SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
FORTE TECHNOLOGIES, INC.
THE COMPANY
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AND
THE SERIES C INVESTORS
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LISTED ON SCHEDULE 1 HERETO
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DATED AS OF FEBRUARY 8, 1996
Forte Technologies, Inc.
SECURITIES PURCHASE AGREEMENT
February 8, 1996
To each of the Series C Investors
(as hereinafter defined)
Gentlemen:
The undersigned, Forte Technologies, Inc., a New York corporation (the
"Company"), hereby agrees with each of the persons listed on Schedule 1 hereto
(as the same may be amended from time to time as herein provided) (each a
"Series C Investor" and, collectively, the "Series C Investors") as follows:
1. DEFINITIONS. Certain terms are used in this Agreement as specifically
defined in Exhibit 1 hereto.
2. THE SERIES C CONVERTIBLE PREFERRED STOCK. The Company has, or will
have prior to the Closing Date(s), duly authorized the issuance and sale to the
Series C Investors on the Closing Date (at the price of $1.20 per share) of
2,333,333 of the Company's Series C Convertible Preferred Stock, par value $0.01
per share, and the reservation, free of preemptive rights and other preferential
rights, of a sufficient number of its authorized but unissued shares of its
voting common stock, $0.01 par value per share ("Voting Common Stock"), to
satisfy the rights of conversion of the holders of the Series C Preferred Stock.
Any shares of Voting Common Stock issuable upon conversion of the Series C
Convertible Preferred Stock, and such shares when issued, are sometimes herein
referred to as the "Conversion Shares."
3. SALE AND PURCHASE OF SERIES C PREFERRED STOCK.
3.1. AGREEMENT TO SELL AND PURCHASE THE SERIES C PREFERRED STOCK. The
Company is selling to each Series C Investor, and each Series C Investor is
purchasing from the Company, subject to the satisfaction of the conditions
precedent set forth in Section 6 hereof and subject to the terms and other
conditions hereinafter set forth, at the Closing(s), that number of shares of
Series C Preferred Stock set forth opposite the name of such Series C Investor
on Schedule 1 attached hereto for a purchase price of $1.20 per share (subject
to adjustment to reflect stock splits, stock dividends, stock combinations,
recapitalizations and like occurrences prior to Closing), representing an
aggregate purchase price of $2,800,000.
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3.2. CLOSING(S).
(a) The closing(s) hereunder with respect to the transactions
contemplated by Sections 2 and 3.1 hereof (the "Closing(s)") will take place at
the offices of Chu, Ring & Associates, 000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx,
at 9:00 a.m. local time, on February 8, 1996, or at such other place and time
and on such other date as may be mutually agreed upon in writing by the
respective Series C Investors and the Company (the "Closing Date(s)").
(b) At the Closing(s), the Company will, unless otherwise
requested, deliver to each Series C Investor a single certificate evidencing the
number of shares of Series C Preferred Stock to be purchased by such Series C
Investor, against payment of the purchase price in immediately available funds
or by cancellation of existing indebtedness, all as set forth on Exhibit 3.2.
(c) Schedule 1 attached hereto shall be amended from time to
time by adding thereto each of the Series C Investors who executes a counterpart
signature page hereto (to the extent not so named).
4. REPRESENTATIONS AND WARRANTIES. In order to induce the Series C
Investors to enter into this Agreement and to purchase the Series C Convertible
Preferred Stock to be purchased by each Series C Investor hereunder, the Company
represents and warrants to each Series C Investor and agrees with each Series C
Investor as follows:
4.1. ORGANIZATION, STANDING, POWER, AUTHORITY, QUALIFICATION. The
Company is a duly organized and validly existing corporation in good standing
under the laws of the State of New York with corporate power and authority
adequate for (a) the execution and delivery of this Agreement and the
performance of its obligations hereunder and under the Related Agreements and
(b) the carrying on of the business conducted by it. The Company has taken all
corporate action necessary to authorize this Agreement and the transactions
contemplated hereby. The Company is duly qualified and in good standing as a
foreign corporation in each other jurisdiction in which such qualification is
required, and is duly authorized, qualified and licensed under all laws,
regulations ordinances or orders of public authorities, or otherwise, to carry
on its business in the places and in the manner conducted and to own its
properties and assets.
