EFTA01117942.pdf

ALIPHCOM SERIES 6 PREFERRED STOCK PURCHASE AGR EEM ENT THIS SERIES 6 PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement') is made and entered into as of February 14, 2014 by and among Aurn iam, a California corporation (the "Company"), and each of those persons and entities, sever ally and not jointly, whose names are set forth on the Schedule of Purchasers attached hereto as Exhibit A (which persons and entities are hereinafter collectively referred to as "Purc hasers" and each individually as a "Purchase?). RECITALS WIIEREAS, the Company has authorized the sale and issuan ce of an aggregate of 23,962,597 shares of its Series 6 Preferred Stock (the "Shares") pursuant to this Agreement; and WHEREAS, Purchasers desire to purchase, and the Company desires to issue and sell, the Shares on the terms and conditions set forth herein (the "Fina ncing"). AGREEMENT Now, THEREFORE, in consideration of the foregoing recitals and the mutual promises, representations, warranties, and covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby ackno wledged, the parties hereto agree as follows: 1. AGREEMENT TO SELL AND PURCHASE. 1.1 Authorization of Shares. The Company has authorized the issuance to Purchasers of the Shares and the issuance of such sale and shares of Common Stock to be issued upon conversion of the Shares (the "Conversion Share s"). The Shares and the Conversion Shares have the rights, preferences, privileges and restrictions set forth in the Amended and Restated Articles of Incorporation of the Company, in the form attached hereto as Exhibit B (the "Restated Arfides'). 1.2 Sale and Purchase of the Shares. Subject to the terms and hereof, at the Initial Closing (as hereinafter defined), the Comp conditions any shall issue and sell to each Purchaser, severally and not jointly, and each Purchaser agree s to purchase from the Company, 1348230 v9/SE EFTA01117942  severally and not jointly, the number of Shares set forth oppos ite such Purchaser's name on Exhibit A, at a purchase price of $11.26756 per share. 2. CLOSING, DELIVERY, PAYMENT AND CONVERSION. 2.1 Initial Closing. The initial closing of the sale and purchase under this Agreement (the "Initial Closing") shall take place of the Shares at 1:00 p.m. on the date first set forth above, at the offices of Cooley LI.P, 101 California Street , 5th Floor, San Francisco, CA 94111-5800 or at such other time or place as the Company and Purchasers of a majority of the Shares may mutually agree (such date is hereinafter referred to as the "Initial Closing Date). 2.2 Subsequent Sales of Shares. (a) At any time on or before the 200th day following the Initia Closing or at such later time as the Company and the holde l rs of a majority of the Shares purchased at the Initial Closing (pursuant to Section 2.1) may mutually agree, the Company may sell up to the balance of the Shares not sold at the Initial Closing to such persons as may be approved by the holders of a majority of the Shares purchased at the Initial Closing (pursuant to Section 2.1), which shall not be unreasonably withheld, and the Company (the "Additional Purchasers"), but subject to Section 2.2(c) below. (b) All such sales made at any subsequent closings (each "Subsequent Closing"), shall be made on the terms and conditions a set forth in this Agreement, and (i) the representations and warranties of the Company set forth in Section 3 hereof (and the Schedule of Exceptions) shall speak as of the Initial Closin g and the Company shall have no obligation to update any such disclosure, and (ii) the repres entations and warranties of the Additional Purchasers in Section 4 hereof shall speak as of the date of such Subsequent Closing (each, a "Subsequent Closing Date). The Schedule of Purch asers may be amended by the Company without the consent of the Purchasers to include any Additional Purchasers upon the execution by such Additional Purchasers of a counterpart signat ure page hereto. Any shares of Series 6 Preferred Stock sold pursuant to this Section 2.2 shall be deemed to be "Shares" for all purposes under this Agreement and any Additional Purchasers thereof shall be deemed to be "Purchasers" for all purposes under this Agreement. The Initia l Closing and any Subsequent Closing are hereinafter referred to individually as a "Closing" and collectively as the "Closings," and the Initial Closing Date and the Subsequent Closing Date(s) are hereinafter referred to individually as a "Closing Date" and collectively as the "Clos ing Dates." Each Closing may take place using facsimile signature pages of the parties hereto . (c) Notwithstanding Section 2.2(a) Rizvi Traverse Management LLC ("Noir), together with its affiliated or related investment funds shall, for the 180 days following 2. 1348830 v9/SF EFTA01117943  the Initial Closing, have the right to purchase up S150, to 000,000 worth of additional Shares (the "Subsequent Allocation"), in the aggregate, in one or more Subse quent Closings, pursuant to the terms of this agreement. If Rizvi provides written notice to the Company that it does not intend to purchase the entirety of its Subsequent Allocation, the remainder 'may be sold to other purchasers in accordance with the terms of Sections 2.2(a) and (b). 