{"id":40941,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/convertible-promissory-note-purchase-agreement-network-computer.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"convertible-promissory-note-purchase-agreement-network-computer","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/finance\/convertible-promissory-note-purchase-agreement-network-computer.html","title":{"rendered":"Convertible Promissory Note Purchase Agreement &#8211; Network Computer Inc. and Middlefield Ventures Inc."},"content":{"rendered":"<pre>                    CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT\n\n          THIS CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT (this \n'AGREEMENT') dated as of November 12, 1997, is entered into between Network \nComputer, Inc., a Delaware corporation (the 'COMPANY' or 'NCI'), and \nMiddlefield Ventures, Inc., a Delaware corporation ('MALLARD').\n\n          WHEREAS, Mallard desires to invest in NCI by purchasing convertible \npromissory notes with an aggregate principal amount of up to $12,000,000 upon \nthe terms and subject to the conditions set forth in this Agreement, and NCI \ndesires such an investment; and\n\n          WHEREAS, Mallard and NCI have entered into a Technology Escrow \nAgreement of even date herewith; and\n\n          WHEREAS, Intel Corporation, a Delaware corporation and the sole \nstockholder of Mallard ('Teal'), and NCI have entered into a Cooperation \nAgreement involving the contribution of $3,000,000 to NCI's non-recurring \nengineering efforts of even date herewith.\n\n          Accordingly, the parties hereto agree as follows:\n\n                                      ARTICLE I\n\n                                     DEFINITIONS\n\n          As used in this Agreement, the following terms shall have the \nfollowing meanings:\n\n          'BUSINESS DAY' means a day other than Saturday or Sunday, on which \ncommercial banks are open for business in San Francisco, California.\n\n          'DOLLARS' and the sign '$' each means lawful money of the United \nStates.\n\n          'GOVERNMENTAL AUTHORITY' means any United States federal, state, \nlocal or other governmental department, commission, board, bureau, agency, \ncentral bank, court, tribunal or other instrumentality or authority, domestic \nor foreign, exercising executive, legislative, judicial, regulatory or \nadministrative functions of or pertaining to government.\n\n          'INDEBTEDNESS' means:  (i) all indebtedness or other obligations \nfor borrowed money or for the deferred purchase price of property or \nservices; (ii) all obligations evidenced by notes, bonds, debentures or \nsimilar instruments, including obligations so evidenced incurred in \nconnection with the acquisition of property, assets or businesses; (iii) all \nindebtedness created or arising under any conditional sale or other title \nretention agreement with respect to property acquired (even though the rights \nand remedies of the seller or lender under such agreement in the event of \ndefault are limited to repossession or sale of such property); (iv) all \nobligations under capital leases; (v) all reimbursement or other obligations \nunder or in respect of letters of credit\n\n\n\nand bankers acceptances; and (vi) all indebtedness secured by any Lien upon \nor in property owned whether or not a person assumed or became liable for the \npayment of such indebtedness.\n\n          'LIEN' means any mortgage, deed of trust, pledge, security \ninterest, assignment, deposit arrangement, charge or encumbrance, lien \n(statutory or other), or other preferential arrangement (including any \nconditional sale or other title retention agreement, any financing lease \nhaving substantially the same economic effect as any of the foregoing or any \nagreement to give any security interest).\n\n          'MATERIAL ADVERSE EFFECT' means any event, matter, condition or \ncircumstance which:  (i) has or would reasonably be expected to have a \nmaterial adverse change on NCI's business, prospects, operating results or \nfinancial condition; (ii) would materially impair the ability of NCI to \nperform or observe its obligations under or in respect of the Transaction \nDocuments; or (iii) materially affects the legality, validity, binding effect \nor enforceability of any of the Agreement or the Notes. \n\n          'MILESTONE' means the Second Note Milestone or the Third Note \nMilestone, as applicable.\n\n          'NOTE' means the First Note (as defined in Section 2.01(b)), the \nSecond Note (as defined in Section 2.03(a)) or the Third Note (as defined in \nSection 2.03(b)), each of which shall be in substantially the form attached \nhereto as EXHIBIT A and shall be issued by NCI to Mallard in accordance with \nthe terms and conditions set forth herein.  Each Note will bear a principal \namount of Four Million Dollars ($4,000,000.00).\n\n          'SECOND NOTE MILESTONE' means the milestone detailed as such on \nSchedule A attached hereto. \n\n          'THIRD NOTE MILESTONE' means the milestone detailed as such on \nSchedule A attached hereto. \n\n          'TRANSACTION DOCUMENTS' means this Agreement, the Notes, the \nAdmission Agreement attached hereto as EXHIBIT B and all other certificates, \ndocuments, agreements and instruments delivered to Mallard under or in \nconnection with this Agreement.\n\n                                      ARTICLE II\n\n                              PURCHASE AND SALE OF NOTES\n\n          SECTION 2.01   SALE AND ISSUANCE OF THE FIRST NOTE.\n\n                  (a)    The Company shall adopt and file with the Secretary \nof State of Delaware on or before the Closing (as defined below) the Restated \nCertificate of Incorporation in the form attached hereto as EXHIBIT C (the \n'RESTATED CERTIFICATE').\n\n                                        2\n\n\n\n                  (b)    Subject to the terms and conditions of this \nAgreement, Mallard agrees to purchase at the Closing, and the Company agrees \nto sell and issue to Mallard at the Closing, one Note in the principal amount \nof Four Million Dollars ($4,000,000) (the 'FIRST NOTE') upon receipt of such \namount. \n\n          SECTION 2.02   CLOSING.  The purchase and sale of the First Note \nshall take place at the offices of Gunderson Dettmer Stough Villeneuve \nFranklin &amp; Hachigian, LLP, 155 Constitution Drive, Menlo Park, California, at \n10:00 a.m. California Time on November 12, 1997 (which time and place is \ndesignated as the 'CLOSING').  At the Closing, the Company shall deliver to \nMallard the First Note against payment of the purchase price therefor by \ncheck, wire transfer, or a combination thereof.  The 'Closing' for the Second \nNote and the Third Note shall be the respective date of funding of each Note.\n\n          SECTION 2.03   SALE AND ISSUANCE OF THE SECOND NOTE AND THE THIRD \nNOTE.  At NCI's election, NCI shall issue and sell to Mallard, and Mallard \nagrees to purchase from NCI, on the terms and conditions herein set forth:\n\n                  (a)    A second Note with a principal amount of Four \nMillion Dollars ($4,000,000) (the 'SECOND NOTE') upon receipt of such amount \nPROVIDED NCI has met the Second Note Milestone; and\n\n                  (b)    A third Note with a principal amount of Four Million \nDollars ($4,000,000) (the 'THIRD NOTE') upon receipt of such amount PROVIDED \nNCI has met the Third Note Milestone.  \n\n                  (c)    If the Second Note Milestone or the Third Note \nMilestone is achieved and accepted pursuant to Section 2.03(d) but NCI \nchooses not to sell and issue the Second Note or Third Note, respectively, to \nMallard, NCI shall so notify Mallard promptly in writing (the 'WAIVER \nNOTICE').  Mallard shall then have the right to purchase, and NCI shall issue \nand sell to Mallard, that number of shares of the Company's Series D \nPreferred Stock as equals Four Million Dollars ($4,000,000) divided by the \nConversion Price of the applicable Note PROVIDED, HOWEVER, Mallard so \nnotifies NCI within five (5) business days of receipt of the Waiver Notice \nand funds the purchase price therefore at a time and to a location specified \nby NCI.  Documentation of such purchase shall be in a form reasonably \nsatisfactory to both NCI and Mallard and shall be included in the definition \nof 'Conversion Shares' as defined in Section 4.01(c) below. \n\n                  (d)    When NCI believes it has appropriately completed the \nMilestone, NCI will deliver evidence thereof to Mallard. Mallard will accept \nor reject the Milestone within fifteen (15) Business Days after delivery; \nfailure to give notice of acceptance or rejection within that period will \nconstitute acceptance. Mallard may reject the Milestone if the Milestone \nfails in some material respect to meet the requirements therefor.  Any \nrejection notice will include a detailed description of any such failures in \na manner sufficient to allow NCI to reproduce and correct them. If Mallard \nrejects the Milestone, NCI will use reasonable commercial efforts to correct \npromptly the failures specified in the rejection notice and re-deliver the \nMilestone to Mallard.  