AEHR TEST SYSTEMS
Stock Purchase Agreement
Dated as of September 18, 1985
AEHR TEST SYSTEMS
STOCK PURCHASE AGREEMENT
Dated as of September 18, 1985
INDEX
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ARTICLE I
PURCHASE, SALE AND TERMS OF SHARES
1.01 The Shares . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Purchase and Sale of Shares . . . . . . . . . . . . . . . 1
(a) The Closing . . . . . . . . . . . . . . . . . . . . . 1
(b) Use of Proceeds . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
CONDITIONS TO CLOSING
2.01 Conditions to Purchaser's Obligations . . . . . . . . . . 2
2.02 Conditions to Company's Obligations . . . . . . . . . . . 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Organization and Standing of the Company . . . . . . . . . 3
3.02 Corporate Action . . . . . . . . . . . . . . . . . . . . . 3
3.03 Governmental Approvals . . . . . . . . . . . . . . . . . . 4
3.04 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 4
3.05 Compliance with Other Instruments . . . . . . . . . . . . 4
3.06 Title to Assets, Patents . . . . . . . . . . . . . . . . . 5
3.07 Financial Information . . . . . . . . . . . . . . . . . . 5
3.08 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.09 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.10 Transactions with Affiliates . . . . . . . . . . . . . . . 6
3.11 Other Matters . . . . . . . . . . . . . . . . . . . . . . 6
3.12 Securities Act of 1933 . . . . . . . . . . . . . . . . . . 7
3.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 7
3.14 No Brokers or Finders . . . . . . . . . . . . . . . . . . 7
3.15 Certain Agreements of Key Employees . . . . . . . . . . . 7
3.16 Capitalization; Status of Capital
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.17 Books and Records . . . . . . . . . . . . . . . . . . . . 8
3.18 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 8
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ARTICLE IV
COVENANTS OF THE COMPANY
4.01 Affirmative Covenants of the Company
Other Than Reporting Requirements . . . . . . . . . . . . 9
(a) Payment of Taxes and Trade Debt . . . . . . . . . . . 9
(b) Preservation of Corporate Existence . . . . . . . . . 9
(c) Compliance with Laws . . . . . . . . . . . . . . . . 10
(d) Keeping of Records and Books of
Account . . . . . . . . . . . . . . . . . . . . . . . 10
(e) Maintenance of Properties, etc. . . . . . . . . . . . 10
(f) New Developments . . . . . . . . . . . . . . . . . . 10
(g) Employee Invention and
Non-Disclosure Agreement . . . . . . . . . . . . . . 10
(h) Budgets and Board Approval . . . . . . . . . . . . . 10
(i) Financings . . . . . . . . . . . . . . . . . . . . . 11
(j) Observer Rights . . . . . . . . . . . . . . . . . . . 11
4.02 Negative Covenants of the Company . . . . . . . . . . . . 11
(a) Dealings with Affiliates and Others . . . . . . . . . 11
4.03 Reporting Requirements . . . . . . . . . . . . . . . . . . 11
4.04 Confidentiality . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V
REGISTRATION RIGHTS
5.01 "Piggy Back" Registration . . . . . . . . . . . . . . . . 12
5.02 Effectiveness . . . . . . . . . . . . . . . . . . . . . . 13
5.03 Indemnification of Holders of
Registrable Shares . . . . . . . . . . . . . . . . . . . . 13
5.04 Indemnification of Company . . . . . . . . . . . . . . . . 14
5.05 Exchange Act Registration . . . . . . . . . . . . . . . . 16
5.06 Damages . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.07 Further Obligations of the Company . . . . . . . . . . . . 16
5.08 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.09 Transfer of Registration Rights . . . . . . . . . . . . . 17
5.10 No Superior Rights . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASERS AND
RESTRICTIONS ON TRANSFERS
6.01 Representations and Warranters by Each Purchaser . . . . . 18
6.02 Legends . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.03 Removal of Legends and Transfer Restrictions . . . . . . . 19
6.04 Additional Purchases of Common Stock . . . . . . . . . . . 20
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ARTICLE VII
DEFINITIONS AND ACCOUNTING TERMS
7.01 Certain Defined Terms . . . . . . . . . . . . . . . . . . 20
7.02 Accounting Terms . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VIII
MISCELLANEOUS
8.01 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . 22
8.02 Amendments, Waivers and Consent . . . . . . . . . . . . . 22
8.03 Addresses for Notices, etc. . . . . . . . . . . . . . . . 23
8.04 Costs, Expenses and Taxes . . . . . . . . . . . . . . . . 23
8.05 Binding Effect; Assignment . . . . . . . . . . . . . . . . 23
8.06 Survival of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . . 24
8.07 Prior Agreements . . . . . . . . . . . . . . . . . . . . . 24
8.08 Severability . . . . . . . . . . . . . . . . . . . . . . . 24
8.09 Governing Law . . . . . . . . . . . . . . . . . . . . . . 24
8.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . 24
8.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 24
8.12 Further Assurances . . . . . . . . . . . . . . . . . . . 24
EXHIBITS
1.01 List of Purchasers
2.02 Matters to be Covered by Opinion Letter
3.03 Schedule of Exceptions and Other Matters
3.07 Financial Statements
3.15 Employee Invention and Nondisclosure Agreement
3.16 Schedule of Stock, Options and Other Rights
and Restrictions
WJS/38v
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AEHR TEST SYSTEMS
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
As of September 18, 1985
To: The Persons listed on EXHIBIT 1.01 hereto
Re: CAPITAL STOCK, WITHOUT PAR VALUE, OF AEHR TEST SYSTEMS
Dear Sirs:
Aehr Test Systems, a California corporation (the "Company"),
hereby agrees with you as follows:
ARTICLE I
PURCHASE, SALE AND TERMS OF SHARES
1.01 THE SHARES. The Company has authorized the issuance and sale of
50,000 shares (the "Shares") of the previously authorized but unissued shares of
its Capital Stock, without par value (the "Common Stock"), to the Persons
(collectively, the "Purchasers" and, individually, a "Purchaser") and in the
respective amounts set forth in EXHIBIT 1.01 hereto.
1.02 PURCHASE AND SALE OF SHARES.
(a) THE CLOSING. Subject to and in reliance upon the
representations, warranties, terms and conditions of this Agreement, the
Company agrees to issue and sell to the Purchasers, and the Purchasers,
severally but not jointly, agree to purchase, the Shares for the aggregate
purchase prices and in the amounts set forth opposite their respective names
in EXHIBIT 1.01 hereto. Such purchase and sale shall take place at a closing
(the "Closing") to be held at the office of Wilson, Sonsini, Xxxxxxxx &
Xxxxxx, Xxx Xxxx Xxxx Xxxxxx, Xxxx Xxxx, XX 00000 on September 18, 1985 at
10:00 A.M., or on such other date and at such time as may be mutually agreed
upon. At the Closing the Company will issue and deliver certificates
evidencing the Shares to be sold to the Purchasers, in the amounts set forth
opposite their respective names in EXHIBIT 1.01 hereto and in such
denominations as each such Purchaser shall specify, against delivery of
cashier's or certified checks payable to, or wire transfer of funds to the
account of, the Company in payment of the full purchase price for the Shares.
(b) USE OF PROCEEDS. The Company agrees to use the proceeds
from the sale of the Shares solely for working capital and other general
corporate purposes.
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ARTICLE II
CONDITIONS TO CLOSING
2.01 CONDITIONS TO PURCHASERS' OBLIGATIONS. The obligation of each
Purchaser to purchase and pay for the Shares at the Closing is subject to the
following conditions:
(a) Each of the representations and warranties of the Company
set forth in Article III hereof shall be true on the date of the Closing.
(b) The Purchasers shall have received prior to or at the
Closing all of the following, each in form and substance satisfactory to the
Purchasers and their special counsel, and all of the following events shall have
occurred prior to or simultaneous with the Closing hereunder:
(i) A copy of all charter documents of the Company
certified by the Secretary of State of California, a certified copy of the
resolutions of the Board of Directors and, if required, the stockholders of the
Company evidencing approval of this Agreement, the authorization for issuance of
the Shares and other matters contemplated hereby, a certified copy of the
By-laws of the Company, and certified copies of all documents evidencing other
necessary corporate or other action and governmental approvals, if any, with
respect to this Agreement and the Shares.
(ii) An opinion of Messrs. Wilson, Sonsini, Xxxxxxxx &
Xxxxxx, counsel for the Company, in substantially the form attached hereto as
EXHIBIT 2.02.
(iii) A certificate of the Secretary or an Assistant
Secretary of the Company stating the names of the officers of the Company
authorized to sign this Agreement, the certificates for the Shares, the other
documents or certificates to be delivered pursuant to this Agreement by the
Company or any of its officers, together with the true signatures of such
officers.
(iv) A certificate from a duly authorized officer of the
Company stating that the representations and warranties of the Company contained
in Article III hereof are true and correct and that all conditions required to
be performed by the Company prior to or at the Closing have been performed.
(c) Prior to the Closing, the Company shall have obtained all
consents or waivers, if any, necessary to execute and deliver this Agreement,
issue the Shares and carry out the transactions contemplated hereby and
thereby, and all such consents and waivers shall be in full force and effect.
All corporate and other action and governmental filings necessary to
effectuate the terms of this Agreement, the Shares and other agreements and
instruments executed and delivered by the Company in connection herewith
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shall have been made or taken, except for any post-sale filing that may be
required under federal and state securities laws. In addition to the documents
set forth above, the Company shall have provided the Purchasers with any other
information or copies of documents that they may reasonably request.
2.02 CONDITIONS TO COMPANY'S OBLIGATIONS. The obligation of the
Company to sell the Shares at the Closing is subject to the following
conditions:
(a) Each of the representations and warranties of each of the
Purchasers set forth in Article VI hereof shall be true on the date of the
Closing.
(b) The Company shall have obtained all consents, permits and
waivers necessary or appropriate for consummation of the transactions
contemplated by this Agreement.
(c) At the time of the Closing, the purchase of the Shares by
the Purchasers hereunder shall be legally permitted by all laws and regulations
to which the Purchasers and the Company are subject.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Except as set forth in EXHIBIT 3.03, the Company represents and warrants as
follows:
3.01. ORGANIZATION AND STANDING OF THE COMPANY. The Company is a duly
organized and validly existing corporation in good standing under the laws of
the jurisdiction in which it is organized and has all requisite corporate power
and authority for the ownership and operation of its properties and for the
carrying on of its business as now conducted and as now proposed to be
conducted. The Company is duly licensed or qualified and in good standing as a
foreign corporation authorized to do business in all jurisdictions in which the
character of the property owned or leased, or the nature of the activities
conducted, by it makes such licensing or qualification necessary, or the failure
to be so qualified will not have a material adverse effect on the condition,
assets, liabilities, earnings or business of the Company.
3.02. CORPORATE ACTION. The Company has all necessary corporate power
and has taken all corporate action required to make all the provisions of this
Agreement, the Shares and any other agreements and instruments executed in
connection herewith and therewith the valid and enforceable obligations they
purport to be. The issuance of the Shares is not subject to preemptive or other
preferential rights, or similar statutory or contractual
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rights, either arising pursuant to any agreement or instrument to which the
Company is a party or which are otherwise binding upon the Company.
3.03. GOVERNMENTAL APPROVALS. Except for filings required by federal
or state securities laws, no authorization, consent, approval, license,
exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, is or will be necessary for, or in connection with, the offer,
issuance, sale, execution or delivery by the Company, of the Shares or the
performance by the Company of its obligations under the Agreement.
3.04. LITIGATION. There is no litigation or governmental proceeding or
investigation pending or threatened against the Company or the Subsidiaries
affecting any of their properties or assets, or, to the knowledge of the
Company, against any officer, or Key Employee of the Company, that might result,
either in any case or in the aggregate, in any material adverse change in the
business, operations, affairs or conditions of the Company or the Subsidiaries
or any of their material properties or assets, or that might call into question
the validity of this Agreement, any of the Shares, or any action taken or to be
taken pursuant hereto or thereto, nor, to the knowledge of the Company, has
there occurred any event or does there exist any condition on the basis of which
any litigation, proceeding or investigation might properly be instituted that
might result, either in any case or in the aggregate, in any material adverse
change in the business, operations, affairs of the Company, the Subsidiaries or
any of their material properties and assets. Neither the Company, any
Subsidiary nor, to the knowledge of the Company, any officer of the Company or
the Subsidiaries, is in default with respect to any order, writ, injunction,
decree, ruling or decision of any court, commission, board or other government
agency that might result, either in any case or in the aggregate, in any
material adverse change in the business, operations, affairs or conditions of
the Company or any of their material properties or assets. The foregoing
sentences include, without limiting their generality, actions pending or, to the
knowledge of the Company, threatened (or any basis therefor known to the
Company) involving the prior employment of employees of the Company or any of
its Subsidiaries in any of the Company's or any Subsidiary's business of any
information or techniques allegedly proprietary to any of their former
employers.
3.05. COMPLIANCE WITH OTHER INSTRUMENTS. The Company and the
Subsidiaries are in compliance in all respects with the terms and provisions of
this Agreement and of their charters and by-laws and in all material respects
with the terms and provisions of each mortgage, indenture, lease, agreement and
other instrument relating to obligations of the Company and the Subsidiaries in
excess of $50,000, individually or in the aggregate, and, of all judgments,
decrees, governmental orders, statutes, rules or regulations by which it is
bound or to which its properties or assets
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are subject the noncompliance with which would have a material adverse effect on
the business, operations, or affairs or conditions of the Company. There is no
term or provision in any of the foregoing documents and instruments that
materially adversely affects the business, assets or financial condition of the
Company or the Subsidiaries. Neither the execution and delivery of this
Agreement or the Shares, nor the consummation of any transaction contemplated
hereby or thereby, has constituted or resulted in or will constitute or result
in a default or violation of any term or provision in any of the foregoing
documents or instruments.
3.06. TITLE TO ASSETS, PATENTS.
(a) The Company and the Subsidiaries have good and marketable
title in fee to their fixed assets that are real property, and good and
merchantable title to all of their other significant assets, now carried on its
books including those reflected in the most recent balance sheet of the Company
contained in EXHIBIT 3.07 attached hereto, or acquired since the date of such
balance sheet (except personal property disposed of since said date in the
ordinary course of business), free of any mortgages, pledges, charges, liens,
security interests or other encumbrances. The Company enjoys peaceful and
undisturbed possession under all significant leases under which it is operating,
and all said leases are valid and subsisting and in full force and effect.
(b) The Company and the Subsidiaries own or have a valid right
to use all significant patents, patent rights, licenses, permits, trade secrets,
trademarks, trademark rights, trade names or trade name rights or franchises,
copyrights, inventions and intellectual property rights being used to conduct
their business as now operated and as now proposed to be operated; and, to the
best knowledge of the Company, the conduct of their businesses as now operated
and as now proposed to be operated does not and will not conflict in any
respects material to the Company and its Subsidiaries considered as a whole with
valid patents, patent rights, licenses, permits, trade secrets, trademarks,
trademark rights, trade names or trade name rights or franchises, copyrights,
inventions and intellectual property rights of others. The Company and the
Subsidiaries have no obligation to compensate any Person for the use of any such
patents or such rights nor has the Company or any Subsidiary granted to any
Person any license or other rights to use in any manner any of such patents or
such rights of the Company and the Subsidiaries.
3.07. FINANCIAL INFORMATION. Attached hereto as EXHIBIT 3.07 are true
and complete copies of the Consolidated audited financial statements of the
Company and its Subsidiaries for the twelve months ended May 31, 1985 and the
Company's unaudited unconsolidated financial statements for the two months ended
July 31, 1985 certified by the chief financial officer of the Company. Such
financial statements when read together, present fairly the financial position
of the Company and its Subsidiaries at the dates
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thereof and their results of operations for the periods covered thereby and have
been prepared in accordance with generally accepted accounting principles
consistently applied. The Company and the Subsidiaries have no liability,
contingent or otherwise, required to be disclosed in a financial statement
prepared in accordance with generally accepted accounting principles which are
not disclosed in the aforesaid financial statements or in the notes thereto,
that could, together with all such other liabilities, materially affect the
financial condition of the Company, nor does the Company have any reasonable
grounds to know of any such liability. Except as set forth in the aforesaid
audited financial statements or as otherwise set forth in this Agreement since
July 31, 1985 (i) there has been no adverse event or occurrence affecting the
business, assets or condition, financial or otherwise, or operations of the
Company and its Subsidiaries; (ii) neither the business, condition, or
operations of the Company, the Subsidiaries nor any of their properties or
assets has been adversely affected as the result of any legislative or
regulatory change, any revocation or change in any franchise, license or right
to do business, or any other event or occurrence, whether or not insured
against; and (iii) the Company has not entered into any transaction with respect
to, or made any distribution on, its capital stock.