23 Delivery. At each Closing, subject to the terms and conditions Company will deliver to each Purchaser a certificate repres hereof, the enting the number of Shares to be purchased at such Closing by such Purchaser, against payment of the purchase price therefor by check, wire transfer made payable to the order of the Company, cancellation or conversion of indebtedness or any combination of the foregoing. In the event that payment by a Purchaser is made, in whole or in part, by cancellation or conversion of indebtedness, then such Purchaser shall surrender to the Company for cancellation or conversion at such Closing any evidence of such indebtedness or shall execute an instrument of cancellation or conversion in form and substance acceptable to the Company. 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth on a Schedule of Exceptions delivered by the Company to Purchasers on the applicable Closing Date, the Company hereby represents and warrants to each Purchaser as of the Closing Date as set forth below. 3.1 Organization and Standing; Corporate Power. The Company corporation duly organized and existing under the laws of the State is a of California and is in good standing under such laws. The Company has the requisite corpo rate power and authority 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 duly qualified to transa ct business and is in good standing in each jurisdiction in which the failure so to qualify would have a material adverse effect on its business, properties or condition (financial or otherw ise). The Company has or will have at the Initial Closing all requisite corporate power to execute and deliver this Agreement and to sell and issue the Shares hereunder, to issue the Conve rsion Shares and to carry out and perform its obligations under the terms of this Agreement. 3.2 Subsidiaries. The Company has no subsidiaries and does not record or beneficially any capital stock or equity interest or own of investment in any corporation, association or business entity. The Company is not a participant in any joint venture, partnership or similar arrangement. Since its inception, the Company has not conso lidated or merged with, acquired all or substantially all of the assets of, or acquired the stock of or any interest in any corporation, partnership, limited liability company or other busine ss entity. 3. 1348830 v9/SF EFTA01117944  33 Capitalization; Voting Rights. (a) Immediately prior to the Initial Closing, following the filing Restated Articles, the Company's authorized capital stock will of the consist of (i) 310,000,000 shares of common stock, of which 68,241,606 shares will be issued and outstanding immediately prior to the Initial Closing, and (ii) 181,898,270 shares of Prefer red Stock, of which (a) 1,250,000 shares are designated Series 1-A Preferred Stock, all of which were issued and outstanding immediately prior to the Initial Closing, (b) 2,037,206 shares are designated Series I -B Preferred Stock, all of which were issued and outstanding immediately prior to the Initial Closing, (c) 23,251,193 shares are designated Series 1-C Preferred Stock , all of which were issued and outstanding immediately prior to the Initial Closing, (d) 61,46 6,070 shares are designated Series 2 Preferred Stock, of which 59,777,831 shares will be issued and outstanding immediately prior to the Initial Closing, (e) 23,000,000 shares are designated Series 3 Preferred Stock, 22,190,990 of which were issued and outstanding immediately prior to the Initial Closing, (f) 7,150,000 shares are designated Series 4 Preferred Stock, 7,131,940 of which were issued and outstanding immediately prior to the Initial Closing, (g) 37,000,000 shares are designated Series 5 Preferred Stock, 28,159,681 of which were issued and outstanding immediatel y prior to the Initial Closing, (h) 2,781,204 shares are designated Series 5A Preferred Stock , all of which were issued and outstanding immediately prior to the Initial Closing, and (i) 23,962,597 shares are designated Series 6 Preferred Stock, none of which were issued and outsta nding immediately prior to the Initial Closing. Each of the issued and outstanding shares of Series 5A Preferred Stock shall convert into approximately 0.6382 shares of Series 6 Preferred Stock at the Initial Closing pursuant to Section 3.I(iii) of the Restated Articles. The Comp any has reserved for issuance (i) under its 2000 Stock Option Plan (the "2000 Plan"), a pool of 54,251,000 shares of Common Stock, and (ii) under its 2010 Equity Incentive Plan (the "2010 Plan" and, together with the 2000 Plan, the "Plans"), a pool of 86,872,000 shares of Common Stock , plus any additional shares subject to option grants issued under the 2000 Plan that are terminated prior to exercise. Under the Plans 40,490,609 options were outstanding and unexercised immediately prior to the Initial Closing and 8,103,214 shares remained available for grant. (b) The outstanding shares of Common Stock and Preferred Stock of the Company have been duly authorized and validly issued, are fully paid and nonassessable, and such shares, and all outstanding options, warrants, convertible notes , and other securities of the Company, have been issued in compliance with the applicable exemptions from the Securities Act of 1933, as amended (the "Securities Act'). (c) Other than (a) the shares reserved for issuance under the Plans, (b) warrants to purchase up to 5,035,241 shares of Common Stock outstanding on the date hereof and (c) as granted pursuant to this Agreement, the Seventh Amen ded and Restated Investor 4. 