EXHIBIT 3.9
▇▇▇▇▇▇.▇▇▇, INC.
SERIES C REDEEMABLE PREFERRED
STOCK PURCHASE AGREEMENT
June 11, 1999
EXHIBITS
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Exhibit A Schedule of Investors
Exhibit B Second Amended and Restated Certificate of Incorporation
Exhibit C Schedule of Exceptions
Exhibit D Opinion Letter of Counsel (▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇)
Exhibit D-1 Opinion Letter of Counsel (▇▇▇▇▇, Winter)
Exhibit E Investors Rights Agreement
▇▇▇▇▇▇.▇▇▇, INC.
SERIES C REDEEMABLE PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES C REDEEMABLE PREFERRED STOCK PURCHASE AGREEMENT (the
"Agreement") is made as of the 11th day of June, 1999, by and among ▇▇▇▇▇▇.▇▇▇,
INC., a Delaware corporation (the "Company"), and those persons and entities set
forth in the Schedule of Investors attached hereto as Exhibit A (each an
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"Investor" and collectively the "Investors").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
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1.1 The Company shall adopt and file with the Secretary of State of
the State of Delaware on or before the Closing (as defined in Section 1.3 below)
an Amended and Restated Certificate of Incorporation in the form attached hereto
as Exhibit B ( the "Second Restated Certificate").
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1.2 Subject to the terms and conditions of this Agreement, each
Investor severally (and not jointly) agrees to purchase at the Closing, and the
Company agrees to sell and issue to each Investor at the Closing, that number of
shares (a) of the Company's Series C Redeemable Preferred Stock, and (b) the
Company's Common Stock (collectively, the "Shares"), which are set forth
opposite such Investor's name in the Schedule of Investors attached hereto as
Exhibit A at a total aggregate purchase price of $11,000,000.00 (the "Purchase
Price").
1.3 The purchase and sale of the Shares shall take place at the
offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 3:00 P. M., on June 11 1999, 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 the Investors (or, at the election of
an Investor, to such Investor's nominee) certificates representing the Shares to
be purchased by that Investor at the Closing against delivery to the Company by
that Investor of a wire transfer or a check in the amount of the purchase price
set forth opposite such Investor's name on Exhibit A hereto payable to the
Company's order.
2. Representations and Warranties of the Company. The Company hereby
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represents and warrants to each Investor that, as of the Closing, except as set
forth on a Schedule of Exceptions attached hereto as Exhibit C (the "Schedule
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of Exceptions"):
2.1 Organization, Good Standing and Qualification. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted and as presently proposed to be conducted
by it, and to enter and perform this Agreement and to carry out the transactions
contemplated by this Agreement. The Company is duly qualified to
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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 and Voting Rights. The authorized capital of the
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Company consists, or will consist prior to the Closing, of:
(a) 2,557,130 shares of Preferred Stock (the "Preferred
Stock"), (i) 231,250 of which shares have been designated Series A Preferred
Stock and of which 231,250 are outstanding prior to Closing, (ii) 2,324,780 of
which shares have been designated Series B Preferred Stock and of which
2,324,774 are outstanding prior to Closing and (iii) 1,100 of which shares have
been designated Series C Redeemable Preferred Stock none of which is outstanding
prior to Closing. The rights, preferences, privileges and restrictions of the
Preferred Stock will be as stated in the Second Restated Certificate.
(b) 2,650,548 shares of Class B Common Stock, of which
2,650,548 shares are outstanding prior to Closing.
(c) 10,000,000 shares of Common Stock (the "Common Stock") of
which 198,000 shares are issued and outstanding. In addition, 446,725 shares of
Common Stock will be sold pursuant to this Agreement.
(d) 2,421,212 shares of Common Stock reserved for issuance
under the Company's 1998 Employee, Director and Consultant Stock Plan (the "1998
Stock Plan"), of which 2,131,013 shares are issuable upon the exercise of
outstanding options and 82,199 shares remain available for future issuance.
(e) Warrants exercisable for up to 100,000 shares of Common
Stock.
(f) Except for (A) the conversion privileges of the Preferred
Stock; (B) options that are currently outstanding to purchase up to 2,131,013
shares of Common Stock; (C) 82,199 shares of Common Stock reserved for future
issuance pursuant to the Company's 1998 Stock Plan pursuant to approval by the
Company's Board of Directors; (D) warrants issued by the Company to purchase
100,000 shares of Common Stock; and (E) the rights set forth in the Company's
Investors' Rights Agreement dated as of March 12, 1999 (the "Investors Rights
Agreement"), there are not outstanding any options, warrants, rights (including
conversion or preemptive rights) or agreements for the purchase or acquisition
from the Company of any shares of its capital stock. The Company is not a party
or subject to any agreement or understanding, and, to the Company's knowledge,
there is no agreement or understanding between any persons and/or entities,
which affects or relates to the voting or giving of written consents with
respect to any security or by a director of the Company.
