FORM
I-STORM, INC.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES D PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
entered into as of________, 2000, by and between I-Storm, Inc., a Nevada
corporation (the "Company") and iVisionary Ventures, LLC, a Delaware Limited
Liability Company (hereinafter referred to as "iVisionary Ventures").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of up to
500,000 shares of its Series D Cumulative Convertible Preferred Stock (the
"Shares" or "Series D Preferred Stock");
WHEREAS, iVisionary Ventures desires to purchase a portion of the
Shares on the terms and conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares to iVisionary
Ventures 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 agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION OF SHARES. On or prior to Closing (as
defined below), the Company shall have authorized (i) the sale and issuance to
iVisionary Ventures of the Shares and (ii) the issuance of such shares of Common
Stock to be issued upon conversion of the Shares (the "Conversion Shares"). The
Shares and the Conversion Shares shall have the rights, preferences, privileges
and restrictions set forth in the Certificate of Designation of the Company in
the form attached hereto as Exhibit A (the "Certificate of Designation").
1.2 SALE AND PURCHASE. Subject to the terms and conditions
hereof, at Closing the Company hereby agrees to issue and sell to iVisionary
Ventures and iVisionary Ventures agrees to purchase from the Company 40,817
Shares, at a purchase price of twelve dollars and twenty-five cents ($12.25) per
share for an aggregate purchase price of five-hundred-thousand dollars
($500,000), subject to adjustment as set forth herein.
1.3 REGISTRATION RIGHTS. The Shares and Conversion Shares
shall have registration rights as set forth in a certain Registration Rights
Agreement executed between the parties of even date.
1.4 TRANSACTION DOCUMENTS. Collectively, this Agreement, the
Certificate of Designation and the Registration Rights Agreement shall be
referred to as the "Transaction Documents."
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2. CLOSING, DELIVERY AND PAYMENT.
2.1 CLOSING. The closing of the sale and purchase of the
Shares under this Agreement shall take place (the "Closing") at such other time,
and at such place, as the Company and iVisionary Ventures may mutually agree (
such date is hereinafter referred to as the "Closing Date").
2.2 DELIVERY. At Closing, subject to the terms and conditions
hereof, the Company will deliver to iVisionary Ventures certificates
representing the number of Shares to be purchased at the Closing by iVisionary
Ventures pursuant to the terms of this Agreement, against payment of the
purchase price therefor in immediately available funds by check or wire transfer
made payable to the order of the Company
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to iVisionary Ventures as of
the date of this Agreement as follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company
is a corporation duly organized, validly existing and in corporate and tax good
standing under the laws of the State of Nevada. The Company has all requisite
corporate power and authority to own, operate and lease its properties and
assets, to execute and deliver this Agreement and the Registration Rights
Agreement in the form attached hereto as Exhibit B (the "Registration Rights
Agreement") ((I) the Registration Rights Agreement, (ii) this Agreement, (iii)
the Certificate of Designation, and (iv) all exhibits, schedules and other
agreements entered into in connection with all of the foregoing, to issue and
sell the Shares and to carry out the provisions of the Transaction Documents and
to carry on its business as presently conducted and as presently proposed to be
conducted.
3.2 SUBSIDIARIES. The Company owns all outstanding shares in
the following wholly-owned subsidiaries (collectively the "Subsidiaries"): LVL
Communications Corporation, a California corporation. Other than the
Subsidiaries, the Company owns no equity securities of any other corporation,
limited partnership or similar entity, and is not a participant in any joint
venture, partnership or similar arrangement except those arrangements made
pursuant to e-commerce and sales and marketing agreements.