4.2. CAPITALIZATION. Immediately after the effective date of the
Restated Certificate of Incorporation (but before giving effect to the
Closing(s)), the authorized capital stock of the Company will consist of
15,000,000 shares of Common Stock, par value $.01 per share ("Voting Common
Stock"), 4,326,000 shares of which are issued and outstanding and 800,000
shares, 9,000 shares and 150,000 shares have been duly reserved for issuance
pursuant to the Company's stock option plan, Management Stock Bonus Plan and
Directors' Stock Option Plan, respectively, 2,500,000 shares of Non-Voting
Common Stock, par value $.01 per share ("Non-Voting Common Stock"), no shares of
which are issued and outstanding, 5,092,589 shares of Series A Convertible
Preferred Stock, par value $.01 per share, all of which are issued and
outstanding and held of record by Kopin Corporation ("Kopin"), 1,851,851 shares
of Series B Convertible Preferred Stock, par value $.01 per
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share, all of which are issued and outstanding and held of record by Kopin, and
2,333,333 shares of the Series C Preferred Stock, no shares of which will be
issued and outstanding. The Company has provided each Series C Investor with a
list of (i) all holders of capital stock of the Company, including the number of
shares of capital stock held by each such holder, and (ii) all outstanding
warrants, options, agreements, convertible securities or other commitments
pursuant to which the Company is or may become obligated to issue (or as to
which it has reserved for issuance) any shares of its capital stock or other
securities of the Company, which names all persons entitled to receive such
shares or other securities (and/or states their respective positions at the
Company) and the shares or other securities required to be issued thereunder.
All such holders are parties to the Shareholders Agreement. All of the issued
and outstanding shares of the capital stock of the Company have been duly
authorized and validly issued in compliance with all applicable provisions of
the Securities Act of 1933, as amended (the "Securities Act") and applicable
state "blue sky" laws and regulations, and are fully paid, non-assessable, and
subject to no liens or restrictions on transfer of any kind except restrictions
on transfer imposed by applicable securities laws and as contemplated under the
Series A Preferred Stock Agreements and Series B Preferred Stock Agreements. The
Company does not have outstanding, except as contemplated by this Agreement and
the Related Agreements and disclosed herein or herewith, any rights (preemptive
or other) to subscribe for or to purchase, or any warrants or options for the
purchase of, or any agreements, understandings or arrangements providing for or
other obligations requiring the issuance (contingent or other) of, or any calls,
commitments or claims of any character relating to, any shares of any class of
its capital stock or any securities convertible into or exchangeable for any
such stock. The Company is not subject to any obligations (contingent or other)
to repurchase or otherwise acquire or rescind the sale of any shares of any
class of its stock or any securities, rights or options related thereto.
4.3. GOVERNING DOCUMENTS. The copies of the Restated Certificate of
Incorporation and By-Laws of the Company as currently in effect which have
heretofore been delivered to each of the Series C Investors are true, complete
and correct.
4.4. FINANCIAL INFORMATION. The Company's balance sheet as at October
31, 1995 and statement for operations for the ten months then ended (unaudited),
previously delivered to each of the Series C Investors, fairly present the
Company's financial condition as at such date and the Company's results of
operations for the period then ended. There has been no material adverse change
since October 31, 1995, in the business, operations, assets, prospects or
condition (financial or otherwise) of the Company or its Business other than in
the ordinary course of business.
4.5. ENFORCEABILITY OF AGREEMENTS. The Company has duly taken all
corporate action necessary to authorize the execution and delivery of this
Agreement and the performance of this Agreement and each of the Related
Agreements. This Agreement and each of the Related Agreements constitutes the
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent enforcement thereof may be
limited by insolvency, bankruptcy and similar laws affecting generally the
enforcement of contractual rights and by the discretionary nature of equitable
remedies.
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4.6. NO VIOLATION; NO DEFAULTS. Neither the execution nor delivery of
this Agreement, nor the consummation of any transaction contemplated hereby or
by any of the Related Agreements, including without limitation the issuance and
sale of the Series C Convertible Preferred Stock as provided herein, has
constituted or resulted in or will constitute or result in a breach of the
provisions of any mortgage, lease, license or other instrument, contract or
agreement to which the Company is a party or by which it is bound, or the
charter or by-laws of the Company or the violation of any judgment, decree, law
or governmental or administrative order, rule or regulation which, singly or in
the aggregate, may have any material adverse effect on the business, operations,
assets, prospects or condition (financial or otherwise) of the Company. The
Company is not in default under any provision of its charter, by-laws, or under
any provision of any mortgage, lease, license or other instrument, contract or
agreement to which it is a party or by which it is bound or of any law,
ordinance, approval, rule or regulation or any terms of any applicable order,
judgment or decree of any court, arbitrator or governmental or administrative
authority which, singly or in the aggregate, may have any material adverse
effect on the business, operation, assets, prospects or condition (financial or
otherwise) of the Company.
4.7. BROKERS' FEES. There are no brokers', finders', or similar fees
due from the Company in respect of the transactions contemplated by this
Agreement or any of the Related Agreements.