1318830 v9/SF EFTA01117945  Rights Agreement, dated concurrent herewith (the "IRA"), the Fifth Amended and Restated Voting Agreement, dated concurrent herewith (the "Votin g Agreement') and the Fourth Amended and Restated Right of First Refusal Agreement, dated concurrent herewith (the "First Refusal Agreement', and collectively, the "Related Agreements"), there are no currently outstanding preemptive or conversion rights, options, warra nts or agreements granted or issued by or binding upon the Company for the purchase or acquisition of any shares of its capital stock. Immediately following the Initial Closing, each share of the Company's outstanding Preferred Stock will be convertible into exactly one (I) share of Comm on Stock. The rights, privileges and preferences of the Series 1-A Preferred Stock, Series I -B Prefer red Stock, Series 1-C Preferred Stock, Series 2 Preferred Stock, Series 3 Preferred Stock, Series 4 Preferred Stock, Series 5 Preferred Stock, Series 5A Preferred Stock and Series 6 Preferred Stock are as stated in the Restated Articles. (d) All outstanding shares of Common Stock and Preferred Stock, and all shares of Common Stock and Preferred Stock when issued upon the exercise or conversion of outstanding options, warrants or other exercisable or convertible securities are or, upon issuance will be, subject to a market standoff or "lockup" agreement of not less than 180 days following the effective date of the Company's initial public offering. (e) Except as contemplated in the IRA, the Company has not grante or agreed to grant any registration rights, including piggyback d rights, to any person or entity. Except as set forth in the Voting Agreement, the Company is not a party or subject to any agreement or understanding, and, to the Company's knowl edge, there is no agreement or understanding between any persons that affects or relates to the voting or giving of written consents with respect to any security or the voting by a director of the Company. 3.4 Authorization. All corporate action on the part of the Comp directors and shareholders necessary for the authorization, execu any, its tion, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated herein, and for the authorization, issuance and delivery of the Shares and of the Conversion Shares has been taken or will be taken prior to the Initia l Closing. This Agreement will constitute a valid and binding obligation of the Company, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of credit ors' rights and (ii) as limited by general principles of equity that restrict the availability of equita ble remedies The Shares, when issued in compliance with the provisions of this Agreement will be validly issued, fully paid and nonacsescable and issued in compliance with all applicable federa l and state securities laws (based in part upon the representations of the Purchasers conta ined herein) and will be free of any liens or encumbrances, and will be free of restrictions on transfer other than under this 5. 1318830 v9/SF EFTA01117946  Agreement, the IRA, the Voting Agreement and the Fourth Amended and Restated Right of First Refusal Agreement, dated concurrent herewith and state and/or federal securities laws. The shares of Common Stock issuable upon conversion of the Shares have been duly and validly reserved and, upon issuance, will be validly issued, fully paid and nonassessable and (based in part upon the representations of the Purchasers contained herein) such shares of Common Stock if issued at the Closing would be issued in compliance with all applicable federal and state securities laws. 3.5 Litigation. There is no action, suit, proceeding, claim, arbitration or investigation pending or, currently threatened in writing against the Company or, to the Company's knowledge, against any officer, director or employee of the Company in connection with such officer's, director's or employee's relationship with, or actions taken on behalf of, the Company, that might result in a material adverse effect or that questions the validity of this Agreement or the right of the Company to enter into any of such agreements, or to consummate the transactions contemplated hereby or thereby, nor is the Company aware that there is any basis for any of the foregoing. The Company is not a party to or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality specifically applicable to the Company. There is no action, suit, proceeding or investigation by the Company currently pending or that the Company intends to initiate. 3.6 Consents. No consent, approval, qualification, order or authorization of, or filing with, any governmental authority is required in connection with the Company's valid execution, delivery or performance of this Agreement, or the offer, sale or issuance of the Shares by the Company, the conversion of the Shares, the issuance of Common Stock upon conversion of the Shares, or the consummation of any other transaction contemplated on the part of the Company hereby or thereby, except (i) the filing of the Restated Articles with the Secretary of State of the State of California prior to the Closing and (ii) filings required pursuant to applicable federal and state securities laws, which filings the Company shall complete within the required statutory period. 3.7 Title to Properties; Liens and Encumbrances. The Company has good and marketable title to its properties and assets and, with respect to the property and assets leased by the Company, holds valid leasehold interests therein, in each case subject to no mortgage, pledge, lien, security interest, conditional sale agreement, encumbrance or charge, except (i) tax, materialmen's or like liens for obligations not yet due or payable or being contested in good faith by appropriate proceedings, (ii) possible minor liens or encumbrances that do not materially detract from the value of the property subject thereto or materially impair the operations of the Company, or (iii) liens, imposed by law, that have otherwise arisen in the ordinary course of 6. 