3.3 CAPITALIZATION; VOTING RIGHTS. The authorized capital
stock of the Company, immediately prior to the Closing, will consist of
25,000,000 shares of Common Stock, (par value $0.01) per share and 4,000,000
shares of Preferred Stock, (par value $0.01), of which 600,000 are designated
Series A Cumulative Convertible Preferred Stock ("Series A Preferred Stock");
1,700,000 are designated Series B Cumulative Convertible Preferred Stock
("Series B Preferred Stock"); and 1,225,000 are designated Series C Cumulative
Convertible Preferred Stock ("Series C Preferred Stock") and 500,000 shares of
Series D Cumulative Convertible Preferred Stock. Immediately prior to the
effective date of this Agreement, 5,460,449 shares of Common Stock, 0 shares
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Series A Preferred Stock (subscribed for 600,000 shares), 407,900 shares of
Series B Preferred Stock, 371,438 shares of Series C Preferred Stock and 244,898
shares of Series D Preferred Stock will be issued and outstanding. Of the
authorized shares of Common Stock, (i) 1.4 million shares are reserved for
issuance to employees pursuant to the 1998-A Incentive Stock Option and
Non-Statutory Option Plan (the "1998 A-Plan") and 1.5 million shares are
reserved for issuance to employees pursuant to the Company's 1998-B Incentive
Stock Option and Non-Statutory Plan (the "1998-B Plan"), (ii) 600,000 shares are
reserved for issuance upon the exercise of certain warrants, (iii) 600,000
shares are reserved for issuance upon the conversion of the Series A Preferred
Stock, (iv) 1,785,000 shares are reserved for issuance upon the conversion of
the Series B Preferred Stock, and (v) 1,650,000 shares are reserved for issuance
upon conversion of the Series C Preferred Stock. The Company has reserved
1,500,000 shares of its Common Stock for issuance upon conversion of the Series
D Preferred Stock. All issued and outstanding shares of the Company's Common
Stock (a) have been duly authorized and validly issued, (b) are fully paid and
nonassessable, and (c) were issued in compliance with all applicable state and
federal laws concerning the issuance of securities. The rights, preferences,
privileges and restrictions of the Shares are as stated in the Certificate of
Designation. Each series of Preferred Stock is convertible into Common Stock on
the basis described in the Reports (as defined below), subject to adjustment as
provided in the respective Certificate of Designation. The Conversion Shares
have been duly and validly reserved for issuance. Other than as set forth in
this Section 3.3 or in the Company's annual, quarterly and 8-K reports, filed
with the Securities and Exchange Commission ("Reports"), there are no
outstanding options, warrants, rights (including conversion or preemptive rights
and rights of first refusal), proxy or shareholder agreements, or agreements of
any kind for the purchase or acquisition from the Company of any of its
securities. When issued in compliance with the provisions of this Agreement and
the Certificate of Designation, and upon payment of the Purchase Price the
Shares and the Conversion Shares will be validly issued, fully paid and
nonassessable, and will be free of any liens or encumbrances; PROVIDED, HOWEVER,
that the Shares and the Conversion Shares may be subject to restrictions on
transfer under state and/or federal securities laws as set forth herein or in
the Registration Rights Agreement or as otherwise required by such laws at the
time a transfer is proposed.
3.4 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action
on the part of the Company, its officers, directors and stockholders necessary
for the authorization of the Transaction Documents, the performance of all
obligations of the Company hereunder and thereunder and the authorization, sale,
issuance and delivery of the Shares pursuant hereto and pursuant to the
Certificate of Designation has been taken or will be taken prior to Closing. The
Transaction Documents, when executed and delivered, will be legal, valid and
binding obligations of the Company enforceable in accordance with their terms,
except as may be limited by: (i) applicable principles limiting the availability
of specific performance, injunctive relief, and other equitable remedies; (ii)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect generally relating to or affecting creditors' rights,
provided, that the Bankruptcy (as defined below) shall not effect the
enforceability of the Transaction Documents and (iii) limitations on the
enforceability of the indemnification provisions of the Registration Rights
Agreement under federal and Nevada law. The sale of the Shares and the
subsequent conversion of the Shares into Conversion Shares are not and will not
be subject to any preemptive rights or rights of first refusal that have not
been properly waived or complied with.
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3.5 UNDISCLOSED LIABILITIES. The Company has no liabilities
other than (i) liabilities disclosed in its Reports, filed with the Securities
and Exchange Commission and (ii) current liabilities incurred in the ordinary
course of business which would not have, either in any individual case or in the
aggregate, material adverse effect on the business, liabilities, properties,
assets, prospects, operations, results of operations and/or condition (financial
or otherwise) of the Company and its subsidiaries taken as a whole (a "Material
Adverse Effect").
3.6 AGREEMENTS; ACTION.
(a) Except as set forth in Schedule 3.6 hereto, there
are no agreements, understandings, instruments, contracts, proposed
transactions, judgments, orders, writs or decrees to which the Company is a
party or by which it is bound which may involve (i) obligations (contingent or
otherwise) of, or payments to, the Company in excess of $25,000, or (ii) the
license of any patent, copyright, trade secret or other proprietary right to or
from the Company (other than licenses arising from the purchase of "off the
shelf" or other standard products), or (iii) indemnification by the Company with
respect to infringements of proprietary rights.
