EXHIBIT 10.4
INVENTA CORPORATION
______________________________
SERIES D CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT
______________________________
January 19, 2000
TABLE OF CONTENTS
Page
----
1. Purchase and Sale of Series D Preferred Stock........................... 1
1.1 Sale and Issuance of Series D Preferred Stock...................... 1
1.2 Closing Date; Delivery............................................. 1
2. Representations and Warranties of the Company........................... 1
2.1 Organization, Good Standing and Qualification..................... 1
2.2 Capitalization.................................................... 2
2.3 Subsidiaries...................................................... 2
2.4 Authorization..................................................... 2
2.5 Valid Issuance of Securities...................................... 2
2.6 Governmental Consents............................................. 3
2.7 Litigation........................................................ 3
2.8 Patent and Trademarks............................................. 3
2.9 Compliance with Other Instruments................................. 4
2.10 Disclosure........................................................ 4
2.11 Registration Rights............................................... 4
2.12 Title to Property and Assets...................................... 4
2.13 Financial Statements.............................................. 5
2.14 Changes........................................................... 5
2.15 Minute Books...................................................... 6
2.16 Labor Agreements and Actions...................................... 6
2.17 Employee Plans.................................................... 6
2.18 Employees......................................................... 7
2.19 Tax Returns and Payments.......................................... 7
2.20 Agreements; Action................................................ 7
2.21 Obligations to Related Parties.................................... 8
2.22 Real Property Holding Corporation................................. 9
2.23 Insurance......................................................... 9
2.24 Investment Company Act............................................ 9
2.25 Qualified Small Business.......................................... 9
2.26 Offering of Shares................................................ 9
3. Representations and Warranties of the Investors......................... 9
3.1 Authorization...................................................... 9
3.2 Purchase Entirely for Own Account.................................. 9
3.3 Disclosure of Information.......................................... 10
3.4 Economic Risk...................................................... 10
3.5 Restricted Securities.............................................. 10
3.6 Further Limitations on Disposition................................. 10
-i-
TABLE OF CONTENTS
(continued)
Page
----
3.7 Legends............................................................ 11
4. California Commissioner of Corporations................................. 11
4.1 Corporate Securities Law........................................... 11
5. Conditions of Investor's Obligations at Closing......................... 11
5.1 Representations and Warranties..................................... 12
5.2 Performance........................................................ 12
5.3 Articles of Incorporation.......................................... 12
5.4 Compliance Certificate............................................. 12
5.5 Shareholders Agreement............................................. 12
5.6 Registration Rights Agreement...................................... 12
5.7 Opinion of Company's Counsel....................................... 12
6. Conditions of the Company's Obligations at Closing...................... 12
6.1 Representations and Warranties..................................... 12
6.2 Payment of Purchase Price.......................................... 12
6.3 Legal Matters...................................................... 12
7. Covenants of the Company................................................ 12
7.1 Delivery of Financial Statements................................... 12
7.2 Inspection Rights.................................................. 13
7.3 Reservation of Common Stock........................................ 13
7.4 Proprietary Information Agreement.................................. 13
7.5 Termination of Information Covenant................................ 13
7.6 Key Man Life Insurance............................................. 14
7.7 Qualified Small Business Stock..................................... 14
7.8 Legal Expenses..................................................... 14
8. Miscellaneous........................................................... 14
8.1 Transfer; Successors and Assigns.................................. 14
8.2 Governing Law..................................................... 14
8.3 Counterparts...................................................... 14
8.4 Titles and Subtitles.............................................. 14
8.5 Notices........................................................... 14
8.6 Finder's Fee...................................................... 15
8.7 Expenses.......................................................... 15
8.8 Amendments and Waivers............................................ 15
8.9 Severability...................................................... 15
8.10 Entire Agreement.................................................. 15
8.11 Exculpation Among Investors....................................... 15
-ii-
EXHIBITS
--------
EXHIBIT A Schedule of Investors
EXHIBIT B Amended and Restated Articles of Incorporation
EXHIBIT C Schedule of Exceptions to Representations and Warranties
EXHIBIT D Form of Proprietary Information Agreement
EXHIBIT E Amended and Restated Shareholders Agreement
EXHIBIT F Amended and Restated Registration Rights Agreement
EXHIBIT G Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
-iii-
SERIES D CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES D CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT ("Agreement")
is made as of the 19th day of January, 2000 by and between Inventa Corporation,
a California corporation (the "Company"), and the persons and entities listed on
the Schedule of Investors attached hereto as Exhibit A (the "Investors").
---------
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Series D Preferred Stock.
---------------------------------------------
1.1 Sale and Issuance of Series D Preferred Stock.
---------------------------------------------
(a) The Company shall adopt and file with the Secretary of State
of California on or before the Closing (as defined below) the Amended and
Restated Articles of Incorporation in the form attached hereto as Exhibit B.
---------
(b) Subject to the terms and conditions of this Agreement, the
Investors agree to purchase at the Closing and the Company agrees to sell and
issue to the Investors at the Closing that number of shares of the Company's
Series D Preferred Stock (the "Shares") for the aggregate purchase price set
forth opposite each Investor's name on Exhibit A attached hereto, at a purchase
---------
price equal to $7.41 per share of Series D Preferred Stock.
1.2 Closing Date; Delivery. The purchase and sale of the Shares shall
----------------------
take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 9:00 a.m., on January ___, 2000, or at such
other time and place as the Company and the Investors mutually agree upon,
orally or in writing (which time and place are designated as the "Closing"). At
the Closing, the Company shall deliver to each Investor a certificate
representing the Shares which such Investor is purchasing against delivery to
the Company by such Investor of a check made payable to the Company or wire
transfer of the aggregate purchase price therefor.
2. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to the Investors that, except as set forth on a Schedule
of Exceptions attached hereto as Exhibit C, specifically identifying the
---------
relevant subparagraph hereof, 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. 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 will
--------------
consist, immediately prior to the Closing, of (i) 14,479,511 shares of Preferred
Stock, 1,000,000 shares of which are designated Series A Preferred Stock and of
which 800,000 are issued and outstanding, 2,560,000 shares of which are
designated Series B Preferred Stock and of which 2,560,000 are issued and
outstanding, 8,219,511 shares of which are designated Series C Preferred Stock
of which 8,055,511 are issued and outstanding, and 3,000,000 shares of which are
designated Series D Preferred Stock, none of which are issued and outstanding,
and (ii) 25,000,000 shares of Common Stock, of which 4,713,055 shares are issued
and outstanding. The Company has reserved 5,355,000 shares of its Common Stock
for issuance pursuant to its 1993 Stock Option Plan. Except as set forth in the
Schedule of Exceptions attached as Exhibit C hereto, there are no outstanding
---------
options, warrants, rights (including conversion or preemptive 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. Except as set forth in the Schedule of Exceptions,
------------
the Company does not presently own or control, 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,
-------------
its officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the performance of all obligations of
the Company hereunder and the authorization, issuance and delivery of the Shares
has been taken or will be taken prior to the Closing, and this Agreement
constitutes a valid and legally binding obligation of the Company, enforceable
in accordance with its terms. The Agreement, the Amended and Restated
Shareholders Agreement attached hereto as Exhibit E (the "Shareholders
---------
Agreement") and the Amended and Restated Registration Rights Agreement attached
hereto as Exhibit F (the "Registration Rights Agreement"), when executed and
---------
delivered, will be valid and binding obligations of the Company enforceable in
accordance with their terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights; (ii) general principles of equity
that restrict the availability of equitable remedies; and (iii) to the extent
that the enforceability of the indemnification provisions in Section 10 of the
Registration Rights Agreement may be limited by applicable laws. The sale of the
Shares and the subsequent conversion of the Shares into Common Stock are not and
will not be subject to any preemptive rights or rights of first refusal that
have not been properly waived or complied with.
2.5 Valid Issuance of Securities.
----------------------------
(a) The Shares that are being issued to the Investors 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. The shares of Common Stock issuable upon conversion of the Shares
have been duly and validly reserved for issuance.
(b) The shares of Common Stock and Preferred Stock outstanding
prior to the Closing are all duly and validly authorized and issued, fully paid
and nonassessable and were issued in compliance with all applicable state and
federal laws concerning the issuance of securities.
-2-
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 (a) the filing pursuant to Section
25102(f) of the California Corporate Securities Law of 1968, as amended, and the
rules thereunder, which filing will be effected in accordance with such section,
and (b) compliance with the Blue Sky Laws of the various states in which the
Investors may reside, which compliance will be effected in accordance with such
laws. The Company currently holds all licenses, permits, franchises,
registrations and qualifications which may be required to conduct its business,
and all such licenses, permits, franchises, registrations and qualifications are
valid and in full force and effect.
2.7 Litigation. Except as set forth in the Schedule of Exceptions,
----------
there is no action, suit, proceeding or investigation pending or currently
threatened against the Company that questions the validity of this Agreement or
the right of the Company to enter into it, or to consummate the transactions
contemplated hereby, or that might result, either individually or in the
aggregate, in any material adverse changes in the assets, condition, affairs or
prospects 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
pending or threatened (or any basis therefor known to the Company) 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
prior 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. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.
2.8 Patent and Trademarks. To its knowledge, the Company owns or
---------------------
possesses sufficient legal rights to all patents, trademarks, service marks,
trade names, copyrights, trade secrets, information and other proprietary rights
and processes necessary for its business as now conducted and as proposed to be
conducted, without any known infringement of the rights of others. There are no
outstanding options, licenses or agreements of any kind relating to the
foregoing, nor is the Company bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes of any other person or entity other than such
licenses or agreements arising from the purchase or sale of "off the shelf" or
standard products. The Company has not received any communications alleging that
the Company has violated or, by conducting its business as proposed, would
violate any of the patents, trademarks, service marks, trade names, copyrights
or trade secrets or other proprietary rights of any other person or entity. The
Company 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 their duties to the Company or that would
conflict with the Company's business as proposed to be conducted. Neither the
execution nor delivery of this Agreement, nor the carrying on of the Company's
business by the employees of the
-3-
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 employee is now obligated. The Company
does not believe it is or will be necessary to utilize any inventions, trade
secrets or proprietary information of any of its employees made prior to their
employment by the Company, except for inventions, trade secrets or proprietary
information that have been assigned to the Company.
2.9 Compliance with Other Instruments.
---------------------------------
(a) The Company is not in violation or default of any provisions
of its Restated Articles of Incorporation 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 this Agreement and the consummation of the transactions
contemplated hereby 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,
contract, rule, or statute, or of the Company's Restated Articles of
Incorporation or Bylaws, or an event which results in the creation of any lien,
charge or encumbrance upon any assets of the Company.
(b) 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, distribution or other agreement.
2.10 Disclosure. The Company has fully provided the Investors with all
----------
the information which the Investors have requested for deciding whether to
acquire the Shares and all information which the Company believes is reasonably
necessary to enable the Investors to make such decision. There is no information
known to the Company which materially adversely affects the business or
operations of the Company which has not been disclosed to the Investors. Neither
this Agreement nor any other statements or certificates made or delivered in
connection herewith contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements herein or therein not
misleading, except that, with respect to financial projections, the Company
represents only that such projections were prepared in good faith and that the
Company believes there is a reasonable basis for such projections.
2.11 Registration Rights. Except as set forth in the Registration
-------------------
Rights Agreement, the Company has not granted or agreed to grant any
registration rights, including piggyback rights, to any person or entity.
2.12 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 the best of its knowledge, holds a valid
leasehold
-4-
interest free of any liens, claims or encumbrances. All facilities, machinery,
equipment, fixtures, vehicles and other properties owned, leased or used by the
Company are in good operating condition and repair (normal wear and tear
accepted) and are reasonably fit and usable for the purposes for which they are
being used.
2.13 Financial Statements. The Company has delivered to the Investors
--------------------
its unaudited financial statements (balance sheet and profit and loss statement
and statement of shareholders equity) at December 31, 1998 and for the fiscal
year then ended and a balance sheet and statement of operations at September 30,
1999 (collectively, the "Financial Statements"). The Financial Statements are
complete and correct in all material respects and have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated and with each other. The Financial
Statements accurately set out and describe the financial condition and operating
results of the Company as of the dates, and for the periods, indicated therein.
Except as set forth in the Financial Statements, the Company has no liabilities,
contingent or otherwise, of a nature required by generally accepted accounting
principles to be reflected in a balance sheet or disclosed in the notes thereto,
other than liabilities incurred in the ordinary course of business subsequent to
September 30, 1999.
2.14 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 Financial
Statements, except changes in the ordinary course of business which have not
been, in the aggregate, materially adverse.
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results, prospects or business of the Company (as such
business is presently conducted and as it is proposed to be conducted);
(c) any waiver by the Company of a valuable right or of a
material debt owed to it;
(d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and which is not material to the assets, properties,
financial condition, operating results or business of the Company (as such
business is presently conducted and as it is proposed to be conducted);
(e) any change or amendment to a material contract or
arrangement by which the Company or any of its assets or properties is bound or
to which the Company or any of such assets or properties is subject;
(f) any resignation or termination of any key officers of the
Company; and the Company, to its knowledge, does not know of the impending
resignation or termination of employment of any such officer;
-5-
(g) to the knowledge of the Company any material change, except
in the ordinary course of business, in the contingent obligations of the Company
by way of guaranty, endorsement, indemnity, warranty or otherwise;
(h) any direct or indirect loans made by the Company to any
shareholder, employee, officer or director of the Company, other than advances
made in the ordinary course of business or loans to purchase Common Stock;
(i) any material change in any compensation arrangement or
agreement with any employee, officer, director or shareholder other than in the
ordinary course of business;
(j) any declaration or payment of any dividend or other
distribution of the assets of the Company;
(k) any labor organization activity;
(l) any debt, obligation or liability incurred, assumed or
guaranteed by the Company, except those for immaterial amounts and for current
liabilities incurred in the ordinary course of business;
(m) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets; or
(n) to the Company's knowledge, any other event or condition of
any character which might materially and adversely affect the assets,
properties, financial condition, operating results or business of the Company
(as such business is presently conducted and as it is proposed to be conducted).
2.15 Minute Books. The Company has offered to provide to the Investors
------------
the minute books of the Company, which contain a complete summary of all
meetings of directors and shareholders since the time of incorporation and
reflect all transactions referred to in such minutes accurately in all material
respects.
2.16 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 have a
material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company (as such business is presently
conducted and as it is proposed to be conducted), nor is the Company aware of
any labor organization activity involving its employees.
2.17 Employee Plans. The Company has no "employee welfare benefit
--------------
plans" as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974 ("ERISA"). The
-6-
Company (i) has not been required to contribute to, (ii) has not terminated or
withdrawn from, and (iii) is not aware of any withdrawal liability assessed
against the Company with respect to any defined benefit plan as defined in
Section 3(35) of ERISA or multi employer plan as defined in Section 4001 of
ERISA in which employees or former employees of the Company have participated.
2.18 Employees. The Company has not knowingly violated any employment-
---------
related laws, including, without limitation, laws relating to equal employment
opportunity, overtime pay and collective bargaining. 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 a present
intention to terminate the employment of any of the foregoing. Except as set
forth in the Schedule of Exceptions, the employment of each officer and employee
of the Company is terminable at the will of the Company. Each former and current
United States employee and consultant of the Company with access to confidential
or proprietary information has executed a Proprietary Information Agreement, the
form of which is attached hereto as Exhibit D. To the Company's knowledge, no
---------
employee of the Company, nor any consultant with whom the Company has
contracted, is in violation of any term of any employment contract, proprietary
information agreement or any other agreement relating to the right of any such
individual to be employed by, or to contract with, the Company because of the
nature of the business to be conducted by the Company; and to the Company's
knowledge the continued employment by the Company of its present employees, and
the performance of the Company's contracts with its independent contractors,
will not result in any such violation. The Company has not received any notice
alleging that any such violation has occurred. The Company's relations with its
employees is good.
2.19 Tax Returns and Payments. The Company has timely filed all tax
------------------------
returns (federal, state and local) required to be filed by it. All taxes shown
to be due and payable on such returns, any assessments imposed, and to the
Company's knowledge all other taxes due and payable by the Company on or before
the Closing have been paid or will be paid prior to the time they become
delinquent. The Company has not been advised except as set forth in the Schedule
of Exceptions (i) that any of its returns, federal, state or other, have been or
are being audited as of the date hereof, or (ii) of any deficiency in assessment
or proposed judgment to its federal, state or other taxes. The Company has no
knowledge of any liability of any tax to be imposed upon its properties or
assets as of the date of this Agreement that is not adequately provided for.
2.20 Agreements; Action.
------------------
(a) Except for agreements explicitly contemplated hereby
including proprietary agreements and agreements between the Company and its
employees with respect to the sale of the Company's Common Stock, and agreements
between the Company and the Investors with respect to their investment, there
are no agreements, understandings or proposed transactions between the Company
and any of its officers, directors, affiliates or any affiliate thereof.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or to its knowledge by which it is bound which may
involve (i) obligations (contingent or otherwise) of, or payments to, the
Company in excess of $25,000 (other than obligations of, or payments to, the
-7-
Company arising from purchase or sale agreements entered into in the ordinary
course of business), or (ii) the license of any patent, copyright, trade secret
or other proprietary right to or from the Company (other than licenses arising
from the purchase or sale of "off the shelf" or other standard products), or
(iii) provisions restricting or affecting the development, manufacture or
distribution of the Company's products or services, or (iv) indemnification by
the Company with respect to infringements of proprietary rights (other than
indemnification obligations arising from purchase or sale agreements entered
into in the ordinary course of business).
(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 any
other liabilities except as set forth in the Schedule of Exceptions (other than
with respect to dividend obligations, distributions, indebtedness and other
obligations incurred in the ordinary course of business or as disclosed in the
Financial Statements) individually in excess of $25,000 or, in the case of
indebtedness and/or liabilities individually less than $25,000, in excess of
$50,000 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 material amount of its assets or rights, other than the sale of
its inventory in the ordinary course of business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
(e) Except as set forth in the Schedule of Exceptions, the
Company has not engaged in the past three (3) months in any material discussion
(i) with any representative of any corporation or corporations regarding the
consolidation or merger of the Company with or into any such corporation or
corporations, (ii) with 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 is disposed of, or (iii) regarding any other form of
acquisition, liquidation, dissolution or winding up of the Company.
2.21 Obligations to Related Parties. There are no obligations of the
------------------------------
Company to officers, directors, shareholders or employees of the Company other
than (a) for payment of salary for services rendered, (b) reimbursement for
reasonable expenses incurred on behalf of the Company and (c) for other standard
employee benefits made generally available to all employees (including stock
option agreements outstanding under any stock option plan approved by the Board
of Directors of the Company). Except as set forth in the Schedule of Exceptions
none of the officers, directors or shareholders of the Company, or any members
of their immediate families, are indebted to the Company or 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, except that officers, directors
and/or shareholders of
-8-
the Company may own stock in publicly traded companies which may compete with
the Company. No officer, director or shareholder, or any member of their
immediate families, is, directly or indirectly, interested in any material
contract with the Company (other than such contracts as relate to any such
person's ownership of capital stock or other securities of the Company). Except
as may be disclosed in the Financial Statements, the Company is not a guarantor
or indemnitor of any indebtedness of any other person, firm or corporation.
2.22 Real Property Holding Corporation. The Company is not a real
---------------------------------
property holding corporation within the meaning of Internal Revenue Code Section
897(c)(2) and any regulations promulgated thereunder.
2.23 Insurance. The Company has or will obtain promptly following
---------
Closing fire and casualty insurance policies with coverage customary for
companies similarly situated to the Company.
2.24 Investment Company Act. The Company is not an "investment
----------------------
company," or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
2.25 Qualified Small Business. The Company represents and warrants to
------------------------
the Investors that, to its knowledge, the Shares should qualify as "Qualified
Small Business Stock" as defined in Section 1202(c) of the Internal Revenue Code
of 1986, as amended (the "Code") as of the date hereof.
2.26 Offering of Shares. Neither the Company nor any person authorized
------------------
or employed by the Company as agent, broker, dealer or otherwise in connection
with the offering or sale of the Shares or any security of the Company similar
to the Shares has offered the Shares or any such similar security for sale to,
or solicited any offer to buy the Shares or any such similar security from, or
otherwise approached or negotiated with respect thereto with, any person or
persons, and neither the Company nor any person acting on its behalf has taken
or will take any other action (including, without limitation, any offer,
issuance or sale of any security of the Company under circumstances which might
require the integration of such security with the Shares under the Securities
Act of 1933, as amended (the "Act") or the rules and regulations of the
Commission thereunder), in either case so as to subject the offering, issuance
or sale of the Shares to the registration provisions of the Act.
3. Representations and Warranties of the Investors. Each Investor for
-----------------------------------------------
itself hereby represents and warrants to the Company that:
3.1 Authorization. This Agreement constitutes its valid and legally
-------------
binding obligation, enforceable in accordance with its terms.
3.2 Purchase Entirely for Own Account. This Agreement is made with
---------------------------------
the Investor in reliance upon the Investor's representation to the Company,
which by the Investor's execution of this Agreement the Investor hereby
confirms, that the Shares will be acquired for
-9-
investment for the Investor's own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof, and that the
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, the Investor
further represents that the Investor 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
Shares. The Investor represents that it has full power and authority to enter
into this Agreement.
3.3 Disclosure of Information. The Investor believes it has received
-------------------------
information that it considers necessary or appropriate for deciding whether to
acquire the Shares. The Investor further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Shares. 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 Investor to rely thereon.
3.4 Economic Risk. The Investor has the capacity to protect his own
-------------
interests in connection with the purchase of the Shares, is capable of
evaluating the merits and risks of investment in the Company, can make an
informed investment decision by reason of (i) his preexisting personal or
business relationship with the Company or any of its officers, directors, or
control persons, or (ii) his business and financial knowledge and experience or
the business and financial knowledge and experience of my professional advisers,
if any, and is able to bear the substantial economic risks of an investment in
the Shares for an indefinite period of time.
3.5 Restricted Securities. It understands that the shares of Common
---------------------
Stock sold hereunder are characterized as "restricted securities" under the
federal securities laws inasmuch as they are being acquired from the Company in
a transaction not involving a public offering and that under such laws and
applicable regulations such shares may be resold without registration under the
Act, only in certain limited circumstances. In this connection, the Investor
represents that he is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.
3.6 Further Limitations on Disposition. Without in any way limiting
----------------------------------
the representations set forth above, the Investor further agrees not to make any
disposition of all or any portion of the Shares unless and until:
(a) There is then in effect a Registration Statement under the Act
covering such proposed disposition and such disposition is made in accordance
with such Registration Statement; or
(b) (i) The Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, the Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration under the Act.
-10-
(c) Notwithstanding the provisions of paragraphs (a) and (b)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by the Investor to a shareholder, partner or other affiliate of
the Investor, if the transferee or transferees agree in writing to be subject to
the terms hereof to the same extent as if they were the Investor hereunder.
