TEST EVOLUTION CORPORATION SERIES A-1 PREFERRED STOCK PURCHASE AGREEMENT October 1, 2007
TEST
EVOLUTION CORPORATION
SERIES
A-1 PREFERRED STOCK PURCHASE AGREEMENT
October
1, 2007
TABLE
OF CONTENTS
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Page
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1.
Purchase and Sale of Preferred Stock
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1
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1.1
Sale and Issuance of Series A-1 Preferred Stock
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1
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1.2
Closings; Delivery
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1
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1.3
Use of Proceeds
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2
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1.4
Defined Terms Used in this Agreement
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2
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2.
Representations and Warranties of the Company
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3
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2.1
Organization, Good Standing, Corporate Power and
Qualification
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3
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2.2
Capitalization
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3
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2.3
Subsidiaries
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4
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2.4
Authorization
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4
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2.5
Valid Issuance of Shares
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4
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2.6
Governmental Consents and Filings
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5
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2.7
Litigation
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5
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2.8
Intellectual Property
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5
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2.9
Compliance with Other Instruments
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6
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2.10
Agreements; Actions
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6
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2.11
Certain Transactions
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7
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2.12
Rights of Registration and Voting Rights
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7
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2.13
Absence of Liens
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7
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2.14
Employee Matters
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8
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2.15
Tax Returns and Payments
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8
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2.16
Confidential Information and Invention Assignment
Agreements
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9
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2.17
Permits
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9
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2.18
Corporate Documents
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9
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2.19
Disclosure
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9
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3.
Representations and Warranties of the Purchaser
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9
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3.1
Authorization
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9
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3.2
Purchase Entirely for Own Account
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9
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3.3
Disclosure of Information
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10
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3.4
Restricted Securities
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10
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3.5
No Public Market
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10
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3.6
Legends
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10
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3.7
Accredited Investor
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11
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3.8
No General Solicitation
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11
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3.9
Residence
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11
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4.
Conditions to the Purchaser’s Obligations at Closing
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11
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4.1
Representations and Warranties
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11
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4.2
Performance
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11
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4.3
Compliance Certificate
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11
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4.4
Qualifications
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11
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4.5
Board of Directors
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11
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4.6
Indemnification Agreement
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11
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4.7
Investors’ Rights Agreement
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12
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4.8
Stockholders Agreement
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12
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4.9
Voting Agreement
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12
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4.10
Restated Certificate
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12
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4.11
Secretary’s Certificate
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12
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4.12
Xxxxxxxxxx Agreement
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12
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4.13
Proceedings and Documents
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12
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5.
Conditions of the Company’s Obligations at Initial Closing
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12
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5.1
Representations and Warranties
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12
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5.2
Performance
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12
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5.3
Qualifications
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13
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5.4
Investors’ Rights Agreement
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13
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5.5
Stockholders Agreement
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13
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5.6
Voting Agreement
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13
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6.
Miscellaneous
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13
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6.1
Survival of Warranties
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13
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6.2
Successors and Assigns
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13
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6.3
Governing Law
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13
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6.4
Counterparts; Facsimile
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13
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6.5
Titles and Subtitles
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14
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6.6
Notices
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14
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6.7
No Finder’s Fees
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14
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6.8
Amendments and Waivers
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14
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6.9
Severability
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14
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6.10
Delays or Omissions
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14
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6.11
Entire Agreement
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14
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Exhibit
A
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Schedule
of Purchaser
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Exhibit
B
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Form
of Amended and Restated Certificate of Incorporation
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Exhibit
C
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Disclosure
Schedule
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Exhibit
D
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Form
of Indemnification Agreement
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Exhibit
E
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Form
of Investors’ Rights Agreement
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Exhibit
F
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Form
of Stockholders Agreement
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Exhibit
G
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Form
of Voting Agreement
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TEST
EVOLUTION CORPORATION
SERIES
A-1 PREFERRED STOCK PURCHASE AGREEMENT
THIS
SERIES A-1 PREFERRED STOCK PURCHASE AGREEMENT (the “Agreement”)
is
made as of the 1st day of October, 2007 by and between Test Evolution
Corporation, a Delaware corporation (the “Company”),
Xxx
Xxxxxxxxxx, an individual and principal stockholder of the Company
(“Xxxxxxxxxx”)
and
the investor listed on Exhibit
A
attached
to this Agreement (the “Purchaser”).
The
parties hereby agree as follows:
1. Purchase
and Sale of Preferred Stock.
1.1. Sale
and Issuance of Series A-1 Preferred Stock.
(a) The
Company shall adopt and file with the Secretary of State of the State of
Delaware on or before the Initial Closing (as defined below) the Amended and
Restated Certificate of Incorporation in the form of Exhibit
B
attached
to this Agreement (the “Restated
Certificate”).
(b) Subject
to the terms and conditions of this Agreement, the Purchaser agrees to purchase
at the Closings (as defined below), and the Company agrees to sell and issue
to
the Purchaser at the Closings, an aggregate of Four Million (4,000,000) shares
of the Company’s Series A-1 Convertible Preferred Stock, $0.001 par value per
share (the “Series
A-1 Preferred Stock”)
as set
forth opposite the Purchaser’s name on Exhibit
A,
at a
purchase price of $1.00 per share (the “Shares”).