3.08. TAXES. The Company and its Subsidiaries have accurately prepared
and timely filed all federal, state and other tax returns required by law to be
filed by them, and all taxes shown to be due and all additional assessments have
been paid or provision made therefor. To the Company's knowledge, none of the
federal income tax returns of the Company and the Subsidiaries have been audited
by the Internal Revenue Service. The Company knows of no significant additional
assessments or adjustments pending or threatened against the Company or any
Subsidiary for any period, nor of any basis for any such assessment or
adjustment.
3.09. ERISA. Neither the Company nor any Subsidiary makes
contributions to any pension, defined benefit plans or defined contribution
plans for its employees that are subject to the federal Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
3.10. TRANSACTIONS WITH AFFILIATES. Except as set forth in the audited
financial statements of the Company set forth in EXHIBIT 3.07, there are no
loans, leases, royalty agreements or other continuing transactions between the
Company and any of the Company's customers or suppliers, and any officer or
director of the Company.
3.11. OTHER MATTERS. Neither the Company nor any Subsidiary has (i)
become directly or contingently liable (including, without limitation, by way of
assumption or guaranty) on any Indebtedness of any other Person or (ii) made or
agreed to make any loan, advance or other investment to or in any other Person.
The Company and each Subsidiary is in compliance in all material respects with
all laws, rules and regulations applicable to them.
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3.12. SECURITIES ACT OF 1933. The Company has complied and will comply
with all applicable federal or state securities laws in connection with the
issuance and sale of the Shares. Neither the Company nor anyone acting on its
behalf has offered or will offer to sell the Shares or similar securities to, or
solicit offers with respect thereto from, or enter into any preliminary
conversations or negotiations relating thereto with, any Person, so as to bring
the issuance and sale of the Shares under the registration provisions of the
Securities Act. Except as set forth in Article V hereof, no Person has demand
or other rights to cause the Company to file any registration statement under
the Securities Act relating to any securities of the Company or any right to
participate in any such registration statement.
3.13 DISCLOSURE. Neither this Agreement, the financial statements
incorporated herein as EXHIBIT 3.07, nor any other agreement, document,
certificate or written or oral statement furnished to the Purchasers or their
special counsel by or on behalf of the Company in connection with the
transactions contemplated hereby when taken as a whole contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading.
There is no fact within the special knowledge of the Company or any of its
executive officers that has not been disclosed herein by them to the
Purchasers and that materially adversely affects, or in the future in their
opinion may, insofar as they can now foresee, materially adversely affect the
business, properties, assets or condition, financial or otherwise, of the
Company. Without limiting the foregoing, the Company has disclosed to the
Purchasers any knowledge that it has that there exists, or there is pending
or planned, any patent, invention, device, application or principle or any
statute, rule, law, regulation, standard or code that would materially
adversely affect the condition, financial or otherwise, or the operations of
the Company.
3.14. NO BROKERS OR FINDERS. No Person has or will have, as a result
of the transactions contemplated by this Agreement, any right, interest or valid
claim against or upon the Company for any commission, fee or other compensation
as a finder or broker because of any act or omission by the Company or any agent
of the Company; and the Company agrees to indemnify and hold the Purchasers
harmless against any such commissions, fees or other compensation.
3.15. CERTAIN AGREEMENTS OF KEY EMPLOYEES.
(a) To the best knowledge of the Company, no Key Employee is a
party to or bound by any agreement, contract or commitment, or subject to any
restrictions, particularly but without limitation in connection with any
previous employment of any such person, which materially and adversely affects,
or in the future may (so far as the Company can reasonably foresee) materially
and adversely affect, the business or operations of the Company or the right of
any such person to participate in the affairs of the Company;
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(b) Each Key Employee who has or had access to proprietary
information of the Company has executed an employee invention and non-disclosure
agreement to the effect and in substantially the form set forth in EXHIBIT 3.15.
To the best of the Company's knowledge, no Key Employee or former Key Employee
of the Company is, or to the Company's knowledge and belief is expected to be,
in violation of the terms or the aforesaid agreements or of any other obligation
relating to the use of confidential or proprietary information of the Company.
3.16 CAPITALIZATION; STATUS OF CAPITAL STOCK. As of the date hereof,
the Company has a total authorized capitalization consisting of 75,000,000
shares of Common Stock, without par value, of which 3,432,022 shares are issued
and outstanding. A complete list of the shares of capital stock currently
issued and outstanding and the names in which such shares are registered is set
forth in EXHIBIT 3.16 hereto. All of the outstanding shares of capital stock of
the Company have been duly authorized, are validly issued and are fully paid and
nonassessable. All shares of capital stock issuable upon exercise of
outstanding options and warrants have been duly authorized and, when issued in
accordance with the terms of such options and warrants, will be validly issued,
and fully paid and nonassessable. The Shares when issued and delivered in
accordance with the terms hereof, will be duly authorized, validly issued and
fully paid and nonassessable. Except as set forth in EXHIBIT 3.16 hereto, there
are no options, warrants or rights to purchase shares of capital stock or other
securities authorized, issued or outstanding, nor is the Company obligated in
any other manner to issue shares of its capital stock or other securities.
There are no restrictions on the transfer of shares of capital stock of the
Company other than those imposed by relevant state and federal securities laws.
No holder of any security of the Company is entitled to preemptive or similar
statutory or contractual rights, either arising pursuant to any agreement or
instrument to which the Company is a party or that are otherwise binding upon
the Company. The offer and sale of all shares of capital stock or other
securities of the Company issued before the Closing complied with or were exempt
from registration or qualification under all federal and state securities laws.
3.17. BOOKS AND RECORDS. The books of account, ledgers, order books,
records and documents of the Company and the Subsidiaries accurately and
completely reflect all material information relating to the businesses of the
Company and the Subsidiaries, the nature, acquisition, maintenance, location
and collection of the assets of the Company and the Subsidiaries, and the nature
of all transactions giving rise to the obligations or accounts receivable of the
Company and the Subsidiaries.
3.18. SUBSIDIARIES. Each of the Company's Subsidiaries is listed in
EXHIBIT 3.03 below and the Company has no other Subsidiaries. All issued and
outstanding shares of capital stock of
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each present Subsidiary are owned by the Company and are the validly issued,
fully paid and nonassessable shares of each Subsidiary, respectively, and are
owned by the Company fee and clear of all encumbrances. Except as set forth in
the audited financial statements of the Company set forth in EXHIBIT 3.07, there
are no outstanding rights, options, warrants, conversion rights or agreements
for the purchase or acquisition of any shares of any of the Subsidiaries'
capital stock.
ARTICLE IV
COVENANTS OF THE COMPANY
4.01. AFFIRMATIVE COVENANTS OF THE COMPANY OF OTHER THAN REPORTING
REQUIREMENTS. Without limiting any other covenants and provisions hereof, the
Company covenants and agrees that, until the completion of a Qualified Public
Offering, and so long as the Purchasers and/or their partners, own (of record or
beneficially) 100,000 shares of Common Stock (such number of shares to be
equitably adjusted whenever there shall occur a stock split, combination,
reclassification or other similar event affecting the Common Stock after the
date of this Agreement), it will perform and observe the following covenants and
provisions and will cause each Subsidiary to perform and observe such of the
following covenants and provisions as are applicable to such Subsidiary:
(a) PAYMENT OF TAXES AND TRADE DEBT. Pay and discharge, and
cause each Subsidiary to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
business, or upon any properties belonging to it, prior to the date on which
penalties attach thereto, and all lawful claims, which, if unpaid, might become
a lien or charge upon any properties of the Company or any Subsidiary, provided
that neither the Company nor any Subsidiary shall be required to pay any such
tax, assessment, charge, levy or claim that is being contested in good faith and
by appropriate proceedings if the Company or Subsidiary concerned shall have
set aside on its books adequate reserves with respect thereto as shall be
determined by its Board of Directors. Pay and cause each Subsidiary to pay,
when due, or in conformity with customary trade terms, all lease obligations,
all trade debt, and all other Indebtedness incident to the operations of the
Company or its Subsidiaries, except such as are being contested in good faith
and by appropriate proceedings if the Company or Subsidiary concerned shall
have set aside on its books adequate reserves with respect thereto as shall be
determined by its Board of Directors.
(b) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain,
and cause each Subsidiary to preserve and maintain, its corporate existence,
rights, franchises and privileges in the jurisdiction of its incorporation, and
qualify and remain qualified, and cause each Subsidiary to qualify and remain
qualified, as a
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foreign corporation in each jurisdiction in which the failure to qualify will
have a material adverse effect upon the condition, assets, liabilities, earnings
or business of the Company. Preserve and maintain, and cause each Subsidiary
to preserve and maintain, all material licenses and other rights to use patents,
processes, licenses, trademarks, trade names, inventions, intellectual property
rights or copyrights owned or possessed by it and necessary to the conduct of
its business.
(c) COMPLIANCE WITH LAWS. Comply, and cause each Subsidiary to
comply, in all material respects with all applicable laws, rules, regulations
and orders of any governmental authority, noncompliance with which could
materially adversely affect its business or condition, financial or otherwise,
except non-compliance being contested in good faith through appropriate
proceedings so long as the Company shall have set up sufficient reserves, if
any, required under generally accepted accounting principles with respect to
such items.
(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Keep, and cause
each Subsidiary to keep, adequate records and books of account, in which
complete entries will be made in accordance with generally accepted accounting
principles consistently applied, reflecting all financial transactions of the
Company and each Subsidiary, and in which, for each fiscal year, all proper
reserves for depreciation, depletion, obsolescence, amortization, taxes, bad
debts and other purposes in connection within its business shall be made.
(e) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and
cause each Subsidiary to maintain and preserve, all of its properties, necessary
or useful in the proper conduct of its business, in good repair, working order
and condition, ordinary wear and tear excepted.
(f) NEW DEVELOPMENTS. Use its best efforts to cause all Key
Employees of the Company and each Subsidiary to execute appropriate patent
assignment agreements to the Company and, where possible and appropriate, to
file and prosecute United States and foreign patent applications relating to and
protecting such developments on behalf of the Company or such subsidiary.
(g) EMPLOYEE INVENTION AND NON-DISCLOSURE AGREEMENT. Use its
best efforts to cause each Key Employee now or hereafter employed by the Company
or any Subsidiary promptly to execute an agreement substantially in the form of
EXHIBIT 3.15 hereto or in a form approved by the Board of Directors.
(h) BUDGETS AND BOARD APPROVAL. Within ninety (90) days of the
commencement of each fiscal year, prepare and submit to, and obtain the approval
of a majority of, the Board of Directors of a budget for the upcoming fiscal
year, including projections of capital and operating expenses, cash flow, and
profits and losses, all itemized in reasonable detail.
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(i) FINANCINGS. Promptly, fully and in detail, inform the Board
of Directors in advance of any commitments or contracts relating to financing of
any nature for the Company or pledge of corporate assets.
(j) OBSERVER RIGHTS. Invite a representative of the Purchasers,
which representative shall be designated by the Purchasers, to attend all
meetings of its Board of Directors in a non-voting, observer capacity, and, in
connection therewith, give such representative copies of all notices, minutes,
consents and other materials, financial and otherwise, that it provides to its
board of directors.
4.02. NEGATIVE COVENANTS OF THE COMPANY. Without limiting any other
covenants and provisions hereof, the Company covenants and agrees that, until
the completion of a Qualified Public Offering, and so long as the Purchasers
and/or their partners, own (of record or beneficially) 100,000 shares of
Common Stock (such number of shares to be equitably adjusted whenever there
shall occur a stock split, combination, reclassification or other similar
event affecting the Common Stock after the date of this Agreement), it will
comply with and observe the following covenants and provisions, and will cause
each Subsidiary to comply with and observe such of the following covenants
and provisions as are applicable to such Subsidiary, and WILL NOT, without
the approval of holders of the Shares in accordance with Section 8.02:
(a) DEALINGS WITH AFFILIATES AND OTHERS. Enter into any
transaction, including, without limitation, any loans or extensions of credit or
royalty agreements, with any officer or director of the Company or any
Subsidiary or holder of any class of capital stock of the Company, or any member
of their respective immediate families or any corporation or other entity
directly or indirectly controlled by one or more of such officers, directors or
stockholders or members of their immediate families unless such transaction is
approved in advance by a majority of disinterested members of the Board of
Directors.
4.03 REPORTING REQUIREMENTS. Until the completion of a Qualified
Public Offering, and so long as the Purchasers and/or their partners, own (of
record or beneficially) 100,000 shares of Common Stock (such number of shares to
be equitably adjusted whenever there shall occur a stock split, combination,
reclassification or other similar event affecting the Common Stock after the
date of this Agreement), the Company will furnish the following to each
Purchaser.
(a) as soon as available and in any event within forty-five (45)
days after the end of each fiscal quarter of the Company, Consolidated balance
sheets of the Company and its Subsidiaries as of the end of such quarter and
Consolidated statements of income and retained earnings of the Company and its
Subsidiaries for the period ending with such quarter, setting forth in each
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case in comparative form the corresponding figures for the corresponding period
of the prior fiscal year, all in reasonable detail and duly certified (subject
to year-end audit adjustments) by the chief financial officer of the Company as
having been prepared in accordance with generally accepted accounting principals
consistently applied, except for the absence of footnotes; provided, however,
that the obligation to deliver Consolidated financial statements shall commence
with the quarter ending February 28, 1986 and until that date the Company shall
use its best efforts to deliver Consolidated financial statements.
(b) as soon as available and in any event within ninety (90)
days after the end of each fiscal year of the Company, a copy of the annual
audit report for such year for the Company and its Subsidiaries, including
therein Consolidated (and, to the extent otherwise prepared by the Company,
consolidating) balance sheets of the Company and its Subsidiaries as of the end
of such fiscal year and Consolidated (and, to the extent otherwise prepared by
the Company, consolidating) statements of income and retained earnings and of
changes in financial position of the Company and its Subsidiaries for such
fiscal year, setting forth in each case in comparative form the corresponding
figures for the preceding fiscal year, all duly certified by an independent
public accountant of national standing;
(c) promptly after sending, making available, or filing the
same, all reports and financial statements that the Company or any Subsidiary
sends or makes available to the stockholders of the Company or the Securities
and Exchange Commission; and
(d) all other information respecting the business, properties or
the condition or operations, financial or otherwise, of the Company or any of
its Subsidiaries that any Purchaser may from time to time reasonably request.
4.40. CONFIDENTIALITY. Any confidential information obtained by any
holder of the Shares pursuant to this Agreement shall be treated as confidential
and shall not be disclosed to a third party without the consent of the Board of
Directors, except that such information shall not be deemed confidential for the
purpose of enforcement of this Agreement or valuation of the Shares and except
that any such holder may otherwise disclose such information to its partners
if such partners agree to be bound by the restrictions contained in this
Section 4.04.
