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EXHIBIT 10.23
▇▇▇▇.▇▇▇, INC.
SERIES B PREFERRED STOCK AND CONVERTIBLE
NOTE PURCHASE AGREEMENT
This Series B Preferred Stock and Convertible Note Purchase Agreement
(the "Agreement") is made as of the 5th day of November, 1999 by and between
▇▇▇▇.▇▇▇, Inc., a California corporation (the "Company"), and the investors
listed on Exhibit A attached hereto (each a "Purchaser" and together the
"Purchasers").
The parties hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED STOCK AND NOTES; CONVERSION OF NOTES.
1.1 SALE AND ISSUANCE OF SERIES B PREFERRED STOCK AND NOTES.
(a) The Company shall adopt and file with the Secretary of State
of the State of California on or before the Closing (as defined below) the Third
Amended and Restated Articles of Incorporation in the form attached hereto as
Exhibit B (the "Restated Articles").
(b) The Company has, or will have before the Initial Closing (as
defined in Section 1.2(a) below) authorized the sale and issuance of up to
5,886,149 shares of Series B Preferred Stock (or as applicable, up to 4,882,822
Shares of Series B Preferred Stock and up to 1,003,327 shares of Series B-1
Preferred Stock), or such greater number of shares of Series B and/or Series B-1
Preferred Stock that will permit ▇▇▇▇▇▇.▇▇▇, Inc. ("▇▇▇▇▇▇.▇▇▇") to maintain its
ownership of the Company at 46% on a fully diluted basis (assuming full
conversion and exercise of all convertible or exercisable securities of the
Company, including securities reserved for issuance and not granted under the
Company's stock and option plans) (the "Ownership Threshold"), but not to exceed
this threshold, after taking into account certain increases to the number of
shares authorized for issuance pursuant to the company's 1999 Stock Plan and
additional issuances under this Agreement. Shares issued to ▇▇▇▇▇▇.▇▇▇ outside
of the 5,886,149 shares contemplated by the first sentence of this Section1.1(b)
which permit ▇▇▇▇▇▇.▇▇▇ to maintain its ownership at the Ownership Threshold
shall also be referred to hereinafter as the "Amazon True-Up Shares." Subject to
the terms and conditions of this Agreement, each Purchaser agrees, severally and
not jointly, to purchase at the Initial Closing or the Second Closing (as
defined below) and the Company agrees to sell and issue to each Purchaser at the
Initial Closing or the Second Closing that number of shares of Series B
Preferred Stock and/or Series B-1 Preferred Stock set forth opposite each such
Purchaser's name on Exhibit A attached hereto under "Initial Closing" and/or
"Second Closing," respectively, at a purchase price of $7.55 per share, and
certain Purchasers agree, severally and not jointly, to purchase at the Initial
Closing and the Company agrees to sell and issue to each such Purchaser at the
Initial Closing a Convertible Promissory Note in either the form attached hereto
as Exhibit C-1 or C-2 (each, a "Note") in the principal amount set forth
opposite each such Purchaser's name on Exhibit A attached hereto under "Initial
Closing." The shares of Series B and/or Series B-1 Preferred Stock issued to the
Purchaser pursuant to this Agreement shall be hereinafter referred to as the
"Stock; and the Stock, the Notes, the Stock issuable upon
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conversion of the Notes, and the Common Stock issuable upon conversion of the
Stock shall collectively be referred to hereinafter as the "Securities."
1.2 CLOSING; DELIVERY; CONVERSION OF NOTES.
(a) The initial purchase and sale of the Stock and Notes shall
take place at the offices of Venture Law Group, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, at 10:00 a.m., on November __, 1999, or at such other time and place
as the Company and the Purchasers mutually agree upon, orally or in writing
(which time and place are designated as the "Initial Closing"). At the Initial
Closing, the Company shall deliver to each Purchaser a certificate representing
the Stock being purchased thereby and/or a Note being purchased by such
Purchaser against payment of the purchase price therefor by check payable to the
Company or by wire transfer to the Company's bank account.
(b) Without limiting the obligations of certain of the
Purchasers to convert the Notes at the Second Closing as provided in Section
1.2(c) below, if the full number of the authorized shares of Series B Preferred
Stock of the Company is not sold at the Initial Closing, the Company shall have
the right, at any time prior to December 31, 1999, to sell the remaining
authorized but unissued shares of Series B Preferred Stock at such other time
and place as the Company and the Purchasers mutually agree upon, orally or in
writing (which time and place are designated as the "Second Closing") to one or
more additional purchasers as determined by the Company, or to any Purchaser
hereunder who wishes to acquire additional shares of Series B Preferred Stock at
the price and on the terms set forth herein, subject only to the Ownership
Threshold applicable to ▇▇▇▇▇▇.▇▇▇, and provided further that so long as
▇▇▇▇▇▇.▇▇▇ has not exceeded the Ownership Threshold and elects to purchase
additional Stock in the Second Closing, it may elect to purchase shares of
Series B-1 Preferred Stock instead of Series B Preferred Stock. Any additional
Purchaser so acquiring shares of Series B Preferred Stock (or as may be
applicable in the case of ▇▇▇▇▇▇.▇▇▇, Series B-1 Preferred Stock) shall be
considered a "Purchaser" for purposes of this Agreement, any Series B Preferred
Stock (or as may be applicable in the case of ▇▇▇▇▇▇.▇▇▇, Series B-1 Preferred
Stock) so acquired by such additional purchaser shall be considered "Stock" for
purposes of this Agreement and all other agreements contemplated hereby, and for
purposes of this Agreement, unless otherwise indicated, the term "Closing"
refers to the closing of the purchase and sale of Securities with respect to a
particular Purchaser. At the Second Closing, the Company shall deliver to each
Purchaser a certificate representing the Stock being purchased thereby against
payment of the purchase price therefor by check payable to the Company or by
wire transfer to the Company's bank account, or by conversion or partial
conversion of the Note issued to such Purchaser in the Initial Closing, all as
more fully set forth in Section 1.2(c) below.
(c) Notwithstanding the provisions of Section 1.2(b) above and
also subject to the following sentence, conversion of the Notes into Stock or
repayment of the unconverted principal and accrued interest thereon shall be
effected by the Company without any further action by the Purchasers at the
Second Closing in accordance with the terms set forth in this Section 1.2(c)
under one of the following three scenarios as may be applicable. Regardless of
which scenario is applicable to the Second Closing, ▇▇▇▇▇▇.▇▇▇ shall have the
right to
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convert the Note issued and sold to it in the Initial Closing (the "Amazon
Note") in whole or in part into Stock or demand repayment of the principal
amount of the Amazon Note and accrued interest thereon in whole or in part, in
accordance with the terms of the Amazon Note, in the form attached hereto as
Exhibit C-1. In connection with any full or partial conversion of the Amazon
Note by ▇▇▇▇▇▇.▇▇▇, the Company shall promptly issue and deliver a share
certificate to ▇▇▇▇▇▇.▇▇▇ for the number of shares of Series B or Series B-1
Preferred Stock applicable to such conversion, repay any unconverted part of the
Amazon Note and applicable accrued interest, and the Amazon Note shall
thereafter be deemed to have been canceled. In addition, regardless of which
scenario is applicable to the Second Closing, ▇▇▇▇▇▇.▇▇▇ shall have the right to
purchase the applicable number of Amazon True-Up Shares to maintain its
percentage ownership of the Company at 46%.
