Exhibit 10.23
NETREON, INC.
SERIES A PREFERRED STOCK
CONTRIBUTION AGREEMENT
JANUARY 29, 2002
NETREON, INC.
SERIES A PREFERRED STOCK
CONTRIBUTION AGREEMENT
This Series A Preferred Stock Contribution Agreement (the "Agreement") is
made and entered into as of January 29, 2002, by and between Netreon, Inc., a
Delaware corporation (the "Company"), and Peerless Systems Corporation, a
Delaware corporation ("Peerless").
Recitals
Whereas, the transactions contemplated herein are intended to qualify as a
tax-free reorganization under Section 354 of the Internal Revenue Code of 1986,
as amended;
Whereas, the Company desires to exchange seven million seven hundred
fourteen thousand two hundred eighty-six (7,714,286) of its Series A Preferred
Stock (the "Preferred Shares") for all of the outstanding capital stock of
Netreon, Inc. a California corporation ("Netreon California" and the "Netreon
California Stock") all of which is held by Peerless, on the terms and conditions
set forth herein; and
Whereas, Peerless desires to exchange all of the outstanding capital stock
of Netreon California held by it for the Preferred Shares on the terms and
conditions set forth herein.
Agreement
Now, Therefore, in consideration of the foregoing recitals and the mutual
promises, representations, warranties, and covenants hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Agreement to Exchange.
1.1 Authorization of Shares. The Company has authorized (a) the
issuance to Peerless of the Preferred Shares and (b) the issuance of such shares
of Common Stock issuable upon conversion of the Preferred Shares (the
"Conversion Shares"). The Preferred Shares and the Conversion Shares have the
rights, preferences, privileges and restrictions set forth in the Amended and
Restated Certificate of Incorporation of the Company, in the form attached
hereto as Exhibit A (the "Restated Charter").
1.2 Issuance and Exchange. Subject to the terms and conditions hereof,
at the Closing (as hereinafter defined), the Company hereby agrees to issue to
Peerless a stock certificate evidencing the Preferred Shares and Peerless agrees
to deliver to the Company stock certificates evidencing its ownership of Netreon
California.
1.
1.3 Value. The parties hereby agree that the Preferred Shares shall
have a deemed value per share of thirty-five cents ($0.35) and that they will
take no action inconsistent with such deemed value.
2. Closing, Delivery And Payment.
2.1 Closing. The closing of the issuance and exchange of the Preferred
Shares under this Agreement (the "Closing") shall take place at 1:00 p.m. on the
date hereof, at the offices of Cooley Godward LLP, Five Palo Alto Square, 3000
El Camino Real, Palo Alto, CA, 94306-2155 or at such other time or place as the
Company and Peerless' may mutually agree (such date is hereinafter referred to
as the "Closing Date").
2.2 Delivery. At the Closing, subject to the terms and conditions
hereof, the Company will deliver to Peerless a certificate representing seven
million seven hundred fourteen thousand two hundred eighty-six (7,714,286)
shares of Series A Preferred Stock against delivery of one of more stock
certificates evidencing Peerless' one hundred percent (100%) ownership of
Netreon California.
3. Representations and Warranties of the Company.
The Company hereby represents and warrants to Peerless as of the date
of this Agreement as set forth below.
3.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite corporate power and
authority to own and operate its properties and assets. The Company has all
requisite power and authority to execute and deliver this Agreement, to issue
and exchange the Preferred Shares and the Conversion Shares, and to carry out
the provisions of this Agreement and the Restated Charter and to carry on its
business as presently conducted. The Company is duly qualified and authorized to
do business and is in good standing as a foreign corporation in all
jurisdictions in which the nature of its activities and of its properties (both
owned and leased) makes such qualification necessary, except for those
jurisdictions in which failure to do so would not have a material adverse effect
on the Company or its business.
3.2 Capitalization; Voting Rights.
(a) The authorized capital stock of the Company, immediately
prior to the Closing, consists of (i) 70,000,000 shares of Common Stock, par
value $0.001 per share, 5,500,000 shares of which are issued and outstanding,
and (ii) 56,500,000 shares of Preferred Stock, par value $0.001 per share,
36,500,000 shares of which are designated Series A Preferred Stock, none of
which are issued and outstanding.
