Series B Preferred Stock Purchase Agreement - BroadVision Inc. and ITOCHU Corp.
BROADVISION, INC.
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SERIES B PREFERRED STOCK PURCHASE AGREEMENT
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JANUARY 31, 1994
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TABLE OF CONTENTS
PAGE
SECTION 1 AUTHORIZATION AND SALE OF THE SERIES B PREFERRED STOCK............ 1
1.1 Authorization...................................................... 1
1.2 Sale of Preferred.................................................. 1
1.3 Closing Date....................................................... 1
1.4 Delivery........................................................... 1
SECTION 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................... 1
2.1 Organization and Standing. ....................................... 1
2.2 Corporate Power.................................................... 1
2.3 Subsidiaries....................................................... 2
2.4 Capitalization..................................................... 2
2.5 Authorization...................................................... 2
2.6 Material Liabilities............................................... 3
2.7 Compliance with Other Instruments, etc............................. 3
2.8 Litigation, etc.................................................... 3
2.9 Registration Rights................................................ 3
2.10 Governmental Consent, etc.......................................... 3
2.11 Offering........................................................... 4
2.12 Certain Transactions............................................... 4
2.13 Intellectual Property.............................................. 4
2.14 Employee and Consultant Agreements................................. 5
2.15 Disclosure......................................................... 5
2.16 Brokers or Finders................................................. 5
2.17 No Dividends....................................................... 5
2.18 Contracts.......................................................... 5
2.19 Employee Compensation Plans........................................ 5
2.20 Related-Party Transactions......................................... 5
2.21 Manufacturing and Marketing Rights................................. 5
2.22 Corporate Documents................................................ 6
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.................... 6
3.1 Authorization...................................................... 6
3.2 Experience......................................................... 6
3.3 Investment......................................................... 6
3.4 Rule 144........................................................... 6
3.5 Ability to Bear Economic Risk...................................... 7
3.6 No Public Market................................................... 7
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TABLE OF CONTENTS
(CONTINUED)
PAGE
3.7 Access to Data..................................................... 7
3.8 Accredited Investor Status......................................... 7
SECTION 4 CONDITIONS TO CLOSING OF INVESTOR................................. 7
4.1 Representations and Warranties..................................... 7
4.2 Covenants.......................................................... 7
4.3 No Material Adverse Change......................................... 7
4.4 Blue Sky........................................................... 8
4.5 Board of Directors................................................. 8
4.6 Compliance Certificate............................................. 8
4.7 Opinion of Counsel................................................. 8
4.8 Investors' Rights Agreement........................................ 8
4.9 Certificate of Designation......................................... 8
SECTION 5 CONDITIONS TO CLOSING OF COMPANY.................................. 8
5.1 Representations and Warranties..................................... 8
5.2 Covenants. ........................................................ 8
5.3 Blue Sky........................................................... 8
5.4 Investors' Rights Agreement........................................ 8
SECTION 6 AFFIRMATIVE COVENANTS OF THE INVESTOR............................. 9
6.1 Covenant Not To Transfer........................................... 9
SECTION 7 AFFIRMATIVE COVENANTS OF THE COMPANY.............................. 9
7.1 Financial Information.............................................. 9
7.2 Assignment of Rights to Financial Information...................... 9
7.3 Company Strategy Briefings......................................... 10
7.4 Termination of Covenants........................................... 10
SECTION 8 MISCELLANEOUS..................................................... 10
8.1 Governing Law...................................................... 10
8.2 Survival........................................................... 10
8.3 Successors and Assigns............................................. 10
8.4 Entire Agreement................................................... 10
ii.
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TABLE OF CONTENTS
(CONTINUED)
PAGE
8.5 Rights of Investor................................................. 10
8.6 Notices, etc....................................................... 10
8.7 Expenses........................................................... 11
8.8 Counterparts....................................................... 11
8.9 Severability....................................................... 11
8.10 California Corporate Securities Law................................ 11
8.11 Approval of Amendments and Waivers................................. 11
EXHIBITS
A - Schedule of Investor
B - Certificate of Designation of Preferences
C - Schedule of Exceptions
D - Investors' Rights Agreement
E - Form of Legal Opinion to the Investor from Cooley Godward Castro
Huddleson & Tatum
iii.