2.3 Subsidiaries. The Company does not presently own or control,
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directly or indirectly, any interest in any other corporation, association, or
other business entity.
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2.4 Authorization. All corporate action on the part of the
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Company, its officers, directors and stockholders necessary for (i) the
authorization, execution and delivery of this Agreement, (ii) the performance of
all obligations of the Company hereunder and (iii) the authorization, issuance
(or reservation for issuance) and delivery of the Shares being sold hereunder
has been taken or will be taken prior to the Closing, and this Agreement and the
Ancillary Agreements each constitute a valid and legally binding obligation of
the Company, enforceable in accordance with its respective terms, except as
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, or by general equitable principles.
2.5 Valid Issuance of Preferred and Common Stock.
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(a) The Shares to be issued, sold and delivered to the
Investors hereunder, when so issued, sold and delivered in accordance with the
terms hereof for the consideration expressed herein, will be duly and validly
issued, fully paid and nonassessable and, based in part upon the representations
of each Investor in this Agreement, will be issued in compliance with all
applicable federal and state securities laws.
(b) The outstanding shares of Common Stock of the Company are
all duly and validly authorized and issued, fully paid and nonassessable, and
were issued in compliance with all applicable federal and state securities laws.
2.6 Governmental Consents. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, local or provincial governmental authority on
the part of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement, except for any filings pursuant to
state and federal securities laws, all of which filings will be effected in a
timely manner. The Company has received all material licenses, permits, orders
or approvals from governmental bodies required for the conduct of its business
as currently conducted.
2.7 Conflict of Interest. The Company and its executive officers
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have no interest (other than as holders of securities of a publicly-traded
company), either directly or indirectly, in any entity, including, without
limitation thereto, any corporation, partnership, joint venture, proprietorship,
firm, person, licensee, business or association (whether as an employee,
officer, director, stockholder, agent, independent contractor, security holder,
creditor, consultant or otherwise) that presently (i) provides any services, or
designs, produces and/or sells any products or product lines, or engages in any
activity which is the same, similar to or competitive with any activity or
business in which the Company is now engaged; (ii) is a supplier, customer, or
creditor of the Company, or has an existing contractual relationship with any of
the Company's managing employees; (iii) has any direct or indirect interest in
any asset or property, real or personal, tangible or intangible, of the Company
or any property, real or personal, tangible, that is necessary or desirable for
the conduct of the Company's business.
2.8 Litigation. There is no action, suit, proceeding or
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investigation pending or, to the Company's knowledge, currently threatened
against the Company which questions the validity of
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this Agreement or the right of the Company to enter into this Agreement, or to
consummate the transactions contemplated hereby or thereby, or which 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, to
the Company's knowledge, is there 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, officers, or directors, 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 other governmental judicial
body. There is no action, suit, proceeding or investigation by the Company
currently pending or which the Company intends to initiate.
2.9 Proprietary Information Agreements. Each key or technical
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employee and officer of the Company has executed an Employment, Confidential
Information and Inventions Assignment Agreement. The Company, after reasonable
investigation, is not aware that any of its employees are in violation thereof.
2.10 Patents and Trademarks. The Company has sufficient title and
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ownership of, or full right to use, all technology, patents, trademarks, service
marks, trade names, copyrights, trade secrets, information, proprietary rights
and processes necessary to enable the Company to conduct its business as now
conducted and, to the Company's knowledge, without any conflict with or
infringement of the rights of others. There are no outstanding options,
licenses, liens, encumbrances or agreements of any kind relating to the
foregoing, nor is the Company bound by or a party to any options, licenses,
liens, encumbrances or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of any other person or entity.
The Company has taken all commercially reasonable security measures to protect
the secrecy, confidentiality and value of all trade secrets, know-how,
inventions, designs, processes and technical data required to conduct its
business. 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 the use of their best efforts to promote the
interests of 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 Company,
nor the conduct of the Company's business as proposed, will, to the Company's
knowledge after reasonable inquiry, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employees is now obligated. The
Company does not reasonably believe it is or will be necessary to utilize any
inventions of any of its employees (or people it currently intends to hire)
created prior to their employment by the Company and which have not been
assigned to the Company.
