Exhibit 10.4
STRATEGIC CONCEPTS CORP.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
SERIES A PREFERRED
STOCK PURCHASE AGREEMENT
JANUARY 30, 1996
EXHIBIT TO STRATEGIC CONCEPTS CORP.
SERIES A PREFERRED STOCK
PURCHASE AGREEMENT
EXHIBIT A - Amendment to Articles of Incorporation
EXHIBIT B - Schedule of Exceptions to Representations and Warranties
EXHIBIT C - Form of Co-Sale Agreement
EXHIBIT D - Form of Registration Rights Agreement
EXHIBIT E - Form of Opinion of ▇▇▇▇▇▇▇▇ & Forester
EXHIBIT F - Form of Compliance Certificate
TABLE OF CONTENTS
Page
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SECTION 1 Authorization and Sale of Series A Preferred Stock...............1
1.1 Authorization...................................................1
1.2 Sale of Series A Preferred Stock................................1
SECTION 2 Closing Date; Delivery...........................................1
2.1 Closing Date....................................................1
2.2 Deliveries......................................................1
SECTION 3 Representations and Warranties of the Company....................2
3.1 Organization and Standing; Articles and By-laws.................2
3.2 Corporate Power.................................................2
3.3 Subsidiaries....................................................2
3.4 Capitalization..................................................2
3.5 Authorization...................................................3
3.6 Title to Properties and Assets; Liens, etc......................3
3.7 Material Contracts and Commitments..............................3
3.8 Patents and Other Intangible Assets.............................4
3.9 Compliance With Other Instruments, None Burdensome, etc.........4
3.10 Litigation, etc.................................................4
3.11 Employees.......................................................5
3.12 Insurance.......................................................5
3.13 Registration Rights.............................................5
3.14 Governmental Consent, Etc.......................................5
3.15 Offering........................................................5
3.16 Brokers or Finders; Other Offers................................5
3.17 Disclosure......................................................6
3.18 Tax Returns and Payments........................................6
3.19 No Conflict of Interest.........................................6
3.20 Corporate Records...............................................6
3.21 Financial Statements............................................6
3.22 Changes.........................................................7
3.23 Environmental Matters...........................................7
3.24 Employee Compensation Plans.....................................8
3.25 Voting Agreements; Shareholder Agreements.......................8
3.26 U.S. Real Property Holding Corporation..........................8
3.27 Private Offering................................................8
3.28 Use of Proceeds.................................................8
3.29 Margin Securities...............................................8
3.30 Absence of Foreign or Enemy Status..............................9
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TABLE OF CONTENTS
(continued)
Page
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SECTION 4 Representations and Warranties of the Purchaser..................9
4.1 Experience......................................................9
4.2 Investment......................................................9
4.3 Rule 144........................................................9
4.4 No Public Market...............................................10
4.5 Access to Data.................................................10
4.6 Authorization..................................................10
4.7 Brokers or Finders.............................................10
4.8 Tax Consequences...............................................10
SECTION 5 Conditions to Closing of Purchaser..............................10
5.1 Representations and Warranties Correct.........................10
5.2 Covenants......................................................11
5.3 Opinion of Company's Counsel...................................11
5.4 Compliance Certificate.........................................11
5.5 Blue Sky.......................................................11
5.6 Legal Matters..................................................11
5.7 Co-Sale and Registration Rights Agreements.....................11
SECTION 6 Conditions to Closing of Company................................11
6.1 Representations................................................11
6.2 Blue Sky.......................................................11
6.3 Legal Matters..................................................11
SECTION 7 Affirmative Covenants of the Company............................12
7.1 Financial Information..........................................12
7.2 Additional Information.........................................13
7.3 Transfer of Information........................................13
7.4 Conflicts of Interest..........................................13
7.5 Termination of Covenants.......................................13
7.6 Participation in Future Financings.............................14
SECTION 8 Restrictions on Transferability of Securities; Compliance
with Securities Act and Right of First Refusal.......................15
8.1 Restrictions on Transferability................................15
8.2 Restrictive Legend.............................................15
8.3 Notice of Proposed Transfers...................................15
8.4 Right of First Refusal.........................................16
8.5 California Corporate Securities Law............................16
SECTION 9 Miscellaneous...................................................17
9.1 Governing Law..................................................17
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TABLE OF CONTENTS
(continued)
Page
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9.2 Survival.......................................................17
9.3 Successors and Assigns.........................................17
9.4 Entire Agreement; Amendment....................................17
9.5 Notices, etc...................................................17
9.6 Delays or Omissions............................................18
9.7 Expenses.......................................................18
9.8 Counterparts...................................................18
9.9 Severability...................................................18
9.10 Titles and Subtitles...........................................18
9.11 Broker's or Finder's Fee.......................................18
9.12 Waiver of Conflict.............................................18
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STRATEGIC CONCEPTS CORP.
SERIES A PREFERRED STOCK
PURCHASE AGREEMENT
This Series A Preferred Stock Purchase Agreement (the "Agreement") is made
as of January 30, 1996 by and among Strategic Concepts Corp., a California
corporation (the "Company"), and Nationwide Mutual Insurance Company, a mutual
insurance company organized under the laws of the State of Ohio (the
"Purchaser").
SECTION 1
Authorization and Sale of Series A Preferred Stock
1.1 Authorization. The Company has authorized the sale and issuance of 100% of
the authorized shares of its Series A Preferred Stock, being 176,471 shares of
its Series A Preferred Stock (the "Shares") having the rights, preferences,
privileges and restrictions set forth in the Amendment to Articles of
Incorporation (the "Amendment") in the form attached to this Agreement as
Exhibit A. The Articles of Incorporation (the "Articles") as amended by the
Amendment are referred to herein as the "Amended Articles."