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SERIES B PREFERRED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of January 31, 1994 between BROADVISION, INC., a
Delaware corporation (the "Company") and the investor as set forth in Exhibit A
hereto ("Investor").
SECTION 1
AUTHORIZATION AND SALE OF THE SERIES B PREFERRED STOCK
1.1 AUTHORIZATION. The Company has authorized the issuance and sale of
800,000 shares of its Series B Preferred Stock (the "Preferred") having the
rights, preferences, privileges and restrictions set forth in the Certificate of
Designation of Preferences in the form attached to this Agreement as Exhibit B
(the "Certificate").
1.2 SALE OF PREFERRED. Subject to the terms and conditions hereof,
Investor agrees to purchase and the Company agrees to sell and issue to Investor
the number of shares of Preferred set forth opposite Investor's name on Exhibit
A at a price of $1.25 per share.
1.3 CLOSING DATE. The closing of the purchase and sale of the Preferred
hereunder (the "Closing") shall be held at the law offices of Cooley Godward
Castro Huddleson & Tatum ("Cooley Godward"), 5 Palo Alto Square, 4th Floor,
Palo Alto, California 94306, on the date of this Agreement or at such other time
and place upon which the Company and the Investor shall agree (the date of the
Closing is hereinafter referred to as the "Closing Date").
1.4 DELIVERY. At the Closing the Company will deliver to Investor a
certificate representing the shares of Preferred that Investor is purchasing
against payment of the purchase price therefor by wire transfer or by check
payable to the order of the Company.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Schedule of Exceptions attached hereto as
Exhibit C, the Company hereby represents and warrants to Investor as follows:
2.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized and validly existing under, and by virtue of, the laws of the State of
Delaware and is in good standing under such laws. The Company has all requisite
corporate power to own and operate its properties and assets and to carry on its
business as presently conducted and as proposed to be conducted. The Company is
qualified to do business as a foreign corporation in each jurisdiction in which
such qualification is presently required.
2.2 CORPORATE POWER. The Company will have at the Closing Date all
requisite legal and corporate power to execute and deliver this Agreement and
the Investors' Rights Agreement
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substantially in the form attached hereto as Exhibit D (the "Investors' Rights
Agreement") (the Agreement and the Investors' Rights Agreement are hereinafter
collectively referred to as the "Agreements"), to sell and issue the Preferred
under this Agreement, to issue the Common Stock issuable upon conversion of the
Preferred and to carry out and perform its obligations under the terms of the
Agreements, including all exhibits and schedules hereto and thereto.
2.3 SUBSIDIARIES. The Company does not own or control, directly or
indirectly, any other corporation, association or business entity.
2.4 CAPITALIZATION. The authorized capital stock of the Company consists,
or immediately prior to the Closing will consist, of 17,000,000 shares of Common
Stock, of which 5,700,000 are issued and outstanding and 6,000,000 shares of
Preferred Stock, of which 4,300,000 are designated Series A Preferred Stock (of
which 4,266,667 are issued and outstanding), and 1,400,000 are designated Series
B Preferred Stock (of which 800,000 will be issued and outstanding immediately
after the Closing). The outstanding shares of Common and Series A Preferred
Stock are owned by the shareholders set forth and in the numbers specified on
Exhibit C. No other shares of capital stock are outstanding. All such issued
and outstanding shares have been duly authorized and validly issued and are
fully paid and nonassessable. The Preferred has the rights, preferences,
privileges and restrictions set forth in the Certificate. Except for (i) the
conversion privileges of the Series A Preferred Stock and the Series B Preferred
Stock specified in the Certificate of Incorporation of the Company, as amended,
and the Certificate, (ii) the obligations of the holders of the Series A
Preferred Stock to purchase Series B Preferred Stock; and (iii) the arrangements
with respect to employee stock set forth in Exhibit C, there are no options,
warrants, conversion privileges or other rights presently outstanding to
purchase or otherwise acquire any authorized but unissued shares of the
Company's capital stock or other securities of the Company. All outstanding
securities of the Company were issued in compliance with the registration or
qualification provisions of all applicable U.S. federal and state securities
laws.