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2.11 Compliance with Other Instruments. The Company is not in
---------------------------------
violation or default of any provisions of its Certificate of Incorporation or
Bylaws, any instrument, judgment, order, writ, decree or contract to which it is
a party or by which it is bound. To its knowledge, the Company is not in
violation of any provision of federal or state statute, rule or regulation
applicable to the Company, the violation or default of which, as the case may
be, would have a material adverse effect upon the business of 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
constitute, with or without the passage of time and giving of notice, either a
default under any such provision, instrument, judgment, order, writ, decree or
contract or an event which results in the creation of any lien, charge or
encumbrance upon any assets of the Company, where the violation or default or
the creation of such lien, charge or encumbrance would have a material adverse
effect upon the business of the Company.
2.12 Agreements; Action.
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(a) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or by which it is bound which may involve (i) obligations
(contingent or otherwise) of, or payments to the Company in excess of, $20,000,
or (ii) the license of any patent, copyright, trade secret or other proprietary
right to or from the Company or (iii) provisions restricting or affecting the
development, manufacture or distribution of the Company's products or services
or indemnification by the Company with respect to infringements of proprietary
rights.
(b) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities individually in excess of $20,000 or, in the case of
indebtedness and/or liabilities individually less than $20,000, 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 of its assets or rights.
(c) 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.
(d) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Certificate of Incorporation or Bylaws, which adversely affects its business,
properties or financial condition.
(e) The Company has not engaged in the past three (3) months in
any discussion (i) with any representative of any corporation or corporations
regarding the 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 on a
transaction or
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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.
2.13 Registration Rights. Except as provided in the Investors'
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Rights Agreement, the Company has not granted or agreed to grant any
registration rights, including piggyback rights, to any person or entity.
2.14 Title to Property and Assets. The Company owns or has rights to
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utilize all such assets, tangible or intangible, necessary for it to operate its
business and to utilize such assets as they are utilized as of the date of this
Agreement. 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 material compliance with such
leases and, to the best of its knowledge, holds a valid leasehold interest free
of any liens, claims or encumbrances.
2.15 Employee Benefit Plans. The Company does not have any Employee
----------------------
Benefit Plan as defined in the Employee Retirement Income Security Act of 1974.
2.16 Tax Returns, Payments and Elections. The Company has filed all
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tax returns and reports as required by law. These returns and reports are true
and correct in all material respects. The Company has paid all taxes and other
assessments due. The Company has not elected pursuant to the Internal Revenue
Code of 1986, as amended ("Code"), to be treated as a Subchapter S corporation
or a collapsible corporation pursuant to Section 341(f) or Section 1362(a) of
the Code, nor has it made any other elections pursuant to the Code (other than
elections which relate solely to methods of accounting, depreciation or
amortization) which would have a material effect on the Company, its financial
condition, its business as presently conducted or proposed to be conducted or
any of its properties or material assets.
2.17 Insurance. The Company has in full force and effect fire and
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casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its tangible
properties that might be damaged or destroyed.
2.18 Year 2000 Compatibility
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(a) All of the Company's products (including products currently
under development) are able to record, store, process and calculate and present
calendar dates falling on and after January 1, 2000, and are able to calculate
any information dependent on or relating to such dates in the same manner and
with the same functionality, data integrity and performance as the products are
able to record, store, process, calculate and present calendar dates on or
before December 31, 1999, or calculate any information dependent on or relating
to such dates (collectively "Year 2000 Compliant").
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(b) All of the Company's material products lose no
functionality with respect to the introduction of records containing dates
falling on or after January 1, 2000.
(c) All of the Company's internal computer systems, including
without limitation, its accounting systems, are Year 2000 Compliant.
2.19 Financial Statements. The financial statements previously
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delivered to the Investors, together with the notes thereto (the "Financial
Statements"), (i) are complete and correct in all material respects, (ii) are in
accordance with the Company's books and records, (iii) present fairly its
financial position as of the dates and for the periods indicated therein,
subject, in the case of unaudited Financial Statements, to normal year-end
adjustments, and (iv) have been prepared in conformity with generally accepted
accounting principles consistently applied throughout the periods indicated,
subject to normal year end adjustments and the absence of footnotes. Except as
set forth in the Financial Statements, the Company has no material liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business and (ii) obligations under contracts and commitments incurred
in the ordinary course of business and not required under generally accepted
accounting principles to be reflected in the Financial Statements which, in both
cases, individually or in the aggregate, are not material to the financial
condition or operating results of the Company. Except as disclosed in the
Financial Statements, the Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
2.20 Changes. Since June 1, 1999, there has not been:
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(a) any change in the assets, liabilities, financial condition
or operating results of the Company, except changes in the ordinary course of
business which have not been, either in any case or 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 contract or arrangement by
which the Company or any of its assets or properties is bound or subject which
is material to the business or finances of the Company;
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(f) any material change in any compensation arrangement or
agreement with any employee;
(g) any loans made by the Company to its employees, officers or
directors other than travel advances made in the ordinary course of business; or
(h) to the Company's knowledge after reasonable inquiry, 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).
