EXHIBIT 5
NEXTNET, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
September 21, 1998
TABLE OF CONTENTS
PAGE
----
1. Purchase and Sale of Preferred Stock.................................. 1
1.1 Sale and Issuance of Series A Preferred Stock................... 1
1.2 Closing; Delivery............................................... 1
2. Representations and Warranties of the Company......................... 1
2.1 Organization, Good Standing and Qualification................... 2
2.2 Capitalization.................................................. 2
2.3 Subsidiaries.................................................... 3
2.4 Authorization................................................... 3
2.5 Valid Issuance of Securities.................................... 3
2.6 Governmental Consents........................................... 4
2.7 Litigation...................................................... 4
2.8 Intellectual Property........................................... 4
2.9 Compliance with Laws; Permits................................... 5
2.10 Compliance with Other Instruments.............................. 5
2.11 Agreements; Action............................................. 5
2.12 Disclosure..................................................... 6
2.13 No Conflict of Interest........................................ 6
2.14 Rights of Registration and Voting Rights....................... 6
2.15 Title to Property and Assets................................... 7
2.16 Financial Statements........................................... 7
2.17 Changes........................................................ 7
2.18 Employee Benefit Plans......................................... 8
2.19 Tax Returns and Payments....................................... 8
2.20 Insurance...................................................... 8
2.21 Labor Agreements and Actions; Employees........................ 8
2.22 Confidential Information and Invention Assignment Agreements... 9
2.23 Permits........................................................ 9
2.24 Corporate Documents............................................ 9
2.25 Obligations of Management...................................... 9
2.26 Section 83(b) Elections........................................ 10
3. Representations and Warranties of the Purchaser....................... 10
3.1 Authorization................................................... 10
3.2 Purchase Entirely for Own Account............................... 10
3.3 Disclosure of Information....................................... 10
3.4 Restricted Securities........................................... 10
3.5 No Public Market................................................ 11
3.6 Restrictions on Transfer........................................ 11
3.7 Legends......................................................... 11
3.8 Accredited Investor............................................. 12
3.9 Foreign Investors............................................... 12
4. Conditions of the Purchasers' Obligations at Closing.................. 12
4.1 Representations and Warranties.................................. 12
4.2 Performance..................................................... 12
4.3 Compliance Certificate.......................................... 12
4.4 Qualifications.................................................. 12
4.5 Opinion of Company Counsel...................................... 13
4.6 Board of Directors.............................................. 13
4.7 Investors' Rights Agreement..................................... 13
4.8 Voting Agreement................................................ 13
4.9 Right of First Refusal Agreement................................ 13
4.10 Restated Certificate........................................... 13
4.11 Confidential Information and Invention Assignment Agreement.... 13
5. Conditions of the Company's Obligations at Closing.................... 13
5.1 Representations and Warranties.................................. 14
5.2 Performance..................................................... 14
5.3 Qualifications.................................................. 14
5.4 Approval of Racotek's Board of Directors........................ 14
6. Miscellaneous......................................................... 14
6.1 Survival of Warranties.......................................... 14
6.2 Transfer; Successors and Assigns................................ 14
6.3 Governing Law................................................... 14
6.4 Counterparts.................................................... 14
6.5 Titles and Subtitles............................................ 14
6.6 Notices......................................................... 14
6.7 Finder's Fee.................................................... 15
6.8 Attorney's Fees................................................. 15
6.9 Amendments and Waivers.......................................... 15
6.10 Severability................................................... 15
6.11 Delays or Omissions............................................ 15
6.12 Entire Agreement............................................... 16
6.13 Corporate Securities Law....................................... 16
6.14 Confidentiality................................................ 16
6.15 Exculpation Among Purchasers................................... 16
-2-
NEXTNET, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This Series A Preferred Stock Purchase Agreement (the "AGREEMENT") is
made as of the 21st day of September, 1998 by and between NextNet, Inc., a
Delaware corporation (the "COMPANY") and Racotek, Inc., a Delaware
corporation (the "PURCHASER").
The parties hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED STOCK.
1.1 SALE AND ISSUANCE OF SERIES A PREFERRED STOCK.
(a) The Company shall adopt and file with the Secretary of
State of the State of Delaware on or before the Closing (as defined below)
the Amended and Restated Certificate of Incorporation in the form attached
hereto as EXHIBIT B (the "RESTATED CERTIFICATE").