The acceptance\/rejection\/correction provisions above \nshall be\n\n                                       3\n\n\n\nreapplied until the Milestone is accepted; provided, however, that upon the \nthird or any subsequent rejection NCI shall have no continued obligation to \nmake further correction. Mallard may not reject a resubmitted Milestone for a \nfailure that was not cited in the immediately preceding rejection notice.\n\n          SECTION 2.04   PROCEDURE FOR PURCHASE OF SECOND NOTE AND THIRD \nNOTE. The purchase of the Second Note or Third Note, as applicable, shall be \nmade upon written notice from NCI to Mallard, which notice shall be received \nby Mallard not later than 3:00 P.M. California time five days prior to the \nproposed date of the sale of the Note.  Each such notice (a 'NOTICE OF \nBORROWING') shall refer to this Agreement and shall specify:  (i) that the \nSecond Note Milestone or Third Note Milestone, as applicable, has been \nachieved, (ii) the proposed date of the sale of the Note, which shall be a \nBusiness Day; and (iii) payment instructions with respect to the funds to be \nmade available to NCI as a result of such borrowing.  Upon fulfillment of the \napplicable conditions set forth in this Agreement, Mallard shall purchase the \nNote from NCI on the date set forth on the Notice of Borrowing.\n\n                                     ARTICLE III\n\n                                  TERMS OF THE NOTES\n\n          SECTION 3.01   INTEREST.  Interest shall accrue on the unpaid \nprincipal amount of each Note from the date of such Note until the maturity \nthereof, at a rate equivalent to the lesser of (a) 5.0% or (b) the maximum \ninterest rate permitted under applicable federal and state laws.  Interest \nshall be computed as simple annual interest on the basis of a year of 360 \ndays for the actual number of days occurring in the period for which such \ninterest is payable.  Interest accrued on a particular Note will be forgiven \nupon conversion of such Note into shares of Series D Preferred Stock or the \nSeries A Common Stock issuable upon conversion thereof.\n\n          SECTION 3.02   REPAYMENT OF THE NOTES.  The principal amount and \naccrued interest outstanding under each Note hereunder shall be due and \npayable on or before the fifth anniversary of the date of issuance of such \nNote (the 'MATURITY DATE'), unless earlier prepaid under Section 3.03, \nconverted under Section 3.05 (in which event interest will be forgiven) or \naccelerated in accordance with Section 3.08.\n\n          SECTION 3.03   PREPAYMENTS.  NCI may, upon prior notice to Mallard \nnot later than 10 Business Days prior to the date of prepayment, prepay the \noutstanding principal amount and interest under any Note in whole or in part, \nwithout premium or penalty.  The notice given of any prepayment shall specify \nthe date and amount of the prepayment and the date of the Note to which such \nprepayment shall be applied.\n\n          SECTION 3.04   PAYMENTS.  NCI shall make each payment under the \nNotes, unconditionally and in full without set-off, counterclaim or other \ndefense, not later than 3:00 p.m. (California Time) on the Maturity Date in \nDollars and in immediately available funds, at the offices of Mallard (as set \nforth in Section 8.02 below, which may be amended from time to time in \naccordance therewith), or to such other office and account of Mallard as it \nfrom time to time shall designate in a written notice to NCI.\n\n                                       4\n\n\n\n          SECTION 3.05   CONVERSION OF NOTES.\n\n                  (a)    RIGHT TO CONVERT.  Subject to and upon compliance \nwith the provisions of this Agreement, Mallard shall have the right at its \noption to convert the outstanding principal amount under the First Note, the \nSecond Note or the Third Note or any portion thereof PROVIDED such portion of \nprincipal amount is at least $1,000,000, into that number of fully paid and \nnon-assessable shares of NCI Series D Preferred Stock obtained by dividing \nthe principal amount under such Note surrendered for conversion by the \nConversion Price (as defined below) in effect at such time.\n\n                  (b)    AUTOMATIC CONVERSION OF THE FIRST NOTE.  Unless \nearlier converted pursuant to Section 3.05(a) above, the outstanding \nprincipal amount under the First Note shall automatically be converted into \nthat number of fully paid and non-assessable shares of NCI Series D Preferred \nStock obtained by dividing the principal amount under the Note surrendered \nfor conversion by the Conversion Price (as defined below) in effect at such \ntime upon the sale by the Company of its Common Stock in a public offering \npursuant to a registration statement filed by the Company under the \nSecurities Act of 1933, as amended (the 'SECURITIES ACT'), with proceeds of \ngreater than $20,000,000 (an 'IPO').\n\n                  (c)    AUTOMATIC CONVERSION OF THE SECOND NOTE AND THE \nTHIRD NOTE.  Unless earlier converted pursuant to Section 3.05(a) above, the \noutstanding principal amount under the Second Note and the Third Note shall \nautomatically be converted into that number of fully paid and non-assessable \nshares of NCI Series D Preferred Stock obtained by dividing the principal \namount under the Note surrendered for conversion by the Conversion Price (as \ndefined below) in effect at such time upon the consummation of an IPO.\n\n                  (d)    EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF \nPREFERRED STOCK ON CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS.  In \norder to exercise the right to conversion with respect to a Note, Mallard \nshall surrender the Note and shall give written notice of conversion to NCI \nthat Mallard elects to convert the Note or the specified portion thereof \nspecified in said notice. Such notice shall also state the name or names \n(with address) in which the certificate or certificates for shares of NCI \nSeries D Preferred Stock which shall be issuable on such conversion shall be \nissued.\n\n          As promptly as practicable, but in no event more than 15 Business \nDays after satisfaction of the requirements for conversion set forth above, \nNCI shall issue and shall deliver to Mallard, a certificate or certificates \nfor the number of full shares issuable upon the conversion of such Note or \nportion thereof in accordance with the provisions of this subsection (d) and \na check or cash in respect of any fractional interest in respect of a share \nof NCI Series D Preferred Stock arising upon such conversion, as provided \nbelow.  In case any Note shall be surrendered for partial conversion, NCI \nshall execute and deliver to the holder of the Note so surrendered, without \ncharge, a new Note or Notes in authorized denominations in an aggregate \nprincipal amount equal to the unconverted portion of the surrendered Note.\n\n          Each conversion shall be deemed to have been effected as to any \nsuch Note (or the specified portion thereof) on the date on which the \nrequirements set forth above in this\n\n                                       5\n\n\n\nAgreement required to be satisfied by the holder have been satisfied as to \nsuch Note (or portion thereof), and the person whose name any certificate or \ncertificates for shares of NCI Series D Preferred Stock shall be issuable \nupon such conversion shall be deemed to have become on said date the holder \nof record of the shares represented thereby.\n\n          No fractional shares or scrip representing fractional shares shall \nbe issued upon conversion of Notes. If any fractional share of stock would be \nissuable upon the conversion of any Note or Notes, NCI shall make an \nadjustment therefor in cash at the current fair market value thereof.\n\n                  (e)    CONVERSION PRICE.  The 'CONVERSION PRICE' shall be \n(i) in the case of the First Note, $1.58, unless the Company has, between the \ndate hereof and April 30, 1998, sold its capital stock in a financing in \nwhich the Company has received gross proceeds of an excess of $5,000,000 (a \n'SUBSEQUENT FINANCING') at a differing price, in which case such Note will \nconvert at the lower of $1.58 or such differing price, and (ii) in the case \nof the Second Note and Third Note, $1.58, unless the Company has, between the \ndate hereof and the date on which such Notes are issued, sold its capital \nstock in a Subsequent Financing at a differing price, in which case such \nNotes shall convert at (A) such differing price if such financing is prior to \nan IPO or (B) the average closing sale price of the Company's Common Stock \nfor the five (5) Business Days preceding the date on which NCI received \nnotice pursuant to Section 2.05(c) or Section 3.05(d) above, as the case may \nbe.  