2.21 Corporate Documents. The Certificate of Incorporation (prior
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to the filing of the Second Restated Certificate) and Bylaws of the Company are
in the form provided to counsel for the Investors. The minute books of the
Company provided to special counsel to the Investors contain a complete summary
of all meetings and unanimous written consents of directors and all meetings and
written consents of stockholders since the time of incorporation.
2.22 Labor Agreements and Actions. The Company is not bound by or
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subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the knowledge of the
Company, has sought to represent any of the employees, representatives or agents
of the Company. There is no strike or other labor dispute involving the Company
pending, or to the knowledge of the Company threatened, which could have a
material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company (as such business is presently
conducted and as it is proposed to be conducted), nor is the Company aware of
any labor organizing activity involving its employees. The Company is not aware
that any officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company, nor does the Company have a present
intention to terminate the employment of any of the foregoing. The employment
of each officer and, to the best of the Company's knowledge, each employee of
the Company is terminable at the will of the Company. To the Company's
knowledge, no employee is in violation of the terms of any employment agreement,
proprietary information agreement, noncompetition agreement or any other
agreement relating to such employee's relationship with any previous employer.
The Company has complied in all material respects with all laws relating to the
employment of labor, including provisions relating to wages, hours, equal
opportunity, collective bargaining and payment of Social Security and other
taxes.
2.23 Section 83(b) Elections. To the best of the Company's
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knowledge, all elections and notices required by Section 83(b) of the Internal
Revenue Code and any analogous provisions of applicable state tax laws have been
made in a timely fashion with respect to individuals who have purchased shares
of the Company's Common Stock.
2.24 Environmental and Safety Laws. To its knowledge after
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reasonable inquiry, the Company is in compliance in all material respects with
all limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any Applicable
Environmental Laws, or in any plan, order, decree, judgment, notice or demand
letter
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issued, entered, promulgated or approved thereunder. The Company is not aware
of, nor has the Company received notice of, any past, present or future events,
conditions, circumstances, activities, practices, incidents, actions or plans
which may interfere with or prevent continued compliance, or which may give rise
to any common law or legal liability, or otherwise form the basis of any claim,
action, suit, proceeding, hearing or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant, or hazardous or toxic
material or waste.
To its knowledge after reasonable inquiry, no Hazardous Material has been
incorporated in, used on, stored on or under, released from, treated on,
transported to or from, or disposed of on or from any property owned or leased
by the Company such that, under Applicable Environmental Laws (i) any such
Hazardous Material would be required to be removed, cleaned-up or remediated
before the property could be altered, renovated, demolished or transferred, or
(ii) the owner or lessee of the property could be subjected to liability for the
removal, clean-up or remediation of such Hazardous Material; and the Company has
not received any notification from any governmental bodies or other third
parties relating to Hazardous Material on or affecting any property owned or
leased by the Company or relating to any potential or known liability under
Applicable Environmental Laws arising from the ownership or leasing of any
property.
For the purposes of this Section 2.25, the following terms shall apply:
"Applicable Environmental Law" shall mean CERCLA, RCRA, the Federal Water
----------------------------
Pollution Control Act, 33 U.S.C. (S)(S) 1261 et seq., the Clean Air Act, 42
-- ---
U.S.C. (S)(S) 7401 et seq., any similar provisions of state or local law in the
-- ---
jurisdictions where the properties of the Company are located and the
regulations thereunder and any other local, state and/or federal laws or
regulations, whether currently in existence or hereafter enacted, that govern:
(a) the existence, cleanup and/or remedy of contamination on property;
(b) the protection of the environment from spilled, deposited or otherwise
emplaced contamination;
(c) the control of hazardous wastes; or
(d) the use, generation, transport, treatment, storage, disposal, removal
or recovery of Hazardous Materials, including building materials.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
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and Liability Act, 42 U.S.C. (S)(S) 6901 et seq.
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"Hazardous Material" shall mean any substance which as of the date of this
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Agreement shall be identified as "hazardous" or "toxic" or otherwise regulated
under CERCLA or RCRA or which has been or shall be determined at any time by any
agency or court to be a hazardous or toxic substance under Applicable
Environmental Law. The term "Hazardous Material" shall also include,
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without limitation, raw materials, building components, the products of any
manufacturing or other activities on the properties, wastes, petroleum, and
source, special nuclear or by-product material as defined by the Atomic Energy
Act of 1954, 42 U.S.C. (S)(S) 3011 et seq., as amended.