(b) Subject to the terms and conditions of this Agreement, the
Purchaser agrees to purchase at the Closing and the Company agrees to sell and
issue to the Purchaser at the Closing that number of shares of Series A
Preferred Stock set forth opposite such Purchaser's name on EXHIBIT A attached
hereto in exchange for the assignment of certain technology from the Purchaser
to the Company as set forth in the Intellectual Property and Assets Transfer
Agreement between the Purchaser and the Company of even date herewith (the
"TRANSFER AGREEMENT"). The shares of Series A Preferred Stock issued to the
Purchaser pursuant to this Agreement shall be hereinafter referred to as the
"STOCK."
1.2 CLOSING; DELIVERY.
(a) The purchase and sale of the Stock shall take place at the
offices of Venture Law Group, 2800 Sand Hill Road, Menlo Park, California, at
9:00 a.m., on the closing date of the sale by the Company to certain investors
of Series B Preferred Stock pursuant to that certain Series B Preferred Stock
Purchase Agreement of even date herewith, or on such other date as the Company
and the Purchaser mutually agree (which time and place are designated as the
"CLOSING").
(b) At the Closing, the Company shall deliver to the Purchaser
a certificate representing the Stock being purchased thereby against delivery
to the Company by the Purchaser at the closing of (a) an executed counter part
of this Agreement, (b) an executed counter part of the Transfer Agreement and
(c) payment of the purchase price therefor by check payable to the Company or
by wire transfer to the Company's bank account.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Purchaser that, except as set forth on a
Schedule of Exceptions attached hereto as EXHIBIT C, which exceptions shall be
deemed to be representations and warranties as if made hereunder:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own and operate its properties and assets and to carry on its
business as presently conducted and as presently proposed to be conducted in
the Business Plan, as defined below. The Company is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure so
to qualify would have a material adverse effect on its business or properties.
2.2 CAPITALIZATION. The authorized capital of the Company consists,
or will consist, immediately prior to the Closing, of:
(a) 4,900,000 shares of Preferred Stock, each with a par value
of $0.0001 per share, 2,400,000 shares of which have been designated Series A
Preferred Stock, none of which are issued and outstanding immediately prior to
the Closing and 2,500,000 shares of which have been designated Series B
Preferred Stock, none of which are issued and outstanding immediately prior to
the Closing. The rights, privileges and preferences of the Preferred Stock are
as stated in the Restated Certificate.
(b) 25,100,000 shares of Common Stock, each with a par value of
$0.0001 per share, 1,100,000 shares of which are issued and outstanding
immediately prior to the Closing. All of the outstanding shares of Common
Stock have been duly authorized, validly issued, fully paid and are
nonassessable and issued in compliance with all applicable federal and state
securities laws. The Company has reserved 4,900,000 shares of Common Stock for
issuance upon conversion of the Preferred Stock.
(c) The Company has reserved 2,017,544 shares of Common Stock
for issuance to officers, directors, employees and consultants of the Company
pursuant to its 1998 Stock Plan duly adopted by the Board of Directors and
approved by the Company stockholders (the "STOCK PLAN"). Of such reserved
shares of Common Stock, 1,000,000 shares have been issued pursuant to
restricted stock purchase agreements, and 1,017,544 shares of Common Stock
remain available for issuance to officers, directors, employees and consultants
pursuant to the Stock Plan.
(d) There are no outstanding options, warrants, rights
(including conversion or preemptive rights and rights of first refusal or
similar rights), proxy or shareholder agreements, or agreements, orally or in
writing, for the purchase or acquisition from the Company of any shares of its
capital stock.
(e) Except as set forth on the Schedule of Exceptions, no stock
plan, stock purchase, stock option or other agreement or understanding between
the Company and any holder of any equity securities or rights to purchase
equity securities provides for acceleration or other changes in the vesting
provisions or other terms of such agreement or understanding as the result of
any merger, consolidated sale of stock or assets, change in control or other
similar transaction by the Company.
-2-
2.3 SUBSIDIARIES. The Company does not currently own or control,
directly or indirectly, any interest in any other corporation, association, or
other business entity.
2.4 AUTHORIZATION. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement, the Investors' Rights Agreement, in
the form attached hereto as EXHIBIT D (the "INVESTORS' RIGHTS AGREEMENT") and
the Voting Agreement in the form attached hereto as EXHIBIT E (the "VOTING
AGREEMENT" and collectively with this Agreement and the Investors' Rights
Agreement, the "AGREEMENTS"), the performance of all obligations of the Company
hereunder and thereunder and the authorization, sale, issuance and delivery of
the Stock and the Common Stock issuable upon conversion of the Stock (together,
the "SECURITIES") has been taken or will be taken prior to the Closing, and the
Agreements, when executed and delivered by the Company, shall constitute valid
and legally binding obligations of the Company, enforceable against the Company
in accordance with their terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and other laws
of general application affecting enforcement of creditors' rights generally, as
limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies, or (ii) to the extent the
indemnification provisions contained in the Investors' Rights Agreement may be
limited by applicable federal or state securities laws. The sale of the Stock
and the subsequent conversion of the Stock into shares of common stock (the
"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.