3.7 Legends. It is understood that the Shares, and the shares of
-------
Common Stock issuable upon conversion thereof and any securities issued in
respect thereof or exchanged therefor may bear one or all of the following
legends:
(a) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT. COPIES OF THE
AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER
MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF
THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE
OFFICES OF THE CORPORATION.
(b) Any legend required by the laws of the State of California,
including any legend required by the California Department of Corporations.
(c) Any legend required by the Blue Sky laws of any other state
to the extent such laws are applicable to the shares represented by the
certificate so legended.
4. California Commissioner of Corporations.
---------------------------------------
4.1 Corporate Securities Law. THE SALE OF THE SECURITIES THAT IS THE
------------------------
SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA, THE ISSUANCE OF SUCH SECURITIES OR THE
PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM 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
SUCH QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
5. Conditions of Investor's Obligations at Closing. The obligations of the
-----------------------------------------------
Investors under Section 1.1 of this Agreement are subject to the fulfillment, on
or before the Closing, of each of the following conditions:
-11-
5.1 Representations and Warranties. The representations and warranties
------------------------------
of the Company contained in Section 2 shall be true and correct in all material
respects as of the Closing.
5.2 Performance. The Company shall have performed and complied with
-----------
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
5.3 Articles of Incorporation. The Company shall have filed with, and
-------------------------
have had accepted for filing by, the California Secretary of State the Amended
and Restated Articles of Incorporation of the Company attached as Exhibit B
---------
hereto.
5.4 Compliance Certificate. The President of the Company shall deliver
----------------------
to the Investors at the Closing a certificate certifying that the conditions
specified in Sections 5.1 and 5.2 have been fulfilled.
5.5 Shareholders Agreement. The Company shall deliver to the Investors
----------------------
at the Closing copies of the Shareholders Agreement executed by the necessary
majority of the signatories thereto.
5.6 Registration Rights Agreement. The Company shall deliver to the
-----------------------------
Investors at the Closing copies of the Registration Rights Agreement executed by
the necessary majority of the signatories thereto.
5.7 Opinion of Company's Counsel. The Purchasers shall have received
----------------------------
from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Company, an opinion
addressed to them, dated the Closing Date, in substantially the form of Exhibit
-------
G.
- -
6. Conditions of the Company's Obligations at Closing. The obligations of
--------------------------------------------------
the Company to the Investors under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions by
the Investors:
6.1 Representations and Warranties. The representations and
------------------------------
warranties of the Investors contained in Section 3 shall be true and correct in
all material respects as of the Closing.
6.2 Payment of Purchase Price. The Investors shall have delivered to
-------------------------
the Company the purchase price specified in Section 1.1 hereof.
6.3 Legal Matters. All material matters of a legal nature which
-------------
pertain to this Agreement, and the transactions contemplated hereby, shall have
been reasonably approved by counsel to the Company.
7. Covenants of the Company.
------------------------
7.1 Delivery of Financial Statements. The Company shall deliver the
--------------------------------
following financial information to each Investor who continues to hold at least
50,000 Shares (or the Common
-12-
Stock into which the Shares have been converted) (as adjusted for any stock
split, stock dividends, combinations, recapitalizations and the like with
respect to such Shares)(for purposes of satisfying the 50,000 share threshold
herein, shares owned by partners, subsidiaries, parents, shareholders or
affiliates will be aggregated; provided, however, that the Company shall only be
required to deliver financial information to one representative of each group of
affiliated persons or entities), and as long as such Investor or a principal,
partner or manager of such Investor, is not employed by or associated with a
competitor of the Company:
(a) as soon as practicable after the end of each fiscal
year of the Company an income statement for such fiscal year, a balance sheet of
the Company as of the end of such year and in any event within 120 days
thereafter, and a schedule as to the sources and applications of funds for such
year, such year-end financial reports to be audited by a "Big Five" accounting
firm and in reasonable detail, prepared in accordance with generally accepted
accounting principles ("GAAP");
(b) prior to the commencement of each fiscal year of the
Company, an operating (c) within thirty (30) days of the end of each month, an
unaudited balance sheet and statement of operations as of the end of such month.
7.2 Inspection Rights. Each Investor shall have the right to
-----------------
visit and inspect any of the properties of the Company or any of its
subsidiaries, and to discuss the affairs, finances and accounts of the Company
or any of its subsidiaries with its officers, and to review such information as
is reasonably requested all at such reasonable times and as often as may be
reasonably requested; provided, however, that the Company shall not be obligated
under this Section 7.2 with respect to a competitor of the Company or with
respect to information which the Board of Directors determines in good faith is
confidential and should not, therefore, be disclosed.
7.3 Reservation of Common Stock. The Company will at all times
---------------------------
reserve and keep available, solely for issuance and delivery upon the conversion
of the Preferred Stock, all Common Stock issuable from time to time upon such
conversion (the "Conversion Stock").
7.4 Proprietary Information Agreement. The Company shall
---------------------------------
require all employees and consultants to execute and deliver a Proprietary
Information Agreement in the form attached hereto as Exhibit D.
---------
7.5 Termination of Information Covenant. The covenant set forth
-----------------------------------
in Section 7.1 shall terminate as to the Investors and be of no further force or
effect at such time as the initial sale of securities pursuant to a registration
statement filed by the Company under the Securities Act in connection with the
firm commitment underwritten offering of its securities to the general public is
consummated.
-13-
7.6 Key Man Life Insurance. The Company shall obtain and
----------------------
maintain a key man life insurance policy for $1,000,000 with respect to the
Chief Executive Officer of the Company with proceeds payable to the Company.
7.7 Qualified Small Business Stock. The Company shall submit to
------------------------------
the Investors and to the Internal Revenue Service any reports that may be
required to be submitted to such persons under Section 1202(d)(1)(C) of the
Internal Revenue Code of 1986, as amended (the "Code") and any related Treasury
Regulations. In addition, within fifteen (15) business days after any Investor
has delivered to the Company a written request for information regarding such
Investor's stock in reasonable contemplation of the Investor's sale, exchange or
other disposition of its stock, the Company shall provide the Investor with such
information as the Investor may reasonably request in order for the Investor to
determine whether the stock held by such Investor constitutes "qualified small
business stock" as defined in Section 1202(c) of the Code. The Company's
obligation to furnish such information pursuant to this Section 7.7 shall
continue notwithstanding the fact that a class of the Company's stock may be
traded on an established securities market.
7.8 Legal Expenses. The Company shall pay the legal expenses of
--------------
the Investors in connection with the Series D Preferred Stock financing in an
aggregate amount not to exceed $25,000.
8. Miscellaneous.
-------------
8.1 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. 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.
8.2 Governing Law. This Agreement shall be governed by and
-------------
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
8.3 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.4 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.
8.5 Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address or
addresses
-14-
indicated for such party on Exhibit A hereto, or at such other address or
---------
addresses as such party may designate by ten (10) days' advance written notice
to the other parties.
8.6 Finder's Fee. Except as elsewhere disclosed in this Agreement,
------------
or in Exhibit C hereto, each party represents that it neither is nor will be
---------
obligated for any finder's fee or commission in connection with this
transaction. The Investor 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 the Investor or any of its officers, employees, or
representatives are responsible.
The Company agrees to indemnify and hold harmless the Investor 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.
8.7 Expenses. If any action at law or in equity is necessary to
--------
enforce or interpret the terms of this Agreement, 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.
8.8 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority-in-interest of the Shares.
8.9 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
8.10 Entire Agreement. This Agreement constitutes the entire
----------------
agreement between the parties hereto pertaining to the subject matter hereof,
and any and all other written or oral agreements existing between the parties
hereto are expressly canceled.
8.11 Exculpation Among Investors. Each Investor 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 investor agrees that no Investor nor the respective
controlling persons, officers, directors, partners, agents or employees of any
Investor shall be liable for any action heretofore or hereafter taken or omitted
to be taken by any of them in connection with the Shares.
-15-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INVENTA CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
INVESTORS:
BANCBOSTON VENTURES INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Director
PRIVATE EQUITY PORTFOLIO FUND II, LLC
BY BANKBOSTON NA, ITS MANAGER,
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
-2-
BATTERY VENTURES III, L.P.
By: Battery Partners III, L.P.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------
▇▇▇▇ ▇▇▇▇▇▇
Title: General Partner
----------------------
-3-
BOSTON MILLENNIA PARTNERS LIMITED PARTNERSHIP
By: ▇▇▇▇ Partners Limited Partnership
Its General Partner
By: /s/ [ILLEGIBLE]
----------------------------
General Partner
BOSTON MILLENNIA ASSOCIATES I, PARTNERSHIP
By: /s/ [ILLEGIBLE]
----------------------------
General Partner
-4-
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ G. AND ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
CHARITABLE ANNUITY TRUST U/D/T
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Trustee
-5-
ESSEX PRIVATE PLACEMENT FUND II, LIMITED PARTNERSHIP
By: Essex Investment Mgt. Company LLC
Its General Partner
By: /s/ [ILLEGIBLE]
-------------------------------------
Its: Principal
-------------------------------------
-▇-
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ BANK, AS TRUSTEE
FOR FIRST PLAZA GROUP TRUST
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
------------------------
The Chase Manhattan Bank Has executed this Document/Agreement
solely to its capacity as Directed Trustee of the First Plaza Group Trust
upon the direction of General Motors Investment Management
Corporation.
-7-
TECHNOLOGY CROSSOVER VENTURES II, C.V.
a Netherlands Antilles Limited Partnership
By: Technology Crossover Management II, L.L.C.
Its: Investment General Partner
By: /s/ RBJ
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
TCV II, V.O.F.
a Netherlands Antilles General Partnership
By: Technology Crossover Management II, L.L.C.
Its: Investment General Partner
By: /s/ RBJ
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
TCV II(Q), L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II, L.L.C.
Its: General Partner
By: /s/ RBJ
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
TECHNOLOGY CROSSOVER VENTURES II, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II, L.L.C.
Its: General Partner
By: /s/ RBJ
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
TCV II STRATEGIC PARTNERS, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II, L.L.C.
Its: General Partner
By: /s/ RBJ
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
-8-
EXHIBIT A
---------
SCHEDULE OF INVESTORS
Name and Address Shares Amount
- ----------------------------------------------- --------------------- ---------------------
BancBoston Ventures Inc. 944,670 $ 7,000,004.70
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Private Equity Portfolio II, LLC 134,952 $ 999,994.32
c/o BancBoston Capital
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Battery Ventures III, L.P. 62,672 $ 464,399.52
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Boston Millennia Associates I, Limited 8,203 $ 60,784.23
Partnership
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Boston Millennia Partners Limited Partnership 417,168 $ 3,091,214.88
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 13,500 $ 100,035.00
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ G. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 6,700 $ 49,647.00
Charitable Annuity Trust, u/d/t
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Essex Private Placement Fund II, 269,906 $ 2,000,003.46
Limited Partnership
c/o Essex Investment Mgt. Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
The ▇▇▇▇▇ Manhattan Bank,
as Trustee for First Plaza Group Trust
Global Investor Services 716,858 $ 5,311,917.78
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Technology Crossover Ventures II, L.P. 203,486 $ 1,507,831.26
c/o Technology Crossover Ventures
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
TCV II (Q), L.P. 156,443 $ 1,159,242.63
c/o Technology Crossover Ventures
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Technology Crossover Ventures II, C.V 31,068 $ 230,213.88
c/o Technology Crossover Ventures
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
TCV II Strategic Partners, L.P 27,764 $ 205,731.24
c/o Technology Crossover Ventures
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-2-
TCV II, V.O.F 6,610 $ 48,980.10
c/o Technology Crossover Ventures
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
TOTAL 3,000,000 $22,230,000.00
-3-
EXHIBIT B
---------
AMENDED AND RESTATED ARTICLES OF INCORPORATION
EXHIBIT C
---------
SCHEDULE OF EXCEPTIONS
EXHIBIT B
---------
AMENDED AND RESTATED ARTICLES OF INCORPORATION
[LOGO]
SECRETARY OF STATE [SEAL]
I, ▇▇▇▇ ▇▇▇▇▇, Secretary of State of the State of California, hereby
certify:
That the attached transcript of 22 page(s) has been compared with the
record on file in this office, of which it purports to be a copy, and that it is
full, true and correct.
[SEAL] IN WITNESS WHEREOF, I execute this
certificate and affix the Great
Seal of the State of California
this day of
JAN 8 2000
-----------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇
Secretary of State
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
INVENTA CORPORATION
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇ certify that:
1. They are the duly elected and acting President and Assistant
Secretary, respectively, of Inventa Corporation, a California
corporation (the "Corporation").
2. The Articles of Incorporation of this Corporation are hereby amended
and restated in full to read as set forth in Exhibit A attached
---------
hereto.
3. The attached amendment and restatement of the Articles of
Incorporation of this Corporation has been duly approved by the Board
of Directors of this Corporation.
4. The attached amendment and restatement of the Articles of
Incorporation of this Corporation has been approved by the holders of
the requisite number of shares of this Corporation in accordance with
Sections 902 and 903 of the California Corporations Code. The total
number of outstanding shares of each class entitled to vote with
respect to the attached amendment and restatement was 800,000 shares
of Series A Preferred Stock, 2,560,000 shares of Series B Preferred
Stock, 8,055,511 shares of Series C Preferred Stock and 4,755,194
shares of Common Stock. The number of shares voting in favor of the
attached amendment and restatement equaled or exceeded the vote
required, such required vote being a majority of the outstanding
shares of the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and Common Stock, voting as separate classes.
The undersigned further declare under penalty of perjury that the
matters set forth in this Certificate are true and correct of their own
knowledge.
Executed at Redwood Shores, California on December ___, 1999.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President
/s/ ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇,
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇,
Assistant Secretary
-2-
EXHIBIT A
----------
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
INVENTA CORPORATION
I.
The name of this corporation is Inventa Corporation (the "Corporation").
II.
The purpose of this Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
III.
This Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the Corporation is authorized to issue is 39,779,511 shares, of
which 25,000,000 shares shall be Common Stock with a par value of $0.001 per
share and of which 14,779,511 shares shall be Preferred Stock, 1,000,000 of
which are designated Series A Preferred Stock with a par value of $0.001 per
share, 2,560,000 of which are designated Series B Preferred Stock with a par
value of $0.001 per share, 8,219,511 of which are designated Series C Preferred
Stock with a par value of $0.001 per share and 3,000,000 of which are designated
Series D Preferred Stock with a par value of $0.001 per share. The Board of
Directors is authorized to fix the number of shares of any series of Preferred
Stock and to determine or alter the rights, preferences, privileges, and
restrictions granted to or imposed upon any wholly unissued series of Preferred
Stock and, within the limits and restrictions stated in any resolution or
resolutions of the Board of Directors originally fixing the number of shares
constituting any series of Preferred Stock, to increase or decrease (but not
below the number of shares of any such series then outstanding) the number of
shares of any such series subsequent to the issue of shares of that series.
IV.
The rights, preferences, privileges and restrictions granted to or imposed
upon the Common Stock and Preferred Stock are as follows:
1. Dividend Provisions. The holders of shares of Series A Preferred
-------------------
Stock ("Series A Preferred"), Series B Preferred Stock ("Series B Preferred"),
Series C Preferred Stock ("Series C Preferred") and Series D Preferred Stock
("Series D Preferred") shall be entitled to receive dividends, out of any assets
legally available therefor, prior and in preference to any declaration or
payment of any dividend (payable other than in Common Stock or other securities
and rights convertible into or entitling the holder thereof to receive, directly
or indirectly, additional shares of Common Stock of this Corporation) on the
Common Stock of this Corporation, at the rate of $0.03 per annum per share of
Series A Preferred (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like with respect to such shares), $0.075 per annum
per share of Series B Preferred (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like with respect to such
shares), $0.10 per annum per share of Series C Preferred (as adjusted for any
stock dividends, combinations, splits, recapitalizations and the like with
respect to such shares) and $0.59 per annum per share of Series D Preferred (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like with respect to such shares) or, if greater (as determined on a per
annum basis and on an as converted basis for the Preferred Stock), an amount
equal to that paid on the Common Stock. Such dividends shall be payable when,
as, and if declared by the Board of Directors, and shall not be cumulative, and
no right shall accrue to holders of Common Stock or Preferred Stock by reason of
the fact that dividends on said shares are not declared in any prior period.
After payment has been made to the holders of Preferred Stock of the full
amounts to which they shall be entitled as set forth in this Section 1, the
holders of Preferred Stock and Common Stock shall be entitled to receive ratably
on an as-converted basis any remaining funds declared as dividends.
2. Liquidation Preference.
----------------------
(a) Preferred Preference. In the event of any liquidation,
--------------------
dissolution, or winding up of the Corporation, either voluntary or involuntary,
the holders of the Series C Preferred and Series D Preferred shall be entitled
to receive on a pro rata basis, prior and in preference to any distribution of
any of the assets or surplus funds of the Corporation to the holders of the
Series A Preferred, Series B Preferred and Common Stock, by reason of their
ownership of such stock, an amount per share equal to the sum of $1.25 per share
of Series C Preferred and $7.41 per share of Series D Preferred (in each case as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like with respect to such shares) plus declared and unpaid dividends, for
each share of Series C Preferred or Series D Preferred then held by them. If
upon the occurrence of such event, the assets and funds thus distributed among
the holders of the Series C Preferred and Series D Preferred shall be
insufficient to permit the payment to such holders of the full aforesaid
preferential amounts, then the entire assets and funds of the Corporation
legally available for distribution shall be distributed among the holders of the
Series C Preferred and Series D Preferred in proportion to the aggregate
liquidation preference of the shares held by each such holder.
-2-
(b) After payment has been made to the holders of the Series C
Preferred and Series D Preferred of the full amounts to which they shall be
entitled as set forth in paragraph 2(a) above, the holders of Series A Preferred
and Series B Preferred shall be entitled to receive, prior and in preference to
any distribution of any of the assets of this Corporation to the holders of
Common Stock by reason of their ownership thereof, an amount per share equal to
$0.50 for each outstanding share of Series A Preferred (as adjusted for any
stock dividends, combinations, splits, recapitalizations and the like with
respect to such shares), and $1.25 for each outstanding share of Series B
Preferred (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like with respect to such shares), plus an amount
equal to any declared but unpaid dividends for each share of Series A Preferred
and Series B Preferred then held by them. If upon the occurrence of such event,
the assets and funds thus distributed among the holders of Series A Preferred
and Series B Preferred shall be insufficient to permit the payment to such
holders of the full aforesaid preferential amounts, then the entire assets and
funds of this Corporation legally available for distribution shall be
distributed ratably among the holders of the Series A Preferred and Series B
Preferred in proportion to the aggregate Series A Preferred liquidation
preference and the Series B Preferred liquidation preference.
(c) After payment has been made to the holders of the Preferred Stock
of the full amounts to which they shall be entitled to as set forth in
paragraphs 2(a) and 2(b) above, the holders of the Common Stock shall then be
entitled to receive the amount of $0.40 per share for each share of Common Stock
then held by them (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like with respect to such shares), plus an amount
equal to all declared but unpaid dividends for each share of Common Stock then
held by them. If the assets and funds thus distributed among the holders of the
Common Stock shall be insufficient to permit the payment to such holders of the
full aforesaid amount, then the entire assets and funds of the Corporation
legally available for distribution, shall be distributed among the holders of
the Common Stock ratably on a per-share basis.
(d) After payment has been made to the holders of the Preferred Stock
and the Common Stock of the full amount to which they shall be entitled as set
forth in paragraphs 2(a), 2(b) and 2(c) above, the holders of the Preferred
Stock and Common Stock shall be entitled to receive ratably on a per-share basis
all the remaining assets based upon the number of shares of Common Stock into
which each share of Preferred Stock is then convertible; provided, however, that
the holders of Preferred Stock shall not be entitled to receive pursuant to this
paragraph (d) (including amounts received pursuant to paragraphs 2 (a) and 2(b)
above) more than a total of $1.00 per share of Series A Preferred, $2.50 per
share of Series B Preferred, $2.50 per share of Series C Preferred and $14.82
per share of Series D Preferred then held by them (as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like with respect to
such shares) plus declared and unpaid dividends.
(e) After payment has been made to the holders of the Preferred Stock
and the Common Stock of the full amounts to which they shall be entitled as set
forth in paragraphs 2(a), 2(b), 2(c) and 2(d) above, the holders of the Common
Stock shall be entitled to receive ratably on a per-share basis all the
remaining assets.
-3-
(f) Mergers. Unless waived by the approval (by vote or written
-------
consent, as provided by law) of the holders of 66 2/3% of the then outstanding
Series C Preferred and holders of 66 2/3% of the then outstanding Series D
Preferred, for purposes of this Section 2, a merger or consolidation of the
Corporation with or into any other corporation or corporations, or the merger of
any other corporation or corporations into the Corporation, in which the
shareholders of the Corporation receive distributions in cash or securities of
another corporation or corporations as a result of such consolidation or merger,
a reorganization, including a sale of the capital stock of the Corporation,
where the shareholders of the Corporation immediately prior to the transaction
possess less than 50% of the voting power of the surviving entity (or its
parent) immediately after the transaction, or a sale of all or substantially all
of the assets of the Corporation, shall be treated as a liquidation, dissolution
or winding up of the Corporation; provided that the holders of the Preferred
Stock and the Common Stock shall each be paid the liquidation preference in cash
or in the securities received or in a combination thereof (which combination
shall be in the same proportions as the consideration received in the
transaction). Any securities to be delivered to the holders of the Preferred
Stock and Common Stock upon merger, reorganization or sale of substantially all
the assets of the Corporation shall be valued as follows:
(i) if traded on a securities exchange, the value shall be
deemed to be the average of the closing prices of the securities on such
exchange over the 30-day period ending three (3) business days prior to the
closing;
(ii) if actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid prices over the 30-day period ending
three (3) business days prior to the closing; and
(iii) if there is no active public market, the value shall be the
fair market value thereof as mutually determined by the Corporation and the
holders of not less than a majority of the outstanding shares of the Preferred
Stock, provided that if the Corporation and the holders of a majority of the
outstanding shares of the Preferred Stock are unable to reach agreement, then by
independent appraisal by an investment banker hired and paid by the Corporation,
but acceptable to the holders of a majority of the outstanding shares of
Preferred Stock.
(g) As authorized by Section 402.5(c) of the California Corporations
Code, the provisions of Sections 502 and 503 of the California Corporations Code
shall not apply with respect to repurchase by the Corporation of shares of
Common Stock issued to or held by employees or consultants of the Corporation or
its subsidiaries upon termination of their employment or services pursuant to
agreement providing for the right of said repurchase.