(b) Under the Company's 2001 Equity Incentive Plan (the "Plan"),
(i) no shares have been issued pursuant to restricted stock purchase agreements
and/or the exercise of outstanding options, (ii) no options to purchase shares
have been granted and are currently outstanding, and (iii) 6,750,000 shares of
Common Stock remain available for future issuance to officers, directors,
employees and consultants of the Company.
2.
(c) Other than the shares reserved for issuance under the Plan
and except as may be granted pursuant to this Agreement, there are no
outstanding options, warrants, rights (including conversion or preemptive rights
and rights of first refusal), proxy or stockholder agreements, or agreements of
any kind for the purchase or acquisition from the Company of any of its
securities. All such preemptive rights have been properly waived or complied
with respect to all prior issuances of capital stock and with respect to the
issuance of the Preferred Shares and Conversion Shares.
(d) All issued and outstanding shares of the Company's Common
Stock (i) have been duly authorized and validly issued and are fully paid and
nonassessable, (ii) were issued in compliance with all applicable state and
federal laws concerning the issuance of securities, and (iii) are subject to a
right of first refusal in favor of the Company upon transfer.
(e) The rights, preferences, privileges and restrictions of the
Preferred Shares and the Conversion Shares are as stated in the Restated
Charter. The Conversion Shares have been duly and validly reserved for issuance.
When issued in compliance with the provisions of this Agreement and the Restated
Charter, the Preferred Shares and the Conversion Shares will be validly issued,
fully paid and nonassessable, and will be free of any liens or encumbrances
other than (i) liens and encumbrances created by or imposed upon Peerless;
provided, however, that the Preferred Shares and the Conversion Shares may be
subject to restrictions on transfer under state and/or federal securities laws
as set forth herein or as otherwise required by such laws at the time a transfer
is proposed.
3.3 Authorization; Binding Obligations. All corporate action on the
part of the Company, its officers, directors and stockholders necessary for the
authorization of this Agreement, the performance of all obligations of the
Company hereunder at the Closing and the authorization, sale, issuance and
delivery of the Preferred Shares pursuant hereto and the Conversion Shares
pursuant to the Restated Charter has been taken. This Agreement, when executed
and delivered, will be a valid and binding obligation of the Company enforceable
in accordance with its terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights and (b) general principles of equity
that restrict the availability of equitable remedies. The issuance of the
Preferred Shares and the subsequent conversion of the Preferred Shares into
Conversion Shares are not and will not be subject to any preemptive rights or
rights of first refusal that have not been properly waived or complied with.
3.4 Liabilities. The Company was incorporated in the State of Delaware
on October 24, 2001, has not commenced any operations or conducted any business
and has no material liabilities, contracts, agreements or understandings with
any party other than fees and expenses incurred in connection with the sale and
issuance of its Series A Preferred Stock pursuant to that certain Series A
Preferred Stock Purchase Agreement of even date herewith (the "Purchase
Agreement") and the other transactions contemplated hereby.
3.5 Offering Valid. Assuming the accuracy of the representations and
warranties of Peerless contained in Section 4.9 hereof, the offer, sale and
issuance of the Shares and the Conversion Shares will be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and will have been registered or qualified (or are
3.
exempt from registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities laws.
3.6 Full Disclosure. The Company has provided Peerless with all
information requested by Peerless in connection with the issuance of the
Preferred Shares in exchange for the Netreon California Stock. To the Company's
knowledge, this Agreement, the exhibits hereto and the other documents delivered
by the Company to Peerless or its attorneys or agents in connection herewith at
the Closing or with the transactions contemplated hereby or thereby, taken as a
whole, do not contain any untrue statement of a material fact nor, to the
Company's knowledge, omit to state a material fact necessary in order to make
the statements contained herein not misleading in light of the circumstances
under which they were made.
4. Representations and Warranties of Peerless.
Peerless hereby represents and warrants to the Company and the Third
Party Beneficiaries (as defined in Section 6.4) as of the date of this Agreement
as set forth below. For the purposes of this Agreement, the knowledge of
Peerless shall be deemed to also include the knowledge of Netreon California.
