C-2 Preference Shares Purchase Agreement - OpenTV Corp and Sun TSI Subsidiary Inc.
OPENTV CORP.
C-2 PREFERENCE SHARES
PURCHASE AGREEMENT
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TABLE OF CONTENTS
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Page
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1. Agreement to Sell and Purchase ....................................... 1
2. Closing, Delivery and Payment ........................................ 1
2.1 Closing ....................................................... 1
2.2 Delivery ...................................................... 1
3. Representations and Warranties of the Company ........................ 2
3.1 Good Standing and Qualification ............................... 2
3.2 Capitalization ................................................ 2
3.3 Authorization; Binding Obligations ............................ 2
3.4 Compliance with Other Instruments ............................. 3
3.5 Consents ...................................................... 3
3.6 Offering Valid ................................................ 3
4.Representations and Warranties of SSI ................................. 3
4.1 Organization, Good Standing and Qualification ................. 3
4.2 Requisite Power and Authority ................................. 3
4.3 Authorization; Binding Obligations ............................ 4
4.4 Compliance with Other Instruments ............................. 4
4.5 Consents ...................................................... 4
4.6 Investment Representations .................................... 4
4.7 Transfer Restrictions ......................................... 5
5. Miscellaneous ........................................................ 5
5.1 Governing Law ................................................. 5
5.2 Successors and Permitted Assigns .............................. 5
5.3 Entire Agreement .............................................. 5
5.4 Severability .................................................. 5
5.5 Amendment ..................................................... 6
5.6 Delays or Omissions ........................................... 6
5.7 Notices ....................................................... 6
5.8 Expenses ...................................................... 6
5.9 Attorneys' Fees ............................................... 6
5.10 Headings ...................................................... 6
5.11 Counterparts .................................................. 6
5.12 No Strict Construction ........................................ 6
5.13 Broker's Fees ................................................. 7
5.14 Consent to Exclusive Jurisdiction ............................. 7
5.15 Waiver of Jury Trial .......................................... 7
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INDEX OF EXHIBITS
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Memorandum of Association Exhibit A
Schedule of Exceptions Exhibit B
Investors' Rights Agreement Exhibit C
List of Stockholders Exhibit D
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OPENTV CORP.
C-2 PREFERENCE SHARES PURCHASE AGREEMENT
This C-2 Preference Shares Purchase Agreement (this "Agreement") is entered
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into as of October 23, 1999, by and between OpenTV Corp., a British Virgin
Islands corporation (the "Company"), and Sun TSI Subsidiary, Inc., a Delaware
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corporation ("SSI").
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Recitals
Whereas, the Company has authorized the sale and issuance of an aggregate
of up to 4,504,504 shares of its C-2 Convertible Preference Shares (the
"Preference Shares");
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Whereas, SSI desires to purchase the Preference Shares on the terms and
conditions set forth herein; and
Whereas, the Company desires to issue and sell the Preference Shares to SSI
on the terms and conditions set forth herein;
Now, Therefore, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto hereby agree as follows:
1. Agreement to Sell and Purchase. Subject to the terms and conditions hereof,
at the Closing (as hereinafter defined) the Company hereby agrees to issue and
sell to SSI, and SSI agrees to purchase from the Company, four million, five
hundred four thousand, five hundred four (4,504,504) Preference Shares for an
aggregate purchase price (the "Purchase Price") equal to Four
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Million, Nine Hundred Ninety-nine Thousand, Nine Hundred Ninety-nine U.S.
Dollars ($4,999,999.00). The Preference Shares shall have the rights,
preferences, privileges and restrictions set forth in the Memorandum of
Association of the Company in the form attached hereto as Exhibit A (the
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"Memorandum").
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2. Closing, Delivery and Payment.
2.1 Closing. The closing of the sale and purchase of the Preference Shares
under this Agreement (the "Closing") shall take place at 10:00 a.m.,
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Pacific Daylight Time, one (1) day following the lapse or early termination of
the appropriate waiting period with respect to the filings required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
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at the offices of Paul, Hastings, Janofsky & Walker LLP, 555 South Flower
Street, 23rd Floor, Los Angeles, California 90071, or such other time or place
as the Company and SSI may mutually agree (such date is hereinafter referred to
as the "Closing Date"). The Closing shall be conditioned on the lapse or early
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termination of the waiting period with respect to filings required under the HSR
Act.
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2.2 Delivery. At the Closing, subject to the terms and conditions hereof,
the Company will deliver to SSI a certificate representing the number of
Preference Shares to be purchased at the Closing by SSI, against payment of the
Purchase Price therefor by wire transfer, in immediately available funds, to an
account designated by the Company.