3. Conversion. The holders of Preferred Stock shall have conversion
----------
rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Preferred Stock shall be
----------------
convertible into share(s) of Common Stock without the payment of any additional
consideration by the holder thereof and, at the option of the holder thereof, at
any time after the date of issuance of such share, at the office of the
Corporation or any transfer agent for the Preferred Stock. Each share of
Preferred Stock
-4-
shall be convertible into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing the applicable Original Issue Price of
such share of Preferred Stock by the Conversion Price (the "Conversion Price")
at the time in effect for a share of such series of Preferred Stock. The
Original Issue Price per share of Series A Preferred is $0.50, and the
Conversion Price per share of Series A Preferred initially shall be $0.50. The
Original Issue Price per share of Series B Preferred is $1.25, and the
Conversion Price per share of Series B Preferred initially shall be $1.25. The
Original Issue Price per share of Series C Preferred is $1.25, and the
Conversion Price per share of Series C Preferred initially shall be $1.25. The
Original Issue Price per share of Series D Preferred is $7.41, and the
Conversion Price per share of Series D Preferred initially shall be $7.41. The
Conversion Price of each series of Preferred Stock shall be subject to
adjustment from time to time as provided below. The number of shares of Common
Stock into which a share of Preferred Stock is convertible is hereinafter
referred to as the "Conversion Rate" of such series.
(b) Automatic Conversion. Each share of Preferred Stock shall
--------------------
automatically be converted into shares of Common Stock at the then effective
Conversion Rate immediately upon the closing of a firm commitment underwritten
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale of Common Stock
in which the aggregate proceeds raised equals or exceeds $20,000,000 (a
"Qualified Public Offering").
Notwithstanding the foregoing, each share of Series A Preferred,
Series B Preferred and Series C Preferred shall automatically be converted into
shares of Common Stock at the applicable effective Conversion Rate upon the
approval (by vote or written consent, as provided by law) of (i) the holders of
at least 2/3 of the then outstanding shares of Series A Preferred, Series B
Preferred and Series C Preferred (voting together as a separate class) and (ii)
the holders of at least 2/3 of the then outstanding shares of Series C
Preferred.
Notwithstanding the foregoing, each share of Series D Preferred
shall automatically be converted into shares of Common Stock at the applicable
effective Conversion Rate upon the approval (by vote or written consent, as
provided by law) of the holders of at least 2/3 of the then outstanding shares
of Series D Preferred.
(c) Mechanics of Conversion. Before any holder of the Preferred Stock
-----------------------
shall be entitled to convert the same into shares of Common Stock, he shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the Corporation or of any transfer agent for the Preferred Stock and shall
give written notice to the Corporation at such office that he elects to convert
the same (except that no such written notice of election to convert shall be
necessary in the event of an automatic conversion pursuant to Section 3(b)
hereof). The Corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Preferred Stock a certificate or
certificates for the number of shares of Common Stock to which such holder shall
be entitled. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the shares of
Preferred Stock to be converted (except that in the case of an automatic
conversion pursuant to Section 3(b) hereof such conversion shall be deemed to
have been made immediately prior to the closing of the offering referred to in
Section 3(b)) and the person
-5-
or persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date.
(d) Fractional Shares. In lieu of any fractional shares to which the
-----------------
holder of Preferred Stock would otherwise be entitled, the Corporation shall pay
cash equal to such fraction multiplied by the fair market value of one share of
each such series of Preferred Stock as determined by the Board of Directors of
the Corporation. Whether or not fractional shares are issuable upon such
conversion shall be determined on the basis of the total number of shares of
Preferred Stock of each holder to be converted at such time into Common Stock
and the number of shares of Common Stock issuable upon such aggregate
conversion.
(e) Adjustment of Conversion Price. The Conversion Price of each
------------------------------
series of Preferred Stock shall be subject to adjustment from time to time as
follows:
(i) If the Corporation shall issue any Common Stock other than
"Excluded Stock", as defined below, without consideration or for consideration
per share less than the applicable Conversion Price for such series in effect on
the date of and immediately prior to such issuance, then and in such event, the
Conversion Price in effect for such series shall be reduced, concurrently with
such issuance, to a price determined by multiplying such Conversion Price by a
fraction, the numerator of which shall be the total number of shares of Common
Stock outstanding (including any shares of Common Stock issuable upon conversion
of the Preferred Stock, or deemed to have been issued pursuant to subdivision
(3) of this clause (i) and to clause (ii) below) immediately prior to such
issuance plus the number of shares of Common Stock which the aggregate
consideration received by the Corporation for the total number of shares of
Common Stock so issued would purchase at such Conversion Price; and the
denominator of which shall be the total number of shares of Common Stock
outstanding (including any shares of Common Stock issuable upon conversion of
the Preferred Stock or deemed to have been issued pursuant to subdivision (3) of
this clause (i) and to clause (ii) below) immediately prior to such issuance
plus the additional shares of Common Stock issued in such issuance (but not
including any additional shares of Common Stock deemed to be issued as a result
of any adjustment in the Conversion Price resulting from such issuance).
For purposes of any adjustment of the Conversion Price pursuant to
this clause (i), the following provisions shall be applicable:
(1) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of cash paid therefor
after deducting any discounts or commissions paid or incurred by the Corporation
in connection with the issuance and sale thereof.
(2) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof as determined by the
Board of Directors of the Corporation, in accordance with generally accepted
accounting treatment; provided, however, that if, at the time
-------- -------
-6-
of such determination, the Corporation's Common Stock is traded in the over-the-
counter market or on a national or regional securities exchange, such fair
market value as determined by the board of directors of the Corporation shall
not exceed the aggregate "Current Market Price" (as defined below) of the shares
of Common Stock being issued.
(3) In the case of the issuance of (i) options to
purchase or rights to subscribe for Common Stock (other than Excluded Stock),
(ii) securities by their terms convertible into or exchangeable for Common Stock
(other than Excluded Stock), or (iii) options to purchase or rights to subscribe
for such convertible or exchangeable securities:
(A) the aggregate maximum number of shares of Common
Stock deliverable upon exercise of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at the time such
options or rights were issued and for a consideration equal to the consideration
(determined in the manner provided in subdivisions (1) and (2) above), if any,
received by the Corporation upon the issuance of such options or rights plus the
minimum purchase price provided in such options or rights for the Common Stock
covered thereby;
(B) the aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange for any such convertible or
exchangeable securities or upon the exercise of options to purchase or rights to
subscribe for such convertible or exchangeable securities and subsequent
conversion or exchange thereof, shall be deemed to have been issued at the time
such securities were issued or such options or rights were issued and for a
consideration equal to the consideration received by the Corporation for any
such securities and related options or rights (excluding any cash received on
account of accrued interest or accrued dividends), plus the minimum additional
consideration, if any, to be received by the Corporation upon the conversion or
exchange of such securities or the exercise of any related options or rights
(the consideration in each case to be determined in the manner provided in
subdivisions (1) and (2) above);
(C) on any change in the number of shares of Common
Stock deliverable upon exercise of any such options or rights or conversion of
or exchange for such convertible or exchangeable securities, or on any change in
the minimum purchase price of such options, rights or securities, other than a
change resulting from the antidilution provisions of such options, rights or
securities, the Conversion Price shall forthwith be readjusted to such
Conversion Price as would have been obtained had the adjustment made upon (x)
the issuance of such options, rights or securities not exercised, converted or
exchanged prior to such change, as the case may be, been made upon the basis of
such change or (y) the options or rights related to such securities not
converted or exchanged prior to such change, as the case may be, been made upon
the basis of such change; and
(D) on the expiration of any such options or rights,
the termination of any such rights to convert or exchange or the expiration of
any options or rights related to such convertible or exchangeable securities,
the Conversion Price shall forthwith be readjusted to such Conversion Price as
would have been obtained had the adjustment made upon the
-7-
issuance of such options, rights, convertible or exchangeable securities or
options or rights related to such convertible or exchangeable securities, as the
case may be, been made upon the basis of the issuance of only the number of
shares of Common Stock actually issued upon the exercise of such options or
rights, upon the conversion or exchange of such convertible or exchangeable
securities or upon the exercise of the options or rights related to such
convertible or exchangeable securities, as the case may be.
(ii) "Excluded Stock" shall mean:
(1) all shares of Common Stock issued and outstanding on
the date this document is filed with the California Secretary of State and all
shares issuable upon exercise of options or warrants outstanding on the date
this document is filed with the California Secretary of State;
(2) all shares of Series A Preferred, Series B Preferred,
Series C Preferred and Series D Preferred and the Common Stock into which such
shares are convertible;
(3) up to 1,562,808 shares of Common Stock, warrants or
options to purchase Common Stock or other securities issued to officers,
directors, consultants or employees of the Corporation pursuant to any plan or
arrangement approved by the Board of Directors of the Corporation; and
(4) shares of Common Stock, warrants or options to purchase
Common Stock or other securities issued to officers, directors, consultants or
employees of the Corporation pursuant to any plan or arrangement approved by a
2/3 vote of the Board of Directors of the Corporation.
All outstanding shares of Excluded Stock (including any
shares issuable upon conversion of the Preferred Stock) shall be deemed to be
outstanding for all purposes of the computations of Section 3(e)(i) above.
(iii) If the number of shares of Common Stock outstanding at any
time after the date hereof is increased by a stock dividend payable in shares of
Common Stock or by a subdivision or split-up of shares of Common Stock, then, on
the date such payment is made or such change is effective, the respective
Conversion Prices of Series A Preferred, Series B Preferred, Series C Preferred
and Series D Preferred shall be appropriately decreased so that the number of
shares of Common Stock issuable on conversion of any shares of such series of
Preferred Stock shall be increased in proportion to such increase of outstanding
shares of Common Stock.
(iv) If the number of shares of Common Stock outstanding at any
time after the date hereof is decreased by a combination of the outstanding
shares of Common Stock, then, on the effective date of such combination, the
respective Conversion Prices of Series A Preferred, Series B Preferred, Series C
Preferred and Series D Preferred shall be appropriately increased so that the
number of shares of Common Stock issuable on conversion of any shares of a
-8-
series of Preferred Stock shall be decreased in proportion to such decrease in
outstanding shares of Common Stock.
(v) In case the Corporation shall declare a cash dividend upon
its Common Stock payable otherwise than out of retained earnings or shall
distribute to holders of its Common Stock shares of its capital stock (other
than Common Stock), stock or other securities of other persons, evidences of
indebtedness issued by the Corporation or other persons, assets (excluding cash
dividends) or options or rights (excluding options to purchase and rights to
subscribe for Common Stock or other securities of the Corporation convertible
into or exchangeable for Common Stock), then, in each such case, the holders of
shares of Preferred Stock shall, concurrent with the distribution to holders of
Common Stock, receive a like distribution based upon the number of shares of
Common Stock into which such shares of Preferred Stock are convertible.
(vi) In case, at any time after the date hereof, of any capital
reorganization, or any reclassification of the stock of the Corporation (other
than as a result of a stock dividend or subdivision, split-up or combination of
shares), or the consolidation or merger of the Corporation with or into another
person (other than a consolidation or merger in which the Corporation is the
continuing entity and which does not result in any change in the Common Stock),
or of the sale or other disposition of all or substantially all the properties
and assets of the Corporation, the shares of Preferred Stock shall, after such
reorganization, reclassification, consolidation, merger, sale or other
disposition, be convertible into the kind and number of shares of stock or other
securities or property of the Corporation or otherwise to which such holder
would have been entitled if immediately prior to such reorganization,
reclassification, consolidation, merger, sale or other disposition he had
converted his shares of Preferred Stock into Common Stock. The provisions of
this clause (vi) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales or other dispositions.
(vii) All calculations under this Section 3 shall be made to the
nearest cent or to the nearest one hundredth (1/100) of a share, as the case may
be.
(viii) For the purpose of any computation pursuant to this
Section 3(e), the "Current Market Price" at any date of one share of Common
Stock, shall be deemed to be the average of the highest reported bid and the
lowest reported offer prices on the preceding business day as furnished by the
National Quotation Bureau, Incorporated (or equivalent recognized source of
quotations); provided, however, that if the Common Stock is not traded in such
-------- -------
manner that the quotations referred to in this clause (viii) are available for
the period required hereunder, Current Market Price shall be determined in good
faith by the Board of Directors of the Corporation, but if challenged by the
holders of more than 50% of the outstanding Series A Preferred, Series B
Preferred, Series C Preferred and Series D Preferred, voting as separate
classes, then as determined by an independent appraiser selected by the Board of
Directors of the Corporation, the cost of such appraisal to be borne equally by
the Corporation and the challenging parties.
(f) Minimal Adjustments. No adjustment in the Conversion Price need
-------------------
be made if such adjustment would result in a change in the Conversion Price of
less than $0.01. Any
-9-
adjustment of less than $0.01 which is not made shall be carried forward and
shall be made at the time of and together with any subsequent adjustment which,
on a cumulative basis, amounts to an adjustment of $0.01 or more in the
Conversion Price.
(g) No Impairment. Without the consent of the majority of the
-------------
outstanding shares of Preferred Stock, the Corporation will not through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 3 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the holders of Preferred Stock against impairment.
(h) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the Conversion Rate pursuant to this Section 3,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon written request at any time
of any holder of Preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (i) such adjustments and readjustments,
(ii) the Conversion Rate of such series at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversions of such holder's shares of
Preferred Stock.
(i) Notices of Record Date. In the event of any taking by the
----------------------
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property or to receive any other right, the Corporation
shall mail to each holder of Preferred Stock at least ten (10) days prior to
such record date, a notice specifying the date on which any such record is to be
taken for the purpose of such dividend or distribution or right, and the amount
and character of such dividend, distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. The Corporation
---------------------------------------------
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
shares of Preferred Stock such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all outstanding
shares of Preferred Stock; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of Preferred Stock, the Corporation will take
such corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
-10-
(k) Notices. Any notice required by the provisions of this Section 3
-------
to be given to the holder of shares of Preferred Stock shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of the Corporation.
(l) Reissuance of Converted Shares. No shares of Preferred Stock
------------------------------
which have been converted into Common Stock after the original issuance thereof
shall ever again be reissued and all such shares so converted shall upon such
conversion cease to be a part of the authorized shares of the Corporation.
(m) Special Adjustment of Conversion Price for Qualified Public
-----------------------------------------------------------
Offering. Notwithstanding Section 3(a) above, in the event the Series D
--------
Preferred is automatically converted into Common Stock by reason of a Qualified
Public Offering as set forth in Section 3(b) hereof, and the initial public
offering price per share (the "IPO Price") is less than 125% of the Original
Issue Price of the Series D Preferred (adjusted for stock splits and the like),
then the Conversion Price per share of Series D Preferred shall be reduced to a
number equal to the quotient of (i) the Conversion Price of the Series D
Preferred in effect immediately prior to such offering divided by (ii) a
fraction, the numerator of which is the Original Issue Price of the Series D
Preferred multiplied by 1.25 and the denominator of which is the IPO Price.
4. Voting Rights. The holder of each share of Preferred Stock shall be
-------------
entitled to the number of votes equal to the number of shares of Common Stock
into which each share of Preferred Stock could be converted on the record date
for the vote or consent of shareholders written consent and, except as otherwise
required by law or provided for herein, shall have voting rights and powers
equal to the voting rights and powers of the Common Stock. The holder of each
share of Preferred Stock shall be entitled to notice of any shareholders'
meeting in accordance with the bylaws of the Corporation and shall vote with
holders of the Common Stock upon the election of directors, except as provided
in Section 5 herein, and upon any other matter submitted to a vote of
shareholders, except those matters required by law to be submitted to a class
vote. Fractional votes shall not, however, be permitted and any fractional
voting rights resulting from the above formula (after aggregating all shares of
Common Stock into which shares of Preferred Stock held by each holder could be
converted) shall be rounded to the nearest whole number (with one-half rounded
upward to one).
5. Election of Directors. At each election of the Corporation's
---------------------
directors, (i) the holders of the Corporation's Series A Preferred shall have
the right, voting as a separate class (with cumulative voting rights as among
themselves in accordance with Section 708 of the California Corporations Code)
to elect one (1) member of the Board of Directors, (ii) the holders of the
Corporation's Series B Preferred shall have the right, voting as a separate
class (with cumulative voting rights as among themselves in accordance with
Section 708 of the California Corporations Code) to elect one (1) member of the
Board of Directors, (iii) the holders of the Corporation's Series C Preferred
shall have the right, voting as a separate class (with cumulative voting rights
as among themselves in accordance with Section 708 of the California
Corporations Code) to elect two (2) members of the Board of Directors, and (iv)
the holders of the Corporation's Common Stock
-11-
shall have the right, voting as a separate class (with cumulative voting rights
as among themselves in accordance with Section 708 of the California
Corporations Code) to elect two (2) members of the Board of Directors. Any
additional directors shall be elected by all of the holders of Common Stock and
Preferred Stock, voting as a single class.
6. Protective Provisions.
---------------------
(a) In addition to any other class vote that may be required by law,
this Corporation shall not without first obtaining the approval (by vote or
written consent, as provided by law) of the holders of at least a majority of
the then outstanding shares of Preferred Stock:
(i) sell, convey or otherwise dispose of all or substantially
all of its property or business, or merge into or effect a reorganization with
any other corporation (other than a wholly owned subsidiary corporation) in
which the shareholders of this Corporation immediately prior to the transaction
possess less than 50% of the voting power of the surviving entity (or its
parent) immediately after the transaction, or sell the capital stock of the
Corporation where the shareholders of this Corporation immediately prior to the
transaction possess less than 50% of the voting power of the Corporation
immediately after the transaction;
(ii) change the rights, preferences, privileges or restrictions
of the Preferred Stock;
(iii) increase or decrease the aggregate number of authorized
shares of Preferred Stock, other than as provided in either subdivision (b) of
Section 405 or subdivision (c) of Section 902 of the California Corporations
Code;
(iv) create a new class or series of shares having rights,
preferences or privileges or increase the number of authorized shares of any
class or shares having rights, preferences or privileges equal to or senior to
any outstanding class or series;
(v) pay any dividend on or purchase, redeem or otherwise
acquire any security junior to the Preferred Stock other than repurchases at
cost from employees, consultants, lessors or suppliers upon termination of
employment, consulting, lessor-lessee, or supplier-purchaser relationship,
respectively; or
(vi) voluntarily dissolve or liquidate the Corporation.
(b) Notwithstanding the foregoing Section 6(a), in addition to any
other series vote that may be required by law, so long as 40% of the originally
issued shares of Series C Preferred are outstanding, this Corporation shall not
without first obtaining the approval (by vote or written consent, as provided by
law) of the holders of at least a majority of the then outstanding shares of
Series C Preferred:
(i) materially adversely change the rights, preferences,
privileges or restrictions of the Series C Preferred;
-12-
(ii) increase or decrease the aggregate number of authorized
shares of Series C Preferred, other than as provided in either subdivision (b)
of Section 405 or subdivision (c) of Section 902 of the California Corporations
Code; or
(iii) create a new class or series of shares having rights,
preferences or privileges senior to the Series C Preferred.
(c) Notwithstanding the foregoing Sections 6(a) and 6(b), in addition
to any other series vote that may be required by law, so long as 40% of the
originally issued shares of Series C Preferred are outstanding, this Corporation
shall not without first obtaining the approval (by vote or written consent, as
provided by law) of the holders of 66 2/3% of the then outstanding shares of
Series C Preferred, voluntarily dissolve or liquidate, sell, convey or otherwise
dispose of all or substantially all of its property or business, or merge into
or effect a reorganization with any other corporation (other than a wholly owned
subsidiary corporation) in which the shareholders of this Corporation
immediately prior to the transaction possess less than 50% of the voting power
of the surviving entity (or its parent) immediately after the transaction if the
consideration received by the holders of the Series C Preferred as a result of
any such liquidation, dissolution, merger or sale of all or substantially all of
the assets of the Corporation is less than $2.50 per share (as adjusted for any
stock dividends, combinations, splits, recapitalizations and the like with
respect to such shares).
(d) Notwithstanding the foregoing Section 6(a), in addition to any
other series vote that may be required by law, so long as 40% of the originally
issued shares of Series D Preferred are outstanding, this Corporation shall not
without first obtaining the approval (by vote or written consent, as provided by
law) of the holders of 66 2/3% of the then outstanding shares of Series D
Preferred, materially adversely change the rights, preferences, privileges or
restrictions of the Series D Preferred.
(e) Unless otherwise required by California law or except as provided
herein, the holders of Common Stock will not have the right to vote as a
separate class on any matter.
7. Repurchase of Shares. In connection with repurchases by this
--------------------
Corporation of its Common Stock, pursuant to its agreements with certain of the
holders thereof, Sections 502 and 503 of the California General Corporation Law
shall not apply in whole or in part with respect to such repurchases.
8. Series B Preferred - Right of Redemption.
----------------------------------------
(a) Subject to Section 8(e) herein, the Corporation shall be
obligated to redeem the Series B Preferred as follows:
(i) At any time after March 31, 2004, the holders of a majority
of the then outstanding shares of Series B Preferred (the "Series B Initiating
Holders") may require the Corporation to the extent it may lawfully do so, to
redeem all of the outstanding Series B Preferred in three (3) equal annual
installments with the first installment date being the date forty-five (45) days
after receipt by the Corporation of the Series B Exercise Notice (as defined
below), the second
-13-
installment being the date one (1) year from the first installment date and the
last installment date being a date two (2) years from such first installment
date (each a "Series B Redemption Date"). The Corporation shall effect such
redemptions on the applicable Series B Redemption Date by paying in cash in
exchange for each share of Series B Preferred to be redeemed on each applicable
Series B Redemption Date a sum equal to the fair market value per share of
Series B Preferred as of the date of receipt by the Corporation of the Series B
Exercise Notice plus all accrued and unpaid dividends thereon. The fair market
value per share of Series B Preferred for the purposes of this Section 8, shall
be determined by the Board of Directors of the Corporation. If such
determination is unacceptable to the holders of a majority of the Series B
Preferred, then the fair market value per share of Series B Preferred shall be
determined by an investment banking firm mutually acceptable to the Corporation
and the holders of a majority of the Series B Preferred. The Series B Initiating
Holders shall have the right to revoke a Series B Exercise Notice by giving
written notice to the Corporation within fifteen (15) days after their receipt
of the Series B Redemption Notice (as defined below). The total amount to be
paid for the Series B Preferred is hereinafter referred to as the "Series B
Redemption Price." The number of shares of Series B Preferred that the
Corporation shall be required to redeem on any one Series B Redemption Date
shall be equal to the amount determined by dividing (i) the aggregate number of
shares of Series B Preferred outstanding immediately prior to the Series B
Redemption Date by (ii) the number of remaining Series B Redemption Dates
(including the Series B Redemption Date to which such calculation applies).
Shares subject to redemption pursuant to this Section 8(a) shall be redeemed
from each holder of Series B Preferred on a pro rata basis.