(b) The Company has not (i) made any loans or
advances to any person, other than ordinary advances for travel expenses, or
(ii) sold, exchanged or otherwise disposed of any of its assets or rights, other
than the sale of its inventory in the ordinary course of business.
3.7 OBLIGATIONS TO RELATED PARTIES. There are no obligations
of the Company to officers, directors, stockholders, or employees of the Company
other than (a) for payment of salaries or directors or consultants fees, which
are described in the Reports, (b) reimbursement for reasonable expenses incurred
on behalf of the Company and (c) for other standard employee benefits made
generally available to all employees. The Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation.
3.8 CHANGES. Except as disclosed in the Company's Reports,
there has not been since December 31, 1999:
(a) a Material Adverse Effect or any event relating
to the operation of the Company which could reasonably be expected to have a
Material Adverse Effect;
(b) Any material change, except in the ordinary
course of business, in the contingent obligations of the Company by way of
guaranty, endorsement, indemnity, warranty or otherwise;
(c) Any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties,
business or prospects or financial condition of the Company;
(d) Any waiver by the Company of a valuable right or
of a material debt owed to it;
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(e) Any direct or indirect loans made by the Company
to any stockholder, employee, officer or director of the Company, other than
employee advances made in the ordinary course of business;
(f) Any material change in any compensation
arrangement or agreement with any employee, officer, director or stockholder;
(g) Any declaration or payment of any dividend or
other distribution of the assets of the Company;
(h) Any debt, obligation or liability incurred,
assumed or guaranteed by the Company, except those for immaterial amounts and
for current liabilities incurred in the ordinary course of business;
(i) Any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets or any sale,
assignment or transfer of any other assets except in the ordinary course of
business;
(j) Any change in any material agreement to which the
Company is a party or by which it is bound which materially and adversely
affects the business, assets, liabilities, financial condition, operations or
prospects of the Company;
(k) Any change in any accounting method used by the
Company other than as disclosed in the Reports.
3.9 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company
has good and marketable title to its properties and assets, including the
properties and assets reflected in the most recent balance sheet included in the
Reports, and good title to its leasehold estates, in each case subject to no
mortgage, pledge, lien, lease, encumbrance or charge, other than (a) those
resulting from taxes which have not yet become delinquent, (b) minor liens and
encumbrances which do not materially detract from the value of the property
subject thereto or materially impair the operations of the Company, and (c)
those that have otherwise arisen in the ordinary course of business, none of
which are material in amount. The Company is in compliance with all material
terms of each lease to which it is a party or is otherwise bound.
3.10 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of any term of its Certificate of Incorporation or Bylaws,
or of any provision of any mortgage, indenture, contract, agreement, instrument
or contract to which it is party or by which it is bound or of any judgment,
decree, order, writ or, any statute, rule or regulation applicable to the
Company which would have a Material Adverse Effect. The execution, delivery, and
performance of and compliance with this Agreement, and the other Transaction
Documents and the issuance and sale of the Shares pursuant hereto and of the
Conversion Shares pursuant to the Certificate of Designation, will not, with or
without the passage of time or giving of notice, result in any such violation,
or be in conflict with or constitute a default under any such term, or result in
the creation of any mortgage, pledge, lien, encumbrance or charge upon any of
the properties or assets of the Company or the suspension, revocation,
impairment, forfeiture or nonrenewal of any permit license, authorization or
approval applicable to the Company, its business or operations or any of its
assets or properties.
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3.11 LITIGATION. There is no action, suit, proceeding or
investigation pending or to the Company's knowledge currently threatened against
the Company that questions the validity of this Agreement, or the other
Transaction Documents or the right of the Company to enter into any of such
agreements, or to consummate the transactions contemplated hereby or thereby, or
which might result, either individually or in the aggregate, in a Material
Adverse Effect, or any change in the current equity ownership of the Company,
nor is the Company aware that there is any basis for the foregoing. The Company
is not a party or subject to the provisions of any order, writ, injunction,
judgment or decree of any court or government agency or instrumentality. There
is no action, suit, proceeding or investigation by the Company currently pending
or which the Company intends to initiate.
3.12 TAX RETURNS AND PAYMENTS. The Company has filed all tax
returns (federal, state and local) required to be filed by it. All taxes shown
to be due and payable on such returns, any assessments imposed, and all other
taxes due and payable by the Company on or before the Closing as it occurs have
been paid or will be paid prior to the time they become delinquent. The Company
has no knowledge of any liability of any tax to be imposed upon its properties
or assets as of the date of this Agreement that is not adequately provided for.