1.2 Sale of Series A Preferred Stock. Subject to the terms and conditions
hereof and the rights, preferences, privileges and restrictions set forth in the
Amendment, the Company will issue and sell to the Purchaser, and the Purchaser
will buy from the Company, the Shares at a cash purchase price of $42.50 per
Share.
SECTION 2
Closing Date; Delivery
2.1 Closing Date. The closing of the purchase and sale of the Shares hereunder
(the "Closing") shall be held at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ at 1:00 p.m., on February 15, 1996
or at such other time and place upon which the Company and the Purchaser shall
agree (the date of the Closing is hereinafter referred to as the "Closing
Date").
2.2 Deliveries. At the Closing, the Company will deliver to the Purchaser
a certificate or certificates, registered in the Purchaser's name, representing
the Shares, against payment of the aggregate purchase price therefor by check or
wire transfer payable to the Company in the amount determined in accordance with
Section 1.2.
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SECTION 3
Representations and Warranties of the Company
Except as set forth in the Schedule of Exceptions to Representations and
Warranties attached hereto as Exhibit B, the Company represents and warrants to
the Purchaser as follows:
3.1 Organization and Standing; Articles and By-laws. The Company is a
corporation duly organized and existing under, and by virtue of, the laws of the
State of California and is in good standing under such laws. The Company has
requisite corporate power to own and operate its properties and assets, and to
carry on its business as currently conducted and as proposed to be conducted.
The Company is not qualified to do business as a foreign corporation in any
jurisdiction and the failure to be so qualified does not have a material adverse
effect on the Company's business. The Company has furnished the Purchaser copies
of its Articles and Bylaws, as amended. Such copies are true, correct and
complete and contain all amendments other than the Amendment through the Closing
Date.
3.2 Corporate Power. The Company will have at the Closing Date all
requisite legal and corporate power to execute and deliver this Agreement, the
Co-Sale Agreement in the form attached hereto as Exhibit C (the "Co-Sale
Agreement") and the Registration Rights Agreement in the form attached hereto as
Exhibit D (the "Registration Rights Agreement") (collectively the "Agreements"),
to sell and issue the Shares hereunder, to issue the Common Stock issuable upon
conversion of the Shares (the "Conversion Shares") and to carry out and perform
its obligations under the terms of the Agreements.
3.3 Subsidiaries. The Company has no subsidiaries or affiliated companies
and does not otherwise own or control, directly or indirectly, any equity
interest in any corporation, association or business entity.
3.4 Capitalization. The authorized capital stock of the Company will, upon
the filing of the Amendment, consist of 5,000,000 shares of Common Stock, of
which 850,000 shares will be issued and outstanding, and 2,000,000 shares of
Preferred Stock, 176,471 shares of which will have been designated Series A
Preferred Stock, none of which will be issued and outstanding prior to the
Closing. All issued and outstanding shares of the Company's capital stock will
have been duly authorized and validly issued, will be fully paid and
nonassessable and free of liens and encumbrances created by the Company and will
have been issued in compliance with all applicable federal and state securities
laws. The Company will have reserved 176,471 shares of Common Stock for issuance
upon conversion of the Shares. Other than (i) the conversion rights of the
Shares issued pursuant to this Agreement, (ii) the rights set forth in the
Shareholders' Agreement dated as of September 30, 1995 between the Company,
Hussein A. Enan and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (the "Founders' Agreement") and (iii)
options outstanding under the Company's 1995 Stock Option Plan, there are no
preemptive rights, voting agreements, options or warrants or other conversion
privileges or rights currently outstanding to purchase any of the authorized but
unissued capital stock of the Company. There are 150,000 shares of Common
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Stock reserved for issuance under the Company's 1995 Stock Option Plan, pursuant
to which options for the purchase of a total of 130,000 shares were outstanding
on January 30, 1996.
3.5 Authorization. All corporate action on the part of the Company, its
directors and shareholders necessary for the authorization, execution, delivery
and performance of the Agreements by the Company, the authorization, sale,
issuance and delivery of the Shares and the Conversion Shares (collectively, the
"Securities") and the performance of all of the Company's obligations hereunder
and thereunder has been taken or will be taken prior to the Closing. The
Agreements, when executed and delivered by the Company, shall constitute valid
and binding obligations of the Company, enforceable in accordance with their
respective terms, except as the indemnification provisions of Section 2.6 of the
Registration Rights Agreement may be limited by principles of public policy, and
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies. The Shares, when issued in
compliance with the provisions of this Agreement, will be validly issued and
will be fully paid and nonassessable and will have the rights, preferences,
privileges and restrictions described in the Amendment. The Conversion Shares
have been duly and validly reserved and, when issued in compliance with the
provisions of this Agreement and the Amendment, will be validly issued, fully
paid and nonassessable. The Securities will be free of any liens or encumbrances
other than those created by or imposed upon the holders thereof through no
action of the Company; provided, however, that the Securities may be subject to
restrictions on transfer under state and/or federal securities laws as set forth
herein. Except as contemplated herein, the Securities are not subject to any
preemptive rights or rights of first refusal.
3.6 Title to Properties and Assets; Liens, etc. The Company has good and
marketable title to its properties and assets, and has good title to all its
leasehold interests, in each case subject to no mortgage, pledge, lien, lease,
encumbrance or charge, other than (i) the lien of current taxes not yet due and
payable (the amount of which has been established as a reserve in the Company's
financial records to the extent required by generally accepted accounting
principles), and (ii) possible minor liens and encumbrances which do not in any
case materially detract from the value of the property subject thereto or
materially impair the operations of the Company, and which have not arisen
otherwise than in the ordinary course of business.