(ii) At any time after March 31, 2004, the Series B Initiating
Holders can elect to exercise the right of first redemption pursuant to this
Section 8(a) by providing written notice (the "Series B Exercise Notice") to the
Corporation. Within fifteen (15) days after the receipt of the Series B
Exercise Notice, the Corporation shall (i) send a notice (a "Series B Redemption
Notice") to each holder of record of the Series B Preferred to be redeemed at
the address of such holder appearing on the books of the Corporation setting
forth (a) the Series B Redemption Price for the shares to be redeemed and (b)
the place at which such holders may obtain payment of the Series B Redemption
Price upon surrender of their share certificates, and (ii) send a notice to each
holder of record of the Series C Preferred at the address of such holder
appearing on the books of the Corporation notifying such holders of the election
of the holders of the Series B Preferred to exercise the right of redemption of
the Series B Preferred. If the Corporation does not have sufficient funds
legally available to redeem all shares to be redeemed at any Series B Redemption
Date (including, if applicable, those to be redeemed at the option of the
Corporation), then it shall redeem such shares pro rata (based on the portion of
the aggregate Series B Redemption Price payable to them) to the extent possible
and shall redeem the remaining shares to be redeemed as soon as sufficient funds
are legally available.
(b) On each Series B Redemption Date, the Corporation shall deposit
the portion of the Series B Redemption Price sufficient to redeem the shares to
be redeemed upon such Series B Redemption Date with a bank or trust corporation
having aggregate capital and surplus in excess of $100,000,000, as a trust fund,
with irrevocable instructions and authority to the bank or trust corporation to
pay, on and after such Series B Redemption Date, the applicable portion of the
-14-
Series B Redemption Price to their respective holders upon the surrender of
their share certificates. Any monies deposited by the Corporation pursuant to
this Section 8(b) for the redemption of shares thereafter converted into shares
of Common Stock pursuant to Section 3 hereof no later than the fifth (5th) day
preceding the applicable Series B Redemption Date shall be returned to the
Corporation forthwith upon such conversion. The balance of any funds deposited
by the Corporation pursuant to this Section 8(b) remaining unclaimed at the
expiration of one (1) year following such Series B Redemption Date shall be
returned to the Corporation.
(c) On or after such Series B Redemption Date, each holder of shares
of Series B Preferred to be redeemed shall surrender such holder's certificates
representing such shares to the Corporation in the manner and at the place
designated in the Redemption Notice, and thereupon the applicable portion of the
Series B Redemption Price of such shares shall be payable to the order of the
person whose name appears on such certificate or certificates as the owner
thereof and each surrendered certificate shall be canceled. In the event less
than all the shares represented by such certificates are redeemed, a new
certificate shall be issued representing the unredeemed shares. From and after
the date the Corporation deposits funds pursuant to Section 8(b) hereof with
respect to shares to be redeemed on such Series B Redemption Date, unless there
shall have been a default in payment of the applicable portion of the Series B
Redemption Price or the Corporation is unable to pay the applicable portion of
the Series B Redemption Price due to not having sufficient legally available
funds, all rights of the holders of such shares as holders of Series B Preferred
(except the right to receive the Series B Redemption Price without interest upon
surrender of their certificates), shall cease and terminate with respect to such
shares, provided that in the event that shares of Series B Preferred are not
redeemed due to a default in payment by the Corporation or because the
Corporation does not have sufficient legally available funds, such shares of
Series B Preferred shall remain outstanding and shall be entitled to all of the
rights and preferences provided herein.
(d) In the event of a call for redemption of any shares of Series B
Preferred, the Conversion Rights (as defined in Section 3) for the shares of
Series B Preferred to be redeemed on a particular Series B Redemption Date shall
terminate at the close of business on the fifth (5th) day preceding such Series
B Redemption Date, unless default is made in payment of the Series B Redemption
Price.
(e) In the event that the Series B Initiating Holders have elected to
exercise their right of redemption pursuant to this Section 8 and to the extent
that the Company receives the Series C Exercise Notice (as defined below) from
the Series C Initiating Holders (as defined below) or the Series D Exercise
Notice (as defined below) from the Series D Initiating Holders (as defined
below) prior to the deposit by the Company of funds pursuant to Section 8(b)
hereof with respect to any applicable Series B Redemption Date, the right of
redemption of the Series C Preferred and the Series D Preferred shall be
superior and in preference to the right of redemption of the Series B Preferred
and the holders of the Series C Preferred and Series D Preferred shall be
entitled to receive the full amount of the Series C Redemption Price and the
Series D Redemption Price out of legally available funds of the Corporation
prior to the payment of any portion of the Series B Redemption Price not
previously deposited by the Company pursuant to Section 8(b) or required to be
paid to the holders of the Series B Preferred pursuant to the last sentence of
Section 8(a)(ii) hereof. In such
-15-
event, after the full amount of the Series C Redemption Price and the Series D
Redemption Price has been deposited pursuant to Sections 9(b) and 10(b) below,
the holders of the Series B Preferred shall be entitled to receive the full
amount of the Series B Redemption Price of the Series B Preferred. If the funds
of the Corporation legally available for redemption of shares of the Series B
Preferred, Series C Preferred or Series D Preferred are insufficient to redeem
the total number of shares of Series B Preferred, Series C Preferred or Series D
Preferred to be redeemed on a Series B Redemption Date, Series C Redemption Date
or Series D Redemption Date, those funds which are legally available will be
used to redeem the maximum possible number of such shares from first the holders
of the Series C Preferred and Series D Preferred to the extent of the full
amount of the Series C Redemption Price and Series D Redemption Price pro rata
based on the relative redemption price of such series and next to the holders of
the Series B Preferred to the extent of the full amount of the Series B
Redemption Price. The shares of Series B Preferred, Series C Preferred or Series
D Preferred not redeemed, as the case may be, shall remain outstanding and
entitled to all the rights and preferences provided herein, including the rights
of conversion set forth in Section 3. At any time thereafter when additional
funds of the Corporation are legally available for the redemption of shares of
Series B Preferred, Series C Preferred or Series D Preferred, as the case may
be, such funds will immediately be used to redeem the balance of the shares
which the Corporation has become obliged to redeem on any Redemption Date but
which it has not redeemed.
9. Series C Preferred - Right of Redemption.
----------------------------------------
(a) Subject to Section 8(e) above, the Corporation shall be obligated
to redeem the Series C Preferred as follows:
(i) Beginning on or after March 31, 2004, the holders of 66
2/3% of the then outstanding shares of Series C Preferred (the "Series C
Initiating Holders") may require the Corporation to the extent it may lawfully
do so, to redeem all of the outstanding Series C Preferred. Such redemption
shall occur on the 45th day following the Corporation's receipt of the Series C
Exercise Notice (as defined below) (such date being herein referred to as the
"Initial Series C Redemption Date"), provided that the Series C Initiating
--------
Holders shall have the right to revoke a Series C Exercise Notice by giving
written notice to the Corporation within fifteen (15) days after their receipt
of the Series C Redemption Notice, and provided further that in lieu of
-------- -------
redeeming all of the Series C Preferred on the Initial Series C Redemption Date
the Corporation shall have the right to redeem the Series C Preferred in three
(3) equal installments, with the first installment date being the Initial Series
C Redemption Date, the second installment being the first anniversary of the
Initial Series C Redemption Date and the last installment being the second
anniversary of the Initial Series C Redemption Date (the Initial Series C
Redemption Date and each of such other redemption dates being herein referred to
as a "Series C Redemption Date"). The Corporation shall effect such redemptions
on the applicable Series C Redemption Date by paying in cash in exchange for
each share of Series C Preferred to be redeemed on each applicable Series C
Redemption Date, a sum equal to the fair market value per share of Series C
Preferred as of the date of receipt by the Corporation of the Series C Exercise
Notice plus all accrued and unpaid dividends with respect to such shares thereon
plus interest at the rate of 10% per annum payable on the amount of the unpaid
Series C Redemption Price (as hereinafter defined) accruing from the Initial
Series C Redemption
-16-
Date until paid. The fair market value per share of Series C Preferred for the
purposes of this Section 9, shall be determined by the Board of Directors of the
Corporation. If such determination is unacceptable to the holders of a majority
of the Series C Preferred, then the fair market value per share of Series C
Preferred shall be determined by an investment banking firm mutually acceptable
to the Corporation and the holders of a majority of the Series C Preferred. The
total amount to be paid for the Series C Preferred is hereinafter referred to as
the "Series C Redemption Price." The number of shares of Series C Preferred that
the Corporation shall be required to redeem on any one Series C Redemption Date
shall be equal to the amount determined by dividing (i) the aggregate number of
shares of Series C Preferred outstanding immediately prior to the Series C
Redemption Date by (ii) the number of remaining Series C Redemption Dates
(including the Series C Redemption Date to which such calculation applies).
Shares subject to redemption pursuant to this Section 9(a) shall be redeemed
from each holder of Series C Preferred on a pro rata basis.
(ii) At any time after March 31, 2004, the Series C Initiating
Holders can elect to exercise the right of first redemption pursuant to this
Section 9(a) by providing written notice (the "Series C Exercise Notice") to the
Corporation. Within fifteen (15) days after the receipt of the Series C Exercise
Notice, the Corporation shall (i) send a notice (a Series C "Redemption Notice")
to each holder of record of the Series C Preferred to be redeemed at the address
of such holder appearing on the books of the Corporation setting forth (a) the
Series C Redemption Price for the shares to be redeemed and (b) the place at
which such holders may obtain payment of the Series C Redemption Price upon
surrender of their share certificates. If the Corporation does not have
sufficient funds legally available to redeem all shares to be redeemed at the
Series C Redemption Date (including, if applicable, those to be redeemed at the
option of the Corporation), then it shall redeem such shares pro rata (based on
the portion of the aggregate Series C Redemption Price payable to them) to the
extent possible and shall redeem the remaining shares to be redeemed as soon as
sufficient funds are legally available.
(b) On or prior to the Series C Redemption Date, the Corporation
shall deposit the applicable portion of the Series C Redemption Price of the
shares to be redeemed on such Series C Redemption Date with a bank or trust
corporation having aggregate capital and surplus in excess of $100,000,000, as a
trust fund, with irrevocable instructions and authority to the bank or trust
corporation to pay, on and after such Series C Redemption Date, the applicable
portion of the Series C Redemption Price of the shares to their respective
holders upon the surrender of their share certificates. Any monies deposited by
the Corporation pursuant to this Section 9(b) for the redemption of shares
thereafter converted into shares of Common Stock pursuant to Section 3 hereof no
later than the fifth (5th) day preceding the Series C Redemption Date shall be
returned to the Corporation forthwith upon such conversion. The balance of any
funds deposited by the Corporation pursuant to this Section 9(b) remaining
unclaimed at the expiration of one (1) year following such Series C Redemption
Date shall be returned to the Corporation.
(c) On or after such Series C Redemption Date, each holder of shares
of Series C Preferred to be redeemed shall surrender such holder's certificates
representing such shares to the Corporation in the manner and at the place
designated in the Series C Redemption Notice, and thereupon the applicable
portion of the Series C Redemption Price of such shares shall be payable to
-17-
the order of the person whose name appears on such certificate or certificates
as the owner thereof and each surrendered certificate shall be canceled. In the
event less than all the shares represented by such certificates are redeemed, a
new certificate shall be issued representing the unredeemed shares. From and
after the date the Corporation deposits funds pursuant to Section 9(b) hereof
with respect to shares to be redeemed on such Series C Redemption Date, unless
there shall have been a default in payment of the applicable portion of the
Series C Redemption Price or the Corporation is unable to pay the applicable
portion of the Series C Redemption Price due to not having sufficient legally
available funds, all rights of the holders of such shares as holders of Series C
Preferred (except the right to receive the Series C Redemption Price without
interest upon surrender of their certificates), shall cease and terminate with
respect to such shares, provided that in the event that shares of Series C
Preferred are not redeemed due to a default in payment by the Corporation or
because the Corporation does not have sufficient legally available funds, such
shares of Series C Preferred shall remain outstanding and shall be entitled to
all of the rights and preferences provided herein.
(d) In the event of a call for redemption of any shares of Series C
Preferred, the Conversion Rights (as defined in Section 3) for the shares of
Series C Preferred to be redeemed on a particular Series C Redemption Date shall
terminate at the close of business on the fifth (5th) day preceding such Series
C Redemption Date, unless default is made in payment of the Series C Redemption
Price.
10. Series D Preferred - Right of Redemption.
----------------------------------------
(a) Subject to Section 8(e) above, the Corporation shall be obligated
to redeem the Series D Preferred as follows:
(i) Beginning on or after March 31, 2004, the holders of 66
2/3% of the then outstanding shares of Series D Preferred (the "Series D
Initiating Holders") may require the Corporation to the extent it may lawfully
do so, to redeem all of the outstanding Series D Preferred. Such redemption
shall occur on the 45th day following the Corporation's receipt of the Series D
Exercise Notice (as defined below) (such date being herein referred to as the
"Initial Series D Redemption Date"), provided that the Series D Initiating
--------
Holders shall have the right to revoke a Series D Exercise Notice by giving
written notice to the Corporation within fifteen (15) days after their receipt
of the Series D Redemption Notice, and provided further that in lieu of
-------- -------
redeeming all of the Series D Preferred on the Initial Series D Redemption Date
the Corporation shall have the right to redeem the Series D Preferred in three
(3) equal installments, with the first installment date being the Initial Series
D Redemption Date, the second installment being the first anniversary of the
Initial Series D Redemption Date and the last installment being the second
anniversary of the Initial Series D Redemption Date (the Initial Series D
Redemption Date and each of such other redemption dates being herein referred to
as a "Series D Redemption Date"). The Corporation shall effect such redemptions
on the applicable Series D Redemption Date by paying in cash in exchange for
each share of Series D Preferred to be redeemed on each applicable Series D
Redemption Date, a sum equal to the fair market value per share of Series D
Preferred as of the date of receipt by the Corporation of the Series D Exercise
Notice plus all accrued and unpaid dividends with respect to such shares thereon
plus interest at the rate of 10% per annum payable on the amount of the unpaid
-18-
Series D Redemption Price (as hereinafter defined) accruing from the Initial
Series D Redemption Date until paid. The fair market value per share of Series D
Preferred for the purposes of this Section 10, shall be determined by the Board
of Directors of the Corporation. If such determination is unacceptable to the
holders of a majority of the Series D Preferred, then the fair market value per
share of Series D Preferred shall be determined by an investment banking firm
mutually acceptable to the Corporation and the holders of a majority of the
Series D Preferred. The total amount to be paid for the Series D Preferred is
hereinafter referred to as the "Series D Redemption Price." The number of shares
of Series D Preferred that the Corporation shall be required to redeem on any
one Series D Redemption Date shall be equal to the amount determined by dividing
(i) the aggregate number of shares of Series D Preferred outstanding immediately
prior to the Series D Redemption Date by (ii) the number of remaining Series D
Redemption Dates (including the Series D Redemption Date to which such
calculation applies). Shares subject to redemption pursuant to this Section
10(a) shall be redeemed from each holder of Series D Preferred on a pro rata
basis.
(ii) At any time after March 31, 2004, the Series D Initiating
Holders can elect to exercise the right of first redemption pursuant to this
Section 10(a) by providing written notice (the "Series D Exercise Notice") to
the Corporation. Within fifteen (15) days after the receipt of the Series D
Exercise Notice, the Corporation shall (i) send a notice (a Series D "Redemption
Notice") to each holder of record of the Series D Preferred to be redeemed at
the address of such holder appearing on the books of the Corporation setting
forth (a) the Series D Redemption Price for the shares to be redeemed and (b)
the place at which such holders may obtain payment of the Series D Redemption
Price upon surrender of their share certificates. If the Corporation does not
have sufficient funds legally available to redeem all shares to be redeemed at
the Series D Redemption Date (including, if applicable, those to be redeemed at
the option of the Corporation), then it shall redeem such shares pro rata (based
on the portion of the aggregate Series D Redemption Price payable to them) to
the extent possible and shall redeem the remaining shares to be redeemed as soon
as sufficient funds are legally available.
(b) On or prior to the Series D Redemption Date, the Corporation
shall deposit the applicable portion of the Series D Redemption Price of the
shares to be redeemed on such Series D Redemption Date with a bank or trust
corporation having aggregate capital and surplus in excess of $100,000,000, as a
trust fund, with irrevocable instructions and authority to the bank or trust
corporation to pay, on and after such Series D Redemption Date, the applicable
portion of the Series D Redemption Price of the shares to their respective
holders upon the surrender of their share certificates. Any monies deposited by
the Corporation pursuant to this Section 10(b) for the redemption of shares
thereafter converted into shares of Common Stock pursuant to Section 3 hereof no
later than the fifth (5th) day preceding the Series D Redemption Date shall be
returned to the Corporation forthwith upon such conversion. The balance of any
funds deposited by the Corporation pursuant to this Section 10(b) remaining
unclaimed at the expiration of one (1) year following such Series D Redemption
Date shall be returned to the Corporation.
(c) On or after such Series D Redemption Date, each holder of shares
of Series D Preferred to be redeemed shall surrender such holder's certificates
representing such shares to the Corporation in the manner and at the place
designated in the Series D Redemption Notice, and
-19-
thereupon the applicable portion of the Series D Redemption Price of such shares
shall be payable to the order of the person whose name appears on such
certificate or certificates as the owner thereof and each surrendered
certificate shall be canceled. In the event less than all the shares represented
by such certificates are redeemed, a new certificate shall be issued
representing the unredeemed shares. From and after the date the Corporation
deposits funds pursuant to Section 10(b) hereof with respect to shares to be
redeemed on such Series D Redemption Date, unless there shall have been a
default in payment of the applicable portion of the Series D Redemption Price or
the Corporation is unable to pay the applicable portion of the Series D
Redemption Price due to not having sufficient legally available funds, all
rights of the holders of such shares as holders of Series D Preferred (except
the right to receive the Series D Redemption Price without interest upon
surrender of their certificates), shall cease and terminate with respect to such
shares, provided that in the event that shares of Series D Preferred are not
redeemed due to a default in payment by the Corporation or because the
Corporation does not have sufficient legally available funds, such shares of
Series D Preferred shall remain outstanding and shall be entitled to all of the
rights and preferences provided herein.
(d) In the event of a call for redemption of any shares of Series D
Preferred, the Conversion Rights (as defined in Section 3) for the shares of
Series D Preferred to be redeemed on a particular Series D Redemption Date shall
terminate at the close of business on the fifth (5th) day preceding such Series
D Redemption Date, unless default is made in payment of the Series D Redemption
Price.
V.
1. Limitation of Directors' Liability. The liability of the directors of
----------------------------------
this Corporation for monetary damages shall be eliminated to the fullest extent
permissible under California law.
2. Indemnification of Corporate Agents. This Corporation is authorized
-----------------------------------
to indemnify its agents to the fullest extent permissible under California law.
For purposes of this provision the term "agent" has the meaning set forth in
Section 317 of the California Corporations Code.
3. Repeal or Modification. Any repeal or modification of the foregoing
----------------------
provisions of this Article V shall not adversely affect any right of
indemnification or limitation of liability of an agent of this Corporation
relating to acts or omissions occurring prior to such repeal or modification.
-20-
EXHIBIT C
---------
SCHEDULE OF EXCEPTIONS
EXHIBIT C
---------
SCHEDULE OF EXCEPTIONS
This Schedule of Exceptions, dated as of the Closing Date, is made and
given pursuant to Section 2 of the Inventa Corporation Series D Preferred Stock
Purchase Agreement dated January 19, 2000 (the "Agreement").
The section numbers in this Schedule of Exceptions correspond to the
section numbers in the Agreement; however, any information disclosed herein
under any section number shall be deemed to be disclosed and incorporated into
any other section number under the Agreement where such disclosure would be
appropriate. Unless the context otherwise requires, all capitalized terms shall
have the same meanings assigned to them in the Agreement.
2.1 Organization, Good Standing and Qualification
---------------------------------------------
The Company has facilities located in Illinois and Virginia and is
currently in the process of qualifying to do business in such states as a
foreign corporation.
2.2 Capitalization.
--------------
On July 8, 1994, the Company granted warrants to purchase 100,000 shares of
Series A Preferred Stock of the Company (200,000 shares after taking into
account the Company's 2-for-1 stock split effective as of January 29, 1997).
The Series A Preferred Stock warrants are exercisable at $0.50 per share. The
Company has reserved a total of 5,355,000 shares of common stock under the
Company's 1993 Stock Option Plan (the "Plan"). As of the Closing, options for
3,620,998 shares were outstanding under the Plan and 1,478,808 shares remained
available for future issuance under the Plan.
In connection with the Loan and Security Agreement with Greyrock Capital
dated November 17, 1999, the Company issued a warrant to Greyrock to purchase up
to 160,000 shares of Series C Preferred Stock at an exercise price of $2.50 per
share. The warrant expires on November 30, 2004.
2.3 Subsidiaries.
------------
The Company has a wholly-owned subsidiary in Singapore called ICG Systems
(Far East) Pte. Ltd. and two wholly-owned subsidiaries in Malaysia called ICG
Systems Sdn. Bhd and Baktimaka Sdn. Bhd. The Company is currently in the process
of liquidating all three subsidiaries.
2.7 Litigation.
----------
The Internal Revenue Service ("IRS") has made assessments on the Company's
former Indian subsidiary called Inventa Software India Pvt. Ltd. (now called
Ventura Data Systems Pvt. Ltd. since the Company's divestiture of its ownership)
with respect to federal tax returns filed by the Company for tax years 1990 and
1991 which included payments of certain expenses (the "Disputed Payments") for
work done for the Company in the United States by employees of the Company's
former subsidiary. The Company has appealed the assessments. No final
determination has yet been made by the IRS. Should the IRS determine that the
Company has a tax liability with respect to the Disputed Payments, the Company
expects that such tax liability, including penalties will not exceed $76,000.
The Company has filed a legal petition for the liquidation of the Malaysian
company Inventa Software (M) SDN. BHD which petition has been approved.
2.8 Patents.
-------
The Company does not currently have the legal right to the name "Inventa"
in Singapore. Further, the Company does not currently have the legal right to
the name "Inventa" in Malaysia subject to liquidation of the Malaysian company
Inventa Software (M) SDN. BHD (see Section 2.7). A Company trademark status
report is attached hereto as Exhibit A.
2.12 Title to Property and Assets.
----------------------------
In connection with the Loan and Security Agreement with Greyrock Capital
dated November 17, 1999, the Company has granted Greyrock a security interest in
all receivables, inventory, equipment, investment property and general
intangibles (as defined in the agreement).
2.13 Financial Statements.
--------------------
The Company's auditors have conducted audit procedures regarding the
Company's financial statements for the fiscal year ended December 31, 1998. The
Company and its auditors are currently engaged in discussions related to expense
recognition associated with the issuance of options under the Company's 1993
Stock Option Plan.
2.14 Changes.
-------
The Company entered into the Loan and Security Agreement with Greyrock
Capital dated November 17, 1999, as described in Section 2.20(c) below.