-- ---
"RCRA" shall mean the Resource Conservation and Recovery Act, 42 U.S.C.
----
(S)(S) 6901 et seq.
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2.25 Disclosure. The Company has fully provided the Investors with all
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the information which Investors have requested for deciding whether to purchase
the Shares and all information which the Company believes is reasonably
necessary to enable the Investors to make such decision. As of the date hereof,
neither this Agreement with the Exhibits hereto nor any other statements or
certificates made or delivered in connection herewith, when read as a whole,
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.
2.26 Real Property Holding Corporation. The Company is not a United
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States real property holding corporation within the meaning of the Internal
Revenue Code Section 897(c)(2) and any regulations promulgated thereunder.
2.27 Qualified Small Business Stock. The Company represents and
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warrants to each Investor that, to the best of its knowledge, as of the Closing
the Shares should qualify as "Qualified Small Business Stock" as defined in
Section 1202 (c) of the Internal Revenue Code of 1986, as amend ed as of the
date hereof.
3. Representations and Warranties of the Investors.
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Each Investor hereby represents and warrants as of the Closing that:
3.1 Authorization. This Agreement constitutes its valid and legally
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binding obligation, enforceable against such Investor in accordance with its
terms.
3.2 Purchase Entirely for Own Account. This Agreement is made with
---------------------------------
such Investor in reliance upon such Investor's representation to the Company,
which by such Investor's execution of this Agreement such Investor hereby
confirms, that the Shares will be acquired for investment for such Investor's
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that such Investor has no intention of
selling or otherwise distributing the same at the present time. By executing
this Agreement, each Investor further represents that such Investor does not
have any contract, undertaking, agreement or arrangement with any person to sell
or transfer to such person or to any third person, with respect to any of the
Shares. Each Investor represents that it has full power and authority to enter
into this Agreement.
3.3 Disclosure of Information. Each Investor represents that it has
-------------------------
had an opportunity to ask questions and receive answers and to request and
receive documents from the Company regarding the terms and conditions of the
offering of the Shares. The foregoing, however,
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does not limit or modify the representations and warranties of the Company in
Section 2 of this Agreement or the right of each Investor to rely thereon.
3.4 Investment Experience. Each Investor is an investor in securities
---------------------
of companies in the development stage and can bear the economic risk of its
investment and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment
in the Shares. Each Investor also represents it has not been organized solely
for the purpose of acquiring the Shares.
3.5 Preexisting Relationship with Company; Business and Financial
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Experience. By reason of its business or financial experience or the business
----------
and financial experience of its professional advisors who are unaffiliated with
the Company and who are not compensated by the Company, each Investor has the
capacity to protect its own interests in connection with the purchase of the
Shares and underlying Conversion Stock. Each Investor also represents it has not
been organized for the purpose of acquiring the Shares.
3.6 Restricted Securities. Each Investor understands that the Shares
---------------------
are characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended (the "Act"), only in certain limited circumstances. In this
connection, each Investor represents that it is familiar with Rule 144, as
presently in effect, promulgated by the Commission under the Act, and
understands the resale limitations imposed thereby and by the Act.
3.7 Lock-Up. Each Investor agrees, in connection with the Company's
-------
initial underwritten public offering of the Company's securities, (a) not to
sell, make short sale of, loan, grant any options for the purchase of, or
otherwise dispose of any of the Shares of the Company held by the Investor
pursuant to this Agreement (other than those shares included in the
registration) without the prior written consent of the Company or the
underwriters managing such initial underwritten public offering of the Company's
securities for one hundred eighty (180) days from the effective date of such
registration and (b) further agrees to execute any agreement reflecting (a)
above as may be requested by the underwriters at the time of the public
offering, and (c) further agrees that the Company may impose stop transfer
instructions with its transfer agent in order to enforce the agreements in (a)
and (b) above. Notwithstanding the foregoing, in the event that any stockholder
of the Company holding at least an aggregate of five percent (5%) (each, a "5%
Stockholder") of the outstanding capital stock of the Company is not subject to
any lock-up provisions in connection with the Company's initial underwritten
public offering of its stock, then each Investor shall not be bound by the lock-
up restrictions of this Section 3.7 to the same extent and on a pro rata basis,
and the lock-up agreement described in subparagraph (b) above shall not be
enforceable against each Investor who is a party to such agreement. Company
shall promptly give each Investor written notice in the event any 5% Stockholder
is not subject to any lock-up provisions in connection with the Company's
initial underwritten public offering of its stock.
-11-
3.8 Legends. Each Investor understands that the certificates
-------
evidencing the Shares and the Conversion Stock may bear one or all of the
following legends at the discretion of the Company:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE
SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED."