4.8. ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in
Schedule 4.8 or in the financial statements referred to in Section 4.4 hereof,
or arising in the ordinary course of business and for obligations created
pursuant to this Agreement and the Related Agreements, as of the Closing Date,
the Company will have no material liabilities (fixed or contingent, including
without limitation any liabilities for money borrowed or any tax liabilities due
or to become due) and will be subject to no material obligations under any
contract or commitment of any kind.
4.9. LITIGATION. Except as disclosed on Schedule 4.9, there is
neither pending nor, to the Company's knowledge and belief, threatened any
action, suit, proceeding or claim, or any basis therefor, to which the Company
is or may be named as a party or its property is or may be subject or which
calls into question any of the transactions contemplated by this Agreement.
4.10. CONSENTS. No consent, approval or authorization of, or filing
with, any governmental authority is required in connection with the Company's
valid execution, delivery or performance of this Agreement and the Related
Agreements, or the consummation of any other transaction to be consummated at
the Closing.
4.11. TRADEMARKS, LICENSES, ETC. Except as disclosed on Schedule 4.11
and to the extent of the collateral security interest of Kopin therein, the
Company has or has the right to use all patents, patent applications,
trademarks, trademark rights, trade names, trade name rights, copyrights,
licenses, trade secrets, permits, authorizations and other rights, as are
necessary for the conduct of its business, all of which are in full force and
effect, and the Company is in substantial compliance with the foregoing without
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infringement of, adverse claim in respect of or known conflict with the valid
rights of others which could affect or impair in a material manner the business
or assets or financial condition of the Company. The Company has previously
delivered to each of the Series C Investors a schedule listing all material
patents, patent applications, licenses, copyrights and similar intellectual
property rights of the Company. All material items of intellectual property used
by the Company's business are or will be made subject to patent, copyright,
trade secret or other appropriate legal protection and the Company is under no
obligation to compensate any other Person for the use thereof. The Company has
complied with all of its obligations of confidentiality in respect of the
claimed trade secrets or proprietary information of others and knows of no
violation of such obligations of confidentiality as are owed to the Company. No
employee, agent or consultant of the Company is subject to confidentiality
restrictions in favor of any third person the breach of which could subject the
Company to any material liability. Each of the Company's employees has executed
and delivered an Employee Proprietary Rights and Nondisclosure Agreement in
substantially the form previously delivered to the Series C Investor in
connection with the Series A Preferred Stock Agreements.
4.12. FOUNDER. Xxxxxxx is of sound mind and body and mentally and
physically capable of fulfilling his obligations under the Employment Agreement.
4.13. PROCEEDS. All cash proceeds from the sale of the Series C
Preferred Stock will be used for working capital purposes.
4.14. REGISTRATION RIGHTS. Except as provided for in the Series A
Securities Purchase Agreement, the Series B Securities Purchase Agreement and
the Registration Rights Agreement and as contemplated hereby, the Company is
under no obligation to register under the Securities Act any of its currently
outstanding securities or any of its securities which may hereafter be issued.
4.15. SUBSIDIARIES; TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES;
INSURANCE. Except as set forth on Schedule 4.15 hereto, the Company has no
subsidiary and owns no security issued by or interest in any other corporation,
partnership or other organization. Except for and to the extent of the
collateral security interest of Kopin therein, the Company has valid title to
and ownership of all the properties and assets purported to be owned by it, free
from all mortgages, pledges, liens, security interests, conditional sale
agreements, encumbrances or charges, except such as are described on Schedule
4.15 hereto. The Company enjoys peaceful and undisturbed possession under all
leases under which it is operating and all such leases are valid and subsisting
and in full force and effect. The Company maintains those insurances (including
product liability insurance) and in the amounts set forth on Schedule 4.15
hereto.
4.16. ENVIRONMENTAL COMPLIANCE. The Company has taken all necessary
steps to investigate its usage of its properties and its operations conducted
thereon and, based upon such diligent investigation, has determined that:
(a) none of the Company or, to the best of its knowledge,
any operator of its properties is in violation, or alleged violation, of any
judgment, decree, order, law,
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license, rule or regulation pertaining to environmental matters, including
without limitation those arising under the Resource Conservation and Recovery
Act ("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("XXXX"), the Federal Clean Water Act, the Federal
Clean Air Act, the Toxic Substances Control Act, or any state or local statute,
regulation, ordinance, order or decree relating to health, safety or the
environment (hereinafter "Environmental Laws"), which violation would have a
material adverse effect on the environment or the business, assets or financial
condition of the Company;
(b) the Company has not received notice from any third party
including without limitation any federal, state or local governmental authority,
(i) that the Company or any predecessor in interest has been identified by the
United States Environmental Protection Agency ("EPA") as a potentially
responsible party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 000 Xxxxxxxx X (1986); (ii) that any hazardous
