EXHIBIT 10.8
▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
This Series B Preferred Stock Purchase Agreement (the "Agreement") is made
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as of October 9, 1998 by and between ▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation
(the "Company"), and the investors listed on Exhibit A attached hereto (each a
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"Purchaser" and together the "Purchasers").
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The parties hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED STOCK .
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1.1 SALE AND ISSUANCE OF SERIES B PREFERRED STOCK.
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(a) The Company shall adopt and file with the Secretary of State
of the State of Delaware on or before the Closing (as defined below) the Third
Amended and Restated Certificate of Incorporation in the form attached hereto as
Exhibit B (the "Restated Certificate").
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(b) Subject to the terms and conditions of this Agreement, each
Purchaser severally agrees to purchase and the Company agrees to sell and issue
to each Purchaser that number of shares of Series B Preferred Stock listed
opposite such Purchaser's name on Exhibit A attached hereto at a purchase price
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of $3.35 per share. The shares of Series B Preferred Stock issued to each
Purchaser pursuant to this Agreement are hereinafter referred to as the "Stock."
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The Stock and the Common Stock issuable upon conversion of the Stock are
hereinafter referred to as the "Securities." The Securities shall have the
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rights, privileges, preferences and restrictions as set forth in the Restated
Certificate.
1.2 CLOSING; DELIVERY.
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(a) The purchase and sale of 4,656,715 shares of the Stock shall
take place at the offices of Venture Law Group, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, at 10:00 a.m., on October 9, 1998 or at such other time and place as
the Company and the Purchasers purchasing a majority of such Stock mutually
agree upon, orally or in writing (which time and place are designated as the
"Closing").
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(b) At the Closing, the Company shall deliver to each Purchaser
a certificate representing the Stock being purchased hereby against payment of
the purchase price therefor by check payable to the Company, wire transfer to
the Company's bank account or cancellation of indebtedness (or any combination
of the foregoing).
(c) At any time within sixty (60) days of the Closing, the
Company shall have the right to sell up to an additional 843,285 shares of
Series B Preferred Stock to one or more additional investors approved by the
Company's board of directors, at the price and on the terms set forth herein.
The purchase of any such additional Stock shall be effected by the execution and
delivery of additional signature pages to this Agreement and the Investors'
Rights
Agreement (as defined in Section 2.4 below) and payment of the purchase price
for such additional shares of Series B Preferred Stock by check payable to the
Company, wire transfer to the Company's bank account or cancellation of
indebtedness (or any combination of the foregoing), or as consideration for a
transfer of technology by such purchaser and/or other obligations of such
purchaser. Such shares of Series B Preferred Stock shall be considered "Stock"
or "Series B Preferred Stock" for purposes of this Agreement and the Investors'
Rights Agreement, and the purchaser of such shares shall be considered a
"Purchaser" under this Agreement and an "Investor" under the Investors' Rights
Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
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represents and warrants to each Purchaser that, except as set forth on the
Schedule of Exceptions attached hereto as Exhibit C, which exceptions shall be
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deemed to be representations and warranties as if made hereunder:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
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corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to carry on its business as now conducted. The Company is qualified to
transact business in the state of Washington and is in good standing under the
laws of the state of Washington. The Company is not required to qualify to
transact business in any other jurisdiction, except where the failure so to
qualify would not have a material adverse effect on its business or properties.
2.2 CAPITALIZATION. Upon the filing of the Restated Certificate, the
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authorized capital of the Company consists, or will consist, immediately prior
to the Closing, of:
(a) 15,500,000 shares of Preferred Stock, (i) 10,000,000 of
which shares have been designated Series A Preferred Stock, all of which are
issued and outstanding immediately prior to the Closing and (ii) 5,500,000 of
which shares have been designated Series B Preferred Stock, none of which are
issued and outstanding immediately prior to the Closing.
(b) 20,500,000 shares of Common Stock, 2,273,000 shares of which
are issued and outstanding immediately prior to the 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) Except for the conversion privileges of the Preferred Stock,
and except as set forth in the Investors' Rights Agreement (as defined below),
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.
2.3 SUBSIDIARIES. The Company does not currently own or control,
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directly or indirectly, any interest in any other corporation, association, or
other business entity.