Concurrently with the closing of the Greyrock agreement, the Company paid off
its line of credit with Silicon Valley Bank.
2.17 Employee Plans.
--------------
The Company has adopted a 401(k) savings plan (the "401(k) Plan").
Participants in the 401(k) Plan may defer compensation in an amount not in
excess of the annual statutory limit. The Company makes matching contributions
in an amount equal to twenty five percent (25%) of the first four percent (4%)
of an individual employee's salary contributed to the 401(k) Plan.
The Company maintains performance incentive bonus plans which provide for
bonus payments to employees upon the attainment of specific performance
criteria.
-2-
2.18 Employees.
---------
Subsequent to July 8, 1994, every United States employee and consultant
with access to confidential or proprietary information of the Company has
executed a Proprietary Information Agreement ("Proprietary Information
Agreement"), substantially in the form attached to the Agreement as Exhibit D.
Prior to July 8, 1994, the Company did not require its employees or consultants
to sign a Proprietary Information Agreement. Certain employees and consultants
of the Company's foreign subsidiaries have not signed a Proprietary Information
Agreement.
In January 1999, the Company entered into an Employment and Noncompetition
Agreement with ▇▇▇▇▇ ▇▇▇▇▇▇▇ for a term of three years. The agreement provides
for severance payments and accelerated vesting of stock options in the event of
termination under certain circumstances and upon a change of control of the
Company.
The Company currently has severance agreements with ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ which provide for severance
payments upon a "change of control" of the Company (as such term is defined in
such agreement).
2.19 Tax Returns and Payments.
------------------------
See Section 2.7 above regarding the examination of the Company by the
Internal Revenue Service.
2.20 Agreements; Action.
------------------
(a) The Company currently has severance agreements with ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ which
provide for severance payments upon a "change of control" of the Company (as
such term is defined in such agreement).
The Company entered into an Employment and Noncompetition Agreement with
▇▇▇▇▇ ▇▇▇▇▇▇▇ as described in Section 2.18 above.
In December 1999, the Company entered into a thirty six (36) month
automobile lease agreement for the benefit of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, the Company's
President. The lease agreement is personally guaranteed by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
(b) The Company entered into a Master Services Agreement with ADP,
Inc. in December 1998, pursuant to which the Company has agreed that (i) for a
period of twenty-four (24) months following the termination of such agreement,
the Company will not provide any Deliverable (as defined in the agreement) to
any provider of payroll software, payroll or payroll related services, and (ii)
for a period of twelve (12) months following the termination of such agreement,
the Company will not build or develop an Internet-enabling application/program
which contains similar functionality to the applications/programs developed
pursuant to the agreement.
The Company entered into a Software Development Agreement with Cal-Surance
Associates, Inc. in February 1999, pursuant to which the Company has agreed that
for a period of twenty-four (24)
-3-
months following completion of the Engagement (as defined in the agreement), the
Company will not undertake an engagement for any brokerage firms that sell
professional liability insurance, insurance companies that sell professional
liability insurance, or other insurance companies selling, marketing or
intending to sell or market professional liability insurance, where the
deliverables of such engagement are substantially similar in the purpose to or
substantially competitive with those provided under the Engagement. This
agreement was subsequently assigned by Cal-Surance to ▇▇▇▇▇▇▇.▇▇▇, Inc. as of
September 16, 1999.
As of July 30, 1999, the Company entered into an Engagement Addendum
subject to a Master Software Development Agreement with ▇▇▇▇▇▇▇.▇▇▇, Inc.
pursuant to which the Company has agreed that for a period of twenty-four (24)
months following completion of any RADD Engagement, the Company will not
undertake an engagement for (i) brokerage firms that sell professional liability
insurance, and/or business owners insurance, workmen's compensation insurance,
commercial automobile insurance and/or comparison shopping as it relates to such
insurance; (ii) insurance companies that sell professional liability insurance,
and/or business owners insurance, workmen's compensation insurance, commercial
automobile insurance and/or comparison shopping as it relates to such insurance;
or (iii) other insurance companies selling, marketing or intending to sell or
market professional liability insurance, and/or business owners insurance,
workmen's compensation insurance, commercial automobile insurance and/or
comparison shopping as it relates to such insurance, where the deliverables of
such engagement are substantially similar in the purpose to or substantially
competitive with those provided under the Engagement.
As of September 20, 1999, the Company entered into an Engagement Addendum
subject to a Master Services Agreement with Pure Markets Corporation
("PMC")("Blacksmith") dated as of August 16,1999, pursuant to which the Company
has agreed that (i) for a period of twelve (12) months after the delivery of the
final Deliverable in accordance with this Engagement Addendum or any additional
Engagement Addendum into which the parties may enter, Inventa agrees that
neither Inventa nor any of its employees (acting within the scope of their
employment) will, without PMC's prior written consent, perform any work or
services for any PMC Competitors, their parents, subsidiaries or affiliates, nor
will Inventa itself become a PMC Competitor. "PMC Competitor" means any person
or entity that engages in, or has taken specific actions to engage in, the
business of providing, either via the Internet or any other electronic means, a
marketplace or exchange whereby multiple lessors and multiple lessees can
interact and conduct lease and related financial transactions in direct
competition with PMC.
The Company leases office space for its headquarters at ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ under a lease agreement expiring in March
2001, with monthly lease payments of approximately $56,778. In addition, the
Company leases office space in New Brunswick, New Jersey; Oakbrook Terrace,
Illinois; Plymouth Meeting, Pennsylvania; and New York, New York under three
lease agreements expiring, respectively, in October 2003, April 2002, December
1999 and September 1999. The monthly lease payments under such agreements are
approximately $11,266, $9,852, $6,500 and $2,200, respectively. The Company also
leases office space in Reston, Virginia on a month-to-month basis with a monthly
lease payment of approximately $5,120.
-4-
The Company leases various equipment under operating lease arrangements.
At December 31, 1998, the minimum aggregate payments under operating equipment
leases for the 1999 and 2000 fiscal years were, respectively, $20,742 and
$11,974.
The Company leases various equipment under capital lease arrangements. At
December 31, 1998, the minimum aggregate payments under capital equipment leases
for the 1999 and 2000 fiscal years were, respectively, $131,496 and $60,308.
(c) On November 17, 1999, the Company entered into a Loan and
Security Agreement with Greyrock Capital that provides for a term loan in the
amount of $4,000,000, for an initial term of one year and a revolving line of
credit up to $2,000,000 based upon accounts receivable balances. The loan bears
interest at the prime rate plus two percent (2%) per annum. In connection with
this agreement, the Company granted warrants to Greyrock to purchase shares of
Series C Preferred Stock as described in Section 2.2 above.
(d) The Company is currently negotiating to acquire all of the
outstanding stock of Xtend-Tech, Inc. in exchange for 1,350,000 shares of the
Company's Common Stock.
-5-
EXHIBIT D
---------
FORM OF PROPRIETARY INFORMATION AGREEMENT
EXHIBIT D
---------
INVENTA CORPORATION
EMPLOYMENT, CONFIDENTIAL INFORMATION AND
INVENTION ASSIGNMENT AGREEMENT
As a condition of my employment with Inventa Corporation, its subsidiaries,
affiliates, successors or assigns (the "Company"), and in consideration of my
employment with the Company and my receipt of the compensation now and hereafter
paid to me by the Company, I agree to the following:
(a) At-Will Employment. I understand and acknowledge that my
------------------
employment with the Company is for an unspecified duration and constitutes "at-
will" employment. I acknowledge that this employment relationship may be
terminated at any time, with or without good cause or for any or no cause, at
the option either of the Company or myself, with or without notice.
(b) Confidential Information.
------------------------
(i) Company Information. I agree at all times during the term
-------------------
of my employment and thereafter, to hold in strictest confidence, and not to
use, except for the benefit of the Company, or to disclose to any person, firm
or corporation without written authorization of the Board of Directors of the
Company, any Confidential Information of the Company. I understand that
"Confidential Information" means any of the Company's proprietary information,
technical data, trade secrets or know-how, including, but not limited to,
research, product plans, products, services, customer lists and customers
(including, but not limited to, customers of the Company on whom I called or
with whom I became acquainted during the term of my employment), markets,
software, developments, inventions, processes, formulas, technology, designs,
drawings, engineering, hardware configuration information, marketing, finances
or other business information disclosed to me by the Company either directly or
indirectly in writing, orally or by drawings or observation of parts or
equipment. I further understand that Confidential Information does not include
any of the foregoing items which has become publicly known and made generally
available through no wrongful act of mine or of others who were under
confidentiality obligations as to the item or items involved.
(ii) Former Employer Information. I agree that I will not,
---------------------------
during my employment with the Company, improperly use or disclose any
proprietary information or trade secrets of any former or concurrent employer or
other person or entity and that I will not bring onto the premises of the
Company any unpublished document or proprietary information belonging to any
such employer, person or entity unless consented to in writing by such employer,
person or entity.
(iii) Third Party Information. I recognize that the Company has
-----------------------
received and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. I agree to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or
corporation or to use it except as necessary in carrying out my work for the
Company consistent with the Company's agreement with such third party.
(c) Inventions.
----------
(i) Inventions Retained and Licensed. I have attached hereto,
--------------------------------
as Exhibit A, a list describing all inventions, original works of authorship,
developments, improvements, and trade secrets which were made by me prior to my
employment with the Company (collectively referred to as "Prior Inventions"),
which belong to me, which relate to the Company's proposed business, products or
research and development, and which are not assigned to the Company hereunder;
or, if no such list is attached, I represent that there are no such Prior
Inventions. If in the course of my employment with the Company, I incorporate
into a the Company product, process or machine a Prior Invention owned by me or
in which I have an interest, the Company is hereby granted and shall have a
nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make,
have made, modify, use and sell such Prior Invention as part of or in connection
with such product, process or machine.
(ii) Assignment of Inventions. I agree that I will promptly
------------------------
make full written disclosure to the Company, will hold in trust for the sole
right and benefit of the Company, and hereby assign to the Company, or its
designee, all my right, title, and interest in and to any and all inventions,
original works of authorship, developments, concepts, improvements or trade
secrets, whether or not patentable or registrable under copyright or similar
laws, which I may solely or jointly conceive or develop or reduce to practice,
or cause to be conceived or developed or reduced to practice, during the period
of time I am in the employ of the Company (collectively referred to as
"Inventions"), except as provided in Section 3(f) below. I further acknowledge
that all original works of authorship which are made by me (solely or jointly
with others) within the scope of and during the period of my employment with the
Company and which are protectible by copyright are "works made for hire," as
that term is defined in the United States Copyright Act.
(iii) Inventions Assigned to the United States. I agree to
----------------------------------------
assign to the United States government all my right, title, and interest in and
to any and all Inventions whenever such full title is required to be in the
United States by a contract between the Company and the United States or any of
its agencies.
(iv) Maintenance of Records. I agree to keep and maintain
----------------------
adequate and current written records of all Inventions made by me (solely or
jointly with others) during the term of my employment with the Company. The
records will be in the form of notes, sketches, drawings, and any other format
that may be specified by the Company. The records will be available to and
remain the sole property of the Company at all times.
-2-
(v) Patent and Copyright Registrations. I agree to assist the
----------------------------------
Company, or its designee, at the Company's expense, in every proper way to
secure the Company's rights in the Inventions and any copyrights, patents, mask
work rights or other intellectual property rights relating thereto in any and
all countries, including the disclosure to the Company of all pertinent
information and data with respect thereto, the execution of all applications,
specifications, oaths, assignments and all other instruments which the Company
shall deem necessary in order to apply for and obtain such rights and in order
to assign and convey to the Company, its successors, assigns, and nominees the
sole and exclusive rights, title and interest in and to such Inventions, and any
copyrights, patents, mask work rights or other intellectual property rights
relating thereto. I further agree that my obligation to execute or cause to be
executed, when it is in my power to do so, any such instrument or papers shall
continue after the termination of this Agreement. If the Company is unable
because of my mental or physical incapacity or for any other reason to secure my
signature to apply for or to pursue any application for any United States or
foreign patents or copyright registrations covering Inventions or original works
of authorship assigned to the Company as above, then I hereby irrevocably
designate and appoint the Company and its duly authorized officers and agents as
my agent and attorney in fact, to act for and in my behalf and stead to execute
and file any such applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters patent or copyright
registrations thereon with the same legal force and effect as if executed by me.
(vi) Exception to Assignments. I understand that the provisions
------------------------
of this Agreement requiring assignment of Inventions to the Company do not apply
to any invention which qualifies fully under the provisions of California Labor
Code Section 2870 (attached hereto as Exhibit B). I will advise the Company
---------
promptly in writing of any inventions that I believe meet the criteria in
California Labor Code Section 2870 and not otherwise disclosed on Exhibit A.
---------
(d) Conflicting Employment. I agree that, during the term of my
----------------------
employment with the Company, I will not engage in any other employment,
occupation, consulting or other business activity directly related to the
business in which the Company is now involved or becomes involved during the
term of my employment, nor will I engage in any other activities that conflict
with my obligations to the Company.
(e) Returning the Company Documents. I agree that, at the time of
-------------------------------
leaving the employ of the Company, I will deliver to the Company (and will not
keep in my possession, recreate or deliver to anyone else) any and all devices,
records, data, notes, reports, proposals, lists, correspondence, specifications,
drawings blueprints, sketches, materials, equipment, other documents or
property, or reproductions of any aforementioned items developed by me pursuant
to my employment with the Company or otherwise belonging to the Company, its
successors or assigns. In the event of the termination of my employment, I agree
to sign and deliver the "Termination Certification" attached hereto as Exhibit
-------
C.
-
(f) Notification of New Employer. In the event that I leave the
----------------------------
employ of the Company, I hereby grant consent to notification by the Company to
my new employer about my rights and obligations under this Agreement.
-3-
(g) Solicitation of Employees. I agree that for a period of twelve
-------------------------
(12) months immediately following the termination of my relationship with the
Company for any reason, whether with or without cause, I shall not either
directly or indirectly solicit, induce, recruit or encourage any of the
Company's employees to leave their employment, or take away such employees, or
attempt to solicit, induce, recruit, encourage or take away employees of the
Company, either for myself or for any other person or entity.
(h) Conflict of Interest Guidelines. I agree to diligently adhere to
-------------------------------
the Conflict of Interest Guidelines attached as Exhibit D hereto.
---------
(i) Representations. I agree to execute any proper oath or verify
---------------
any proper document required to carry out the terms of this Agreement. I
represent that my performance of all the terms of this Agreement will not breach
any agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any oral or written agreement in
conflict herewith.
(j) Arbitration and Equitable Relief.
--------------------------------
(i) Arbitration. Except as provided in Section 10(b) below, I
-----------
agree that any dispute or controversy arising out of or relating to any
interpretation, construction, performance or breach of this Agreement, shall be
settled by arbitration to be held in San Francisco County, California, in
accordance with the rules then in effect of the American Arbitration
Association. The arbitrator may grant injunctions or other relief in such
dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator's decision in any court having jurisdiction. The
Company and I shall each pay one-half of the costs and expenses of such
arbitration, and each of us shall separately pay our counsel fees and expenses.
(ii) Equitable Remedies. I agree that it would be impossible or
------------------
inadequate to measure and calculate the Company's damages from any breach of the
covenants set forth in Sections 2, 3, and 5 herein. Accordingly, I agree that if
I breach any of such Sections, the Company will have available, in addition to
any other right or remedy available, the right to obtain an injunction from a
court of competent jurisdiction restraining such breach or threatened breach and
to specific performance of any such provision of this Agreement. I further agree
that no bond or other security shall be required in obtaining such equitable
relief and I hereby consent to the issuance of such injunction and to the
ordering of specific performance.
(k) General Provisions.
------------------
(i) Governing Law; Consent to Personal Jurisdiction. This
-----------------------------------------------
Agreement will be governed by the laws of the State of California. I hereby
expressly consent to the personal jurisdiction of the state and federal courts
located in California for any lawsuit filed there against me by the Company
arising from or relating to this Agreement.
-4-
(ii) Entire Agreement. This Agreement sets forth the entire
----------------
agreement and understanding between the Company and me relating to the subject
matter herein and merges all prior discussions between us. No modification of or
amendment to this Agreement, nor any waiver of any rights under this agreement,
will be effective unless in writing signed by the party to be charged. Any
subsequent change or changes in my duties, salary or compensation will not
affect the validity or scope of this Agreement.
(iii) Severability. If one or more of the provisions in this
------------
Agreement are deemed void by law, then the remaining provisions will continue in
full force and effect.
(iv) Successors and Assigns. This Agreement will be binding upon
----------------------
my heirs, executors, administrators and other legal representatives and will be
for the benefit of the Company, its successors, and its assigns.
Date: _________________
___________________________________
Signature
___________________________________
Name of Employee (typed or printed)
________________________
Witness
-5-
EXHIBIT A
---------
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP
Identifying Number
Title Date or Brief Description
------------------------------------------------------------------
____ No inventions or improvements
____ Additional Sheets Attached
Signature of Employee: __________________________
Print Name of Employee: _________________________
Date: _________________
-6-
EXHIBIT B
---------
CALIFORNIA LABOR CODE SECTION 2870
EMPLOYMENT AGREEMENTS; ASSIGNMENT OF RIGHTS
(l) "Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
(i) Relate at the time of conception or reduction to practice of
the invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer.
(ii) Result from any work performed by the employee for the
employer.
(m) To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable."
-7-
EXHIBIT C
---------
INVENTA CORPORATION
TERMINATION CERTIFICATION
This is to certify that I do not have in my possession, nor have I failed
to return, any devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items belonging to the Company, its subsidiaries, affiliates, successors or
assigns (the "Company").
I further certify that I have complied with all the terms of the Company's
Employment Confidential Information and Invention Assignment Agreement signed by
me, including the reporting of any inventions and original works of authorship
(as defined therein), conceived or made by me (solely or jointly with others)
covered by that agreement.
I further agree that, in compliance with the Employment, Confidential
Information and Invention Assignment Agreement, I will preserve as confidential
all trade secrets, confidential knowledge, data or other proprietary information
relating to products, processes, know-how, designs, formulas, developmental or
experimental work, computer programs, data bases, other original works of
authorship, customer lists, business plans, financial information or other
subject matter pertaining to any business of the Company or any of its
employees, clients, consultants or licensees.
I further agree that for twelve (12) months from this date, I will not hire
any employees of the Company and I will not solicit, induce, recruit or
encourage any of the Company's employees to leave their employment.
Date:_____________________ ___________________________________
(Employee's Signature)
___________________________________
(Type/Print Employee's Name)
-8-
EXHIBIT D
---------
INVENTA CORPORATION
CONFLICT OF INTEREST GUIDELINES
It is the policy of the Company to conduct its affairs in strict compliance
with the letter and spirit of the law and to adhere to the highest principles of
business ethics. Accordingly, all officers, employees and independent
contractors must avoid activities which are in conflict, or give the appearance
of being in conflict, with these principles and with the interests of the
Company. The following are potentially compromising situations which must be
avoided. Any exceptions must be reported to the President and written approval
for continuation must be obtained.
(n) Revealing confidential information to outsiders or misusing
confidential information. Unauthorized divulging of information is a violation
of this policy whether or not for personal gain and whether or not harm to the
Company is intended. (The Employment, Confidential Information and Invention
Assignment Agreement elaborates on this principle and is a binding agreement.)
(o) Accepting or offering substantial gifts, excessive entertainment,
favors or payments which may be deemed to constitute undue influence or
otherwise be improper or embarrassing to the Company.
(p) Participating in civic or professional organizations that might
involve divulging confidential information of the Company.
(q) Initiating or approving personnel actions affecting reward or
punishment of employees or applicants where there is a family relationship or is
or appears to be a personal or social involvement.
(r) Initiating or approving any form of personal or social harassment
of employees.
(s) Investing or holding outside directorship in suppliers,
customers, or competing companies, including financial speculations, where such
investment or directorship might influence in any manner a decision or course of
action of the Company.
(t) Borrowing from or lending to employees, customers or suppliers.
(u) Acquiring real estate of interest to the Company.
(v) Improperly using or disclosing to the Company any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity with whom obligations of confidentiality exist.
-9-
(w) Unlawfully discussing prices, costs, customers, sales or markets
with competing companies or their employees.
(x) Making any unlawful agreement with distributors with respect to
prices.
(y) Improperly using or authorizing the use of any inventions which
are the subject of patent claims of any other person or entity.
(z) Engaging in any conduct which is not in the best interest of the
Company.
Each officer, employee and independent contractor must take every necessary
action to ensure compliance with these guidelines and to bring problem areas to
the attention of higher management for review. Violations of this conflict of
interest policy may result in discharge without warning.
-10-
EXHIBIT E
---------
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
INVENTA CORPORATION
_____________________
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
_____________________
January 19, 2000
TABLE OF CONTENTS
Page
----
ARTICLE I Right of First Refusal on Shareholder Transfer............... 2
1.1 Company Right........................................ 2
1.2 Preferred Holders' Right............................. 2
1.3 Failure to Exercise Rights........................... 2
1.4 Price................................................ 2
1.5 Transfer of Rights................................... 3
1.6 Prohibited Transfers................................. 3
1.7 Definition of "Shares"............................... 3
1.8 Permitted Transfers.................................. 3
ARTICLE II Right of Co-Sale on Shareholder Transfer.................... 3
2.1 Right of Co-Sale..................................... 3
2.2 Agreement not to Transfer............................ 4
2.3 Definition of Shares................................. 4
2.4 Permitted Transfers.................................. 4
2.5 Prohibited Transfers................................. 4
ARTICLE III Right of First Refusal on Company Issuances................ 5
3.1 Grant of Right....................................... 5
3.2 New Securities....................................... 6
3.3 Notice............................................... 6
3.4 Sale after Company Notice............................ 7
3.5 Assignment........................................... 7
ARTICLE IV Termination of Rights....................................... 7
ARTICLE V Specific Performance......................................... 8
ARTICLE VI Legends..................................................... 8
ARTICLE VII Board of Directors......................................... 8
7.1 Board of Directors................................... 8
7.2 Compensation Committee............................... 9
7.3 Audit Committee...................................... 9
ARTICLE VIII Reorganizations........................................... 9
ARTICLE IX General Provisions.......................................... 10
9.1 Governing Law........................................ 10
9.2 Entire Agreement..................................... 10
-i-
TABLE OF CONTENTS
(continued)
Page
----
9.3 Amendment............................................. 10
9.4 Successors............................................ 10
9.5 Invalidity of Provisions.............................. 10
9.6 Notice................................................ 10
9.7 No Waiver............................................. 10
9.8 Cooperation........................................... 11
9.9 Addition of Parties................................... 11
9.10 Counterparts.......................................... 11
EXHIBIT A - Schedule of Purchasers
EXHIBIT B - Schedule of Holders of Series A Preferred Stock
EXHIBIT C - Schedule of Holders of Series B Preferred Stock
EXHIBIT D - Schedule of Holders of Series C Preferred Stock
EXHIBIT E - Schedule of Certain Common Stock Holders
EXHIBIT F - Form of Instrument of Accession
-ii-
INVENTA CORPORATION
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT
THIS AMENDED AND RESTATED SHAREHOLDERS AGREEMENT is made this 19th day of
January, 2000, between Inventa Corporation, a California corporation (the
"Company"), the purchasers of the Company's Series D Preferred Stock (the
"Purchasers") as listed on Exhibit A attached hereto, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------
("Founder"), the holders of the Company's Series A Preferred Stock (the "Series
A Holders") listed on Exhibit B attached hereto, the holders of the Company's
---------
Series B Preferred Stock (the "Series B Holders") listed on Exhibit C attached
---------
hereto, the holders of the Company's Series C Preferred Stock (the "Series C
Holders") listed on Exhibit D attached hereto, and certain holders of the
---------
Company's Common Stock (the "Common Holders") as listed on Exhibit E attached
---------
hereto. The Purchasers, Series A Holders, Series B Holders and Series C Holders
shall collectively be referred to as the "Preferred Holders". The Purchasers,
the Founder, the Preferred Holders and the Common Holders shall collectively be
referred to as the "Shareholders".