ARTICLE V
REGISTRATION RIGHTS
5.01 "PIGGY BACK" REGISTRATION. If at any time the Company shall
determine to register under the Securities Act (including pursuant to a demand
of any stockholder of the Company
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exercising registration rights) any of its Common Stock (except shares to be
issued solely in connection with any acquisition of any entity or business,
shares issuable solely upon exercise of stock options, or shares issuable solely
pursuant to employee benefit plans), it shall send to each holder of Registrable
Shares, written notice of such determination and, if within thirty (30) days
after receipt of such notice, such holder shall so request in writing, the
Company shall use its best efforts to include in such registration statement all
or any part of the Registrable Shares that such holder requests to be
registered, except that if, in connection with any offering involving an
underwriting of Common Stock to be issued by the Company, the managing
underwriter shall impose a limitation on the number of shares of such Common
Stock included in any such registration statement because, in its judgment, such
limitation is necessary to effect an orderly public distribution, and such
limitation is imposed among all holders of Common Stock exercising their
contractual incidental ("piggy back") right to include such Common Stock in the
registration statement as provided below on a PRO RATA basis (according to the
number of shares of Common Stock held by such holders that are entitled to such
"piggy back" registration rights). In the event of any such limitation, the
Company may include in such registration statement only (i) shares of Common
Stock to be sold for the Company's account; (ii) Registrable Shares; and (iii)
shares of Common Stock the holders of which are entitled to registration
pursuant to an agreement with the Company approved by the Board of Directors;
provided, that, in the case of clauses (ii) and (iii) of the preceding sentence,
such inclusion shall be on the PRO RATA basis hereinabove described.
Notwithstanding the foregoing, no such reduction shall be made with respect to
securities being offered by the Company for its own account. If any holder of
Registrable Shares disapproves of the terms of such underwriting, he may elect
to withdraw therefrom by written notice to the Company and the managing
underwriter.
5.02 EFFECTIVENESS. The Company will use its best efforts to maintain
the effectiveness for up to ninety (90) days of any registration statement
pursuant to which any of the Registrable Shares are being offered, and from time
to time will amend or supplement such registration statement and the prospectus
contained therein as and to the extent necessary to comply with the Securities
Act and any applicable state securities statute or regulation.
5.03 INDEMNIFICATION OF HOLDERS OF REGISTRABLE SHARES. In the event
that the Company registers any of the Registrable Shares under the Securities
Act, the Company will indemnify and hold harmless each holder and each
underwriter of the Registrable Shares so registered (including any broker or
dealer through whom such shares may be sold) and each person, if any, who
controls such holder or any such underwriter within the meaning of Section 15 of
the Securities Act from and against any and all losses, claims, damages,
expenses or liabilities, joint or several, to
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which they or any of them become subject under the Securities Act or under any
other statute or at common law or otherwise, and, except as hereinafter
provided, will reimburse each such holder, each such underwriter and each such
controlling person, if any, for any legal or other expenses reasonably incurred
by them or any of them in connection with investigating or defending any actions
whether or not resulting in any liability, insofar as such losses, claims,
damages, expenses, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement, in any preliminary or amended preliminary prospectus or
in the prospectus (or the registration statement or prospectus as from time to
time amended or supplemented by the Company) or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading or any violation by the Company of any rule or regulation promulgated
under the Securities Act applicable to the Company and relating to action or
inaction required of the Company in connection with such registration, unless
such untrue statement or omission was made in such registration statement,
preliminary or amended, preliminary prospectus or prospectus in reliance upon
and in conformity with information furnished in writing to the Company in
connection therewith by such holder of Registrable Shares, any such underwriter
or any such controlling person expressly for use therein. Promptly after
receipt by any holder of Registrable Shares, any underwriter or any controlling
person of notice of the commencement of any action in respect of which indemnity
may be sought against the Company, such holder of Registrable Shares, or such
underwriter or such controlling person, as the case may be, will notify the
Company in writing of the commencement thereof, and, subject to the provisions
hereinafter stated, the Company shall assume the defense of such action
(including the employment of counsel, who shall be counsel satisfactory to such
holder of Registrable Shares, such underwriter or such controlling person, as
the case may be), and the payment of expenses insofar as such action shall
relate to any alleged liability in respect of which indemnity may be sought
against the Company. Such holder of Registrable Shares, any such underwriter or
any such controlling person shall have the right to employ separate counsel in
any such action and to participate in the defense thereof but the fees and
expenses of such counsel shall not be at the expense of the Company unless the
employment of such counsel has been specifically authorized by the Company. The
Company shall not be liable to indemnify any person for any settlement of any
such action effected without the Company's consent. The Company shall not,
except with the approval of each party being indemnified under this Section
5.03, consent to entry of any judgment or enter into any settlement that does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to the parties being so indemnified of a release from all liability in
respect to such claim or litigation.
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5.04. INDEMNIFICATION OF COMPANY. In the event that the Company
registers any of the Registrable Shares under the Securities Act, each holder
of the Registrable Shares so registered will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed the
registration statement, each underwriter of the Registrable Shares so registered
(including any broker or dealer through whom such of the shares may be sold) and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act from and against any and all losses, claims, damages,
expenses, or liabilities, joint or several, to which they or any of them may
become subject under the Securities Act or under any other statue or at common
law or otherwise, and, except as hereinafter provided, will reimburse the
Company and each such director, officer, underwriter or controlling person for
any legal or other expenses reasonably incurred by them or any of them in
connection with investigating or defending any actions whether or not resulting
in any liability, insofar as such losses, claims, damages, expenses, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement, in any
preliminary or amended preliminary prospectus or in the prospectus (or the
registration statement or prospectus as from time to time amended or
supplemented) or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, but only insofar as any
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company in connection therewith by such
holder of Registrable Shares expressly for use therein; PROVIDED, HOWEVER, that
such holder's obligations hereunder shall be limited to an amount equal to the
proceeds to such holder of the Registrable Shares sold in such registration.
Promptly after receipt of notice of the commencement of any action in respect of
which indemnity may be sought against such holder of Registrable Shares, the
Company will notify such holder of Registrable Shares in writing of the
commencement thereof, and such holder of Registrable Shares shall, subject to
the provisions hereinafter stated, assume the defense of such action (including
the employment of counsel, who shall be counsel satisfactory to the Company) and
the payment of expenses insofar as such action shall relate to the alleged
liability in respect of which indemnity may be sought against such holder of
Registrable Shares. The Company and each such director, officer, underwriter
or controlling person shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel shall not be at the expense of such holder of Registrable Shares
unless employment of such counsel has been specifically authorized by such
holder of Registrable Shares. Notwithstanding the two preceding sentences, if
the action is one in which the Company may be obligated to indemnify any holder
of Registrable Shares pursuant to Section 5.03, the Company shall have the right
to assume the defense of such action, subject to the right of such holders to
participate
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therein as permitted by Section 5.03. Such holder of Registrable Shares shall
not be liable to indemnify any person for any settlement of any such action
effected without such holder's consent. Such holder shall not, except with the
approval of the Company, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to the party being so indemnified of a release from
all liability in respect to such claim or litigation.
5.05. EXCHANGE ACT REGISTRATION. The Company will use its best efforts
to file on a timely basis with the Securities and Exchange Commission all
information that the Commission may require under either of Section 13 or
Section 15(d) of the Exchange Act and shall use its best efforts to take all
action that may be required as a condition to the availability of Rule 144 under
the Securities Act (or any successor exemptive rule hereinafter in effect) with
respect to the Company's Common Stock. The Company shall furnish to any holder
of Registrable Shares forthwith upon request (i) a written statement by the
Company as to its compliance with the reporting requirements of Rule 144, (ii) a
copy of the most recent annual or quarterly report of the Company as filed with
the Securities and Exchange Commission, and (iii) any other reports and
documents that a holder may reasonably request in availing itself of any rule or
regulation of the Securities and Exchange Commission allowing a holder to sell
any such Registrable Securities without registration.
5.06. DAMAGES. The Company recognizes and agrees that the holder of
Registrable Shares will not have an adequate remedy if the Company fails to
comply with this Article V and that damages will not be readily ascertainable,
and the Company expressly agrees that, in the event of such failure, it shall
not oppose an application by the holder of Registrable Shares or any other
person entitled to the benefits of this Article V requiring specific performance
of any and all provisions hereof or enjoining the Company from continuing to
commit any such breach of this Article V.
5.07 FURTHER OBLIGATIONS OF THE COMPANY. Whenever under the
preceding Sections of this Article V, the Company is required hereunder to
register Registrable Shares, it agrees that it shall also do the following:
(a) Furnish to each selling holder of Registrable Shares such
copies of each preliminary and final prospectus and any other documents that
such holder may reasonably request to facilitate the public offering of its
Registrable Shares;
(b) Use its best efforts to register or qualify the Registrable
Shares to be registered pursuant to this Article V under the applicable
securities or "blue sky" laws of such jurisdictions as any selling holder may
reasonably request; PROVIDED, HOWEVER, that the Company shall not be obligated
to qualify to do business in any jurisdiction where it is not then so qualified
or to take any action that would subject it to the service of process
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in suits other than those arising out of the offer or sale of the securities
covered by the registration statement in any jurisdiction where it is not then
so subject;
(c) Furnish to each selling holder a signed counterpart of
(i) an opinion of counsel for the Company, dated the effective
date of the registration statement, and
(ii) "comfort" letters signed by the Company's independent public
accountants who have examined and reported on the Company's financial
statements included in the registration statement, to the extent permitted
by the standards of the American Institute of Certified Public Accountants,
covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and (in the case of the
accountants' "comfort" letters) with respect to events subsequent to the date of
the financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' "comfort" letters delivered to the underwriters in
underwritten public offerings of securities, to the extent that the Company is
required to deliver or cause the delivery of such opinion or "comfort" letters
to the underwriters in an underwritten public offering of securities;
(d) Permit each selling holder of Registrable Shares or his counsel or
other representatives to inspect and copy such corporate documents and records
as may reasonably be requested by them; and
(e) Furnish to each selling holder, upon request, a copy of all
documents filed and all correspondence from or to the Securities and Exchange
Commission in connection with any such offering.
5.08. EXPENSES. In the case of a registration under Sections 5.01, the
Company shall bear all costs and expenses of each such registration, including,
but not limited to, printing, legal and accounting expenses, Securities and
Exchange Commission filing fees and "blue sky" fees and expenses; PROVIDED,
HOWEVER, that the Company shall have no obligation to pay or otherwise bear (i)
any portion of the fees or disbursements of counsel (other than counsel for the
Company) for the selling holders of Registrable Shares in connection with the
registration of their Registrable Shares, or (ii) any portion of the
underwriters' commissions or discounts attributable to the Registrable Shares
being offered and sold by the holders of Registrable Shares.
5.09. TRANSFER OF REGISTRATION RIGHTS. The registration rights of the
holders of Registrable Shares under this Article V may be transferred without
the consent of the Company to any
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transferee of Registrable Shares that (i) is a partner of a Purchaser, (ii)
acquires all of the Registrable Shares held by a Purchaser or (iii) holds 25,000
Registrable Shares (such number to be equitably adjusted whenever there shall
occur a stock split, combination, reclassification or other similar event
affecting the Common Stock after the date of this Agreement).
5.10. NO SUPERIOR RIGHTS. The Company will not grant registration
rights to any Person that are superior to the rights granted hereunder without
the prior consent of Purchasers holding at least fifty-one percent (51%) of the
Registrable Shares unless the holders of Registrable Shares are also granted
such superior rights.
ARTICLE VI
Representations and Warranties of Purchasers
and Restrictions on Transfer
6.01 REPRESENTATIONS AND WARRANTIES BY EACH PURCHASER. Each
Purchaser, for that Purchaser alone, represents and warrants to the Company with
respect to this purchase as follows:
(a) This Agreement constitutes the Purchaser's valid and legally
binding obligation, enforceable in accordance with its terms.
(b) It is experienced in evaluating and investing in high
technology companies such as the Company.
(c) It is acquiring the Shares for investment for its own
account and not with a view to, or for resale in connection with, any
distribution thereof. It understands that the Shares to be purchased have not
been registered under the Securities Act by reason of a specific exemption from
the registration provisions of the Securities Act that depends upon, among other
things, the bona fide nature of the investment intent as expressed herein.
(d) It acknowledges that the Shares must be held indefinitely
unless subsequently registered under the Securities Act, or unless an exemption
from such registration is available. It is aware of the provisions of Rule 144
promulgated under the Securities Act that permit limited resale of Shares
purchased in a private placement subject to the satisfaction of certain
conditions.
(e) It understands that no public market now exists for any of
the securities issued by the Company, and that it is unlikely that a public
market will ever exist for the Shares.
(f) It has had an opportunity to discuss the Company's business,
management, and financial affairs with the Company's management and to review
the Company's facilities. It understands that such discussions, as well as the
written information
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issued by the Company, were intended to describe the aspects of the Company's
business and prospects that the Company believes to be material, but that these
descriptions were not necessarily thorough or exhaustive.
6.02 LEGENDS. Each certificate representing the Shares shall be
endorsed with the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD
OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
and if imposed by the California Department of Corporations, the following
legend:
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY,
OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION
THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED
IN THE COMMISSIONER'S RULES.
The Company need not register a transfer of Shares, unless the conditions
specified in the foregoing legends are satisfied. The Company may also instruct
its transfer agent not to register the transfer of any of the Shares unless the
conditions specified in the foregoing legends are satisfied.
6.03 REMOVAL OF LEGENDS AND TRANSFER RESTRICTIONS. The legend
relating to the Securities Act endorsed on a stock certificate pursuant to
Section 6.02 of this Agreement and the stop transfer instructions with respect
to the Shares represented by such certificate shall be removed and the Company
shall issue a certificate without such legend to the holder of such Shares if
such Shares are registered under the Securities Act and a prospectus meeting the
requirements of Section 10 of the Securities Act is available or if such holder
provides to the Company an opinion of counsel for such holder of the Shares
reasonably satisfactory to the Company, or a no-action letter or interpretive
opinion of the staff of the Securities and Exchange Commission (the
"Commission") to the effect that a public sale, transfer or assignment of such
Shares may be made without registration and without compliance with any
restriction such as Rule 144. The California Commissioner of Corporations
legend (if required) will be removed if the Commissioner of Corporations of the
State of California has consented to the removal of such legend.
-20-
6.04 ADDITIONAL PURCHASES OF COMMON STOCK. The Purchasers covenant
and agree that they shall not acquire more than an aggregate of three hundred
thousand shares of Common Stock (including the Shares) or other equity
securities of the Company (such number to be appropriately adjusted for stock
splits, stock dividends and the like) from the Company or from other
stockholders of the Company without the prior approval of the Board of
Directors. This section 6.04 shall terminate automatically upon the closing of
the Company's initial registered public offering under the Securities Act.
ARTICLE VII
DEFINITIONS AND ACCOUNTING TERMS.
7.01. CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Agreement" means this Common Stock Purchase Agreement as from time to
time amended and in effect between the parties.
"Board of Directors" shall mean the then present members of the Board of
Directors of the Company.
"Company" means and shall include Aehr Test Systems and its successors and
assigns.
"Consolidated" when used with reference to any term defined herein mean
that term as applied to the accounts of the Company and its Subsidiaries
consolidated in accordance with generally accepted accounting principles after
eliminating intercompany items and minority interests.
"ERISA" shall have the meaning assigned to that term in Section 3.09.
"Exchange Act" means the Securities Exchange Act of 1934, or any similar
federal statute, and the rules and regulations of the Securities and Exchange
Commission (or of any other Federal Agency then administering the Exchange Act)
thereunder, all as the same shall be in effect at the time.
"Indebtedness" means all obligations, contingent and otherwise, which
should, in accordance with generally accepted accounting principles consistently
applied, be classified upon the obligor's balance sheet as liabilities,
excluding any liabilities in respect of deferred federal or state income taxes,
but in any event including, without limitation, liabilities secured by any
mortgage on property owned or acquired subject to such mortgage, whether or not
the liability secured thereby shall have been assumed, and
-21-
also including, without limitation, (i) all guaranties, endorsements and other
contingent obligations, in respect of Indebtedness of others, whether or not the
same are or should be so reflected in said balance sheet, except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business and (ii) the present value of
any lease payments due under leases required to be capitalized in accordance
with applicable Statements of Financial Accounting Standards, determined by
discounting all such payments at the interest rate determined in accordance with
applicable Statements of Financial Accounting Standards.
"Key Employee" means and includes, currently, Xxxx Xxxxxxx, Xxxxxxx Xxxxx,
Xxxxxx Xxx, Xxxxxxx Xxxxxxxxxx, Xx., Xxxxxxx Xxxxxxx, and in the future the
foregoing individuals as well as the Chairman of the Board of Directors, the
President, any Vice-President and the Treasurer of the Company or any
Subsidiary, or any person who is not an officer of the Company or any Subsidiary
and is in charge of one or more of the following functions: sales, marketing,
production, or engineering and technical development or any other position or
employee so designated by the Board of Directors of the Company.