The Company has all requisite corporate power and authority to
execute and deliver the Agreements, to issue and sell the Stock and the
Conversion Shares and to carry out the provisions of the Agreements and the
Restated Certificate.
2.5 VALID ISSUANCE OF SECURITIES. The Stock that is being issued to
the Purchaser hereunder, when issued, sold and delivered in accordance with the
terms hereof for the consideration expressed herein, will be duly and validly
issued, fully paid and nonassessable and free of restrictions on transfer other
than restrictions on transfer under this Agreement, the Investors' Rights
Agreement and applicable state and federal securities laws and will have the
rights preferences and privileges as set forth in the Restated Certificate.
Based in part upon the representations of the Purchaser in this Agreement and
subject to the provisions of Section 2.6 below, the Stock will be offered, sold
and issued, as contemplated by this Agreement, in compliance with all
applicable federal and state securities laws. The Common Stock issuable upon
conversion of the Stock has been duly and validly reserved for issuance, and
upon issuance in accordance with the terms of the Restated Certificate, shall
be duly and validly issued, fully paid and nonassessable and free of
restrictions on transfer other than restrictions on transfer under this
Agreement, the Investors' Rights Agreement and applicable federal and state
securities laws and will be issued in compliance with all applicable federal
and state securities laws. Neither the Company nor any agent on its behalf has
solicited or will solicit any offers to sell or has offered to sell or will
offer to sell all or any part of the Shares to any person or persons so as to
bring the sale of such Shares by the Company within the registration provisions
of the Securities Act or any state securities laws.
-3-
2.6 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for filings pursuant to Section 25102(f)
of the California Corporate Securities Law of 1968, as amended, and the rules
thereunder, other applicable state securities laws and Regulation D of the
Securities Act of 1933, as amended (the "SECURITIES ACT").
2.7 LITIGATION. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company, nor, to the Company's knowledge, is there any basis for
the foregoing. The foregoing includes, without limitation, actions pending or
threatened (or any basis therefor known to the Company) involving the prior
employment of any of the Company's employees, their use in connection with the
Company's business of any information or techniques allegedly proprietary to
any of their former employers, or their obligations under any agreements with
prior employers. The Company is not a party or subject to the provisions of
any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality. There is no action, suit, proceeding or
investigation by the Company currently pending or which the Company intends to
initiate.
2.8 INTELLECTUAL PROPERTY. To its knowledge, the Company owns or
possesses sufficient legal rights to use without material cost, free and
clear of all liens, charges, claims and restrictions, all patents,
trademarks, service marks, tradenames, copyrights, trade secrets, licenses,
information and proprietary rights and processes necessary for its business
as now conducted and as presently proposed to be conducted in the Business
Plan without any conflict with, or infringement of, the rights of others.
There are no outstanding options, licenses or agreements of any kind relating
to the foregoing, nor is the Company bound by or a party to any options,
licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information
and other proprietary rights and processes of any other person or entity.
The Company has not received any communications alleging that the Company has
violated or, by conducting its business as presently proposed in the Business
Plan, would violate any of the patents, trademarks, service marks,
tradenames, copyrights, trade secrets or other proprietary rights or
processes of any other person or entity. The Company is not aware that any
of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of such employee's best efforts to promote the
interest of the Company or that would conflict with the Company's business as
presently proposed in the Business Plan. Neither the execution or delivery
of this Agreement, nor the carrying on of the Company's business by the
employees of the Company, nor the conduct of the Company's business as
presently proposed in the Business Plan, will, to the Company's knowledge,
conflict with or result in a breach of the terms, conditions, or provisions
of, or constitute a default under, any contract, covenant or instrument under
which any such employee is now obligated. The Company does not believe it is
or will be necessary to use any inventions, trade secrets or proprietary
information of any of its employees (or persons it currently intends to hire)
made prior to their employment by the Company.
-4-
2.9 COMPLIANCE WITH LAWS; PERMITS. To its knowledge, the Company is
not in violation of any applicable statute, rule, regulation, order or
restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of
its properties which violation would materially and adversely affect the
business, assets, liabilities, financial condition or operations of the
Company.