Scenario 1: If in the Second Closing the Company sells 1,324,504 shares of
Series B Preferred Stock for an aggregate purchase price of $10,000,005.20 (the
"Target Amount") to a new investor who did not previously own any capital stock
of the Company (an "Outside Investor"), then ▇▇▇▇▇▇.▇▇▇ may, in its sole
discretion, elect to purchase up to 609,272 shares of Series B and/or Series B-1
Preferred Stock (subject to the Ownership Threshold), and the principal amount
of and accrued interest on each of the Notes issued and sold to the other
Purchasers in the Initial Closing shall be repaid in full in cash by the
Company.
Scenario 2: If the Company does not sell any shares of Series B Preferred Stock
to an Outside Investor in the Second Closing, then ▇▇▇▇▇▇.▇▇▇ shall not purchase
additional stock in the Second Closing and the principal amount of each Note
issued to the other Purchasers in the Initial Closing shall be converted in full
into a total of 584,052 shares of Series B Preferred Stock, and accrued interest
on each such Note shall be payable in full in cash by the Company to each such
Purchaser.
Scenario 3: If the Company sells less than the Target Amount of Series B
Preferred Stock to an Outside Investor in the Second Closing, then ▇▇▇▇▇▇.▇▇▇
may, in its sole discretion, elect to purchase additional shares of Series B
and/or Series B-1 Preferred Stock in the Second Closing, but only to the extent
that following such additional purchase its percentage ownership of the capital
stock of the Company on a fully diluted basis (assuming full conversion and
exercise of all convertible or exercisable securities of the Company, including
securities reserved for issuance and not granted under the Company's stock and
option plans) will not exceed the Ownership Threshold. If ▇▇▇▇▇▇.▇▇▇ elects to
purchase fewer shares of Stock than the maximum number to which it would
otherwise be entitled to maintain its ownership at 46% on a fully diluted basis
at the time of the Second Closing, then the Company may in its sole discretion
elect to convert in whole or in part the Notes issued to the other Purchasers in
the Initial Closing on a pro rata basis based on the respective principal
amounts of such Notes and/or to sell additional shares of Stock to any
Purchaser, provided that the total number of shares of Series B and/or Series
B-1 Preferred Stock issued hereunder (including upon conversion of the Notes)
does not exceed 5,886,149 shares total for all closings (plus, as may be
applicable, the Amazon True-Up Shares). Any unconverted principal under the
Notes issued to each of the other Purchasers, and accrued interest on the
foregoing Notes shall be payable in full in cash by the Company to each
Purchaser as applicable at the Second Closing.
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1.3 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT COMPLIANCE.
(a) The Company agrees to use its best efforts to make an
appropriate filing of a Notification and Report Form pursuant to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), with respect to the transactions contemplated hereby as promptly as
practicable and in any event within ten (10) business days of the date hereof
and to supply as promptly as practicable any additional information and
documentation that may be requested pursuant to the HSR Act and to take all
other actions necessary to cause the expiration or termination of applicable
waiting periods under the HSR Act as soon as practicable. The Company will
cooperate and coordinate with the Purchasers in exchanging information and
providing reasonable assistance as the other party may request in connection
with the foregoing, to the extent such request is appropriate and reasonably
necessary.
(b) Each of the Purchasers (to the extent that a Purchaser is
required to make a filing under the HSR Act) listed on Exhibit A hereto agrees
to use its best efforts to make an appropriate filing of a Notification and
Report Form pursuant to the HSR Act with respect to the transactions
contemplated hereby as promptly as practicable and in any event within ten (10)
business days of the date hereof and to supply as promptly as practicable any
additional information and documentation that may be requested pursuant to the
HSR Act and to take all other actions necessary to cause the expiration or
termination of applicable waiting periods under the HSR Act as soon as
practicable. The Purchasers will cooperate and coordinate with the Company in
exchanging information and providing reasonable assistance as the other party
may request in connection with the foregoing to the extent such request is
appropriate and reasonably necessary. Each Purchaser hereby agrees to pay the
filing fees and the related costs incurred by such Purchasers to effect any HSR
filing that is applicable to such Purchaser.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Purchaser that, except as set forth on a
Schedule of Exceptions attached hereto as Exhibit D, which exceptions shall be
deemed to be representations and warranties as if made hereunder:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California and has all requisite corporate power and authority
to carry on its business as now conducted and as proposed to be conducted in the
future. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure so to qualify would have a
material adverse effect on its business or properties.
2.2 CAPITALIZATION. The authorized capital of the Company consists,
or will consist, immediately prior to the Initial Closing, of:
(a) 21,427,328 shares of Preferred Stock, 7,227,328 of which
shares have been designated Series A Preferred Stock, all of which are issued
and outstanding immediately prior to the Initial Closing, 12,900,000 of which
shares have been designated Series B Preferred Stock, 6,622,517 of which are
issued and outstanding immediately prior to the Initial Closing, and 1,300,000
of which shares have been designated Series ▇-▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
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▇▇▇▇ of which are issued and outstanding immediately prior to the Initial
Closing. The rights, privileges and preferences of the Preferred Stock are as
stated in the Restated Articles. All of the outstanding shares of Preferred
Stock have been duly authorized, fully paid and are nonassessable and issued in
compliance with all applicable federal and state securities laws.
(b) 36,000,000 shares of Common Stock, 5,358,246 shares of which
are issued and outstanding immediately prior to the Initial Closing. All of the
outstanding shares of Common Stock have been duly authorized, fully paid and are
nonassessable and issued in compliance with all applicable federal and state
securities laws.
(c) The Company has reserved 4,623,909 shares of Common Stock
for issuance to officers, directors, employees and consultants of the Company
pursuant to its 1999 Stock Plan duly adopted by the Board of Directors and
approved by the Company shareholders (the "Stock Plan"). Of such reserved shares
of Common Stock, 3,546,409 shares have been issued pursuant to restricted stock
purchase agreements or exercised options, options to purchase 1,077,500 shares
have been granted or are currently outstanding, and no shares of Common Stock
remain available for issuance to officers, directors, employees and consultants
pursuant to the Stock Plan. Except as set forth on the Schedule of Exceptions,
options and Common Stock granted to employees by the Company pursuant to the
Stock Plan are subject to the following vesting schedule: 25% of the shares
comprising each grant to employees shall vest on the one-year anniversary of the
vesting commencement date for such grant, and thereafter 1/48th of the shares
comprising the grant shall vest on each monthly anniversary of the vesting
commencement date for such grant over the following 36 months. Unvested shares
of Common Stock issued to employees pursuant to the Stock Plan are subject to
the Company's right of repurchase at the original grantee's purchase price.
