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EXHIBIT 10.5
ACCELERATED NETWORKS, INC.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
FEBRUARY 24, 1999
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ACCELERATED NETWORKS, INC.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
FEBRUARY 24, 1999
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TABLE OF CONTENTS
PAGE
1. AUTHORIZATION AND SALE OF SHARES...................................................1
1.1 Authorization...............................................................1
1.2 Agreement to Purchase and Sell..............................................1
2. CLOSING DATE; DELIVERY.............................................................1
2.1 The Closing.................................................................1
2.2 Delivery....................................................................1
3. COMPANY REPRESENTATIONS AND WARRANTIES.............................................2
3.1 Organization and Standing...................................................2
3.2 Capitalization..............................................................2
3.3 Subsidiaries................................................................3
3.4 Due Authorization...........................................................3
3.5 Valid Issuance of Stock.....................................................3
3.6 Financial Statements; Absence of Changes....................................4
3.7 Title to Properties and Assets..............................................4
3.8 Intellectual Property.......................................................4
3.9 Material Contracts and Obligations..........................................5
3.10 Litigation..................................................................5
3.11 Governmental Consents.......................................................5
3.12 Third Party Consents........................................................6
3.13 Compliance with Other Instruments...........................................6
3.14 Disclosure..................................................................6
3.15 Registration Rights.........................................................6
3.16 Tax Matters.................................................................6
3.17 Tax Elections...............................................................6
3.18 Shareholders, Directors and Officers........................................7
3.19 Employees...................................................................7
3.20 Permits.....................................................................7
3.21 Employee Benefit Plans......................................................7
3.22 Year 2000 Compliance........................................................
4. REPRESENTATIONS AND WARRANTIES OF INVESTOR.........................................8
4.1 Due Authorization...........................................................8
4.2 Investigation...............................................................8
4.3 Purchase for Own Account....................................................8
4.4 Exempt from Registration....................................................8
4.5 Economic Risk...............................................................9
4.6 Restricted Securities.......................................................9
4.7 Restrictive Legends.........................................................9
4.8 Further Limitations on Disposition..........................................9
4.9 Governmental Consents......................................................10
4.10 Third Party Consents.......................................................10
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TABLE OF CONTENTS (continued)
PAGE
5. CONDITIONS TO INVESTOR'S OBLIGATIONS AT THE CLOSING...............................10
5.1 Representations and Warranties Correct; Performance of Obligations.........10
5.2 Performance................................................................10
5.3 Amendment to Articles and Bylaws...........................................10
5.4 Opinion of Company's Counsel...............................................11
5.5 Compliance Certificate.....................................................11
5.6 Proceedings and Documents..................................................11
5.7 Investors' Rights Agreement................................................11
5.8 Voting Agreement...........................................................11
5.9 Authorizations.............................................................11
5.10 Approval of the Managing Board of Siemens..................................11
5.11 No Material and Adverse Matters Discovered.................................11
6. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING................................11
6.1 Representations and Warranties.............................................12
6.2 Payment of Purchase Price..................................................12
6.3 Restated Articles Effective................................................12
6.4 Investors' Rights Agreement................................................12
6.5 Voting Agreement...........................................................12
6.6 Board of Directors Approval................................................12
7. MISCELLANEOUS.....................................................................12
7.1 Governing Law..............................................................12
7.2 Survival...................................................................12
7.3 Successors and Assigns.....................................................12
7.4 Entire Agreement...........................................................13
7.5 Notices....................................................................13
7.6 Amendments and Waivers.....................................................13
7.7 Delays or Omissions........................................................13
7.8 Each Party to Bear Own Costs...............................................13
7.9 Third Parties..............................................................14
7.10 Finder's Fees..............................................................14
7.11 Titles and Subtitles.......................................................14
7.12 Counterparts...............................................................14
7.13 Severability...............................................................14
7.14 Confidentiality............................................................14
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TABLE OF CONTENTS (CONTINUED)
Exhibits
A - Restated Articles of Incorporation
B - Investors' Rights Amendment
C - Schedule of Exceptions
D - Amended and Restated Voting Agreement
E - List of Security Holders
F - Form of Opinion
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SERIES C PREFERRED STOCK PURCHASE AGREEMENT
This Series C Preferred Stock Purchase Agreement ("Agreement") is made this 24th
day of February 1999, by and between Accelerated Networks, Inc., a California
corporation (the "Company"), and Siemens AG, a corporation organized under the
laws of Germany (the "Investor").
In consideration of the mutual promises, covenants and conditions hereinafter
set forth, the parties hereto agree as follows:
1. AUTHORIZATION AND SALE OF SHARES
1.1 Authorization. As of the Closing (as defined below), the Company
will have authorized the issuance, pursuant to the terms and conditions of this
Agreement, Eight Million Eight Hundred Forty-Five Thousand Six Hundred
Forty-Eight (8,845,648) shares of the Company's Series C Preferred Stock, $.001
par value, having the rights, preferences, privileges and restrictions set forth
in the Amended and Restated Articles of Incorporation of the Company attached to
this Agreement as Exhibit A (the "Restated Articles").