Two
Million (2,000,000) Shares shall be purchased by Purchaser and sold and issued
by the Company at the “Initial
Closing,”
and
Two Million (2,000,000) Shares shall be purchased by Purchaser and sold and
issued by the Company at the “Second
Closing,”
(each
such term defined below).
1.2. Closings;
Delivery.
(a) The initial
purchase and sale of Two Million (2,000,000) Shares shall take place remotely
via the exchange of documents and signatures, at 11:00 a.m. on October __,
2007,
or at such other time and place as the Company and the Purchaser mutually agree
upon, orally or in writing (which time and place are designated as the
“Initial
Closing”).
The
second purchase and sale of Two Million (2,000,000) Shares shall take place
remotely via the exchange of documents and signatures, at 11:00 a.m. on April
1,
2008, or (i) at such other time and place as the Company and the Purchaser
mutually agree upon, orally or in writing, or (ii) at such earlier time as
the
Purchaser may, acting in its sole discretion, designate in writing to the
Company, (which time and place are designated as the “Second
Closing”;
and
together with the Initial Closing, the “Closings”).
Notwithstanding the foregoing, if prior to the date of the Second Closing any
matter, issue, event, occurrence, right or obligation in which the percentage
ownership of shares of Series A Preferred Stock is at issue, or with respect
to
which the matter, issue, event, occurrence, right or obligation would be
impacted in any way based on the percentage ownership of shares of Series A-1
Preferred Stock and Series A-2 Preferred Stock, or the rights of the holders
of
Series A-1 Preferred Stock would in any way be impaired (each a “Meaningful
Matter”),
the
Purchaser shall have the right, exercisable in its sole discretion, to be
exercised within ten (10) business days of notice of the pendency of a
Meaningful Matter, to accelerate its purchase of Shares at the Second Closing.
The Company covenants and agrees that resolution of any Meaningful Matter will
not be permitted to occur prior to the expiration of such ten day period.
(b) At
the
Closings, the Company shall deliver to the Purchaser a certificate representing
the Shares being purchased by Purchaser at such Closing against payment of
the
purchase price therefor by wire transfer to a bank account designated by the
Company.
1.3 Use
of
Proceeds.
In
accordance with the directions of the Company’s Board of Directors, as it shall
be constituted in accordance with the Voting Agreement (as defined below),
the
Company will use the proceeds from the sale of the Shares to commence
development and manufacturing and sales operations for instrument products
for
module test and measurement and for other general corporate
purposes.
1.4. Defined
Terms Used in this Agreement.
In
addition to the terms defined above, the following terms used in this Agreement
shall be construed to have the meanings set forth or referenced
below.
“Affiliate”
means,
with respect to any specified Person, any other Person who or which, directly
or
indirectly, controls, is controlled by, or is under common control with such
specified Person, including, without limitation, any partner, officer, director,
member or employee of such Person and any venture capital fund now or hereafter
existing that is controlled by or under common control with one or more general
partners or managing members of, or shares the same management company with,
such Person.
“Code”
means
the Internal Revenue Code of 1986, as amended.
“Company
Intellectual Property”
means
all patents, patent applications, trademarks, trademark applications, service
marks, tradenames, copyrights, trade secrets, licenses, domain names, mask
works, information and proprietary rights and processes as are necessary to
the
conduct of the Company’s business as now conducted and as presently proposed to
be conducted.
“Indemnification
Agreement”
means
the agreement between the Company and each member of its Board of Directors,
in
the form of Exhibit
D
attached
to this Agreement.
“Investors’
Rights Agreement”
means
the agreement among the Company and the Purchaser dated as of the date of the
Initial Closing, in the form of Exhibit
E
attached
to this Agreement.
“Key
Employee”
means
any executive-level employee (including division director and vice
president-level positions) as well as any employee or consultant who either
alone or in concert with others develops, invents, programs or designs any
Company Intellectual Property.
2
“Knowledge,”
including
the phrase “to
the Company’s knowledge,” shall
mean the actual knowledge of the officers of the Company after due
inquiry.
“Material
Adverse Effect”
means
a
material adverse effect on the business, assets (including intangible assets),
liabilities, financial condition, property, prospects or
results of operations of the Company.
“Person”
means
any individual, corporation, partnership, trust, limited liability company,
association or other entity.
“Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Stockholders
Agreement”
means
the agreement among the Company, the Purchaser, and certain other stockholders
of the Company, dated as of the date of the Initial Closing, in the form of
Exhibit
F
attached
to this Agreement.
“Transaction
Agreements”
means
this Agreement, the Restated Certificate, the Investors’ Rights Agreement, the
Stockholders Agreement, the Confidentiality, Noncompetition and Assignment
of
Inventions Agreement between the Company and Xxxxxxxxxx dated as of even date
herewith, the Voting Agreement and the Indemnification Agreements.
“Voting
Agreement”
means
the agreement among the Company, the Purchaser and certain other stockholders
of
the Company, dated as of the date of the Initial Closing, in the form of
Exhibit
G
attached
to this Agreement.
2. Representations
and Warranties of the Company.
The
Company and Xxxxxxxxxx hereby jointly and severally represent and warrant to
the
Purchaser that, except as set forth on the Disclosure Schedule attached as
Exhibit
C
to this
Agreement, which exceptions shall be deemed to be part of the representations
and warranties made hereunder, the following representations are true and
complete as of the date of the Initial Closing. The Disclosure Schedule shall
be
arranged in sections corresponding to the numbered and lettered sections and
subsections contained in this Section
2,
and the
disclosures in any section or subsection of the Disclosure Schedule shall
qualify other sections and subsections in this Section
2
only to
the extent it is readily apparent from a reading of the disclosure that such
disclosure is applicable to such other sections and subsections.