WHEREAS, Founder is the beneficial owner or may be deemed to be the
beneficial owner of 4,500,000 shares of the Common Stock of the Company.
WHEREAS, the Series A Holders and the Company are parties to the Series A
Preferred Stock Purchase Agreement dated July 8, 1994 (the "Series A
Agreement").
WHEREAS, the Series B Holders and the Company are parties to the Series B
Preferred Stock Purchase Agreement dated February 14, 1997 (the "Series B
Agreement").
WHEREAS, the Series C Holders and the Company are parties to the Series C
Preferred Stock Purchase Agreements dated May 11, 1998 and May 28, 1999 (the
"Series C Agreements").
WHEREAS, the Common Holders are the owners of 42,696 shares of the Common
Stock of the Company.
WHEREAS, the parties desire that this Agreement supersede the Restated
Shareholders Agreement dated May 11, 1998 in its entirety.
WHEREAS, the Purchasers have requested, as a condition to entering into the
Series D Convertible Preferred Stock Purchase Agreement of even date herewith
(the "Series D Agreement") that the Founder and the Shareholders enter into this
Agreement, and the Founder and the Shareholders, as an inducement to the
Purchasers to enter into the Series D Agreement of even date herewith, are
willing to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises, mutual covenants and
terms hereof, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
ARTICLE I
Right of First Refusal on Shareholder Transfer
----------------------------------------------
1.1 Company Right. If at any time a Shareholder desires (or is required)
-------------
to sell or transfer in any manner any Shares (as hereinafter defined) pursuant
to the terms of a bona fide offer received from a third party (a "Buyer"), the
Shareholder shall submit a written offer to sell such Shares (the "Offered
Shares") to the Company on terms and conditions, including price, not less
favorable to the Company than those on which the Shareholder proposes to sell
such Offered Shares to Buyer (the "Offer"). The Offer shall disclose the
identity of the Buyer, the number of Offered Shares, the terms of the proposed
sale or transfer and any other material facts relating to the sale or transfer.
Within fifteen (15) days after receipt of the Offer, the Company shall give
notice to the Shareholder of its intent to purchase all or some of the Offered
Shares from the Shareholder on the terms and conditions set forth in the Offer.
1.2 Preferred Holders' Right. If, for any reason whatsoever, the Company
------------------------
shall not exercise its right to purchase all of the Offered Shares as provided
herein, the Company shall promptly provide to the Preferred Holders, written
notice (the "Notice") of same (which shall include a copy of the Offer provided
to the Company pursuant to Section 1.1 hereof), and then the Preferred Holders
shall have the right, for a period of fifteen (15) days from the date of the
Notice to purchase, on a pro rata basis, on the same terms and conditions as are
set forth in the Offer, that portion of the Offered Shares which the Company
shall not have agreed to purchase from the Shareholder (all such remaining
Shares being referred to as the "Remaining Offered Shares"). For purposes of
this Section 1.2, Preferred Holder's pro rata right shall be calculated by
dividing the number of shares of Common Stock issuable upon conversion of
Preferred Stock held by such Preferred Holder by the total number of shares of
Common Stock issuable upon conversion of Preferred Stock held by all Preferred
Holders.
1.3 Failure to Exercise Rights. In the event that the Company and the
--------------------------
Preferred Holders, taken together, do not purchase all of the Offered Shares
pursuant to and within the time periods set forth above, any remaining Offered
Shares may be sold or transferred by the Shareholder at any time within 90 days
thereafter, subject to compliance with Article II. Any such sale or transfer
shall be at not less than the price nor upon other terms and conditions, if any,
not more favorable to the Buyer than those specified in the Offer. Any Offered
Shares not sold within such 90-day period shall thereafter again be subject to
the requirements of this Article I. In the event that Shares are sold or
transferred to the Preferred Holders pursuant to this subsection, said Offered
Shares shall no longer be subject to this Agreement.
1.4 Price. With respect to any Shares to be transferred pursuant to
-----
Section 1.1 hereof and as to which a price has not been set by the Shareholder
under Section 1.1 hereof, the price per Share shall be a price set by the Board
of Directors of the Company which will reflect the current value of the Shares
in terms of present earnings and future prospects of the Company. The Company
shall notify the Shareholder of the price so determined within fifteen (15) days
after receipt by it of the Offer. If the Shareholder disputes the price as set
by the Board of Directors by giving notice to the
-2-
Company within ten (10) days after being informed of the price, the price of the
Shares shall be determined by an independent financial analyst selected by the
Board of Directors of the Company, with the cost of such determination to be
divided equally between the Company and the Shareholder. The Board of Directors
shall select such analyst within fifteen (15) days after receipt of notice that
the Shareholder is disputing the price set by the Board of Directors. If the
Board is not notified of any such dispute within such ten (10) day period, the
decision of the Board of Directors as to the purchase price shall be final. Any
time required to determine a purchase price or to resolve a dispute shall be
added to the fifteen (15) day period in which the Company may exercise its right
to purchase the Offered Shares.
1.5 Transfer of Rights. The right of the Preferred Holders to purchase
------------------
Offered Shares hereunder may not be assigned except to a transferee or assignee
who qualifies as a partner, subsidiary or affiliate of one of the Preferred
Holders, or a parent of one of the Preferred Holders, or any entity which has
the same parent corporation as one of the Preferred Holders.
1.6 Prohibited Transfers. The Shareholder shall not sell, assign,
--------------------
transfer, pledge, hypothecate, mortgage or dispose of, by gift or otherwise, or
in any way encumber, all or any part of the Shares owned by him during the term
of this Agreement other than in compliance with the terms of this Article I.
1.7 Definition of "Shares". For purposes of this Article I, the term
---------------------
"Shares" shall mean and include all shares of capital stock of the Company owned
by the Shareholder, whether presently held or hereafter acquired.
1.8 Permitted Transfers. The right of first refusal contained in this
-------------------
Article I shall not apply to: (a) any transfer of Shares by the Shareholder by
gift or bequest or through inheritance to, or for the benefit of, any family
member; (b) any transfer of Shares by the Shareholder to a trust for the benefit
of any family member; (c) any sale or transfer of Shares to the Company (or any
assignee of the Company) pursuant to the terms of a stock restriction or stock
repurchase agreement (which provides for such sale upon the Shareholder's
termination of employment); (d) any sale of Common Stock in a public offering
pursuant to a registration statement filed by the Company with the Securities
and Exchange Commission; (e) any pledge made pursuant to a bona fide loan
transaction that creates a mere security interest; (f) any transfer of Shares by
a Shareholder that is a partnership to its partners; or (g) any transfer of
Shares by a Shareholder that is a trust to a successor trust or successor
trustee. In the event of any transfer pursuant to (a), (b), (f) or (g), the
transferee of the Shares shall hold the Shares so acquired with all the rights
conferred by, and subject to all the restrictions imposed by, this Agreement.
ARTICLE II
Right of Co-Sale on Shareholder Transfer
----------------------------------------
2.1. Right of Co-Sale. In the event that the Shareholder desires (or is
----------------
required) to sell or transfer in any manner any Shares (as hereinafter defined)
pursuant to the terms of a bona fide offer received from a Buyer, and the
Company and the Preferred Holders do not exercise their right of
-3-
first refusal as to all of the Offered Shares as set forth in Article I hereof,
each Preferred Holder shall have the right (the "Right of Co-Sale") to require,
as a condition to such sale or transfer, that the Buyer purchase from each
Preferred Holder at the same price per share and on the same terms and
conditions as involved in such sale or disposition by the Shareholder that
percentage of the Offered Shares not purchased by the Company or the Preferred
Holders pursuant to Article I above, expressed by a fraction, the numerator of
which is the number of shares of Preferred Stock (on an as-converted into Common
Stock basis) and Common Stock held by such Preferred Holder and the denominator
of which is the aggregate number of shares of Preferred Stock (on an as-
converted into Common Stock basis) and Common Stock held by all Preferred
Holders and the number of Shares held by the Shareholder. The Preferred Holders
shall act upon the Buyer's offer to buy as soon as practicable after receipt
from the Company of the Notice and in all events within fifteen (15) days after
receipt of the Notice. In the event that the Preferred Holders shall elect to
exercise their Right of Co-Sale, the Preferred Holders shall communicate in
writing such election to the Shareholder.
2.2. Agreement not to Transfer. The Shareholder shall not sell, assign,
-------------------------
transfer, pledge, hypothecate, mortgage or dispose of, by gift or otherwise, or
in any way encumber, all or any part of the Shares (as hereinafter defined)
owned by him during the term of this Agreement other than in compliance with the
terms of this Article II.
2.3. Definition of Shares. For purposes of this Article II, the term "
--------------------
Shares" shall mean and include all shares of capital stock of the Company owned
by the Shareholder, whether presently held or hereafter acquired.
2.4. Permitted Transfers. The Right of Co-Sale contained in this Article II
-------------------
shall not apply to: (a) any transfer of Shares by the Shareholder by gift or
bequest or through inheritance to, or for the benefit of, any family member; (b)
any transfer of Shares by the Shareholder to a trust for the benefit of any
family member; (c) any sale or transfer of Shares to the Company pursuant to the
terms of a stock restriction or stock repurchase agreement (which provides for
such sale upon the Shareholder's termination of employment with the Company, if
applicable); (d) any sale or transfer of Shares to the Company or the Preferred
Holders pursuant to the provisions of Article I hereof; (e) any sale of Common
Stock in a public offering pursuant to a registration statement filed by the
Company with the Securities and Exchange Commission; (f) any pledge made
pursuant to a bona fide loan transaction that creates a mere security interest;
(g) any transfer of Shares by a Shareholder that is a partnership to its
partners; or (h) any transfer of Shares by a Shareholder that is a trust to a
successor trust or successor trustee. In the event of any transfer pursuant to
(a), (b), (g) or (h), the transferee of the Shares shall hold the Shares so
acquired with all the rights conferred by, and subject to all the restrictions
imposed by, this Agreement.
2.5. Prohibited Transfers.
--------------------
(a) In the event that the Shareholder should sell any Shares in
contravention of the co-sale rights of each Preferred Holder under this
Agreement (a "Prohibited Transfer"), each Preferred Holder, in addition to such
other remedies as may be available at law, in equity or hereunder, shall have
the put option provided below, and such Shareholder shall be bound by the
applicable provisions of such option.
-4-
(b) In the event of a Prohibited Transfer, each Preferred Holder shall
have the right to sell to such Shareholder the type and number of shares of
Common Stock equal to the number of shares each Preferred Holder would have been
entitled to transfer to the Buyer under Section 2.1 hereof had the Prohibited
Transfer been effected pursuant to and in compliance with the terms hereof. Such
sale shall be made on the following terms and conditions:
(i) The price per share at which the shares are to be sold to the
Shareholder shall be equal to the price per share paid by the Buyer to such
Shareholder in such Prohibited Transfer. The Shareholder shall also reimburse
each Preferred Holder for any and all fees and expenses, including legal fees
and expenses, incurred pursuant to the exercise or the attempted exercise of the
Preferred Holder's rights under this Article II.
(ii) Within ninety (90) days after the date on which a Preferred
Holder received notice of the Prohibited Transfer or otherwise became aware of
the Prohibited Transfer, such Preferred Holder shall, if exercising the option
created hereby, deliver to the Shareholder the certificate or certificates
representing the shares to be sold, each certificate to be properly endorsed for
transfer.
(iii) Such Shareholder shall, upon receipt of the certificate or
certificates for the shares to be sold by a Preferred Holder, pursuant to this
Section 2.5(b), pay the aggregate purchase price therefor and the amount of
reimbursable fees and expenses, as specified in Section 2.5(b)(i), in cash or by
other means acceptable to the Preferred Holder.
(iv) Notwithstanding the foregoing, any attempt by the Shareholder to
transfer Shares in violation of Article II hereof shall be voidable at the
option of a majority in interest of the Preferred Holders if the Preferred
Holders do not elect to exercise the put option set forth in this Section 2.5,
and the Company agrees it will not effect such a transfer nor will it treat any
alleged transferee as the holder of such shares without the written consent of a
majority in interest of the Preferred Holders.
ARTICLE III
Right of First Refusal on Company Issuances
3.1. Grant of Right. Preferred Holder who continues to hold, respectively,
--------------
shares of Series A Preferred Stock purchased pursuant to the Series A Agreement,
Series B Preferred Stock purchased pursuant to the Series B Agreement, Series C
Preferred Stock purchased pursuant to the Series C Agreement and Series D
Preferred Stock purchased pursuant to the Series D Agreement (the "Preferred
Shares"), the right of first refusal to purchase all or any part of such
Preferred Holder's Pro Rata Share (as hereinafter defined) of the New Securities
(as defined in Section 3.2) which the Company may, from time to time, propose to
sell and issue, with a right of over-subscription (as provided in Section 3.3
below). The Preferred Holders may purchase said New Securities on the same terms
and at the same price at which the Company proposes to sell the New Securities.
The "Pro Rata Share" of each Preferred
-5-
Holder, for purposes of this right of first refusal, is the ratio of the total
number of shares of Common Stock held by such Preferred Holder, including (i)
any shares of Common Stock into which shares of Preferred Stock held by such
Preferred Holder are convertible, and (ii) any shares deliverable upon the
exercise of options of other rights to purchase Common Stock held by such
Preferred Holder, to the total number of shares of Common Stock outstanding
immediately prior to the issuance of the New Securities (including (i) any
shares of Common Stock into which outstanding shares of Preferred Stock are
convertible and (ii) any shares deliverable upon the exercise of options or
other rights to purchase Common Stock).
3.2 New Securities. "New Securities" shall mean any capital stock of the
--------------
Company, whether now authorized or not, and any rights, options or warrants to
purchase said capital stock, and securities of any type whatsoever that are, or
may become, convertible into said capital stock; provided, however, that "New
-------- -------
Securities" does not include (i) the Preferred Shares or other securities issued
or issuable upon conversion of the Preferred Shares ("Conversion Shares"), (ii)
securities offered pursuant to a registration statement filed under the
Securities Act of 1933, as amended (the "Act"), (iii) securities issued pursuant
to the acquisition of another corporation by the Company by merger, purchase of
substantially all of the assets or other reorganization, (iv) shares offered
pursuant to lease financing transactions or bank or lending institution
financing transactions that are approved by the Board of Directors, (v)
securities issued in connection with any stock split, stock dividend or
recapitalization of the Company, (vi) all securities hereafter issued or
issuable to officers, directors, employees or consultants of the Company (for
the primary purpose of soliciting or retaining their employment or services)
pursuant to any employee or consultant stock offering, plan or arrangement
approved by the Board of Directors, (vii) securities issuable pursuant to
warrants outstanding as of January 7, 2000 (the "Warrant Shares") or securities
issued upon conversion of the Warrant Shares, and (viii) warrants for up to
675,000 shares to be issued to First Plaza Group Trust (or any designee thereof)
("First Plaza") upon the achievement of certain sales targets to General Motors
Corporation, or any affiliate thereof, as a result of the introduction by First
Plaza, and the shares issuable upon exercise thereof.
3.3 Notice. In the event the Company proposes to undertake an issuance of
------
New Securities, it shall give to the Preferred Holders written notice (the
"Company Notice") of its intention, describing the type of New Securities,
number of shares, the price, the terms upon which the Company proposes to issue
the same, and notice to the effect that each Preferred Holder must respond to
such Company Notice within twenty (20) days after the date thereof. The
Preferred Holders shall have twenty (20) days from the date of such Company
Notice to purchase any or all of the New Securities for the price and upon the
terms specified in the Company Notice by giving written notice to the Company
and stating therein the quantity of New Securities to be purchased and
forwarding payment for such New Securities to the Company if immediate payment
is required by such terms, or in any event no later than forty-five (45) days
after the date of the Company Notice. The Company shall promptly, in writing,
inform each Preferred Holder which elects to purchase its Pro Rata Share of the
New Securities of any other Preferred Holder's failure to do so (the "Over-
subscription Notice"), in which case the Preferred Holders electing to purchase
their Pro Rata Share of the New Securities shall have the right to purchase
their Pro Rata Share of such shares (the "Over-subscription Right") and any
portion of the remainder of such shares which other Preferred Holders
-6-
have elected not to purchase pursuant to the exercise of their Over-subscription
Right, for the price and upon the terms specified in the Company Notice for a
period of thirty (30) days after the date of the Over-subscription Notice. If a
Preferred Holder elects not to exercise such right, then that portion of the
shares which is not purchased may be offered to third parties on terms no less
favorable to the Company for a period of one hundred twenty (120) days.
3.4 Sale after Company Notice. In the event any Preferred Holder fails to
-------------------------
exercise in full the right of first refusal within said twenty (20) day period,
the Company shall have ninety (90) days thereafter to sell or enter into an
agreement (pursuant to which the sale of New Securities covered thereby shall be
closed, if at all, within thirty (30) days from the date of said agreement) to
sell the New Securities respecting which such Preferred Holder's rights were not
exercised, at a price and upon general terms no more favorable to the Preferred
Holders thereof than specified in the Company Notice. In the event the Company
has not sold the New Securities within said ninety (90) day period (or sold and
issued New Securities in accordance with the foregoing within thirty (30) days
from the date of said agreement), the Company shall not thereafter issue or sell
any New Securities without first offering such securities to the Preferred
Holders in the manner provided above.
3.5 Assignment. The right of first refusal granted under this Article III
----------
is assignable by the Preferred Holders to any transferee of a minimum of fifty
thousand (50,000) shares of Series A Preferred Stock, fifty thousand (50,000)
shares of Series B Preferred Stock, fifty thousand (50,000) shares of Series C
Preferred Stock, or fifty thousand (50,000) shares of Series D Preferred Stock
(in each case as adjusted for any stock split, stock dividends, combinations,
recapitalizations and the like with respect to such shares), as applicable, or
the Common Stock into which each such series of Preferred Stock has been
converted. For the purposes of satisfying the 50,000 share threshold herein, the
number of shares of the Common Stock issuable upon conversion of applicable
series of Preferred Stock owned by the Preferred Holders shall include the
holdings of partners, subsidiaries, parents, shareholders or affiliates of the
Preferred Holders (or any entities which have the same parent corporation as the
Preferred Holders) and such holdings shall be aggregated together and with the
holdings of the Preferred Holders with respect to the applicable series of
Preferred Stock.
ARTICLE IV
Termination of Rights
---------------------
The Right of First Refusal on Shareholder Transfer, Co-Sale Right, Right of
First Refusal on Company Issuances, the right to designate members of the Board
of Directors, Compensation Committee and Audit Committee and the right to direct
the voting of the shares beneficially owned by the Founder created under
Articles I, II, III, VII and VIII of this Agreement, respectively, shall expire
upon (i) the closing of the first public offering of the Common Stock of the
Company to the general public which is effected pursuant to a registration
statement filed with, and declared effective by, the Securities and Exchange
Commission under the Securities Act of 1933, as amended; (ii) upon the closing
of a transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation) which results in (a)
the holders of the
-7-
outstanding voting equity securities of the Company immediately prior to such
transaction or series of related transactions holding securities representing
less than 50% of the voting power of the surviving entity immediately following
such transaction or series of related transactions or (b) the sale or
disposition by the Company of all or substantially all the Company's assets; or
(iii) with respect to the Right of First Refusal on Shareholder Transfer, the
date on which less than 50% of the Preferred Stock of the Company initially
issued remains outstanding (as adjusted for any stock split, stock dividends,
combinations, recapitalizations and the like with respect to the shares).
ARTICLE V
Specific Performance
--------------------
The rights of the parties under this Agreement are unique and, accordingly,
the parties shall, in addition to such other remedies as may be available to any
of them at law or in equity, have the right to enforce their rights hereunder by
actions for specific performance to the extent permitted by law.
ARTICLE VI
Legends
-------
The certificates representing the Shares shall bear a legend indicating the
existence of the restrictions imposed by Article I, II, III, VII and VIII of
this Agreement. Nothing in this Agreement should be construed as a modification
or amendment of any restrictions on transfer under applicable federal or state
securities laws.
ARTICLE VII
Board of Directors
------------------
7.1 Board of Directors. As soon as practicable after the Closing, the
------------------
Board of Directors of the Company shall be comprised of seven members. The
Purchasers and the Shareholders agree to cause to be elected to the Company's
Board of Directors (i) one representative elected by the holders of Series A
Preferred Stock, (ii) one representative elected by the holders of Series B
Preferred Stock (who shall be a representative of Battery Ventures L.P.), (iii)
two representatives elected by the holders of the Series C Preferred Stock (one
of whom shall be a representative of the Technology Crossover Ventures entities,
and one of whom shall be a representative of Boston Millennia Partners Limited
Partnership), (iv) two representatives elected by the holders of Common Stock of
the Company (one of whom shall be ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and the other shall be
reasonably approved by the holders of the Series C Preferred Stock), and (v) the
Chief Executive Officer of the Company. In addition, the Board of Directors of
the Company shall elect ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ as Chairman of the Board to serve in
that capacity as long as he is a director of the Company. If any Preferred
Holder named in clause (ii) or (iii) above elects not to designate a
representative to the Board, such Preferred Holder shall have the right to
appoint an observer who shall be entitled to
-8-
attend all meetings of the Board and to consult with management. The Company
shall pay the reasonable out-of-pocket expenses of non-employee members of the
Company's Board of Directors in connection with attending Board of Directors
meetings and will pay the reasonable out-of-pocket expenses of Board observers
in connection with attending Board of Directors meetings, in accordance with the
Company's standard travel policy.