3.7 Material Contracts and Commitments. Set forth on Exhibit B hereto is a
list of all material contracts of the Company in effect on January 30, 1996 and
a list of all material liabilities or obligations of the Company, absolute or
contingent, that exceed $50,000 in any one case. All the material contracts,
agreements and instruments to which the Company is a party are valid, binding
and in full force and effect in all material respects, and are valid, binding
and enforceable by the Company in accordance with their respective terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies. The Company, prior to the
Closing, will have provided the Purchaser or its special counsel with true and
complete copies of all such material contracts, agreements and instruments.
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3.8 Patents and Other Intangible Assets. All the patents, trademarks,
service marks, trade names, copyrights, trade secrets, information, proprietary
rights and processes owned by the Company are listed on Exhibit B attached
hereto. The Company has sufficient title and ownership of all patents,
trademarks, service marks, trade names, copyrights, trade secrets, information,
proprietary rights and processes necessary for its business as now conducted and
as proposed to be conducted 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, 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 proposed would violate, and, to the
best of its knowledge, the Company is not violating, any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity. The Company is not aware that
any of its employees or consultants is obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or subject
to any judgment, decree or order (except as imposed by laws of general
application) of any court or administrative agency, that would interfere with
the use of his or her best efforts to promote the interests of the Company, or
that would conflict with the Company's business as proposed to be conducted.
Neither the execution nor delivery of the Agreements, nor the carrying on of the
Company's business by the employees or consultants of the Company, nor the
conduct of the Company's business as proposed, will, to the Company's knowledge,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract, covenant or instrument under which
any of such employees or consultants is now obligated.
3.9 Compliance With Other Instruments, None Burdensome, etc. The Company
is not in violation of any term of its Articles or By-laws, or in any material
respect of any term or provision of any mortgage, indebtedness, indenture,
contract, agreement or instrument to which it is a party, or any decree, order,
statute, rule or regulation applicable to it. The execution, delivery and
performance of and compliance with the Agreements, and the issuance of the
Securities, will not result in any material violation of, or conflict with, or
constitute a material default under, or result in the creation of, any mortgage,
pledge, lien, encumbrance or charge upon any of the properties or assets of the
Company; and there is no such violation or default which materially and
adversely affects the business of the Company or any of the Company's properties
or assets.
3.10 Litigation, etc. The Company has not instituted nor is a party to any
action, suit, proceeding or investigation against any party. There are to the
Company's knowledge no actions, suits, proceedings or investigations pending
against the Company or its properties (nor, to the best of the Company's
knowledge, against directors, officers or employees of the Company) before any
court or governmental agency (nor, to the best of the Company's knowledge, is
there any reasonable basis therefor or threat thereof), which, either in any
case or in the aggregate, is likely to result in any material adverse change in
the business or financial condition of the Company or any of its properties or
assets, or in any material impairment of the right or ability of the Company to
carry on its business, or in any material liability on the part of
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the Company, and none which questions the validity of the Agreements or any
action taken or to be taken in connection herewith and therewith, including,
without limitation, any such action involving the prior employment of any of the
Company's employees or their obligations under any agreements with prior
employers.
3.11 Employees. To the best of the Company's knowledge, after reasonable
investigation, no employee or consultant of the Company is in violation of any
term of any employment contract, patent disclosure agreement or any other
contract or agreement relating to the relationship of any such person with the
Company or any other party because of the nature of the business conducted or
proposed to be conducted by the Company. The Company has no collective
bargaining agreements covering any of its employees. The Company is not aware of
any key employee of the Company who has any plans to terminate his or her
employment with the Company. All employees of the Company involved in the
technical development of the Company's software have executed Proprietary
Information Agreements, copies of which will have been made available to the
Purchaser or its special counsel prior to the Closing. The Company does not
anticipate the necessity to acquire rights to any inventions of any employees,
or people it currently intends to hire, made prior to their employment by the
Company.
3.12 Insurance. The Company has fire, casualty and liability insurance
policies in such amounts and with such coverage as are carried by companies
similar to the Company.
3.13 Registration Rights. Except as set forth in this Agreement, the
Founders' Agreement and the Registration Rights Agreement, the Company is not
under any contractual obligation to register any of its currently outstanding
securities or of any of its securities which may hereafter be issued.
3.14 Governmental Consent, Etc. No consent, approval or authorization of
or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of the Agreements, or the offer, sale or issuance of the Securities, or
the consummation of any other transaction contemplated hereby or thereby, except
for filing of the Amendment in the office of the Secretary of State of the State
of California, filing of notices required by Section 25102(f) of the California
Corporate Securities Law of 1968 and any other filings required under applicable
federal and state securities laws of other states.
3.15 Offering. Subject to the accuracy of the Purchaser's representations
in Section 4 hereof and in written responses to the Company's inquiries, the
offer, sale and issuance of the Shares in conformity with the terms of this
Agreement, and the issuance of the Conversion Shares, constitute transactions
exempt from the registration requirements of Section 5 of the Securities Act of
1933, as amended (the "Securities Act").
3.16 Brokers or Finders; Other Offers. The Company has not incurred, and
will not incur, directly or indirectly, as a result of any action taken by the
Company, any liability for brokerage or finders' fees or agents' commissions or
any similar charges in connection with this Agreement.
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3.17 Disclosure. The Company has fully provided the Purchaser with all the
information which the Purchaser and its special counsel have requested for
deciding whether to purchase the Shares. No representation or warranty of the
Company or the Subsidiary contained in this Agreement and the Exhibits attached
hereto and any certificate furnished or to be furnished to the Purchaser at the
Closing (when read together) contains any untrue statement of a material fact or
omits 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.