Notwithstanding the foregoing, a Subsequent Financing shall not include \n(i) the issuance or sale of Common Stock (or options therefor) to employees, \nconsultants and directors, pursuant to plans or agreements approved by the \nBoard of Directors for the primary purpose of soliciting or retaining their \nservices, (ii) the issuance of securities pursuant to the conversion or \nexercise of convertible or exercisable securities that are outstanding on the \ndate hereof or that are not outstanding on the date hereof but which NCI is \ncontractually obligated to issue and sell hereafter, (iii) the issuance of \nsecurities in connection with a bona fide business acquisition by the \nCompany, whether by merger, consolidation, sale of assets, sale or exchange \nof stock or otherwise, (iv) the issuance of securities to financial \ninstitutions or lessors in connection with commercial credit arrangements, \nequipment financings or similar transactions, (v) the purchase of shares of \nSeries B, Series C or Series C-1 Preferred Stock by NCI or Oracle pursuant to \nthe right afforded by NCI and Oracle to certain holders thereof in Sections 1 \nand 2 of the Put\/Call and Voting Agreement dated August 11, 1997, by and \namong NCI, Oracle and certain stockholders of the Company, or (vi) the \nissuance after the date hereof of up to 22,000,000 shares of Series A-1 \nPreferred Stock, at a purchase price of $1.10 per share pursuant to the \nConvertible Note Purchase Agreement dated July 23, 1997, between Oracle and \nNCI. \n\n                  (f)    EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR \nSALE.  If any of the following events occur, namely (i) any reclassification \nor change of outstanding shares of NCI Series D Preferred Stock (other than a \nchange in par value, or from par value to no par value, or from no par value \nto par value, or as a result of a subdivision or combination), (ii) any \nconsolidation, merger or combination of NCI with another corporation as a \nresult of which holders of NCI Series D Preferred Stock shall be entitled to \nreceive stock, securities or other property or assets (including cash) with \nrespect to or in exchange for such Preferred Stock (a\n\n                                      6\n\n\n\n'Merger'), or (iii) any sale or conveyance of the properties and assets of \nNCI as, or substantially as, an entirety to any other corporation as a result \nof which holders of Preferred Stock shall be entitled to receive stock, \nsecurities or other property or assets (including cash) with respect to or in \nexchange for such Preferred Stock (an 'Asset Sale'), then NCI or the \nsuccessor or purchasing corporation, as the case may be, shall execute with \nMallard an amendment to this Agreement providing that all issued and \noutstanding Notes shall be convertible into the kind and amount of shares of \nstock and other securities or property or assets (including cash) receivable \nupon such reclassification, change, consolidation, merger, combination, sale \nor conveyance by a holder of a number of shares of Preferred Stock issuable \nupon conversion of such Notes immediately prior to such reclassification, \nchange, consolidation, merger, combination, sale or conveyance.\n\n                  (g)    RESERVATION OF SHARES; SHARES TO BE FULLY PAID.  NCI \nshall provide, free from preemptive rights, out of its authorized but \nunissued shares or shares held in treasury, sufficient shares to provide for \nthe conversion of the Notes from time to time as such Notes are presented for \nconversion.  From the execution of this Agreement, NCI will take all \ncorporate action which may, in the opinion of its counsel, be necessary in \norder that NCI may validly and legally issue shares of such NCI Series D \nPreferred Stock at such adjusted Conversion Price.\n\n          NCI covenants that all shares of NCI Series D Preferred Stock (and \nthe shares of Series A Common Stock issuable upon conversion thereof) which \nmay be issued upon conversion of Notes will upon issue be fully paid and \nnon-assessable by NCI and free from all taxes, Liens and other charges with \nrespect to the issue thereof.\n\n          SECTION 3.06   TAXES ON PAYMENTS.  To the extent applicable, NCI \nshall withhold any present or future income, stamp or other taxes, levies, \nimposts, duties, charges, fees, deductions or withholdings, now or hereafter \nimposed, levied, collected, withheld or assessed by any Governmental \nAuthority ('TAXES') from any amounts payable to Mallard hereunder and so \nnotify Mallard as promptly as possible thereafter, NCI shall send to Mallard \nnotice showing payment thereof. NCI will not be responsible for any income \ntax of Mallard for interest due on the Note, or stamp duty or other tax due \non conversion of the Note into shares of Preferred Stock.\n\n          SECTION 3.07   NO REBORROWING.  Once repaid or converted, the \nprincipal amount of the Notes may not be reborrowed.\n\n          SECTION 3.08   ACCELERATION.  Notwithstanding the provisions of \nSection 3.05(b), (c) or (f), Mallard may alternatively elect to be repaid the \noutstanding principal amount and accrued interest on the Notes (the \n'OUTSTANDING BALANCE') in the event of an IPO, a Merger or an Asset Sale.  \nSuch election shall be made by written notice received by NCI within five (5) \nBusiness Days of Mallard's receipt of notice from NCI that it intends to \nconsummate such IPO, Merger or Asset Sale within the succeeding ninety (90) \ndays.  Such repayment shall be made within 45 Business Days after the \ncompletion of such IPO or upon completion of a Merger or Asset Sale.\n\n                                       7\n\n\n\n                                      ARTICLE IV\n\n                            REPRESENTATIONS AND WARRANTIES\n\n          SECTION 4.01   REPRESENTATIONS AND WARRANTIES OF NCI.  NCI hereby \nrepresents and warrants to Mallard that, except as set forth on the Schedule \nof Exceptions (the 'SCHEDULE OF EXCEPTIONS') furnished to Mallard which \nexceptions shall be deemed to be representations and warranties as if made \nhereunder:\n\n                  (a)    ORGANIZATION, GOOD STANDING AND QUALIFICATION.  The \nCompany is a corporation duly organized, validly existing and in good \nstanding under the laws of the State of Delaware and has all requisite \ncorporate power and authority to carry on its business as now conducted.  The \nCompany is duly qualified to transact business and is in good standing in \neach jurisdiction in which the failure to so qualify would have a Material \nAdverse Effect on NCI. The Company does not presently own or control, \ndirectly or indirectly, any interest in any other corporation, association, \nor other business entity.  The Company is not a participant in any joint \nventure, partnership, or similar arrangement.\n\n                  (b)    CAPITALIZATION AND VOTING RIGHTS.  The authorized \ncapital of the Company consists, or will consist immediately prior to the \nClosing, of:\n\n                       (i)    PREFERRED STOCK.  375,000,000 shares of \nPreferred Stock (the 'PREFERRED STOCK'), 84,999,900 shares of which have been \ndesignated Series A Preferred Stock and are outstanding, 70,000,000 shares of \nwhich have been designated Series A-1 Preferred Stock and 20,909,090 shares \nare outstanding, 14,500,000 shares of which have been designated Series B \nPreferred Stock and 13,924,553 shares are outstanding, 60,000,000 shares of \nwhich have been designated Series C Preferred Stock and 40,003,946 shares are \noutstanding, 60,000,000 shares of which are designated Series C-1 Preferred \nStock and none are outstanding, 12,000,000 of which are designated Series D \nPreferred Stock and none are outstanding.  The rights, privileges and \npreferences of the Preferred Stock will be as stated in the Company's \nRestated Certificate.\n\n                       (ii)   COMMON STOCK.  425,000,000 shares of common \nstock ('COMMON STOCK'), 302,000,000 shares of which have been designated \nSeries A Common Stock of which 43,850 shares are outstanding, and 60,000,000 \nshares of which have been designated Series B Common Stock none of which are \nissued and outstanding.  \n\n                       (iii)  The outstanding shares of Preferred Stock and \nCommon Stock have all been duly and validly authorized and issued, fully paid \nand nonassessable, and were issued in accordance with the registration or \nqualification provisions of the Securities Act and any relevant state \nsecurities laws or pursuant to valid exemptions therefrom.\n\n                       (iv)   Except for (A) the conversion privileges of the \nPreferred Stock to be issued under this Agreement, (B) the rights provided in \nthe Stockholders Agreement, dated August 11, 1997, among NCI and certain \nstockholders of NCI (the 'STOCKHOLDERS AGREEMENT'), (C) the rights provided \nin the Put\/Call and Voting Agreement dated\n\n                                      8\n\n\n\nAugust 11, 1997, among NCI and certain stockholders of NCI (the 'P\/C VOTING \nAGREEMENT') and (D) currently outstanding options to purchase 16,608,881 \nshares of Series C Preferred Stock and 7,338,517 shares of Series A Common \nStock granted to employees pursuant to the Company's equity incentive plans \n(the 'OPTION PLANS'), there are not outstanding any options, warrants, rights \n(including conversion or preemptive rights) or agreements for the purchase or \nacquisition from the Company of any shares of its capital stock.  