2.10 COMPLIANCE WITH OTHER INSTRUMENTS.
(a) The Company is not in violation or default of any
provisions of its Restated Certificate or Bylaws or of any instrument,
judgment, order, writ, decree or contract to which it is a party or by which it
is bound or, to its knowledge, of any provision of federal or state statute,
rule or regulation applicable to the Company. The execution, delivery and
performance of the Agreements and the consummation of the transactions
contemplated hereby or thereby will not result in any such violation or be in
conflict with or constitute, with or without the passage of time and giving of
notice, either a default under any such provision, instrument, judgment, order,
writ, decree or contract or an event which results in the creation of any lien,
charge or encumbrance upon any assets of the Company.
(b) To its knowledge, the Company has avoided every condition,
and has not performed any act, the occurrence of which would result in the
Company's loss of any right granted under any license, distribution agreement
or other agreement.
2.11 AGREEMENTS; ACTION.
(a) There are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors,
affiliates, or any affiliate thereof.
(b) Except for agreements explicitly contemplated by the
Agreements, there are no agreements, understandings, instruments, contracts or
proposed transactions to which the Company is a party or by which it is bound
that involve (i) obligations (contingent or otherwise) of, or payments to, the
Company in excess of, $25,000, (ii) the license of any patent, copyright, trade
secret or other proprietary right to or from the Company or (iii) the grant of
rights to manufacture, produce, assemble, license, market, or sell its products
to any other person or affect the Company's exclusive right to develop,
manufacture, assemble, distribute, market or sell its products.
(c) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or
incurred any other liabilities individually in excess of $25,000 or in excess
of $100,000 in the aggregate, (iii) made any loans or advances to any person,
other than ordinary advances for travel expenses, or (iv) sold, exchanged or
otherwise disposed of any of its assets or rights, other than the sale of its
inventory in the ordinary course of business.
(d) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Restated Certificate or Bylaws,
-5-
that adversely affects its business as now conducted or as presently proposed
to be conducted in the Business Plan, its assets or properties or its
financial condition.
(e) The Company has not engaged in the past three (3) months in
any discussion (i) with any representative of any corporation or corporations
regarding the consolidation or merger of the Company with or into any such
corporation or corporations, (ii) with any corporation, partnership,
association or other business entity or any individual regarding the sale,
conveyance or disposition of all or substantially all of the assets of the
Company, or a transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the Company is disposed of, or (iii)
regarding any other form of acquisition, liquidation, dissolution or winding up
of the Company.
2.12 DISCLOSURE. The Company has fully provided the Purchaser with
all the information that the Purchaser have requested for deciding whether to
acquire the Stock including certain of the Company's projections describing its
proposed business (collectively, the "BUSINESS PLAN"). The Agreements, the
exhibits attached hereto or thereto, any certificate furnished or to be
furnished to Purchaser at the Closing, the Business Plan or any other documents
which have been prepared by the Company for the Purchasers or their attorneys
or agents in connection with the transaction as contemplated by the Agreement
(when read together) do not contain any untrue statement of a material fact nor
omit to state a material fact necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made. To the extent the Business Plan was prepared by
management of the Company, the Business Plan and the financial and other
projections contained in the Business Plan were prepared in good faith;
however, the Company does not warrant that it will achieve such projections.
2.13 NO CONFLICT OF INTEREST. The Company is not indebted, directly
or indirectly, to any of its officers or directors, shareholders or employees
or to their respective spouses or children, in any amount whatsoever other than
in connection with expenses or advances of expenses incurred in the ordinary
course of business or relocation expenses of employees. None of the Company's
officers, directors, or shareholders or any members of their immediate
families, are, directly or indirectly, indebted to the Company (other than in
connection with purchases of the Company's stock) or, to the Company's
knowledge, have any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has
a business relationship, or any firm or corporation which competes with the
Company except that officers, directors and/or stockholders of the Company may
own stock in (but not exceeding two percent of the outstanding capital stock
of) any publicly traded companies that may compete with the Company. To the
Company's knowledge, none of the Company's officers, directors or shareholders
or any members of their immediate families are, directly or indirectly,
interested in any material contract with the Company. The Company is not a
guarantor or indemnitor of any indebtedness of any other person, firm or
corporation.
2.14 RIGHTS OF REGISTRATION AND VOTING RIGHTS. Except as
contemplated in the Investors' Rights Agreement, the Company has not granted or
agreed to grant any registration rights, including piggyback rights, to any
person or entity. Except as contemplated
-6-
in the Voting Agreement, neither the Company nor any stockholder of the
Company has entered into any agreements with respect to the voting of capital
shares of the Company.
2.15 TITLE TO PROPERTY AND ASSETS. The Company owns its property and
assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens which arise in the ordinary course of business and
do not materially impair the Company's ownership or use of such property or
assets. With respect to the property and assets it leases, the Company is in
compliance with such leases and, to its knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances.