4.1 Organization, Good Standing and Qualification of Peerless.
Peerless is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Peerless has all requisite corporate
power and authority to own and operate its properties and assets. Peerless has
all requisite power and authority to execute and deliver this Agreement and to
carry out the provisions of this Agreement. Peerless is duly qualified and
authorized to do business and is in good standing in the State of California.
4.2 Capitalization .
(a) Netreon California is a wholly-owned subsidiary of Peerless.
(b) The authorized capital stock of the Netreon California
consists of (i) one thousand (1,000) shares of Common Stock, par value $0.001
per share, one thousand (1,000) shares of which are issued and outstanding.
(c) There are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal), proxy or
stockholder agreements, or agreements of any kind for the purchase or
acquisition from Netreon California or Peerless of any of the securities of
Netreon California. All such preemptive rights have been properly waived or
complied with respect to all prior issuances of capital stock.
(d) All issued and outstanding shares of the Netreon California's
Common Stock (i) have been duly authorized and validly issued and are fully paid
and nonassessable, (ii) were issued in compliance with all applicable state and
federal laws concerning the issuance of securities and (iii) are free of any
liens or encumbrances.
4.3 Authorization; Binding Obligations. All corporate action on the
part of Peerless, its officers, directors and stockholders necessary for the
authorization of this Agreement and the performance of all obligations of
Peerless hereunder at the Closing has been
4.
taken. This Agreement, when executed and delivered, will be a valid and binding
obligation of Peerless enforceable in accordance with its terms, except (a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights and
(b) general principles of equity that restrict the availability of equitable
remedies.
4.4 Compliance with Other Instruments. Except as set forth in the
"Schedule of Exceptions" (as such term is defined under the Purchase Agreement),
the execution, delivery, and performance of and compliance with this Agreement
and the exchange of the shares of capital stock of Netreon California for the
Preferred Shares pursuant hereto will not, with or without the passage of time
or giving of notice, result in any such material violation, or be in conflict
with or constitute a material default under any provision of Peerless' or
Netreon California's charter or bylaws or of any instrument, judgment, order,
writ, decree or contract to which either Peerless or Netreon California is a
party or by which either is bound or, to the knowledge of Peerless and Netreon
California, of any provision of federal or state statute, rule or regulation
applicable to Peerless or Netreon California., or result in the creation of any
mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of Peerless or Netreon California or the suspension, revocation,
impairment, forfeiture or nonrenewal of any permit, license, authorization or
approval applicable to Netreon California or Peerless or either of their
businesses or operations or any of their assets or properties except as any of
the foregoing that would not, individually or in the aggregate, have a material
adverse effect on the Subsidiary.
4.5 Litigation. There is no action, suit, proceeding or investigation
pending or, to Peerless' knowledge, currently threatened in writing against
Peerless or Netreon California that questions the validity of this Agreement or
the right of Peerless to enter into this Agreement, or to consummate the
transactions contemplated hereby or which might result, either individually or
in the aggregate, in any material adverse change in the assets, condition, or
affairs of Netreon California, financially or otherwise, or any change in the
current equity ownership of Netreon California, nor is Peerless aware that there
is any basis for any of the foregoing.
4.6 Solvency. Peerless further affirms the following with respect to
its financial condition:
(a) Peerless is not insolvent, as defined by 11 U.S.C. Section.
101(32);
(b) Peerless will not be rendered insolvent or have its capital
impaired as a result of the transactions contemplated by this Agreement;
(c) Peerless is not engaged in a business or about to engage in a
business for which the remaining property and assets of Peerless after the
transactions contemplated by this Agreement will leave Peerless with an
unreasonably small amount of capital to continue the operation of Peerless'
business; and
(d) Peerless has not incurred and does not believe that it will
incur debts that it will be unable to pay upon their maturity
(e) Peerless is not entering into this Agreement or any of the
other agreements referenced in this Agreement with the intent to defraud, delay
or hinder the creditors
5.
of either Peerless or Netreon California and the consummation of the
transactions contemplated by this Agreement, and the other agreements referenced
in this Agreement, will not have any such effect. The transactions contemplated
in this Agreement or any agreements referenced in this Agreement will not
constitute a fraudulent conveyance, or otherwise give rise to any right of any
creditor of Peerless or Netreon California to any of the Netreon California
Stock after the Closing.