waste as defined by 42 U.S.C. (S)6903(5), any hazardous substances as defined by
42 U.S.C. (S)9601(14), any pollutant or contaminant as defined by 42 U.S.C.
(S)9601(33) and any toxic substance, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws ("Hazardous
Substances") which any one of them has generated, transported or disposed of has
been found at any site at which a federal, state or local agency or other third
party has conducted or has ordered that the Company or any predecessor in
interest conduct a remedial investigation, removal or other response action
pursuant to any Environmental Law; or (iii) that any of them is or shall be a
named party to any claim, action, cause of action, complaint (contingent or
otherwise) legal or administrative proceeding arising out of any third party's
incurrence of costs, expenses, losses or damages of any kind whatsoever in
connection with the release of Hazardous Substances;
(c) except as set forth in Schedule 4.16 to each of the Series
A Securities Purchase Agreement and the Series B Securities Purchase Agreement,
to the best of the Company's knowledge: (i) no portion of the Company's
properties has been used for the handling, manufacturing, processing, storage or
disposal of Hazardous Substances except in accordance with applicable
Environmental Laws; and no underground tank or other underground storage
receptacle for Hazardous Substances is located on such properties; (ii) in the
course of any activities conducted by the Company or operators of its
properties, no Hazardous Substances have been generated or are being used on
such properties except in accordance with applicable Environmental Laws; (iii)
there have been no releases (i.e. any past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
disposing or dumping) or threatened releases of Hazardous Substances on, upon,
into or from the properties of the Company, which releases would have a material
adverse effect on the value of such properties or adjacent properties or the
environment; (iv) to the best of the Company's knowledge, there have been no
releases on, upon, from or into any real property in the vicinity of the real
properties of the Company which, through soil or ground water contamination, may
have come to be located on, and which would have a material adverse effect on
the value of, the properties of the Company; and (v) in addition, any Hazardous
Substances that have been generated on the properties of the Company, have
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been transported offsite only by carriers having an identification number issued
by the EPA and treated or disposed of only by treatment or disposal facilities
maintaining valid permits as required under applicable Environmental Laws, which
transporters and facilities have been and are, to the best of the Company's
knowledge, operating in compliance with such permits and applicable
Environmental Laws; and
(d) to the best of the Company's knowledge, none of the
properties of the Company are or shall be subject to any applicable
environmental cleanup responsibility law or environmental restrictive transfer
law or regulation by virtue of the transactions set forth herein and
contemplated hereby.
4.17. TAXES. The Company and its Predecessor have, to the best of
the Company's knowledge, accurately prepared and timely filed all federal, state
and other tax returns required by law to be filed by each of them, and all taxes
shown to be due and all additional assessments have been paid or provision made
therefore. There are no transfer, issuance or similar taxes imposed by law in
connection with the issuance, sale or delivery of the Series C Preferred Stock.
4.18. OFFERING. Subject to the truth and accuracy of the
representations of each of the Series C Investors set forth in Section 5 hereof,
the offer, sale and issuance of the Series C Convertible Preferred Stock as
contemplated by this Agreement are exempt from the registration requirements of
the Securities Act, and neither the Company nor any one acting on its behalf
will take any action hereafter that would cause the loss of such exemption. The
Company has complied and will comply with all applicable state "blue sky" or
securities laws in connection with the offer, sale and issuance of the Series C
Convertible Preferred Stock as contemplated by this Agreement.
4.19. DISCLOSURE. Neither this Agreement nor any of the Related
Agreements 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 misleading in the light of the circumstances under which they were made.
There is no fact known to the Company which materially adversely affects, or in
the future is likely to materially adversely affect, the business, operations,
affairs, prospects, condition, properties or assets of the Company which has not
been set forth in this Agreement (including the exhibits and schedules hereto),
in the other documents, certificates, instruments or statements furnished to
each of the Series C Investors by or on behalf of the Company or in reports to
the Board of Directors.
5. SERIES C INVESTOR REPRESENTATIONS. Each of the Series C
Investors represents and warrants to the Company that:
5.1. That he or it has received and carefully reviewed descriptive
memoranda relating to the Company and any other materials relating thereto that
he has requested.
5.2. That no person or entity, other than the Company or its
authorized representatives, has offered Series C Preferred Stock to the
undersigned.
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5.3. That he or it has such knowledge and experience in financial and
business matters that he or it is capable of evaluating the merits and risks of
an investment in the Company, or he and his or its financial and investment
advisors together have such knowledge and experience in financial and business
matters that they are capable of evaluating the merits and risks of an
investment in the Company.
5.4. That (i) it has been called to his or its attention in
connection with his or its investment in the Company that such investment is
speculative in nature and involves a high degree of risk, and (ii) he or it is
aware that the Company is in the start-up stage and thus has a limited operating
history.