The Company \nis not a party or subject to any agreement or understanding, and, to the best \nof the Company's knowledge, there is no agreement or understanding between \nany persons and\/or entities, which affects or relates to the voting or giving \nof written consents with respect to any security or by a director of the \nCompany other than the P\/C Voting Agreement and the Stockholders Agreement.\n\n                  (c) AUTHORIZATION.  The execution, delivery and performance \nof the Transaction Documents and any other agreement contemplated hereunder \nby NCI have been duly authorized by all necessary corporate action of NCI.  \nThe shares of Series D Preferred Stock to be issued upon conversion of the \nNotes and the shares of Series A Common Stock issuable upon conversion of \nsuch shares of Series D Preferred Stock (collectively, the 'CONVERSION \nSHARES') have been or will be duly authorized by all necessary corporate \naction of NCI (including, without limitation, approval of the filing of an \nappropriate amendment to the Company's Certificate of Incorporation \nauthorizing the Conversion Shares) and, upon issuance and payment therefor, \nwill be validly issued, fully paid and non-assessable, and issued, upon \nMallard making appropriate written investment representations to NCI upon the \nconversion of each Note into shares of Series D Preferred Stock as provided \nin this Agreement, in compliance with the qualification and registration \nrequirements or exemptions therefrom under all applicable state and federal \nsecurities laws.\n\n                  (d)    VALID ISSUANCE OF PREFERRED AND COMMON STOCK.  The \nSeries D Preferred Stock issuable upon conversion of the Notes and the Series \nA Common Stock issuable upon conversion of the shares of Series D Preferred \nStock issuable upon conversion of the have been duly and validly reserved for \nissuance and, upon issuance in accordance with the terms of the Restated \nCertificate, will be duly and validly issued, fully paid, and nonassessable \nand will be free of restrictions on transfer other than restrictions on \ntransfer under this Agreement and under applicable state and federal \nsecurities laws.\n\n                  (e)    APPROVALS AND CONSENTS.  No approval, consent or \nauthorization of any natural person, firm, corporation or Governmental \nAuthority which has not heretofore been obtained is necessary for the \nexecution or delivery of this Agreement, the Transaction Documents or any \nother agreement contemplated hereunder by NCI or for the performance by NCI \nof any of the terms or conditions thereof, except (i) at NCI's election, the \nfiling of a Notice of Sale of Securities Pursuant to Regulation D promulgated \nunder the Securities Act, and (ii) the filing of a Notice with the California \nCommissioner of Corporations pursuant to Section 25102(f) of the California \nCorporations Code.\n\n                  (f)    OFFERING.  Subject in part to the truth and accuracy \nof Mallard's representations set forth in Section 4.02 of this Agreement, the \noffer, sale and issuance of the Notes as contemplated by this Agreement are \nexempt from the registration requirements of the\n\n                                       9\n\n\n\nSecurities Act, and neither the Company nor any authorized agent acting on \nits behalf will take any action hereafter that would cause the loss of such \nexemption.\n\n                  (g)    LITIGATION.  There is no action, suit, proceeding or \ninvestigation pending or currently threatened against the Company that \nquestions the validity of this Agreement or the Transaction Documents, or the \nright of the Company to enter into such agreements, or to consummate the \ntransactions contemplated hereby or thereby, or that might result, either \nindividually or in the aggregate, in any Material Adverse Effect on NCI, or \nany change in the current equity ownership of the Company.  The foregoing \nincludes, without limitation, actions, suits, proceedings or investigations \npending or threatened involving the prior employment of any of the Company's \nofficers, their use in connection with the Company's business of any \ninformation or techniques allegedly proprietary to any of their former \nemployers, or their obligations under any agreements with prior employers.  \nThe Company is not a party or subject to the provisions of any order, writ, \ninjunction, judgment or decree of any court or government agency or \ninstrumentality.  There is no action, suit, proceeding or investigation by \nthe Company currently pending or that the Company intends to initiate. \n\n                  (h)    PATENTS AND TRADEMARKS.  To its knowledge (but \nwithout having conducted any special investigation or patent search), the \nCompany has sufficient title and ownership of all patents, trademarks, \nservice marks, trade names, copyrights, trade secrets, information, \nproprietary rights and processes necessary for its business as now conducted \nwithout any conflict with or infringement of the rights of others.  The \nCompany has not received any communications alleging that the Company has \nviolated or, by conducting its business, would violate any of the patents, \ntrademarks, service marks, trade names, copyrights or trade secrets or other \nproprietary rights of any other person or entity.  The Company is not aware \nthat any of its employees is obligated under any contract (including \nlicenses, covenants or commitments of any nature) or other agreement, or \nsubject to any judgment, decree or order of any court or administrative \nagency, that would interfere with the use of his or her best efforts to \npromote the interests of the Company or that would conflict with the \nCompany's business as conducted.  Neither the execution nor delivery of this \nAgreement nor the carrying on of the Company's business by the employees of \nthe Company, nor the conduct of the Company's business will, to the Company's \nknowledge, conflict with or result in a breach of the terms, conditions or \nprovisions of, or constitute a default under, any contract, covenant or \ninstrument under which any of such employees is now obligated.\n\n                  (i)    COMPLIANCE WITH LAW.  NCI, to its knowledge, is in \nmaterial compliance with all applicable statutes, laws, regulations and \nexecutive orders of the United States of America and all states, foreign \ncountries, and other governmental bodies and agencies having jurisdiction \nover its business or properties except to the extent non-compliance would not \nhave a Material Adverse Effect on NCI, and NCI has received no notice of any \nviolation of such statutes, laws, regulations or orders which has not been \nremedied prior to the date hereof.\n\n                  (j)    AGREEMENTS; CONTRACTS.  NCI has not materially \nbreached, nor does it have knowledge of any claim or threat that it has \nmaterially breached, any terms or conditions of any material agreement, \ncontract, lease, license, instrument or commitment that,\n\n                                     10\n\n\n\nindividually or in the aggregate, could have a Material Adverse Effect on \nNCI, nor is NCI in violation of any term of its Certificate of Incorporation \nor Bylaws, as now in effect. The execution, delivery and performance of and \ncompliance with this Agreement and the other Agreements contemplated hereby, \nand the issuance of the Notes or the Conversion Shares, have not resulted and \nwill not result in any violation of, or conflict with, or constitute a \ndefault under any of the foregoing, or result in the creation of any Lien or \ncharge upon any of the properties or assets of NCI.  \n\n                  (k)    DISCLOSURE.  The Company has provided Mallard with \nall the information that it has requested for deciding whether to purchase \nthe Notes.  To its knowledge, neither this Agreement nor any other written \nstatements or certificates made or delivered in connection herewith or \ntherewith contains any untrue statement of a material fact or omits to state \na material fact necessary to make the statements herein or therein not \nmisleading. \n\n                  (l)    TITLE TO PROPERTY AND ASSETS.  The Company owns its \nproperty and assets free and clear of all Liens, except such Liens that are \nimmaterial in size (individually or in the aggregate), arise in the ordinary \ncourse of business and do not materially impair the Company's ownership or \nuse of such property or assets.  With respect to the property and assets it \nleases, the Company is in compliance with such leases and, to its knowledge, \nholds a valid leasehold interest free of any Liens.\n\n                  (m)    FINANCIAL STATEMENTS.  NCI has furnished Mallard \nwith the balance sheet of NCI as of May 31, 1997, and the related statements \nof operations and cash flows for the nine-month period ended May 31, 1997 and \nthe balance sheet of NCI as of September 30, 1997, and the related statement \nof operations and cash flows for the four-month period ended September 30, \n1997 (together, the 'NCI FINANCIAL STATEMENTS').  