4.7 Full Disclosure. Peerless has provided the Company with all
information requested by the Company in connection with the issuance of the
Preferred Shares in exchange for the Netreon California Stock. To Peerless'
knowledge, this Agreement, the exhibits hereto and the other documents delivered
by Peerless to the Company or its attorneys or agents in connection herewith at
the Closing or with the transactions contemplated hereby or thereby, taken as a
whole, do not contain any untrue statement of a material fact nor, to Peerless'
knowledge, omit to state a material fact necessary in order to make the
statements contained herein not misleading in the light of the circumstances
under which they were made.
4.8 Purchase Agreement Representations. Peerless affirms and
represents and warrants to the Company for the benefit of the Company, the
representations and warranties made by Peerless with respect to the Subsidiary
(as Netreon California is defined in the Purchase Agreement) contained in
Section 4 of the Purchase Agreement. Peerless agrees that the Company shall be
entitled to rely upon such representations and warranties as though made and
given by Peerless hereunder.
4.9 Investment Representations. Peerless understands that neither the
Preferred Shares nor the Conversion Shares have been registered under the
Securities Act. Peerless also understands that the Preferred Shares are being
offered and issued pursuant to an exemption from registration contained in the
Securities Act based in part upon Peerless' representations contained in this
Agreement. Peerless hereby represents and warrants as follows:
(a) Peerless Bears Economic Risk. Peerless has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Peerless must bear the economic risk of
this investment indefinitely unless the Preferred Shares (or the Conversion
Shares) are registered pursuant to the Securities Act, or an exemption from
registration is available. Peerless understands that the Company has no present
intention of registering the Preferred Shares, the Conversion Shares or any
shares of its Common Stock. Peerless also understands that there is no assurance
that any exemption from registration under the Securities Act will be available
and that, even if available, such exemption may not allow Peerless to transfer
all or any portion of the Preferred Shares, or the Conversion Shares under the
circumstances, in the amounts or at the times Peerless might propose.
(b) Acquisition for Own Account. Peerless is acquiring the
Preferred Shares and the Conversion Shares for Peerless' own account for
investment only, and not with a view towards their distribution.
6.
(c) Peerless Can Protect Its Interest. Peerless represents that
by reason of its, or of its management's, business or financial experience,
Peerless has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement. Further, Peerless is aware of no
publication of any advertisement in connection with the transactions
contemplated in the Agreement.
(d) Accredited Investor. Peerless represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
(e) Company Information. Peerless has had the opportunity to ask
questions of and receive answers from, the Company and its management regarding
the terms and conditions of this investment.
(f) Rule 144. Peerless acknowledges and agrees that the Preferred
Shares, and, if issued, the Conversion Shares are "restricted securities" as
defined in Rule 144 promulgated under the Securities Act as in effect from time
to time and must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
Peerless has been advised or is aware of the provisions of Rule 144, which
permits limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things: the
availability of certain current public information about the Company, the resale
occurring following the required holding period under Rule 144 and the number of
shares being sold during any three-month period not exceeding specified
limitations.
5. Conditions to Closing.
5.1 Conditions to Peerless' Obligations at the Closing. Peerless'
obligations to consummate the exchange for the Preferred Shares at the Closing
are subject to the satisfaction, at or prior to the Closing Date, of the
following conditions:
(a) Representations and Warranties True; Performance of
Obligations. The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects as of the Closing Date
with the same force and effect as if they had been made as of the Closing Date,
and the Company shall have performed all obligations and conditions herein
required to be performed or observed by it on or prior to the Closing.
(b) Legal Investment. On the Closing Date, the issuance and
exchange of the Preferred Shares and the proposed issuance of the Conversion
Shares shall be legally permitted by all laws and regulations to which Peerless
and the Company are subject.
(c) Consents, Permits, and Waivers. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement (except for such
as may be properly obtained subsequent to the Closing).
7.