2.1. Organization,
Good Standing, Corporate Power and Qualification.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to carry on its business as presently conducted and as proposed
to
be conducted. The Company is duly qualified to transact business and is in
good
standing in each jurisdiction in which the failure to so qualify would have
a
Material Adverse Effect.
2.2. Capitalization.
The
authorized capital of the Company consists, immediately prior to the Initial
Closing, of:
3
(a) Forty
Million (40,000,000) shares of common stock, $0.001 par value per share (the
“Common
Stock”),
Four
Million (4,000,000) shares of which are issued and outstanding immediately
prior
to the Initial Closing. All of the outstanding shares of Common Stock have
been
duly authorized, are fully paid and nonassessable and were issued in compliance
with all applicable federal and state securities laws.
(b) Six
Million (6,000,000) shares of Preferred Stock, Four Million (4,000,000) of
which
shares have been designated Series A-1 Preferred Stock, none of which are issued
and outstanding immediately prior to the Initial Closing, and Two Million
(2,000,000) of
which
shares have been designated Series A-2 Preferred Stock, all of which are issued
and outstanding immediately prior to the Initial Closing. The Series A-1
Preferred Stock and the Series A-2 Preferred Stock are sometimes referred to
together as the Series A Preferred Stock. The rights, privileges and preferences
of the Series A Preferred Stock are as stated in the Restated Certificate and
as
provided by the general corporation law of the jurisdiction of the Company’s
incorporation.
(c) Except
as
set forth herein, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal or similar rights)
or agreements, orally or in writing, to purchase or acquire from the Company
any
shares of Common Stock or Series A-1 Preferred Stock, or any securities
convertible into or exchangeable for shares of Common Stock or Series A-1
Preferred Stock.
2.3. Subsidiaries.
The
Company does not currently own or control, directly or indirectly, any interest
in any other corporation, partnership, trust, joint venture, limited liability
company, association, or other business entity. The Company is not a participant
in any joint venture, partnership or similar arrangement.
2.4. Authorization.
All
corporate action required to be taken by the Company’s Board of Directors and
stockholders in order to authorize the Company to enter into the Transaction
Agreements, and to issue the Shares at the Closings and the Common Stock
issuable upon conversion of the Shares, has been taken or will be taken prior
to
the Initial Closing. All action on the part of the officers of the Company
necessary for the execution and delivery of the Transaction Agreements, the
performance of all obligations of the Company under the Transaction Agreements
to be performed as of the Closings, and the issuance and delivery of the Shares
has been taken or will be taken prior to the Initial Closing. The Transaction
Agreements, when executed and delivered by the Company, shall constitute valid
and legally binding obligations of the Company, enforceable against the Company
in accordance with their respective terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance,
or
other laws of general application relating to or affecting the enforcement
of
creditors’ rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies, or (iii) to the extent the indemnification provisions contained in
the
Investors’ Rights Agreement and the Indemnification Agreement may be limited by
applicable federal or state securities laws.
2.5. Valid
Issuance of Shares.
The
Shares, when issued, sold and delivered in accordance with the terms and for
the
consideration set forth in this Agreement, will be validly issued, fully paid
and nonassessable and free of restrictions on transfer other than restrictions
on transfer under certain of the Transaction Agreements, applicable state and
federal securities laws and liens or encumbrances created by or imposed by
the
Purchaser. Assuming the accuracy of the representations of the Purchaser in
Section
3
of this
Agreement, and subject to the filings described in Section
2.6(ii)
below,
the Shares will be issued in compliance with all applicable federal and state
securities laws. The Common Stock issuable upon conversion of the Shares has
been duly reserved for issuance, and upon issuance in accordance with the terms
of the Restated Certificate, will be validly issued, fully paid and
nonassessable and free of restrictions on transfer other than restrictions
on
transfer under certain of the Transaction Agreements, applicable federal and
state securities laws and liens or encumbrances created by or imposed by the
Purchaser. Based in part upon the representations of the Purchaser in
Section
3
of this
Agreement, and subject to Section
2.6
below,
the Common Stock issuable upon conversion of the Shares will be issued in
compliance with all applicable federal and state securities laws.
4
2.6. Governmental
Consents and Filings.
Assuming the accuracy of the representations made by the Purchaser in
Section
3
of this
Agreement, no consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state
or
local governmental authority is required on the part of the Company in
connection with the consummation of the transactions contemplated by this
Agreement, except for (i) the filing of the Restated Certificate, which will
have been filed as of the Initial Closing, and (ii) filings pursuant to
Regulation D of the Securities Act, and applicable state securities laws, which
have been made or will be made in a timely manner.
2.7. Litigation.
There
is no claim, action, suit, proceeding, arbitration, complaint, charge or
investigation pending or, to the Company’s knowledge, currently threatened (i)
against the Company or any officer, director or Key Employee of the Company
arising out of their employment or relationship with the Company; (ii) that
questions the validity of the Transaction Agreements or the right of the Company
to enter into them, or to consummate the transactions contemplated by the
Transaction Agreements; or (iii) that would reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect. Neither
the
Company nor, to the Company’s knowledge, any of its officers, directors or Key
Employees is a party or is named as subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality (in the case of officers, directors or Key Employees, such
as
would affect the Company). There is no action, suit, proceeding or investigation
by the Company pending or which the Company intends to initiate.