"Ownership Percentage" means and includes, with respect to each holder of
Registrable Shares for purposes of Section 5.01, the number of Registrable
Shares held by such holder divided by the aggregate of the then-outstanding
shares of Common Stock of the Company.
"Person" means an individual, corporation, partnership, joint venture,
trust, or unincorporated organization, or a government or any agency or
political subdivision thereof.
"Purchaser" means and shall include the persons listed on EXHIBIT 1.01.
"Qualified Public Offering" means and includes the closing of an
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, converting the offer and sale of
Common Stock for the account of the Company from which the aggregate gross
proceeds to the Company exceed $7,500,000 and in which the price per share is at
least $10.00 per share (such amount to be equitably adjusted whenever there
shall occur a stock split, combination, reclassification or other similar event
affecting the Common Stock).
"Registrable Shares" means and includes (i) the Shares, (ii) any other
shares of Common Stock acquired by the Purchasers within 60 days of the Closing
and (iii) any shares of Common Stock issued on or with respect to the foregoing
by way of stock split, stock dividend, recapitalization or the like.
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"Securities Act" means the Securities Act of 1933, or any similar Federal
statute, and the rules and regulations of the Securities and Exchange Commission
(or of any other Federal agency then administering The Securities Act)
thereunder, all as the same shall be in effect at the time.
"Shares" shall have the meaning assigned to that term in Section 1.01.
"Subsidiary" or "Subsidiaries" means any corporation, 50% or more of the
outstanding voting stock of which shall at the time be owned by the Company or
by one or more Subsidiaries, or any other entity or enterprise, 50% or more of
the equity of which shall at the time be owned by the Company or by one or more
Subsidiaries.
7.02. ACCOUNTING TERMS. All accosting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistent with those applied in preparation of the financial
statements set forth in EXHIBIT 3.07, and all other financial data submitted
pursuant to this Agreement and all financial tests to be calculated in
accordance with this Agreement shall be prepared and calculated in accordance
with such principles.
ARTICLE VIII
MISCELLANEOUS
8.01. NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part
of any Purchaser, or any other holder of the Shares in exercising any right,
power or remedy hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy
hereunder. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
8.02. AMENDMENTS, WAIVERS AND CONSENTS. Any provision in this
Agreement or the Shares to the contrary nothwithstanding, changes in or
additions to this Agreement or the Shares may be made, and compliance with any
covenant or provision herein or therein set forth may be omitted or waived, if
the Company, (i) shall obtain consent thereto in writing from Persons holding an
aggregate of at least sixty percent (60%) of the Shares, and (ii) shall, in each
such case, deliver copies of such consent in writing to any holders who did not
execute the same. Any waiver or consent may be given subject to satisfaction of
conditions stated therein and any waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
-23-
8.03. ADDRESS FOR NOTICES, ETC. All notices, requests, demands and
other communications provided for hereunder shall be in writing (including
telegraphic communication) and mailed or telegraphed or delivered to the
applicable party at the addresses indicated below:
If to the Company:
Aehr Test Systems
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
with a copy to:
Xxxxx X. Xxxxxx
Wilson, Sonsini, Xxxxxxxx & Xxxxxx
Xxx Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
If to the Purchaser: at the addresses set forth under their respective
names on EXHIBIT 1.01 hereto.
If to any other holder of the Shares: at such holder's address for notice
as set forth in the register maintained by the Company, or, as to each of the
foregoing, at such other address as shall be designated by such Person in a
written notice to the other party complying as to delivery with the terms of
this Section. All such notices, requests, demands and other communications
shall, when mailed or telegraphed, respectively, be effective when deposited in
the mails or delivered to the telegraph company, respectively, addressed as
aforesaid.
8.04. COSTS, EXPENSES AND TAXES. The Company agrees to pay the
reasonable fees and out-of-pocket expenses of Messrs. Xxxxx, Xxxxxxx &
Xxxxxxxxx, special counsel for the Purchasers with respect thereto (which costs
and expenses shall not exceed $10,000). In addition, the Company shall pay any
and all stamp and other taxes payable or determined to be payable in connection
with the execution and delivery of this Agreement, the Shares, and other
instruments and documents to be delivered hereunder or thereunder and agrees to
save the Purchaser harmless from the against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
and filing fees.
8.05. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Company and the Purchasers and their
respective successors and assigns, except that the Company shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Purchasers obtained in accordance with Section 8.02
hereof.
-24-
8.06. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in this Agreement, the Shares, or any other instrument or
document delivered in connection herewith or therewith, shall survive the
execution and delivery hereof or thereof.
8.07. PRIOR AGREEMENTS. This Agreement constitutes the entire
agreement between the parties and supersedes any prior understandings or
agreements concerning the subject matter hereof.
8.08. SEVERABILITY. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.
8.09. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California.
8.10. HEADINGS. Article, Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
8.11. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
8.12. FURTHER ASSURANCES. From and after the date of this
Agreement, upon the request of the Purchasers, the Company and each Subsidiary
shall execute and deliver such instruments, documents and other writings as may
be necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement and the Shares.
[The remainder of this page is intentionally left blank.]
-25-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
AEHR TEST SYSTEMS
By: /s/ Xxxx X. Xxxxxxx
-------------------------------
President
SUMMIT VENTURES, L.P.
By: Summit Partners, L.P.
General Partner
By: Stamps, Xxxxxxx & Co.
General Partner
By: /s/ illegible
---------------------------
General Partner
SV EUROFUND C.V.
By: SV International, L.P.
General Partner
By: Stamps, Xxxxxxx
International & Co.
General Partner
By: /s/ illegible
----------------------
General Partner
SUMMIT INVESTORS. L.P.
By: /s/ illegible
--------------------------------
General Partner
EXHIBIT 1.01
LIST OF PURCHASERS
Name and Address Number of Aggregate Purchase
of Purchaser Shares Price of Shares
---------------- --------- -----------------
Summit Ventures, L.P. 30,002 $300,020
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
SV Eurofund C.V. 19,773 197,730
c/o SV Interna-
tional, L.P.
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Summit Investors, L.P. 225 2,250
c/o Summitt Partners, L.P.
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000 ------ -------
TOTAL 50,000 $500,000
------ --------
------ --------
September 19, 1985
To Each Purchaser listed on
the List of Purchasers
Gentlemen:
This opinion is rendered to you in compliance with Section 2.01 (b) (ii) of
the Stock Purchase Agreement dated as of September 18, 1985 (the "Agreement")
among Aehr Test Systems (the "Company") and you. The terms as defined in the
Agreement shall, unless otherwise defined herein or unless the context otherwise
requires, have the same defined meanings herein.
We are general legal counsel to the Company. As its counsel, we have made
such legal and factual examinations and inquiries as we have deemed advisable or
necessary for the purpose of rendering this opinion and have examined, among
other things, originals, certified copies, or copies otherwise identified to our
satisfaction as being true copies of the originals of the following:
(a) The Articles of Incorporation and By-Laws, as amended to date, of the
Company;
(b) Advice from the California Secretary of State and California Franchise
Tax Board as to the good standing of the Company;
(c) The resolutions of the board of directors of the Company with respect
to the Agreement and the transactions covered thereby; and
(d) The Agreement and the Exhibits thereto.
We have also relied upon and obtained from public officials, officers and
representatives of the Company, such other certificates and written assurances
as we consider necessary for the purposes of rendering this opinion. As used in
this opinion, the expressions "to our knowledge" and "known to us" with
reference to matters of fact means that, after an examination of documents made
available to us by the Company, we find no reason to believe that the opinions
expressed herein are factually incorrect, but beyond that we have made no
independent factual investigation for the purpose of rendering this opinion.
The opinions hereinafter expressed are subject to the following
qualifications:
(a) No opinion is given with respect to the effect of applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the rights of creditors generally;
(b) No opinion is given with respect to the effect of rules of law
governing specific performance, injunctive relief or other equitable remedies;
(c) No opinion is given with respect to the enforceability of the
indemnification provisions of Sections 5.03 or 5.04 of the Agreement;
(d) No opinion is given with respect to compliance with the antifraud
provisions under federal and state laws; and
(e) We are members of the bar of the state of California and we do not
hold ourselves out as experts of the laws of other states.
On the basis of the foregoing and in reliance thereon, we are of the
opinion that:
1. The Company is a duly organized and validly existing corporation in
good standing under the laws of the jurisdiction in which it was organized and
has all requisite corporate power and authority for the ownership and operation
of its properties and for the carrying on of its business as now conducted and
as now proposed to be conducted. Except as disclosed in Exhibit 3.03 of the
Agreement, the Company is duly licensed or qualified and in good standing as a
foreign corporation authorized to do business in all jurisdictions in which the
character of the property owned or leased, or the nature of the activities
conducted, by it makes such licensing or qualification necessary, or the failure
to be so qualified will not have a materially adverse effect on the condition,
assets, liabilities, earnings or business of the Company.
-2-
2. The Company has all necessary corporate power and has taken all
corporate action required to make all the provisions of the Agreement and any
other agreements and instruments executed in connection with the Agreement the
valid and binding obligations of the Company enforceable in accordance with
their respective terms. The Company has duly executed and delivered the
Agreement, the Shares, and each other agreement and instrument executed in
connection with the agreement and each is a legal, valid and binding obligation
of the Company enforceable in accordance with its terms. The issuance of the
Shares does not require any further corporate action, and will not be subject to
preemptive or other preferential rights or similar statutory or contractual
rights arising pursuant to any agreement or instrument, known to us, to which
the Company is a party or which are otherwise binding upon the Company.
3. Except for filings under federal and state securities law which may be
made under applicable provisions after the Closing, no further authorization,
consent, approval, license, exemption of or filing or registration with any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, under any applicable laws, rules or
regulations in effect, is or will be necessary for, or in connection with, the
offer, issuance, sale, execution or delivery by the Company of the Shares, or
for the performance by it of the Company's obligations under the Agreement or
the Shares.
4. There is, to our knowledge, no litigation or governmental proceeding
or investigation pending or threatened against the Company or any of its
Subsidiaries affecting any of their material properties or assets, or, to our
knowledge, against any officer or Key Employee of the Company, that might
result, either in any case or in the aggregate, in any material adverse change
in the business, operations, affairs or conditions of the Company, any of its
Subsidiaries, or any of their material properties or assets, or that might call
into question the validity of the Agreement, any of the Shares, or any action
taken or to be taken pursuant thereto, nor, to our knowledge, has there occurred
any event or does there exist any condition on the basis of which any
litigation, proceeding or investigation might properly be instituted that might
result, either in any case or in the aggregate, in any material adverse change
in the business, operations, affairs or conditions of the Company, any of its
Subsidiaries, or any of their material properties or assets. To our knowledge,
no officer of Key Employee of the Company, or any of its Subsidiaries, is in
default with respect to any order, writ, injunction decree, ruling or decision
of any court, commission, board of other government agency that might result,
either in any case or in the aggregate, in any material adverse change in the
business, operations, affairs or conditions of the Company, any of its
Subsidiaries, or any of their material properties or assets. The fore-
-3-
going sentences include, without limiting their generality, actions pending or
threatened, which are known to us, (or any basis therefor known to us) involving
the prior employment of any of the Company's or any Subsidiary's officers or
employees or their use in connection with the Company or any Subsidiary's
business of any information or techniques allegedly proprietary to any of their
former employers.
5. The Company is in compliance in all respects with the terms and
provisions of its Articles of Incorporation and By-laws and in all material
respects with the terms and provisions of the mortgages, indentures, leases,
agreements and other instruments known to us relating to obligations of the
Company in excess of $50,000, individually or in the aggregate, and of all
judgments, decrees, governmental orders, statutes, rules or regulations by which
it is bound or to which it or any of its properties or assets are subject of
which we have knowledge, the noncompliance with which would have a materially
adverse effect on the business, operations, affairs or conditions of the
Company, or any of its material properties or assets. Neither the execution and
delivery of the Agreement or Shares, nor the consummation or any transaction
contemplated thereby, has constituted or resulted in or will constitute or
result in a default or violation of any term or provision in any of the
documents, instruments, judgements, decrees, orders, statutes, rules and
regulations, known to us.
6. Subject to the accuracy of the Purchaser's representations in Section
6.01 of the Agreement and in written responses to the Company's inquiries, the
offer, sale, and issuance of the Shares in conformity with the terms of the
Agreement constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act of 1933, as amended and the registration or
qualification requirements of the applicable state securities laws.
7. The Company has a total authorized capitalization consisting of
75,000,000 shares of Common Stock, of which 3,432,022 shares are issued and
outstanding. All the outstanding shares of capital stock of the Company have
been duly authorized, are validly issued and are fully paid and nonassessable.
The Shares, when issued and delivered in accordance with the terms thereof, will
be duly authorized, validly issued and fully paid and nonassessable. Except as
set forth in Exhibit 3.16 to the Agreement, there are no options, warrants or
rights to purchase shares of capital stock or other securities of the Company
which are authorized, issued or outstanding, nor is the Company obligated in any
other manner to issue shares of its capital stock other than those imposed by
relevant state and federal securities laws and those contemplated by the
Agreement. No holder of any security of the Company is entitled to preemptive
or similar statutory or contractual rights, either arising pursuant to any
agreement or instrument, known to
-4-
us, to which the Company is a party or which is otherwise binding upon the
Company. The offer and sale of the shares of Capital Stock under the Capital
Stock Investment Agreement dated April 12, 1984 was exempt from the registration
requirements of Section 5 of the Securities Act of 1933, as amended.
This opinion may not be furnished to, quoted to or relied upon by any other
person, firm or corporation without our prior written consent.
Very truly yours,
WILSON, SONSINI, GOODRIBH & XXXXXX
J. Xxxxx XxXxxxx
-5-
AEHR TEST SYSTEMS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
---------------
3. PROPERTY AND EQUIPMENT:
Property and equipment at May 31 comprise:
1995 1984
---- ----
Leasehold improvements $ 513,649 $ 397,792
Furniture and fixtures 374,134 211,251
Machinery and equipment 645,110 261,024
Test equipment 1,007,672 497,293
Transportation equipment - 7,333
---------- ----------
2,540,565 1,374,693
Less accumulated
depreciation and
amortization 657,677 336,910
---------- ----------
$1,882,888 $1,037,783
---------- ----------
---------- ----------
4. INVESTMENT IN FOREIGN JOINT VENTURE:
In October 1981, the Company and an individual formed a corporate
joint venture in Tokyo, Japan to manufacture, import, export and sell
test systems, parts and accessories. The Company contributed cash of
$241,895 for a 50% interest in the profits or losses of the joint
venture. The Company also holds an option to purchase all or part of
the remaining 50% interest in such amounts and at such times it
chooses through March 1, 1997 at an exercise price based on future
earnings of the joint venture as defined in the agreement.
Continued
8
AEHR TEST SYSTEMS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
---------------
4. INVESTMENT IN FOREIGN JOINT VENTURE, continued:
Summary financial information as of May 31, 1985 and 1984 and for the
years then ended follows:
Balance Sheets: 1985 1984
-------------- ---- ----
Cash and cash equivalents $ 837,209 $ 915,352
Accounts receivable 2,817,991 918,366
Inventories 4,425,863 1,737,424
Other assets 692,994 397,893
---------- ----------
$8,774,057 $3,969,035
---------- ----------
---------- ----------
Notes payable $2,469,234 $1,720,060
Account payable to Aehr Test Systems 707,888 383,621
Accounts payable and accrued liabilities 4,294,708 1,228,850
---------- ----------
7,471,830 3,332,531
Stockholder's equity 1,302,227 636,504
---------- ----------
$8,774,057 $3,969,035
---------- ----------
---------- ----------
Statements of Income:
--------------------
Sales $9,040,033 $4,474,578
Cost of sales 5,808,328 3,012,783
---------- ----------
Gross profit 3,231,705 1,461,795
Selling, general and administrative
expense 1,112,528 869,619
Research and development expense 360,583 -
---------- ----------
Income before income taxes and
extraordinary item 1,758,594 592,176
Provision for income taxes 1,033,674 365,110
---------- ----------
Income before extraordinary item 724,920 227,066
Extraordinary item - tax benefit
resulting from utilization of
loss carryforward - 67,072
---------- ----------
Net income $ 724,920 $ 294,138
---------- ----------
---------- ----------
During fiscal 1985 and 1984, respectively, the Company sold $2,666,943
and $1,386,217 of its product to the joint venture.