5.5. INVESTMENT REPRESENTATION. It is acquiring the Series C
Preferred Stock for investment, and not with a view to selling or otherwise
distributing any thereof in violation of the Securities Act; provided, however,
that nothing contained herein shall prevent any Series C Investor from
requesting that the Series C Preferred Stock be registered in the name of its
nominee or transferring the Series C Preferred Stock in compliance with
applicable laws.
5.6. FULL ACCESS. He or it and his or its representatives have been
permitted full and complete access to the books and records and other documents
of the Company which he or his or it and its representatives have desired or
requested to review and that he and his or it and its representatives have had a
full opportunity to meet with the officers of the Company to discuss such
matters as such Investor has elected to review, and that any questions regarding
the Company and its business have been answered to the full satisfaction of the
undersigned.
5.7. ACCREDITED INVESTOR. He or it is an "accredited investor" as
defined in Regulation D under the Securities Act.
5.8. That he or it understands that no federal or state agency has
passed upon or made any recommendation or endorsement of an investment in the
Series C Preferred Stock.
5.9. That he or it will notify the Company immediately, and in any
event prior to the date this agreement is accepted by the Company, if any event
occurs which would materially and adversely affect any of the above
representations or warranties.
5.10. AUTHORIZATION; ENFORCEABILITY. It has taken all necessary
action to authorize its execution, delivery and performance of this Agreement
and the other Related Agreements to which it is or may become a party. This
Agreement constitutes, and each of the Related Agreements to which it is a party
will constitute, upon execution and delivery thereof at the Closing, its legal,
valid and binding agreement.
5.11. BROKERS. It has not retained, utilized or been represented by
any broker or finder in connection with the transactions contemplated by this
Agreement.
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6. CONDITIONS PRECEDENT. The obligation of each of the Series C Investors
to purchase the Series C Preferred Stock at the Closing(s) is subject to the
Company's compliance with its agreements herein and to the satisfaction, on or
prior to the Closing Date(s), of the following conditions precedent:
6.1. LEGALITY; GOVERNMENTAL AUTHORIZATIONS. The purchase of and
payment for the Series C Preferred Stock to be purchased by each of the Series C
Investors shall not be prohibited by any law or governmental order or
regulation, and shall not subject the Series C Investor to any penalty, tax,
liability or other onerous condition. All necessary consents, approvals,
licenses, permits, orders and authorizations of, or registrations, declarations
and filings with, any governmental or administrative agency or of any other
Person with respect to any of the transactions contemplated hereby or by the
Related Agreements shall have been duly obtained or made and shall be in full
force and effect. True and complete copies of each of the foregoing as in effect
shall have been furnished to each Series C Investor.
6.2. NO CHANGE IN LAW, ETC. No legislation, order, rule, ruling or
regulation shall have been enacted or made by or on behalf of any governmental
body, department or agency, nor shall any investigation by any governmental
authority or administrative body have been commenced, nor shall any decision of
any court of competent jurisdiction have been rendered which in the judgment of
the Series C Investor would materially and adversely affect, restrain, prevent
or change the transactions contemplated by this Agreement or the Related
Agreements or materially and adversely affect the business, operations, assets,
prospects or condition (financial or otherwise) of the Company.
6.3. PROPER PROCEEDINGS. All necessary and proper proceedings shall
have been taken by the Company to authorize the execution, delivery and
performance of each of this Agreement and the Related Agreements and of each of
the transactions contemplated hereby and thereby.
6.4. GENERAL. All instruments and legal, governmental,
administrative and corporate proceedings in connection with the transactions
contemplated by this Agreement and the Related Agreements shall be satisfactory
in form and substance to the Series C Investor, and each Series C Investor shall
have received counterpart originals, or certified or other copies of all
documents, including without limitation records of corporate or other
proceedings and opinions of counsel, which it may have reasonably requested in
connection therewith.
6.5. RESTATED CERTIFICATE OF INCORPORATION. The Restated Certificate
of Incorporation shall have been approved by resolutions duly adopted by the
Company's shareholders and its board of directors and shall have been filed by
the office of the Secretary of State of the State of New York.
6.6. SERIES A PREFERRED STOCK AGREEMENTS AND SERIES B PREFERRED
STOCK AGREEMENTS. Each of the Series A Preferred Stock Agreements and the
Series B Preferred Stock Agreements shall be in full force and effect.
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6.7. LEGAL OPINION. Each Series C Investor shall have received a
favorable legal opinion from Xxxxxxxxx & Xxxxxxx substantially in the form of
Exhibit 6.7 hereto.
6.8. REPRESENTATIONS AND WARRANTIES; OFFICERS' CERTIFICATES. The
representations and warranties contained or incorporated by reference herein
shall be true and correct in all material respects on and as of the Closing
Date(s) with the same force and effect as though made on and as of the Closing
Date(s), both before and after giving effect to the sale of the Series C
Convertible Preferred Stock; and each Series C Investor shall have received on
the Closing Date(s) a certificate to these effects signed by the President of
the Company and a certificate as to the matters represented and warranted in
Section 4.12 signed by Xxxxxxx.