2.4 AUTHORIZATION. All corporate action on the part of the Company,
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its officers, directors and stockholders necessary for the authorization,
execution and delivery of this
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Agreement, the Second Amended and Restated Investors' Rights Agreement in the
form attached hereto as Exhibit D (the "Investors' Rights Agreement"), and
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collectively with this Agreement, the "Agreements"), the performance of all
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obligations of the Company hereunder and thereunder and the authorization,
issuance 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,
will 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.
2.5 VALID ISSUANCE OF SECURITIES. The Stock that is being issued to
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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 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 Stock 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 Certificate, 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
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
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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 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 the Securities Act of
1933, as amended (the "Securities Act") and the rules thereunder.
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2.7 LITIGATION. There is no action, suit, proceeding or investigation
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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, nor is the Company aware that there is any basis for
the foregoing. 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. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company intends to initiate.
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2.8 INTELLECTUAL PROPERTY. To its knowledge, the Company owns or
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possesses sufficient legal rights to all patents, trademarks, service marks,
tradenames, copyrights, trade secrets, licenses, information and proprietary
rights necessary for its business as now conducted without any conflict with, or
infringement of, the rights of others. The Company has not received any
communications alleging that the Company has violated or, by conducting its
business, would violate any of the patents, trademarks, service marks,
tradenames, copyrights, trade secrets or other proprietary rights of any other
person or entity. The Company is not aware that any of its employees is
obligated under any contract 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. Neither the execution or
delivery of this Agreement, nor the carrying on of the Company's business as now
conducted by the employees of the Company, 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 of any of its employees (or persons it
currently intends to hire) made prior to their employment by the Company.
2.9 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
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violation or default of any provisions of its Restated Certificate or Bylaws or
in violation or default 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 any federal or state statute, rule or regulation applicable to
the Company, the effect of which would have a material adverse effect on 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.
2.10 AGREEMENTS; ACTION.
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(a) Except for agreements explicitly contemplated by the
Agreements, there are no agreements, understandings, instruments, contracts or
proposed transactions 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 (other than standard
"off the shelf" product licenses), or (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.
(b) 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 or in excess of
$300,000 in the aggregate, (iii) made any loans or advances
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to any person, other than ordinary advances for business expenses, or (iv) sold,
exchanged or otherwise disposed of any of its assets or rights, other than in
the ordinary course of business.
2.11 NO CONFLICT OF INTEREST. The Company is not indebted, directly or
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indirectly, to any of its 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. None of the Company's 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 that competes
with the Company except that officers, directors and/or stockholders 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.
To the Company's knowledge, none of the Company's officers or directors or any
members of their immediate families are, directly or indirectly, interested in
any material contract with the Company. The Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation.
2.12 RIGHTS OF REGISTRATION AND VOTING RIGHTS. Except as contemplated
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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. To the Company's knowledge, except as provided in the Company's Amended
and Restated Voting Agreement dated August 10, 1998 with certain stockholders,
no stockholder of the Company has entered into any agreements with respect to
the voting of capital shares of the Company.
2.13 TITLE TO PROPERTY AND ASSETS. The Company owns its property and
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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.
2.14 CHANGES. Since the Company's inception, there has not been:
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(a) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business, properties,
prospects, or financial condition of the Company;
(b) any waiver or compromise by the Company of a valuable right
or of a material debt owed to it;
(c) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the business, properties,
prospects or financial condition of the Company;
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(d) any material change to a material contract or agreement by
which the Company or any of its assets is bound or subject;
(e) any sale or assignment of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(f) any mortgage, pledge, transfer of a security interest in, or
lien, created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;
(g) any loans or guarantees made by the Company 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;
(h) any declaration, setting aside or payment or other
distribution in respect to any of the Company's capital stock, or any direct or
indirect redemption, purchase, or other acquisition of any of such stock by the
Company;
(i) to the Company's knowledge, any other event or condition of
any character that might materially and adversely affect the business,
properties, prospects or financial condition of the Company; or
(j) any arrangement or commitment by the Company to do any of the
things described in this Section 2.14.
2.15 TAX RETURNS AND PAYMENTS. The Company has filed all tax returns
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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.