2.5 AUTHORIZATION. All corporate action on the part of the Company, its
officers, 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 Preferred (and the Common Stock issuable upon
conversion of the Preferred) and the performance of the Company's obligations
under the Agreements has been taken or will be taken prior to the Closing. The
Agreements, when executed and delivered by the Company, will constitute valid
and binding obligations of the Company enforceable in accordance with their
terms, subject to laws of general application relating to bankruptcy,
insolvency, the relief of debtors, general equity principles, and limitations
upon rights to indemnity. The Preferred, when issued in compliance with the
provisions of this Agreement, will be duly and validly issued, fully paid and
nonassessable and free of restrictions on transfer other than restrictions under
the Agreements and under applicable federal and state securities laws. The
Common Stock issuable upon conversion of the Preferred has been duly and validly
reserved and, when issued in compliance with the provisions of this Agreement,
will be duly and validly issued, fully paid and nonassessable and free of
restrictions on transfer other than restrictions under the Agreements, the right
of first refusal provided in the Company's Bylaws, and applicable federal
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and state securities laws. The Preferred is not subject to any preemptive
rights or rights of first refusal.
2.6 MATERIAL LIABILITIES. The Company has no material indebtedness or
liabilities, absolute or contingent (individually or in the aggregate), except
(1) with respect to services rendered by its employees or consultants; (2) with
respect to unpaid legal and other fees and costs incurred in connection with the
formation and ongoing business of the Company, the issuance of Common Stock to
its founder and the issuance of the Preferred in connection with this Agreement;
(3) liabilities incurred in the ordinary course of business that do not exceed
$50,000 in the aggregate; and (4) as set forth in Exhibit C.
2.7 COMPLIANCE WITH OTHER INSTRUMENTS, ETC. The Company is not, and will
not by virtue of entering into and performing the Agreements and the
transactions contemplated thereunder be, in violation of any term of its
Certificate of Incorporation or Bylaws or any term or provision of any mortgage,
indenture, contract, agreement, instrument, judgment or decree to which it is a
party or by which it is bound, and is not, and will not by virtue of entering
into and performing the Agreements and the transactions contemplated thereunder
be, in violation of any order addressed specifically to the Company nor, to the
best of the Company's knowledge, any order, statute, rule or regulation
applicable to the Company.
2.8 LITIGATION, ETC. There are no actions, suits, proceedings or
investigations pending or threatened against the Company before any court or
governmental agency (nor, to the best of the Company's knowledge, is there any
basis therefor). There is no judgment, decree, or order of any court in effect
against the Company and the Company is not in default with respect to any order
of any governmental authority to which the Company is a party or by which it is
bound. There is no action, suit, proceeding, or investigation by the Company
currently pending or which the Company presently intends to initiate.
2.9 REGISTRATION RIGHTS. Except as set forth in the Investors' Rights
Agreement, the Company is not under any obligation to register (as defined in
Section 1.2 of the Investors' Rights Agreement) any of its presently outstanding
securities or any of its securities that may hereafter be issued.
2.10 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 Preferred (and
the Common Stock issuable upon conversion of the Preferred) or the consummation
of any other transaction contemplated thereby, except for (a) the filing of the
Certificate in the Office of the Secretary of State of the State of Delaware and
(b) the filing of a Notice with the California Commissioner of Corporations
pursuant to Section 25102(f) of the California Corporations Code and/or such
other filings as may be required under other applicable blue sky laws, which
filings, if required, will be accomplished in a timely manner prior to or
promptly upon completion of the Closing, as applicable.
3.
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2.11 OFFERING. Subject to the accuracy of the representations set forth in
Section 3 hereof, the offer, sale and issuance of the Preferred pursuant to this
Agreement and the issuance of the Common Stock to be issued upon conversion of
the Preferred constitute transactions exempt from the registration requirements
of Section 5 of the Securities Act of 1933, as amended (the "Securities Act").