3.18 Tax Returns and Payments. The Company has filed all tax returns and
reports as required by law. Such returns and reports are true and correct in all
material respects and accurately reflect all tax liabilities of the Company with
respect to all tax periods covered thereby. The Company has not received notice
that the Company's income tax returns or any franchise tax return have been
audited by any governmental authority. The Company has paid all taxes and other
assessments due on or before the date hereof and such payments were made prior
to the time penalties that would accrue therein. The Company knows of no new tax
assessments. All taxes which should be reserved on the books of the Company in
accordance with generally accepted accounting principles have been so reserved.
3.19 No Conflict of Interest. Except for indebtedness to Hussein A. Enan
for funds advanced to the Company, the Company is not indebted, directly or
indirectly, to any of its officers, directors or shareholders or to their
respective spouses or children, in any amount whatsoever. None of said officers,
directors or, to the best of the Company's knowledge, shareholders, or any
members of their immediate families, are indebted to the Company or have any
direct or indirect ownership interest in any firm or corporation with which the
Company is affiliated or with which the Company has a business relationship, or
any firm or corporation which competes with the Company, except that officers,
directors and/or shareholders of the Company may own up to five percent (5%) of
the outstanding stock of publicly traded companies which may have a business
relationship with or compete with the Company. Except as contemplated by the
Founders' Agreement, no officer, director or shareholder, or any member of their
immediate families, is, 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.
3.20 Corporate Records. A copy of the minutes of the proceedings of the
shareholders and directors (the "Minutes") has been provided to counsel for the
Purchaser. The Minutes are correct and complete and reflect all such proceedings
to the date hereof.
3.21 Financial Statements. The Company has delivered to Purchaser its
unaudited financial statements (balance sheet and profit and loss statement) at
September 30, 1995 and from inception to that date (the "Financial Statements").
The Financial Statements are true, complete and correct in all material
respects, subject to normal year-end adjustments, and have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the period indicated. The Financial Statements accurately set
out and describe the financial condition and operating results of the Company as
of the date, and for the period, indicated therein, subject to normal year-end
audit adjustments. Except as set forth in the
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Financial Statements, the Company has no liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
subsequent to September 30, 1995, and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in the Financial
Statements, which, individually or in the aggregate, are not material to the
financial condition or operating results of the Company. The Company maintains
and will continue to maintain a system of accounting established and
administered in accordance with generally accepted accounting principles.
3.22 Changes. Since September 30, 1995, the Company has not:
(a) experienced any change in the assets, liabilities, financial
condition or operating results from that reflected in the Financial Statements,
except changes in the ordinary course of business which have not been, in the
aggregate, materially adverse;
(b) experienced any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the assets, properties,
financial condition, operating results, prospects or business (as such business
is presently conducted and as it is proposed to be conducted);
(c) waived a valuable right or a material debt;
(d) discharged or satisfied any lien, claim or encumbrance or
payment of any of their obligations, except in the ordinary course of business
and which is not material to their assets, properties, financial condition,
operating results or business (as such business is presently conducted and as it
is proposed to be conducted);
(e) changed or amended any material contract or arrangement by which
the Company or any of its assets or properties are bound or subject;
(f) materially changed any compensation arrangement or agreement
with any employee;
(g) to the Company's knowledge, experienced any other event or
condition of any character which might materially and adversely affect the
assets, properties, financial condition, operating results or business of the
Company (as such business is presently conducted and as it is proposed to be
conducted); or
(h) defaulted under any material contract or agreement or any
indenture or debt.
3.23 Environmental Matters. The Company and the uses made by it of its
properties and assets are in compliance in all material respects with all
environmental laws, regulations, rules, orders and ordinances, and the Company,
to the best of the Company's knowledge, holds all permits and licenses required
to conduct its business thereunder. To the best of the Company's knowledge, all
properties and assets leased or owned by the Company, including,
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without limitation, all structures, contents, soil, subsoil and ground water, do
not contain hazardous substances in quantities that could reasonably be expected
to have a material adverse effect on the Company. To the best of the Company's
knowledge, the Company has no liability or obligation, whether to any
governmental authority or to any other person or entity, for damages, claims,
penalties, forfeitures or otherwise, as a consequence of the generation,
transportation or disposal of any such hazardous substance or any "hazardous
waste," as defined in 42 U.S.C. 6901 et seq.
3.24 Employee Compensation Plans. The Company is not a party to or bound
by any currently effective employment contracts, deferred compensation
agreements, bonus plans, incentive plans, profit sharing plans, retirement
agreements or other employee compensation agreements, except as provided by the
Founders' Agreement. Subject to applicable law, the employment of each officer
and employee of the Company is terminable at will of the Company, except as
provided by the Founders' Agreement.
3.25 Voting Agreements; Shareholder Agreements. The Company is not aware
of any voting or other agreements by and between its shareholders concerning the
manner in which shares of its capital stock shall be voted, other than as may be
contemplated hereunder or set forth in the Founders' Agreement.
3.26 U.S. Real Property Holding Corporation. The Company is not now and
has never been a "United States real property holding corporation," as defined
in Section 897(c)(2) of the Internal Revenue Code of the United States and
Section 1.897-2(b) of the Treasury Regulations promulgated by the Internal
Revenue Service thereunder, and the Company has filed with the Internal Revenue
Service all statements, if any, with its United States income tax returns which
are required under Section 1.897-2(h) of such Regulations.
3.27 Private Offering. The Company has not offered any of the Securities
or any similar security of the Company for sale to, or solicited offers to buy
any thereof from, or otherwise approached or negotiated with respect thereto
with, any prospective purchaser, other than the Purchaser and up to ten (10)
other prospective purchasers who are "qualified institutional buyers" within the
meaning of SEC Rule 144A.
3.28 Use of Proceeds. The Company shall apply the net proceeds from the
sale of the Securities for general corporate purposes.