7.2 Compensation Committee. The Company shall use its best efforts and the
----------------------
Purchasers and Shareholders agree to cause the Board of Directors of the Company
to appoint and maintain a Compensation Committee, which shall contain no more
than three persons, one of whom shall be a representative of Boston Millennia
Partners Limited Partnership, one of whom shall be a representative of Battery
Ventures, and one of whom shall be ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇. The Compensation Committee
shall administer the Company's stock option plans and make recommendations to
the Board of Directors with respect to management compensation and terms of
employment. The Board of Directors of the Company shall have the power to accept
or reject any recommendation of the Compensation Committee, but shall not
approve an employee's compensation in amounts which differ from the amounts
recommended by the Compensation Committee.
7.3 Audit Committee. The Company shall use its best efforts and the
---------------
Purchasers and Shareholders agree to cause the Board of Directors to appoint and
maintain an Audit Committee, which shall include at least one representative of
the Purchasers.
ARTICLE VIII
Reorganizations
---------------
The Shareholders hereby agree that at any meeting of the shareholders
of the Company, however called, and in any written action by consent of
shareholders of the Company, the Shareholders shall vote all shares of stock of
the Company entitled to vote held by the Shareholder as directed by the holders
of a majority of the outstanding shares of Common Stock and Common Stock
issuable upon conversion of Preferred Stock then held by the Shareholders in
connection with any reorganization of the Company pursuant to Section 1200 et.
seq. of the California Corporations Code; provided, however, that this Article
VIII shall not affect any rights granted to the Preferred Holders or the
Purchasers pursuant to Sections 6(a) and 6(c) of the Company's Amended and
Restated Articles of Incorporation. The Shareholders shall not enter into any
agreement or understanding with any person or entity to vote or give
instructions in any manner inconsistent with the preceding sentence. In the
event any Shareholder fails to vote in accordance herewith, such Shareholders
shall be deemed to have irrevocably appointed such person or persons as may be
designated by the Board of Directors of the Company as proxy to vote such
Shareholder's stock in accordance herewith.
-9-
ARTICLE IX
General Provisions
------------------
9.1 Governing Law. This Agreement shall be governed by the laws of the
-------------
State of California without regard to choice of law provisions.
9.2 Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties with respect to the subject matter hereof and supersedes all
prior oral or written agreements and understandings between them or any of them
as to such subject matter.
9.3 Amendment. Except as otherwise expressly provided herein, this
---------
Agreement, other than Article VII herein, may be amended only upon the written
consent of the majority of the shares beneficially owned or deemed to be
beneficially owned by the Founder, the majority-in-interest of the Preferred
Holders, the majority-in-interest of the Common Holders, and the Company;
provided, however, that Article VII herein may be amended only upon the written
consent of 2/3 of (i) the shares then beneficially owned or deemed to be
beneficially owned by the Founder and the shares then owned by the Common
Holders, (ii) the shares then owned by the Series A Holders (iii) the shares
then owned by the Series B Holders, (iv) the shares then owned by the Series C
Holders and (v) the shares then owned by the Purchasers, with each voting as a
separate class.
9.4 Successors. This Agreement shall be binding upon and shall inure to
----------
the benefit of the parties hereto and their respective heirs, executors, legal
representatives, successors, and permitted transferees, except as may be
expressly provided otherwise herein.
9.5 Invalidity of Provisions. In the case any one or more of the
------------------------
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement and such
invalid, illegal and unenforceable provision shall be reformed and construed so
that it will be valid, legal, and enforceable to the maximum extent permitted by
law.
9.6 Notice. Any notice, demand or request required or permitted to be
------
given by either the Company or the Shareholders pursuant to the terms of this
Agreement shall be in writing and shall be deemed given when delivered
personally or deposited in the U.S. mail, First Class with postage prepaid, and
addressed to the parties at the addresses of the parties set forth on the
Exhibits to this Agreement or such other address as a party may request by
notifying the other in writing.
9.7 No Waiver. Any party's failure to enforce any provision or provisions
---------
of this Agreement shall not in any way be construed as a waiver of any such
provision or provisions, nor prevent that party thereafter from enforcing each
and every other provision of this Agreement. The rights granted to the parties
herein are cumulative and shall not constitute a waiver of any party's right to
assert all other legal remedies available to it under the circumstances.
9.8 Cooperation. The parties agree upon request to execute any further
-----------
documents or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.
-10-
9.9 Addition of Parties. The Company agrees that until the termination of
-------------------
this Agreement, it will cause each of the key employees of the Company who holds
at least 100,000 shares of the capital stock of the Company (on an as-converted
basis and as adjusted for any stock split, stock dividends, combinations,
recapitalizations and the like with respect to such shares), to enter into this
Agreement and thereby to be bound by the terms hereof, all by execution of an
Instrument of Accession in the form attached as Exhibit E hereto. Any such
---------
person so entering into this Agreement shall be deemed to be a Shareholder for
purposes of this Agreement.
9.10 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
This space intentionally left blank
-11-
The foregoing agreement is hereby executed as of the date first above
written.
"COMPANY" INVENTA CORPORATION
a California corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
"PURCHASERS"
BANCBOSTON VENTURES INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Director
PRIVATE EQUITY PORTFOLIO FUND II, LLC
BY BANKBOSTON NA, ITS MANAGER
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President, Director
BATTERY VENTURES III, L.P.
By: Battery Partners III, L.P.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Title: ▇▇▇▇ ▇▇▇▇▇▇, GENERAL PARTNER
-------------------------------
BOSTON MILLENNIA PARTNERS LIMITED PARTNERSHIP
By: ▇▇▇▇ Partners Limited Partnership
Its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
General Partner
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
BOSTON MILLENNIA ASSOCIATES I
PARTNERSHIP
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
General Partner
-▇▇-
▇▇▇▇▇▇ ▇. AND ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ CHARITABLE ANNUITY
TRUST U/D/T
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Trustee
ESSEX PRIVATE PLACEMENT FUND II,
LIMITED PARTNERSHIP
By: Essex Investment Mgt. Company LLC
Its General Partner
By: /s/ [ILLEGIBLE]
---------------------------------
Title: PRINCIPAL
------------------------------
THE CHASE MANHATTAN BANK, AS
TRUSTEE FOR FIRST PLAZA GROUP
TRUST
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Title: VICE PRESIDENT
------------------------------
The Chase Manhattan Bank has executed
this Document/Agreement solely in its
capacity as Directed Trustee of the
First Plaza Group Trust upon the
direction of General Motors Investment
Management Corporation.
TCV II (Q), L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II,
L.L.C.,
Its: General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
-15-
TCV II Strategic Partners, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II,
L.L.C.,
Its: General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
TCV II, V.O.F.
a Netherlands Antilles General Partnership
By: Technology Crossover Management II,
L.L.C.,
Its: Investment General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
Technology Crossover Ventures II, C.V.
a Netherlands Antilles Limited Partnership
By: Technology Crossover Management II,
L.L.C.,
Its: Investment General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
Technology Crossover Ventures II, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II,
L.L.C.,
Its: General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
-16-
"OTHER SHAREHOLDERS"
BATTERY VENTURES III, L.P.
By: Battery Partners III, L.P.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: General Partner
BATTERY VENTURES L.P.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: General Partner
BOSTON MILLENNIA ASSOCIATES I PARTNERSHIP
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
General Partner
BOSTON MILLENNIA PARTNERS
LIMITED PARTNERSHIP
By: ▇▇▇▇ Partners Limited Partnership,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
General Partner
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________________
A. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
____________________________________
Electra ▇. ▇▇▇▇▇▇▇▇▇
-17-
____________________________________
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ G. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Charitable Annuity Trust, u/d/t
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Trustee
____________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________________
▇▇▇▇▇▇ ▇▇▇▇▇
____________________________________
B. ▇▇▇▇▇▇▇▇ ▇▇▇▇
____________________________________
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-18-
__________________________________________
▇▇▇▇ ▇▇▇▇▇▇▇
__________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
__________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
__________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
__________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
__________________________________________
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇
TCV II (Q), L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II,
L.L.C.,
Its: General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
-19-
TCV II Strategic Partners, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II,
L.L.C.,
Its: General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
TCV II, V.O.F.
a Netherlands Antilles General Partnership
By: Technology Crossover Management II,
L.L.C.,
Its: Investment General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
Technology Crossover Ventures II, C.V.
a Netherlands Antilles Limited Partnership
By: Technology Crossover Management II,
L.L.C.,
Its: Investment General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
Technology Crossover Ventures II, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II,
L.L.C.,
Its: General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
-20-
EXHIBIT F
---------
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
IVENTA CORPORATION
_____________________________
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
_____________________________
January 19, 2000
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This Restated Registration Rights Agreement (the "Agreement"), dated as of
January 25, 2000 is entered into by and among Inventa Corporation, a California
corporation (the "Company") and the holders of the Company's Series A Preferred
Stock listed on Exhibit A attached hereto (collectively, the "Series A
---------
Holders"), the holders of the Company's Series B Preferred Stock listed on
Exhibit B attached hereto (collectively, the "Series B Holders"), the holders of
---------
the Company's Series C Preferred Stock listed on Exhibit C attached hereto
---------
(collectively, the "Series C Holders") the holders of the Company's Series D
Preferred Stock listed on Exhibit D added hereto (collectively, the "Series D
---------
Holders")and the Xtend-Tech Shareholders (collectively, the "Xtend-Tech
Holders") (the Series A Holders, the Series B Holders, the Series C Holders, the
Series D Holders and the Xtend-Tech Holders shall collectively be referred to as
"Shareholders").
R E C I T A L S
---------------
A. The Series A Holders, the Series B Holders, the Series C Holders and
the Company are parties to the Restated Registration Rights Agreement dated
January 19, 2000.
B. The Xtend-Tech Holders and the Company are parties to the Agreement
and Plan of Reorganization as of the date hereof (the "Reorganization
Agreement").
C. The execution of this Agreement is in connection with the closing of
the transactions contemplated by the Reorganization Agreement.
D. The Shareholders and the Company desire that the transactions
contemplated by the Reorganization Agreement be consummated.
E. The Series A Holders, the Series B Holders, the Series C Holders, the
Series D Holders and the Company desire that this Agreement supersede the
Restated Registration Rights Agreement dated January 19, 2000 in its entirety.
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
-------------------
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the common stock of the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Holder" shall mean any holder, or an assignee under Section 15
hereof, of outstanding Registrable Securities.
"Initiating Holders" shall mean any Holders who in the aggregate are
Holders of more than fifty percent (50%) of the outstanding Registrable
Securities.
The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities", subject to Sections 5(b) and 6(b) hereof,
shall mean shares of Common Stock (i) issued or issuable pursuant to the
conversion of the Shares, and (ii) issued in respect of securities issued
pursuant to the conversion of the Shares upon any stock split, stock dividend,
recapitalization, substitution, or similar event, and (iii) issued in respect to
securities issued to Xtend-Tech Holders pursuant to the stock exchange
transaction consummated in the Reorganization Agreement; provided, however, that
Registrable Securities shall not include any (a) shares of Common Stock which
have previously been registered, (b) shares of Common Stock which have
previously been sold to the public, or (c) securities which would otherwise be
Registrable Securities held by a Holder who is then permitted to sell all of
such securities within any three (3) month period following the Company's
initial public offering pursuant to Rule 144 if such securities then held by
such Holder constitute less than one percent of the Company's outstanding equity
securities.
"Registration Expenses" shall mean all expenses (excluding
underwriting discounts and selling commissions) incurred in connection with a
registration under Sections 5, 6 and 8 hereof, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses, and the expense of any
special audits incident to or required by any such registration, and the
reasonable fees and expenses of one counsel for the selling Shareholders (but
excluding the compensation of regular employees of the Company, which shall be
paid in any event by the Company).
"Restricted Securities" shall mean the securities of the Company
required to bear or bearing the legend set forth in Section 3 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities.
"Shares" shall mean shares of the Company's Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock.
2. Restrictions on Transferability. The Restricted Securities held by the
-------------------------------
Shareholders shall not be transferred except upon the conditions specified in
this Agreement, which conditions are intended to insure compliance with the
provisions of the Securities Act or, in the case of Section 16 hereof, to assist
in an orderly distribution. Each Shareholder will cause any proposed transferee
of Restricted Securities held by that Shareholder to agree to take and hold
those securities subject to the provisions and upon the conditions specified in
this Agreement.
3. Restrictive Legend. Each certificate representing (i) the Shares, and
------------------
(ii) shares of the Company's Common Stock issued upon conversion of the Shares,
and (iii) any other securities issued in respect of the Shares, or the Common
Stock issued upon conversion of the Shares, upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event, shall
(unless otherwise permitted or unless the securities evidenced by such
certificate shall have been registered under the Securities Act) be stamped or
otherwise imprinted with a legend substantially in the following form (in
addition to any legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, (THE "ACT") OR ANY STATE SECURITIES LAWS. SUCH
SHARES MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND
ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT.
COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND
RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICE OF THE
CORPORATION.
Upon request of a holder of such a certificate, the Company shall
remove the foregoing legend from the certificate or issue to such holder a new
certificate therefor free of any transfer legend, if, with such request, the
Company shall have received either the opinion referred to in Section 4(i) or
the "no-action" letter referred to in Section 4(ii) to the effect that any
transfer by such holder of the securities evidenced by such certificate will not
violate the Securities Act and applicable state securities laws, unless any such
transfer legend may be removed pursuant to Rule 144(k), in which case no such
opinion or "no-action" letter shall be required, and provided that the Company
shall not be obligated to remove any such legends prior to the date of the
initial public offering of the Company's Common Stock under the Securities Act.
4. Notice of Proposed Transfers. The holder of each certificate
----------------------------
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 4. Prior to any proposed transfer
of any Restricted Securities (other than under circumstances described in
Sections 5, 6 and 8 hereof), the holder thereof shall give written notice to the
Company of such holder's intention to effect such transfer. Each such notice
shall describe the manner and circumstances of the proposed transfer in
sufficient detail, and shall be accompanied (except in transactions in
compliance with Rule 144 promulgated under the Securities Act or for a transfer
to a holder's spouse, ancestors, descendants or a trust for any of their
benefit, or in transactions involving the distribution without consideration of
Restricted Securities by a holder that is a partnership to any of its partners
or retired partners or to the estate of any of its partners or retired partners,
or by a holder that is a trust to any successor trust or successor trustee) by
either (i) a written opinion of legal counsel to the holder who shall be
reasonably satisfactory to the Company, addressed to the Company and reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act or (ii) a "no-action" letter from the
Commission to the effect
that the distribution of such securities without registration will not result in
a recommendation by the staff of the Commission that action be taken with
respect thereto, whereupon the holder of such Restricted Securities shall be
entitled to transfer such Restricted Securities in accordance with the terms of
the notice delivered by such holder to the Company. Each certificate evidencing
the Restricted Securities transferred as above provided shall bear the
restrictive legend set forth in Section 3 above, except that such certificate
shall not bear such restrictive legend after the date of the Company's initial
public offering under the Securities Act if the opinion of counsel or "no-
action" letter referred to above expressly indicates that such legend is not
required in order to establish compliance with the Securities Act or if such
legend is no longer required pursuant to Rule 144(k).
5. Demand Registration.
-------------------
(a) Request for Registration. If the Company shall receive from
------------------------
Initiating Holders a written request that the Company effect any registration
with respect to the Registrable Securities, the Company will:
(i) promptly given written notice of the proposed registration
to all other Holders; and
(ii) as soon as practicable, use its diligent best efforts to
effect such registration after January 1, 2000 (including, without limitation,
the execution of an undertaking to file post effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act) as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are specified in
a written request delivered to the Company within fifteen (15) days after
receipt of such written notice from the Company; provided that the Company shall
not be obligated to effect, or to take any action to effect, any such
registration pursuant to this Section 5:
(A) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(B) After the Company has effected two (2) such
registrations pursuant to this Section 5(a) and such registrations have been
declared or ordered effective, or withdrawn at the request of the majority of
the Initiating Holders, and the sales of such Registrable Securities have
closed; or
(C) Within one hundred eighty (180) days of the effective
date of any other registration statement on Form S-1.
Subject to the foregoing clauses (A), (B) and (C), the Company shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practicable, after receipt of the request or
requests of the Initiating Holders; provided, however, that
if the Company shall furnish to such Holders a certificate signed by the
President of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
its shareholders for such registration statement to be filed on or before the
time filing would be required and it is therefore essential to defer the filing
of such registration statement, the Company shall have the right to defer such
filing (but not more than once during any twelve month period) for a period of
not more than ninety (90) days after receipt of the request of the Initiating
Holders.
The registration statement filed pursuant to the request of the
Initiating Holders, may, subject to the provisions of Section 5(b) below,
include other securities of the Company which are held by officers or directors
of the Company or which are held by persons who, by virtue of agreements with
the Company, are entitled to include their securities in any such registration,
but the Company shall have no right to include any of its securities in any such
registration except as provided in Section 5(b) below.
(b) Underwriting. If the Initiating Holders intend to distribute the
------------
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
Section 5, and the Company shall include such information in the written notice
referred to in Section 5(a)(i) above. The right of any Holder to registration
pursuant to Section 5 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting (unless otherwise mutually agreed by a majority-in-interest of
the Initiating Holders and such Holder with respect to such participation and
inclusion) to the extent provided herein. A Holder may elect to include in such
underwriting all or a part of the Registrable Securities he holds.
If officers or directors of the Company shall request inclusion of
securities of the Company other than Registrable Securities in any registration
pursuant to Section 5, or if holders of securities of the Company who are
entitled by contract with the Company to have securities included in such a
registration (such officers, directors, and other shareholders being
collectively referred to as the "Other Shareholders") request such inclusion,
the Initiating Holders shall, on behalf of all Holders, offer to include the
securities of such Other Shareholders in the underwriting and may condition such
offer on their acceptance of the further applicable provisions of this
Agreement. The Company shall (together with all Holders and Other Shareholders
proposing to distribute their securities through such underwriting) enter into
an underwriting agreement in customary form with the representative of the
underwriter or underwriters (the "Underwriter") selected for such underwriting
by more than fifty percent (50%) of the Initiating Holders and reasonably
acceptable to the Company. Notwithstanding any other provision of this Section
5, if the Underwriter determines that marketing factors require a limitation on
the number of shares to be underwritten, the Underwriter may (subject to the
allocation priority set forth below) limit the number of Registrable Securities
to be included in the registration and underwriting to not less than fifty
percent (50%) of the securities which Holders have requested be included
therein. The Company shall so advise all holders of securities requesting
registration, and the number of shares of securities that are entitled to be
included in the registration and underwriting shall be allocated in the
following priority: first, among all Holders of Registrable Securities
requesting inclusion (and pro rata among such holders on the basis of all
Registrable Securities then held by such holders); and second, among all Other
Shareholders in proportion, as nearly as practicable, to the respective amounts
of securities which
they had requested to be included in such registration at the time of filing the
registration statement. If any Holder or Other Shareholder disapproves of the
terms of any such underwriting, such holder may elect to withdraw therefrom by
written notice to the Company and the Underwriter. Any Registrable Securities
excluded or withdrawn from such underwriting shall be withdrawn from such
registration. If the Underwriter has not limited the number of Registrable
Securities or other securities to be underwritten, the Company may include its
securities for its own account in such registration if the underwriter so agrees
and if the number of Registrable Securities and other securities which would
otherwise have been included in such registration and underwriting will not
thereby be limited.
6. Company Registration.
--------------------
(a) If the Company shall determine to register any of its securities
either for its own account or for the account of a security holder or holders
exercising their respective demand registration rights, other than a
registration relating solely to employee benefit plans or a registration
relating solely to a Commission Rule 145 transaction or a registration on any
registration form which does not permit secondary sales or does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of Registrable Securities, the Company
will:
(i) promptly give to each Holder written notice thereof (which,
to the extent then known, shall include a list of the jurisdictions in which the
Company intends to attempt to qualify such securities under the applicable blue
sky or other state securities laws); and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all of the Registrable Securities specified in a written request or
requests made by any Holder within fifteen (15) days after receipt of the
written notice from the Company described in clause (i) above, except as set
forth in Section 6(b) below. Such written request may specify all or a part of a
Holder's Registrable Securities.
(b) Underwriting. If the registration of which the Company gives
------------
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 6(a)(i). In such event the right of any Holder to
registration pursuant to Section 6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and the Other Shareholders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the Underwriter selected for underwriting by the Company.
Notwithstanding any other provision of this Section 6, if the Underwriter
determines that marketing factors require a limitation on the number of shares
to be underwritten, and (a) if such registration is the first registered
offering of the Company's securities to the public, the Underwriter may (subject
to the allocation priority set forth below) exclude from such registration and
underwriting some or all of the Registrable Securities which would otherwise be
underwritten pursuant hereto, and (b) if such registration is other than the
first registered offering of the sale of the Company's securities to the public,
the Underwriter may
(subject to the allocation priority set forth below) limit the number of
Registrable Securities to be included in the secondary portion of the
registration and underwriting to not less than fifty percent (50%) of the
securities which Holders have requested be included therein. The Company shall
so advise all holders of securities requesting registration, and the number of
shares of securities that are entitled to be included in the registration and
underwriting by persons other than the Company shall be allocated in the
following priority: first, to Holders of Registrable Securities (and pro rata
among such holders on the basis of all Registrable Securities then held by such
holders); and second, among all Other Shareholders in proportion, as nearly as
practicable, to the respective amounts of securities which they had requested to
be included in such registration at the time of filing the registration
statement. If any Holder or Other Shareholder disapproves of the terms of any
such underwriting, he may elect to withdraw therefrom by written notice to the
Company and the Underwriter. Any Registrable Securities or other securities
excluded or withdrawn from such underwriting shall be withdrawn from such
registration.
7. Expenses of Registration. All Registration Expenses incurred in
------------------------
connection with any registration, qualification or compliance pursuant to this
Agreement shall be borne by the Company, and all Selling Expenses shall be borne
by the holders of the securities so registered pro rata on the basis of the
number of their shares so registered; provided, however, that the Company shall
not be required to pay any Registration Expenses if, as a result of the
withdrawal of a request for registration by Initiating Holders, the registration
statement does not become effective, unless such withdrawal is caused by a
material adverse change in the business or operations of the Company after such
request for registration, or unless the Initiating Holders agree to have such
registration considered a registration pursuant to Section 5(a)(ii)(B). If the
Company is not required to pay any Registration Expenses, then the Holders and
Other Shareholders requesting registration shall bear such Registration Expenses
pro rata on the basis of the number of their shares so included in the
registration request, and such registration shall not be considered a
registration for purposes of Section 5(a)(ii)(B).