1348830 v9/SF EFTA01117947  business. With respect to the assets it leases, the Company is in material compliance with such leases. 3.8 Financial Statements. The Company has made available to each Purchaser its audited financial statements (including balance sheet, income statement and statement of cash flows) as of and for the years ended December 31, 2011 and December 31, 2012 and unaudited financial statements as of and for the year ended December 31, 2013 (the "Statement Date") (collectively, the "Financial Statements"). The Financial Statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods indicated, except that the Financial Statements may not contain all footnotes required by generally accepted accounting principles. The Financial Statements fairly present the financial condition and operating results of the Company as of the dates, and for the periods, indicated therein, subject to normal year-end audit adjustments. Except as set forth in the Financial Statements, the Company has no material liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to the Statement Date and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected in the Financial Statements, which, in both cases, individually or in the aggregate are not material to the financial condition or operating results of the Company. 3.9 Changes. Since the Statement Date, there has not been to the Company's knowledge: (a) any change in the assets, liabilities, financial condition or operating results of the Company from that reflected in the Financial Statements, except changes in the ordinary course of business that have not been, in the aggregate, materially adverse; (b) any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting the business, properties or condition (financial or otherwise) of the Company; (c) any waiver or material compromise by the Company of a valuable right or of a material debt owed to it; (d) any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company, except in the ordinary course of business and that is not material to the business, properties or condition (financial or otherwise) of the Company; (e) any material adverse change to a material contract or arrangement by which the Company or any of its assets is bound or subject; 7. 1348830 v9/SF EFTA01117948  (I) any material change in any compensation arrangement or agreement with any employee, officer, director or shareholder; (g) any sale, assignment or exclusive license or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets; (h) any receipt of notice by the Company that there has been a loss of, or material order cancellation by, any major customer of the Company; (1) any resignation or termination of employment of any officer or key employee of the Company, and the Company is not aware of any impending resignation or termination of employment of any such officer or key employee; (j) any mortgage, pledge, transfer of a security interest in, or lien, created by the Company, with respect to any of its material properties outside the ordinary course of business; (k) any loans or guarantees made by the Company to or for the benefit of its employees, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of its business; (I) any declaration, setting aside or payment or other distribution in respect of any of the Company's capital stock, or any direct or indirect redemption, purchase, or other acquisition of any of such stock by the Company; (m) any material change, except in the ordinary course of business, in the contingent obligations of the Company by way of guaranty, endorsement, indemnity, warranty or otherwise; (n) any labor organization activity related to the Company; (o) any other event or condition of any character that might materially and adversely affect the business, properties or condition (financial or otherwise) of the Company; or (p) any arrangement or commitment by the Company to do any of the things described in this Section 3.9. 3.10 Employee Benefit Plans. Section 3.10 of the Schedule of Exceptions sets forth all employee benefit plans maintained, established or sponsored by the Company, or in or 8. 1348830 v9/SF EFTA01117949  to which the Company participates or contributes, if any, which is subject to the Employee Retirement Income Security Act of 1974 ("MUSA"). The Company has made all required contributions with respect to compensation for services rendered to date (other than any very recent 401(k) salary deferral contributions which will be deposited into any such plan as soon as such contributions can reasonably be segregated from the Company's general assets and/or any Company contributions that may be deposited by the date of the Company's tax return (or on such other date as such plan provides) and has no liability to any such employee benefit plan, other than liability for health plan continuation coverage described in Part 6 of Title 1(B) of ERISA or liability for any recent 401(k) contributions and/or any Company contributions as described above, and has complied in all material respects with all applicable laws for any such employee benefit plan. 3.11 Status of Proprietary Assets. (a) The Company owns or is duly licensed under or otherwise authorized to use, all patent applications, trademarks, service marks, trade names, copyrights, trade secrets, confidential and proprietary information, designs, processes and proprietary rights, and, to its