3. Representations and Warranties of the Company.
Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit B, the Company hereby represents and warrants to SSI as follows:
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3.1 Good Standing and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the British
Virgin Islands. The Company has all requisite corporate power and authority to
execute and deliver this Agreement and the Investors' Rights Agreement in the
form attached hereto as Exhibit C (the "Investors' Rights Agreement"), to issue
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and sell the Preference Shares hereunder, to issue shares of A Ordinary Shares
of the Company upon conversion of the Preference Shares (the "Conversion
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Shares"), and to carry out the provisions of this Agreement, the Investors'
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Rights Agreement and the Memorandum.
3.2 Capitalization. Immediately prior to the Closing, the Company will be
authorized to issue (i) 500,000,000 A Ordinary Shares, none of which are issued
and outstanding; (ii) 200,000,000 B Ordinary Shares, 153,158,733 shares of which
are issued and outstanding, (iii) 500,000,000 C Preference Shares, (A)
24,000,000 of which shares have been designated as C-1 Convertible Preference
Shares and (B) 5,000,000 shares of which have been designated as C-2 Convertible
Preference Shares, none of which are issued and outstanding. The rights,
preferences, privileges and restrictions of the Preference Shares are as stated
in the Memorandum. The Conversion Shares have been duly and validly reserved for
issuance upon conversion of the Preference Shares. Other than as set forth on
Exhibit D and except as may be granted pursuant to the Investors' Rights
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Agreement, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal), securities
convertible into or exchangeable for capital stock, or agreements of any kind
for the purchase, subscription or acquisition from the Company of any capital
stock of the Company. When issued in compliance with the provisions of this
Agreement and the Memorandum, the Preference Shares and the Conversion Shares
will be validly issued, fully paid and nonassessable, and will be free of all
liens or encumbrances; provided, however, that the Preference Shares and the
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Conversion Shares may be subject to restrictions on transfer under state and/or
federal securities laws as set forth herein or in the Investors' Rights
Agreement or as otherwise required by such laws at the time a transfer is
proposed.
3.3 Authorization; Binding Obligations. All corporate action on the part
of the Company necessary for the authorization of, the execution and delivery of
this Agreement and the Investors' Rights Agreement, the performance of all
obligations of the Company hereunder and thereunder at the Closing and the
authorization, sale, issuance and delivery of the Preference Shares pursuant
hereto and the Conversion Shares pursuant to the Memorandum has been taken or
will be taken prior to the Closing. The Agreement and the Investors' Rights
Agreement, when executed and delivered, will be valid and binding obligations of
the Company enforceable against the Company in accordance with their terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights;
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(ii) general principles of equity that restrict the availability of equitable
remedies; and (iii) to the extent that the enforceability of the indemnification
provisions in Section 8 of the Investors' Rights Agreement may be limited by
principles of public policy. The sale of the Preference Shares and the
subsequent conversion of the Preference Shares into the Conversion Shares, are
not and will not be subject to any preemptive rights, rights of first refusal,
rights of first offer or other similar rights granted by the Company that have
not been properly waived or complied with.
3.4 Compliance with Other Instruments. The execution, delivery, and
performance of and compliance with this Agreement and the Investors' Rights
Agreement, and the issuance and sale of the Preference Shares pursuant hereto
and the Conversion Shares pursuant to the Memorandum will not result in any such
material violation, or be in material conflict with or constitute a material
default under any mortgage, indenture, contract, agreement, instrument or
contract to which it is party or of any judgment, decree, order, writ applicable
to the Company.
3.5 Consents. Except as required by the HSR Act, no governmental orders,
permissions, consents, approvals or authorizations are required to be obtained
by the Company and no registrations or declarations are required to be filed by
the Company in connection with the execution and delivery of this Agreement and
the Investors' Rights Agreement and the offer, sale or issuance of the
Preference Shares and the Conversion Shares, except such as have been duly and
validly obtained or filed, or with respect to any filings that must be made
after the Closing, as will be filed in a timely manner.
3.6 Offering Valid. Assuming due payment for the Preference Shares and the
accuracy of the representations and warranties of SSI contained in Section 4.6
hereof, the offer, sale and issuance of the Preference Shares and the Conversion
Shares will be exempt from the registration requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and will have been
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registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws, and no registration, permit or qualification requirements
under the laws of the British Virgin Islands are applicable to the offer, sale
and issuance by the Company of the Preference Shares and the Conversion Shares
in accordance herewith.
4. Representations and Warranties of SSI.
SSI hereby represents and warrants to the Company as follows:
4.1 Organization, Good Standing and Qualification. SSI is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Delaware. SSI has all requisite corporate power and authority to
execute and deliver this Agreement and the Investors' Rights Agreement, to
purchase the Preference Shares and the Conversion Shares hereunder, and to carry
out the provisions of this Agreement and the Investors' Rights Agreement.