Continued
9
AEHR TEST SYSTEMS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
---------------
5. NOTES PAYABLE:
At May 31, 1985, the Company had available an unsecured revolving line
of credit with a bank which provides for borrowings of up to
$4,500,000. Under this agreement which is available until
September 30, 1985, interest is charged at the bank's prime rate
(10.0% at May 31, 1985). The agreement requires the Company to
maintain specified financial ratios and an average compensating
balance of $200,000. The compensating balance does not constitute a
legal restriction on the Company's cash, and to the extent it is not
maintained, the bank charges a fee based on an interest formula
contained within the agreement. At May 31, 1985 $1,200,000 was
outstanding under the line of credit.
6. LONG-TERM DEBT:
Long-term debt at May 31 consists of:
1985 1984
---- ----
Unsecured revolving term loan
bearing interest at the bank's
prime rate plus 0.25% (10.25%
at May 31, 1985). Borrowing, up
to a maximum amount of $3,500,000,
are available until September 30,
1986. Principal outstanding at
September 30, 1986 will be payable
in sixty equal monthly installments
commencing October 1, 1986. $1,400,000 -
Term note bearing interest at the
bank's prime rate plus 1/2%. - $475,000
Term note bearing interest at the
bank's prime rate plus 3/4%. - 308,335
Obligations under capital leases 16,664 32,057
---------- --------
1,416,664 815,392
Less amount due within one year 10,153 188,136
---------- --------
$1,406,511 $627,256
---------- --------
---------- --------
Continued
10
AEHR TEST SYSTEMS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
---------------
6. LONG-TERM DEBT, continued:
The aggregate amount of future maturities by fiscal year for all long-
term debt at May 31, 1985 is as follows:
1986 $ 12,872
1987 77,250
1988 280,000
1989 280,000
1990 280,000
Thereafter 490,000
----------
1,420,122
Less interest relating to
capital leases 3,458
----------
$1,416,664
----------
----------
7. LEASE COMMITMENTS:
The Company leases most of its present manufacturing and office space
under an operating lease which expires in 1991. Under the terms of
the lease, the rentals will be adjusted upward every two years based
on the Consumer Price Index but with increases not to exceed 14% for
any adjustment. The lease contains a renewal option whereby the
Company may extend the lease term for an additional five years with
the same terms. In addition, the Company is required to pay for
insurance, taxes and maintenance of the property.
The Company has entered into an operating lease agreement for
additional office space. The lease commences upon the later of
completion of the facility or January 15, 1986 and expires in 1991.
The Company will be responsible for taxes, insurance, maintenance and
utilities related to the property. The lease contains a renewal
option whereby the Company may extend the lease term for an additional
four years, with rentals to be determined by mutual agreement at the
time of renewal.
Continued
11
AEHR TEST SYSTEMS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
---------------
7. LEASE COMMITMENTS, continued:
Minimum annual rentals payable under operating leases in each of the
next five years are as follows:
1986 $ 511,191
1987 953,309
1988 967,009
1989 986,365
1990 1,007,718
Thereafter 1,277,675
----------
$5,703,267
----------
----------
Net rent expense for the years ended May 31, 1985 and 1984 was
approximately $432,000 and $334,000, respectively.
8. COMMON STOCK:
Approximately 625,000 shares of common stock outstanding at May 31,
1985 have certain registration rights which are exercisable after the
earlier of March 1, 1989 or 120 days after the effective date of the
first registration of a public offering of the Company's capital
stock.
9. STOCK OPTIONS:
The Company has two incentive stock option plans under which 775,000
shares of capital stock were reserved for issuance to employees and
paid consultants. Both plans provide that options be granted at an
exercise price equal to the fair market value at the date of grant, as
determined by the Board of Directors. The options expire five years
from the grant date and most options become exercisable in increments
over a four-year period from the date of grant. At May 31, 1985,
options to purchase 95,675 shares were exercisable.
Continued
12
AEHR TEST SYSTEMS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
---------
9. STOCK OPTIONS, continued:
Activity under the two plans was as follows:
Optioned Shares
Reserved But --------------------------------------------
Unoptioned Number of Price
Shares Shares Per Share Total
---------- --------- --------- -----
Balances,
June 1, 1983 140,000 269,000 $ .40 to $ 4.00 $505,500
Options granted (67,100) 67,100 $6.00 to $ 8.50 419,100
Options exercised - (80,250) $ .40 to $ 4.00 (83,250)
Options terminated 42,250 (42,250) $3.60 to $ 6.00 (169,500)
------- ------- --------------- ----------
Balances,
May 31, 1984 115,150 213,600 $ .40 to $ 8.50 671,850
Options granted (73,630) 73,630 $8.50 to $10.00 631,105
Options exercised - (58,250) $ .50 to $ 4.00 (31,750)
Options terminated 34,650 (34,650) $ .40 to $ 8.50 (87,900)
------- ------- --------------- ----------
Balances,
May 31, 1985 76,170 194,330 $ .40 to $10.00 $1,183,305
------- ------- --------------- ----------
------- ------- --------------- ----------
Notes receivable for capital stock comprises $350,000 of noninterest-
bearing notes received by the Company from employees exercising stock
options in 1981 and a $92,400 note bearing interest at 9% issued in 1984 in
connection with the sale of stock to an employee. The notes are
collateralized by the shares issued to the employees, except one note for
$150,000 which is collateralized by a deed of trust in real property. The
notes are due in the years 1986 and 1989, except one note for $200,000
which is due upon the creation of a public market for the Company's stock
or May 1986, whichever occurs later.
10. EMPLOYEE BONUS PLAN:
The Company has a noncontributory, trusteed employee bonus plan for
full-time employees. The intent of the Company is to contribute shares of
the Company's stock to the plan, although the plan also allows cash
contributions. The contribution is determined annually by the Company and
cannot exceed 15% of the annual aggregate salaries of those employees
eligible for participation in the plan. Individuals' account balances vest
at a rate of 25% per year commencing upon completion of three years of
service. Nonvested balances which are forfeited are allocated to the
remaining employees in the plan.
Continued
13
AEHR TEST SYSTEMS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
----------
10. EMPLOYEE BONUS PLAN, continued
The authorized contribution to the plan for the year ended May 31, 1985 was
approximately $241,900, which was charged to expense in fiscal 1985 and
will be paid to the plan in fiscal 1986 by the issuance of 24,190 shares of
the Company's capital stock. The number of shares of stock to be issued to
the plan was based on a valuation by the Board of Directors of $10.00 per
share as of May 31, 1985.
The authorized contribution to the plan for the year ended May 31, 1984 was
approximately $164,000, which was charged to expense in fiscal 1984 and was
paid to the plan in fiscal 1985 by the issuance of 19,192 shares of the
Company's capital stock. The number of shares of stock issued to the plan
was based on a valuation by the Board of Directors of $8.50 per share as of
May 31, 1984.
The contribution of 25,180 shares made to the plan in fiscal 1984 was
authorized and charged to expense in fiscal 1983.
11. PROVISION FOR INCOME TAXES:
The provision for income taxes for the years ended May 31 consists of the
following:
1985 1984
---- ----
State income taxes:
Currently payable $ 285,000 $ 36,000
Deferred 37,000 174,000
Federal income taxes:
Currently payable (refundable) 524,000 (278,000)
Deferred 218,000 797,000
---------- --------
$1,064,000 $729,000
---------- --------
---------- --------
Continued
14
AEHR TEST SYSTEMS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
----------
11. PROVISION FOR INCOME TAXES, continued:
The Company's effective tax rate differs from the U.S. federal statutory
tax rate as follows:
1985 1984
---- ----
Maximum statutory income tax rate 46.0% 46.0%
Effect of graduated rates (.5) (.9)
Investment tax credit (1.7) (1.9)
Research and development tax credit (11.1) (10.3)
State taxes, net of federal tax
effect 4.9 4.8
Undistributed earnings of foreign
joint venture not having a
federal tax effect (4.5) (2.9)
DISC earnings not subjected to
federal taxes (2.4) (3.0)
FSC earnings exempt from
federal taxes (2.0) -
Other (.1) (.5)
----- -----
Provision for income taxes 28.6% 31.3%
----- -----
----- -----
15
[AEHR TEST SYSTEMS LETTERHEAD]
September 12, 1985
Summit Ventures
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Gentlemen:
To my knowledge, the attached unaudited and unconsolidated Income Statement for
the two months ended July 31, 1985 and Balance Sheet as of July 31, 1985 are
true and correct.
/s/ Xxxxxxx X. Xxxxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxxxxx
Treasurer and Chief Financial
Officer
AEHR TEST SYSTEMS
INCOME STATEMENT
FOR THE TWO MONTHS ENDED JULY 31, 1985
($ in thousands)
Net Sales $5,096
Cost of Goods Sold 2,703
------
Gross Margin 2,393
Operating Expenses:
Sales and Marketing 636
R & D 616
General & Admin 216
------
Total Operating Exp 1,468
------
Operating Profit 925
------
Other Income & Expense:
Interest 15
Other Expense 75
------
Total Other 90
------
Net Income Before Taxes 835
Tax Provision 311
Net Income $524
------
------
/s/ Xxxxxxx X. Xxxxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxxxxx
Treasurer and Chief Financial
Officer
AEHR TEST SYSTEMS
BALANCE SHEET
JULY 31, 1985
($ in thousands)
ASSETS
Current Assets:
Cash ($23)
Accounts Receivable, Net 5,621
Inventories 7,723
Prepaid Expenses 47
--------
Total Current Assets 13,368
Property, Plant & Equipment, Net 1,836
Other Assets 749
--------
Total Assets $15,953
--------
--------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $2,112
Accrued Liabilities 1,791
Accrued Income Taxes 1,940
--------
Total Current Liabilities 5,843
Other Long-term Liabilities 255
--------
Total Liabilities 6,098
Stockholders' Equity:
Capital Stock 2,130
Notes Secured by Capital Stock (442)
Retained Earnings 7,643
Net Income YTD 524
--------
Total Stockholders' Equity 9,855
--------
Total Liabilities and Stockholders' Equity $15,953
--------
--------
/s/ Xxxxxxx X. Xxxxxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxxxxx
Treasurer and Chief Financial
Officer
PATENT AND CONFIDENTIALITY AGREEMENT
In consideration and as a condition of my employment or continued
employment by AEHR TEST SYSTEMS (the "Company") and the compensation paid
therefor:
1. ASSIGNMENT OF INVENTIONS. I hereby assign and transfer to the Company
my entire right, title and interest in and to all inventions, improvements,
discoveries, ideas, designs, documents, and other data (whether or not
patentable) made, conceived, or first reduced to practice by me, whether solely
or jointly with others, during the period of my employment with the Company (the
"Inventions"), which relate in any manner to the actual or anticipated business
or research and development of the Company or its subsidiaries, or result from
or are suggested by any task assigned to me or by any of the work I have
performed or may perform for the Company. Provided, however, that this
Agreement does not require assignment of an Invention which qualifies fully for
protection under Section 2870 of the California Labor Code (hereinafter "Section
2870"). In the event any Invention relating in any manner to the actual or
anticipated business or research and development of the Company or its
subsidiaries is disclosed by me under paragraph 2 within six (6) months after
ceasing to serve as a consultant of the Company, it is to be presumed that such
Invention was conceived or resulted form developments made during the period of
my relationship with the Company and I agree that any such Invention will belong
to the Company, subject to the provisions of section 2870.
2. DISCLOSURE OF INVENTIONS; PATENTS. I agree promptly to disclose all
Inventions to whomever may be designated by the Company, regardless of whether I
believe the Invention is protected by Section 2870, in order to permit the
Company to claim rights to which it may be entitled under this Agreement. Such
disclosure shall be received in confidence by the Company. With respect to all
inventions which are to be assigned pursuant to paragraph 1, I will assist the
Company in any reasonable manner to obtain for its own benefit patents thereon
in any and all countries, and I will execute when requested, patent applications
and assignments thereof to the Company or persons designated by it, and any
other lawful documents deemed necessary by the Company to carry out the purposes
of this agreement, and I will further assist the Company in every way to enforce
any patents obtained, including, without limitation, testifying in any suit or
proceeding involving any of said patents or executing any documents deemed
necessary by the Company, all without further consideration than provided for
herein, but at the expense of the Company. I agree to preserve such Inventions
as confidential information of the Company. I further agree that the
obligations and undertakings stated in this paragraph 2 shall con-
3.15
tinue beyond the termination of my consulting relationship with the Company, but
if I am called upon to render such assistance after the termination of my
consulting relationship, then I shall be entitled to a fair and reasonable per
diem fee in addition to reimbursement of any expenses incurred at the request
of the Company. I agree to keep and maintain adequate and current written
records of all such Inventions made by me (in the form of notes, sketches,
drawings and as may be specified by the Company), which records shall be
available to and remain the property of the Company at all times.
3. CONFIDENTIALITY. I agree that without the Company's prior express
consent, I will not during my employment by the Company engage directly or
indirectly in any employment, consulting or activity other than for the
Company in any business in which the Company is now or may hereafter become
engaged. I agree that I will not during the period I am serving as an
employee for the Company or thereafter at any time disclose directly or
indirectly to any person or entity or use for my own benefit any trade
secrets or confidential information relating to products, processes,
know-how, machines, designs, drawings, software, formulas, test data,
marketing data, business plans and strategies, employees, negotiations and
contracts with other companies, disclosures and applications for patents and
the status of their prosecution, or any other subject matter pertaining to
any of the business of the Company or any of its clients, customers,
consultants, licensees or affiliates, known to, learned or acquired by me
during the period or my employment by the Company, except to such an extent
as may be necessary in the ordinary course of performing my particular duties
as an employee of the Company. I acknowledge that all the foregoing
information is proprietary to the Company and is a special, valuable and
unique asset of the business of the Company, and that my giving service as an
employee creates a relationship of confidence and trust between myself and
the Company with respect to the proprietary information.
4. PRIOR INVENTIONS. All inventions which I have made prior to my
employment by the Company shall be excluded from the scope of this Agreement.
As a matter of record, I have set forth at the end of this Agreement a complete
list of all inventions, discoveries or improvements relating to the Company's
business which I have conceived prior to my serving as a consultant for the
Company. I represent and covenant that the list is complete and that, if no
items are on the list, I have no such prior inventions.
5. RETURN OF CONFIDENTIAL MATERIAL. I agree to deliver promptly to the
Company on termination of my employment by the Company, whether or not for cause
and whatever the reason, or at any time it may so request, all memoranda, notes,
records, reports, manuals, drawings, blueprints, and any other documents of a
con-
-2-
fidential nature belonging to the Company, including all copies of such
materials, which I may then possess or have under my control. I further agree
that upon termination of my status as a consultant that I shall not take with me
any document or data of any description containing or pertaining to the
proprietary information of the Company as set forth in paragraph 3.
6. CUSTOMER LISTS AND EMPLOYEES. I agree that I shall not for a period
of six (6) months immediately following the termination of my relationship with
the Company for any reason, whether with or without cause, either directly or
indirectly: (1) call on, solicit, or take away any of the customers of the
Company on whom I called or with whom I became acquainted during the period of
my employment with the Company, either for myself or for any other person or
entity, or (2) solicit or take away, or attempt to solicit or take away any
employees of the Company, either for myself or for any other person or entity.
7. TRADE SECRETS OF OTHERS. I represent that my performance of all the
terms of this Agreement and as an employee of the Company does not and will not
breach any agreement to keep in confidence proprietary information or trade
secrets acquired by me in confidence or in trust prior to my entering into
a consulting relationship with the Company, and I will not disclose to the
Company, or induce the Company to use, any confidential or proprietary
information or material belonging to any previous employer or others. I agree
not to enter into any agreement either written or oral in conflict herewith.