2.8. Intellectual
Property.
The
Company owns or possesses or can acquire on commercially reasonable terms
sufficient legal rights to all Company Intellectual Property without, to the
Company’s knowledge, any conflict with, or infringement of, the rights of
others. To the Company’s knowledge, (i) no product or service marketed or sold
(or proposed to be marketed or sold) by the Company violates or will violate
any
license or infringes or will infringe any intellectual property rights of any
other party and (ii) no product or services currently marketed or sold by a
third party infringes any intellectual property rights of the Company. Other
than with respect to commercially available software products under standard
end-user object code license agreements, there are no outstanding options,
licenses, agreements, claims, encumbrances or shared ownership interests of
any
kind relating to the Company Intellectual Property, nor is the Company bound
by
or a party to any options, licenses or agreements of any kind with respect
to
the patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, proprietary rights and processes of any other Person.
The
Company has not received any communications alleging that the Company has
violated or, by conducting its business, would violate any of the patents,
trademarks, service marks, tradenames, copyrights, trade secrets, mask works
or
other proprietary rights or processes of any other Person. The Company has
obtained and possesses valid licenses to use all of the software programs
present on the computers and other software-enabled electronic devices that
it
owns or leases or that it has otherwise provided to its employees for their
use
in connection with the Company’s business. To the Company’s knowledge, it will
not be necessary to use any inventions of any of its employees or consultants
(or Persons it currently intends to hire) made prior to their employment by
the
Company. Each employee and consultant has assigned or will assign to the Company
all intellectual property rights he or she owns that are related to the
Company’s business as now conducted and as presently proposed to be conducted.
5
2.9. Compliance
with Other Instruments.
The
Company is not in violation or default (i) of any provisions of its Restated
Certificate or Bylaws, (ii) of any instrument, judgment, order, writ or decree,
(iii) under any note, indenture or mortgage, or (iv) under any lease, agreement,
contract or purchase order to which it is a party or by which it is bound that
is required to be listed on the Disclosure Schedule, or,
to
its knowledge, of any provision of federal or state statute, rule or regulation
applicable to the Company, the violation of which would have a Material Adverse
Effect. The execution, delivery and performance of the Transaction Agreements
and the consummation of the transactions contemplated by the Transaction
Agreements will not result in any such violation or be in conflict with or
constitute, with or without the passage of time and giving of notice, either
(i)
a default under any such provision, instrument, judgment, order, writ, decree,
contract or agreement or (ii) an event which results in the creation of any
lien, charge or encumbrance upon any assets of the Company or the suspension,
revocation, forfeiture, or nonrenewal of any material permit or license
applicable to the Company.
2.10. Agreements;
Actions.
(a) Except
for the Transaction Agreements and as disclosed on Schedule
C,
there
are no agreements, understandings, instruments, contracts or proposed
transactions to which the Company is a party or by which it is bound that
involve (i) obligations (contingent or otherwise) of, or payments to, the
Company in excess of $25,000, (ii) the license of any patent, copyright,
trademark, trade secret or other proprietary right to or from the Company,
(iii)
the grant of rights to manufacture, produce, assemble, license, market, or
sell
its products to any other Person, (iv) any limit on the Company’s exclusive
right to develop, manufacture, assemble, distribute, market or sell its products
in any territory, or (v) indemnification by the Company with respect to
infringements of proprietary rights. Neither the Company nor, to its knowledge,
any third party to any agreement disclosed on Schedule
C
is in
default with respect to such agreement.
(b) The
Company has not (i) declared or paid any dividends, or authorized or made any
distribution upon or with respect to any class or series of its capital stock,
(ii) incurred any indebtedness for money borrowed or incurred any other
liabilities individually or in the aggregate in excess of $25,000, (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.
For the purposes of subsections (b) and (c) of this Section
2.10,
all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same Person (including Persons the
Company has reason to believe are affiliated with each other) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts
of
such subsection.
6
(c) The
Company is not a guarantor or indemnitor of any indebtedness of any other
Person.
2.11. Certain
Transactions.
(a) Other
than (i) standard employee benefits generally made available to all employees,
(ii) standard director and officer indemnification agreements approved by the
Board of Directors (including, without limitation, the Indemnification
Agreements), and (iii) the purchase of shares of the Company’s capital stock and
the issuance of options to purchase shares of the Company’s Common Stock, in
each instance, approved in the written minutes of the Board of Directors,
complete copies of which have been provided to Purchaser, there are no
agreements, understandings or proposed transactions between the Company and
any
of its officers, directors, consultants or Key Employees, or any Affiliate
thereof.
(b) The
Company is not indebted, directly or indirectly, to any of its directors,
officers or employees or to their respective spouses or children or to any
Affiliate of any of the foregoing, other than in connection with expenses or
advances of expenses incurred in the ordinary course of business or employee
relocation expenses and for other customary employee benefits made generally
available to all employees. None of the Company’s directors, officers or
employees, or any members of their immediate families, or any Affiliate of
the
foregoing (i) are, directly or indirectly, indebted to the Company or, (ii)
to
the Company’s knowledge, have any direct or indirect ownership interest in any
firm or corporation with which the Company is affiliated or with which the
Company has a business relationship, or any firm or corporation which competes
with the Company except that directors, officers or employees or stockholders
of
the Company may own stock in (but not exceeding two percent (2%) of the
outstanding capital stock of) publicly traded companies that may compete with
the Company. To the Company’s knowledge, none of the Company’s Key Employees or
directors or any members of their immediate families or any Affiliate of any
of
the foregoing are, directly or indirectly, interested in any material contract
with the Company.