6.9. CONVERSION OF XXXXXXX' SHARES. Xxxx Xxxxxxx shall have exchanged such
number of his shares of Voting Common Stock into Non-Voting Common Stock as
shall be required under Section 9 hereto.
7. COVENANTS. The covenants of the Company set forth in Section 7 of the Series
A Securities Purchase Agreement with the Investor therein are incorporated
herein by reference with the same force and effect with respect to the
obligations of the Company and the rights of the Series C Investors.
8. ELECTION OF ADDITIONAL DIRECTORS. On and from time to time after the date
of this Agreement, so long as Xxxxxxx owns any shares of Non-Voting Common Stock
of the Company, Kopin and Xxxxxxx shall vote (or cause to be voted) all
securities of the Company owned by them at such times and entitled to vote on
any matter mentioned below in this Section 8, and will cause each of their
respective Affiliates to vote all such securities of the Company owned by such
Affiliates at such time and entitled to vote on any such matter, in each case as
follows:
(a) So as to fix the number of directors of the Company at nine (9).
(b) To elect three persons to the Board of Directors from a written list
provided to Kopin by management of the Company which shall include the names of
not less than fifteen (15) persons who are not affiliated with the Company and
meeting such other business and industry criteria set forth on Schedule 8
attached hereto Within forty-five (45) days of receipt of such list, Kopin will
select for consideration and further discussion with management its tentative
selection for election to the Board of Directors three (3) persons from such
list, and Kopin shall thereafter diligently proceed to make its selections and
elect as Directors three (3) persons from such list. Within seventy-five days
from the receipt of such list (or such longer period, if any, as may be required
in order for the persons selected by Kopin to qualify and agree to serve) Kopin
shall cause such three (3) persons to be elected as Directors. The Chief
Executive Officer is hereby granted a proxy to vote all of the shares of the
capital stock of the Company owned by Kopin for the purpose of electing three
(3) persons selected by management, in its sole discretion, from such list, if
Kopin
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does not make its tentative selections or cause the election of Directors within
the time periods set forth above.
(c) To remove as a member of the Board, with or without cause, any person
previously designated for election by Kopin, and elected to the Board pursuant
to this Section 8, upon written request for such removal, with or without cause,
by Kopin. To fill a vacancy on the Board of Directors caused by the termination
of service as a Director of a person elected pursuant to subsection (b), such
vacancy to be filled in accordance with the provisions contained in subsection
(b), except that the list to be provided by management shall include the names
of not less than five (5) or more persons for each such vacancy.
The provisions of this Section 8 shall be in addition to and not in limitation
of the provisions of Section 4 of the Shareholders Agreement. The provisions of
this Section 8 shall terminate upon the earliest to occur of the events set
forth in Section 2.02(a) of the Restated Certificate of Incorporation.
9. CONVERSION OF XXXXXXX' SHARES. Xxxxxxx agrees that, on or prior to the
Initial Closing Date, and from time to time thereafter until the earliest to
occur of the events set forth in Section 2.02(a) of the Restated Certificate of
Incorporation, he will convert that number of the shares of Voting Common Stock
owned by him into Non-Voting Common Stock which is required in order for Kopin
at all times to own more than 50% of the outstanding shares of the Voting Common
Stock, including as Voting Common Stock for these purposes the number of shares
of Voting Common Stock into which the outstanding shares of Preferred Stock are,
at such time, convertible.
10. AMENDMENTS TO SERIES PREFERRED STOCK AGREEMENTS. The Company, Travers,
Travers Family Limited Liability Company and the Series C Investors hereby agree
to amend the Series A Preferred Stock Agreements and Series B Preferred Stock
Agreements as follows:
10.1. DEFINITION OF "PREFERRED STOCK." The Series C Convertible Preferred
Stock shall, as of and from the initial date so issued and sold by the Company
to the Series C Investors, be deemed to be included within the definition of
"Preferred Stock" as that term is defined in the Series A Preferred Stock
Agreements, and such Series C Convertible Preferred Stock shall be entitled to
all of the rights and benefits and subject to all of the obligations inuring to
the Preferred Stock under the Series A Preferred Stock Agreements. By executing
and delivering this Agreement, the Company and each Series C Investor
acknowledges and agrees that each such Series C Investor is being made a party
to, and is bound by, the respective provisions of the Shareholders Agreement,
First Refusal Agreement and the Registration Rights Agreement as if it were an
Investor party thereto.