8. OTHER OBLIGATIONS. I acknowledge that the Company from time to time
may have agreements with other persons or with the U.S. Government, or agencies
thereof, which impose obligations or restrictions on the Company regarding
inventions made during the course of work thereunder or regarding the
confidential nature of such work. I agree to be bound by all such obligations
and restrictions and to take all action necessary to discharge the obligations
of the Company thereunder.
9. INJUNCTIVE RELIEF. I agree that it would be difficult to measure the
damage to the Company from any breach by me of the covenants set forth in
paragraphs 1, 2, 3, 5, or 6 herein, that injury to the Company from any such
breach would be impossible to calculate, and that money damages would therefore
be an inadequate remedy for any such breach. Accordingly, I agree that if I
breach paragraphs 1, 2, 3, 5, and 6 or any of them, the Company shall be
entitled, in addition to all other remedies it may have, to injunctions or other
appropriate orders to restrain any such breach without showing or proving any
actual damage to the Company.
-3-
10. GENERAL. I acknowledge receipt of this Agreement and agree that, with
respect to the subject matter hereof, this Agreement is my entire agreement with
the Company, superseding any previous oral or written communications,
representations, understandings, or agreements with the Company or any officer
or representative thereof. This Agreement shall inure to the benefit of the
successors and assigns of the Company, and shall be binding upon my heirs,
assigns, administrators and representatives. To the extent that any of the
agreements set forth herein, or any word, phrase, clause or sentence thereof
shall be found to be illegal or unenforceable for any reason, such agreement,
word, phrase, clause or sentence shall be modified or deleted in such a manner
so as to make the Agreement, as modified, legal and enforceable under applicable
laws. This Agreement shall be governed by the laws of the State of California,
which state shall have jurisdiction of the subject matter hereof. This
Agreement may not be changed, modified, released, discharged, abandoned, or
otherwise amended, in whole or in part, except by an instrument in writing
signed by the Consultant and the Company.
Dated: , 19 .
----------- ---
Employee:
-----------------------------------
Print Name
-----------------------------------
Signature
AEHR TEST SYSTEMS
By:
------------------------------
Title:
-----------------------------
-4-
AEHR TEST SYSTEMS
SHAREHOLDERS LIST
August 15, 1985
Cert. Total
Name No. Date Shares Shares
----------------------------------- ------ ---------- --------- ---------
Aehr Test Systems 128 09/07/82 28,120
Employee Stock Bonus Plan 189 10/08/83 18,418
135 Constitution Dr. 205 08/30/84 19,192
Xxxxx Xxxx, XX 00000 248 02/28/85 31,517
257 04/10/85 2,559
273 08/15/85 23,800
277 08/15/85 2,686 126,292
Xxxxx Xxxxxxxx and 28 08/10/79 1,000
Xxxxxx Xxxxxxxx, XXXXXX 00 04/21/82 4,000 5,000
000 Xxxxx Xxxx Xxxxx
Xxxxx Xxxx, XX 00000
Xxxxxxxxx Xxxxx 268 08/12/85 9,800 9,800
x/x XXX Xxxxx
00-00, 0-Xxxxx
Xxxxxxx, Xxxxxxxx-Xx
Xxxxx, 000 Xxxxx
Atherton Ventures 156 05/27/83 8,250 8,250
c/o Xxxxx X. Xxxxxx
Two Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Xxxx Xxxxxx 216 11/12/84 1,000 1,000
000 Xxxx Xxxxx
Xxxxxxx, XX 00000
Xxxxxxxx X. Xxxxxxxxx and 222 12/03/84 1,100 1,100
Biogio X. Xxxxxxxxx,
Joint Tenants
000 Xxxxxxxxx Xxx
Xxxxxxx Xxxx, XX 00000
Xxxxxx X. Xxxxx 29 08/10/79 1,500
000 Xxxxxx Xxx., Xxx. A 81 04/21/82 6,000 7,500
Xxxx Xxxx, XX 00000
3.16
Cert. Total
Name No. Date Shares Shares
----------------------------------- ------ ---------- --------- ---------
Xxxx X. Xxxxxxxxx 138 03/07/83 3,130 3,130
0 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Xxxxxxx X. Xxxxxx 30 08/10/79 1,000
3091 Chardonnay 217 11/12/84 3,000 4,000
Xxxxxxxxxx, XX 00000
Xxxxxxx Xxxxxx and Xxxxxxxx 225 12/03/84 555 555
Xxxxxx, Joint Tenants
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxx X. Xxxxxx and 147 05/04/83 125,000
Xxxxxxxx X. Xxxxxx, his wife, 227 12/03/84 1,313 126,313
as their Community Property
0000 Xxxxx Xxxxx Xxxxxx
Xxx. 0000
Xxx Xxxxxxxxx, XX 00000
Xxxx Xxxxxx, Xx. 172 08/04/83 1,660 1,660
0000 Xxxxxxx Xxx
Xxx Xxxxxxxxx, XX 00000
Xxxxx Xxxxxx, Xx. 171 08/04/83 1,660 1,660
0000 Xxxxxxxxxx, Xxx. 0000
Xxx Xxxxxxxxx, XX 00000
Xxxxxx X. Xxxx 231 12/05/84 9,500 9,500
00000 Xxxxxxxxxx Xxxx
Xxx Xxxxx Xxxxx, XX 00000
Xxxxx X. Xxxxx 201 04/18/84 5,000 5,000
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxx X. Xxxxx Trustee 169 07/26/83 204,900 204,900
Xxxxx X. Xxxxx Trust
U/D/T dated May 20, 1983
000 Xxxxxx Xxx.
Xxxxxxxx, XX 00000
Xxxxxxxx X. Xxxxx 149 05/04/83 10,000 10,000
0000 Xxxxx Xxx.
Xxxxxxxxx, XX 00000
-2-
Cert. Total
Name No. Date Shares Shares
----------------------------------- ------ ---------- --------- ---------
Xxxx Xxxxxxxx Bremond, 159 05/30/83 3,750 3,750
Trustee of the Xxxx Xxxxxxxx
Bremond Separate Property Trust
U/D/T January 6, 1983
000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Xxxxx X. Xxxxxxx 145 03/08/83 3,750 3,750
0 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
J. Xxxxx Xxxxxx 187 10/07/83 2,114 2,114
00 Xxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Xxxxxxx X. Xxxxx 151 05/27/83 400 400
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
T. Xxxxxx Xxxxx and 20 07/20/79 5,000
Xxxxxxxxx Xxxxx JTWROS 86 04/21/82 20,000 25,000
00000 Xxxxxxxx Xxxx
Xxxxx, XX 00000
Xxxx X. Xxxx 232 12/28/84 1,000 1,000
Aehr Test Systems
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Xxxxxx X. Xxxx 233 12/28/84 500 500
000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Xxxxx X. Xxxxxxxxx 32 08/10/79 1,000
000 Xxxxxxxx Xx. 87 04/21/82 64,000
Xxx Xxxxx, XX 00000 157 05/27/83 5,000
158 05/30/83 6,000
202 04/18/84 6,500
239 12/28/84 30,000 112,500
Xxxx Xxxx 236 12/28/84 2,000 2,000
The Case Companies
000 Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
-3-
Cert. Total
Name No. Date Shares Shares
----------------------------------- ------ ---------- --------- ---------
CHARALYN, Inc. Defined Benefit 255 03/06/85 3,000 3,000
and Money Purchase Pension Plan
(Xxxx Xxxxxxx, Trustee)
00000 Xxx Xxxxxx Xxxx
Xxx Xxxxx Xxxxx, XX 00000
Xxxx X. Xxxxxxxx 78 04/15/82 3,000
0000 Xxxxxxxx 88 04/21/82 12,000 15,000
Xxxxxx, Xxxxx 00000
Xxxx Xxxxx and Xxxxx 226 12/03/84 277 277
Xxxxx, Joint Tenants
0000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Xxxx Xxxxxx Xxxxxxx and 89 04/21/82 8,000 8,000
Xxxxxxxx X. Xxxxxxx, JTWROS
00 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Xxxxx X. Xxxxxx 152 05/27/83 250
6227 Xxxxxxx Dr. 243 01/07/85 5,000 5,250
Xxx Xxxx, XX 00000
Xx. X. Xxxxxxx Xxxxxx 168 07/26/83 100 100
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Xxxxx Xxxxxxx 129 09/20/82 3,375
0000 Xxxxx Xxx. 130 09/21/82 6,000 9,375
Xxxxx Xxxx, XX 00000
Xxxxx Xxxxxxx, Trustee 26 07/20/79 5,000
UAD 6/1/68 f/b/o XXXXXXXXX X. 91 04/21/82 20,000 25,000
XXXXXX TRUST #2
X.X. Xxx 0000
Xxxxx Xxxx, XX 00000
Xxxxx Xxxxxxx, Trustee 27 07/20/79 5,000
UAD 3/1/79 f/b/o XXXXXX X. 92 04/21/82 20,000 25,000
XXXXXX TRUST #2
X.X. Xxx 0000
Xxxxx Xxxx, XX 00000
-4-
Cert. Total
Name No. Date Shares Shares
----------------------------------- ------ ---------- --------- ---------
Xxxxxx X. Xxxxxxxx 35 08/10/79 2,500
Xxxxxxxxxxxxxx 0 90 04/21/82 10,000 12,500
X0000 Xxxxxxxxx
Xxxxxxxxx, Xxxx Xxxxxxx
Ferlic Investments, Ltd. 182 10/12/83 1,000 1,000
c/o Xxxxxxxx X. Xxxxxx
000 Xxxxxx Xxxxxxxx
Xxxxx, XX 00000
Xxxxxxx X. Xxxxxx and 93 04/21/82 30,000
Xxxxxxx X. Xxxxxx, JTWROS 253 02/20/85 4,500 34,500
X.X. Xxx 000
Xxxxxxx, XX 00000
Xxxxx Xxxx Xxxxxx 252 02/20/85 1,000 1,000
X.X. Xxx 000
Xxxxxxx, XX 00000
Xxxxx X. Xxxxxx and 24 07/20/79 10,000
Xxxxxx X. Xxxxxx 36 08/10/79 1,000
0000 Xxxxxxx Xxx. 94 04/21/82 44,000 55,000
Xxx Xxxxx, XX 00000
Xxxxxxx X. Xxxxxxxxx and 37 08/10/79 1,500
Xxxxxx Xxxxxxxxx, JTWROS 95 04/21/82 6,000 7,500
0000 Xxxxx Xxx
Xxx Xxxx, XX 00000
Xxxxx Xxxxxx 212 10/10/84 186 186
000 Xxxxxxx Xxx
Xxx Xxxx, XX 00000
Xxxx Xxxxxxxx 241 12/28/84 4,687 4,687
0 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Xxxxxxxx X. Xxxxxxxx 240 12/28/84 4,688 4,688