2.12 CERTAIN TRANSACTIONS. Since its date of incorporation, the Company
has not (a) discharged or satisfied any obligation or liability other than as
authorized by its Board of Directors, or in the ordinary course of business or
in amounts less than $100,000 in the aggregate, (b) declared or made any payment
or distribution to its shareholders or redeemed or purchased any of its shares
of capital stock or securities, (c) mortgaged or subjected to encumbrances any
of its assets, (d) sold, transferred or leased to third parties any of its
assets except in the ordinary course of business, (e) canceled or compromised
any material debt or any claim or waived or released any right of material
value, suffered any physical damage or destruction or loss materially and
adversely affecting its properties, operations or business, (f) made any loans
or advances to any persons other than immaterial amounts (both individually and
in the aggregate) in the ordinary course of business or (g) entered into any
material transaction other than as approved by its Board of Directors or in the
ordinary course of business or agreed to any of the foregoing other than with
respect to transactions relating to this Agreement.
2.13 INTELLECTUAL PROPERTY. To the best of its knowledge (but without
having conducted any special investigation or patent search), the Company has or
will be able to license on commercially reasonable terms sufficient legal rights
to all patents, copyrights, trade secrets, information, proprietary rights and
processes (collectively "Proprietary Information") necessary for its business as
now conducted and as proposed to be conducted without any conflict with or
infringement of the rights of others. Except for agreements with its own
officers, employees and consultants substantially in the forms referenced in
Section 2.14 below, 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 infringed or that the Company would, by conducting its business as
proposed, violate or infringe any of the patents, trademarks, service marks,
trade names, copyrights or trade secrets or other proprietary rights of any
other person or entity. Neither the execution nor delivery of this Agreement,
nor the carrying on of the Company's business by the employees of and
consultants to the Company, nor the conduct of the Company's business as now
conducted or 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 is now obligated. The Company does not believe it is or will be
necessary to utilize any inventions of any of its employees (or people it
currently intends to hire) made prior to their employment by the Company.
4.
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2.14 EMPLOYEE AND CONSULTANT AGREEMENTS. All employees and consultants of
the Company have entered into proprietary information and inventions agreements,
substantially in the Company's standard forms and, to the best of the Company's
knowledge, none of the Company's current or former employees or consultants is
in violation of such agreements.
2.15 DISCLOSURE. None of the representations or warranties made by the
Company in this Agreement and no information in the Exhibits hereto contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained herein and therein not misleading.
2.16 BROKERS OR FINDERS. The Company has not entered into any agreement or
arrangement giving rise to any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with the Agreements.
2.17 NO DIVIDENDS. The Company has not made any declaration, setting aside
for payment or other distribution in respect of any of the Company's capital
stock or any direct or indirect redemption, repurchase or other acquisition of
any of such stock.
2.18 CONTRACTS. Except as listed on Exhibit C, the Company is not party to
any contract or agreement (i) with expected receipts or expenditures in excess
of $10,000, (ii) involving a license or grant of rights to or from the Company
involving patents, trademarks, copyrights, or other proprietary information
applicable to the business of the Company, (iii) with provisions restricting or
affecting the development, manufacture, or distribution of the Company's
products or services, or (iv) that provides indemnification by the Company with
respect to infringements of proprietary rights.
2.19 EMPLOYEE COMPENSATION PLANS. Except as listed on Exhibit C, the
Company is not 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. Subject to general principles related to wrongful termination of
employees, the employment of each officer and employee of the Company is
terminable at the will of the Company.
2.20 RELATED-PARTY TRANSACTIONS. No employee, officer, or director of the
Company or member of his or her immediate family is indebted to the Company, nor
is the Company indebted (or committed to make loans or extend or guarantee
credit) to any of them. To the best of the Company's knowledge, none of such
persons has 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 that competes with the Company, except
that employees, officers, or directors of the Company and members of their
immediate families may own stock in publicly traded companies that may have
business relationships with or may compete with the Company.