4.2 Authorization; Binding Obligations. All corporate action on the part
of SSI necessary for the authorization of, the execution and delivery of this
Agreement and the Investors' Rights Agreement, and the performance of all
obligations of SSI hereunder and thereunder at the Closing has been taken or
will be taken prior to the Closing. The
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Agreement and the Investors' Rights Agreement, when executed and delivered, will
be valid and binding obligations of SSI enforceable against SSI in accordance
with their terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights; (ii) general principles of equity that
restrict the availability of equitable remedies; and (iii) to the extent that
the enforceability of the indemnification provisions in Section 8 of the
Investors' Rights Agreement may be limited by principles of public policy.
4.3 Compliance with Other Instruments. The execution, delivery, and
performance of and compliance with this Agreement and the Investors' Rights
Agreement will not result in any such material violation, or be in material
conflict with or constitute a material default under any material mortgage,
indenture, contract, agreement, instrument or contract to which it is party or
of any judgment, decree, order, writ applicable to SSI.
4.4 Consents. Except as required by the HSR Act, no governmental orders,
permissions, consents, approvals or authorizations are required to be obtained
and no registrations or declarations are required to be filed by SSI in
connection with the execution and delivery of this Agreement and the Investors'
Rights Agreement, and the purchase of the Preference Shares and the Conversion
Shares, except such as have been duly and validly obtained or filed, or with
respect to any filings that must be made after the Closing, as will be filed in
a timely manner.
4.5 Investment Representations. SSI understands that neither the
Preference Shares nor the Conversion Shares have been registered under the
Securities Act. SSI also understands that the Preference Shares being offered
and sold and the Conversion Shares will be offered and sold pursuant to an
exemption from registration contained in the Securities Act based in part upon
SSI's representations and warranties contained in this Agreement. SSI hereby
represents and warrants as follows:
(a) SSI Bears Economic Risk. SSI has substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to the Company so that it is capable of evaluating the merits
and risks of its investment in the Company and has the capacity to protect its
own interests. SSI must bear the economic risk of this investment indefinitely
unless the Preference Shares (or the Conversion Shares) are registered pursuant
to the Securities Act, or an exemption from registration is available.
(b) Acquisition for Own Account. SSI is acquiring the Preference
Shares (and the Conversion Shares) for SSI's own account for investment only,
and not with a view towards, or for resale in connection with, their
distribution.
(c) Accredited Investor. SSI represents that it is an accredited
investor within the meaning of Regulation D under the Securities Act.
(d) Company Information. SSI has had an opportunity to discuss the
Company's business, management and financial affairs with directors, officers
and management of the Company and has had the opportunity to review the
Company's operations and facilities and is satisfied with the results thereof.
SSI has received all information it considers necessary or appropriate for
deciding whether to invest in the Company.
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(e) Rule 144. SSI acknowledges and agrees that the Preference Shares
and, upon issuance, the Conversion Shares must be held indefinitely unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available. SSI has been advised or 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.
(f) Residence. The office or offices of SSI in which its investment
decision with respect to the Company was made is located at 901 San Antonio
Road, Palo Alto, California 94303.
(g) No Public Market. SSI understands that no public market now exists
for any of the securities issued by the Company and that the Company has made no
assurances that a public market will ever exist for the Company's securities.
4.6 Transfer Restrictions. SSI acknowledges and agrees that the Preference
Shares and upon issuance, the Conversion Shares, are subject to restrictions on
transfer as set forth in the Investors' Rights Agreement.
5. Miscellaneous.
5.1 HSR Filings. SSI and the Company hereby agree to file with the
appropriate governmental authorities the notification and report form under the
HSR Act with respect to the purchase and sale of the Preference Shares to SSI by
the Company as promptly as possible after the date hereof, but no later than ten
(10) days after the date hereof, and to cooperate with each other with respect
thereto.
5.2 Governing Law. This Agreement shall be governed in all respects by the
internal substantive laws, and not the laws of conflicts, of the State of
California.
5.3 Successors and Permitted Assigns. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the parties hereto and their respective successors and permitted
assigns and shall inure to the benefit of and be enforceable by each such
person. Neither this Agreement nor any right or obligation hereunder shall be
assignable or delegable except with the prior written consent of the other party
hereto.
5.4 Entire Agreement. This Agreement and the Exhibits hereto constitute
the full and entire understanding and agreement between the parties with regard
to the subjects hereof and supercede all prior agreements, commitments and
contracts with respect to the subject matter hereof. No party shall be liable or
bound to any other in any manner by any representations, warranties, covenants
and agreements with respect to the subject matter hereof except as specifically
set forth herein.