knowledge, all patents, that are necessary to enable it to carry on its business as now conducted and as proposed to be conducted ("Proprietary Assets") without any conflict with, or infringement of, the rights of others. (b) The Company has not received any written communications alleging that the Company has violated or, by conducting its business as proposed, would violate any of the patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights or processes of any other person or entity, nor is the Company aware of any basis therefor. (c) Each former and current employee, officer and consultant of the Company has executed a proprietary information and inventions agreement in the form(s) as delivered to Purchasers. To the Company's knowledge, no employee, officer, or consultant of the Company is in violation of such proprietary information and inventions agreement or any prior employee contract or proprietary information and inventions agreement with any other corporation or third party. No former and current employee, officer or consultant of the Company has excluded works or inventions made prior to his or her employment with the Company from his or her assignment of inventions pursuant to such employee, officer or consultant's proprietary information and inventions agreement. (d) The Company does not believe it is or will be necessary to use any inventions, trade secrets or proprietary information of any of its employees (or persons it currently intends to hire) made prior to their employment by the Company and not assigned to 9. 1348830 v9/SF EFTA01117950  the Company. Set forth in Section 3.11 of the Schedule of Exceptions is a listing of all patents and trademarks of the Company and all applications therefor. 3.12 Licenses; Other Agreements. (a) The Company has not granted, and, to the Company's knowledge, there are not outstanding, any options, licenses or agreements of any kind relating to any Proprietary Asset of the Company, nor is the Company bound by or a party to any option, license or agreement of any kind with respect to any of its Proprietary Assets, in each case except for such options, licenses or arrangements as have been entered into in the ordinary course of the Company's business and in substantially the form of the Company's standard agreements, if any. (b) The Company is not 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 or that involve indemnification by the Company with respect to such third party assets, except for (i) standard end-user, object code, internal-use software licenses, (ii) support/maintenance agreements and (iii) standard confidentiality or nondisclosure agreements entered into in the ordinary course of business and in substantially the form of the Company's standard agreements, if any. 313 Offering. Subject to the truth and accuracy of each Purchaser's representations set forth in this Agreement, the offer, sale and issuance of the Shares and Conversion Shares as contemplated by this Agreement are exempt from the registration requirements of the Securities Act, and from the qualification requirements of the California Corporate Securities Law of 1968, as amended. 3.14 Compliance with Other Instruments. (a) The Company is not in any violation of or default under any term of the Restated Articles or its Bylaws. The Company is not in violation of, or default under any provision of any instrument, mortgage, deed of trust, loan, contract, commitment, judgment, decree, order or obligation to which it is a party or by which it or any of its properties are bound, which violations or defaults, individually or in the aggregate, would reasonably be expected to materially adversely affect the business, properties or condition (financial or otherwise) of the Company. To the Company's knowledge, it is not in violation of any provision of any federal, state or local statute, rule or governmental regulation that would materially adversely affect the business, properties or condition (financial or otherwise) of the Company. The Company has all franchises, permits, licenses and any similar authority necessary for the conduct of its business, the lack of which would reasonably be expected to materially and adversely affect the business, 10. 1348830 v9/SF EFTA01117951  properties or condition (financial or otherwise) of the Company. The Company is not in default in any material respect under any of such franchises, permits, licenses or other similar authority. (b) Neither the execution and delivery of this Agreement nor the performance by the Company of its obligations under this Agreement (including the issuance of the Shares (and the Common Stock issuable upon conversion thereof) will: (i) violate any provisions of the Restated Certificate or the Bylaws of the Company; (ii) with or without the giving of notice or the passage of time, or both, violate, or be in conflict with, or constitute a material default under, or cause or permit the termination or the acceleration of the maturity of, any debt obligation of the Company; (iii) require notice to or the consent of any party to any agreement or commitment, including, without limitation, any lease or license to which the Company is a party, or by which it or its properties is bound or subject; (iv) result in the creation or imposition of any security interest, lien, or other encumbrance upon any property or assets of the Company under any agreement or commitment to which it is a party, or by which it or its properties is bound or subject; or (v) violate any statute or law or any judgment, decree, order, regulation or rule of any court or governmental authority to which the Company or its properties is bound or subject. 