1.2 Agreement to Purchase and Sell.
(a) The Closing. Subject to the terms and conditions hereof, at the
Closing, the Company will issue and sell to Investor, and Investor will purchase
from the Company, 8,845,648 shares of Series C Preferred Stock at a price of
$3.3915 per share.
(b) Payment of Purchase Price for Shares. All shares of Series C
Preferred Stock to be sold to Investor pursuant to this Agreement are
hereinafter referred to collectively as the "Shares." The aggregate purchase
price for the Shares shall be Thirty Million dollars ($30,000,000). The parties
acknowledge that Investor has previously paid to the Company the sum of Two
Million dollars ($2,000,000) (the "Deposit") pursuant to that certain Memorandum
of Terms for a Strategic Investment in Accelerated Networks, Inc. (the
"Memorandum of Terms") dated February 5, 1999 between the Company and Investor.
The Deposit shall be applied to the aggregate purchase price, and Investor shall
pay Twenty-Eight Million dollars ($28,000,000) to the Company by way of wire
transfer of immediately available funds.
2. CLOSING DATE; DELIVERY
2.1 The Closing. The purchase and sale of the Shares pursuant to
Paragraph 1.2(a) shall be held at the offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
in Irvine, California, on March 7, 1999, or at such other time and place prior
to March 7, 1999 as the Company and Investor may mutually agree upon in writing
(the "Closing").
2.2 Delivery. The Company will deliver to Investor a certificate
representing the shares to be purchased by Investor against payment of the
amount required by Section 1.2(b).
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3. COMPANY REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to Investor that, except as
set forth in the Schedule of Exceptions ("Schedule of Exceptions") attached to
this Agreement as Exhibit C (which Schedule of Exceptions shall be deemed to be
representations and warranties to Investor), the statements in the following
paragraphs of this Section 3 are all true and correct:
3.1 Organization and Standing. 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 all
corporate power and authority to own, lease and operate its properties and to
conduct its business as currently conducted and as proposed to be conducted. The
Company is qualified to do business as a foreign corporation in each
jurisdiction in which the conduct of its business requires such qualification
except where failure to be so qualified would have a material adverse effect on
its financial condition, business or operations. The Company has made available
to Investor true, correct and complete copies of its Articles of Incorporation
and Bylaws.
3.2 Capitalization. Immediately prior to the Closing (and after the
filing of the Restated Articles with the California Secretary of State), the
authorized capital stock of the Company will consist of (i) Seventy-Five Million
(75,000,000) shares of Common Stock, of which Nine Million Three Hundred
Twenty-Five Thousand (9,325,000 ) shares are issued and outstanding, and (ii)
Thirty-One Million Nine Hundred Forty-Five Thousand Six Hundred Forty-Eight
(31,945,648) shares of Preferred Stock, of which (A) Eleven Million Five Hundred
Thousand (11,500,000) shares have been designated Series A Preferred Stock,
Eleven Million Two Hundred Twenty Thousand (11,220,000) of which shares are
issued and outstanding, (B) Eleven Million Six Hundred Thousand (11,600,000)
shares have been designated Series B Preferred Stock, Eleven Million Five
Hundred Eighty-Four Thousand Eight Hundred Forty-Eight (11,584,848) of which
shares are issued and outstanding and (C) Eight Million Eight Hundred Forty-Five
Thousand Six Hundred Forty-Eight (8,845,648) shares have been designated Series
C Preferred Stock, all of which may be sold to Investor pursuant to this
Agreement. The Company has reserved Eight Million Eight Hundred Forty-Five
Thousand Six Hundred Forty-Eight (8,845,648) additional shares of its Common
Stock for possible issuance upon the conversion of the Shares (the "Conversion
Shares"). After the filing of the Restated Articles with the California
Secretary of State, except for (i) the conversion privileges of the Shares, the
Company's Series A Preferred Stock and the Company's Series B Preferred Stock,
(ii) the rights provided in the Restated Investors' Rights Agreement dated as of
May 15, 1998, among the Company and certain of its shareholders, as amended by
an amendment (the "Investors' Rights Amendment") in the form attached hereto as
Exhibit B (as so amended, the "Investors' Rights Agreement"), and (iii) the Six
Million (6,000,000) shares of Common Stock authorized for issuance under the
Company's 1997 Stock Option/Stock Issuance Plan (the "Plan"), of which Two
Million Four Hundred Twenty-Five Thousand (2,425,000) shares have been issued
and are outstanding pursuant to the exercise of options and Two Million Six
Thousand Seven Hundred Twenty (2,006,720) shares are issuable upon exercise of
outstanding options, there are no options, warrants, conversion privileges or
other rights, or agreements with respect to the issuance thereof, presently
outstanding to purchase any of the capital stock of the Company. All shares are
duly authorized, validly issued, fully paid and nonassessable and have been
issued by the Company in compliance with the registration requirements of
securities laws. Apart from the
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exceptions noted in this Paragraph 3.2, no shares of the Company's outstanding
capital stock, or stock issuable upon exercise or exchange of any outstanding
options or other stock issuable by the Company, are subject to any rights of
first refusal or other rights to purchase such stock (whether in favor of the
Company or any other person), pursuant to any agreement or commitment of the
Company. Attached to this Agreement as Exhibit E is a complete list of all
outstanding shareholders, option holders and other security holders of the
Company as of the time immediately prior to the Closing (and after the filing of
the Restated Articles with the California Secretary of State, other than option
exercises which may occur between the date hereof and the Closing).