(b) Any legend required by the laws of the State of California or any
other state the securities laws of which apply to the transactions contemplated
by this Agreement.
4. Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE
------------------------
SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY 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. Closing Conditions.
------------------
5.1 Conditions of Investor's Obligations at Closing. The obligations
-----------------------------------------------
of each Investor under of this Agreement are subject to the fulfillment on or
before the Closing of each of the following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in Section 2 shall be true on and as of the
Closing in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of the
Closing.
(b) 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 in
all material respects.
(c) Compliance Certificate. The President of the Company shall
----------------------
deliver to the Investors at the Closing a certificate on behalf of the Company
certifying that the conditions specified in Sections 5.1(a) and (b) have been
fulfilled and stating that there shall have been no material adverse change in
the business, affairs, prospects, operations, properties, assets or condition of
the Company since the date of this Agreement.
-12-
(d) Qualifications. Except for notices required to be filed
--------------
after the date of the Closing with certain federal and state securities
commissions, which notices the Company hereby covenants to file on a timely
basis, the Company shall have obtained all approvals of any federal or state
governmental authority or regulatory body that are required in connection with
the lawful sale and issuance of the Shares.
(e) Proceedings and Documents. All corporate and other
-------------------------
proceedings in connection with the transactions contemplated at the Closing and
all documents incident thereto shall be reasonably satisfactory in form and
substance to Investor's special counsel, and they shall have received all such
counterpart original and certified or other copies of such documents as they may
reasonably request.
(f) Second Restated Certificate. The Second Restated Certificate
---------------------------
in the form attached hereto as Exhibit A shall have been filed with the Delaware
---------
Secretary of State.
(g) Opinion of Company Counsel. Investors shall have received
--------------------------
from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional Corporation, and ▇▇▇▇▇
Winter, counsels for the Company, an opinion, dated as of the Closing, in the
form attached hereto as Exhibit D and Exhibit D-1.
--------- -----------
(h) Directors. Upon the effectiveness of the Closing, the
---------
Company's Board of Directors shall consist of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
5.2 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
that Investor:
(a) Representations and Warranties. The representations and
------------------------------
warranties of each Investor contained in Section 3 shall be true on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of the Closing.
(b) Payment of Purchase Price. Each Investor shall have
-------------------------
delivered the purchase price specified in Section 1.2 hereof.
6. Covenants.
---------
6.1 Directors. From and upon the Closing, the Company's Board of
---------
Directors shall consist of:
(a) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(constituting three (3) of the four (4) directors entitled to be elected by the
Common Stock and Series A Preferred Stock, voting together as a single class, at
each annual election of directors (the "Common Directors", including any and all
successors thereto)) who shall serve until their successors are duly elected and
qualified or until their earlier resignation or removal;
-13-
(b) ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (constituting the two (2)
directors entitled to be elected by the Series B Preferred Stock, voting
separately as a class, at each annual election of directors), who shall serve
until their successors are duly elected and qualified or until their earlier
resignation or removal; and
(c) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, (constituting the one (1) director entitled
to be elected by the Series C Redeemable Preferred Stock, at each annual
election of directors so long as at least one share of Series C Redeemable
Preferred Stock remains outstanding) who shall serve until a successor is duly
elected and qualified or until earlier resignation or removal (the "Series C
Director", including any and all successors thereto).
6.2 Redemption of Series C Preferred Stock. Notwithstanding the
--------------------------------------
provisions of Section 7.1 below, in the event of a redemption of the Series C
Preferred Stock, then effective within fifteen (15) days following such
redemption and payment of the Redemption Price (as defined in the Second
Restated Certificate), or within the time period otherwise expressly provided
for below:
(a) The authorized number of directors of the Company shall be
reduced to five (5) in accordance with the terms and provisions of the bylaws of
the Company;
(b) Prior to the redemption of the Series C Preferred Stock, (i)
the Investors shall use best efforts to cause the Series C Director to resign,
such resignation to be effective no later than fifteen (15) days after the
redemption of the Series C Preferred Stock and the payment of the Redemption
Price (as defined in the Second Restated Certificate), or (ii) if such
resignation has not been delivered to the Company prior to such redemption,
immediately prior to such redemption the Investors will remove the Series C
Director as a director, such removal to be effective no later than fifteen (15)
days after the redemption of the Series C Preferred Stock and the payment of the
Redemption Price (as defined in the Second Restated Certificate); and
(c) To the extent that there are four (4) Common Directors at
the time of such redemption, the Company shall use best efforts to cause the
director that was appointed to fill the vacancy in the Board of Directors
pursuant to the terms and provisions of the Bylaws of the Company, which vacancy
existed as the date hereof, to resign as a director of the Company, effective
upon the resignation or removal of the Series C Director as provided in Section
6.2(b) above.