2.16 LABOR AGREEMENTS AND ACTIONS. The Company is not bound by or
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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 have a
material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company, nor is the Company aware of any
labor organization activity involving its employees. 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.
2.17 CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENTS.
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Each employee, consultant and officer of the Company has executed an agreement
with the Company regarding confidentiality and proprietary information. The
Company is not aware that
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any of its employees or consultants is in violation thereof, and the Company
will use its best efforts to prevent any such violation.
2.18 PERMITS. The Company has all franchises, permits, licenses and
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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 is not in default in any
material respect under any of such franchises, permits, licenses or other
similar authority.
2.19 CORPORATE DOCUMENTS. The Restated Certificate and Bylaws of the
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Company are in the form made available to counsel for the Purchasers. The copy
of the minute books of the Company made available to the Purchasers contains
minutes of all meetings of directors and stockholders and all actions by written
consent without a meeting by the directors and stockholders since the date of
incorporation and reflects all actions by the directors and stockholders with
respect to all transactions referred to in such minutes accurately in all
material respects.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
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hereby represents and warrants to the Company that:
3.1 AUTHORIZATION. Such Purchaser has full power and authority to
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enter into this Agreement. The Agreements, when executed and delivered by the
Purchaser, will constitute valid and legally binding obligations of the
Purchaser, enforceable in accordance with their terms, except (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, or
(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
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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
participation 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
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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
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written information delivered by the Company to the Purchaser, were intended to
describe the aspects of the Company's business that it believes to be material.
3.4 RESTRICTED SECURITIES. The Purchaser understands that the
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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 that are outside of the Purchaser's
control, and which the Company is under no obligation and may not be able to
satisfy.
3.5 NO PUBLIC MARKET. The Purchaser understands that no public
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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,
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and any securities issued in respect thereof or exchange therefor, may bear one
or all of the following legends:
(a) "THE SECURITIES 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
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defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
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4. CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT CLOSING. The obligations
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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
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warranties of the Company contained in Section 2 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 date of the
Closing.
4.2 PERFORMANCE. The Company shall have performed and complied
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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
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deliver to the Purchasers at the Closing a certificate certifying that the
conditions specified in Sections 4.1 and 4.2 have been fulfilled.
4.4 QUALIFICATIONS. All authorizations, approvals or permits, if any,
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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.
4.5 OPINION OF COMPANY COUNSEL. The Purchasers at the Closing shall
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have received from Venture Law Group, counsel for the Company, an opinion dated
as of the Closing in substantially the form of Exhibit E.
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4.6 BOARD OF DIRECTORS. As of the Closing, the Board shall have six
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(6) authorized directors and shall be comprised of ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇, with one vacancy to be filled pursuant
to the provisions of the Company's Amended and Restated Voting Agreement dated
August 10, 1998 with certain stockholders.
4.7 INVESTORS' RIGHTS AGREEMENT. The Company and each Purchaser shall
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have executed and delivered the Investors' Rights Agreement in substantially the
form attached as Exhibit D.
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4.8 RESTATED CERTIFICATE. The Company shall have filed the Restated
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Certificate with the Secretary of State of Delaware on or prior to the Closing,
which shall continue to be in full force and effect as of the Closing.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations of
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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
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warranties of each Purchaser contained in Section 3 shall be true and correct in
all material respects on and as
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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
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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,
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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.
5.4 INVESTORS' RIGHTS AGREEMENT. The Company and each Purchaser shall
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have executed and delivered the Investors' Rights Agreement in substantially the
form attached as Exhibit D.
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5.5 RESTATED CERTIFICATE. The Company shall have filed the Restated
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Certificate with the Secretary of State of Delaware on or prior to the Closing,
which shall continue to be in full force and effect as of the Closing.
6. MISCELLANEOUS.
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6.1 SURVIVAL OF WARRANTIES. Unless otherwise set forth in this
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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 for a period of one (1)
year following the Closing.
6.2 TRANSFER; SUCCESSORS AND ASSIGNS. The terms and conditions of
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this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. 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 and all acts and transactions
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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
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counterparts, each 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
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Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
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6.6 NOTICES. Any notice required or permitted by this Agreement shall
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be in writing and shall be deemed sufficient upon delivery, when delivered
personally or by overnight courier or sent by telegram or fax, 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
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subsequently modified by written notice, and if to the Company, with a copy to
Venture Law Group, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ attn: ▇▇▇▇
▇▇▇▇▇▇▇▇▇.