All of such NCI Financial \nStatements, (i) are in accordance with the respective books of NCI; (ii) have \nbeen prepared in all material respects in accordance with GAAP except that \nsuch do not contain any footnotes required by GAAP; (iii) present fairly the \nfinancial position of NCI as of the date thereof and the results of \noperations and cash flows of NCI for the respective period indicated therein; \nand (iv) do not reflect any material items of nonrecurring income except as \nstated therein. NCI has no liabilities of any nature, whether accrued, \nabsolute, contingent or otherwise, and whether due or to become due, that \nwould be required to be reflected in a balance sheet, prepared in accordance \nwith GAAP that were not disclosed or provided for in the NCI Financial \nStatements other than liabilities incurred since September 30, 1997, which \nwere incurred in the ordinary course of business and are not individually or \nin the aggregate, material to NCI's business, operating results or financial \ncondition ('NCI'S BUSINESS').  All reserves set forth on the NCI Financial \nStatements were adequate.  There are no loss contingencies (as such term is \nused in Statement of Financial Accounting Standards No. 5) that were not \nadequately provided for in the NCI Financial Statements.\n\n                  (n)    ABSENCE OF CHANGES.  Since September 30, 1997: (a) \nthere has been no material adverse change in NCI's Business or any \ndevelopment particular  to NCI's Business and not generally known to the \npublic that reasonably could be expected to cause a material adverse change \nin NCI's Business; (b) there has been no damage, destruction or loss\n\n                                       11\n\n\n\n(whether or not covered by insurance) which has had a Material Adverse Effect \non NCI; (c) there has been no change by NCI in accounting principles or \nmethods except insofar as may be required by a change in generally accepted \naccounting principles; (d) there has been no revaluation by NCI of any of its \nassets, including, without limitation, writing down the value of inventory or \nwriting off notes or accounts receivable; and (e) NCI has conducted its \nbusiness only in the ordinary course consistent with past practice.\n\n                  (o)    TAX RETURNS, PAYMENTS AND ELECTIONS.  The Company \nhas filed all tax returns and reports as required by law.  These returns and \nreports are true and correct in all material respects.  The Company has paid \nall taxes and other assessments due, except those contested by it in good \nfaith that are listed in the Schedule of Exceptions.  The provision for taxes \nof the Company as shown in the Financial Statements is adequate for taxes due \nor accrued as of the date thereof.  The Company has not elected pursuant to \nthe Internal Revenue Code of 1986, as amended (the 'CODE'), to be treated as \na Subchapter S corporation or a collapsible corporation pursuant to Section \n1362(a) or Section 341(f) of the Code, nor has it made any other elections \npursuant to the Code (other than elections that relate solely to methods of \naccounting, depreciation or amortization) that would have a material effect \non the Company, its financial condition, its business as presently conducted \nor any of its properties or material assets.  \n\n          SECTION 4.02   REPRESENTATIONS AND WARRANTIES OF MALLARD.  Mallard \nhereby represents and warrants to NCI that:\n\n                  (a)    AUTHORIZATION.  Mallard has full power and authority \nto enter into this Agreement and the Transaction Documents, and each such \nagreement constitutes its valid and legally binding obligation, enforceable \nin accordance with its terms.\n\n                  (b)    ORGANIZATION, GOOD STANDING AND QUALIFICATION.  \nMallard is a corporation duly organized, validly existing and in good \nstanding under the laws of the State of Delaware and has all requisite \ncorporate power and authority to carry on its business as now conducted.  \nMallard is duly qualified to transact business and is in good standing in \neach jurisdiction in which the failure to so qualify would have a Material \nAdverse Effect on Mallard.  Other than as disclosed on SCHEDULE A attached \nhereto, Mallard does not presently own or control, directly or indirectly, \nany interest in any other corporation, association, or other business entity, \nand Mallard is not a participant in any joint venture, partnership, or \nsimilar arrangement.\n\n                  (c)    PURCHASE ENTIRELY FOR OWN ACCOUNT.  This Agreement \nis made with Mallard in reliance upon its representation to NCI, which by its \nexecution hereof Mallard hereby confirms, that the Notes to be received by \nit, the Series D Preferred Stock issuable upon conversion of the Notes and \nthe Series A Common Stock issuable upon conversion of the shares of Series D \nPreferred Stock issuable upon conversion of the Notes (collectively, the \n'SECURITIES') will be acquired for investment for its own account, not as a \nnominee or agent, and not with a view to the resale or distribution of any \npart thereof, and that Mallard has no present intention of selling, granting \nany participation in, or otherwise distributing the same.  By executing this \nAgreement, Mallard further represents that it does not have any contract, \nundertaking, agreement\n\n                                      12\n\n\n\nor arrangement with any person to sell, transfer or grant participations to \nsuch person or to any third person, with respect to any of the Securities. \n\n                  (d)    DISCLOSURE OF INFORMATION.  Mallard believes it has \nreceived all the information it considers necessary or appropriate for \ndeciding whether to purchase the Notes.  Mallard further represents that it \nhas had an opportunity to ask questions and receive answers from the Company \nregarding the terms and conditions of the offering of the Notes, and the \nbusiness, properties, prospects and financial condition of the Company.  The \nforegoing, however, does not limit or modify the representations and \nwarranties of the Company in Section 4.01 of this Agreement or the right of \nMallard to rely thereon.  \n\n                  (e)    INVESTMENT EXPERIENCE.  Mallard is an investor in \nsecurities of companies in the development stage and acknowledges that it is \nable to fend for itself, can bear the economic risk of its investment, and \nhas such knowledge and experience in financial or business matters that it is \ncapable of evaluating the merits and risks of the investment in the Notes.  \nIf other than an individual, Investor also represents it has not been \norganized for the purpose of acquiring the Notes. \n\n                  (f)    ACCREDITED INVESTOR.  Mallard is an 'accredited \ninvestor' within the meaning of SEC Rule 501 of Regulation D, as presently in \neffect. \n\n                  (g)    RESTRICTED SECURITIES.  Mallard understands that the \nSecurities it is purchasing are characterized as 'restricted securities' \nunder the federal securities laws inasmuch as they are being acquired from \nthe Company in a transaction not involving a public offering and that under \nsuch laws and applicable regulations such securities may be resold without \nregistration under the Securities Act, only in certain limited circumstances. \n In this connection, Mallard represents that it is familiar with SEC Rule \n144, as presently in effect, and understands the resale limitations imposed \nthereby and by the Securities Act.  \n\n                  (h)    FURTHER LIMITATIONS ON DISPOSITION.  Without in any \nway limiting the representations set forth above, Mallard further agrees not \nto make any disposition of all or any portion of the Securities unless and \nuntil the transferee has agreed in writing for the benefit of the Company to \nbe bound by this Section 4.02, and: \n\n                       (i)    There is then in effect a Registration \nStatement under the Securities Act covering such proposed disposition and \nsuch disposition is made in accordance with such Registration Statement; or\n\n                       (ii)   (1) Mallard shall have notified the Company of \nthe proposed disposition and shall have furnished the Company with a detailed \nstatement of the circumstances surrounding the proposed disposition, and (2) \nif reasonably requested by the Company, Mallard shall have furnished the \nCompany with an opinion of counsel, reasonably satisfactory to the Company \nthat such disposition will not require registration of such shares under the \nSecurities Act.  It is agreed that the Company will not require opinions of \ncounsel for transactions made pursuant to Rule 144 except in unusual \ncircumstances. \n\n                                      13\n\n\n\n                  (i)    LEGENDS.  It is understood that the certificates \nevidencing the Securities may bear one or all of the following legends:\n\n                       (i)    'These securities have not been registered \nunder the Securities Act of 1933, as amended.  They may not be sold, offered \nfor sale, pledged or hypothecated in the absence of a registration statement \nin effect with respect to the securities under such Securities Act or an \nopinion of counsel satisfactory to the Company that such registration is not \nrequired or unless sold pursuant to Rule 144 of such Securities Act.'