11. REMEDIES.
11.1. REMEDIES. If either party shall fail to perform or observe any of the
covenants, agreements or provisions set forth or incorporated by reference in
this Agreement or in any of the Related Agreements, then and in each and every
such case the other party may proceed to enforce performance of such obligations
in such manner as it
-12-
may elect and may proceed to protect and enforce its rights by suit in equity,
action at law and/or other appropriate proceeding for performance of such
obligations.
11.2. COURSE OF DEALING. No course of dealing between the Company on the one
hand, and any Series C Investor or any holder of Series C Convertible Preferred
Stock, on the other hand, shall operate as a waiver of any rights under this
Agreement or any Related Agreement. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right or remedy on any other occasion.
No waiver or statement of satisfactory cure or consent shall be binding upon one
party or any holder of any Series C Convertible Preferred Stock unless it is in
writing and signed by the party to be changed.
11.3. WAIVERS. Each party hereby waives, to the extent not prohibited by
applicable law, (a) all presentments, demands for performance, notices of
nonperformance (except to the extent required by the provisions hereof) and (b)
any requirement of diligence or promptness on the part of any other party or any
Series C Convertible Preferred Stock in the enforcement of its rights under the
provisions of this Agreement.
11.4. EQUITABLE REMEDIES. The parties to this Agreement hereby acknowledges
that monetary damages are an inadequate remedy for breach of the covenants and
provisions contained in this Agreement or in any Related Agreement; therefore,
it is agreed that each of such covenants of one party and provisions shall be
enforceable by specific performance, including all forms of injunctive relief.
Each party hereby waives any defense based on the adequacy of any remedies at
law.
12. PAYMENT ON SERIES C PREFERRED STOCK; TRANSFER; LEGENDS
12.1. PAYMENT. All payments made by the Company in respect of any Series C
Preferred Stock shall be made in immediately available funds in lawful money of
the United States for credit, not later than 12:00 noon, Boston time, to the
account of the respective Series C Investor and shall be accompanied by
sufficient information to identify the source and application thereof, or in any
event by such other reasonable method or at such other address, as the
respective Series C Investor shall have from time to time notified the Company
thereof.
12.2. TRANSFER OF SERIES C PREFERRED STOCK. If, at any time of any
conversion, transfer (other than a conversion or transfer not involving a change
in the beneficial ownership of such securities) or surrender for exchange of any
share of Series C Preferred Stock or any securities issued upon exchange or
conversion, or in replacement thereof (or in respect of such securities), such
securities shall not be registered under the Securities Act or qualified under
any applicable state securities law, the Company may require, as a condition of
allowing such conversion, transfer or exchange, that the holder or transferee of
such securities, as the case may be, furnish to the Company such information as,
in the reasonable opinion of counsel for the Company, is necessary in order to
establish that such exercise, transfer or exchange may be made without
registration under the Securities Act or qualification under such state
securities law; provided, however, that nothing contained in this Section 12.2
shall relieve the Company from complying with the provisions
-13-
of Section 8 of the Series A Securities Purchase Agreement, as amended hereby,
or any provision of the Restated Certificate of Incorporation.
12.3. LEGENDS. To the extent applicable, each certificate or other document
evidencing any of the Series C Preferred Stock to be purchased and sold pursuant
to this Agreement or any Common Stock issued upon conversion of the Series C
Preferred Stock shall be endorsed with the legends set forth below, and each
Series C Investor covenants that, except to the extent such restrictions are
waived by the Company, it shall not transfer the shares represented by any such
certificate without complying with the restrictions on transfer described in the
legends endorsed on such certificate:
(a) The following legend under the Securities Act:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144
PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
THE COMPANY AND ITS COUNSEL AND FROM ATTORNEYS REASONABLY ACCEPTABLE
TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED."
(b) If required by the authorities of any state in connection with the
issuance or sale of the Series C Preferred Stock or the Common Stock issued upon
conversion of the Series C Preferred Stock, the legend required by such state
authority.
12.4. REMOVAL OF LEGENDS.
(a) Any legend endorsed on a certificate pursuant to Section 12.3(a)
hereof shall be removed (i) if the Series C Preferred Stock to be purchased and
sold pursuant to this Agreement or Common Stock issued upon conversion of Series
C Preferred Stock represented by such certificate shall have been effectively
registered under the Securities Act, (ii) if such shares are being transferred
in compliance with Rule 144 promulgated under the Securities Act, or (iii) if
the holder of such shares shall have provided the Company with an opinion of
counsel, in form and substance reasonably acceptable to the Company and its
counsel and from attorneys reasonably acceptable to the Company and its counsel,
stating that the proposed sale, transfer or assignment of such shares may be
made without registration.