3.29 Margin Securities. None of the transactions contemplated herein and
in the Securities (including, without limitation, the use of the proceeds from
the sale of the Securities) violates, will violate or will result in a violation
of Section 7 of the Securities Exchange Act of 1934, as amended, or any
regulations issued pursuant thereto, including, without limitation, Regulation
G, Regulation T and Regulation X of the Board of Governors of the Federal
Reserve System, 12 C.F.R., Chapter II. The Company does not own, or with the
proceeds of the sale of the Securities intends to own, carry or purchase, or
refinance borrowings that were used to own, carry or purchase, any margin
security, including margin securities originally issued by the Company. The
obligations of the Company under this Agreement and the Securities are not and
will not be secured by any margin sold on the basis of any such collateral.
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3.30 Absence of Foreign or Enemy Status. The Company is not in violation
of, and neither the issue and sale of the Securities by the Company nor its use
of the proceeds thereof as contemplated by this Agreement will violate the
Trading with the Enemy Act, as amended, or any executive orders, proclamations
or regulations issued pursuant thereto, including, without limitation,
regulations administered by the Office of Foreign Asset Control of the
Department of the Treasury (31 C.F.R., Subtitle B, Chapter V).
SECTION 4
Representations and Warranties of the Purchaser
Purchaser hereby represents and warrants to the Company as follows:
4.1 Experience. Purchaser has substantial experience in evaluating and
investing in private placement transactions so that Purchaser is capable of
evaluating the merits and risks of Purchaser's investment in the Company.
Purchaser, by reason of its business or financial experience or the business or
financial experience of its professional advisors who are unaffiliated with and
who are not compensated by the Company or any affiliate or selling agent of the
Company, directly or indirectly, has the capacity to protect its own interests
in connection with the purchase of the Shares hereunder, provided that the
foregoing does not limit the right of the Purchaser to rely upon the
representations and warranties of the Company set forth in Section 3.
4.2 Investment. Purchaser is acquiring the Shares for investment for
Purchaser's own account, not as a nominee or agent, and not with the view to, or
for resale in connection with, any distribution thereof. Purchaser understands
that the Shares 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 Purchaser's representations as
expressed herein. If Purchaser is not an individual, Purchaser has not been
formed for the specific purpose of acquiring the Shares.
4.3 Rule 144. Purchaser acknowledges that the Shares must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. Purchaser is aware of the
provisions of Rule 144 promulgated under the Securities Act which permit limited
resale of shares purchased in a private placement subject to the satisfaction of
certain conditions, including (except as limited by Rule 144(k)), among other
things, the existence of a public market for the Shares, the availability of
certain current public information about the Company, the resale occurring not
less than two years after a party has purchased and paid for the security to be
sold, the sale being effected through a "broker's transaction" or in
transactions directly with a "market maker" (as provided by Rule 144(f)) and the
number of Shares being sold during any three-month period not exceeding
specified limitations.
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4.4 No Public Market. Purchaser understands that no public market now
exists for any of the securities issued by the Company, that the Company has
made no assurances that a public market will ever exist for the Shares, and
that, even if such a public market exists at some future time, the Company may
not then be satisfying the current public information requirements of Rule 144.
4.5 Access to Data. Purchaser and its representatives have met with
representatives of the Company and thereby have had the opportunity to ask
questions of, and receive answers from, such representatives concerning the
Company and the terms and conditions of this transaction, as well as to obtain
any information requested by Purchaser. Purchaser believes that any questions
raised by Purchaser or its representatives concerning the transaction have been
answered to the satisfaction of Purchaser and its representatives. Purchaser's
decision to purchase the Shares is based in part on the answers to such
questions as Purchaser and its representatives have raised concerning the
transaction and on its own evaluation of the risks and merits of the purchase
and the Company's proposed business activities, provided that the foregoing does
not limit the right of the Purchaser to rely upon the representations and
warranties of the Company set forth in Section 3.
4.6 Authorization. The Agreements, when executed and delivered by
Purchaser, will constitute a valid and legally binding obligation of Purchaser,
enforceable in accordance with their respective terms, except as the
indemnification provisions of Section 2.6 of the Registration Rights Agreement
may be limited by principles of public policy, and subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
4.7 Brokers or Finders. The Company has not incurred, and will not incur,
directly or indirectly, as a result of any action taken by Purchaser, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement.
4.8 Tax Consequences. Purchaser shall be solely responsible for seeking
advice on the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. Purchaser is not
relying on any statements or representations of the Company or any of its agents
and understands that Purchaser (and not the Company) shall be responsible for
Purchaser's own tax liability that may arise as a result of this investment or
the transactions contemplated by this Agreement.
SECTION 5
Conditions to Closing of Purchaser
The Purchaser's obligations to purchase the Shares at the Closing are, at
the option of the Purchaser, subject to and conditioned upon the fulfillment or
waiver as of the Closing Date of the following conditions:
5.1 Representations and Warranties Correct. The representations and warranties
made by the Company in Section 3 hereof shall be true and correct in all
material respects when made, and
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shall be true and correct in all material respects on the Closing Date with the
same force and effect as if they had been made on and as of said date.
5.2 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all material respects.
5.3 Opinion of Company's Counsel. The Purchaser shall have received from
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel to the Company, an opinion addressed to it,
dated the Closing Date, in substantially the form of Exhibit E attached hereto.
5.4 Compliance Certificate. The Company shall have delivered to the
Purchaser a form of compliance certificate of the Company in the form of Exhibit
F hereto, executed by the Chief Executive Officer of the Company, dated the
Closing Date, and certifying to the fulfillment of the conditions specified in
Sections 5.1, 5.2 and 5.5 of this Agreement.
5.5 Blue Sky. The Company shall have obtained all necessary Blue Sky law
permits and qualifications, or secured exemptions therefrom, required by any
state for the offer and sale of the Securities.
5.6 Legal Matters. All material matters of a legal nature which pertain to
the Agreements and the transactions contemplated hereby and thereby shall have
been reasonably approved by counsel to the Purchaser.