(d) Except for (a) the conversion privileges of the outstanding
Series A Preferred Stock and the Series B Preferred Stock previously issued and
the Series B and/or Series B-1 Preferred Stock to be issued pursuant to this
Agreement, (b) the Right of First Offer set forth in Section 2.3 of the Amended
and Restated Investors Rights Agreement to be entered into by the Company, ▇▇▇▇
▇▇▇▇▇▇▇▇, the Purchasers, the holders of Series A Preferred Stock and the prior
holders of Series B Preferred Stock at the Closing, and (c) outstanding options
issued pursuant to the Stock Plan, there are no outstanding options, warrants,
rights (including conversion or preemptive rights and rights of first refusal or
similar rights) or agreements, orally or in writing, for the purchase or
acquisition from the Company of any shares of its capital stock. Other than the
Amended and Restated Voting Agreement of even date herewith by and among the
Company, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, the holders of Series A Preferred
Stock, the prior holders of Series B Preferred Stock and the Purchasers
hereunder, the Company is not a party or subject to any agreement or
understanding, and to the best of its knowledge, there is no agreement or
understanding between any persons and/or entities, that affects or relates to
the voting or giving of written consents with respect to any security or by a
director of the Company.
2.3 SUBSIDIARIES. The Company does not currently own or control,
directly or indirectly, any interest in any other corporation, association, or
other business entity. The Company is not a participant in any joint venture,
partnership or similar arrangement.
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2.4 AUTHORIZATION. All corporate action on the part of the Company,
its officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the Amended and Restated Investors'
Rights Agreement, in the form attached hereto as Exhibit E (the "Investors'
Rights Agreement"), the Amended and Restated Right of First Refusal and Co-Sale
Agreement in the form attached hereto as Exhibit F (the "Co-Sale Agreement") and
the Amended and Restated Voting Agreement in the form attached hereto as Exhibit
G (the "Voting Agreement" and collectively with this Agreement, the Investors'
Rights Agreement and the Co-Sale Agreement, the "Agreements"), the performance
of all obligations of the Company hereunder and thereunder and the
authorization, issuance (or reservation for issuance), sale and delivery of the
Securities has been taken or will be taken prior to the Closing, and the
Agreements, when executed and delivered by the Company, shall constitute valid
and legally binding obligations of the Company, enforceable against the Company
in accordance with their terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of
general application affecting enforcement of creditors' rights generally, as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies, or (ii) to the extent the indemnification
provisions contained in the Investors' Rights Agreement may be limited by
applicable federal or state securities laws. The sale of the Securities is not
and will not be subject to any preemptive rights or rights of first refusal,
except for those rights waived or exercised by certain Purchasers purchasing the
Stock set forth on Exhibit A.
2.5 VALID ISSUANCE OF SECURITIES. The Securities that are being
issued to the Purchasers hereunder, when issued, sold and delivered in
accordance with the terms hereof for the consideration expressed herein, will be
duly and validly issued, fully paid and nonassessable and free of restrictions
on transfer other than restrictions on transfer under this Agreement, the Notes,
the Investors' Rights Agreement and applicable state and federal securities
laws. Based in part upon the representations of the Purchasers in this Agreement
and subject to the provisions of Section 2.6 below, the Securities will be
issued in compliance with all applicable federal and state securities laws. The
Common Stock issuable upon conversion of the Stock has been duly and validly
reserved for issuance, and upon issuance in accordance with the terms of the
Restated Articles, shall be duly and validly issued, fully paid and
nonassessable and free of restrictions on transfer other than restrictions on
transfer under this Agreement, the Investors' Rights Agreement and applicable
federal and state securities laws and will be issued in compliance with all
applicable federal and state securities laws.
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 for the filing of the Restated Articles
and filings pursuant to Section 25102(f) of the California Corporate Securities
Law of 1968, as amended, and the rules thereunder, other applicable state
securities laws and Regulation D of the Securities Act of 1933, as amended (the
"Securities Act").
2.7 OFFERING. Subject in part to the truth and accuracy of each
Purchaser's representations set forth in Section 3 of this Agreement, the offer,
sale and issuance of the
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Securities as contemplated by this Agreement are, to the Company's knowledge,
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 knowingly 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 knowledge, currently threatened
against the Company that questions the validity of the Agreements or the right
of the Company to enter into them, or to consummate the transactions
contemplated hereby or thereby, or that might result, either individually or in
the aggregate, in any material adverse changes in the assets, condition or
affairs of the Company, financially or otherwise, or any change in the current
equity ownership of the Company, nor is the Company aware that there is any
basis for the foregoing. The foregoing includes, without limitation, actions,
suits, proceedings or investigations pending or threatened involving the prior
employment of any of the Company's employees, their 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 former
employers. The Company is not a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality nor has the Company received any notice thereof. There is no
action, suit, proceeding or investigation by the Company or any of its
subsidiaries currently pending or which the Company or any of its subsidiaries
intends to initiate.
2.9 INTELLECTUAL PROPERTY. To its knowledge, the Company owns or
possesses sufficient legal rights to all patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes necessary for its business as now conducted and
as proposed to be conducted in the future without any conflict with, or
infringement of, the rights of others and believes it can obtain, on
commercially reasonable terms, any additional rights necessary for the conduct
of its business as proposed to be conducted. The Company has not received any
communications alleging that the Company has violated or, by conducting its
business as currently conducted or as presently proposed, would violate any of
the patents, trademarks, service marks, tradenames, copyrights, trade secrets or
other proprietary rights or processes of any other person or entity. The Company
is not aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with the use of such employee's best efforts to
promote the interest of the Company or that would conflict with the Company's
business as currently conducted or as proposed to be conducted. Neither the
execution or delivery of the Agreements, nor the carrying on of the Company's
business by the employees of the Company, nor the conduct of the Company's
business as proposed, will, to the Company's 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 such employee is now
obligated. The Company does not believe it is or will be necessary to use any
inventions, trade secrets or proprietary information of any of its employees (or
persons it currently intends to hire) made prior to their employment by the
Company. The Schedule of Exceptions includes a list of all patents, copyrights,
trademarks and domain names claimed or owned by the Company and all licenses by
the Company of any intellectual property or technology from third parties.
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2.10 COMPLIANCE WITH OTHER INSTRUMENTS.
(a) The Company is not in violation or default of any provisions
of its Restated Articles or Bylaws or of any instrument, judgment, order, writ,
decree or contract to which it is a party or by which it is bound or, to its
knowledge, of any provision of federal or state statute, rule or regulation
applicable to the Company. The execution, delivery and performance of the
Agreements and the consummation of the transactions contemplated hereby or
thereby will not result in any such violation or be in conflict with or
constitute, with or without the passage of time and giving of notice, either a
default under any such provision, instrument, judgment, order, writ, decree or
contract or an event which results in the creation of any lien, charge or
encumbrance upon any assets of the Company or nonrenewal of any permit, license,
authorization or approval applicable to the Company, its business or operations
or any of its assets or properties.
(b) To its knowledge, the Company has avoided every condition,
and has not performed any act, the occurrence of which would result in the
Company's loss of any right granted under any license, permit, authorization,
distribution agreement or other agreement.
2.11 AGREEMENTS; ACTION.
(a) Except for agreements explicitly contemplated by the
Agreements, there are no agreements, understandings or proposed transactions
between the Company and any of its officers, directors, members of their
immediate families, affiliates, or any affiliate thereof.