2.16 FINANCIAL STATEMENTS. Except as set forth in the Business Plan,
the Company has not prepared any balance sheet, income statement, statement of
operations, statement of changes in financial position and stockholders' equity
or other financial statement.
2.17 CHANGES. Since the date of the Business Plan, there has not
been:
(a) any change in the assets, liabilities, financial condition
or operating results of the Company from that reflected in the Business Plan,
except changes in the ordinary course of business that have not been, either
individually or in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business, properties,
prospects, or financial condition of the Company;
(c) any waiver or compromise by the Company of a valuable right
or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the business, properties,
prospects or financial condition of the Company;
(e) any material change to a material contract or agreement by
which the Company or any of its assets is bound or subject;
(f) any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
(g) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;
(h) any resignation or termination of employment of any officer
or key employee of the Company; and the Company, is not aware of any impending
resignation or termination of employment of any such officer or key employee;
(i) 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;
-7-
(j) 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;
(k) any declaration, setting aside or payment or other
distribution in respect to any of the Company's capital stock, or any direct or
indirect redemption, purchase, or other acquisition of any of such stock by the
Company;
(l) to the Company's knowledge, any other event or condition of
any character that might materially and adversely affect the business,
properties, prospects or financial condition of the Company;
(m) any material change, except in the ordinary course of
business, in the contingent obligations of the Company by way of guaranty,
endorsement, indemnity, warranty or otherwise;
(n) any debt, obligation or liability incurred, assumed or
guaranteed by the Company, except those for immaterial amounts and for current
liabilities incurred in the ordinary; or
(o) any arrangement or commitment by the Company to do any of
the things described in this Section 2.16.
2.18 EMPLOYEE BENEFIT PLANS. The Company does not have any Employee
Benefit Plan as defined in the Employee Retirement Income Security Act of 1974.
2.19 TAX RETURNS AND PAYMENTS. The Company has timely filed all tax
returns and reports as required by law. These returns and reports are true and
correct in all material respects. The Company has paid all taxes and other
assessments due. The Company has not been audited (and is not presently under
audit) in respect of any such tax return or report.
2.20 INSURANCE. The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its
properties that might be damaged or destroyed.
2.21 LABOR AGREEMENTS AND ACTIONS; EMPLOYEES. The Company is not
bound by or subject to (and none of its assets or properties is bound by or
subject to) any written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or, to the
knowledge of the Company, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or other labor
dispute involving the Company pending, or to the knowledge of the Company
threatened, which could have a material adverse effect on the assets,
properties, financial condition, operating results, or business of the Company,
nor is the Company aware of any labor organization activity involving its
employees. The employment of each officer and employee of the Company is
terminable at the will of the Company. To its knowledge, the Company has
complied in all material respects with all applicable state and federal equal
employment opportunity laws and
-8-
with other laws related to employment. To the Company's knowledge, no
employee of the Company, nor any consultant with whom the Company has
contracted, is in violation of any term of any employment contract,
proprietary information agreement or any other agreement relating to the
right of any such individual to be employed by, or to contract with, the
Company because of the nature of the business to be conducted by the Company;
and to the Company's knowledge the continued employment by the Company of its
present employees, and the performance of the Company's contracts with its
independent contractors, will not result in any such violation. The Company
has not received any notice alleging that any such violation has occurred.
No employee of the Company has been granted the right to continued employment
by the Company or to any material compensation following termination of
employment with the Company. To the Company's knowledge, no officer or key
employee intends to terminate his or her employment with the Company, nor
does the Company have a present intention to terminate the employment of any
officer or key employee.
2.22 CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENTS.
Each former and current employee, consultant and officer of the Company has
executed an agreement with the Company regarding confidentiality and
proprietary information substantially in the form or forms delivered to the
counsel for the Purchasers. No current employee, officer or consultant of
the Company has excluded works or inventions made prior to his or her
employment with the Company from his or her assignment of inventions pursuant
to such employee, officer or consultant's Proprietary Information and
Inventions Agreement. The Company is not aware, after reasonable inquiry,
that any of its employees or consultants is in violation thereof, and the
Company will use its best efforts to prevent any such violation.
2.23 PERMITS. The Company has all franchises, permits, licenses and
any similar authority necessary for the conduct of its business, as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company and
believes it can obtain, without undue burden or expenses, any similar authority
for the conduct of its business as planned to be conducted in the Business
Plan. The Company is not in default in any material respect under any of such
franchises, permits, licenses or other similar authority.