3.3 Subsidiaries. The Company has no subsidiaries and does not presently
own or control, directly or indirectly, any interest in any other corporation,
partnership, trust, joint venture, association, or other entity.
3.4 Due Authorization. All corporate action on the part of the Company,
its officers, directors and shareholders, necessary for the sale and issuance of
the Shares and the Conversion Shares and the performance of the Company's
obligations under this Agreement, the Investors' Rights Agreement and the Voting
Agreement (as defined herein) has been taken or will be taken prior to the
Closing. This Agreement and the Investors' Rights Agreement are valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, moratorium, reorganization and similar laws affecting
creditors' rights generally and to general equitable principles. The Shares are
not subject to any preemptive rights or rights of first refusal pursuant to any
agreement or commitment of the Company. The execution, delivery and performance
by the Company of this Agreement and compliance herewith and the sale and
issuance of the Shares and Common Stock issuable upon conversion of the Shares
will not result in any violation of and will not conflict with, or result in a
breach of any of the terms of, or constitute a default under, any provision of
state or federal law to which the Company is subject, the Company's Articles of
Incorporation or Bylaws, each as amended, or any provision of any mortgage,
indenture, agreement, instrument, judgment, decree, order, rule or regulation or
other restriction to which the Company is a party or by which it is bound, the
breach of or default under which would have a material adverse effect upon the
business or operations of the Company, or result in the creation of any
mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of the Company pursuant to any such term; provided, however, that the
Shares (and the Common Stock issuable upon conversion thereof) may be subject to
restrictions on transfer under state and/or federal securities laws. The shares
of Common Stock issuable upon conversion of the Shares have been duly and
validly reserved and are not subject to any preemptive rights or rights of first
refusal and, upon issuance, will be validly issued, fully paid and
nonassessable.
3.5 Valid Issuance of Stock. The outstanding capital stock of the
Company are, and the Shares, when issued, sold and delivered in accordance with
the terms of this Agreement for the consideration provided for herein, will be,
duly and validly issued, fully paid and nonassessable and are and will be free
of any liens or encumbrances created by the Company. The Conversion Shares have
been duly and validly reserved for issuance, are not subject to any preemptive
rights or rights of first refusals and upon issuance in accordance with the
terms of the Restated Articles, will be duly and validly issued, fully paid and
nonassessable.
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3.6 Financial Statements; Absence of Changes. The Company has made
available to Investor its audited financial statements at December 31, 1997 and
for the fiscal year then ended, its unaudited financial statements at December
31, 1998 and for the fiscal year then ended (each dated February 22, 1999) and
its unaudited interim financial statements at January 29, 1999 and for the one
month period then ended (each dated February 22, 1999) (collectively, the
"Financial Statements"). Except that the unaudited interim Financial Statements
do not contain footnotes and are subject to normal year end adjustments, the
Financial Statements (i) are complete and correct in all material respects and
(ii) accurately set out and describe in all material respects 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, other than (i) liabilities
incurred in the ordinary course of business subsequent to January 29, 1999 and
(ii) obligations under contracts and commitments incurred in the ordinary course
of business, which, in both cases, are not individually or in the aggregate in
excess of $300,000 or otherwise material to the financial condition or operating
results of the Company. The audited financial statements, which will be
available following the Closing, will not be different in any material respect
from the unaudited Financial Statements at December 31, 1998 and for the fiscal
year then ended. Since January 29, 1999, there has not been (i) any sale,
assignment or transfer of any patents, trademarks, copyrights, trade secrets or
other intangible assets owned by the Company; (ii) any resignation or
termination of employment of any key officer of the Company; (iii) any mortgage,
pledge, transfer of a security interest in, or lien, created by the Company,
with respect to any of its material properties or assets, except liens for taxes
not yet due or payable; (iv) any loans or guarantees made by the Company to or
for the benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business; (v) any declaration, setting aside or payment
or other distribution in respect of any of the Company's capital stock, or any
direct or indirect redemption, purchase or other acquisition of any of such
stock by the Company; or (vi) any other event or condition of any character
which is reasonably likely to materially and adversely affect the assets,
financial condition, properties, operating results or business of the Company.