2.21 MANUFACTURING AND MARKETING RIGHTS. The Company has not granted
rights to manufacture, produce, assemble, license, market, or sell its products
to any other person,
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corporation, partnership or other entity, and is not bound by any agreement that
affects the Company's exclusive right to develop, manufacture, assemble,
distribute, market, or sell its products, and has not licensed or sold any of
its technology or proprietary information to any person, corporation,
partnership or other entity.
2.22 CORPORATE DOCUMENTS. The Company has furnished the Investor with
copies of the Certificate of Incorporation and Bylaws as currently in effect.
Said copies are true, correct, and complete and contain all amendments through
the Closing Date.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
Investor hereby represents and warrants to the Company as follows:
3.1 AUTHORIZATION. The Agreements constitute valid and legally binding
obligations of Investor, enforceable in accordance with their terms except as
the enforceability thereof may be subject to the effect of (i) any applicable
bankruptcy, insolvency, reorganization or other law relating to or affecting
creditors' rights generally, and (ii) general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law). Investor is authorized and has full right and power to purchase the
Preferred, and the person signing the Agreements and any other instrument
executed and delivered hereby on behalf of such entity has been duly authorized
by such entity and has full power and authority to do so.
3.2 EXPERIENCE. The Investor has, from time to time, evaluated
investments in new, high technology companies and has, either individually or
through the personal experience of one or more of its current officers or
partners, experience in evaluating and investing in new, high technology
companies. The Investor has such knowledge and experience in financial and
business matters such that it is capable of evaluating the merits and risks of
its investment in the Preferred and it is able to protect its own interests in
connection with this transaction.
3.3 INVESTMENT. The Investor is acquiring the Preferred (and any Common
Stock issuable upon conversion of the Preferred) for investment for its own
account and not with the view to, or for resale in connection with, any
distribution thereof. The Investor understands that the Preferred (and any
Common Stock issuable upon conversion of the Preferred) to be purchased has not
been 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 as expressed herein.
3.4 RULE 144. The Investor acknowledges that the Preferred must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. The Investor is aware of the
provisions of Rule 144 promulgated under the Securities Act which permits
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, 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
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securities to be sold, the sale being 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. The Investor is aware that the conditions for resale set
forth in Rule 144 have not been satisfied and that the Company has no plan to
satisfy these conditions in the foreseeable future.
3.5 ABILITY TO BEAR ECONOMIC RISK. The Investor understands that
investment in the Preferred involves a high degree of risk, and represents that
it is able, without impairing its financial condition, to hold the Preferred for
an indefinite period of time and to suffer a complete loss on its investment.
3.6 NO PUBLIC MARKET. The Investor understands that no public market now
exists for any of the securities issued by the Company and that it is unlikely
that a public market will ever exist for the Preferred.
3.7 ACCESS TO DATA. The Investor has had an opportunity to discuss the
Company's business, management and financial affairs with its management. The
Investor understands that such discussions, as well as any written information
issued by the Company, were intended to describe the aspects of the Company's
business and prospects which the Company believes to be material.
3.8 ACCREDITED INVESTOR STATUS. Investor is an "accredited investor" as
that term is defined in Regulation D, Rule 501 by reason of being a corporation,
not formed for the specific purpose of acquiring the securities being purchased
hereunder, with total assets in excess of US $5,000,000.
SECTION 4
CONDITIONS TO CLOSING OF INVESTOR
Investor's obligation to purchase the Preferred at the Closing is subject
to the fulfillment to its satisfaction on or prior to the Closing Date of the
following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company contained in Section 2 shall be true on and as of the Closing with
the same effect as though such representations and warranties had been made on
and as of the date of the Closing.
4.2 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 respects.
4.3 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in the Company's financial condition, affairs or prospects between the
date of this Agreement and the Closing Date, if different.
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4.4 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 Preferred and Common Stock issuable upon
conversion of the Preferred.
4.5 BOARD OF DIRECTORS. The Board of Directors of the Company immediately
following the Closing will consist of Pehong Chen, David L. Anderson and Yogen
K. Dalal.
4.6 COMPLIANCE CERTIFICATE. The Company shall have delivered on the
Closing Date a certificate signed by an officer of the Company certifying that
the conditions specified in Sections 4.1 through 4.4 have been fulfilled.