(d) Filing of Restated Charter. The Restated Charter shall have
been filed with the Secretary of State of the State of Delaware and shall
continue to be in full force and effect as of the Closing Date.
(e) Reservation of Conversion Shares. The Conversion Shares
issuable upon conversion of the Preferred Shares shall have been duly authorized
and reserved for issuance upon such conversion.
(f) Minimum Purchase. The first closing under the Purchase
Agreement shall have concurrently occurred.
(g) 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
reasonably satisfactory in substance and form to Peerless and its special
counsel, and Peerless and its special counsel shall have received all such
counterpart originals or certified or other copies of such documents as they may
reasonably request.
(h) Assignment and Assumption of Technology Agreements. The
Assignment and Assumption of Technology Agreement substantially in the form
attached hereto as Exhibit B shall have been executed and delivered by the
Company.
(i) Software License. The [license agreement] substantially in
the form attached hereto as Exhibit C shall have been executed and delivered by
the Company.
(j) Terra Bella Lease. Peerless shall have received from the
landlord of Netreon California's Terra Bella property the full and unconditional
release of all obligations of Peerless with respect to such property and the
lease thereof in form and substance satisfactory to Peerle
5.2 Conditions to Obligations of the Company. The Company's obligation
to issue and exchange the Preferred Shares at the Closing is subject to the
satisfaction, on or prior to the Closing, of the following conditions:
(a) Representations and Warranties True. The representations and
warranties in Section 4 made by Peerless shall be true and correct in all
material respects at the date of the Closing, with the same force and effect as
if they had been made on and as of said date.
(b) Performance of Obligations. Peerless shall have performed and
complied with all agreements and conditions herein required to be performed or
complied with by Peerless on or before the Closing.
(c) Filing of Restated Charter. The Restated Charter shall have
been filed with the Secretary of State of the State of Delaware.
(d) Consents, Permits, and Waivers. Peerless shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the
8.
transactions contemplated by the Agreement (except for such as may be properly
obtained subsequent to the Closing).
(e) Minimum Purchase. The first closing under the Purchase
Agreement involving the sale of not less than $500,000 of Series A Preferred
Stock shall concurrently occur.
6. Miscellaneous.
6.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of California as such laws are applied to agreements
between California residents entered into and performed entirely in California.
6.2 Survival. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Company or
Peerless and the closing of the transactions contemplated hereby for a period of
eighteen (18) months after the Closing Date, except that the representations of
Peerless under Section 4.2 hereof shall survive for a period of three (3) years.
All statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of the Company or Peerless pursuant hereto
in connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company or Peerless, as the case may be,
hereunder solely as of the date of such certificate or instrument.
6.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Preferred Shares, or Conversion Shares from
time to time.
6.4 Third Party Beneficiaries. The purchasers of the Company's Series
A Preferred Stock (the "Third Party Beneficiaries") pursuant to the Purchase
Agreement, are the intended third party beneficiaries of the representations and
warranties of Peerless contained in Section 4 hereof, and shall be entitled to
rely upon such representations and warranties as though they were a party
hereunder.
6.5 Entire Agreement. This Agreement, the Purchase Agreement, the
exhibits and schedules hereto and thereto, and the other documents delivered
pursuant hereto and thereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and no party
shall be liable or bound to any other in any manner by any representations,
warranties, covenants and agreements except as specifically set forth herein and
therein.
6.6 Severability. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
9.
6.7 Acknowledgements. Peerless acknowledges and agrees that the
contribution of the Netreon California Stock pursuant to this Agreement is made
in exchange for fair and equivalent consideration. The Company acknowledges and
agrees that the issuance of the Preferred Shares pursuant to this Agreement is
made in exchange for fair and equivalent consideration.
6.8 Amendment and Waiver.
(a) This Agreement may be amended or modified only upon the
written consent of the Company and Peerless; provided further, that Section 4
and Section 6.4 hereof may only be amended or modified with the written consent
of a majority interest of the Third Party Beneficiaries.
(b) The obligations of the Company and the rights of Peerless may
be waived only with the written consent of the Company and Peerless. provided
further, that Section 6.4 hereof may only be waived with the written consent of
a majority interest of the Third Party Beneficiaries.