3.7 Title to Properties and Assets. The Company has good and marketable
title to its properties and assets held in each case subject to no mortgage,
pledge, lien, encumbrance, security interest or charge of any kind, except such
mortgage, pledge, lien, encumbrance, security interest or charge that arises in
the ordinary course of business and does not materially impair the Company's
ownership or use of such property. With respect to the property and assets it
leases, the Company is in compliance with such leases and, to the Company's
knowledge, the Company holds valid leasehold interests in such assets free of
any liens, encumbrances, security interests or claims of any party other than
the lessors of such property and assets.
3.8 Intellectual Property. To the Company's knowledge (but without
having conducted any special investigation or patent search), the Company has
sufficient title, license and/or ownership of all patents, trademarks, service
marks, trade names, copyrights, trade secrets, information, proprietary rights
and processes necessary for its business as now conducted without any conflict
with or infringement of the rights of others. Except for the agreements with its
own employees or consultants referenced in Paragraph 3.9 and licensing
agreements entered into by the Company in the ordinary course of its business,
there are no outstanding options, licenses, or agreements of the Company
relating to the foregoing, and the Company is not a party
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or bound by any options, licenses or agreements 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.
Neither the Company; nor to its knowledge any of its employees, has 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 warrants that to the actual knowledge of
its executive officers, no employee of the Company 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 conflict with his obligation to use his best
efforts to promote the interests of the Company or that would conflict with the
Company's business. Reasonable security measures have been taken to protect the
secrecy, confidentiality and value of the proprietary information referred to in
this Section 3.8.
3.9 Material Contracts and Obligations. The Company has made available
to counsel for Investor accurate copies of all agreements, contracts, leases,
licenses, instruments, commitments, indebtedness, liabilities and other
obligations, written or to the knowledge of the Company, oral, absolute or
contingent, to which the Company is a party or by which it is bound that are (i)
material to the conduct and operations of its business and properties; (ii)
involve any of the officers, consultants, directors, employees or shareholders
of the Company; or (iii) obligate the Company to share, license or develop any
product or technology (except licensing agreements entered into by the Company
in the ordinary course of its business). All employees of the Company have
executed a "Proprietary Information and Inventions Agreement" concerning
non-disclosure of confidential information and assignment of inventions to the
Company in a form previously delivered to counsel for Investor. For purposes of
this Paragraph 3.9, "material" shall mean any agreement, contract, indebtedness,
liability or other obligation committing either party in an amount in excess of
$50,000.
3.10 Litigation. There are no actions, proceedings or investigations
pending or, to the Company's knowledge, threatened, against or affecting the
Company or its property, that, either in any case or in the aggregate, might
result in any material adverse change in the business, prospects, condition,
affairs or operations of the Company or in any of its properties or assets, in
any material impairment of the right or ability of the Company to carry on its
business as now conducted and as proposed to be conducted, or in any change in
the current equity ownership of the Company, and none that questions the
validity of this Agreement or any action taken or to be taken in connection
herewith.
3.11 Governmental Consents. Except for filings of (i) the Restated
Articles of Incorporation of the Company with the Secretary of the State of
California and (ii) notices required or permitted to be filed with certain
federal and state securities commissions (which the Company agrees to timely
file), no consents, approvals, orders, authorizations or registrations,
qualifications, designations, declarations or filings with any federal or state
governmental authority on the part of the Company is required in connection with
the valid execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein. Based in part on the
representations of Investor set forth in Paragraph 4 below, the offer, sale and
issuance of the Shares in conformity with the terms of this Agreement are exempt
from the registration and prospectus delivery requirements of the Securities Act
of 1933, as amended
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(the "Securities Act"), and have been qualified or are exempt from
qualifications under all applicable state securities qualification requirements.
3.12 Third Party Consents. Except as set forth above in Section 3.11,
all third party consents, approvals, orders or authorizations required to be
obtained by the Company in connection with the consummation of the transactions
contemplated herein have been obtained.
3.13 Compliance with Other Instruments. The Company is not in violation,
breach or default of any term of its Articles of Incorporation or Bylaws or, in
any material respect, of any term or provision of any mortgage, indenture,
contract, agreement or instrument to which the Company is a party or by which it
may be bound, or of any provision of any foreign or domestic state or federal
judgment, decree, order, statute, rule or regulation applicable and material to
the Company. The execution, delivery and performance of, and compliance with,
this Agreement and the consummation of the transactions contemplated hereby will
not result in any such. violation or default, or be in conflict with or
constitute, with or without the passage of time or the giving of notice or both,
(i) a default under the Company's Articles of Incorporation or Bylaws, or under
any agreement or contract of the Company, (ii) to the Company's knowledge, a
violation of any statutes, laws, regulations or orders, or (iii) an event which
results in the creation of any lien, charge or encumbrance upon any asset of the
Company.