3.13 REGISTRATION RIGHTS. Except as required pursuant to the
Registration Rights Agreement or as listed in Schedule 3.15, the Company is
presently not under any obligation, and has not granted any rights, to register
(as defined in the Registration Rights Agreement) any of the Company's presently
outstanding securities or any of its securities that may hereafter be issued.
3.14 COMPLIANCE WITH LAWS; PERMITS. The Company is not in
violation of any applicable statute, rule, regulation, order or restriction of
any domestic or, to the knowledge of the Company, any foreign government or any
instrumentality or agency thereof in respect of the conduct of its business or
the ownership of its properties which violation would have a Material Adverse
Effect.
3.15 OFFERING VALID. Assuming the accuracy of the
representations and warranties of iVisionary Ventures contained in Section 4.2
hereof, the offer, sale and issuance of the Shares and the Conversion Shares
will be exempt from the registration requirements of the Securities Act of 1933,
as amended (the "Securities Act") and will have been registered or qualified (or
are exempt from registration and qualification) under the registration, permit
or qualification requirements of all applicable state securities laws. Neither
the Company nor any agent on its behalf has solicited or will solicit any offers
to sell or has offered to sell or will offer to sell all or any part of the
Shares and Conversion Shares to any person or persons so as to bring the sale of
such Shares or Conversion Shares by the Company within the registration
provisions of the Securities Act or any state securities laws.
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3.16 CONTRACTS The Company's subsidiary, LVL Communications
Corporation, reorganized pursuant to Chapter Eleven of the Bankruptcy Code
following the approval of a Plan of Reorganization, without creditor objection,
on April 16, 1998, by the United States Bankruptcy Court for the Northern
District of California (such reorganization, together with all proceedings in
connection therewith, the "Bankruptcy"). Since July 17, 1998, the date upon
which LVL became a wholly owned subsidiary of the Company, the Company has not
been, and currently is not in default in any respect under or in breach of nor
in receipt of any claim of default or breach under any material contract to
which the Company is subject (including without limitation all performance
bonds, warranty obligations or otherwise); no event has occurred which with the
passage of time or the giving of notice or both would result in a default,
breach or event of non-compliance under any material contract to which the
Company is subject (including without limitation all performance bonds, warranty
obligations or otherwise); the Company does not have any present expectation or
intention of not fully performing all such obligations; the Company does not
have any knowledge of any breach or anticipated breach by the other parties to
any such contract to which it is a party.
3.17 DISCLOSURE. There is no fact which the Company has not
disclosed to iVisionary Ventures herein and of which the Company, or any of its
officers, directors or executive employees is aware and which could reasonably
be anticipated to have a Material Adverse Effect.
3.18 NO BROKERS. No agent, broker, person or firm acting on
behalf of the Company is or will be entitled, as a result of any action or
agreement by the Company, to any commission or broker's or finder's fees from
iVisionary Ventures in connection with any of the transactions contemplated
herein.
3.19 SOFTWARE. The current software applications used by the
Company in the operation of its business (the "Software"), to the extent it has
been designed or developed by the Company's management information or
development staff or by consultants on the Company's behalf, is original and
capable of copyright protection in the United States, and the Company has
complete rights to and ownership of such software. To the Company's knowledge,
no part of any such software is an imitation or copy of, or infringes upon, the
software of any other Person or violates or infringes upon any common law or
statutory rights of any other person, including, without limitation, rights
relating to defamation, contractual rights, copyrights, trade secrets, and
rights of privacy or publicity. The Company has not sold, assigned, licensed,
distributed, or in any other way disposed of or encumbered the Software. The
Software, to the extent it is licensed from any third party licensor or
constitutes "off-the-shelf" software, is held by the Company legitimately. All
of the Company's computer hardware has legitimately-licensed software installed
therein. To the Company's knowledge, the Software is free from any software
defect or programming or documentation error which might have a materially
adverse effect on the Company.
3.20 INTELLECTUAL PROPERTY. To the best knowledge of the Company, the
Company has not interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any intellectual property rights of third parties, and
the Company has not received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation or violation. To
the best knowledge of Seller, no third party is currently interfering with,
infringing upon, misappropriating, or otherwise coming into conflict with any
intellectual property rights of Seller.