2.12. Rights
of Registration and Voting Rights.
Except
as provided in the Investors’ Rights Agreement, the Company is not under any
obligation to register under the Securities Act any of its currently outstanding
securities or any securities issuable upon exercise or conversion of its
currently outstanding securities. To the Company’s knowledge, except as
contemplated in the Voting Agreement, no stockholder of the Company has entered
into any agreements with respect to the voting of capital shares of the
Company.
2.13. Absence
of Liens.
The
property and assets that the Company owns are free and clear of all mortgages,
deeds of trust, liens, loans and encumbrances, except for statutory liens for
the payment of current taxes that are not yet delinquent and encumbrances and
liens that arise in the ordinary course of business and do not materially impair
the Company’s ownership or use of such property or assets. With respect to the
property and assets it leases, the Company is in compliance with such leases
and, to its knowledge, holds a valid leasehold interest free of any liens,
claims or encumbrances other than those of the lessors of such property or
assets.
7
2.14. Employee
Matters.
(a) A
list of
Company employees appears on Schedule
C.
(b) Xxxxxxxxxx
is not 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 materially
interfere with his ability to promote the interest of the Company or that would
conflict with the Company’s business. Neither the execution or delivery of the
Transaction Agreements, nor the carrying on of the Company’s business by the
employees of the Company, nor the conduct of the Company’s business as now
conducted and as presently proposed to be conducted, will, to the Company’s
knowledge, conflict with or result in a breach of the terms, conditions, or
provisions of, or constitute a default under, any contract, covenant or
instrument under which Xxxxxxxxxx or any employee anticipated to be engaged
by
the Company is obligated.
(c) The
Company is not delinquent in payments to any of its employees, consultants,
or
independent contractors for any wages, salaries, commissions, bonuses, or other
direct compensation for any service performed for it to the date hereof or
amounts required to be reimbursed to such employees, consultants, or independent
contractors. The Company has complied in all material respects with all
applicable state and federal equal employment opportunity laws and with other
laws related to employment, including those related to wages, hours, worker
classification, and collective bargaining. The Company has withheld and paid
to
the appropriate governmental entity or is holding for payment not yet due to
such governmental entity all amounts required to be withheld from employees
of
the Company and is not liable for any arrears of wages, taxes, penalties, or
other sums for failure to comply with any of the foregoing.
(d) The
Company has not made any representations regarding equity incentives to any
officer, employees, director or consultant that are inconsistent with the share
amounts and terms set forth in the minutes of meetings of the Company’s Board of
Directors, complete copies of which have been delivered to the
Purchaser.
2.15. Tax
Returns and Payments.
There
are
no federal, state, county, local or foreign taxes due and payable by the Company
which have not been timely paid. There are no accrued and unpaid federal, state,
country, local or foreign taxes of the Company which are due, whether or not
assessed or disputed. There have been no examinations or audits of any tax
returns or reports by any applicable federal, state, local or foreign
governmental agency. The Company has duly and timely filed all federal, state,
county, local and foreign tax returns required to have been filed by it and
there are in effect no waivers of applicable statutes of limitations with
respect to taxes for any year.
8
2.16. Confidential
Information and Invention Assignment Agreements.
Xxxxxxxxxx has executed an agreement with the Company regarding confidentiality
and proprietary information substantially in the form or forms delivered to
the
counsel for the Purchaser (the “Confidential
Information Agreements”).
2.17. Permits.
The
Company has all franchises, permits, licenses and any similar authority
necessary for the conduct of its business, the lack of which could reasonably
be
expected to have a Material Adverse Effect. The Company is not in default in
any
material respect under any of such franchises, permits, licenses or other
similar authority.
2.18. Corporate
Documents.
The
Restated Certificate and Bylaws of the Company are in the form provided to
the
Purchaser. The copy of the minute books of the Company provided to the Purchaser
contains minutes of all meetings of directors and stockholders and all actions
by written consent without a meeting by the directors and stockholders since
the
date of incorporation and accurately reflects in all material respects all
actions by the directors (and any committee of directors) and stockholders
with
respect to all transactions referred to in such minutes.
2.19. Disclosure.
The
Company has made available to the Purchaser all the information reasonably
available to the Company that the Purchaser has requested for deciding whether
to acquire the Shares. No representation or warranty of the Company contained
in
this Agreement, as qualified by the Disclosure Schedule, and no certificate
furnished or to be furnished to Purchaser at the Initial Closing contains any
untrue statement of a material fact or, to the Company’s knowledge, omits to
state a material fact necessary in order to make the statements contained herein
or therein not misleading in light of the circumstances under which they were
made.
3. Representations
and Warranties of the Purchaser.
The
Purchaser hereby represents and warrants to the Company that:
3.1. Authorization.
The
Purchaser has full power and authority to enter into the Transaction Agreements.
The Transaction Agreements to which Purchaser is a party, when executed and
delivered by the Purchaser, will constitute valid and legally binding
obligations of the Purchaser, enforceable in accordance with their terms, except
(a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and any other laws of general application affecting
enforcement of creditors’ rights generally, and as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, or (b) to the extent the indemnification provisions contained in
the
Investors’ Rights Agreement may be limited by applicable federal or state
securities laws.