5.7 Co-Sale and Registration Rights Agreements. The Company, the Founders
and the Purchaser shall have entered into the Co-Sale Agreement and the
Registration Rights Agreement.
SECTION 6
Conditions to Closing of Company
The Company's obligation to sell and issue the Shares at the Closing is,
at the option of the Company, subject to and conditioned upon the fulfillment or
waiver of the following conditions:
6.1 Representations. The representations made by the Purchaser in Section
4 hereof shall be true and correct when made, and shall be true and correct on
the Closing Date.
6.2 Blue Sky. The Company shall have obtained all necessary Blue Sky law
permits and qualifications, or secured exemptions therefrom, required by any
state for the offer and sale of the Securities.
6.3 Legal Matters. All material matters of a legal nature which pertain to
the Agreements and the transactions contemplated hereby and thereby shall have
been reasonably approved by ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to the Company.
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SECTION 7
Affirmative Covenants of the Company
The Company hereby covenants and agrees as follows:
7.1 Financial Information. The Company will mail the following reports to
Purchaser for so long as Purchaser is a holder of any Securities:
(a) As soon as practicable after the end of each quarterly fiscal
period in each fiscal year of the Company (other than the last quarterly fiscal
period of each such fiscal year), and in any event within forty-five (45) days
thereafter, duplicate copies of (i) a consolidated balance sheet of the Company
as at the end of such quarter, and (ii) statements of income, changes in
shareholders' equity and cash flows of the Company for such quarter and (in the
case of the second and third quarters) for the portion of the fiscal year ending
with such quarter), setting forth in each case in comparative form the figures
for the corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with generally accepted accounting principles
applicable to quarterly financial statements generally, and certified as
complete and correct, subject to changes resulting from year-end adjustments, by
a senior financial officer of the Company, and accompanied by the certificate
required by this Agreement.
(b) As soon as practicable after the end of each fiscal year of the
Company, and in any event within ninety (90) days thereafter, duplicate copies
of (i) a balance sheet of the Company as at the end of such year, and (ii)
consolidated statements of income, changes in shareholders' equity and cash
flows of the Company for such year, setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail,
prepared in accordance with generally accepted accounting principles and
accompanied by (iii) an opinion thereon of independent certified public
accountants of recognized national standing selected by the Company, which
opinion shall, without qualification, state that such financial statements
present fairly, in all material respects, the financial position of the Company
being reported upon and its results of operations and cash flows and have been
prepared in conformity with generally accepted accounting principles, and that
the examination of such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing standards, and that
such audit provides a reasonable basis for such opinion in the circumstances.
and (iv) a certification by a senior financial officer of the Company that such
financial statements are complete and correct.
(c) Promptly, but in any event not more than five (5) business days
after the receipt thereof, a copy of each other report submitted to the Company
by independent certified public accountants in connection with any annual,
interim or special audit made by them of the books of the Company.
(d) Promptly upon their becoming available, one copy of each
financial statement, report, notice or proxy statement sent by the Company to
stockholders generally, and of each regular or periodic report and any
registration statement, prospectus or written communication (other than
transmittal letters), and each amendment thereto, in respect thereof
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filed by the Company with, or received the Company in connection therewith from,
the National Association of Securities Dealers, any securities exchange or the
Securities and Exchange Commission or any successor agency.
(e) For so long as Purchaser is eligible to receive reports under
this Section 7.1, it shall also have the right, at its expense, to visit and
inspect any of the properties of the Company or any of its subsidiaries, to
examine their books of account and records, to discuss their affairs, finances
and accounts with their officers, employees and accountants and to consult with
and advise their directors and officers on the management of the business, all
at such reasonable times and as often as may be reasonably requested; provided,
however, that the Company shall not be obligated to provide any information that
it reasonably considers to be a trade secret or to be confidential information.
7.2 Additional Information. As long as Purchaser (together with any
affiliates) holds not less than 50,000 Shares (or an equivalent number
consisting of the Shares and Conversion Shares, as adjusted for
recapitalizations, stock splits, stock dividends and the like), the Company will
mail the following reports to Purchaser:
(a) Prior to the end of each fiscal quarter, a budget for the next
fiscal quarter, and, as soon as prepared, any other budgets or revised budgets
prepared by the Company.
(b) As soon as practicable after the end of each fiscal month, and
in any event within thirty (30) days thereafter, a monthly progress report
against budget, explaining any material discrepancies.
7.3 Transfer of Information. The information rights set forth in Sections
7.1 and 7.2 may be transferred in any non-public transfer of Securities,
provided that the Company is given written notice of such transfer, and provided
further that the right to receive the information set forth in Section 7.2 may
only be transferred to a holder of, or affiliated holders who in the aggregate
hold, at least the amount of shares specified in Section 7.2. In the event that
the Company reasonably determines that provision of information to a transferee
pursuant to this Section 7.3 would materially adversely affect its proprietary
or competitive position, such information may be edited in the manner necessary
to avoid such affect.
7.4 Conflicts of Interest. Unless the Company first obtains appropriate
approval of its Board of Directors and, if necessary, shareholders in accordance
with the California Corporations Code, the Company shall use its best efforts to
ensure that (a) officers of the Company will not become indebted to the Company
except in connection with stock purchases approved by the Board of Directors,
travel advances and other transactions in the ordinary course of business, and
(b) officers of the Company will not have any direct or indirect ownership
interest in any firm or corporation with which the Company has a business
relationship or with which it competes (except that officers may own up to five
percent (5%) of the outstanding stock in publicly traded companies which may
have a business relationship with or compete with the Company).