8. Registration on Form S-3. The Company shall use its best efforts to
------------------------
qualify for registration on Form S-3, and to that end, the Company shall comply
with the reporting requirements of the Exchange Act following the effective date
of the first registration of any securities of the Company for a registered
public offering. After the Company has qualified for the use of Form S-3,
Initiating Holders shall have the right to request four (4) registrations on
Form S-3 (such requests shall be in writing and shall state the number of shares
of Registrable Securities to be disposed of and the intended method of
disposition of such shares by each such holder), subject only to the following
limitations:
(a) The Company shall not be obligated to cause a registration on
Form S-3 to become effective prior to one hundred eighty (180) days following
the effective date of a Company-initiated registration (other than a
registration effected solely to qualify an employee benefit plan or to effect a
business combination pursuant to Rule 145), provided that notice of such
Company-initiated registration is given to Holders prior to receipt of a request
from a holder of Registrable Securities for registration on Form S-3, and
provided that the Company shall use its best efforts to achieve such
effectiveness promptly following such one hundred eighty (180) day period;
(b) The Company shall not be obligated to cause a registration on
Form S-3 to become effective prior to expiration of one hundred eighty (180)
days following the effective date of the most recent registration pursuant to a
request by a holder of Registrable Securities under this Agreement or pursuant
to a request by a holder of registration rights under any other agreement of the
Company granting Form S-3 demand registration rights; provided, however, that
the Company shall use its best efforts to achieve such effectiveness promptly
following such one hundred eighty (180) day period;
(c) The Company shall not be required to effect a registration
pursuant to this Section 8 more than once in any twelve (12) month period;
(d) The Company shall not be required to maintain and keep any such
registration on Form S-3 effective for a period exceeding one hundred eighty
(180) days from the effective date thereof. The Company shall give notice to all
Holders and all holders of registration rights under any other agreement of the
Company granting Form S-3 or similar demand registration rights of the receipt
of a request for registration pursuant to this Section 8 and shall provide a
reasonable opportunity for all such other holders to participate in the
registration. Subject to the foregoing, the Company will use its best efforts to
effect promptly the registration of all shares of Registrable Securities on Form
S-3 to the extent requested by the Holder or Holders thereof for purposes of
disposition. In the event the Underwriter, in the case of an underwritten
offering, determines that market factors require a limitation on the number of
shares to be underwritten, then shares shall be excluded from such registration
and underwriting pursuant to the method described in Section 6(b); and
(e) The value of the aggregate shares of Registrable Securities to be
registered on Form S-3 for each such right of registration shall be at least
$500,000.
9. Registration Procedures. In the case of each registration effected by
-----------------------
the Company pursuant to this Agreement, the Company will keep each Holder
advised in writing as to the initiation of such registration and as to the
completion thereof. At its expense, the Company will:
(a) Keep such registration effective for a period of ninety (90) days
(except as set forth in Section 8(d)) or until the Holder or Holders have
completed the distribution described in the registration statement relating
thereto, whichever first occurs; and
(b) Furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request; and
(c) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 5 or 8 hereof, the Company will
enter into any underwriting agreement reasonably necessary to effect the offer
and sale of Common Stock, provided such underwriting agreement contains
customary underwriting provisions, and provided further that if the underwriter
so requests the underwriting agreement will contain customary indemnification
and contribution provisions, and provided further that the Underwriter is
reasonably acceptable to the Company.
10. Indemnification.
---------------
(a) The Company will indemnify each Holder, each of its officers,
directors and partners, and each person controlling such Holder, if Registrable
Securities held by such Holder are included in the securities with respect to
which registration, qualification or compliance has been effected pursuant to
this Agreement, and each underwriter, if any, and each person who controls any
underwriter, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
or any violation by the Company of the Securities Act including any rule or
regulation thereunder applicable to the Company relating to action or inaction
required of the Company in connection with any such registration, qualification
or compliance, and will reimburse each such Holder, each of its officers,
directors and partners, and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement (or alleged untrue statement) or omission (or alleged omission) based
upon written information furnished to the Company by such Holder or underwriter
and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities or other securities
held by such Holder are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify the
Company, each of its directors, officers and agents and each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of the
Securities Act and the rules and regulations thereunder, each other such Holder
and each of their officers, directors and partners, and each person controlling
such Holder, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, and will reimburse the Company and such
Holders, directors, officers, agents, partners, persons, underwriters or control
persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by such Holder and stated to be specifically for use therein;
provided, however, that the obligations of such Holders hereunder shall be
limited to an amount equal to the net proceeds to each such Holder of securities
sold as contemplated herein.
(c) Each party entitled to indemnification under this Section 10 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement. An indemnified
party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such proceeding. No
Indemnifying Party in the defense of any such claim or litigation shall, except
with the consent of each Indemnified Party, consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
(d) If the indemnification provided for in this Section 10 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any losses, claims, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall to the extent permitted by applicable law contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with any untrue or alleged untrue statement of a material fact or
the omission to state a material fact that resulted in such loss, claim, damage
or liability, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by a court of law by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, that in no event shall any contribution by a Holder thereunder exceed
the proceeds from the offering received by such Holder.
(e) The obligations of the Company and Holders under this Section 10
shall survive completion of any offering of Registrable Securities in a
registration statement and the termination of this agreement.
11. Information by Holder. Each Holder holding securities included in any
---------------------
registration shall furnish to the Company such information regarding such Holder
as the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this Agreement.
12. Limitations on Registration of Issues of Securities. From and after
---------------------------------------------------
the date of this Agreement, the Company shall not enter into any agreement with
any holder or prospective holder of any securities of the Company giving such
holder or prospective holder the right to require the Company to initiate any
registration of any securities of the Company, provided that this Section 12
shall not limit the right of the Company to enter any agreements with any holder
or prospective holder of any securities of the Company giving such holder or
prospective holder the right to require the Company, upon any registration of
any of its securities, to include, among the securities which the Company is
then registering, securities owned by such holder. Any right given by the
Company to any holder or prospective holder of the Company's securities in
connection with the registration of securities shall be conditioned such that it
shall be consistent with the provisions of this Agreement and with the rights of
the Holders provided in this Agreement.
13. Rule 144 Reporting. With a view to making available the benefits of
------------------
certain rules and regulations of the Commission which may permit the sale of the
Restricted Securities to the public without registration, the Company agrees to:
(a) Make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act, at all times from
and after ninety (90) days following the effective date of the first
registration under the Securities Act filed by the Company for an offering of
its securities to the general public;
(b) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act at any time after it has become subject to
such reporting requirements;
(c) So long as a Shareholder owns any Restricted Securities, furnish
to the Shareholder forthwith upon request a written statement by the Company as
to its compliance with the reporting requirements of Rule 144 (at any time from
and after ninety (90) days following the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents so filed as a Shareholder may reasonably request in availing itself of
any rule or regulation of the Commission allowing a Shareholder to sell any such
securities without registration.
14. No-Action Letter or Opinion of Counsel in Lieu of Registration.
--------------------------------------------------------------
Notwithstanding anything in this Agreement to the contrary, if at any time after
the date of the Company's initial public offering of its securities under the
Securities Act the Company shall have obtained from the Commission a "no-action"
letter in which the Commission has indicated that it will take no action if,
without registration under the Securities Act, any Holder disposes of
Registrable Securities covered by any request for registration made under this
Agreement in the manner in which such Holder proposes to dispose of the
Registrable Securities included in such request, or if in the opinion of counsel
for the Company concurred in by counsel for such Holder no registration under
the Securities Act is required in connection with such disposition, the
Registrable Securities included in such request shall not be eligible for
registration under this Agreement; provided, however, with respect to any Holder
who may deemed to be an "affiliate," as that term is defined under Rule 144,
if, notwithstanding the opinion of such counsel, the Holder is unable to dispose
of all of the Registrable Securities included in his request in the manner in
which such Holder so proposes without registration, the Registrable Securities
included in such request shall be eligible for registration under this
Agreement.
15. Transfer or Assignment of Registration Rights. The rights to cause
---------------------------------------------
the Company to register a Shareholder's securities granted to such Shareholder
by the Company under Sections 5, 6 and 8 hereof may be transferred or assigned
by the Shareholder to a transferee or assignee of at least 100,000 shares of the
Restricted Securities; provided, however, that a Shareholder may transfer or
assign such rights to a partner or shareholder of Shareholder or to a successor
trust or successor trustee without restriction as to minimum shareholding. The
Company shall be given written notice by Shareholder at the time of said
transfer or assignment, stating the name and address of said transferee or
assignee and identifying the securities with respect to which such registration
rights are being transferred or assigned, and provided further that the
transferee or assignee of such rights is not deemed by the Board of Directors of
the Company, in its reasonable judgment, to be a competitor of the Company; and
provided further that the transferee or assignee of such rights assumes the
obligations of a Shareholder under this Agreement.
16. "Market Stand-off" Agreement. Each Shareholder agrees, if requested by
---------------------------
the Company and an underwriter of Common Stock (or other securities) of the
Company, not to sell or otherwise transfer or dispose of any Common Stock (or
other securities) of the Company held by Shareholder during a period of time
determined by the Company and its underwriters (not to exceed 180 days)
following the effective date of the Company's initial public offering of its
capital stock, provided that all officers, directors and employees of the
Company holding stock or stock options of at least one (1%) percent of the
Company's outstanding stock prior to the initial public offering of the Company
enter into similar agreements; provided, further, that with respect to the
Series C Holders and Series D Holders, the prohibition against the sale,
transfer or other dispostions of any Common Stock (or other securities) of the
Company held by them pursuant to this Section 16 shall not prohibit (i) the sale
of any shares of Common Stock purchased by such Series C Holder or Series D
Holder pursuant to a directed share program or otherwise in the Company's
initial public offering, or (ii) the sale, in the open market, of any shares of
Common Stock by such Series C Holder or Series D Holder provided that such
shares are purchased in the open market after the completion of the Company's
initial public offering.
Such agreement shall be in writing in a form satisfactory to the
Company and such underwriter. The Company may impose stop-transfer instructions
with respect to the Shares (or securities) subject to the foregoing restriction
until the end of said period.
17. Governing Law. This Agreement and the legal relations between the
-------------
parties arising hereunder shall be governed by and interpreted in accordance the
laws of the State of California. The parties hereto agree to submit to the
jurisdiction of the federal and state courts of the State of California with
respect to the breach or interpretation of this Agreement or the enforcement of
any and all rights, duties, liabilities, obligations, powers, and other
relations between the parties arising under this Agreement.
18. Entire Agreement. This Agreement constitutes the full and entire
----------------
understanding and agreement between the parties regarding rights to
registration. Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto.
19. Notices, Etc. All notices and other communications required or
-------------
permitted hereunder shall be in writing and shall be mailed by first-class mail,
postage prepaid, or otherwise delivered by hand or by messenger, addressed (a)
if to a Shareholder, at the address or addresses set forth on Exhibit A, Exhibit
--------- -------
B, Exhibit C, Exhibit C attached hereto, or at such other address or addresses
- --------- ---------
as the Shareholder shall have furnished to the other parties hereto in writing,
or (b) if to any other holder of any securities, at such address as such holder
shall have furnished the other parties hereto in writing, or, until any such
holder so furnishes an address to the Company, then to and at the address of the
last holder of such Shares who has so furnished an address to the Company, or
(c) if to the Company, at the address of its principal offices set forth on the
signature page of this Agreement, or at such other address as the Company shall
have furnished to the other parties hereto in writing.
20. Other Registration Rights. This Agreement supersedes any previous
-------------------------
agreement between the Company and any party with respect to the grant by the
Company of registration rights, including but not limited to Registration Rights
Agreement dated February 14, 1997.
21. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
22. Amendments. Any provision of this Agreement may be amended, waived or
----------
modified upon the written consent of the Company, and the Shareholders (or their
assignees to whom Shareholders have expressly assigned their rights in
compliance with Section 15 hereof) who then hold more than fifty percent (50%)
of the Registrable Securities then held by persons entitled to registration
rights hereunder, provided further, any such amendment, waiver or modification
applies by its terms to each applicable Shareholder and each such assignee and,
provided further, that a Shareholder or such assignee hereunder may waive any of
such Holder's rights or the Company's obligations hereunder without obtaining
the consent of any other Shareholder or assignee.
(Remainder of this page left intentionally blank)
IN WITNESS WHEREOF, the parties have executed this Restated Registration
Rights Agreement as of the date first above written.
"INVENTA CORPORATION"
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
-14-
"SHAREHOLDERS"
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
BANCBOSTON VENTURES INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Director
BATTERY VENTURES III, L.P.
By: Battery Partners III, L.P.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: GENERAL PARTNER
BOSTON MILLENNIA PARTNERS
LIMITED PARTNERSHIP
By: ▇▇▇▇ Partners Limited Partnership,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇
---------------------------------
General Partner
BOSTON MILLENNIA ASSOCIATES & PARTNERSHIP
By: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇, General Partner
---------------------------------
____________________________________
▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-▇▇-
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ BANK AS TRUSTEE
FOR FIRST PLAZA GROUP TRUST
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ The Chase Manhattan Bank has executed
--------------------------------- this Document/Agreement solely in its
▇▇▇▇ ▇. ▇▇▇▇▇ capacity as Directed Trustee of the
First Plaza Group Trust upon the
Title: VICE PRESIDENT direction of General Motors Investment
------------------------------ Management Corporation.
____________________________________
Electra ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ G. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Charitable Annuity Trust, u/d/t
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Trustee
____________________________________
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
ESSEX PRIVATE PLACEMENT FUND II, LIMITED PARTNERSHIP
By: Essex Investment Mgt. Company LLC
Its General Partner
By: /s/ [ILLEGIBLE]
---------------------------------
Its: PRINCIPAL
--------------------------------
____________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-16-
___________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
___________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
PRIVATE EQUITY PORTFOLIO II, LLC
BY BANKBOSTON NA, ITS MANAGER
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
___________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
___________________________________
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
TCV II (Q), L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II, L.L.C.,
Its: General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
-17-
TCV II STRATEGIC PARTNERS, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II, L.L.C.,
Its: General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
TCV II, V.O.F.
a Netherlands Antilles General Partnership
By: Technology Crossover Management II, L.L.C.,
Its: Investment General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
TECHNOLOGY CROSSOVER VENTURES II, C.V.
a Netherlands Antilles Limited Partnership
By: Technology Crossover Management II, L.L.C.,
Its: Investment General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
TECHNOLOGY CROSSOVER VENTURES II, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management II, L.L.C.
Its: General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
-18-
EXHIBIT G
---------
LEGAL OPINION OF ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
PROFESSIONAL CORPORATION
January 19, 2000
To: Each Investor listed on
the Schedule of Investors
to the Inventa Corporation
Series D Convertible Preferred
Stock Purchase Agreement
[LOGO]
Ladies and Gentlemen:
Reference is made to the Series D Convertible Preferred Stock
PALO ALTO Purchase Agreement dated as of January 19, 2000 (the "Purchase
Agreement"), complete with all listed exhibits thereto, by and among
Inventa Corporation, a California corporation, (the "Company") and
each of you, providing for the issuance by the Company to the
Investors of shares of Series D Preferred Stock of the Company (the
"Shares"). This opinion is rendered to you in compliance with
▇▇▇▇▇▇▇▇ Section 5.6 of the Purchase Agreement, and all terms used herein
have the meanings defined for them in the Purchase Agreement unless
otherwise defined herein.
AUSTIN We have acted as counsel for the Company in connection with the
negotiation of the Purchase Agreement and the issuance of the
Shares. As such counsel, we have made such legal and factual
examinations and inquiries as we have deemed advisable or necessary
for the purpose of rendering this opinion. In addition, we have
examined originals or copies of such corporate records of the
Company, certificates of public officials and such other documents
which we consider necessary or advisable for the purpose of
rendering this opinion. In such examination we have assumed the
genuineness of all signatures on original documents, the
authenticity and completeness of all documents submitted to us as
originals, the conformity to original documents of all copies
submitted to us and the due execution and delivery of all documents
(except as to due execution and delivery by the Company) where due
execution and delivery are a prerequisite to the effectiveness
thereof.
As used in this opinion, the expression "to our knowledge,"
"known to us" or similar language with reference to matters of fact
means that, after an examination of documents made available to us
by the Company, and after inquiries of officers of the Company, but
without any further independent factual investigation, we find no
reason to believe that the opinions expressed herein are factually
incorrect. Further, the expression "to our knowledge," "known to us"
or similar language with reference to matters of fact refers to the
current actual knowledge of the attorneys of this firm who have
worked on matters for the Company. Except to the extent expressly
set forth herein or as we otherwise believe to be necessary to our
opinion, we have not undertaken any independent investigation to
determine the existence or absence of any fact, and no
January 19, 2000
Page 2
inference as to our knowledge of the existence or absence of any
fact should be drawn from our representation of the Company or the
rendering of the opinion set forth below.
For purposes of this opinion, we are assuming that you have all
requisite power and authority, and have taken any and all necessary
corporate or partnership action, to execute and deliver the Purchase
Agreement, and we are assuming that the representations and
warranties made by the Investors in the Purchase Agreement and
pursuant thereto are true and correct. We are also assuming that
each Investor has purchased the Shares for value, in good faith and
without notice of any adverse claims within the meaning of the
California Uniform Commercial Code.
The opinions hereinafter expressed are subject to the following
qualifications:
(a) We express no opinion as to the effect of applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
federal or state laws affecting the rights of creditors;
(b) We express no opinion as to the effect of rules of law
governing specific performance, injunctive relief or other equitable
remedies (regardless of whether any such remedy is considered in a
proceeding at law or in equity);
(c) We express no opinion as to compliance with the anti-
fraud provisions of applicable securities laws;
(d) We express no opinion as to the enforceability of the
indemnification provisions of the Registration Rights Agreement to
the extent the provisions thereof may be subject to limitations of
public policy and the effect of applicable statutes and judicial
decisions; and
(e) We are members of the Bar of the State of California
and we express no opinion as to any matter relating to the laws of
any jurisdiction other than the federal laws of the United States of
America and the laws of the State of California. To the extent this
opinion addresses applicable securities laws of states other than
the State of California, we have not retained nor relied on the
opinion of counsel admitted to the bar of such states, but rather
have relied on compilations of the securities laws of such states
contained in reporting services presently available to us.
Based upon and subject to the foregoing, and except as set
forth in the Schedule of Exceptions to the Purchase Agreement, we
are of the opinion that:
1. The Company is a corporation duly organized and validly
existing under, and by virtue of, the laws of the State of
California and is in good standing under such laws. The Company has
requisite corporate power to own and operate its properties and
assets, and to carry on its business as presently conducted. The
Company is duly qualified to do business, and in good standing in
all foreign jurisdictions where its ownership or leasing of
properties or the conduct of its
January 19, 2000
Page 3
business requires such qualification, except where the failure to be
so qualified would not have a material adverse effect on the
Company's business as now conducted.
2. The Company has all requisite legal and corporate power to
execute and deliver the Purchase Agreement, the Shareholders
Agreement, the Registration Rights Agreement and the side letter
agreement of even date herewith among the Company and the Investors
listed on Schedule A thereto regarding a proposed private placement
of common stock (collectively, the "Agreements"), to sell and issue
the Shares under the Purchase Agreement, to issue the Common Stock
issuable upon conversion of the Shares and to carry out and perform
its obligations under the terms of the Agreements.
3. The authorized capital of the Company consists of (i)
14,779,511 shares of Preferred Stock, 1,000,000 shares of which are
designated Series A Preferred Stock and of which 800,000 are issued
and outstanding, 2,560,000 shares of which are designated Series B
Preferred Stock and of which 2,560,000 are issued and outstanding,
8,219,511 shares of which are designated Series C Preferred Stock
and of which 8,055,511 are issued and outstanding, and 3,000,000
shares of which are designated Series D Preferred Stock, none of
which are issued and outstanding, and (ii) 25,000,000 shares of
Common Stock, of which 4,713,055 shares are issued and outstanding.
All issued and outstanding shares of the Company's capital stock
have been duly authorized and validly issued and are fully paid and
nonassessable. The Shares, when issued pursuant to the terms of the
Purchase Agreement (including Common Stock issued upon conversion of
the Shares), will be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in the Agreements and all the
exhibits thereto, to our knowledge, there are no options, warrants
or other rights (including conversion or preemptive rights) or
agreements outstanding to purchase any of the Company's authorized
and unissued capital stock.
4. All corporate action on the part of the Company, its
directors and shareholders necessary for the authorization,
execution, delivery and performance of the Agreements, the
authorization, sale, issuance and delivery of the Shares and the
performance of the Company's obligations under the Agreements has
been taken. The Agreements have been duly and validly executed and
delivered by the Company and constitute valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms. The Shares will have the rights,
preferences and privileges described in the Restated Articles. To
our knowledge, the Shares and the Common Stock issuable on
conversion of the Shares will be free of any liens, encumbrances or
preemptive rights contained in the Company's Restated Articles or
Bylaws.
5. The execution, delivery and performance of and compliance
with the terms of the Agreements, and the issuance of the Shares do
not violate any provision of the Restated Articles or Bylaws, or, to
our knowledge, any provisions of any applicable federal or state
law, rule or regulation. To our knowledge, the execution, delivery
and performance of and compliance with the Agreements and the
issuance of the Shares do not violate or constitute a default under,
any material contract, agreement, instrument, judgment or decree
binding upon the Company.
January 19, 2000
Page 4
6. To our knowledge, there are no actions, suits, proceedings
or investigations pending against the Company or its properties
before any court or governmental agency (nor, to our knowledge, has
the Company received any written threat thereof), which, either in
any case or in the aggregate, are likely to result in any material
adverse change in the business or financial condition of the
Company, or in any material impairment of the right or ability of
the Company to carry on its business as now conducted, or which
questions the validity of the Agreements or any action taken or to
be taken by the Company in connection therewith.
7. No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of
the Company is required in connection with the valid execution and
delivery of the Agreements or other offer, sale or issuance of the
Shares or the consummation of any other transaction contemplated
thereby, except (a) filing of the Restated Articles in the Office of
the Secretary of State of the State of California, and (b)
qualification (or taking such action as may be necessary to secure
an exemption from qualification, if available) under the California
Corporate Securities Law and other applicable blue sky laws (but
excluding jurisdictions outside of the United States) of the offer
and sale of the Shares (and the Common Stock issuable upon
conversion thereof) and the modification of rights of shareholders
contemplated by the Purchase Agreement. The filing referred to in
clause (a) above has been accomplished and is effective, and to our
knowledge there are no proceedings or written threat thereof which
question the validity of such filing. Our opinion herein is
otherwise subject to the timely and proper completion of all filings
and other actions contemplated by clause (b) above where such
filings and actions are to be undertaken on or after the date
hereof.
8. Subject to the accuracy of each Investor's representations
in Section 3 of the Purchase Agreement we are of the opinion that
the offer, sale and issuance of the Shares in conformity with the
terms of the Purchase Agreement constitute transactions exempt from
the requirements of Section 5 of the Securities Act of 1933, as
amended.
This opinion is furnished to the Investors solely for their
benefit in connection with the purchase of the Shares, and may not
be relied upon by any other person or for any other purpose without
our prior written consent.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