5.5 Severability. In case any provision of the Agreement shall be
determined to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
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5.6 Amendment. No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by the other party hereto.
5.7 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, shall impair any
such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of or in
any similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent or approval of any kind or character on
any party's part of any breach, default or noncompliance under this Agreement,
or any waiver on such party's part of any provisions or conditions of the
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing.
5.8 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed facsimile if sent during
normal business hours of the recipient, if not, then on the next business day;
(iii) three (3) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
Company at c/o OpenTV, Inc., 401 East Middlefield Road, Mountain View,
California 94043 and to SSI at c/o Sun Microsystems, Inc., 901 San Antonio Road,
Mail Stop PAL1-521, Palo Alto, California 94303, attention Laura Fennel, or at
such other address as the Company or SSI may designate by ten (10) days advance
written notice to the other parties hereto.
5.9 Expenses. Each party hereto shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
the Agreement and the Investors' Rights Agreement.
5.10 Attorneys' Fees. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants.
5.11 Headings. The headings of the sections and subsections of the
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.
5.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
5.13 No Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or
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disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.
5.14 Broker's Fees. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 5.14 being untrue.
5.15 Consent to Exclusive Jurisdiction. EACH PARTY HERETO HEREBY CONSENTS
TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE
COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, AND IRREVOCABLY AGREES THAT ALL
ACTIONS OR PROCEEDINGS RELATING TO OR ARISING OUT OF THIS AGREEMENT, THE
INVESTORS' RIGHTS AGREEMENT, THE PREFERENCE SHARES OR THE CONVERSION SHARES
SHALL BE TRIED AND LITIGATED ONLY IN SUCH COURTS. EACH PARTY HERETO HEREBY
WAIVES TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT,
BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH ACTION, SUIT, OR
PROCEEDING, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF
THE ABOVE-NAMED COURTS, THAT IT IS IMMUNE FROM EXTRATERRITORIAL INJUNCTIVE
RELIEF OR OTHER INJUNCTIVE RELIEF, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM
ATTACHMENT OR EXECUTION, THAT ANY SUCH ACTION, SUIT, OR PROCEEDING MAY NOT BE
BROUGHT OR MAINTAINED IN ONE OF THE ABOVE-NAMED COURTS, THAT ANY SUCH ACTION,
SUIT OR PROCEEDING BROUGHT OR MAINTAINED IN ONE OF THE ABOVE-NAMED COURTS SHOULD
BE DISMISSED ON THE GROUNDS OF FORUM NON CONVENIENS, SHOULD BE TRANSFERRED TO
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ANY COURT OTHER THAN ONE OF THE ABOVE-NAMED COURTS, OR THAT THIS AGREEMENT OR
THE SUBJECT MATTER HEREOF MAY NOT BE ENFORCED IN OR BY ANY OF THE ABOVE-NAMED
COURTS. EACH OF THE PARTIES HERETO HEREBY CONSENTS TO SERVICE OF PROCESS IN ANY
SUCH ACTION, SUIT, OR PROCEEDING IN ANY MANNER PERMITTED BY THE LAWS OF THE
STATE OF CALIFORNIA, AGREES THAT SERVICE OF PROCESS BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO THE PERSONS AND AT THE ADDRESSES SET FORTH IN
SECTION 5.8 ABOVE, IS REASONABLY CALCULATED TO GIVE ACTUAL NOTICE, AND WAIVES
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AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY
SUCH ACTION, SUIT OR PROCEEDING ANY CLAIM THAT SUCH SERVICE OF PROCESS DOES NOT
CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS.
5.16 Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES ITS RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE INVESTORS' RIGHTS AGREEMENT, THE PREFERENCE SHARES, THE
CONVERSION SHARES, OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT
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MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION 5.16
HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS
SHALL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER
WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS TO (OR
ASSIGNMENTS OF) THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL (WITHOUT A JURY) BY THE COURT.
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In Witness Whereof, each party hereto has caused this C-2 Preference Shares
Purchase Agreement to be executed by its duly authorized representative as of
the date set forth in the first paragraph hereof.
COMPANY:
OpenTV Corp.,
a British Virgin Islands corporation
By:________________________
Name:
Title:
SSI:
Sun TSI Subsidiary, Inc.,
a Delaware corporation
By:_______________________
Name:
Title:
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Exhibit A
MEMORANDUM OF ASSOCIATION OF THE COMPANY
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Exhibit B
SCHEDULE OF EXCEPTIONS
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Exhibit C
INVESTORS' RIGHTS AGREEMENT
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Exhibit D
LIST OF SHAREHOLDERS
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