3.2. Purchase
Entirely for Own Account.
This
Agreement is made with the Purchaser in reliance upon the Purchaser’s
representation to the Company, which by the Purchaser’s execution of this
Agreement, the Purchaser hereby confirms, that the Shares to be acquired by
the
Purchaser will be acquired for investment for the Purchaser’s own account, not
as a nominee or agent, and not with a view to the resale or distribution of
any
part thereof, and that the Purchaser has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Agreement, the Purchaser further represents that the Purchaser does not
presently have any contract, undertaking, agreement or arrangement with any
Person to sell, transfer or grant participations to such Person or to any third
Person, with respect to any of the Shares. The Purchaser has not been formed
for
the specific purpose of acquiring the Shares.
9
3.3. Disclosure
of Information.
The
Purchaser has had an opportunity to discuss the Company’s business, management,
financial affairs and the terms and conditions of the offering of the Shares
with the Company’s management and has had an opportunity to review the Company’s
facilities. The foregoing, however, does not limit or modify the representations
and warranties of the Company and Xxxxxxxxxx in Section
2
of this
Agreement or the right of the Purchaser to rely thereon.
3.4. Restricted
Securities.
The
Purchaser understands that the Shares, and the shares of Common Stock issued
upon conversion thereof, have not been, and will not be, registered under the
Securities Act, by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of the Purchaser’s
representations as expressed herein. The Purchaser understands that the Shares,
and the shares of Common Stock issued upon conversion thereof, are “restricted
securities” under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Purchaser must hold the Shares,
and the shares of Common Stock issued upon conversion thereof, indefinitely
unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and
qualification requirements is available. The Purchaser acknowledges that the
Company has no obligation to register or qualify the Shares, or the shares
of
Common Stock issued upon conversion thereof, for resale except as set forth
in
the Investors’ Rights Agreement. The Purchaser further acknowledges that if an
exemption from registration or qualification is available, it may be conditioned
on various requirements including, but not limited to, the time and manner
of
sale, the holding period for the Shares, or the shares of Common Stock issued
upon conversion thereof, and on requirements relating to the Company which
are
outside of the Purchaser’s control, and which the Company is under no
obligation and
may
not be able to satisfy.
3.5. No
Public Market.
The
Purchaser understands that no public market now exists for the Shares, or the
shares of Common Stock issued upon conversion thereof, and that the Company
has
made no assurances that a public market will ever exist for such
shares.
3.6. Legends.
The
Purchaser understands that the Shares, and any securities issued in respect
of
or exchange for the Shares, may bear one or all of the following
legends:
(a) “THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH
TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT
SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”
10
(b) Any
legend set forth in, or required by, the other Transaction
Agreements.
(c) Any
legend required by the securities laws of any state to the extent such laws
are
applicable to the Shares, or any securities issued in respect of or exchange
for
the Shares, represented by the certificate so legended.
3.7. Accredited
Investor.
The
Purchaser is an accredited investor as defined in Rule 501(a) of Regulation
D
promulgated under the Securities Act.
3.8. No
General Solicitation.
Neither
the Purchaser, nor any of its agents, if any, has either, directly or
indirectly, including through a broker or finder (a) engaged in any general
solicitation, or (b) published any advertisement in connection with the offer
and sale of the Shares.
3.9. Residence.
The
Purchaser is located in the state identified in the address of the Purchaser
set
forth on Exhibit
A.
4. Conditions
to the Purchaser’s Obligations at Initial Closing.
The
obligations of the Purchaser to purchase Shares at the Initial Closing are
subject to the fulfillment, on or before the Initial Closing, of each of the
following conditions, as applicable, unless otherwise waived:
4.1. Representations
and Warranties.
The
representations and warranties of the Company and Xxxxxxxxxx contained in
Section
2
shall be
true and correct in all respects as of such Closing.
4.2. Performance.
The
Company shall have performed and complied with all covenants, agreements,
obligations and conditions contained in this Agreement that are required to
be
performed or complied with by the Company on or before such
Closing.
4.3. Compliance
Certificate.
The
President of the Company shall deliver to the Purchaser at such Closing a
certificate certifying that the conditions specified in Sections
4.1 and 4.2
have
been fulfilled.
4.4. Qualifications.
All
authorizations, approvals or permits, if any, of any governmental authority
or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Shares pursuant to this
Agreement shall be obtained and effective as of such Closing.
4.5. Board
of Directors.
As of
the Initial Closing, the authorized size of the Board shall be three (3), and
the Board shall be comprised of Xxxxxxx Xxxxx and Xxx Xxxxxxxxxx, leaving one
vacancy.
4.6. Indemnification
Agreement.
The
Company and each member of the Board of Directors shall have executed and
delivered an Indemnification Agreement.
11
4.7. Investors’
Rights Agreement.
The
Company, the
Purchaser and the other stockholders of the Company named as parties thereto
shall have executed and delivered the Investors’ Rights Agreement.
4.8. Stockholders
Agreement.
The
Company, the Purchaser and the other stockholders of the Company named as
parties thereto shall have executed and delivered the Stockholders
Agreement.
4.9. Voting
Agreement.
The
Company, the Purchaser, and the other stockholders of the Company named as
parties thereto shall have executed and delivered the Voting
Agreement.