3.14 Disclosure. No representation or warranty by the Company in this
Agreement or in any written statement or certificate signed by the President of
the Company furnished pursuant to this Agreement contains or will contain any
untrue statement of a material fact, or omits to state a material fact, in each
case which would cause the statements made herein or therein in the light of the
circumstances under which they were made to be materially misleading. The minute
books of the Company provided to the Investor contain complete and accurate
records of all meetings and other corporate actions of its shareholders and its
Board of Directors and committees thereof. The stock ledger of the Company is
complete and accurate and reflects all issuances, transfers, repurchases and
cancellations of shares of capital stock of the Company. The Company believes in
good faith that the assumptions made by the Company in preparing the 1999
Business Plan and any financial projections previously provided to Investor were
reasonable when made.
3.15 Registration Rights. Except as provided in the Investors' Rights
Agreement, the Company has not granted or agreed to grant any person or entity
any rights (including piggy-back registration rights) to have any securities of
the Company registered with the United States Securities and Exchange Commission
("SEC") or any other governmental authority.
3.16 Tax Matters. To the Company's knowledge, the Company has no unpaid
federal, state, county or local taxes. There have been no examinations or audits
of any tax returns or reports of the Company by any applicable federal, state or
local governmental agency. The Company has duly filed all federal, state, county
and local tax returns required to have been filed by it and paid all taxes shown
to be due on such returns. There are in effect no waivers of applicable statutes
of limitations with respect to taxes for any year.
3.17 Tax Elections. The Company has not elected pursuant to the Internal
Revenue Code of 1986, as amended (the "Code"), to be treated as a Subchapter S
corporation or
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collapsible corporation pursuant to Section 1362(a) or Section 341(f) of the
Code, nor has it made any other elections pursuant to the Code (other than
elections which relate solely to matters of accounting, depreciation or
amortization) which would have a material adverse affect on the Company, its
financial condition, its business as presently conducted or presently proposed
to be conducted or any of its properties or material assets.
3.18 Shareholders, Directors and Officers. To the actual knowledge of
the Company's executive officers and without any inquiry of any of the following
individuals, none of the officers or directors or significant employees or
consultants of the Company, has, individually or collectively, a material
interest in any entity which is a competitor, customer or supplier of (or has
any existing contractual relationship with) the Company, other than holdings of
less than 1% of publicly-held entities.
3.19 Employees. To the Company's knowledge, no employee of the Company
is in violation of any term of any employment contract, patent disclosure
agreement, non-competition agreement, or any restrictive covenant to a former
employer relating to the right of any such employee to be employed by the
Company because of the nature of the business conducted or presently proposed to
be conducted by the Company or to the use of trade secrets or proprietary
information of others. There is neither pending nor, to the Company's knowledge,
threatened any actions, suits, proceedings or claims, or to its knowledge any
basis therefor or threat thereof, with respect to any contract, agreement,
covenant or obligation referred to in the preceding sentence. The Company does
not have any collective bargaining agreement covering any of its employees. No
employee of the Company has an employment agreement or a severance arrangement
with the Company and such employees are employed on an "at will" basis.
3.20 Permits. To the Company's knowledge, the Company has such material
permits, licenses, franchises, authorizations and clearances of governmental or
regulatory authorities ("Permits") as are necessary to own its properties and to
conduct its business as presently conducted. The Company has fulfilled and
performed all its material obligations with respect to its Permits, and no event
has occurred that allows or would allow revocation or termination thereof or
results or would result in any other material impairment of the rights of the
Company.
3.21 Employee Benefit Plans. To the Company's knowledge, the Company is
and has been in compliance with all applicable laws, rules and regulations
relating to employment and employment practices, terms and conditions of
employment, wages and hours and the provisions of all laws or rules or
regulations applicable to any employee benefit compensation, stock option or
other similar plan, maintained or contributed to by it for the benefit of its
employees, the failure of which would have a material adverse effect on the
Company and its financial position. There are no claims (other than routine
claims for benefits) pending or threatened with respect to any of such plans or
arrangements.
3.22 Year 2000 Compliance.
To the Company's knowledge, (a) all Calendar-Related processing by its
products of Date Data or of any System Date will not cause its products to cease
to operate substantially in accordance with their specifications, (b) all data
fields for the Date Data contained in its products are four-digit fields capable
of indicating century and millennium, and (c) no change in the
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System Date (including the change from the year 1999 to the year 2000) will
cause its products to cease to operate substantially in accordance with their
specifications. Notwithstanding any provision to the contrary set forth in this
Agreement, the Company makes no representation or warranty with respect to its
products operating in conjunction with any computer software, computer firmware,
computer hardware, or any combination of the foregoing supplied by third
parties. As used in this Section 3.22, the following terms shall have the
meanings set forth below:
"Calendar-Related" refers to date values based on the Gregorian calendar
as defined in Encyclopedia Britannica, 15th edition, 1982, page 602, and
to all uses of those date values described in the Company's product
specifications.
"Date Data" means any Calendar-Related data in the inclusive range
January 1, 1900 through December 31, 2050 that the Company's products
use in any manner.