(b) Except for agreements explicitly contemplated by the
Agreements, there are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs, or decrees to which the Company
is a party or by which it is bound that involve (i) obligations (contingent or
otherwise) of, or payments to, the Company in excess of $50,000, (ii) the
license of any patent, copyright, trade secret or other proprietary right to or
from the Company, (iii) the grant of rights to manufacture, produce, assemble,
license, market, or sell its products to any other person or affect the
Company's exclusive right to develop, manufacture, assemble, distribute, market
or sell its products or services, or (iv) indemnification by the Company with
respect to infringement of proprietary rights.
(c) The Company has not (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
incurred any other liabilities individually in excess of $50,000 nor, in the
case of indebtedness and/or liabilities individually less than $50,000, in
excess of $100,000 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 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 has reason to
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believe are affiliated therewith) shall be aggregated for the purpose of meeting
the individual minimum dollar amounts of such subsections.
(e) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Restated Articles or Bylaws that, to its knowledge, adversely affects its
business as now conducted and as proposed to be conducted in the future, its
properties or its financial condition.
(f) The Company has not engaged in the past three (3) months in
any discussion (i) with any representative of any corporation or corporations
regarding the merger of the Company with or into any such corporation or
corporations, (ii) with any representative of any corporation, partnership,
association or other business entity or any individual regarding the sale,
conveyance or disposition of all or substantially all of the assets of the
Company or a transaction or Series of related transactions in which more than
fifty percent (50%) of the voting power of the Company would be disposed of, or
(iii) regarding any other form of liquidation, dissolution or winding up of the
Company.
2.12 DISCLOSURE. The Company has fully provided the Purchasers with
all the information that the Purchasers have requested for deciding whether to
acquire the Securities and all information that the Company believes is
reasonably necessary to enable the Purchasers to make such a decision, including
certain financial projections. No representation or warranty of the Company
contained in this Agreement and the exhibits attached hereto, any certificate
furnished or to be furnished to Purchasers at the Closing, or other information
furnished to the Purchasers (when read together) contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained herein or therein not misleading in light of the
circumstances under which they were made. To the extent the financial
projections were prepared by management of the Company, such financial
projections were prepared in good faith. The assumptions applied in preparing
such projections appeared reasonable to management as of the date thereof and as
of the date hereof. The Purchasers understand that actual results may differ
substantially from those projections.
2.13 NO CONFLICT OF INTEREST. The Company is not indebted (or
committed to make loans or extend or guarantee credit), directly or indirectly,
to any of its employees, officers or directors or to their respective spouses or
children, in any amount whatsoever other than in connection with expenses or
advances of expenses incurred in the ordinary course of business or relocation
expenses of employees nor is the Company contemplating such indebtedness as of
the date of this Agreement. None of the Company's employees, officers or
directors, or any members of their immediate families, are, directly or
indirectly, indebted to the Company (other than in connection with purchases of
the Company's stock) or, to 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 nor is the Company contemplating
such indebtedness as of the date of this Agreement, except that employees,
officers, directors and/or shareholders of the Company may own stock in (but not
exceeding two percent of the outstanding capital stock of) any publicly traded
company that may compete with the Company.
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To the Company's knowledge, none of the Company's officers, directors or
shareholders or any members of their immediate families are, directly or
indirectly, interested in any material contract with the Company, nor does any
such person own, directly or indirectly, in whole or in part, any material
tangible or intangible property that the Company uses or contemplates using in
the conduct of its business. The Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
2.14 RIGHTS OF REGISTRATION AND VOTING RIGHTS. Except as
contemplated in the Investors' Rights Agreement, the Company has not granted or
agreed to grant any registration rights, including piggyback rights, to any
person or entity. Except as contemplated in the Voting Agreement, to the
Company's knowledge, no shareholder of the Company has entered into any
agreements with respect to the voting of capital shares of the Company.
2.15 TITLE TO PROPERTY AND ASSETS. The Company owns its property and
assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens which arise in the ordinary course of business and
do not materially impair the Company's ownership or use of such property or
assets. With respect to the property and assets it leases, the Company is in
compliance with such leases and, to its knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances.
2.16 BALANCE SHEET. The Company has delivered to each Purchaser that
has requested it a copy of its unaudited balance sheet as of September 30, 1999
(the "Balance Sheet"), attached hereto as Exhibit G. The Balance Sheet has been
prepared in accordance with generally accepted accounting principles and fairly
presents the financial condition of the Company as of the date indicated
therein, subject to normal year-end audit adjustments. Except as set forth in
the Balance Sheet, the Company has no material liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of
business subsequent to September 30, 1999 that are not material, individually or
in the aggregate, 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 Balance Sheet, which, in both
cases, individually or in the aggregate are not material to the financial
condition or operating results of the Company. Except as disclosed to the
Purchasers, 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.
2.17 EMPLOYEE BENEFIT PLANS. The Company does not have any Employee
Benefit Plan as defined in the Employee Retirement Income Security Act of 1974.
2.18 LABOR AGREEMENTS AND ACTIONS. The Company is not 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, and no labor union has requested or, to the knowledge of the
Company, has sought to represent any of the employees, representatives or agents
of the Company. There is no strike or other labor dispute involving the Company
pending, or to the knowledge of the Company threatened, which could
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have a material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company (as is presently conducted and as
it is proposed to be conducted), nor is the Company aware of any labor
organization activity involving its employees. The Company is not aware that any
officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company, nor does the Company have the
present intention to terminate the employment of any of the foregoing. The
employment of each officer and employee of the Company is terminable at the will
of the Company. To its knowledge, the Company has complied in all material
respects with all applicable state and federal equal employment opportunity laws
and with other laws related to employment. 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 plan or agreement.
2.19 CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AND EMPLOYEE
STOCK PURCHASE AGREEMENTS. Each current and former employee, consultant and
officer of the Company has executed agreements with the Company regarding
confidentiality and proprietary information (the "Confidential Information and
Invention Assignment Agreement") and any stock purchases substantially in the
form or forms delivered to the counsel for the Purchasers. No current employee,
officer or consultant of the Company has excluded works or inventions made prior
to his or her employment with the Company from his or her assignment of
inventions pursuant to such employee, officer or consultant's Confidential
Information and Invention Assignment Agreement. The Company is not aware that
any of its employees or consultants is in violation thereof, and the Company
will use its best efforts to prevent any such violation. The Company as taken
reasonable security measures to maintain the confidentiality of the Company's
proprietary information.
2.20 PERMITS. The Company has all franchises, permits, licenses and
any similar authority necessary for the conduct of its business, the lack of
which could materially and adversely affect the business, properties, prospects,
or financial condition of the Company. The Company believes it can obtain,
without undue burden or expense, any similar authority for the conduct of its
business as planned to be conducted. The Company is not in default in any
material respect under any of such franchises, permits, licenses or other
similar authority.
2.21 CORPORATE DOCUMENTS. The Restated Articles and Bylaws of the
Company are in the form provided to counsel for the Purchasers. The copy of the
minute books of the Company provided to the Purchasers' counsel contains minutes
of all meetings of directors and shareholders and all actions by written consent
without a meeting by the directors and shareholders since the date of
incorporation and reflects all actions by the directors (and any committee of
directors) and shareholders with respect to all transactions referred to in such
minutes accurately in all material respects.