2.24 CORPORATE DOCUMENTS. The Restated Certificate and Bylaws of the
Company are in the form provided to counsel for the Purchaser. The copy of the
minute books of the Company provided to the Purchaser's counsel contains
minutes of all meetings of directors and stockholders and all actions by
written consent without a meeting by the directors and stockholders since the
date of incorporation and reflects all actions by the directors (and any
committee of directors) and stockholders with respect to all transactions
referred to in such minutes accurately in all material respects.
2.25 OBLIGATIONS OF MANAGEMENT. Each officer of the Company is
currently devoting one hundred percent (100%) of his or her business time to
the conduct of the business of the Company. The Company is not aware of any
officer or key employee of the Company planning to work less than full-time at
the Company in the future.
-9-
2.26 SECTION 83(b) ELECTIONS. To the Company's knowledge, all
elections and notices permitted by Section 83(b) of the Internal Revenue Code
and any analogous provisions of applicable state tax laws have been timely
filed by all employees who have purchased shares of the Company's common stock
under agreements that provide for the vesting of such shares.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby represents and warrants to the Company that:
3.1 AUTHORIZATION. Such Purchaser has full power and authority to
enter into this Agreement. The Agreements, when executed and delivered by the
Purchaser, will constitute valid and legally binding obligations of the
Purchaser, enforceable in accordance with their terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and any other laws of general application affecting enforcement of
creditors' rights generally, and as limited by laws relating to the
availability of a specific performance, injunctive relief, or other equitable
remedies, or (b) to the extent the indemnification provisions contained in the
Investors' Rights Agreement may be limited by applicable federal or state
securities laws.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
the Purchaser in reliance upon the Purchaser's representation to the Company,
which by the Purchaser's execution of this Agreement, the Purchaser hereby
confirms, that the Securities to be acquired by the Purchaser will be acquired
for investment for the Purchaser's own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof, and that the
Purchaser has no present intention of selling, granting any participation in,
or otherwise distributing the same. By executing this Agreement, the Purchaser
further represents that the Purchaser does not presently have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or
grant participations to such person or to any third person, with respect to any
of the Securities. The Purchaser has not been formed for the specific purpose
of acquiring the Securities.
3.3 DISCLOSURE OF INFORMATION. The Purchaser has had an opportunity
to discuss the Company's business, management, financial affairs and the terms
and conditions of the offering of the Stock with the Company's management and
has had an opportunity to review the Company's facilities. The Purchaser
understands that such discussions, as well as the Business Plan and any other
written information delivered by the Company to the Purchaser, were intended to
describe the aspects of the Company's business which it believes to be
material.
3.4 RESTRICTED SECURITIES. The Purchaser understands that the
Securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Purchaser's representations as
expressed herein. The Purchaser understands that the Securities are
"restricted securities" under applicable U.S. federal and state securities laws
and that, pursuant to these laws, the Purchaser must hold the Securities
indefinitely unless they are registered with the Securities and Exchange
Commission and qualified by state authorities, or an exemption from such
registration
-10-
and qualification requirements is available. The Purchaser acknowledges that
the Company has no obligation to register or qualify the Securities for
resale except as set forth in the Investors' Rights Agreement. The Purchaser
further acknowledges that if an exemption from registration or qualification
is available, it may be conditioned on various requirements including, but
not limited to, the time and manner of sale, the holding period for the
Securities, and on requirements relating to the Company which are outside of
the Purchaser's control, and which the Company is under no obligation and may
not be able to satisfy.
3.5 NO PUBLIC MARKET. The Purchaser understands that no public
market now exists for any of the securities issued by the Company, and that the
Company has made no assurances that a public market will ever exist for the
Securities.
3.6 RESTRICTIONS ON TRANSFER
(a) Each Purchaser agrees not to make any disposition of all or
any portion of the Stock or Conversion Shares unless and until:
(i) 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
(ii) (A) The transferee has agreed in writing to be bound
by the terms of these restrictions, (B) such Purchaser 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 (C) if reasonably requested by the Company, such Purchaser 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 for transactions made pursuant to Rule 144 except in
unusual circumstances.
(iii) Notwithstanding the provisions of paragraphs (i)
and (ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Purchaser which is (A) a partnership to its
partners or former partners in accordance with partnership interests, (B) a
corporation to its shareholders in accordance with their interest in the
corporation, (C) a limited liability company to its members or former members
in accordance with their interest in the limited liability company, or (D) to
the Purchaser's family member or trust for the benefit of an individual
Purchaser ; PROVIDED that in each case the transferee will be subject to the
terms of these restrictions to the same extent as if he were an original
Purchaser hereunder.
