------------
Telephone:
--------------------------------------------
Facsimile:
--------------------------------------------
PLEASE PROVIDE ALL OF THE ABOVE-REQUESTED INFORMATION
SCHEDULE A
SCHEDULE OF INVESTORS
NUMBER OF TOTAL PURCHASE
NAME AND ADDRESS SHARES PURCHASED PRICE OF SHARES
---------------- ---------------- ---------------
COMCAST TECHNOLOGY, INC. 3,125,000 $5,000,000.00
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇ COMMUNICATIONS, INC. 3,125,000 $5,000,000.00
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
GENERAL INSTRUMENT CORPORATION 3,125,000 $5,000,000.00
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
LUCENT TECHNOLOGIES INC. 3,125,000 $5,000,000.00
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
MARUBENI CORPORATION 625,000 $1,000,000.00
▇-▇-▇, ▇▇▇▇▇▇▇▇▇ ▇-▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇▇▇
MEDIAONE INTERACTIVE SERVICES, INC. 3,125,000 $5,000,000.00
c/o MediaOne Ventures
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ COMMUNICATIONS, INC. 5,000,000 $8,000,000.00
▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ COMMUNICATIONS, INC. 5,000,000 $8,000,000.00
▇▇▇-▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇. CASE, III 17,187 $27,499.20
▇▇▇▇▇▇▇ ▇▇▇ 6,251 $10,001.60
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 12,500 $20,000.00
▇▇▇▇▇▇ ▇▇▇▇▇ 17,187 $27,499.20
ACCESS TECHNOLOGY PARTNERS, L.P. 493,750 $790,000.00
ACCESS TECHNOLOGY PARTNERS BROKERS FUND, L.P. 5,469 $8,750.40
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ CALIFORNIA 49,219 $78,750.40
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ EMPLOYEE VENTURE FUND, ▇.▇. ▇▇ 23,437 $37,499.20
c/o ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
SUN MICROSYSTEMS, INC. 3,125,000 $5,000,000.00
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
Mail Stop PAL1-S21
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
WIND RIVER SYSTEMS, INC. 1,250,000 $2,000,000.00
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ---------- --------------
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
31,250,000 $50,000,000.00
========== ==============
S-1
SCHEDULE B
SCHEDULE OF EXCEPTIONS
S-2
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
E-1
EXHIBIT B
ADMISSION AGREEMENT
E-2
EXHIBIT C
OPINION OF COMPANY COUNSEL
▇-▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇-▇
EXHIBIT E
PRO FORMA CAPITALIZATION TABLE
E-5