00000 Xxxxxxx Xxx
Xxxxxxxxx, XX 00000
J. Xxxxx Xxxx 133 02/17/83 2,000 2,000
00000 Xxxxx Xxxx Xxxx
Xxx Xxxxx, XX 00000
-5-
Cert. Total
Name No. Date Shares Shares
----------------------------------- ------ ---------- --------- ---------
Xxxxx Xxxxx Xxxx 60 05/15/80 4,000
c/o Xxxx Xxxxxx Xxxxxxxx 96 04/21/82 76,000
000 Xxxxx Xxxx Xxxxxx 134 02/17/83 3,000 83,000
Xxxxx Xxxx, XX 00000
Xxxxxxxx Xxxxxxxxxx 267 08/12/85 7,800
x/x XXX Xxxxx
00-00,0-Xxxxx
Xxxxxxx, Xxxxxxxx-Xx
Xxxxx, 000 Xxxxx
Xxxxxx X. Held, Trustee of 237 12/28/84 500 500
X.X. Held Associates Money
Purchase Pension & Defined
Benefit Pension Trust
DTD 1-28-82
000 Xxxxx Xxxxx Xxxx., #000
Xxxxx Xxxxxx, XX 00000
Xxxx Xxxxxxxxx 166 07/05/83 30,000 30,000
00000 Xxxxxx Xxxxx
Xxx Xxxxx Xxxxx, XX 00000
Xxxx X. Xxxxxxxxx and 39 08/10/79 2,500
Xxxxxx X. Xxxxxxxxx 98 07/21/82 10,000 12,500
Trustees U/D/T dated
4/19/78
00000 Xxxxxx Xxxxx
Xxx Xxxxx Xxxxx, XX 00000
Xxxxx Palm Xxxxxxxxxxxx 40 08/10/79 500
223 More Avenue 99 04/21/82 2,000 2,500
Xxx Xxxxx, XX 00000
Xxx X. Xxxxxx, Trustee 238 12/28/84 2,000 2,000
of the Xxxxxx X. Xxxxxx
Pension & Profit Sharing Trust
Xxxxxxxx 0, Xxxxx 000
0000 Xxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Xxxxx Xxxx 234 12/28/84 1,000 1,000
0000 Xxxxxxx Xxx
Xxxxxxx, XX 00000
-6-
Cert. Total
Name No. Date Shares Shares
----------------------------------- ------ ---------- --------- ---------
Xxxx Xxxxx 193 02/08/84 1,000 1,000
000 Xxxxx Xxx.
Xxxx Xxxx, XX 00000
Xxxxx X. Xxxxxx 57 03/26/80 1,200
Post Office Box 420 100 04/21/82 4,800 6,000
Xxxxxx, XX 00000
Xxxxxxx X. XxXxxxxxx 77 04/18/82 1,000
000 Xxx Xxxxxxxx Xxxx 101 04/21/82 4,000
Xxxxxxxxxx, XX 00000 126 06/16/82 2,500
135 03/04/83 1,000 8,500
Xxxxxx Xxx 19 07/20/79 5,000
000 Xxxxxxxx Xxx 70 05/11/81 20,000
Xxxxxxx Xxxxxx, XX 00000 102 04/21/82 100,000 125,000
Xxxxxxx Xxxx, Trustee 160 05/30/83 5,000 5,000
of the Xxxxx Xxxxx
Torresdal Trust I
U/T/A dated 5/30/83
0000 Xxxxxxxx Xxx
Xxxxxxx Xxxx, XX 00000
Xxxxxxx Xxxx, Trustee 161 05/30/83 5,000 5,000
of the Xxxxxxx Xxx
Xxxxxxxxx Trust I
U/T/A dated 5/30/83
0000 Xxxxxxxx Xxx
Xxxxxxx Xxxx, XX 00000
Xxxxxxx Xxxx, Trustee 162 05/30/83 5,000 5,000
of the Xxxxx Xxxxx
Xxxxxxxxx Trust I
U/T/A dated 5/30/83
0000 Xxxxxxxx Xxx
Xxxxxxx Xxxx, XX 00000
Xxxxxxx Xxxx, Trustee 163 05/30/83 5,000 5,000
of the Xxxx Xxxx
Xxxxxxxxx Trust I
U/T/A dated 5/30/83
0000 Xxxxxxxx Xxx
Xxxxxxx Xxxx, XX 00000
-7-
Cert. Total
Name No. Date Shares Shares
----------------------------------- ------ ---------- --------- ---------
Xxxxxxx Xxxx, Trustee 164 05/30/83 5,000 5,000
of the Xxxxx Xxxxx
Xxxxxxxxx Trust I
U/T/A dated 5/30/83
0000 Xxxxxxxx Xxx
Xxxxxxx Xxxx, XX 00000
Xxxxxx Xxxx and Xxxxxxx 228 12/03/84 1,200 1,200
Long, Joint Tenants
0000 Xxxxxxxx Xxx
Xxxxxxx Xxxx, XX 00000
Los Gatos Ventures 246 01/15/85 5,000 5,000
0 Xxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000
Xxxxx and Xxxxxxxxx Xxxxxxxx 196 03/27/84 3,750 3,750
0000 Xxxxx
Xxxxx Xxxx, XX 00000
Xxxx Xxxxx Xxxxxxx 251 02/20/85 1,000 1,000
000 Xxxxxxx Xxxxxx
Xxxxx Xxxx, XX 00000
Xxxx Xxxxxxxx 41 08/10/79 5,000
X.X. Xxx 0000 000 04/21/82 20,000 25,000
00 Xxxx Xxxx Xxxxx
Xxxxx, Xxx Xxxxxx 00000
Xxxxx Xxxxxxxxxx and 223 12/03/84 775 775
Xxxx X. Xxxxxxxxxx,
Joint Tenants
000 Xxxxxxx Xxx
Xxxxx Xxx Xxxxxxxxx, XX 00000
Xxxxx X. Xxxxxxx 76 04/15/82 1,000
00 Xxxxxx Xxxx 103 04/21/82 4,000
Xxxxxx, XX 00000 127 06/16/82 2,500 7,500
Xxxxxxxx III 50 09/11/79 20,000
0000 Xxxx Xxxx Xxxx 61 07/21/80 18,000
Xxxxx Xxxx, XX 00000 73 08/11/81 5,000
104 04/21/82 172,000
132 11/23/83 10,000
197 04/12/84 58,824 283,824
-8-
Cert. Total
Name No. Date Shares Shares
----------------------------------- ------ ---------- --------- ---------
Xxxxxxx XxXxxxx as 63 07/24/80 25
Custodian for Xxxxxxxx 105 04/21/82 100 125
Xxx XxXxxxx (UGMA)
000 Xxxxxxxxx
Xxxx Xxxx, XX 00000
Alexandria Xxxx XxXxxx 125 05/27/82 12,000
000 Xxxxxx Xxxxx 192 11/04/83 3,000 15,000
Xxxxx, XX 00000
Xxxxx X. XxXxxx 124 05/27/82 12,000
0000 Xxxxxxxxxx Xxxxx 191 11/04/83 3,000 15,000
Xxx Xxxxx, XX 00000
Xxxxx X. Xxxxxx 249 02/15/85 1,000 1,000
0000 Xxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Xxxx Xxxxxxx Xxxxx and 175 08/30/83 50,000
Xxxxxxx Xxxx Xxxxx, 178 08/30/83 2,000
Trustees of the 179 08/30/83 40,000
Xxxx Xxxxxxx Xxxxx and 260 04/16/85 3,000 95,000
Xxxxxxx Xxxx Xxxx
Trusts, U/D/T dated
December 23, 1982
00000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Xxxxx Xxxxxx 140 03/07/83 11,875 11,875
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxx, XX 00000
Xxxxxx Xxxxxxx 153 05/27/83 300
0000 Xxxxxx Xxx 242 01/04/85 10,000 10,300
Xxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxx 53 11/02/79 500
and Xxxxx Xxxxxx Xxxxxxx 109 04/21/82 2,000 2,500
JT TEN WROS
0000 Xxxxxx Xxx
Xxxxxxxx, XX 00000
-9-
Cert. Total
Name No. Date Shares Shares
----------------------------------- ------ ---------- --------- ---------
X.X. Xxxxxxx 14 07/20/79 25,000
000 Xxxx Xxxxxx Xxx. 48 08/20/79 2,500
Xxxxxxxx Xxxx, XX 00000 110 04/21/82 110,000 137,500
Xxxxxxx X. Xxxxx and 52 11/02/79 1,000
Xxxxxxxx X. Xxxxx 111 04/21/82 4,000 5,000
JT TEN WROS
000 Xxxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Xxxxxx X. Xxxx 4 07/20/79 5,000
1736 Terrace 112 04/21/82 20,000
Xxxxxxx, XX 00000 181 09/21/83 15,000 40,000
Xxxxxx X. Xxxxxx 15 07/20/79 25,000
and Xxxxx X. Xxxxxx 43 08/10/79 2,500
000 Xxxxxx Xxxx 113 04/21/82 110,000 137,500
Xxxxx, XX 00000
Xxxxxx X. Xxxxxxxxx, Trustee 67 05/07/81 2,375
of the Xxxxxx X. Xxxxxxxxx and 114 04/21/82 9,500 11,875
Xxxxx X. Xxxxxxxxx Trusts U/D/T
dated 1/12/77
c/o Rollins, Burdick, Hunter
X.X. Xxx 00000
Xxxx Xxxx, XX 00000
Portola Valley Ventures 254 03/05/85 3,810 3,810
Xxx Xxxx Xxxx Xxxxxx, Xxx. 000
Xxxx Xxxx, XX 00000
Xxxx X. Xxxxxxx 1 07/20/79 125,000
1736 Terrace 25 07/20/79 2,500
Xxxxxxx, XX 00000 58 04/17/80 2,500
62 07/21/80 32,000
65 06/24/80 5,000
115 04/21/82 668,000
200 04/18/84 25,000
266 07/22/85 50,000 910,000
Xxxxx X. Xxxxxx 154 05/27/83 300 300
00000 Xxxxxxxx Xx.
Xxxxxxxxx, XX 00000
-10-
Cert. Total
Name No. Date Shares Shares
----------------------------------- ------ ---------- --------- ---------
Xxxxxxx XxXxxxx Xxxxxxx 190 10/21/83 15,000 15,000
Xxxxxxxxxxxxxxxx Xx. 00
0000 Xxxxxxxxx
Xxxx Xxxxxxx
X.X. Xxxxxx & X. X. Xxxxxxx 264 05/15/85 5,000 5,000
Trustees FBO Xxxxx X. Xxxxxx
WILSON, SONSINI, XXXXXXXX &
XXXXXX
Xxx Xxxx Xxxx Xxxxxx, Xxx. 000
Xxxx Xxxx, XX 00000
Rutven Associates I, L.P. 198 04/16/84 8,824 8,824
c/o X.X. Xxxxxxxxxx,
Unterberg & Towbin
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Rutven Associates II, L.P. 199 04/16/84 5,882 5,882
c/o X. X. Xxxxxxxxxx,
Xxxxxxxxx & Towbin
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxx X. Xxxxxx and 44 08/10/79 5,000
Xxxxxxx X. Xxxxxx, JTWROS 117 04/21/82 20,000 25,000
000 Xxxxxxxx Xxx
Xxx Xxxxx, XX 00000
Xxxxxx Xxx Xxxxxx 250 02/20/85 1,000 1,000
00 Xxxxxxx Xxxxx
Xx. Xxx Xxxxxxxxx, XX 00000
Xxxxx X. Xxxxx 155 05/27/83 500 500
0000 Xxxxxxxx Xx.
Xxx Xxxx, XX 00000
Xxxxxxx X. Xxxxx 195 03/19/84 15,400
00000 Xxxxx Xxxx 271 08/12/85 1,000 16,400
Xxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxxx 118 04/21/82 60,000 70,400
000 Xxxxx Xxxx 261 05/13/85 10,400
Xxxxxxxx, XX 00000
-11-
Cert. Total
Name No. Date Shares Shares
----------------------------------- ------ ---------- --------- ---------
Xxxxxxx X. Xxxxxxx, Xx. 244 01/11/85 500 500
or Xxxxx X. Xxxxxxx,
XX WROS
00000 Xxxxxxxxxx Xxxxx
Xxxxx, XX 00000
Xxxxx X. Xxxxxxx, Trustee 218 11/13/84 2,300 4,600
of the Xxxxxxx X. Xxxxxxx, 263 05/13/85 2,300
Trust I UTA dated July 25,
0000
000-00xx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000
Sabro Shikano 269 08/12/85 4,900 4,900
x/x XXX Xxxxx
00-00, 0-Xxxxx
Xxxxxxx, Xxxxxxxx-Xx
Xxxxx, 000 Xxxxx
Xxxxx X. Xxxxxx 204 07/02/84 500
0000 X. Xxxx Xxxxxx 265 06/28 500 1,000
Xxxxxxxxx, XX 00000
Xxxxx X. Xxxxxxx 141 03/07/83 11,560 11,560
0 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Xxxxxx X. Xxxxxxxxxxxxx 220 11/30/84 250 250
0000 Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Xxx Xxxxxxx 174 08/08/83 1,250 1,250
000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxx Xxxxxxxxx 18 07/20/79 10,000
and Xxxxx Xxxxxxxxx 120 04/21/82 263,000
000 Xxxxxxxxx Xxx 165 05/30/83 25,000
Xxxxxxx Xxxx, XX 00000 210 10/05/84 5,000
229 12/03/84 800 303,800
Xxxxx Xxxxxx 170 08/04/83 1,660 1,660
0000 Xxxxxx Xxxx
Xxxxxx Xxxxx, XX 00000
-12-
Cert. Total
Name No. Date Shares Shares
----------------------------------- ------ ---------- --------- ---------
Xxxxx X. Xxxxxx and 224 12/03/84 1,000 1,000
Xxxxx Xxxxxxx Tullus,
Community Property
0000 Xxxxxx Xxxx
Xxxxxx Xxxxx, XX 00000
Xxxx X. Xxxxxx 142 03/07/83 10,625 10,625
0 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Xxxxxx X. Xxxxx 207 09/05/84 10,000 10,000
Trust FBO Xxxxxx X. Xxxxx
00000 Xxxxx Xx.
Xxx Xxxxx Xxxxx, XX 00000
Xxxxxx X. Xxxx 47 08/10/79 2,500
0000 Xxxxxxxxx Xxx. 123 04/21/82 10,000 12,500
Xxx Xxxxx, XX 00000
----------
TOTAL OUTSTANDING - 3,432,022
*Held in Safe
-13-
AEHR TEST SYSTEMS
Amended May 1978 STOCK OPTION PLAN
OPTION STATUS
September 13, 1985
Total
Exer- Shares Outstanding
Name of Date cise Shares Exer- Shares and
Optionee of Xxxxx Xxxxx Granted cised Returned Unexercised
--------------------- -------- -------- ---------- -------- -------- -----------
Xxxxxx X. Xxxxxxxxx 05/22/84 $8.50 400 400
Xxxxxxxxx X. X. 03/15/84 $6.00 4,000 4,000
Bastoul
Xxxxxxx X. Xxxxxx 03/15/82 $2.00 5,000 5,000 0
Xxxxx X. Xxxxxxxxx 05/22/84 $8.50 400 400
Xxxxxx X. Xxxx 09/15/82 $4.00 25,000
05/13/83 $4.00 25,000 12,500 37,500 0
Xxxxxx Xxxxx 04/19/79 $ .40 5,000 5,000 0
Xxxxx Xxxxx 04/19/79 $ .40 5,000 5,000 0
Xxxxxxxx Xxxxx 04/19/79 $ .40 10,000 10,000 0
Xxxx X. Xxxx 08/20/84 $8.50 200 200
Xxxxx X. Xxxxxxxxx 10/22/79 $ .50 50,000 50,000 0
Xxxxxxx X. Xxxxxxxx 06/15/84 $8.50 2,000 2,000
Xxxxxxxx X. Xxxxx 03/15/84 $6.00 2,000 2,000
Xxxxx X. Xxxxxxxx 05/22/84 $8.50 2,500 2,500
Xxxxx X. Xxxxxx 01/14/80 $ .50 5,000 5,000 0
Xxxxxxx X. Xxxxxxxxxx 03/15/84 $6.00 7,000 7,000
Xxxxxxx X. Xxxxxxxx 03/15/84 $6.00 1,000 1,000 0
Xxxxx Xxxx 10/22/79 $ .50 20,000 20,000 0
Total
Exer- Shares Outstanding
Name of Date cise Shares Exer- Shares and
Optionee of Xxxxx Xxxxx Granted cised Returned Unexercised
--------------------- --------- -------- ---------- -------- -------- -----------
Xxxxxx Xxxxx 05/27/80 $ .50 20,000 20,000 0
Xxxx Xxxxxxxxx 05/11/81 $2.00 60,000 30,000 30,000 0
Xxxxx X. Xxxxxx 06/15/84 $8.50 1,000 1,000 0
Xxxxx X. Xxxxx 03/15/84 $6.00 700 700
Xxxx Xxxxxxxxx 05/13/83 $4.00 20,000 20,000
Xxx Xxx 12/05/80 $2.00 100,000 100,000 0
Xxxxxx Xxxxxxxxx 06/15/84 $8.50 3,000 3,000
Xxxxx XxXxxxx Xxxxxxx 10/22/79 $ .50 15,000 15,000 0
Xxxxxx Xxxxxx 06/15/84 $8.50 400 400
Xxxx Xxxxx 10/22/79 $ .50 50,000 50,000
12/05/80 $2.00 10,000 10,000 0
Xxxxxx X. Xxxxxx 03/15/84 $6.00 500 500
Xxxxxx X. Xxxxxxx 01/14/80 $ .50 10,000 10,000 0
Xxxxxx Xxxx 04/19/79 $. 40 15,000 15,000 0
Xxxxxxx X. Xxxxxxx 04/19/79 $ .40 10,000 10,000 0
Xxxxx Xxxxxxxxx 05/22/84 $8.50 400 400 0
Xxxx X. Xxxxxxx 04/19/79 $ .40 25,000
01/03/80 $ .50 25,000
07/24/80 $1.80 25,000
07/24/80 $2.00 25,000 100,000 0
Xxxxx Xxxxxx 03/15/84 $6.00 200 200
Xxxxxxxxx X. Xxx 03/15/84 $6.00 1,000 1,000
Xxxxx X. Xxxxxx 05/22/84 $8.50 400 400
Xxxxx Xxxxxx 10/22/79 $ .50 5,000 5,000 0
-2-
Total
Exer- Shares Outstanding
Name of Date cise Shares Exer- Shares and
Optionee of Xxxxx Xxxxx Granted cised Returned Unexercised
--------------------- -------- -------- ---------- -------- -------- -----------
Xxxxxxx X. Xxxxx 03/15/84 $6.00 16,600 16,600
Xxxxxxx X. Xxxxxxx 05/11/81 $2.00 75,000 75,000 0
Xxxxxxx X. Xxxxxxxxx 08/20/84 $8.50 500 500
Xxx Xxxxxxx 03/15/82 $2.00 5,000 1,250 3,750 0
Xxxxxxx Xxxx Throck- 06/15/84 $8.50 2,500 2,500
xxxxxx
Xxxxx Torresdal 10/22/79 $ .50 5,000 5,000 0
---------- ---------- ---------- ----------
Totals : 696,700 523,750 108,650 64,300
Shares Available in Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . .625,000
Total Outstanding and Unexercised. . . . . . . . . . . . . . . . 64,300
Total Exercised. . . . . . . . . . . . . . . . . . . . . . . . . 523,750 588,050
------- ---------
Total Available for Future Grants. . . . . . . . . . . . . . . . 36,950
-3-
AEHR TEST SYSTEMS
1983 INCENTIVE STOCK OPTION PLAN
OPTION STATUS
September 13, 1985
Total
Exer- Shares Outstanding
Name of Date cise Shares Exer- Shares and
Optionee of Xxxxx Xxxxx Granted cised Returned Unexercised
--------------------- -------- -------- ---------- -------- -------- -----------
Xxxx Xxxxxx 02/28/85 $ 8.50 4,000 4,000
Xxxxxx X. Xxxxxx 09/14/84 $ 8.50 11,750
02/08/85 $ 8.50 3,250 15,000
Xxxxx Xxxxxxx 05/23/83 $ 4.00 5,000 5,000
Xxxx Xxxxx 05/23/83 $ 4.00 1,000 1,000
Xxxx Xxxx 07/13/83 $ 6.00 5,000 5,000
Xxxxx Xxxx 02/28/85 $ 8.50 500 500
Xxxxx Xxxxx 02/28/85 $ 8.50 2,000 2,000
Xxxxxx Xxxxxxxx 09/14/84 $ 8.50 500 500
Xxxxxxx Xxxxxxxxxx 07/13/83 $ 6.00 10,000
02/28/85 $ 8.50 3,000 13,000
Xxxxx Xxxxxx 11/14/84 $ 8.50 280 280
Xxxxxx Xxxxxx 02/28/85 $ 8.50 500 500
Xxxxxxx Xxxxxx 09/16/83 $ 6.00 1,000 1,000 0
Xxxxx Xxxxxx 04/01/85 $ 8.50 1,000 1,000
Xxx Xxxxxxxx 09/14/84 $ 8.50 2,000 2,000
Xxxxxxx Xxxxxx 04/01/85 $ 8.50 3,000 3,000
Total
Exer- Shares Outstanding
Name of Date cise Shares Exer- Shares and
Optionee of Xxxxx Xxxxx Granted cised Returned Unexercised
--------------------- -------- -------- ---------- -------- -------- -----------
Xxxxxxx Xxxxxxxxxxx 02/28/85 $ 8.50 2,000 2,000
Xxxxx Xxxxxx 05/23/83 $ 4.00 1,000 1,000
Xxxxx Xxxx 02/28/85 $ 8.50 3,000 3,000
Xxxxx Xxxxx 02/28/85 $ 8.50 500 500
Xxxxxx Xxx 02/28/85 $ 8.50 10,000 10,000
Xxxxxxx Xxx 02/28/85 $ 8.50 1,000 1,000
Xxxx Xxxxxx 09/14/84 $ 8.50 3,500 3,500
Xxxx XxXxxx 02/28/85 $ 8.50 3,000 3,000
Xxxxxx Xxxxxx 07/12/85 $10.00 500 500
Xxxx Xxxxxxx 02/28/85 $ 8.50 2,000 2,000
Xxxx Xxxx Perretta 09/14/84 $ 8.50 2,000 2,000
Xxxxx Xxxxx 07/12/85 $10.00 4,000 4,000
Xxxxx Xxxxxxxx 07/12/85 $10.00 500 500
Xxxxxxx Xxxxx 07/12/85 $10.00 3,000 3,000
Xxxxxx Xxxxxx 09/14/84 $ 8.50 750 750
Xxxxx Xxxxxx 05/23/83 $ 4.00 2,000 1,000 1,000 0
Xxxxx Xxxxx 07/13/83 $ 6.00 11,000 11,000
Xxxxxx Xxxxxxxxxxxxx 05/23/83 $ 4.00 1,000 250 750 0
Xxxxx Xxxxx 04/01/85 $ 8.50 500 500
-2-
Total
Exer- Shares Outstanding
Name of Date cise Shares Exer- Shares and
Optionee of Xxxxx Xxxxx Granted cisedReturned Unexercised
---------------- --------- ----- ------- ----- -------- -----------
Xxxxxx Xxxx 09/16/83 $ 6.00 500 500 0
Xxx Xxxxx 02/28/85 $ 8.50 3,000 3,000
------- ------ ------- ---------
Totals: 108,530 1,250 3,250 104,030
Shares Available in Plan. . . . . . . . . . . . . . . . . 150,000
Total Outstanding and Unexercised. . . . . . . . 104,030
Total Exercised. . . . . . . . . . . . . . . . . 1,250
---------
105,280
-------
Total Available for Future Grants. . . . . . . . 44,720
-------
-3-
SCHEDULE OF EXCEPTIONS
This Schedule of Exceptions, dated as of September 18, 1985, is made and
given pursuant to Article III of the Aehr Test Systems Stock Purchase
Agreement dated September 18, 1985 (the "Agreement"). The section numbers in
this Schedule of Exceptions correspond to the section numbers in the
Agreement; however, any information disclosed herein under any section number
shall be deemed to be disclosed and incorporated into any other section
number under the Agreement where such disclosure would be appropriate. Any
terms defined in the Agreement shall have the same meaning when used in this
Schedule of Exceptions as when used in the Agreement unless the context
otherwise requires.