2.22 QUALIFIED SMALL BUSINESS STOCK. As of the Closing: (i) the
Company will not have made any purchases of its own stock during the one-year
period proceeding the Closing having an aggregate value exceeding 5% of the
aggregate value of all its stock as of the beginning of such period and (ii) the
Company's aggregate gross assets, as defined by Code
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Section 1202(d)(2), at no time between October 7, 1998, and through the Closing
have exceeded or will exceed $50 million, taking into account the assets of any
corporations required to be aggregated with the Company in accordance with Code
Section 1202(d)(3).
2.23 MANUFACTURING AND MARKETING RIGHTS. The Company has not granted
exclusive rights to develop, manufacture, produce, assemble, license, market,
distribute or sell its products or services to any other person or entity and is
not bound by any agreement that affects the Company's exclusive right to
develop, manufacture, produce, assemble, license, distribute, market or sell its
products, services or any other products that use its proprietary information.
2.24 TAX RETURNS, PAYMENTS AND ELECTIONS. The Company has filed 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.
The Company has paid all taxes and other assessments due. 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 adverse effect on the Company, its
financial condition, its business as presently conducted or proposed to be
conducted or any of its properties or material assets. The Company has never 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. Since the date of the Balance Sheet,
the Company has not 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.
The Company has 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.
2.25 SECTION 83(b) ELECTIONS. To the best of the Company's
knowledge, all individuals who have purchased unvested shares of the Company's
Common Stock have timely filed elections under Section 83(b) of the Code and any
analogous provisions of applicable state tax laws.
2.26 BROKERS. The Company has no contract, arrangement or
understanding with any broker, finder or similar agent with respect to the
transactions contemplated by this Agreement.
2.27 INSURANCE. The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed and to
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satisfy its contractual obligations. The Company has in full force and effect
products liability and errors and omissions insurance in amounts customary for
companies similarly situated.
2.28 YEAR 2000. To the Company's knowledge, each hardware and
software product and other computer and information technology used by the
Company in its business (collectively, the "Software") will accurately receive,
provide and process date and time data (including, but not limited to,
calculating, comparing and sequencing) from, into and between the twentieth and
twenty-first centuries, including, without limitation, leap year calculations,
without a decrease in the functionality of the Software so that the Software
will not malfunction, cease to function or provide invalid or incorrect results
as a result of date or time data, to the extent that other information
technology, used in combination with the information technology being acquired,
properly exchanges date and/or time data with it. To the Company's knowledge,
the Software is designed to be used prior to, during and after the calendar year
2000 A.D. and will operate during each such time period without error relating
to date or time data, specifically including any error relating to, or the
product of, date data which represents or references different centuries or more
than one century. Without limiting the generality of the foregoing, to the
Company's knowledge, the Software (a) will not abnormally end or provide invalid
or incorrect results as a result of date or time data, specifically including
date or time data which represents or references different centuries or more
than one century, (b) has been designed to ensure year 2000 compatibility,
including, but not limited to, date and time data century recognition,
calculations which accommodate same century and multi-century formulas and date
values, and date data interface values that reflect the century, and (c)
includes "Year 2000 Capabilities," meaning that the Software (i) will manage and
manipulate data involving dates or time, including single century formulas and
multi-century formulas, and will not cause an abnormally ending scenario within
the application or generate incorrect values or invalid results involving such
dates, (ii) provides that all date-related user interface functionalities and
data fields include the indication of century, and (iii) provides that all
date-related data interface functionalities include the indication of century.
2.29 COMPLIANCE WITH LAWS. To its knowledge, the Company is not in
violation of any applicable statute, rule, regulation, order or restriction of
any domestic or foreign government or any instrumentality or agency thereof in
respect of the conduct of its business or the ownership of its properties which
violation would materially and adversely affect the business, assets,
liabilities, financial condition operations or prospects of the Company. To the
best of the Company's knowledge, the Company is not in violation of any
applicable statute, law or regulation relating to the environment or
occupational health and safety, and to the best of the Company's knowledge, no
material expenditures are or will be required in order to comply with any such
existing statute, law or regulation.
2.30 OBLIGATIONS OF MANAGEMENT. To the best of the Company's
knowledge, each of the Company's Chief Executive Officer, President and Chief
Financial Officer is currently devoting one hundred percent (100%) of his or her
business time to the conduct of the business of the Company. The Company is not
aware that any such officer or key employee of the Company is planning to work
less than full time at the Company in the future.
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2.31 USE OF PROCEEDS. The Company will use proceeds from the sale of
the Stock for working capital purposes. Such proceeds shall not be used to repay
indebtedness to any stockholders of the Company.
2.32 CHANGES. Since September 30, 1999, there has not been:
(a) any change in the assets, liabilities, financial condition
or operating results of the Company from that reflected in the Balance Sheet,
except changes in the ordinary course of business that have not been or are
expected to be, in the aggregate, materially adverse;
(b) any waiver or compromise by the Company of a valuable right
or of a material debt owed to it;
(c) any material change in any compensation arrangement or
agreement (including salary, bonus, insurance or pension benefits) with any
employee, officer, director or shareholder;
(d) any change or amendment to any of the governing documents of
the Company (including the Restated Articles and Bylaws of the Company), except
as contemplated hereunder; or
(e) any arrangement or commitment by the Company to do any of
the things described in this Section 2.32.
2.33 SIGNIFICANT CUSTOMERS AND SUPPLIERS. No customer or supplier
that was significant to the Company during the period from February 17, 1999 to
the date hereof has terminated, materially reduced or threatened to terminate or
materially reduce its purchases from, or provision of products or services to,
the Company, as the case may be.
2.34 SERIES A PREFERRED STOCK. The holders of Series A Preferred
Stock, as of the Closing, will not have any rights or privileges other than as
reflected in the Series A Preferred Stock Purchase Agreement, the Restated
Articles, and the Agreements.
2.35 ALL TERMS. The Agreements, together with the Restated Articles,
Series A Preferred Stock Purchase Agreement dated as of April 22, 1999, and
Series B Preferred Stock Purchase Agreement dated as of June 18, 1999 contain
all terms relating to the issuances of Series A Preferred Stock and Series B
Preferred Stock and the relationships among the holders of such stock, except as
set forth in the Schedule of Exceptions.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser,
severally and not jointly, hereby represents and warrants to the Company that:
3.1 AUTHORIZATION. Such Purchaser has full power and authority to
enter into the Agreements. The Agreements, when executed and delivered by the
Purchaser and the other parties hereto and thereto that are required to enter
into the Agreements, will constitute valid and legally binding obligations of
the Purchaser, enforceable in accordance with their terms, except
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(a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and any other laws of general application affecting
enforcement of creditors' rights generally, and as limited by laws relating to
the availability of a specific performance, injunctive relief, or other
equitable remedies, and (b) to the extent the indemnification provisions
contained in the Investors' Rights Agreement may be limited by applicable
federal or state securities laws.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
the Purchaser in reliance upon the Purchaser's representation to the Company,
which by the Purchaser's execution of this Agreement, the Purchaser hereby
confirms, that the Securities to be acquired by the Purchaser will be acquired
for investment for the Purchaser'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 the
Purchaser has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, the Purchaser
further represents that the Purchaser does not presently 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. The Purchaser has not been formed for the specific purpose of
acquiring the Securities.