7.5 Termination of Covenants. The covenants set forth in Sections 7.1, 7.2
and 7.4 shall terminate and be of no further force or effect at such time as the
Company is required to file
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reports with the Securities and Exchange Commission (the "Commission") pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.
7.6 Participation in Future Financings. As used in this Section 7.6, the
term "New Securities" means any class or series of stock of the Company, whether
or not presently authorized, and any warrants, options, or rights to acquire
such stock, and any instrument convertible into or exchangeable for such stock.
(a) Except as provided in paragraph (c) below, if the Company shall
issue any New Securities, it shall offer to sell to Purchaser and to each
assignee permitted under paragraph (e) below (Purchaser or such assignee being
hereinafter called the "Holder") a Ratable Portion of such New Securities on the
same terms and conditions and at the lowest price as such New Securities are
issued to any person. "Ratable Portion" shall mean that portion of such New
Securities that bears the same ratio to all such New Securities (including for
this purpose all New Securities which may be purchased by all Holders pursuant
to this Section 7.6) as the number of Shares and Conversion Shares held by the
Holder bears to the Outstanding Common Shares. "Outstanding Common Shares" means
all shares of Common Stock then outstanding and all shares of Common Stock
issuable upon conversion of all convertible securities then outstanding and upon
exercise of warrants and options then outstanding.
(b) The Company shall use reasonable efforts to notify the Holder a
reasonable time prior to the initial issuance of the New Securities and to
provide the Holder with an opportunity to participate in the issuance
contemporaneously with the first purchaser of the New Securities; but in no
event shall notice be given later than 30 days after the issuance. Such notice
shall contain all material terms of the issuance and of the New Securities. The
Holder may elect to exercise all or any portion of its rights under this Section
7.6 by giving written notice to the Company within 15 days of the Company's
notice. If the consideration paid by others for the New Securities is not cash,
and if the electing Holder cannot for any reason pay for the New Securities in
the form of such non-cash consideration, the Holder may pay the cash equivalent
thereof, as determined in good faith by the Board of Directors. All payments
shall be delivered by the electing Holder to the Company not later than the date
specified by the Company in its notice, but in no event earlier than 20 days
after the Company's notice.
(c) The provisions of this Section 7.6 shall not apply to shares of
Common Stock issued or issuable by the Company which shares are excluded from
the definition of "Additional Shares of Common Stock" for purposes of Article
IV, Section 2, of the Amended Articles.
(d) The rights of the Holder under this Section 7.6 shall terminate
immediately prior to the closing of an underwritten public offering of
securities by the Company which satisfies the requirements of the Amended
Articles (as in effect at such time) for the automatic conversion of the Series
A Preferred.
(e) The Purchaser's rights under this Section 7.6 shall be
assignable only to an assignee who acquires all of the Purchaser's Shares.
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SECTION 8
Restrictions on Transferability of Securities;
Compliance with Securities Act and Right of First Refusal
8.1 Restrictions on Transferability. The Securities shall not be sold, assigned,
transferred or pledged except upon the conditions specified in this Section 8.
The Purchaser will cause any proposed purchaser, assignee, transferee, or
pledgee of the Securities held by the Purchaser to agree to take and hold such
securities subject to the provisions and upon the conditions specified in this
Section 8 and in the Registration Rights Agreement.
8.2 Restrictive Legend. Each certificate representing (i) the Securities
and (ii) any other securities issued in respect of the Securities upon any stock
split, stock dividend, recapitalization, merger, consolation or similar event,
shall (unless otherwise permitted by the provisions of Section 8.3 below) be
stamped or otherwise imprinted with a legend in the following form (in addition
to any legend required under applicable state securities laws):
THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN
SERIES A PREFERRED STOCK PURCHASE AGREEMENT BY AND BETWEEN THE
SHAREHOLDER, THE CORPORATION AND CERTAIN HOLDERS OF SECURITIES OF
THE CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON
WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION.
The Purchaser consents to the Company making a notation on its records and
giving instructions to any transfer agent of the Securities in order to
implement the restrictions on transfer established in this Section 8.
8.3 Notice of Proposed Transfers. The holder of each certificate
representing securities of the Company required to bear the legend set forth in
Section 8.2 ("Restricted Securities"), by acceptance thereof, agrees to comply
in all respects with the provisions of this Section 8.3. Prior to any proposed
sale, assignment, transfer or pledge of any Restricted Securities, the holder
thereof shall give written notice to the Company of such holder's intention to
effect such transfer, sale, assignment or pledge. Each such notice shall
describe the manner and circumstances of the proposed transfer, sale, assignment
or pledge in sufficient detail, and shall be accompanied at such holder's
expense by either (i) an unqualified written opinion of legal counsel who shall
be, and whose legal opinion shall be, reasonably satisfactory to the Company
addressed to the Company, to the effect that the proposed transfer of the
Restricted Securities may be effected without registration under the Securities
Act, or (ii) a "no action" letter from the Commission to the effect that the
transfer of such securities without registration will not result in a
recommendation by the staff of the Commission that action be taken with respect
thereto, whereupon, subject to compliance with Section 8.4 hereof, the holder of
such Restricted Securities shall be entitled to transfer such Restricted
Securities in accordance with the terms of the notice delivered by the holder to
the Company. The Company will not require such
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a legal opinion or "no action" letter (a) in any transaction covered by an
effective registration statement under the Securities Act, (b) in any
transaction in compliance with Rule 144, or (c) in any transfer to a Related
Party (as defined in Section 8.4(b)), provided that each transferee agrees in
writing to be subject to the terms of this Section 8.3. Until termination of the
right of first refusal provided in Section 8.4, such notice shall also set forth
the number of Restricted Securities proposed to be transferred, the name and
address of the proposed transferee and the proposed amount and form of
consideration and terms and conditions of payment. Each certificate evidencing
the Restricted Securities transferred as above provided shall bear, except if
such transfer is made pursuant to Rule 144, the appropriate restrictive legend
set forth in Section 8.2 above, except that such certificate shall not bear such
restrictive legend if, in the opinion of counsel for such holder and the
Company, such legend is not required in order to establish compliance with any
provisions of the Securities Act or with Section 8.4 of this Agreement.