6.9 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement or the Restated
Charter, shall impair any such right, power or remedy, nor shall it be construed
to be a waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of or in any similar breach, default or noncompliance thereafter
occurring. It is further agreed that any waiver, permit, consent or approval of
any kind or character on Peerless' part of any breach, default or noncompliance
under this Agreement or under the Restated Charter or any waiver on such party's
part of any provisions or conditions of the Agreement or the Restated Charter
must be in writing and shall be effective only to the extent specifically set
forth in such writing. All remedies, either under this Agreement, the Restated
Charter, by law, or otherwise afforded to any party, shall be cumulative and not
alternative.
6.10 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed electronic mail or facsimile if
sent during normal business hours of the recipient, if not, then on the next
business day, in either case of confirmed by contemporaneous dispatch of notice
by any of the methods contemplated under clauses (a), (c) or (d) of this
section, (c) five (5) days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (d) one (1) day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be sent
to the corporate offices of the Company and to Peerless at 2381 Rosecrans
Avenue, El Segundo, CA 90245 or at such other address or electronic mail address
as the Company or Peerless may designate by ten (10) days advance written notice
to the other parties hereto.
6.11 Expenses. Each party shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
the Agreement.
10.
6.12 Attorneys' Fees. In the event that any suit or action is
instituted to enforce any provision in this Agreement, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
6.13 Titles and Subtitles. The titles of the sections and subsections
of the Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
6.14 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.
6.15 Broker's Fees. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 7.14 being untrue.
6.16 Pronouns. All pronouns contained herein, and any variations
thereof, shall be deemed to refer to the masculine, feminine or neutral,
singular or plural, as to the identity of the parties hereto may require.
6.17 California 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 THEREFOR
PRIOR TO SUCH QUALIFICATION OR IN THE ABSENCE OF AN EXEMPTION FROM SUCH
QUALIFICATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH CONSIDERATION BY THE
COMPANY, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED
UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION FROM SUCH QUALIFICATION
BEING AVAILABLE.
6.18 Cooperation. From and after the Closing Date, Peerless shall
cooperate with the Company and the Purchaser's subsidiaries, and shall execute
and deliver such documents and take such other actions as the Company may
reasonably request, including but not limited to tax and accounting information,
for the purpose of consummating and making effective the transactions
contemplated hereby. From and after the Closing Date, the Company shall
cooperate with Peerless and shall execute and deliver such documents and take
such other actions as Peerless may reasonably request to: (a) vest full title
and possession of the assets listed on Exhibit A to that certain Bill of Sale,
dated of even date herewith, in Peerless, and (b) vest full title and possession
of the assets listed on Schedule A to that certain Assignment and Assumption of
Technology Assets, dated of even date herewith, in Peerless.
11.
6.19 Indemnification. The Company hereby agrees to defend, indemnify
and hold Peerless harmless from all direct damages (including reasonable costs)
finally awarded to a third party and for reasonable attorney fees and expenses
incurred therewith solely if such obligation arises solely out of the conduct of
the business or the operations of the Company or Netreon California or any of
their representatives or agents (other than Peerless and its affiliates) acting
in such capacity for the Company or Netreon California, as the case may be,
after the Closing Date and for which a written indemnification notice is
delivered to the Company prior to the eighteen (18) month anniversary of the
Closing Date; provided that any such indemnity shall not apply to the extent
that such damages arise out of, any activity or action undertaken or failure to
act by Peerless or, prior to the Closing, Netreon California, including any
breach by Peerless or Netreon California of any representation, covenant or
warranty in any agreement entered into with the Company.