3.3 DISCLOSURE OF INFORMATION. The Purchaser has had an opportunity
to discuss the Company's business, management, financial affairs and the terms
and conditions of the offering of the Stock with the Company's management and
has had an opportunity to review the Company's facilities. The Purchaser
understands that such discussions, as well as any other written information
delivered by the Company to the Purchaser, were intended to describe the aspects
of the Company's business which it believes to be material. 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 RESTRICTED SECURITIES. The Purchaser understands that the
Securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Purchaser's representations as
expressed herein. The Purchaser understands that the Securities are "restricted
securities" under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Purchaser must hold the Securities indefinitely
unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and
qualification requirements is available. The Purchaser acknowledges that the
Company has no obligation to register or qualify the Securities for resale
except as set forth in the Investors' Rights Agreement. The Purchaser further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Securities,
and on requirements relating to the Company which are outside of the Purchaser's
control, and which the Company is under no obligation and may not be able to
satisfy.
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3.5 NO PUBLIC MARKET. The Purchaser understands that no public
market now exists for any of the securities issued by the Company, and that the
Company has made no assurances that a public market will ever exist for the
Securities.
3.6 LEGENDS. The Purchaser understands that the Securities, and any
securities issued in respect of or exchange for the Securities, may bear one or
all of the following legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933."
(b) Any legend set forth in the other Agreements.
(c) Any legend required by the Blue Sky laws of any state to the
extent such laws are applicable to the shares represented by the certificate so
legended.
3.7 ACCREDITED INVESTOR. The Purchaser is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act, as
presently in effect.
4. CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT CLOSING. The obligations
of each Purchaser to the Company under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 shall be true and correct on
and as of the Initial Closing with the same effect as though such
representations and warranties had been made on and as of the date of the
Initial Closing.
4.2 PERFORMANCE. The Company shall have performed and complied with
all covenants, 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 the Purchasers at the Initial Closing a certificate certifying 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,
prospects, operations, properties, assets or condition of the Company since the
date of the Balance Sheet.
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
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connection with the lawful issuance and sale of the Securities pursuant to this
Agreement shall be 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 shall be reasonably satisfactory in form and
substance to Purchasers' special counsel, which shall have received all such
counterpart original and certified or other copies of such documents as it has
reasonably requested. This may include, without limitation, good standing
certificates and certification by the Company's Secretary regarding the
Company's Restated Articles and Bylaws and Board of Director and shareholder
resolutions relating to this transaction.
4.6 OPINION OF COMPANY COUNSEL. The Purchasers shall have received
from Venture Law Group, counsel for the Company, an opinion, dated as of the
Closing, in substantially the form of Exhibit I.
4.7 BYLAWS. As of the Initial Closing, the Bylaws of the Company
shall provide that the Board of Directors of the Company shall consist of five
(5) persons, which number shall not be changed by an amendment to the Restated
Articles or the Bylaws without consent of holders of seventy percent (70%) of
the outstanding shares of Preferred Stock; and as of the Second Closing, the
Company shall have taken all appropriate action to amend its Bylaws to provide
that the Board of Directors of the Company shall consist of six (6) persons,
which number shall not be changed by an amendment to the Restated Articles or
the Bylaws without consent of holders of seventy percent (70%) of the
outstanding shares of Preferred Stock.
4.8 BOARD OF DIRECTORS. As of the Initial Closing, the Board shall
be comprised of five (5) directors: one representative designated by ▇▇▇▇▇▇
Capital Management, one representative designated by Hummer Winblad Venture
Partners, one director designated by ▇▇▇▇▇▇.▇▇▇, the Company's Chief Executive
Officer, and ▇▇▇▇ ▇▇▇▇▇▇▇▇. As of the Second Closing and pursuant to the Bylaws
amendment contemplated by Section 4.7 above, the Board shall be comprised of six
(6) directors, including the five (5) directors set forth above and one vacancy
to be filled in the manner set forth in the Voting Agreement attached hereto as
Exhibit G.
4.9 INVESTORS' RIGHTS AGREEMENT. The Company, each Purchaser, the
holders of Series A Preferred Stock, the prior holders of Series B Preferred
Stock and ▇▇▇▇ ▇▇▇▇▇▇▇▇ shall have executed and delivered the Investors' Rights
Agreement in substantially the form attached as Exhibit E.
4.10 RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT. The Company, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, each Purchaser, the holders of Series A Preferred
Stock, the prior holders of Series B Preferred Stock and all holders of more
than 100,000 shares of the Company's Common Stock shall have executed and
delivered the Co-Sale Agreement in substantially the form attached as Exhibit F.
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4.11 RESTATED ARTICLES. The Company shall have filed the Restated
Articles with the Secretary of State of California on or prior to the Initial
Closing Date, which shall continue to be in full force and effect as of each
Closing Date, and shall deliver a copy of such filed Restated Articles to each
Purchaser at Closing.
4.12 CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AND EMPLOYEE
STOCK PURCHASE AGREEMENTS. The Company and each of its employees and consultants
shall have entered into the Company's standard form Confidential Information and
Invention Assignment Agreement, in substantially the form provided to the
Purchasers' legal counsel. Each holder of Common Stock of the Company shall have
entered into an Employee Stock Purchase Agreement, in substantially the form
provided to the Purchasers' legal counsel.
4.13 VOTING AGREEMENT. The Company, each Purchaser, the holders of
Series A Preferred Stock, the prior holders of Series B Preferred Stock, ▇▇▇▇
▇▇▇▇▇▇▇▇, and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ shall have executed and delivered the Voting
Agreement in substantially the form attached hereto as Exhibit G.
4.14 SECURITIES COMPLIANCE. The Company shall have taken all actions
necessary to comply with any federal or state securities laws applicable to the
transactions contemplated hereunder that are required to be taken prior to the
Closing.
4.15 STOCK CERTIFICATES AND NOTES. The Company shall have delivered
to each Purchaser a duly executed stock certificate evidencing the Stock
purchased by such Purchaser hereunder and, as applicable, a Note evidencing
indebtedness of the Company to such Purchaser in the principal amount set forth
thereon.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations
of the Company to each Purchaser under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each Purchaser contained in Section 3 shall be true and correct in
all material respects 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 PERFORMANCE. All covenants, agreements and conditions contained
in this Agreement to be performed by the Purchasers on or prior to the Closing
shall have been performed or complied with in all material respects.
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 Stock pursuant to this Agreement shall be obtained and effective as of the
Closing.
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6. MISCELLANEOUS.
6.1 SURVIVAL OF WARRANTIES. Unless otherwise set forth in this
Agreement, the warranties, representations and covenants of the Company and the
Purchasers 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 Purchasers or the Company.
6.2 TRANSFER; SUCCESSORS AND ASSIGNS. 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. The parties agree
that the Purchaser may assign their rights and obligations under this Agreement
to any of their affiliates (as defined in Rule 501 of Regulation D promulgated
under the Securities Act of 1933, as amended) or to any successors to the
Purchasers or such affiliates.