3.7 LEGENDS. The Purchaser understands that the Securities and any
securities issued in respect of or exchange for the Securities, may bear one or
all of the following legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN
-11-
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR
DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF
1933."
(b) Any legend set forth in the other Agreements.
(c) Any legend required by the Blue Sky laws of any state to
the extent such laws are applicable to the shares represented by the
certificate so legended.
3.8 ACCREDITED INVESTOR. The Purchaser is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
3.9 FOREIGN INVESTORS. If the Purchaser is not a United States
person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986,
as amended), such Purchaser hereby represents that it has satisfied itself as
to the full observance of the laws of its jurisdiction in connection with any
invitation to subscribe for the Stock or any use of this Agreement, including
(i) the legal requirements within its jurisdiction for the purchase of the
Stock, (ii) any foreign exchange restrictions applicable to such purchase,
(iii) any governmental or other consents that may need to be obtained, and
(iv) the income tax and other tax consequences, if any, that may be relevant to
the purchase, holding, redemption, sale, or transfer of the Stock. Such
Purchaser's subscription and payment for and continued beneficial ownership of
the Stock, will not violate any applicable securities or other laws of the
Purchaser's jurisdiction.
4. CONDITIONS OF THE PURCHASER'S OBLIGATIONS AT CLOSING. The
obligations of the Purchaser to the Company under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 shall be true and correct in
all material respects on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the date of the
Closing.
4.2 PERFORMANCE. The Company shall have performed and complied with
all covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.
4.3 COMPLIANCE CERTIFICATE. The President of the Company shall
deliver to the Purchaser at the Closing a certificate certifying that the
conditions specified in Sections 4.1 and 4.2 have been fulfilled.
4.4 QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or
of any state that are required in
-12-
connection with the lawful issuance and sale of the Stock pursuant to this
Agreement shall be obtained and effective as of the Closing.
4.5 OPINION OF COMPANY COUNSEL. The Purchaser shall have received
from Venture Law Group, counsel for the Company, an opinion, dated as of the
Closing, in substantially the form of EXHIBIT G.
4.6 BOARD OF DIRECTORS. As of the Closing, the Board shall be
comprised of Isaac Shpantzer, Joseph Costello, Dixon Doll, Barry Schiffman, Don
Green, Vladimir Kelman with one seat remaining vacant.
4.7 INVESTORS' RIGHTS AGREEMENT. The Company, the Purchaser, the
purchasers of the Company's Series B Preferred Stock pursuant to that certain
Series B Preferred Stock Purchase Agreement dated of even date herewith (the
"SERIES B PURCHASERS"), Isaac Shpantzer, Vladimir Kelman and Beverly Waldorf
shall have executed and delivered the Investors' Rights Agreement in
substantially the form attached as EXHIBIT D.
4.8 VOTING AGREEMENT. The Company, the Purchaser, the Series B
Purchasers, Isaac Shpantzer, Vladimir Kelman, Beverly Waldorf, Eric Dunn,
Stuart Froelich, Kerry Shore and Tony Klein shall have executed and delivered
the Voting Agreement in substantially the form attached as EXHIBIT E.
4.9 RIGHT OF FIRST REFUSAL AGREEMENT. The Company, the Purchaser
and the Series B Purchasers shall have executed and delivered the Right of
First Refusal Agreement in substantially the form attached as EXHIBIT F.
4.10 RESTATED CERTIFICATE. The Company shall have filed the Restated
Certificate with the Secretary of State of Delaware on or prior to the Closing
Date, which shall continue to be in full force and effect as of the Closing
Date.
4.11 CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT.
The Company and each of its employees shall have entered into the Company's
standard form Confidential Information and Invention Assignment Agreement, in
substantially the form provided to the Purchaser.
4.12 MINIMUM INVESTMENT. In the Initial Closing, the Company shall
have received an aggregate investment of not less than $8,000,000.
4.13 APPROVAL OF RACOTEK'S BOARD OF DIRECTORS. The assignment of
certain technology pursuant to the Intellectual Property and Assets Transfer
Agreement between Racotek and the Company of even date herewith shall have been
approved by the disinterested members of the Board of Directors of Racotek.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations
of the Company to the Purchaser under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
-13-
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Purchaser contained in Section 3 shall be true and correct in
all material respects on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the Closing.
5.2 PERFORMANCE. All covenants, agreements and conditions contained
in this Agreement to be performed by the Purchaser on or prior to the Closing
shall have been performed or complied with in all material respects.
5.3 QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and sale
of the Stock pursuant to this Agreement shall be obtained and effective as of
the Closing.