4.7 OPINION OF COUNSEL. The Investor shall have received from Cooley
Godward, counsel for the Company, an opinion in substantially the form of
Exhibit E attached to this Agreement.
4.8 INVESTORS' RIGHTS AGREEMENT. The Company and Investor shall have
entered into the Investors' Rights Agreement.
4.9 CERTIFICATE OF DESIGNATION. The Certificate shall have been filed
with the Secretary of State of Delaware.
SECTION 5
CONDITIONS TO CLOSING OF COMPANY
The Company's obligation to issue and sell the Preferred at the Closing is
subject to the fulfillment of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Investor contained in Section 3 shall be true on and as of the Closing with
the same effect as though such representations and warranties had been made on
and as of the Closing.
5.2 COVENANTS. All covenants, agreements and conditions contained in this
Agreement to be performed by Investor on or prior to the Closing Date shall have
been performed or complied with in all respects.
5.3 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 Preferred and Common Stock issuable upon
conversion of the Preferred.
5.4 INVESTORS' RIGHTS AGREEMENT. The Company and Investor shall have
entered into the Investors' Rights Agreement.
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SECTION 6
AFFIRMATIVE COVENANTS OF THE INVESTOR
6.1 COVENANT NOT TO TRANSFER. Investor hereby agrees not to transfer the
Preferred (and any Common Stock into which the Preferred may be converted)
except upon the conditions set forth in the Section 1.1 of the Investors' Rights
Agreement.
SECTION 7
AFFIRMATIVE COVENANTS OF THE COMPANY
7.1 FINANCIAL INFORMATION. The Company will furnish the following reports
to Investor for so long as Investor is a holder of (or is entitled to receive
upon conversion) Registrable Securities (as defined in the Investors' Rights
Agreement, hereinafter referred to as the "Registrable Securities" for purposes
of this Section 7) equalling not less than 1 percent of the Company's then
outstanding shares (calculated on an as-converted basis).
(a) As soon as practicable after the end of each fiscal year, and in
any event within 90 days thereafter, audited consolidated balance sheets of the
Company and its subsidiaries, if any, as of the end of such fiscal year, and
audited consolidated statements of income, shareholders' equity and cash flow of
the Company and its subsidiaries, if any, for such year, prepared in accordance
with generally accepted accounting principles and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail and certified by independent public accountants of recognized national
standing selected by the Company;
(b) As soon as practicable after the end of every quarter in each
fiscal year of the Company and in any event within 30 days thereafter, an
unaudited consolidated balance sheet of the Company and its subsidiaries, if
any, as of the end of each such quarterly period, and consolidated statements of
income and cash flow of the Company and its subsidiaries for such period and for
the current fiscal year to date prepared in accordance with generally accepted
accounting principles (other than for accompanying notes), all in reasonable
detail and signed, subject to changes resulting from year-end audit adjustments,
by the principal financial or accounting officer of the Company;
(c) Contemporaneously with delivery to the holders of Common Stock, a
copy of each report of the Company delivered to holders of Common Stock.
7.2 ASSIGNMENT OF RIGHTS TO FINANCIAL INFORMATION. The rights granted
pursuant to Section 7.1 may be assigned or otherwise conveyed by the Investor
(or by any permitted transferee of any such rights) only in connection with the
transfer to a single transferee of Registrable Securities equalling not less
than 1 percent of the Company's then outstanding shares (calculated on an as-
converted basis) (including, for such purposes transfers by affiliates of a
transferror) or upon the written consent of the Company which consent shall not
be unreasonably withheld.
9.
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7.3 COMPANY STRATEGY BRIEFINGS. The Company will conduct semi-annual
reviews of Company strategy with Investor, which shall include the presentation
of information with respect to the Company's operating budget, at the offices of
the Company at times mutually agreeable to the Company and the Investor.