\n\n                       (ii)   Any legend required by the laws of the State of \nCalifornia, including any legend required by the California Department of \nCorporations.\n\n          SECTION 4.03   CALIFORNIA COMMISSIONER OF CORPORATIONS AND \nCORPORATE SECURITIES LAW.  THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF \nTHIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS \nOF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT \nOR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH \nQUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM \nQUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS \nCODE.  THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED \nUPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.\n\n                                      ARTICLE V\n\n                                      CONDITIONS\n\n          SECTION 5.01   CONDITIONS OF MALLARD AT THE CLOSING.  The \nobligation of Mallard to purchase the Notes at the Closing shall be subject \nto the satisfaction of each of the following conditions:\n\n                  (a)    The representations and warranties of NCI contained \nin Section 4.01 shall be true on and as of the Closing with the same effect \nas though such representations and warranties had been made on and as of the \ndate of such Closing.\n\n                  (b)    The Company shall have performed and complied with \nall agreements, obligations and conditions contained in this Agreement that \nare required to be performed or complied with by it on or before the Closing.\n\n                  (c)    The President, Chief Executive Officer or Chief \nFinancial Officer of the Company, on behalf of the Company, shall deliver to \nMallard at the Closing a certificate stating that the conditions specified in \nSections 5.01(a) and (b) have been fulfilled and stating that there shall \nhave been no Material Adverse Effect on NCI since September 30, 1997.\n\n                                      14\n\n\n\n                  (d)    All authorizations, approvals, or permits, if any, \nof any Governmental Authority that are required in connection with the lawful \nissuance and sale of the Securities pursuant to this Agreement shall be duly \nobtained and effective as of the Closing.\n\n                  (e)    The Admission Agreement, in substantially the form \nattached hereto as EXHIBIT B, shall have been executed by all applicable \nparties and the appropriate approvals for amending the P\/C Voting Agreement \nand the Stockholders Agreement shall have been obtained.\n\n                  (f)    There is no Event of Default (as defined in Section \n7.01).\n\n          SECTION 5.02   OTHER CONDITIONS OF MALLARD.  The obligation of \nMallard to purchase the Second Note or the Third Note, as the case may be, \nshall be subject to the satisfaction of each of the following conditions:\n\n                  (a)    the conditions set forth in Section 5.01(a), \n5.01(b), 5.01(c) and 5.01(d) shall have been satisfied.  \n\n                  (b)    NCI shall have given the Notice of Borrowing as \nprovided in Section 2.04.\n\n                  (c)    Mallard shall have received, in form and substance \nreasonably satisfactory, such additional approvals, opinions, documents and \nother information as Mallard may reasonably request.\n\n          SECTION 5.03   CONDITIONS OF NCI.  The obligations of the Company \nto Mallard under this Agreement are subject to each of the following \nconditions:\n\n                  (a)    The representations and warranties of Mallard \ncontained in Section 4.02 shall be true on and as of the Closing and the date \non which the Second Note and Third Note, if applicable, are issued, with the \nsame effect as though such representations and warranties had been made on \nand as of such dates. \n\n                  (b)    Mallard shall have funded the principal amount of \nthe Notes as specified in Sections 2.01(b) and 2.03(a) and (b).\n\n                  (c)    All authorizations, approvals, or permits, if any, \nof any Governmental Authority that are required in connection with the lawful \nissuance and sale of the Securities pursuant to this Agreement shall be duly \nobtained and effective as of the Closing.\n\n                                       15\n\n\n\n                                      ARTICLE VI\n\n                                      COVENANTS\n\n          SECTION 6.01   AFFIRMATIVE COVENANTS.  So long as any of the Notes \nshall remain unpaid or Mallard shall have any obligation to purchase Notes \nhereunder, NCI agrees that:\n\n                  (a)    PRESERVATION OF EXISTENCE.  NCI will maintain and \npreserve, through itself or any successor to its business, its corporate \nexistence, its rights to transact business and all other rights, franchises \nand privileges necessary or desirable in the normal course of its business \nand operations and the ownership of its material properties.\n\n                  (b)    PAYMENT OF TAXES.  NCI will pay and discharge all \ntaxes, fees, assessments and governmental charges or levies imposed upon it \nor upon its properties or assets prior to the date on which penalties attach \nthereto, and all lawful claims for labor, materials and supplies which, if \nunpaid, might become a Lien upon any properties or assets of NCI, except to \nthe extent such taxes, fees, assessments or governmental charges or levies, \nor such claims, are being contested in good faith by appropriate proceedings \nand are adequately reserved against in accordance with generally accepted \naccounting principles.\n\n                  (c)    COMPLIANCE WITH LAWS.  NCI will comply in all \nmaterial respects with the requirements of all applicable laws, rules, \nregulations and orders of any Governmental Authority and the terms of any \nmaterial indenture, contract or other instrument to which it may be a party \nor under which it or its properties may be bound, except to the extent \nfailure to so comply would not have a Material Adverse Effect.\n\n                  (d)    MAINTENANCE OF PROPERTIES.  NCI will use \ncommercially reasonable efforts to maintain and preserve all of its material \nproperties necessary or useful in the proper conduct of its business in good \nworking order and condition in accordance with the general practice of other \ncorporations of similar character and size, ordinary wear and tear excepted.\n\n                  (e)    LICENSES.  NCI will use commercially reasonable \nefforts to obtain and maintain all licenses, authorizations, consents, \nfilings, exemptions, registrations and other governmental approvals necessary \nin connection with the execution, delivery and performance of the Transaction \nDocuments, the consummation of the transactions therein contemplated or the \noperation and conduct of its business and ownership of its properties.\n\n                  (f)    FURTHER ASSURANCES AND ADDITIONAL ACTS.  NCI will \nexecute, acknowledge, deliver, file, notarize and register at its own expense \nall such further agreements, instruments, certificates, documents and \nassurances and perform such acts as Mallard shall deem reasonably necessary \nor appropriate to effectuate the purposes of the Transaction Documents, and \npromptly provide Mallard with evidence of the foregoing reasonably \nsatisfactory in form and substance to Mallard.\n\n                                     16\n\n\n\n                  (g)    PLACE OF BUSINESS.  The Company shall provide \nMallard prompt written notice of any change in the location of its principal \nplace of business and its chief executive office from 1000 Bridge Parkway, \nRedwood Shores, California.  \n\n                  (h)    INSPECTION RIGHTS.  The Company shall permit \nMallard, at Mallard's expense, to visit and inspect the Company's properties, \nto examine its books of account and records and to copy the same and to make \nexcerpts therefrom, and to discuss the Company's affairs, finances and \naccounts with its officers, all at such reasonable times during normal \nbusiness hours as may be reasonably requested by Mallard, so long as such \ninspection, examination, copying and discussions do not unreasonably \ninterfere with the business of the Company and Mallard agrees to keep any and \nall information obtained during inspection, examination, copying and \ndiscussions confidential, not disclose such information (except as may be \nrequired by law or court order, such information and not otherwise known to \nMallard through other sources or publicly known).\n\n                                     ARTICLE VII\n\n                                  EVENTS OF DEFAULT\n\n          SECTION 7.01   EVENTS OF DEFAULT.  Any of the following events that \nshall occur shall constitute an 'EVENT OF DEFAULT':\n\n                  (a)    PAYMENTS.  NCI shall fail to pay when due any amount \nof principal of, or interest on, any Note, or any other amount payable under \nany Transaction Document, and such failure shall remain unremedied by NCI for \na period of 30 days following the date of notice that such payment is due. \n\n                  (b)    REPRESENTATIONS AND WARRANTIES.  