4.10. Restated
Certificate.
The
Company shall have filed the Restated Certificate with the Secretary of State
of
Delaware on or prior to the Initial Closing, which shall continue to be in
full
force and effect as of the Closings.
4.11. Secretary’s
Certificate.
The
Secretary of the Company shall have delivered to the Purchaser at the Initial
Closing a certificate certifying (i) the Bylaws of the Company, (ii) resolutions
of the Board of Directors of the Company approving the Transaction Agreements
and the transactions contemplated under the Transaction Agreements, and (iii)
resolutions of the stockholders of the Company approving the Restated
Certificate.
4.12. Xxxxxxxxxx
Agreement
Xxxxxxxxxx shall have executed and delivered to the Company a Confidentiality,
Noncompetition and Assignment of Inventions Agreement in the form approved
by
Purchaser and its counsel.
4.13. Proceedings
and Documents.
All
corporate and other proceedings in connection with the transactions contemplated
at the Initial Closing and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Purchaser, and the Purchaser (or
its
counsel) shall have received all such counterpart original and certified or
other copies of such documents as reasonably requested. Such documents may
include good standing certificates.
5. Conditions
of the Company’s Obligations at Initial Closing.
The
obligations of the Company to sell Shares to the Purchaser at the Initial
Closing are subject to the fulfillment, on or before the Initial Closing, of
each of the following conditions, as applicable, unless otherwise
waived:
5.1. Representations
and Warranties.
The
representations and warranties of the Purchaser contained in Section
3
shall be
true and correct in all respects as of such Closing.
5.2. Performance.
The
Purchaser shall have performed and complied with all covenants, agreements,
obligations and conditions contained in this Agreement that are required to
be
performed or complied with by them on or before such Closing.
12
5.3. Qualifications.
All
authorizations, approvals or permits, if any, of any governmental authority
or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Share pursuant to this
Agreement shall be obtained and effective as of such Closing.
5.4. Investors’
Rights Agreement.
The
Purchaser and the other stockholders of the Company named as parties thereto
shall have executed and delivered the Investors’ Rights Agreement.
5.5. Stockholders
Agreement.
The
Purchaser and the other stockholders of the Company named as parties thereto
shall have executed and delivered the Stockholders Agreement.
5.6. Voting
Agreement.
The
Purchaser and the other stockholders of the Company named as parties thereto
shall have executed and delivered the Voting Agreement.
6. Miscellaneous.
6.1. Survival
of Warranties.
Unless
otherwise set forth in this Agreement, the representations and warranties of
the
Company and the Purchaser contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closings and shall
in no way be affected by any investigation or knowledge of the subject matter
thereof made by or on behalf of the Purchaser or the Company.
6.2. Successors
and Assigns.
The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Nothing
in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
6.3. Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of Delaware, regardless of the laws that might otherwise govern under
applicable principles of conflicts of law. Any action, suit or proceeding
initiated under this agreement shall be brought in the state or federal courts
located within the domicile jurisdiction of the party against which such action,
suit or proceeding is brought, and such courts shall have exclusive jurisdiction
over such claims, with the parties hereto submitting to the jurisdiction of
such
courts. The prevailing party in any action, suit or proceeding shall be entitled
to reimbursement of its reasonable legal fees and expenses from the other party
in such matter.
6.4. Counterparts;
Facsimile.
This
Agreement may be executed and delivered by facsimile signature and in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13
6.5. Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
6.6. Notices.
All
notices and other communications given or made pursuant to this Agreement shall
be in writing and shall be deemed effectively given: (a) upon personal delivery
to the party to be notified, (b) when sent by confirmed electronic mail or
facsimile if sent during normal business hours of the recipient, and if not
so
confirmed, then on the next business day, (c) five (5) days after having been
sent by registered or certified mail, return receipt requested, postage prepaid,
or (d) one business (1) day after deposit with a nationally recognized overnight
courier, specifying next business day delivery, with written verification of
receipt. All communications to the Purchaser shall be sent to the Purchaser
at
the address, e-mail address or facsimile number set forth on Exhibit
A,
or to
such e-mail address, facsimile number or address as subsequently modified by
written notice given in accordance with this Section
6.6,
and a
copy of such notice shall also be given to Xxxxxx X. Xxxxxxx, Esq., Moomjian,
Waite, Wactlar & Xxxxxxx, LLP; 000 Xxxxxxx Xxxxxxxxxx, Xxxxxxx, XX 00000;
E-mail xxxxxxxx@xxxxxxx.xxx; Fax: 000 000-0000. All communications to the
Company shall be sent to the Company at the address, e-mail address or facsimile
number set forth on the signature page hereto, and a copy of such notice shall
also be sent to Xxxxxx Xxxxxxxx, Esq., x/x Xxxxxxxxx Xxxxxxxxxx & Xxxx XXX,
Xxxxxxxxxx Tower, 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000, E-mail:
xxxxxxxxx@xxx.xxx; Fax: 000-000-0000.
6.7. No
Finder’s Fees.
Each
party represents that it neither is nor will be obligated for any finder’s fee
or commission in connection with this transaction. The Purchaser agrees to
indemnify and to hold harmless the Company from any liability for any commission
or compensation in the nature of a finder’s or broker’s fee arising out of this
transaction (and the costs and expenses of defending against such liability
or
asserted liability) for which the Purchaser or any of its officers, employees,
or representatives is responsible. The Company agrees to indemnify and hold
harmless the Purchaser from any liability for any commission or compensation
in
the nature of a finder’s or broker’s fee arising out of this transaction (and
the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
6.8. Amendments
and Waivers.