6.3 GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
6.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts and may be executed by facsimile, any of which shall be deemed an
original and all of which together shall constitute one 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. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon delivery, when delivered
personally or by overnight courier or sent by fax (with confirmation of
successful electronic transmission), or forty-eight (48) hours after being
deposited in the U.S. mail, as certified or registered mail, with postage
prepaid, addressed to the party to be notified at such party's address as set
forth on the signature page or Exhibit A hereto, or as subsequently modified by
written notice, and
(a) if to the Company, with a copy to:
Venture Law Group
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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(b) if to Hummer Winblad Venture Partners, with a copy to:
Gunderson, Dettmer, Stough, Villeneuve, Franklin & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: __________
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
(c) if to ▇▇▇▇▇▇ Capital Management, with a copy to:
Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
or (d) if to ▇▇▇▇▇▇.▇▇▇, with a copy to:
▇▇▇▇▇▇▇ Coie LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
6.7 FINDER'S FEE. Each party represents that it neither is nor will
be obligated for any finder's 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
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which each Purchaser or any of its officers, 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 finder's fee (and the costs and expenses of defending against
such liability or asserted liability) for which the Company or any of its
officers, employees or representatives is responsible.
6.8 FEES AND EXPENSES. Upon the Initial Closing, the Company shall
pay the reasonable fees and expenses of one legal counsel to the Purchasers
incurred with respect to this Agreement, the documents referred to herein and
the transactions contemplated hereby and thereby, provided such fees and
expenses do not exceed $15,000. The Purchasers shall pay any additional legal
fees and expenses incurred in excess of the foregoing.
6.9 ATTORNEY'S FEES. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of any of the
Agreements, the prevailing party shall be
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21
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
6.10 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or 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 at least 70% of the Stock (or the Common Stock issuable upon
conversion of the Stock). Any amendment or waiver effected in accordance with
this Section 6.10 shall be binding upon the Purchasers and each transferee of
the Stock (or the Common Stock issuable upon conversion thereof), each future
holder of all such securities, and the Company. Notwithstanding the foregoing,
this Agreement (including Exhibit A hereto) may be amended with only the written
consent of the Company to include additional purchasers of Series B and/or
Series B-1 Preferred Stock at the Second Closing as "Purchasers."
6.11 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
6.12 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such non-breaching or non-defaulting party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
6.13 ENTIRE AGREEMENT. This Agreement, and the documents referred to
herein constitute the entire agreement between the parties hereto pertaining to
the subject matter hereof, and any and all other written or oral agreements
relating to the subject matter hereof existing between the parties hereto are
expressly canceled.
6.14 CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES WHICH ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY
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SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF
ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION
BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
6.15 CONFIDENTIALITY. Each party hereto agrees that, except with the
prior written permission of the other party, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone any
confidential information, knowledge or data concerning or relating to the
business or financial affairs of the other parties to which such party has been
or shall become privy by reason of this Agreement, discussions or negotiations
relating to this Agreement, the performance of its obligations hereunder or the
ownership of Stock purchased hereunder ("Confidential Information"); provided,
however, that (a) Confidential Information shall not include (i) information
that is or becomes available to the general public other than as a result of
disclosure by any Purchaser, (ii) information known to any Purchaser prior to
discussions or negotiations related to this Agreement as demonstrated by
tangible evidence of such prior knowledge by such Purchaser, or (iii) general
knowledge of the Company's industry not specifically related to the Company's
business; and (b) Hummer Winblad Venture Partners III, L.P., Hummer Winblad
Technology Fund III, L.P. and ▇▇▇▇▇▇ Capital Management may distribute
Confidential Information concerning the Company to their respective limited
partners. The provisions of this Section 6.15 shall be in addition to, and not
in substitution for, the provisions of any separate nondisclosure agreement
executed by the parties hereto with respect to the transactions contemplated
hereby.
6.16 EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges that
it is not relying upon any person, firm or corporation, other than the Company
and its officers and directors, in making its investment or decision to invest
in the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable to any other Purchaser for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the
purchase of the Securities.
6.17 WAIVER OF CONFLICTS. Each party to this Agreement acknowledges
that Venture Law Group, counsel for the Company, has in the past performed and
may continue to perform legal services for certain of the Purchasers in matters
unrelated to the transactions described in this Agreement, including the
representation of such Purchasers in venture capital financings and other
matters. Accordingly, each party to this Agreement hereby (a) acknowledges that
they have had an opportunity to ask for information relevant to this disclosure;
and (b) gives its informed consent to Venture Law Group's representation of
certain of the Purchasers in such unrelated matters and to Venture Law Group's
representation of the Company in connection with this Agreement and the
transactions contemplated hereby.
6.18 AGGREGATION OF STOCK. All shares of stock held or acquired by
affiliated entities or persons hereunder shall be aggregated together for the
purpose of determining the availability of rights under this Agreement.
[SIGNATURE PAGE FOLLOWS]
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The parties have executed this Series B Preferred Stock and Convertible
Note Purchase Agreement as of the date first written above.
COMPANY:
▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------
(print)
Title: CEO
---------------------------------
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
PURCHASERS:
SPINNAKER TECHNOLOGY FUND LP
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
(print)
Title: Managing Director of Operations
---------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax:
SIGNATURE PAGE TO PURCHASE AGREEMENT
24
SPINNAKER TECHNOLOGY OFFSHORE FUND LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
(print)
Title: Managing Director of Operations
------------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SPINNAKER FOUNDERS FUND LP
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
(print)
Title: Managing Director of Operations
------------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SPINNAKER OFFSHORE FOUNDERS FUND LTD
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
(print)
Title: Managing Director of Operations
------------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
(print)
Title: VP, Corp. Dev.
-------------------------------------
Address: ▇▇▇▇ -▇▇▇▇ ▇▇▇. ▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
HUMMER WINBLAD VENTURE PARTNERS IV, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
(print)
Title: Member
------------------------------------
Address: ▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇
THE PHOENIX PARTNERS IV LIMITED PARTNERSHIP
By: The Phoenix Management IV. LLC
---------------------------------------
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
(print)
Title: Managing Member
-------------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
THE ▇▇▇▇▇ ▇▇▇▇▇▇ TRUST
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By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ trust
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
(print)
Title: Trustee
-------------------------------------
Address: c/o The ▇▇▇▇▇ ▇▇▇▇▇▇ Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
COMCAST INTERACTIVE CAPITAL, L.P.
By: CIC Venture Management L.P.
---------------------------------------
By: /s/ ▇▇▇▇▇ ▇. Patlore
---------------------------------------
Name: ▇▇▇▇▇ ▇. Patlore
-------------------------------------
(print)
Title: Vice President
------------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
CYBER CONTROL DEVELOPMENT LIMITED
By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
-------------------------------------
(print)
Title: Director
------------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ Plaza
▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
ASIA PACIFIC TECHNOLOGY & FINANCE 1 N.V.
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By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: Pleadis Investment Management B.V.
By ▇▇▇▇▇▇ ▇▇▇▇▇▇, Managing Director
(print)
Title:
-------------------------------------
Address: ▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ Antilles
With a copy: ETF Group, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇-▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
Fax number: ▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇
Attention: Counsel and Secretary
BAYSTAR INTERNATIONAL LTD, a British Virgin
Islands Corporation
By: BayStar International Management, LLC
Its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
WORLD ONLINE INTERNATIONAL B.V.