Any representation \nor warranty by NCI in the Transaction Documents shall prove to have been \nincorrect in a material respect when made or deemed made.\n\n                  (c)    FAILURE BY NCI TO PERFORM CERTAIN COVENANTS.  NCI \nshall fail to perform or observe any material term, covenant or agreement \ncontained in this Agreement and any such failure shall remain unremedied for \na period of 30 days from the notice by Mallard of the occurrence thereof.\n\n                  (d)    BANKRUPTCY.  NCI shall admit in writing its \ninability to, or shall fail generally or be generally unable to, pay its \ndebts (including its payrolls) as such debts become due, or shall make a \ngeneral assignment for the benefit of creditors; or NCI shall file a \nvoluntary petition in bankruptcy or a petition or answer seeking \nreorganization, to effect a plan or other arrangement with creditors or any \nother relief under the Bankruptcy Reform Act of 1978 (the 'BANKRUPTCY CODE') \nor under any other state or federal law relating to bankruptcy or \nreorganization granting relief to debtors, whether now or hereafter in \neffect, or shall file an answer admitting the jurisdiction of the court and \nthe material allegations of any involuntary petition filed against NCI \npursuant to the Bankruptcy Code or any such other state or federal law;\n\n                                      17\n\n\n\nor NCI shall be adjudicated a bankrupt, or shall make an assignment for the \nbenefit of creditors, or shall apply for or consent to the appointment of any \ncustodian, receiver or trustee for all or any substantial part of NCI's \nproperty, or shall take any action to authorize any of the actions or events \nset forth above in this subsection; or an involuntary petition seeking any of \nthe relief specified in this subsection shall be filed against NCI; or any \norder for relief shall be entered against NCI in any involuntary proceeding \nunder the Bankruptcy Code or any such other state or federal law referred to \nin this subsection (d).\n\n                  (e)    DEFAULT UNDER OTHER INDEBTEDNESS.  NCI shall:  (i) \nfail to make any payment of any principal of, or interest or premium on, any \nmaterial Indebtedness (other than in respect of the Notes) when due (whether \nby scheduled maturity, required prepayment, acceleration, demand or \notherwise) and such failure shall continue after the applicable grace period, \nif any, specified in the agreement or instrument relating to such \nIndebtedness as of the date of such failure or otherwise agreed to by the \nparties; or (ii) fail to perform or observe any material term, covenant or \ncondition on its part to be performed or observed under any material \nagreement or instrument relating to any other Indebtedness, when required to \nbe performed or observed, and such failure shall continue after the \napplicable grace period, if any, specified in such agreement or instrument, \nif the effect of such failure to perform or, observe accelerates the maturity \nof such Indebtedness.\n\n          SECTION 7.02   CURE.  Upon each of such Event of Default, the \nCompany shall have thirty (30) days to cure such default after receipt of \nwritten notice of default from Mallard specifying the nature of the Company's \ndefault.  If the Company is unable to cure its default within such thirty \n(30) day period, Mallard may, at its option, accelerate repayment of the \nOutstanding Balance in which case the Outstanding Balance shall be due and \npayable immediately.  Upon any default of the Company hereunder, Mallard may \npursue any remedies that are available to it.  In addition, Mallard shall \nhave a right to offset any amounts due upon such a default against any \namounts (including royalties, if any) payable by Mallard or its parent to the \nCompany.\n\n                                     ARTICLE VIII\n\n                                    MISCELLANEOUS\n\n          SECTION 8.01   AMENDMENTS AND WAIVERS.  Any term of this Agreement \nmay be amended and the observance of any term of this Agreement may be waived \n(either generally or in a particular instance and either retroactively or \nprospectively), only with the written consent of NCI and Mallard.  Any \namendment or waiver effected in accordance with this paragraph shall be \nbinding upon both parties hereto.\n\n          SECTION 8.02   NOTICES.  Except as may be otherwise provided \nherein, all notices, requests, waivers and other communications made pursuant \nto this Agreement shall be in writing and shall be conclusively deemed to \nhave been duly given (a) when hand delivered to the other party; (b) when \nreceived when sent by facsimile at the address and number set forth below \n(provided, however, that notices given by facsimile shall not be effective \nunless either (i) a\n\n                                       18\n\n\n\nduplicate copy of such facsimile notice is promptly given by one of the other \nmethods described in this Section 8.02, or (ii) the receiving party delivers \na written confirmation of receipt for such notice either by facsimile or any \nother method described in this Section 8.02; (c) three business days after \ndeposit in the U.S. mail with first class or certified mail receipt requested \npostage prepaid and addressed to the other party as set forth below; or (d) \nthe next business day after deposit with a national overnight delivery \nservice, postage prepaid, addressed to the parties as set forth below with \nnext-business-day delivery guaranteed, provided that the sending party \nreceives a confirmation of delivery from the delivery service provider.\n\n     To Mallard:                                To the Company:\n\n     Middlefield Ventures, Inc.                 Network Computer, Inc.\n     2200 Mission College Blvd.                 1000 Bridge Parkway\n     Santa Clara, CA 95052                      Redwood Shores, CA 94065\n     Attn:  Treasurer                           Attn:  Nancy Hilker\n     Fax Number:  (408) 765-6038                Attn:  Roger Ross, Esq.\n                                                Fax Number:  (650) 631-4683\n\n     with copies to:                            with copies to:\n\n     Intel Corporation                          Gunderson Dettmer et.al.\n     220 Mission College Blvd.                  155 Constitution Drive \n     Mail Stop SC4-203                          Menlo Park, CA 94025 \n     Santa Clara, CA 95052                      Attn:  Buddy Arnheim \n     Attn:  General Counsel                     Fax Number: (650) 321-2800\n     Fax Number:  (408) 765-7630\n\n\n          SECTION 8.03   SURVIVAL.  All covenants, agreements, \nrepresentations and warranties made herein shall, except to the extent \notherwise provided herein, survive the execution and delivery of this \nAgreement, the execution and delivery of the Notes, and shall continue in \nfull force and effect so long as Mallard has any commitment, any Notes remain \noutstanding or unpaid or any obligation to perform any other act under this \nAgreement or the Transaction Documents otherwise remains unsatisfied.\n\n          SECTION 8.04   BENEFITS OF AGREEMENT.  The Transaction Documents \nare entered into for the sole protection and benefit of the parties hereto \nand their successors and assigns, and no other person shall be a direct or \nindirect beneficiary of, or shall have any direct or indirect cause of action \nor claim in connection with, any Transaction Document.\n\n          SECTION 8.05   BINDING EFFECT; ASSIGNMENT.  This Agreement shall \nbecome effective when it shall have been executed by NCI and Mallard and \nthereafter shall be binding upon, inure to the benefit of and be enforceable \nby NCI, Mallard and their respective successors and assigns; PROVIDED that \nNCI may not assign any of its rights, interests or obligations under this \nAgreement or the other Transaction Documents, and any attempt to do so shall \nbe null and void without Mallard's prior written consent, which consent shall \nnot be unreasonably withheld.  NCI\n\n                                      19\n\n\n\nhereby consents to the assignment or transfer of all or any part of the \nobligations and rights by Mallard to Mallard's parent or to one or more \nsubsidiaries of Mallard or of Mallard's parent.\n\n          SECTION 8.06   GOVERNING LAW.  This Agreement shall be governed by, \nand construed in accordance with the law of the State of Delaware without \nregard to application of principles of conflicts of laws.\n\n          SECTION 8.07   ENTIRE AGREEMENT.  This Agreement and the documents \nreferred to herein constitute the entire agreement between the parties and no \nparty shall be liable or bound to any other party in any manner by any \nwarranties, representations, or covenants except as specifically set forth \nherein or therein.\n\n          SECTION 8.08   SEVERABILITY.  If one or more provisions of this \nAgreement are held to be unenforceable under applicable law, such provision \nshall be excluded from this Agreement and the balance of the Agreement shall \nbe interpreted as if such provision were so excluded and shall be enforceable \nin accordance with its terms.