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4. REPRESENTATIONS AND WARRANTIES OF iVisionary Ventures.
iVisionary Ventures hereby represents and warrants to the Company as
follows (such representations and warranties do not lessen or obviate the
representations and warranties of the Company set forth in this Agreement):
4.1 REQUISITE POWER AND AUTHORITY. iVisionary Ventures has all
necessary power and authority under all applicable provisions of law to execute
and deliver this Agreement and the Registration Rights Agreement and to perform
the obligations of iVisionary Ventures hereunder and thereunder. All action on
iVisionary Ventures's part required for the lawful execution and delivery of
this Agreement and the Registration Rights Agreement have been or will be
effectively taken prior to the Closing. Upon their execution and delivery, this
Agreement and the Registration Rights Agreement will be valid and binding
obligations of iVisionary Ventures, enforceable in accordance with their terms,
except as may be limited by: (i) applicable principles limiting the availability
of specific performance, injunctive relief, and other equitable remedies; (ii)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect generally relating to or affecting creditors' rights, and
(iii) limitations on the enforceability of the indemnification provisions of the
Registration Rights Agreement under federal and Nevada law
4.2 INVESTMENT REPRESENTATIONS. iVisionary Ventures
understands that none of the Shares and the Conversion Shares has been
registered under the Securities Act. iVisionary Ventures also understands that
the Shares are being offered and sold pursuant to an exemption from registration
contained in the Securities Act and the Rules and Regulations thereunder based
in part upon iVisionary Ventures representations contained in this Agreement and
the Registration Rights Agreement. iVisionary Ventures hereby represents and
warrants as follows:
(a) IVISIONARY VENTURES BEARS ECONOMIC RISK.
iVisionary Ventures has 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. iVisionary Ventures
must bear the economic risk of this investment indefinitely unless the Shares
(or the Conversion Shares) are registered pursuant to the Securities Act, or an
exemption from registration is available. iVisionary Ventures understands that
the Company has no present intention of registering the Shares or any shares of
its Common Stock (except as contemplated by the Registration Rights Agreement).
iVisionary Ventures also understands that there is no assurance that any
exemption from registration under the Securities Act will be available and that,
even if available, such exemption may not allow iVisionary Ventures to transfer
all or any portion of the Shares or the Conversion Shares under the
circumstances, in the amounts or at the times iVisionary Ventures might propose.
(b) ACQUISITION FOR OWN ACCOUNT. iVisionary Ventures
is acquiring the Securities for iVisionary Ventures' own account for investment
only, and not with a view towards their resale or distribution.
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(c) IVISIONARY VENTURES CAN PROTECT ITS INTEREST.
iVisionary Ventures represents that by reason of its, or of its management's,
business or financial experience, iVisionary Ventures has the capacity to
protect its own interests in connection with the transactions contemplated in
this Agreement and the Registration Rights Agreement. Further, iVisionary
Ventures is aware of no publication of any advertisement in connection with the
transactions contemplated in the Agreement.
(d) ACCREDITED INVESTOR. iVisionary Ventures
represents that it is an accredited investor within the meaning of Regulation D
under the Securities Act.
(e) COMPANY INFORMATION. iVisionary Ventures has
adequately and to its own satisfaction conducted its independent due diligence
and investigation of the Company. iVisionary Ventures has received and read the
Reports and 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.
iVisionary Ventures has also had the opportunity to ask questions of and receive
answers from, the Company and its management regarding the terms and conditions
of this investment and to obtain any additional information which the Company
possesses or can acquire without unreasonable effort and expense necessary to
verify the accuracy of any information furnished by the Company. iVisionary
Ventures has received satisfactory answers to any questions asked and all
information that it has requested.
(f) RULE 144. iVisionary Ventures acknowledges and
agrees that the Shares and the Conversion Shares must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption
from such registration is available. iVisionary Ventures has been advised or is
aware of the provisions of Rule 144 promulgated under the Securities Act as in
effect from time to time, which permits limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things: the availability of certain current public information about
the Company, the resale occurring following the required holding period under
Rule 144, the sale being effected through a "broker's transaction" or in a
transaction 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.
(g) RESIDENCE. The office or offices of iVisionary
Ventures in which its investment decision was made is located at 656 Lakeshore
Drive, Lexington, Kentucky.
4.3 TRANSFER RESTRICTIONS. iVisionary Ventures acknowledges
and agrees that the Shares and, if issued upon conversion of the Shares, the
Conversion Shares, are subject to restrictions on transfer under applicable
securities laws and as set forth in the Registration Rights Agreement and
herein. iVisionary Ventures understands and agrees that the Share and Conversion
Share certificates may bear a legend or legends setting forth applicable
restrictions on transferability under applicable securities law and this
Agreement and the registration Rights Agreement and that it will not transfer
any Shares in violation of any such restrictions.