8.4 Right of First Refusal. Except as otherwise permitted by subsection
(b) of this Section 8.4, no holder may transfer Restricted Securities to any
person or persons (a "transferee") without first offering such Restricted
Securities to the Company for purchase at the same price and on the same terms
as the proposed transfer to the transferee.
(a) Upon receipt of the notice provided for in Section 8.3, the
Company shall have the option for a period of 15 days following the date said
notice is received, to purchase all or any part of the Restricted Securities
specified in such notice. In the event that the Company shall fail to exercise
such option to purchase all Restricted Securities being offered within such
15-day time period, then the holder shall have the right for a period of 45 days
after the termination of the 15-day period (or after waiver by the Company of
its option to purchase), to transfer the remaining Restricted Securities which
were the subject of the option, but only in the manner and on the terms and
conditions as set forth in the notice given by the holder.
(b) Each holder of Restricted Securities may, without complying with
the provisions of Section 8.4(a), transfer any Restricted Securities owned or
held by him to any of his Related Parties and such Related Parties may transfer
Restricted Securities to his Related Parties or to such holder. Related Party of
any holder shall mean any parent, majority shareholder, subsidiary, partner or
affiliate of such holder or any corporation, general or limited partnership,
trust or other entity or organization in which any of the foregoing,
individually or in the aggregate, has a majority of the equity interest. With
respect to any individual, Related Party means members of such holder's
immediate family, and trusts if a majority of the beneficiaries of the trust are
such holder or members of his immediate family.
(c) The provision of this Section 8.4 shall terminate upon
conversion of all of the outstanding Shares into Common Stock. This section
shall not apply to Securities sold pursuant to a registration statement filed
under the Securities Act which results in the automatic conversion of Shares
into Common Stock.
8.5 California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH
ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
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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 IS UNLAWFUL UNLESS THE SALE OF SECURITIES
IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS
SO EXEMPT.
SECTION 9
Miscellaneous
9.1 Governing Law. This Agreement shall be governed in all respects by the laws
of the State of California.
9.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Purchaser and the
closing of the transactions contemplated hereby.
9.3 Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
permitted successors, assigns, heirs, executors and administrators of the
parties hereto; provided, however, that the rights of the Purchaser to purchase
the Shares shall not be assignable without the consent of the Company.
9.4 Entire Agreement; Amendment. This Agreement and the other documents
delivered pursuant hereto at the Closing constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and no party shall be liable or bound to any other party in
any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought;
provided, however, that holders of at least a majority of the Securities (other
than shares of such Common Stock that are no longer Registrable Securities, as
defined in the Registration Rights Agreement) may, with the written consent of
the Company, waive, modify or amend on behalf of all holders, any provisions
hereof benefiting such holders, so long as the effect thereof will be that all
such holders will be treated equally.
9.5 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand, messenger or
telecopy, addressed (a) if to Purchaser, at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, Attention: Executive Vice President - Investments, or at such other
address as Purchaser shall have furnished to the Company in writing, or (b) if
to any other holder of any Securities, at such address as such holder shall have
furnished the Company in writing, or, until any such holder so furnishes an
address to the Company, then to
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and at the address of the last holder of such Securities who has so furnished an
address to the Company, or (c) if to the Company, to its address set forth on
the cover page of this Agreement and addressed to the attention of the Chief
Executive Officer, or at such other address as the Company shall have furnished
to the Purchaser. Each such notice or other communication shall for all purposes
of this Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or five
(5) business days after the same has been deposited in a regularly maintained
receptacle for the deposit of the United States mail, addressed and postage
prepaid as aforesaid.
9.6 Delays or Omissions. Except where a specific time period is defined in
this Agreement for the exercise of a right, or as otherwise expressly provided
herein, no delay or omission to exercise any right, power or remedy accruing to
any holder of any Securities, upon any breach or default of the Company under
this Agreement, shall impair any such right, power or remedy of such holder 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. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
9.7 Expenses. The Company and the Purchaser shall bear their own expenses
incurred on its behalf with respect to this Agreement and the transactions
contemplated hereby. In the event of an action to resolve a dispute regarding
interpretation of this Agreement, the expenses of the prevailing party shall be
paid by the party which does not prevail.
9.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
9.9 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
9.10 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not considered in construing or
interpreting this Agreement.
9.11 Broker's or Finder's Fee. The Company and the Purchaser agree to
indemnify and hold harmless the other from any liability for any commission or
compensation in the nature of a brokerage or finder's fees or agents'
commissions (and the costs and expenses of defending against such liability or
asserted liability) for which the Company or the Purchaser or any of their
respective officers, agents, employees or representatives is responsible in
connection with this transaction.
9.12 Waiver of Conflict. Each party to this Agreement that has been or
continues to be represented by ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ hereby acknowledges that Rule
3-310 of the Rules of Professional Conduct promulgated by the State Bar of
California requires an attorney to avoid
-18-
representations in which the attorney has or had a relationship with another
party interested in the representation without the informed written consent of
all parties affected. By executing this Agreement, each such party gives its
informed written consent to the representation of the Company by ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ in connection with this Agreement and the transactions contemplated
hereby.
The foregoing agreement is hereby executed as of the date first above
written.
STRATEGIC CONCEPTS CORP.
a California corporation
By: /s/ Hussein A. ▇▇▇▇
▇▇▇▇▇▇▇ A. Enan,
Chief Executive Officer
NATIONWIDE MUTUAL INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Executive Vice President - Investments
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