"System Date" means any Calendar-Related date value in the inclusive
range from January 1, 1985 through December 31, 2035 (including the
transition between such values) that the Company's products will be able
to use as their current date while operating.
4. REPRESENTATIONS AND WARRANTIES OF INVESTOR
Investor represents and warrants to the Company as follows:
4.1 Due Authorization. All corporate action on the part of Investor, and
its officers, directors, partners and shareholders, necessary for the purchase
of the Shares and the performance of Investor's obligations under this
Agreement, the Investors' Rights Agreement and the Voting Agreement (as defined
herein) has been taken or will be taken prior to the Closing. This Agreement and
the Investors' Rights Agreement are valid and binding obligations of Investor
enforceable in accordance with their terms, subject, as to enforcement of
remedies, to applicable bankruptcy, insolvency, moratorium, reorganization and
similar laws affecting creditors' rights generally and to general equitable
principles.
4.2 Investigation. Investor acknowledges that it has had an opportunity
to discuss the business, affairs and current prospects of the Company with the
Company's officers. Investor further acknowledges having had access to
information about the Company that it has requested or considers necessary for
purposes of purchasing the Shares.
4.3 Purchase for Own Account. The Shares that Investor will purchase
hereunder and the Conversion Shares issuable upon conversion of such Shares will
be acquired by such Investor, not as a nominee or agent, and not with a view to
or in connection with the distribution of any part thereof within the meaning of
the Securities Act. Investor is an "accredited investor" within the meaning of
Regulation D of the Securities Act.
4.4 Exempt from Registration. Investor understands that the Shares and
the Conversion Shares (collectively, the "Securities") will not be registered
under the Securities Act, on the ground that the sale provided for in this
Agreement is exempt from registration under the
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Securities Act, and that the reliance of the Company on such exemption is
predicated in part on Investor's representations set forth in this Agreement.
4.5 Economic Risk. Investor acknowledges that it is experienced in
evaluating and investing in securities of companies in the development stage and
acknowledges that it is able to fend for itself in the transactions contemplated
by this Agreement and has the ability to bear the economic risks of its
investment pursuant to this Agreement.
4.6 Restricted Securities. Investor understands that the Securities may
not be sold, transferred, or otherwise disposed of without registration under
the Securities Act or an exemption therefrom, and that, in the absence of an
effective registration statement covering the Securities or an available
exemption from registration under the Securities Act, the Securities must be
held indefinitely. In particular, Investor is aware that the Securities may not
be sold pursuant to Rule 144 promulgated under the Securities Act unless (i)
adequate information concerning the Company is then available to the public,
(ii) such Investor has held the Securities for the applicable holding period
specified in Rule 144 and (iii) all other terms and conditions of Rule 144 are
satisfied.
4.7 Restrictive Legends. It is understood that each certificate
representing (i) the Shares, (ii) the Conversion Shares, and (iii) any other
securities issued in respect of the Shares upon any stock split, stock dividend,
recapitalization, merger or similar event (unless no longer required in the
opinion of counsel for the Company) shall be stamped or otherwise imprinted with
legends substantially in the following forms (in addition to any legend that may
now or hereafter be required by applicable federal or state law):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. THEY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO SUCH SECURITIES, THE AVAILABILITY OF CERTAIN EXEMPTIONS FROM
SUCH REGISTRATION REQUIREMENTS, OR DELIVERY OF AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER OF SUCH SECURITIES THAT SUCH OFFER, SALE,
TRANSFER, PLEDGE OR HYPOTHECATION IS IN FULL COMPLIANCE WITH THE
SECURITIES ACT OF 1933, AS AMENDED."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS SET FORTH IN THAT CERTAIN RESTATED INVESTORS' RIGHTS
AGREEMENT, AS AMENDED, AND THAT CERTAIN AMENDED AND RESTATED VOTING
AGREEMENT, AS AMENDED, COPIES OF WHICH MAY BE OBTAINED BY THE HOLDER,
UPON REQUEST AND WITHOUT CHARGE, AT THE PRINCIPAL OFFICE OF THE
CORPORATION."
4.8 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, Investor further agrees not to make any
disposition of all or any
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portion of the Shares or Conversion Shares unless and until the transferee has
agreed in writing for the benefit of the Company to be bound by this Section 4,
the Investors' Rights Agreement and the Voting Agreement; provided, and to the
extent, this Section and such agreements are then applicable, and:
(a) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(b) (i) 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, Investor shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company that such disposition
will not require registration of such shares under the Securities Act. It is
agreed that the Company will not require opinions of counsel from Investor for
transactions made pursuant to Rule 144 under the Securities Act except in
unusual circumstances and will not require opinions of counsel in transactions
involving the transfer or distribution of the Shares by Investor to any direct
or indirect subsidiary, parent or affiliate of Investor.
4.9 Governmental Consents. All consents, approvals, orders,
authorizations or registrations, qualifications, designations, declarations or
filings with any U.S., federal or state governmental authority on the part of
Investor required in connection with the consummation of the transactions
contemplated herein shall have been obtained prior to and be effective as of the
Closing.