By: [SIGNATURES ILLEGIBLE]
--------------------------------------
Name: [SIGNATURES ILLEGIBLE]
-------------------------------------
Title:Director/ COO/CFO
-------------------------------------
Address: ▇▇▇▇▇▇▇▇ ▇▇
▇ ▇ ▇▇▇ ____
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇
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THE ▇▇▇▇▇▇▇▇ FAMILY LIMITED PARTNERSHIP DTD
1/7/99
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: General Partners
Address: ▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. (▇▇▇▇) ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Address: ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Address: ▇▇▇▇ ▇. ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
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▇▇▇▇ ▇▇▇▇▇▇▇ PARTNERSHIP
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Address: The Highlands
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
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EXHIBITS
Exhibit A - Schedule of Purchasers
Exhibit B - Form of Third Amended and Restated Articles of Incorporation
Exhibit C - 1 Form of Convertible Promissory Note Issuable to ▇▇▇▇▇▇.▇▇▇
Exhibit C - 2 Form of Convertible Promissory Note Issuable to Other
Purchasers
Exhibit D - Schedule of Exceptions to Representations and Warranties
Exhibit E - Form of Amended and Restated Investors' Rights Agreement
Exhibit F - Form of Amended and Restated Right of First Refusal and
Co-Sale Agreement
Exhibit G - Form of Amended and Restated Voting Agreement
Exhibit H - Balance Sheet dated September 30, 1999
Exhibit I - Form of Legal Opinion of Venture Law Group
31
EXHIBIT A
SCHEDULE OF PURCHASERS
INITIAL CLOSING
PRINCIPAL AMOUNT
NUMBER OF SHARES OF CONVERTIBLE
NAME/ADDRESS/TEL/FAX OF SERIES B PURCHASE PRICE PROMISSORY NOTE
--------------------------------------- ------------------ ------------------- -------------------
Spinnaker Technology Fund, L.P. 215,998 $ 1,630,784.90 $ 510,349.80
c/▇ ▇▇▇▇▇▇ Capital Management
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Spinnaker Technology Offshore 205,691 $ 1,552,967.05 $ 486,001.05
Fund Limited
c/▇ ▇▇▇▇▇▇ Capital Management
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Spinnaker Founders Fund, L.P. 117,082 $ 883,969.10 $ 276,639.55
c/▇ ▇▇▇▇▇▇ Capital Management
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
32
PRINCIPAL AMOUNT
NUMBER OF SHARES OF CONVERTIBLE
NAME/ADDRESS/TEL/FAX OF SERIES B PURCHASE PRICE PROMISSORY NOTE
--------------------------------------- ------------------ ------------------- -------------------
Spinnaker Offshore Founders Fund 66,509 $ 502,142.95 $ 157,145.70
Cayman Limited
c/▇ ▇▇▇▇▇▇ Capital Management
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇.▇▇▇, Inc. 1,692,038 $12,774,886.90 $ 2,975,115.25
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: General Counsel
Hummer Winblad Venture 1,008,800 $ 7,616,440.00 $ 2,383,565.20
Partners IV, L.P.
▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
The Phoenix Partners IV Limited 252,200 $ 1,904,110.00 $ 595,891.30
Partnership
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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33
PRINCIPAL AMOUNT
NUMBER OF SHARES OF CONVERTIBLE
NAME/ADDRESS/TEL/FAX OF SERIES B PURCHASE PRICE PROMISSORY NOTE
--------------------------------------- ------------------ ------------------- -------------------
The ▇▇▇▇▇ ▇▇▇▇▇▇ Trust 2,649 $ 19,999.95 --
c/o ▇▇▇▇▇ ▇▇▇▇▇▇ Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
------------------ ------------------- -------------------
Total for Initial Closing: 3,560,967 $26,885,300.85 $ 7,384,707.85
================== =================== ===================
-3-
34
SECOND CLOSING
Number of Shares
Name/Address/Tel/Fax of Series B Purchase Price
------------------------------------------- ------------------------ ---------------------
Spinnaker Technology Fund, L.P. 67,596 $510,349.80*
c/▇ ▇▇▇▇▇▇ Capital Management
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Spinnaker Technology Offshore 64,371 $486,001.05*
Fund Limited
c/▇ ▇▇▇▇▇▇ Capital Management
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Spinnaker Founders Fund, L.P. 36,641 $276,639.55*
c/▇ ▇▇▇▇▇▇ Capital Management
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Spinnaker Offshore Founders Fund 20,814 $157,145.70*
Cayman Limited
c/▇ ▇▇▇▇▇▇ Capital Management
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇.▇▇▇, Inc. 394,055 $2,975,115.25*
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: General Counsel
-1-
35
Number of Shares
Name/Address/Tel/Fax of Series B Purchase Price
------------------------------------------- ------------------------ ---------------------
Hummer Winblad Technology 1,375,307 $10,383,567.85**
Fund IV, L.P.
▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
The Phoenix Partners IV 78,926 $595,891.30*
Limited Partnership
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Comcast Interactive Capital, L.P. 331,125 $2,499,993.75
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
Cyber Control Development Limited 198,675 $1,499,996.25
38th Floor, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇
Asia Pacific Technology & 132,450 $999,997.50
Finance ▇ ▇.▇.
▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ Antilles
Attn: Managing Director
-2-
36
Number of Shares
Name/Address/Tel/Fax of Series B Purchase Price
------------------------------------------- ------------------------ ---------------------
With a copy to:
ETF Group
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇-▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
Tel: ▇▇▇-▇▇-▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇-▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
General Counsel & Secretary
BayStar Capital, L.P. 33,112 $249,995.60
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
BayStar International Ltd. 33,113 $250,003.15
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
World Online International B.V. 66,225 $499,998.75
▇▇▇▇▇▇▇▇ ▇▇
▇.▇. ▇▇▇ ___
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
The ▇▇▇▇▇▇▇▇ Family Limited 19,868 $150,003.40
Partnership DTD 1/7/99
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-3-
37
Number of Shares
Name/Address/Tel/Fax of Series B Purchase Price
------------------------------------------- ------------------------ ---------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 19,868 $150,003.40
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 19,868 $150,003.40
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: 206-
Fax: ▇▇▇-
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 19,868 $150,003.40
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, #▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ Partnership 19,868 $150,003.40
The Highlands
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
VLG Investments 1999 4,636 $35,001.80
Venture Law Group
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 22,186 $167,504.30
Venture Law Group
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
-4-
38
Number of Shares
Name/Address/Tel/Fax of Series B Purchase Price
------------------------------------------- ------------------------ ---------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. 2,318 $17,500.90
Venture Law Group
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ 1,325 $10,003.75
Venture Law Group
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 993 $7,497.15
Venture Law Group
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇ 993 $7,497.15
Venture Law Group
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 662 $4,998.10
Venture Law Group
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
======================== =====================
Total for Second Closing: 2,964,863 $22,384,715.65***
======================== =====================
* Conversion of Convertible Promissory Note issued to the Purchaser as of
the Initial Closing.
** Includes conversion of Convertible Promissory Note in the principal
amount of $2,383,565.20 and payment of $8,000,002.65 at the time of the
Second Closing.
*** Includes conversion of Convertible Promissory Notes in the aggregate
principal amount of $7,384,707.85 and total payments of $15,000,007.80
at the time of the Second Closing.
-5-