The Company's obligation to defend, indemnify and hold Peerless
harmless pursuant to this Section 6.19 is subject to the following conditions:
(i) Peerless shall notify the Company promptly in writing within thirty (30)
days after the date Peerless first becomes aware of any such claim and prior to
the eighteen (18) month anniversary of the Closing Date; (ii) the Company shall
have sole control of the negotiation and defense of any such claim except where
there is a conflict between the interests of Peerless, on the one hand and the
Company or Netreon California on the other hand, in which event, Peerless shall
have the right to retain counsel of its choosing at Peerless' expense, subject
to the Company's reimbursement obligations hereunder; and (iii) Peerless shall
cooperate and give the Company all reasonably requested available information,
at the Company's expense, to enable the Company to settle, compromise, negotiate
and defend any such claim. Neither the Company nor Netreon California shall
enter into any settlement or compromise of any such claim against Peerless
without the prior written consent of Peerless, which shall not be unreasonably
withheld, unless such settlement or compromise completely and irrevocably
results in no liability to Peerless for such claim. Peerless retains the right
to retain separate counsel at its own expense, subject to the Company's
reimbursement obligations hereunder if the Company does not assume the defense
of a claim within twenty (20) days after the date Peerless notifies the Company
of such claim. Further, no such indemnification or reimbursement obligation
shall apply with respect to the settlement or compromise of any claim which is
entered into without the prior written consent of the Company, which shall not
be unreasonably withheld. Notwithstanding the foregoing, the total liability of
the Company pursuant to this Section 6.19 shall not in the aggregate exceed Two
Million U.S. Dollars (U.S. $2,000,000), and any obligation of the Company to
defend, indemnify and hold Peerless harmless pursuant to this Section 6.19 shall
terminate with respect to all claims for which Company does not receive written
notice from Peerless prior to the eighteen (18) month anniversary of the Closing
Date.
12.
In Witness Whereof, the parties hereto have executed the Series a Preferred
Stock Contribution Agreement as of the date set forth in the first paragraph
hereof.
Netreon, Inc. Peerless Systems Corporation
By: /s/ Adam Au By: /s/ William R. Neil
-------------------------------------- ---------------------------------
Adam Au For Howard Nellor
President and Chief Executive Officer President and Chief Executive Officer
Series a Preferred Stock Contribution Agreement
Signature Page
Table of Contents
Page
1. Agreement to Exchange....................................................................................1
1.1 Authorization of Shares.........................................................................1
1.2 Issuance and Exchange...........................................................................1
1.3 Value...........................................................................................2
2. Closing, Delivery and Payment............................................................................2
2.1 Closing.........................................................................................2
2.2 Delivery........................................................................................2
3. Representations and Warranties of the Company............................................................2
3.1 Organization, Good Standing and Qualification...................................................2
3.2 Capitalization; Voting Rights...................................................................2
3.3 Authorization; Binding Obligations..............................................................3
3.4 Liabilities.....................................................................................3
3.5 Offering Valid..................................................................................3
3.6 Full Disclosure.................................................................................3
4. Representations and Warranties of Peerless...............................................................4
4.1 Organization, Good Standing and Qualification of Peerless.......................................4
4.2 Capitalization..................................................................................4
4.3 Authorization; Binding Obligations..............................................................4
4.4 Compliance with Other Instruments...............................................................4
4.5 Litigation......................................................................................5
4.6 Solvency........................................................................................5
4.7 Full Disclosure.................................................................................6
4.8 Purchase Agreement Representations..............................................................6
4.9 Investment Representations......................................................................6
5. Conditions to Closing....................................................................................7
5.1 Conditions to Peerless' Obligations at the Closing..............................................7
5.2 Conditions to Obligations of the Company........................................................8
6. Miscellaneous............................................................................................9
6.1 Governing Law...................................................................................9
6.2 Survival........................................................................................9
i.
Table of Contents
(CONTINUED)
Page
6.3 Successors and Assigns..........................................................................9
6.4 Third Party Beneficiaries.......................................................................9
6.5 Entire Agreement................................................................................9
6.6 Severability....................................................................................9
6.7 Acknowledgements................................................................................9
6.8 Amendment and Waiver............................................................................9
6.9 Delays or Omissions............................................................................10
6.10 Notices........................................................................................10
6.11 Expenses.......................................................................................10
6.12 Attorneys' Fees................................................................................10
6.13 Titles and Subtitles...........................................................................11
6.14 Counterparts...................................................................................11
6.15 Broker's Fees..................................................................................11
6.16 Pronouns.......................................................................................11
6.17 California Corporate Securities Law............................................................11
6.18 Cooperation....................................................................................11
6.19 Indemnification................................................................................11
ii.
Table of Contents
(CONTINUED)
Page