3.01 ORGANIZATION AND STANDING OF COMPANY.
The Company has sales offices in Texas and Massachusetts and an
employee in Pennsylvania. The Company is not qualified to do business in any of
these states.
3.05 COMPLIANCE WITH OTHER INSTRUMENTS.
The Company believed that to the extent it is not in compliance in all
material respects with the terms and provisions of an agreement or other
instrument relating to obligations of the Company that such noncompliance is
currently adequately reserved for on its financial statements.
3.06 TITLE TO ASSETS, PATENTS.
(b) Under Japanese law the Company may be required to purchase patents
from its employees in order to acquire proprietary rights to such patents.
3.07 FINANCIAL STATEMENTS.
The May 31, 1985 financial statements include the accounts of the
Company and its wholly-owned subsidiaries, a domestic international sales
corporation and a foreign sales corporation. Aehr Test Japan, the foreign joint
venture, was accounted for by the equity method.
The Company's backlog on May 31,1985, and July 31, 1985, was
approximately $16,500,000 and $12,400,000, respectively. The Company believes
that this trend may continue until a rebound occurs in the semiconductor market.
Exhibit 3.03
Since July 31, 1985 the Company has issued the following shares of its
Capital Stock:
Aehr Test Systems Employee
Stock Bonus Plan 23,800(1)
Xxxxxxx X. Xxxxx 1,000(2)
The employees of Aehr Test Japan 22,500(2)
-----------------------
(1) Contribution to Plan.
(2) $10.00 per share cash issuance price.
3.08 TAXES.
The Company has obtained an extension from the Internal Revenue
Service for the filing of its income tax return for the year ending May 31,
1985.
3.09 ERISA.
The Company has an employee stock ownership plan, a copy of which has
been provided to the special counsel for the Purchasers. See Note 10 of Notes
to Consolidated Financial Statements of Aehr Test Systems and Subsidiaries for
the year ended May 31, 1985.
The Company's practice has been to repurchase, at the then current
fair market value, shares distributed by the Employee Stock Bonus Plan to
terminated employees if the employees so desire. The current fair market value
of the Company's Capital Stock is $10.00 per share. The Company intends to
repurchase approximately 5,000 shares from recently terminated employees in the
near future.
3.10 TRANSACTIONS WITH AFFILIATES.
Xxxxx X. Xxxxxx is director and secretary of the Company and is a
member of Wilson, Sonsini, Xxxxxxxx & Xxxxxx, the Company's general counsel.
Set forth below are the outstanding principal amounts of loans owed to
the Company by its officers:
Xxx Xxx $200,000
Xxxxxxx Xxxxxxx $150,000
Xxxxxxx Xxxxx $ 92,400
-2-
3.11 OTHER MATTERS.
Under certain theories of successor liability, the Company may be
liable for certain Indebtedness of its Subsidiaries.
3.12 SECURITIES OF ACT OF 1933.
173,530 shares of the Common Stock of the Company have certain
registration rights as set forth in the Stock Investment Agreement dated April
12, 1984, and the Capital Stock Purchase Agreement dated September 11, 1979.
3.15 CERTAIN AGREEMENTS OF KEY EMPLOYEES.
(b) Xxx Xxx has agreed to sign a modified confidentiality agreement,
but has not yet done so. No former Key Employee has signed a proprietary
information agreement, however to the Company's knowledge, no former employee is
wrongfully using any proprietary information of the Company.
3.18 SUBSIDIARIES.
The Company has three Subsidiaries, Aehr Test Japan, a partially-owned
subsidiary incorporated under the laws of Japan, Aehr Test Foreign Sales
Corporation, a foreign sales corporation, organized under the laws of the
Virgin Islands and Aehr Test International, a domestic international sales
corporation. The Company has an option to acquire all of the outstanding shares
of Aehr Test Japan. A copy of such documentation has been provided to special
counsel for the purchasers.
IN WITNESS WHEREOF, the Company has executed this Schedule of Exceptions as
of the date first above written.
AEHR TEST SYSTEMS
By:
---------------------------
Title:
-------------------------
-3-
[COOPERS & XXXXXXX LETTERHEAD]
To the Board of Directors
and Stockholders
Aehr Test Systems
Menlo Park, California
We have examined the consolidated balance sheets of Aehr Test Systems and
Subsidiaries as of May 31, 1985 and 1984 and the related consolidated statements
of income, stockholders' equity and changes in financial position for the years
then ended. Our examinations were made in accordance with generally accepted
auditing standards, and, accordingly, included such tests of the accounting
records and such other auditing procedures as we considered necessary in the
circumstances.
In our opinion, the aforementioned financial statements present fairly the
consolidated financial position of Aehr Test Systems and Subsidiaries as of May
31, 1985 and 1984 and the consolidated results of their operations and changes
in their financial position for the years then ended in conformity with
generally accepted accounting principles applied on a consistent basis.
COOPERS & XXXXXXX
San Jose, California
July 15, 1985
3.07
AEHR TEST SYSTEMS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, May 31, 1985 and 1984
---------------
ASSETS 1985 1984
---- ----
Current assets:
Cash $ 498,190 $ 182,973
Accounts receivable, less allowance
for doubtful accounts of $670,954
in 1985 and $147,000 in 1984 5,375,067 5,700,056
Account receivable from foreign joint
venture 707,888 383,621
Inventories 8,390,500 5,467,671
Refundable income taxes - 232,251
Prepaid expenses and other current
assets 23,755 20,420
----------- -----------
Total current assets 14,995,400 11,986,992
Property and equipment 1,882,888 1,037,783
Investment in foreign joint venture 682,267 319,807
Other assets 36,683 29,598
----------- -----------
$17,597,238 $13,374,180
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable 1,200,000 1,900,000
Current portion of long-term debt 10,153 188,136
Accounts payable 2,144,504 2,196,089
Accured expenses 1,895,300 1,068,547
Income taxes payable 434,000 -
Deferred income taxes 1,109,238 975,000
----------- -----------
Total current liabilities 6,793,195 6,327,772
Long-term debt, less current portion 1,406,511 627,256
Deferred income taxes 241,000 120,779
----------- -----------
Total liabilities 8,440,706 7,075,807
----------- -----------
Commitments (Note 7).
Stockholders' equity:
Capital stock, no par value:
Authorized, 75,000,000 shares;
Issued and outstanding, 3,334,591
shares in 1985 and 3,263,262
shares in 1984 2,037,780 1,894,858
Notes receivable for capital stock (442,400) (502,400)
Retained earnings 7,561,152 4,905,915
----------- -----------
Total stockholders' equity 9,156,532 6,298,373
----------- -----------
$17,597,238 $13,374,180
----------- -----------
----------- -----------
The accompanying notes are an integral part
of these consolidated financial statements.
2
AEHR TEST SYSTEMS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
for the years ended May 31, 1985 and 1984
---------------
1985 1984
---- ----
Net sales $30,133,510 $18,257,267
Cost of sales 17,398,070 10,067,576
----------- -----------
Gross profit 12,735,440 8,189,691
----------- -----------
Selling, general and administrative
expense 5,352,319 3,572,883
Research and development expense 3,625,620 2,261,618
Equity in net income of foreign
joint venture (362,460) (147,070)
Interest expense, net 400,724 172,138
----------- -----------
9,016,203 5,859,569
----------- -----------
Income before provision for
income taxes 3,719,237 2,330,122
Provision for income taxes 1,064,000 729,000
----------- -----------
Net income $ 2,655,237 $ 1,601,122
----------- -----------
----------- -----------
The accompanying notes are an integral
part of these consolidated financial statements.
3
AEHR TEST SYSTEMS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
for the years ended May 31, 1985 and 1984
-------
Notes
Capital Stock Receivable
--------------------- for Capital Retained
Shares Amount Stock Earnings Total
------ ------ ----------- -------- -----
Balances, June 1, 1983 3,103,550 $1,033,272 $(470,000) $3,304,793 $3,868,065
Issuance of capital stock:
Private placement, net of offering costs of $2,260 73,530 622,745 622,745
Stock options exercised 80,250 83,250 83,250
Pursuant to employee bonus plan 25,180 151,080 151,080
To employee 15,400 92,400 (92,400) -
Repurchases of capital stock:
From employee (30,000) (60,000) 60,000 -
From employee bonus plan (4,648) (27,889) (27,889)
Net income 1,601,122 1,601,122
--------- ---------- ---------- ----------- ----------
Balances, May 31, 1984 3,263,262 1,894,858 (502,400) 4,905,915 6,298,373
Issuance of capital stock:
Stock options exercised 58,250 31,750 31,750
Pursuant to employee bonus plan 19,192 163,132 163,132
Repurchase of capital stock:
From employee bonus plan (6,113) (51,960) (51,960)
Repayment of notes receivable 60,000 60,000
Net income 2,655,237 2,655,237
--------- ---------- ---------- ----------- ----------
Balances, May 31, 1985 3,334,591 $2,037,780 $(442,400) $7,561,152 $9,156,532
--------- ---------- ---------- ----------- ----------
--------- ---------- ---------- ----------- ----------
The accompanying notes are an Integral part
of these consolidated financial statements.
4
AEHR TEST SYSTEMS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
for the years ended May 31, 1985 and 1984
--------
Resources provided: 1985 1984
---- ----
From operations:
Net income $2,655,237 $1,601,122
Items included in net income not
affecting working capital:
Depreciation and amortization 320,767 164,908
Equity in net income of foreign
joint venture (362,460) (147,070)
Noncurrent deferred income taxes 120,221 24,779
---------- ----------
Working capital provided by
operations 2,733,765 1,643,739
Proceeds from issuance of capital
stock and exercise of stock
options, net 202,922 829,186
Proceeds from long-term debt 2,258,333 475,000
---------- ----------
Total resources provided 5,195,020 2,947,925
---------- ----------
Resources applied:
Expenditures for property and equipment 1,165,872 557,055
Payments and current maturities of
long-term debt 1,479,078 197,041
Other 7,085 7,086
---------- ----------
Total resources applied 2,652,035 761,182
---------- ----------
Increase in working capital $2,542,985 $2,186,743
---------- ----------
---------- ----------
Increase (decrease) on working capital by
components:
Increase (decrease) in current assets:
Cash 315,217 (272,294)
Accounts receivable (722) 2,894,558
Inventories 2,922,829 3,178,036
Prepaid expenses and other current
assets 3,335 7,077
---------- ----------
3,240,659 5,807,377
---------- ----------
Decrease (increase) in current
liabilities:
Notes payable 700,000 (1,900,000)
Current portion of long-term debt 177,983 (73,525)
Accounts payable 51,585 (1,126,077)
Accrued expenses (826,753) (212,283)
Income taxes payable and refundable (666,251) 638,251
Deferred income taxes (134,238) (947,000)
---------- ----------
(697,674) (3,620,634)
---------- ----------
Increase in working capital $2,542,985 $2,186,743
---------- ----------
---------- ----------
The accompanying notes are an integral
part of these consolidated financial statements.
5
AEHR TEST SYSTEMS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
CONSOLIDATION:
The financial statements include the accounts of the Company and its
wholly-owned subsidiaries, a domestic international sales corporation
(DISC) and a foreign sales corporation (FSC). The foreign joint venture
is accounted for by the equity method. All intercompany accounts and
transactions have been eliminated.
FOREIGN CURRENCY TRANSLATION:
The Company's equity in income and losses from its investment in the
foreign joint venture is translated into United States dollar equivalents
using the weighted average exchange rates in effect during the year.
INVENTORIES:
Inventories are stated at the lower of cost (first-in, first-out method) or
market.
PROPERTY AND EQUIPMENT:
Property and equipment are stated at cost. Leasehold improvements are
amortized over the lesser of their useful lives or the terms of the related
lease. Furniture, fixtures and equipment are depreciated on a
straight-line basis over their useful lives. The range of estimated useful
lives is as follows:
Leasehold improvements Life of lease
Furniture and fixtures 5 to 7 years
Equipment 3 to 7 years
INCOME TAXES:
Deferred income taxes are recorded to reflect the tax effects of timing
differences in reporting certain items for financial statement and income
tax purposes. The differences relate primarily to installment sales,
depreciation and a portion of DISC income.
Continued
6
AEHR TEST SYSTEMS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:
INCOME TAXES, continued:
Investment tax credits are accounted for by the flowthrough method which
reduces the provision for federal income taxes during the year in which the
credits are utilized.
The Company intends to reinvest its share of the undistributed earnings of
its foreign joint venture. Therefore, it makes no provision for additional
U.S. taxes which might result from distribution of such earnings unless
they are actually repatriated. Through May 31, 1985, the Company's share
of the joint venture's income on which no provision for any additional U.S.
income taxes had been made amounted to $440,372.
2. INVENTORIES:
Inventories at May 31 comprise:
1985 1984
---- ----
Raw materials and sub-
assemblies $5,077,488 $3,476,689
Work in process 2,568,533 1,884,968
Finished product 744,479 106,014
---------- ----------
$8,390,500 $5,467,671
---------- ----------
---------- ----------
Continued
7