\n\n          SECTION 8.09   COUNTERPARTS.  This Agreement may be executed in any \nnumber of counterparts and by different parties hereto in separate \ncounterparts, each of which when so executed shall be deemed to be an \noriginal and all of which taken together shall constitute but one and the \nsame agreement.\n\n          SECTION 8.10   PUBLIC ANNOUNCEMENTS.  Neither party shall use the \nother's name nor refer to the other directly or indirectly in connection with \nthe investment contemplated herein in any advertisement, news release or \nprofessional or trade publication, or in any other manner, unless otherwise \nrequired by law, or with prior written consent.  The parties agree that there \nwill be no press release or other public statement issued by either party \nrelating to this Agreement unless required by law or mutually agreed to, and \nfurther agree to keep the terms and conditions of such in strictest \nconfidence, it being understood that this restriction shall not prohibit \ndisclosure to the parties counsel, accountants and professional advisors.  If \neither party determines that it is required by law to disclose the terms and \nconditions of this Agreement and the Notes, or to file this Agreement or the \nNotes with any governmental agency or authority, it shall, a reasonable time \nbefore making any such disclosure or filing, consult with the other regarding \nsuch filing and seek confidential treatment for such portions of those \nagreements as may be reasonably requested by the other.\n\n          Notwithstanding the above, the Company may disclose the existence \nof this Agreement and the Notes to bona fide potential investors who are \nunder obligations of nondisclosure, similar to those contained herein and \nwhich the Company believes in good faith are seriously considering investing \nin the Company.  In addition, the Company may disclose that a financial \nrelationship exists between the parties hereto (but not the terms of such \nfinancial relationship) to customers, potential customers, strategic partners \nor potential strategic partners.\n\n          SECTION 8.11   DISPUTE RESOLUTION.  The parties agree to negotiate \nin good faith to resolve any dispute between them regarding this Agreement.  \nIf the negotiations do not resolve the dispute to the reasonable satisfaction \nof both parties, then each party shall nominate\n\n                                      20\n\n\n\none officer as its representative. These representatives shall, within thirty \n(30) days of a written request by either party to call such a meeting, meet \nin person and alone (except for one assistant for each party) and shall \nattempt in good faith to resolve the dispute.  If the disputes cannot be \nresolved in such meeting, the parties agree that they shall, if requested in \nwriting by either party, meet within thirty (30) days after such written \nnotification for one day with an impartial mediator and consider dispute \nresolution alternatives other than litigation.  If an alternative method of \ndispute resolution is not agreed upon within thirty (30) days after the one \nday mediation, either party may begin litigation proceedings. This procedure \nshall be a prerequisite before taking any additional action hereunder.\n\n\n\n                               [SIGNATURE PAGE FOLLOWS]\n\n\n                                        21\n\n\n\n\n          IN WITNESS WHEREOF, the parties hereto have duly executed this \nAgreement, as of the date first above written.\n\n                                   NETWORK COMPUTER, INC.\n\n\n\n\n                                   By: \n                                       ------------------------------------\n\n                                   Title: Chief Executive Officer\n                                          ---------------------------------\n\n                                   \n                                   MIDDLEFIELD VENTURES, INC.\n                                   \n\n\n                                   By:\n                                      ------------------------------------\n\n                                   Title:\n                                         ---------------------------------\n\n\n\n          --Signature Page to the Convertible Note Purchase Agreement--\n\n\n\n\n                                      EXHIBIT A\n\n                         FORM OF CONVERTIBLE PROMISSORY NOTE\n\nTHESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. \nTHEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED FOR HYPOTHECATED IN THE \nABSENCE OF A REGISTRATION STATEMENT IS AN EFFECT WITH RESPECT TO THE \nSECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE \nCOMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO \nRULE 144 OF SUCH ACT.\n\n                             CONVERTIBLE PROMISSORY NOTE\n\n\n$______                                                           ______, 199__\nRedwood Shores, California\n\n          FOR VALUE RECEIVED, Network Computer, Inc., a Delaware corporation \n('MAKER' or 'NCI'), promises to pay to the order of Middlefield Ventures, \nInc., a Delaware corporation ('HOLDER' or 'MALLARD'), the principal sum of \nFour Million Dollars ($4,000,000), together with interest from the date of \nthis Note on the unpaid principal balance at a rate equal to the lesser of \n(a) 5.0% or (b) the maximum interest rate permitted under applicable federal \nand state laws. Interest shall be computed as simple annual interest on the \nbasis of a year of 360 days for the actual number of days occurring in the \nperiod for which such commitment fee or interest is payable.  Payment shall \nbe made by Maker to Holder at the offices of Mallard, located at 2200 Mission \nCollege Blvd., Santa Clara, CA 95052, or to such other office and account of \nHolder as it from time to time shall designate in a written notice to Maker.\n\n          This Note is issued pursuant to that certain Convertible Note \nPurchase Agreement dated as of November 12, 1997, between Maker and Holder \n(the 'AGREEMENT'). Terms used herein have the meanings assigned to those \nterms in the Agreement, unless otherwise defined herein.\n\n          The terms of payment of principal and accrued interest shall be in \naccordance with the terms and conditions of the Agreement.  Payment shall be \nmade in lawful tender of the United States and shall be credited first to \naccrued interest then due and payable with the remainder applied to \nprincipal. Prepayment of the principal, together with accrued interest, may \nbe made at any time without penalty or premium, subject to Section 3.03 of \nthe Agreement.\n\n          The unpaid principal on this Note (or any portion thereof) shall be \nconvertible at the election of Holder into shares of NCI Series D Preferred \nStock pursuant to the terms and conditions set forth in the Agreement.\n\n          If action is instituted to collect this Note, Maker will pay all \ncosts and expenses, including reasonable attorneys' fees, incurred in \nconnection with such action. Maker hereby waives notice of default, \npresentment or demand for payment, protest or notice of nonpayment or \ndishonor and all other notices or demands relative to this instrument.\n\n\n\n          The holding of any provision of this Note to be invalid or \nunenforceable by a court of competent jurisdiction shall not affect any other \nprovisions and the other provisions of this Note shall remain in full force \nand effect.\n\n          This Note shall be construed in accordance with the laws of the \nstate of Delaware, without regard to the conflicts of law provisions of the \nstate of Delaware or of any other state.\n\n          The Maker has caused this Convertible Promissory Note to be issued \nas of the date first above written.\n\n\n                                   NETWORK COMPUTER, INC.\n\n\n                                   By:\n                                      ------------------------------------\n                                   Title:\n                                         ---------------------------------\n\n\n\n\n                                      EXHIBIT B\n\n                                 ADMISSION AGREEMENT\n\n\n\n\n                                      EXHIBIT C\n\n                                 RESTATED CERTIFICATE\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8051],"corporate_contracts_industries":[9513],"corporate_contracts_types":[9560,9567],"class_list":["post-40941","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-liberate-technologies","corporate_contracts_industries-technology__software","corporate_contracts_types-finance","corporate_contracts_types-finance__loan"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/40941","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=40941"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=40941"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=40941"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=40941"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}