7.4 TERMINATION OF COVENANTS. The covenants set forth in Sections 7.1,
7.2 and 7.3 shall terminate and be of no further force or effect after the
earlier of (a) the date upon which a registration statement filed by the Company
under the Securities Act in connection with the firm commitment underwritten
public offering of its securities first becomes effective, or (b) the date when
none of the Preferred is outstanding.
SECTION 8
MISCELLANEOUS
8.1 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California as applicable to contracts entered into and performed
entirely within the State of California.
8.2 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by Investor and the closing of
the transactions contemplated hereby. All statements as to factual matters
contained in this Agreement or in any certificate or other instrument delivered
by or on behalf of the Company pursuant to this Agreement shall be deemed to be
made as of the date of this Agreement, and not necessarily as of some later
date.
8.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto,
provided, however, that the rights of Investor to purchase the Preferred shall
not be assignable without the consent of the Company.
8.4 ENTIRE AGREEMENT. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
8.5 RIGHTS OF INVESTOR. Each holder of the Preferred (and Common Stock
issued upon conversion of the Preferred) shall have the absolute right to
exercise or refrain from exercising any right or rights that such holder may
have by reason of this Agreement or ownership of any Preferred, including
without limitation the right to consent to the waiver of any obligation of the
Company under this Agreement and to enter into an agreement with the Company for
the purpose of modifying this Agreement or any agreement affecting any such
modification, and such holder shall not incur any liability to any other holder
or holders of Preferred with respect to exercising or refraining from exercising
any such right or rights.
8.6 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,
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or otherwise delivered by hand or by messenger, addressed (a) if to the
Investor, to Investors' addresses set forth on the signature page hereof or at
such other address as shall have been furnished to the Company in writing by
Investor or (b) if to the Company, to the address of its principal executive
office and addressed to the attention of the Corporate Secretary, or at such
other address or addresses as the Company shall have furnished in writing to the
Investor. All notices and other communications mailed pursuant to the
provisions of this Section 8.6 shall be deemed delivered when mailed.
8.7 EXPENSES. Each party to this Agreement shall bear its own expenses
and legal fees incurred by it with respect to this Agreement and all related
transactions and agreements.
8.8 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be enforceable against the party actually executing such
counterpart, and which together shall constitute one instrument.
8.9 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.
8.10 CALIFORNIA CORPORATE SECURITIES LAW. The sale of the securities which
are the subject of this Agreement has not been qualified with the Commissioner
of corporations of the state of California, and the issuance of such securities
or the payment or receipt of any part of the consideration therefor prior to
such qualification, if required by law, is unlawful. The rights of all parties
to this agreement are expressly conditioned upon such qualification being
obtained, if required by law.
8.11 APPROVAL OF AMENDMENTS AND WAIVERS. Any term of this agreement may be
amended or terminated and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with the written consent of the Company and the holders of a
majority of the outstanding Preferred Stock sold under this Agreement, and
Common Stock issued upon conversion thereof (calculated on an as-converted
basis), excluding from the determination of such a majority (both in determining
the total number of such shares outstanding and the number of such shares
consenting or not consenting) all shares previously disposed of by the Investor
or transferees pursuant to one or more registration statements under the
Securities Act or pursuant to Rule 144 thereunder. Any amendment, termination
or waiver effected in accordance with this section shall be binding upon each
holder of any securities issued pursuant to this Agreement (including securities
into which
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such securities have been converted or exchanged), each future holder of any or
all such securities and the Company.
The foregoing Agreement is hereby executed as of the date first above
written.
BROADVISION, INC.
By: /s/ Pehong Chen
--------------------------------
PEHONG CHEN
President
Address: 3 Lagoon Drive, Suite 350
Redwood City, CA 94065
INVESTOR
ITOCHU CORPORATION
By: /s/ Bunei Yoshizumi
--------------------------------
Address: 5-1, Kita-Aoyama, 2-Chome
Minato-Ku, Tokyo 107-77
Japan
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EXHIBIT A
SCHEDULE OF INVESTORS
SERIES B
PREFERRED SHARES PRICE
Itochu Corporation 800,000 $1,000,000.00