6.3 [Intenitonally Omitted].
---------------------
6.4 Registration Rights. The Company covenants and agrees as follows:
-------------------
(a) Definitions. For purposes of this Section 6.4:
-----------
In addition to the definition of "Registrable Securities" as set forth
in Section 1 of the Investors Rights Agreement, the term "Registrable
Securities" also includes the Common Stock issued pursuant to this Agreement.
-14-
The term "Shareholder" means any holder of Registrable Securities,
securities convertible into Registrable Securities and any person holding such
securities to whom the right under the Investors Rights Agreement has been
transferred in accordance with Section 2.13 thereof.
The term "Registration Rights" means those rights and attendant
obligations set forth in Section 2 of the Investors Rights Agreement.
(b) Grant of Rights. The Company hereby grants to the
---------------
Shareholders the Registration Rights. A true and complete copy of the Investors
Rights Agreement is attached hereto as Exhibit E. The Company represents and
---------
warrants to the Shareholders that the Company has obtained all consents of
necessary parties to the Investors Rights Agreement and of any other persons
that are required in order for the shares of Common Stock issued pursuant to
this Agreement to be included in the definition of "Registrable Securities" and
for each such Shareholder to be included in the definition of "Holder," as such
terms are used in the Investors Rights Agreement. Furthermore, the Company
represents and warrants to the Shareholders that the Company is not a party to
any agreement that conflicts in any manner with the Shareholders' Registration
Rights granted hereunder to cause the Company to register Registrable Securities
pursuant to the Investors Rights Agreement and this Section 6.4. The intent of
this Section 6.4 is to grant the Registration Rights to the Shareholders, and
this Section 6.4 is not intended to accord the Shareholders any additional
rights under the Investors Rights Agreement.
(c) Amendment of Registration Rights. The Company covenants and
--------------------------------
agrees that it shall not, without the prior written consent of the Shareholders
holding a majority of the outstanding Registrable Securities, amend, modify or
restate the Investor Rights Agreement if the rights of the Shareholders would be
subordinated, diminished or otherwise adversely affected in a different manner
than other "Holders" of "Registrable Securities" (as defined in the Investors
Rights Agreement).
7. Miscellaneous.
-------------
7.1 Survival of Warranties. Subject to the applicable statute of
----------------------
limitations, the warranties, representations and covenants of the Company and
Investor contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing for a period of the
earlier of (i) the redemption of the shares of Series C Redeemable Preferred
Stock pursuant to the Second Restated Certificate, or (ii) eighteen (18) months
from the date hereof and shall in no way be affected by any investigation of the
subject matter thereof made by or on behalf of the Investors or the Company.
7.2 Successors and Assigns. Except as otherwise provided herein, the
----------------------
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Shares sold hereunder or any Conversion Stock). 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.
-15-
7.3 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
7.4 Dispute Resolution. The parties agree to negotiate in good faith
------------------
to resolve any dispute between them regarding this Agreement. If the
negotiations do not resolve the dispute to the reasonable satisfaction of both
parties, then each party shall nominate one senior officer of the rank of Vice
President or higher as its representative. These representatives shall, within
thirty (30) days of a written request by either party to call such a meeting,
meet in person and alone (except for one assistant for each party) and shall
attempt in good faith to resolve the dispute. If the disputes cannot be resolved
by such senior managers in such meeting, the parties agree that they shall, if
requested in writing by either party, meet within thirty (30) days after such
written notification for one day with an impartial mediator and consider dispute
resolution alternatives other than litigation. If an alternative method of
dispute resolution is not agreed upon within thirty (30) days after the one day
mediation, either party may begin litigation proceedings. This procedure shall
be a prerequisite before taking any additional action hereunder.
7.5 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.
7.6 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.
7.7 Notices. Except as may be otherwise provided herein, all notices,
-------
requests, waiver and other communications made pursuant to this Agreement shall
be in writing and addressed as set forth below and shall be conclusively deemed
to have been duly given (a) when hand delivered to the other party; (b) when
received when sent by facsimile; (c) three business days after deposit in the
U.S. mail with first class of certified mail receipt requested postage prepaid;
or (d) the next business day after deposit with a national overnight delivery
service, postage prepaid, with next business-day delivery guaranteed, provided
that the sending party receives a confirmation of delivery from the delivery
service provider. Each person making a communication hereunder by facsimile
shall promptly confirm by telephone to the person to whom such communication was
addressed each communication made by it by facsimile pursuant hereto but the
absence of such confirmation shall not affect the validity of any such
communication. Notwithstanding the foregoing, all notices and communications to
or from addresses outside the United States, shall be given by facsimile and
certified in writing sent by overnight or two-day national courier service. All
notices, requests, waivers and other communications made pursuant to the
Agreement shall be addressed (a) if to an Investor, at such Investor's address
set forth on the signature page to this Agreement, or (b) if to the Company, at
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other address as
the Company shall have furnished to the Investors in writing.