5.4 APPROVAL OF RACOTEK'S BOARD OF DIRECTORS. The assignment of
certain technology pursuant to the Transfer Agreement shall have been approved
by the disinterested members of the Board of Directors of Racotek.
6. MISCELLANEOUS.
6.1 SURVIVAL OF WARRANTIES. Unless otherwise set forth in this
Agreement, the warranties, representations and covenants of the Company and the
Purchaser contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement.
6.2 TRANSFER; SUCCESSORS AND ASSIGNS. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
6.3 GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Delaware, without giving effect to principles of conflicts of law.
6.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
6.5 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.6 NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon delivery, when
delivered personally or by overnight
-14-
courier or sent by telegram or fax, or 10 days after being deposited in the
U.S. mail, as certified or registered mail, with postage prepaid, addressed
to the party to be notified at such party's address as set forth on the
signature page or EXHIBIT A hereto, or as subsequently modified by written
notice, and (a) if to the Company, with a copy to Glen R. Van Ligten, Venture
Law Group, 2800 Sand Hill Road, Menlo Park, California 94025 or (b) if to the
Purchaser, with a copy to Mike Sullivan, Cooley Godward LLP, Five Palo Alto
Square, 3000 El Camino Real, Palo Alto, California 94306.
6.7 FINDER'S FEE. Each party represents that it neither is nor will
be obligated for any finder's fee or commission in connection with this
transaction. The Purchaser agrees to indemnify and to hold harmless the
Company from any liability for any commission or compensation in the nature of
a finder's fee (and the costs and expenses of defending against such liability
or asserted liability) for which the Purchaser or any of its officers,
employees, or representatives is responsible. The Company agrees to indemnify
and hold harmless the Purchaser from any liability for any commission or
compensation in the nature of a finder's fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Company
or any of its officers, employees or representatives is responsible.
6.8 ATTORNEY'S FEES. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of any of the
Agreements, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to
which such party may be entitled.
6.9 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived only with the written consent of the Company and Racotek.
Any amendment or waiver effected in accordance with this Section 6.10 shall be
binding upon the Purchaser and each transferee of the Stock (or the Common
Stock issuable upon conversion thereof), each future holder of all such
securities, and the Company.
6.10 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then
(a) such provision shall be excluded from this Agreement, (b) the balance of
the Agreement shall be interpreted as if such provision were so excluded and
(c) the balance of the Agreement shall be enforceable in accordance with its
terms.
6.11 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any
such right, power or remedy of such non-breaching or non-defaulting party nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part
of any party of any provisions or conditions of this Agreement, must be in
writing and
-15-
shall be effective only to the extent specifically set forth in such writing.
All remedies, either under this Agreement or by law or otherwise afforded to
any party, shall be cumulative and not alternative.
6.12 ENTIRE AGREEMENT. This Agreement, and the documents referred to
herein constitute the entire agreement between the parties hereto pertaining to
the subject matter hereof, and any and all other written or oral agreements
relating to the subject matter hereof existing between the parties hereto are
expressly canceled.
6.13 CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES WHICH ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED
UPON THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
6.14 CONFIDENTIALITY. Each party hereto agrees that, except with the
prior written permission of the other party, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone any
confidential information, knowledge or data concerning or relating to the
business or financial affairs of the other parties to which such party has been
or shall become privy by reason of this Agreement, discussions or negotiations
relating to this Agreement, the performance of its obligations hereunder or the
ownership of Stock purchased hereunder. The provisions of this Section 6.15
shall be in addition to, and not in substitution for, the provisions of any
separate nondisclosure agreement executed by the parties hereto with respect to
the transactions contemplated hereby.
6.15 EXCULPATION AMONG PURCHASERS. The Purchaser acknowledges that
it is not relying upon any person, firm or corporation, other than the Company
and its officers and directors, in making its investment or decision to invest
in the Company. The Purchaser agrees that no Series B Purchaser nor the
respective controlling persons, officers, directors, partners, agents, or
employees of any Series B Purchaser shall be liable to the Purchaser or to any
other Series B Purchaser for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the purchase of the
Securities.
[Signature Pages Follow]
-16-
The parties have executed this Series A Preferred Stock Purchase
Agreement as of the date first written above.
COMPANY:
NEXTNET, INC.
By: /s/ Isaac Shpantzer
Name: Isaac Shpantzer
Title: President
Address:
11173 Meg Grace Lane
Eden Prairie, MN 55344
PURCHASER:
RACOTEK, INC.
By: /s/ Mike Fabiashi
Name: Mike Fabiashi
Title: President and CEO
Address:
7301 Ohms Lane, Suite 200
Minneapolis, MN 55439