Any
term of this Agreement may be amended, terminated or waived only with the
written consent of the Company, Xxxxxxxxxx and the Purchaser. Any amendment
or
waiver effected in accordance with this Section
6.8
shall be
binding upon the Purchaser (and any transferee and assignee of the Purchaser)
and the Company.
6.9. Severability.
The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
6.10. Delays
or Omissions.
No
delay or omission to exercise any right, power or remedy accruing to any party
under this Agreement, upon any breach or default of any other party under this
Agreement, shall impair any such right, power or remedy of such non-breaching
or
non-defaulting party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only
to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party, shall be cumulative
and not alternative.
6.11. Entire
Agreement.
This
Agreement (including the Exhibits hereto) and the other Transaction Agreements
constitute the full and entire understanding and agreement between the parties
with respect to the subject matter hereof, and any other written or oral
agreement relating to the subject matter hereof existing between the parties
are
expressly canceled.
[Remainder
of Page Intentionally Left Blank]
14
IN
WITNESS WHEREOF, the parties have executed this Series A-1 Preferred Stock
Purchase Agreement as of the date first written above.
|
COMPANY:
|
|||
|
TEST
EVOLUTION CORPORATION
|
|||
|
By:
|
/s/
Xxx Xxxxxxxxxx
|
||
|
Name:
|
Xxx
Xxxxxxxxxx
|
||
|
Title:
|
President
|
||
|
Address:
|
00
Xxxxxxx Xxxxxx
|
||
|
Xxxxxxxxx,
XX 00000
|
|||
|
Attn.:
|
President
|
||
|
E-mail:
|
xxxxxxxxxxx@xxxx.xx
|
||
|
Fax
No.:
|
|||
|
PURCHASER:
|
|||
|
AEROFLEX
INCORPORATED
|
|||
|
By:
|
/s/
Xxxxxxx Xxxxx
|
||
|
Name:
|
Xxxxxxx
Xxxxx
|
||
|
Title:
|
President
and
CEO
|
||
EXHIBITS
|
Exhibit A
-
|
Schedule
of Purchaser
|
|
Exhibit B
-
|
Form
of Amended and Restated Certificate of Incorporation
|
|
Exhibit C
-
|
Disclosure
Schedule
|
|
Exhibit D
-
|
Form
of Indemnification Agreement
|
|
Exhibit E
-
|
Form
of Investors’ Rights Agreement
|
|
Exhibit F
-
|
Form
of Stockholders Agreement
|
|
Exhibit G
-
|
Form
of Voting Agreement
|
EXHIBIT
A
SCHEDULE
OF PURCHASER
|
Name,
Address, E-mail and Fax No.
|
Number
of Shares Held
|
Purchase
Price
|
|
Aeroflex
Incorporated
00
Xxxxx Xxxxxxx Xxxx
Xxxxxxxxx,
XX 00000
E-mail:
Fax
No.:
|
4,000,000,
upon consummation of the Closings (2,000,000 at each Closing)
|
$4,000,000
($2,000,000 at each Closing)
|
|
TOTAL:
|
4,000,000
|
$4,000,000,
|
EXHIBIT
B
FORM
OF AMENDED AND RESTATED
CERTIFICATE
OF INCORPORATION
[See
Tab 7]
EXHIBIT
C
DISCLOSURE
SCHEDULE
| Section 2.2(c) |
The
Company has had discussions with three individuals regarding the
proposed
issuance of shares of common stock, either as restricted stock or
as
options. The following number of shares have been discussed, but
no such
discussions have been finalized or reduced to written
documentation:
|
|
Xxxxx
Xxx (employee):
|
4,000,000
shares
|
|
Xxxxxxx
Xxxxxxxxxx:
|
800,000
shares
|
|
Future
Employee:
|
4,000,000
shares
|
| Section 2.3 |
The
Company has had discussions with Metrikos, Inc., a Massachusetts
corporation, regarding a potential investment by the Company, pursuant
to
which the Company would acquire shares of Metrikos stock. Discussions
have
included the possibility of the Company acquiring a controlling interest
in Metrikos.
|
| Section 2.10 |
The
Company has entered into a contractual arrangement with the Purchaser
pursuant to which the Company is providing development services.
In
connection with such arrangement, the Company is subcontracting certain
portions of the services to
Metrikos.
|
| Section 2.11 |
In
connection with the closing of the purchase and sale of Series A-1
Preferred Stock, the Company intends to enter into Confidentiality
Agreements with its employees, and a Confidentiality and Noncompetition
Agreement with Xxx Xxxxxxxxxx.
|
| Section 2.14(a): |
The
Company currently employs the following
individuals:
|
Xxx
Xxxxxxxxxx
Xxxxx
Xxx
Xxxxxxx
Xxxxxxxxxx
EXHIBIT
D
FORM
OF INDEMNIFICATION AGREEMENT
[See
Tabs 5, 5A and 5B]
EXHIBIT
E
FORM
OF INVESTORS’ RIGHTS AGREEMENT
[See
Tab 2]
EXHIBIT
F
FORM
OF STOCKHOLDERS AGREEMENT
[See
Tab 3]
EXHIBIT
G
FORM
OF VOTING AGREEMENT
[See
Tab 4]