6.7 FINDER'S FEE. Each party represents that it neither is nor will
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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. If the Closing is consummated, the Company
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shall pay the reasonable fees and expenses of one special counsel for 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 $5,000.
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 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 only with the written consent of the Company and the holders of at
least a majority of the Stock purchased hereunder. Any amendment or waiver
effected in accordance with this Section 6.10 shall be binding upon the
Purchasers and each transferee of the Securities, each future holder of all such
Securities, and the Company.
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
11
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 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. Except as provided below, 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. 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. Notwithstanding the
foregoing provisions of this Section 6.15, with regard to the obligations of
▇▇▇▇▇▇.▇▇▇, Inc. ("▇▇▇▇▇▇.▇▇▇"), the existing Nondisclosure Agreement between
----------
the Company and ▇▇▇▇▇▇.▇▇▇ dated August 10, 1998 shall remain in full force and
effect and shall supersede in all respects the obligations contained in this
Section 6.15 that would otherwise be binding upon ▇▇▇▇▇▇.▇▇▇.
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
12
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. 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.
[Signature Pages Follow]
13
The parties have executed this Series B Preferred Stock Purchase Agreement
as of the date first written above.
COMPANY:
▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and CEO
Address: ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PURCHASERS:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
VIII, L.P.
By: KPCB VIII Associates, L.P., its
General Partner
By:________________________________
a General Partner
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
KPCB VIII FOUNDERS FUND, L.P.
By: KPCB VIII Associates, L.P.,
its General Partner
By:________________________________
a General Partner
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
The parties have executed this Series B Preferred Stock Purchase Agreement
as of the date first written above.
COMPANY:
▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By:________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President and CEO
Address: ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PURCHASERS:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
VIII, L.P.
By: KPCB VIII Associates, L.P., its
General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
a General Partner
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
KPCB VIII FOUNDERS FUND, L.P.
By: KPCB VIII Associates, L.P.,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
a General Partner
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
KPCB LIFE SCIENCES ZAIBATSU FUND II,
L.P.
By: KPCB VII Associates, L.P., its
General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
a General Partner
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇.▇▇▇, INC.
By:_________________________________
(Signature)
Name:_______________________________
(print)
Title:______________________________
Address: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
____________________________________
(Print name of Purchaser)
By:_________________________________
(Signature)
Name:_______________________________
(print)
Title:______________________________
Address: ___________________________
___________________________
SIGNATURE PAGE TO
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
KPCB LIFE SCIENCES ZAIBATSU FUND II,
L.P.
By: KPCB VII Associates, L.P., its
General Partner
By: /s/
---------------------------------
a General Partner
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
(Signature)
Name: ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
(print)
Title: Vice President
------------------------------
Address: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
____________________________________
(Print name of Purchaser)
By:_________________________________
(Signature)
Name:_______________________________
(print)
Title:______________________________
Address: ___________________________
___________________________
SIGNATURE PAGE TO
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
EXHIBITS
--------
Exhibit A - Schedule of Purchasers
Exhibit B - Form of Third Amended and Restated Certificate of Incorporation
Exhibit C- Schedule of Exceptions to Representations and Warranties
Exhibit D - Form of Second Amended and Restated Investors' Rights Agreement
Exhibit E - Form of Legal Opinion of Venture Law Group
EXHIBIT A
---------
SCHEDULE OF PURCHASERS
PURCHASER NAME TOTAL PURCHASE PRICE SHARES
------------------------------------------ -------------------- --------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VIII, L.P. $5,028,798.90 1,501,134
KPCB VIII Founders Fund, L.P. $291,198.75 86,925
KPCB Life Sciences Zaibatsu Fund II, L.P. $279,999.70 83,582
▇▇▇▇▇▇.▇▇▇, Inc. $9,999,997.90 2,985,074
TOTAL $15,599,995.25 4,656,715
EXHIBIT B
---------
FORM OF THIRD AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
SEE TAB NO.3
EXHIBIT C
---------
SCHEDULE OF EXCEPTIONS TO
REPRESENTATIONS AND WARRANTIES
EXHIBIT C
---------
SCHEDULE OF EXCEPTIONS
Set forth below are exceptions to the representations and warranties of
▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. (the "Company") contained in Section 2 of the Series B
-------
Preferred Stock Purchase Agreement (the "Agreement"). Section references in this
---------
Schedule of Exceptions are for convenience only; each disclosure are exception
set forth below is intended to qualify all of the Company's representations and
warranties in the Agreement. All capitalized terms used herein and not defined
herein shall have the same meanings as in the Agreement.