7.8 Finder's Fee. Each party represents that it neither is nor will
------------
be obligated for any finders' fee or commission in connection with this
transaction. Each Investor agrees to
-16-
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 such Investor
or any of its officers, partners, employees, or representatives is responsible.
The Company agrees to indemnify and hold harmless the Investors from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
7.9 Expenses. If the Closing is effected, the Company shall, at the
--------
Closing, reimburse the reasonable fees and out-of-pocket expenses of ▇▇▇▇ ▇▇▇▇
▇▇▇▇ & Freidenrich LLP, special counsel for the Investors. If any action at law
or in equity is necessary to enforce or interpret the terms of this Agreement or
the Second Restated Certificate, the prevailing party shall be entitled to
reasonable attorney's fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
7.10 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 Investors holding a majority of
the outstanding Shares. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any securities purchased under
this Agreement at the time outstanding (including securities into which such
securities are convertible), each future holder of all such securities, and the
Company.
7.11 Severability. If one or more provisions of this Agreement are
------------
determined to be unenforceable under applicable law, such provisions 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.
7.12 Aggregation of Stock. All shares of the stock held or acquired by
--------------------
affiliated entities or persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
7.13 Attorneys' Fees. In an action or proceeding brought by a party to
---------------
this Agreement to enforce any provision of this Agreement or to seek damages for
a breach thereof, the prevailing party shall be entitled to recover the
reasonable costs and expenses incurred by it in connection with that action or
proceeding (including, but not limited to, attorneys' fees).
[The remainder of this page is left blank intentionally.]
-17-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
COMPANY:
▇▇▇▇▇▇.▇▇▇, INC.
By:_________________________
Name:_______________________
Title:______________________
▇▇▇▇▇▇.▇▇▇, Inc.
Series C Redeemable Preferred Stock
Purchase Agreement Counterpart, dated June 11, 1999
INVESTORS:
VANTAGEPOINT VENTURE PARTNERS III, LP
BY: VANTAGEPOINT VENTURE ASSOCIATES III, LLC, ITS
GENERAL PARTNER
By:_____________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Managing Member
VANTAGEPOINT COMMUNICATIONS PARTNERS, LP
BY: VANTAGEPOINT COMMUNICATIONS
ASSOCIATES, LLC, ITS GENERAL PARTNER
By:_____________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Managing Member
HKL I, LLC
By:_____________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, General Partner
▇▇▇▇▇▇.▇▇▇, Inc.
Series C Redeemable Preferred Stock
Purchase Agreement, dated June 11, 1999
INVESTORS:
GCW&F INVESTMENT PARTNERS
BY: ▇▇▇▇ ▇▇▇▇ CORPORATION, ITS MANAGING
PARTNER
By: _______________________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President and Chief Financial Officer
▇▇▇▇▇ ▇▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇.▇▇▇, Inc.
Series C Redeemable Preferred Stock
Purchase Agreement, dated June 11, 1999
EXHIBIT A
---------
Schedule of Investors
--------------------------------------------------------------------------------------------------------------------------------
Number of
Shares of
Number of Shares of Series C Redeemable
Common Stock Preferred Stock
Name Purchased Purchased Total Amount Invested ($)
--------------------------------------------------------------------------------------------------------------------------------
VantagePoint Venture
Partners III, LP 270,742 667 $ 6,666,666.67
--------------------------------------------------------------------------------------------------------------------------------
VantagePoint Communications
Partners, LLP 135,372 333 $ 3,333,333.33
-------------------------------------------------------------------------------------------------------------------------------
HKL I, LLC 38,581 95 $ 950,000.00
--------------------------------------------------------------------------------------------------------------------------------
GCW&F Investment Partners 1,624 4 $ 40,000.00
--------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ 406 1 $ 10,000.00
--------------------------------------------------------------------------------------------------------------------------------
Total: 446,725 1,100 $11,000,000.00
Exhibit B
---------
Second Amended and Restated Certificate of Incorporation
Exhibit C
---------
Schedule of Exceptions
Exhibit D
---------
Form of Opinion Letter of Counsel
(Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇)
Exhibit D-1
-----------
Form of Opinion Letter of Counsel
(▇▇▇▇▇, Winter)
Exhibit E
---------
Investors Rights Agreement