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5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO IVISIONARY VENTURES' OBLIGATIONS AT CLOSING.
iVisionary Ventures' obligations to purchase the Shares at Closing are subject
to the satisfaction, at or prior to the Closing Date, of the following
conditions (any of which may be waived by iVisionary Ventures):
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE
OF OBLIGATIONS. The representations and warranties of the Company contained in
Article 3 which are qualified as to materiality or Material Adverse Effect shall
be true and correct, subject to such qualification, at and as of the Closing
Date as if made at and as of such date, all other representations and warranties
of the Company shall be true and correct as of the Closing Date as if made at
and as of such date except where the failure of such representation or warranty
to be true and correct would not have a Material Adverse Effect. The Company
shall have performed and complied with all material agreements and conditions
herein required to be performed or complied with by it on or before Closing.
(b) LEGAL INVESTMENT. On the Closing Date, the sale
and issuance of the Shares and the proposed issuance of the Conversion Shares
shall be legally permitted by all laws and regulations to which iVisionary
Ventures and the Company are subject.
(c) CONSENTS, PERMITS, AND WAIVERS. The Company shall
have obtained any and all consents, permits and waivers necessary or appropriate
for consummation of the transactions contemplated by the Transaction Documents.
(d) CORPORATE DOCUMENTS. The Company shall have
delivered to iVisionary Ventures or its counsel, copies of all corporate
documents of the Company as iVisionary Ventures shall reasonably request.
(e) RESERVATION OF CONVERSION SHARES. The Conversion
Shares shall have been duly authorized and reserved for issuance upon such
conversion or exercise.
(f) COMPLIANCE CERTIFICATE. The Company shall have
delivered to iVisionary Ventures a Compliance Certificate, executed by the
President of the Company, dated such Closing Date, to the effect that the
conditions specified in subsections (a), (c) and (e) of this Section 5.1 have
been satisfied.
(g) TRANSACTION DOCUMENTS. The Company shall have
executed this Agreement and the Registration Rights Agreement, and shall have
amended the Certificate of Designation with the Nevada Secretary of State, or
other appropriate authority.
(h) PROCEEDINGS AND DOCUMENTS. All corporate and
other proceedings in connection with the transactions contemplated at the
Closing hereby and all documents and instruments incident to such transactions
shall be reasonably satisfactory in substance and form to the iVisionary
Ventures and its counsel, and iVisionary Ventures and its counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
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(i) COMPLIANCE WITH SECURITIES LAWS; CONTINUED
LISTING. The Company shall have complied with applicable securities laws and its
common stock shall be quoted on the NASD OTC Electronic Bulletin Board
("OTCBB").
(j) PRODUCTS AND SERVICES AGREEMENTS. The Products
and Services Agreements between the Company and iVisionary Ventures, dated as of
the date hereof, together with any Order Forms and Addendum thereto, shall be
executed simultaneously with the Closing.
(k) CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
Company's obligation to issue and sell the Shares at Closing is subject to the
satisfaction, on or prior to such Closing, of the following conditions (any of
which may be waived by the Company):
(l) REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties of iVisionary Ventures contained in Article 5
which are qualified as to materiality or Material Adverse Effect shall be true
and correct at and as of the Closing Date as if made at and as of such date and
all other representations and warranties of iVisionary Ventures shall be shall
be true and correct as of the Closing Date except where the failure of such
representation or warranty to be true and correct would not have a Material
Adverse Effect.
(m) PERFORMANCE OF OBLIGATIONS. iVisionary Ventures
shall have performed and complied with all material agreements and conditions
herein required to be performed or complied with by iVisionary Ventures on or
before such Closing.
(n) REGISTRATION RIGHTS AGREEMENT. The Registration
Rights Agreement shall have been executed and delivered by iVisionary Ventures.
LEGAL INVESTMENT. On such Closing Date, the sale and issuance of the Shares and
the proposed issuance of the Conversion Shares shall be legally permitted by all
laws and regulations to which iVisionary Ventures and the Company are subject.
6. COVENANTS.
6.1 COMPLIANCE WITH TRANSACTION DOCUMENTS. Each of the parties
shall observe or comply with each of its respective covenants set forth in each
of the Transaction Documents.