3.15 Employees and Independent Contractors. (a) Other than indicated on the Schedule of Exceptions, the Company is not a party to or bound by any currently effective employment contract, deferred compensation arrangement, bonus plan, incentive plan, profit sharing plan, retirement agreement or other employee compensation plan or agreement. (b) To the Company's knowledge, no employee or independent contractor of the Company is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of such employee's or independent contractor's best efforts to promote the Company's business as now conducted and as currently proposed to be conducted. The Company has not received any written notice alleging that a violation of any such contract or other agreement has occurred. (c) Neither the execution or delivery of this Agreement, nor the carrying on of the Company's business by the employees and independent contractors of the Company, nor the conduct of the Company's business as now conducted, will, to the Company's knowledge, conflict with or result in a material breach of the terms, conditions, or provisions of, or constitute a material default under, any contract, covenant or instrument under which any such employee or independent contractor is now obligated. 1348830 v9/SF EFTA01117952  (d) The Company is not aware that any officer, key employee or of employees intends to terminate his, her or their employmen group t with the Company, nor does the Company have a present intention to terminate the employmen t of any officer, key employee or group of employees. 3.16 Agreements; Action. (a) Except for agreements explicitly contemplated hereby, or Related Agreements, there are no agreements, understand in the ings or proposed transactions between the Company and any of its officers, directors, affiliates, or any affiliate thereof. (b) Other than as indicated on the Schedule of Exceptions, there agreements, understandings, instruments, contracts or propo are no sed transactions to which the Company is a party or by which it is bound that involve obligations of, or payments to the Company in excess of, $1,000,000 or in excess of $2,000,000 in the aggregate. (c) Other than as disclosed on the Schedule of Exceptions, Company has not (i) declared or paid any dividends, or autho the rized or made any distribution upon or with respect to any class or series of its capital stock, (ii) incurred or guaranteed any indebtedness for money borrowed or incurred any liabilities in excess of $1,000,000 in the aggregate (other than indebtedness set forth on the Financial Statements), (iii) made any loans or advances to any person, other than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or rights other than the sale of its inventory in the ordinary course of business. (d) The Company is not a party to or bound by any contra agreement or instrument, or subject to any restriction under the ct, Restated Articles or Bylaws, that materially and adversely affects its business as now condu cted, its properties or its financial condition. (e) The Company is not a guarantor or indemnitor of any indebtednes of any other person or entity. s 3.17 Related Party Transactions. The Company is not indirectly, to any of its shareholders, officers or directors or indebted, directly or to their respective affiliates, spouses or children, in any amount whatsoever other than in conne ction with payments for services rendered and for expenses or advances of expenses incurred in the ordinary course of business or relocation expenses of employees. . To the Company's know ledge, none of the Company's shareholders, key employees, officers or directors, or any affilia tes thereof or members of their immediate families, are, directly or indirectly, indebted to the Company (other than in connection 12. 1348830 v9/SF EFTA01117953  with purchases of the Company's stock) or have any direct or indirect ownership interest in any entity with which the Company is affiliated or with which the Company has a business relationship, or any entity that competes with the Company, except that officers, directors, key employees and/or shareholders of the Company and their affiliates and family members may own stock in (but not exceeding two percent of the outstanding capital stock of) any publicly traded company that may compete with the Company. To the Company's knowledge, none of the Company's shareholders, key employees, officers or directors or any members of their immediate families are, directly or indirectly, interested in any material contract with the Company (other than such contracts as relate to any such person's ownership of capital stock or other securities of the Company). 3.18 Tax Matters. The Company has filed all federal, California and other income tax returns and reports as required by law. These returns and reports are true and correct in all material respects, provided, however that the Company makes no representation or warranty as to the amount or availability of any net operating loss or other carryovers. The Company has paid all taxes shown to be due on such returns, and has reserved on its books an amount sufficient for all other material taxes due through the date of its most recent financial statements. The Company has not elected pursuant to the Internal Revenue Code of 1986, as amended (the "Code"), to be treated as a Subchapter S corporation or a collapsible corporation pursuant to Section 1362(a) or Section 341(f) of the Code, nor has i