Section 2.2 -- Capitalization
-----------------------------
1. The Company has adopted a 1998 Stock Plan, which reserves 2,735,000
shares of Common Stock for issuance to officers, directors, employees and
consultants of the Company. To date, options to purchase 999,500 shares have
been issued under such Plan and an additional 8,000 shares of Common Stock have
been issued under the Plan.
2. The Company has offered, or is in the process of issuing, shares of
Common Stock (or options therefor) to certain potential employees and
consultants.
Section 2.8 -- Intellectual Property
------------------------------------
1. ▇▇▇ ▇▇▇▇▇, the Company's current Vice President of Strategy and
Business Development, performed some of the preliminary work for the founding of
the Company during the period of time while he was employed by Cybersmith, Inc.
("Cybersmith"). ▇▇. ▇▇▇▇▇ and Cybersmith have entered into a letter agreement
----------
confirming that Cybersmith does not own or have any rights to any work product
or intellectual property that ▇▇. ▇▇▇▇▇ developed on behalf of the Company
during his tenure at Cybersmith.
2. The Company may use certain intellectual property that was developed
by ▇▇▇ ▇▇▇▇▇ prior to his employment with the Company and was assigned to the
Company in June 1998 as partial consideration for ▇▇. ▇▇▇▇▇'▇ purchase of Common
Stock from the Company.
3. The Company is working with its trademark counsel to determine the
availability of certain trademarks it may use in connection with its business,
and if appropriate, to register such trademarks.
Section 2.10 -- Agreements; Action
----------------------------------
1. The Company has entered into offer letters with ▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇▇, copies of which have been provided to counsel for the Purchasers.
2. The Company has entered into a Technology License and Marketing
Agreement with ▇▇▇▇▇▇.▇▇▇, Inc. ("▇▇▇▇▇▇.▇▇▇"), pursuant to which the parties
----------
have licensed to each other certain proprietary technology and agreed to
undertake certain joint marketing efforts.
3. The Company has entered into an agreement with Excite, Inc. regarding
the promotion of the Company's business to Excite users.
4. The Company has entered into an agreement (and an amendment to such
agreement) with Yahoo! Inc. regarding the promotion of the Company's business to
Yahoo! users.
5. The Company has entered into an agreement with TriNet to provide
certain payroll and benefit services to the Company.
6. The Company is in discussions with several potential lenders,
including Comdisco, regarding obtaining a bank line of credit and an equipment
lease line.
7. In August 1998, the Company entered into an office lease for its
current facilities in Redmond, Washington.
Section 2.11 -- No Conflict of Interest
---------------------------------------
1. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ ("KPCB"), a major stockholder of the
----
Company, was an early investor in ▇▇▇▇▇▇.▇▇▇ and maintains a substantial equity
stake in ▇▇▇▇▇▇.▇▇▇. ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇, directors of the Company, are
both partners of KPCB. ▇▇. ▇▇▇▇▇ is also a member of ▇▇▇▇▇▇.▇▇▇'s board of
directors. ▇▇▇▇▇▇.▇▇▇ is a major stockholder of the Company and is party to the
Technology License and Marketing Agreement discussed under Section 2.10 above.
2. See arrangements with ▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ listed below.
Section 2.16 -- Labor Agreements and Actions
--------------------------------------------
1. The Company's offer letters with ▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ provide
for certain arrangements with regard to termination of employment without cause.
2. The Company may enter into offer letters with other new executive
officers when hired.
-2-
EXHIBIT D
---------
FORM OF SECOND AMENDED AND RESTATED INVESTORS' RIGHTS
AGREEMENT
SEE TAB NO.7
EXHIBIT E
---------
FORM OF LEGAL OPINION
OF
VENTURE LAW GROUP
SEE TAB NO.10