6.2 FURTHER ASSURANCES. Each of the parties hereto agrees to
use all commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations, to consummate and make
effective the transactions contemplated by this Agreement and the Transaction
Documents as expeditiously as practicable and to ensure that the conditions set
forth in Articles 4 and 5 are satisfied. In case at any time after the Closing
Date any further action is necessary or desirable to carry out the purposes of
this Agreement or any of the other Transaction Documents, each of the parties to
this Agreement shall take or cause to be taken all such necessary action,
including the execution and delivery of such further instruments and documents,
including but not limited to the issuance of securities to iVisionary Ventures,
as may be reasonably requested by either party for such purposes or otherwise to
complete or perfect the contemplated transactions.
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6.3 ACCESS AND INFORMATION. During the term of this Agreement,
the Company shall permit iVisionary Ventures and its representatives and agents
to have access to the Company's and its Subsidiaries' offices and the Company's
officers, counsel, auditors, books and records, and the opportunity to
investigate the Company's and its Subsidiaries' title to property and the
condition and nature of its assets, business and liabilities, in each case upon
reasonable notice and during normal business hours; subject to agreement by
iVisionary Ventures to treat as confidential all proprietary, confidential and
trade secret information of the Company.
6.4 IVISIONARY VENTURES REPRESENTATIVE. For a period of three
years herefrom, the Company shall permit a representative of iVisionary Ventures
to attend all annual and special Board Meetings of the Company. The Company
shall also cause notice of such annual and special Board meetings to be provided
to the iVisionary Ventures representative in the form and manner as may be
provided by the Company's Bylaws from time to time.
7. TERMINATION.
7.1 TERMINATION This Agreement may be terminated at any time
(a) by mutual consent of the Company and iVisionary Ventures, (b) by the Company
(i) upon the failure of iVisionary Ventures to perform or comply in all material
respects with any of its covenants or agreements contained herein or in the
Transaction Documents (ii) if any representation or warranty of iVisionary
Ventures shall not have been true and correct in any material respect as of the
time at which it was made, (c) by iVisionary Ventures (i) upon the failure of
the Company to perform or comply in all material respects with any of its
covenants or agreements contained herein or in the Transaction Documents, (ii)
if any representation or warranty of the Company shall not have been true and
correct in any material respect as of the time at which it was made, (iii) if
the Company shall commence (by petition, application, or otherwise) a voluntary
case or other proceeding under the laws of any jurisdiction or an involuntary
case or other proceeding shall be commenced under the laws of any jurisdiction
against the Company seeking liquidation, reorganization, or other relief with
respect to itself or its debts under any bankruptcy, insolvency, or other
similar law now or hereafter in effect, or seeking the appointment of a trustee,
self-trusteeship, receiver, custodian, or other similar official of it or any
substantial part of its property, or shall consent (by answer or failure to
answer or otherwise) to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it, or shall make an assignment for the benefit of creditors,
or shall generally not pay its debts as they become due, or shall take any
action to authorize any of the foregoing.
7.2 NO WAIVER. Termination by any party shall not be deemed to
be a waiver of any claim such party may have against the other party hereunder
or under the other Transaction Documents. If this Agreement is terminated
pursuant to Section 7.1, all further obligations of the parties under this
Agreement will terminate, except that the confidentiality obligations under
Section 5.3 will survive the termination of this Agreement. Nothing in this
Section shall relieve any party of any liability for a breach of this Agreement
prior to its termination.
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8. MISCELLANEOUS.
8.1 GOVERNING LAW; CONSENT TO JURISDICTION. (a) This Agreement
shall be governed in all respects by the laws of the State of Nevada without
regards to conflicts of laws; provided that, with respect to matters of
corporate law, the laws of the state in which the Company is incorporated shall
govern.
8.2 SURVIVAL; INDEMNIFICATION. (a) The representations,
warranties, covenants and agreements made herein, unless otherwise indicated by
their terms shall survive any investigation made by iVisionary Ventures and the
closing of the transactions contemplated hereby for a period of three (3) years
from the date hereof; provided, that Sections 4 and 3.15 shall survive
indefinitely; provided, further that any claims made for indemnification made
prior to the expiration of such period shall survive and not be extinguished by
the expiration of such period. All statements as to factual matters contained in
any certificate or other instrument delivered by or on behalf of the Company
pursuant hereto in connection with the transactions contemplated hereby or by
the other Transaction Documents shall be deemed to be representations and
warranties by the Company hereunder.