4.10 Third Party Consents. All third party consents, approvals, orders
or authorizations required to be obtained by Investor in connection with the
consummation of the transactions contemplated herein have been obtained.
5. CONDITIONS TO INVESTOR'S OBLIGATIONS AT THE CLOSING
The obligation of Investor to purchase the Shares at the Closing is
subject to the fulfillment to the satisfaction of Investor on or prior to the
Closing of the following conditions:
5.1 Representations and Warranties Correct; Performance of Obligations.
The representations and warranties made by the Company in Section 3 hereof shall
be true and correct when made, and shall be true and correct as of the Closing
with the same force and effect as if they had been made on and as of said date,
subject to changes contemplated by this Agreement.
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 and
shall have obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein.
5.3 Amendment to Articles and Bylaws. The Restated Articles shall have
been duly adopted by the Company by all necessary corporate action of its Board
of Directors and shareholders and shall have been duly filed with and accepted
by the California Secretary of
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State. The Company's bylaws shall have been amended to provide that the
Company's Board of Directors shall be comprised of not less than 5 nor more than
8 directors.
5.4 Opinion of Company's Counsel. Investor shall have received from
counsel to the Company, an opinion, in substantially the form attached hereto as
Exhibit F addressed to Investor, dated the date of Closing.
5.5 Compliance Certificate. At the Closing there shall have been
delivered to Investor a certificate, dated as of such date of Closing, signed by
the Company's President certifying that the conditions specified in Paragraphs
5.1 and 5.2 of this Agreement have been fulfilled.
5.6 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be satisfactory in
substance and form to Investor, and Investor shall have received all such
counterpart originals or certified or other copies of such documents as Investor
may reasonably request.
5.7 Investors' Rights Agreement. The required parties shall have
executed the Investors' Rights Amendment, and the Investors' Rights Agreement
shall be in full force and effect.
5.8 Voting Agreement. The required parties shall have executed an
Amended and Restated Voting Agreement dated as of February 24, 1999 among the
Company and certain of its shareholders (the "Voting Agreement") in
substantially the form attached hereto as Exhibit D, and the Voting Agreement
shall be in full force and effect.
5.9 Authorizations. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body (including, without limitation,
federal and state securities commissions) that are required in connection with
the lawful issuance and sales of the Shares pursuant to this Agreement shall
have been duly obtained and shall be effective on and as of the Closing.
5.10 Approval of the Managing Board of Siemens. The purchase of the
Company's Series C Preferred Stock pursuant to this Agreement shall have been
approved by the Managing Board of Directors of Siemens AG, and Investor shall
have obtained all other necessary board approvals.
5.11 No Material and Adverse Matters Discovered. There shall have been
no material adverse change in the business, prospects, condition, affairs or
operations of the Company or in any of its properties or assets, or in any
material impairment of the right or ability of the Company to carry on its
business as now conducted and as proposed to be conducted.
6. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING
The obligations of the Company under this Agreement are subject to the
fulfillment at or before the Closing of the following conditions:
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6.1 Representations and Warranties. The representations and warranties
of Investor contained in Section 4 hereof shall be true as of the Closing with
the same force and effect as if they had been made on and as of said date,
subject to changes contemplated by this Agreement.
6.2 Payment of Purchase Price. Investor shall have delivered to the
Company the remaining purchase price for the Shares as set forth in Section 1.2
(b) hereof.
6.3 Restated Articles Effective. The Restated Articles shall have been
duly adopted by the Company by all necessary corporate action of its Board of
Directors and shareholders, and shall have been duly filed with and accepted by
the California Secretary of State.
6.4 Investors' Rights Agreement. The required parties shall have
executed the Investors' Rights Amendment, and the Investors' Rights Agreement
shall be in full force and effect.
6.5 Voting Agreement. The required parties shall have executed the
Voting Agreement, and the Voting Agreement shall be in full force and effect.
6.6 Board of Directors Approval. The Company's Board of Directors and
shareholders shall have approved the sale of the Company's Series C Preferred
Stock pursuant to this Agreement.
7. MISCELLANEOUS
7.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California, without
regard to the conflict of law provisions thereof. All unresolved disputes
arising under this Agreement shall be submitted to, and resolved exclusively by,
arbitration to be held in Los Angeles County, California. The arbitration shall
be conducted under the then-prevailing rules of the American Arbitration
Association. The award of the arbitrator shall be binding and may be entered as
a judgment in any court of competent jurisdiction. Each party shall bear the
cost of preparing and presenting its case. The costs of the arbitration,
including the fees and expenses of the arbitrator, will be paid by the
non-prevailing party, as determined by the arbitrator. This provision shall not
be construed to prohibit either party from seeking preliminary or permanent
injunctive relief in any court of competent jurisdiction
7.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any party hereto and the
closing of the transactions contemplated hereby for a period of two (2) years
from the Closing.