(b) The Company shall indemnify and hold iVisionary Ventures
and its directors, officers, shareholders, employees, agents and each other
person which controls (within the meaning of the Securities Act) iVisionary
Ventures, harmless against all liability, loss or damage, together with all
reasonable costs and expenses related thereto (including legal and accounting
fees and expenses) (collectively "Damages"), arising from any breach of or any
inaccuracy in, any representations, warranties, covenants or agreements
contained herein or in any of the Transaction Documents or in any schedule,
certificate or exhibit to any of the Transaction Documents, provided, that such
indemnification shall not include any consequential damages(c)) iVisionary
Ventures shall indemnify and hold the Company and its directors, officers,
shareholders, employees, agents and each other person which controls (within the
meaning of the Securities Act) the Company harmless against all Damages, arising
from any breach of or any inaccuracy in, any representations, warranties,
covenants or agreements contained herein or in any of the Transaction Documents
or in any schedule, certificate or exhibit to any of the Transaction Documents;
provided, that such indemnification shall not include any consequential damages.
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8.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares or the Conversion Shares from time to
time; further provided however, that for a period of one year from the Closing,
iVisionary Ventures may only transfer the Shares or Conversion Shares with the
express written consent of I-Storm, such consent not to be unreasonably
withheld.
8.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and
Schedules hereto, the Registration Rights Agreement and the other Transaction
Documents 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 in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein and therein.
8.5 SEVERABILITY. In case any provision of the Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby, to the extent permitted by applicable law.
8.6 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only
upon the written consent of the Company and holders of at least a majority of
the outstanding Shares (treated as if converted and including any Conversion
Shares issued upon conversion of the Shares that have not been sold to the
public).
(b) The obligations of the Company and the rights of
the holders of the Shares and the Conversion Shares under the Agreement may be
waived only with the written consent of the holders of at least a majority of
the outstanding Shares (treated as if converted and including any Conversion
Shares issued upon conversion of the Shares that have not been sold to the
public).
8.7 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 the Transaction
Documents, 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 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 iVisionary Ventures' part of any
breach, default or noncompliance under the Transaction Documents or any waiver
on such party's part of any provisions or conditions of the Transaction
Documents, or the Certificate of Designation must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under the Transaction Documents, the Certificate of
Designation, by law, or otherwise afforded to any party, shall be cumulative and
not alternative.
8.8 NOTICES. All notices required or permitted hereunder shall
be in writing and shall be deemed effectively given: (a) upon personal delivery
to the party to be notified; (b) when sent by confirmed telex or facsimile if
sent during normal business hours of the recipient, if not, then on the next
business day; (c) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (d) the first
business 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 or iVisionary Ventures at its
respective address set forth as follows or at such other address as the Company
or iVisionary Ventures respectively may designate by written notice to the other
party hereto:
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If to the Company to:
I-Storm Inc.
2440 W. El Camino Real #520
Mountain View, CA 94040-1400
Facsim ilie: (650) 962-5430
Attn: Calbert Lai
With a copy to:
Paula Argento, Esq.
DeMartino, Finkelstein, Rosen and Virga
1818 N Street, NW Suite 400
Washington, DC 20036
If to iVisionary Ventures to:
656 Lakeshore Drive
Lexington, Kentucky 40502
Attn: Stephen Dawahare
8.9 EXPENSES; ATTORNEYS' FEES. Each party shall pay all costs
and expenses incurred by it in connection with the negotiation, execution and
delivery of the Transaction Documents. In the event that any dispute between 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, which shall include, without
limitation, all fees, costs and expenses of appeals.
8.10 PUBLIC ANNOUNCEMENT. Until the termination of this
Agreement and the Transaction Documents, neither the Company nor iVisionary
Ventures shall issue or cause the publication of any press release or other
public announcement with respect to the transactions contemplated by the
Transaction Documents without the consent of the other party which consent shall
not be unreasonably withheld, provided that each party shall give the other
parties a reasonable opportunity to review and comment thereon.
8.11 TITLES AND SUBTITLES. The titles of the articles sections
and subsections of the Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
8.12 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.
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8.13 PRONOUNS. All pronouns contained herein, and any
variations thereof, shall be deemed to refer to the masculine, feminine or
neutral, singular or plural, as to the identity of the parties hereto may
require.
IN WITNESS WHEREOF, the parties hereto have executed this SERIES D PREFERRED
STOCK PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.
I-STORM, INC. iVisionary Ventures, L.L.C.
By: By:
----------------------------------- -----------------------------------
Name: Name:
--------------------------------- ---------------------------------
Title: Title:
-------------------------------- --------------------------------
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