7.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the respective successors and assigns of the parties hereto. Investor may
assign its rights and obligations under this Agreement to any affiliate or
subsidiary of Investor. 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.
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7.4 Entire Agreement. Except for the Memorandum of Terms and all
obligations thereunder, which shall be unaffected by this Agreement and which
shall remain in full force and effect until the Closing of this Agreement, this
Agreement and the other documents and agreements referred to herein, constitute
the entire understanding and agreement between the parties with regard to the
subject matter hereof.
7.5 Notices. Except as otherwise provided, all notices and other
communications required or permitted hereunder shall be in writing, shall be
effective when given, and shall in any event be deemed to be given upon receipt
or, if earlier, (i) five (5) days after deposit with the U.S. postal service or
other applicable postal service, if delivered by first class mail, postage
prepaid, (ii) upon delivery, if delivered by hand, (iii) one (1) business day
after the day of deposit with Federal Express or similar overnight courier,
freight prepaid, if delivered by overnight courier or (iv) one (1) business day
after the day of facsimile transmission, if delivered by facsimile transmission
with copy by first class mail, postage prepaid, and shall be addressed, (a) if
to Investor, at Investor's address set forth below its signature, or at such
other address as such Investor shall have furnished the Company in writing, or
(b) if to the Company, at its address as set forth below, or at such other
address as the Company shall have furnished to Investor in writing.
7.6 Amendments and Waivers. This Agreement and any term hereof may be
amended, waived, discharged or terminated by a written instrument signed by the
Company and holders of sixty-six and sixty-six hundredths percent (66.66 %) or
more of the shares of Common Stock issued or issuable upon conversion of the
Series C Preferred Stock issued under this Agreement. In no event shall the
obligation of any Investor to purchase shares hereunder be increased, except
upon the written consent of such Investor.
7.7 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to the Company or to Investor upon a breach or default
of any party hereto under this Agreement shall impair any such right, power or
remedy of the Company or Investor, nor shall it be construed to be a waiver of
any such breach or default, or an acquiescence therein, or of any similar breach
or default thereafter occurring. Any waiver, permit, consent or approval of any
kind or character on the part of the Company or Investor of a breach or default
under this Agreement, or any waiver on the part of the Company or Investor of
any provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to the
Company or Investor, shall be cumulative and not alternative.
7.8 Each Party to Bear Own Costs. Except as otherwise provided in
Section 7.10, each of the parties shall pay all costs and expenses incurred or
to be incurred by it in negotiating and preparing this Agreement and in closing
and carrying out the transactions contemplated by this Agreement.
Notwithstanding the foregoing, promptly after the Closing (and only if (i) this
Agreement is executed on or prior to February 24, 1999, (ii) the Investor is
prepared to consummate the Closing on or before March 1, 1999, and (iii) the
Closing actually is consummated), the Company shall reimburse the Investor up to
$15,000 for the reasonable fees and expenses of one special counsel to the
Investor.
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7.9 Third Parties. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third person to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action against any party to this Agreement.
7.10 Finder's Fees.
(a) The Company hereby agrees to indemnify and to hold Investor harmless
of and from any liability for commission or compensation in the nature of a
finder's fee of any broker or other person or firm (and the costs and expenses
of defending against such liability or asserted liability) for which the
Company, or any of its employees or representatives, is responsible.
(b) Investor hereby agrees to indemnify and to hold the Company harmless
of and from any liability for any commission or compensation in the nature of a
finder's fee to any broker or other person or firm (and the costs and expenses
of defending against such liability or asserted liability) for which such
Investor, or any of its employees or representatives, is responsible.
7.11 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
7.12 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.
7.13 Severability. Should any provision of this Agreement be determined
to be illegal or unenforceable, such determination shall not affect the
remaining provisions of this Agreement.
7.14 Confidentiality. Each of the parties hereto agree that, except with
the prior written permission of the other party, it shall at all times keep
confidential and not divulge, furnish, or make accessible to anyone any
confidential information, knowledge, or data concerning or relating to the
business or financial affairs of the other party to which said party has been or
shall become privy by reason of this Agreement, the Voting Agreement,
discussions or negotiations relating to this Agreement, or the performance of
its obligations hereunder; provided, the foregoing restrictions shall not apply
to any information, knowledge or data which (a) is already in the public domain
at the time of disclosure or becomes publicly available through no breach of
this provision by said party; (b) was lawfully in said party's possession prior
to receipt from the other party without obligation of confidentiality; (c) is
received independently from a third party free to lawfully disclose such
information to said party; (d) is subsequently independently developed by said
party; or (e) is required to be disclosed by court order or applicable law.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year hereinabove first written.
THE COMPANY:
ACCELERATED NETWORKS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
INVESTOR:
SIEMENS AG
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
Name & Title: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
By: /s/ ▇▇▇▇-JAUCHIM ▇▇▇▇▇▇
------------------------------------------
Name & Title: ▇▇▇▇-Jauchim ▇▇▇▇▇▇, CFO
Address: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇-▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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