(b) Any legend endorsed on a certificate pursuant to Section 12.3(b)
hereof shall be removed if the Company receives an order of the appropriate
state authority authorizing such removal or if the holder of Series C Preferred
Stock to be purchased and sold pursuant to this Agreement or Common Stock issued
upon conversion of the Series C Preferred Stock provides the Company with an
opinion of counsel, in form and substance reasonably acceptable to the Company
and its counsel and from attorneys
-14-
reasonably acceptable to the Company and its counsel, stating that such legend
may be removed.
13. EXPENSES, ETC. Whether or not the transactions contemplated by this
Agreement and the Related Agreements shall be consummated, each party agrees to
pay and be responsible for the respective expenses incurred by it in connection
herewith.
14. NOTICES. All notices and other communications pursuant to this Agreement
shall be in writing, either delivered in hand or sent by first-class mail,
postage prepaid, or sent by telex, telecopier, facsimile machine or telegraph,
addressed as follows:
(a) if to the Company, at the address thereof set forth on the first
page hereof, or at such other address as shall have been furnished to the
Series C Investor in writing by the Company with a copy to Xxxxxxxxx &
Xxxxxxx, 0000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000, Attention: Xxxxxx X.
Xxxxxx, Esq.;
(b) if to the Series C Investors, at the address thereof set forth next
to the respective Series C Investor's name on Schedule 1 hereto or at such
other address as shall have been furnished to the Company in writing by the
Series C Investor with a copy to Xxxx X. Xxx, Esq., c/o Chu, Ring &
Associates, 000 Xxxxxx Xxxxxx, Xxxxxx, XX 00000.
Any notice or other communication pursuant to this Agreement shall be
deemed to have been duly given or made and to have become effective (i) when
delivered in hand to the party to which it was directed, (ii) if sent by telex,
telecopier, facsimile machine or telegraph and properly addressed in accordance
with the foregoing provisions of this Section 14, when received by the
addressee, or (iii) if sent by first-class mail, postage prepaid, and properly
addressed in accordance with the foregoing provisions of this Section 14, (A)
when received by the addressee, or (B) on the third business day following the
day of dispatch thereof, whichever of (A) or (B) shall be the earlier.
15. SURVIVAL AND TERMINATION OF COVENANTS. All covenants, agreements,
representations and warranties made herein or in any other document referred to
herein or delivered to the Series C Investors pursuant hereto shall be deemed to
have been material and relied on by each of the Series C Investors,
notwithstanding any investigation made by the Series C Investors, and shall
survive the execution and delivery to the Series C Investors hereof and of the
Series C Preferred Stock and shall terminate only as follows: (a) upon the
Company's Qualified Initial Public Offering, except as to the covenants of the
Company contained in Sections 7, 8, and 9 hereof, the provisions of Section 8 of
the Series A Securities Purchase Agreement and Sections 13 and 15 hereof; or (b)
as to any Series C Investor, if such Series C Investor no longer hold any Series
C Preferred Stock or any Common Stock, this Agreement shall terminate in its
entirety except for the provisions of Sections 13 and 15 hereof.
16. AMENDMENTS AND WAIVERS. Except as otherwise expressly required by any
other provisions of this Agreement, none of the terms or provisions contained in
this Agreement, and none of the agreements, obligations or covenants of the
Company
-15-
contained in this Agreement or in any Related Agreement or in any of the Series
Preferred Stock Agreements to the extent that, as amended hereby, they may
affect, govern, or apply to the Series C Convertible Preferred Stock, may be
amended, modified, supplemented, waived or terminated unless the Company and
Series C Investors holding not less than sixty percent (60%) of the Series C
Convertible Preferred Stock and shares issued upon conversion thereof shall
execute an instrument in writing agreeing or consenting to such amendment,
modification, supplement, waiver or termination.
17. MISCELLANEOUS. This Agreement and the Related Agreements set forth the
entire understanding of the parties hereto with respect to the transactions
contemplated hereby. The invalidity or unenforceability of any term or
provision hereof shall not affect the validity or enforceability of any other
term or provision hereof. The headings in this Agreement are for convenience of
reference only and shall not alter or otherwise affect the meaning hereof. This
Agreement is intended to take effect as a sealed instrument and may be executed
in any number of counterparts which together shall constitute one instrument and
shall be governed by and construed in accordance with the domestic substantive
laws of the State of New York without giving effect to any choice or conflict of
law provision or rule that would cause the application of the domestic
substantive laws of any other state, and shall bind and inure to the benefit of
the parties hereto and their respective successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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If the foregoing corresponds with your understanding of our agreement,
kindly sign this signature page and the accompanying copies thereof (which have
already been signed by the Company) in the appropriate space below and return
one counterpart of the same to the Company. This letter shall thereupon become
a binding agreement between you and the Company.
Very truly yours,
FORTE TECHNOLOGIES, INC.
By:
-------------------------------
Title
FOR PURPOSES OF SECTIONS 8, 9 AND 10:
-----------------------------
Xxxx X. Xxxxxxx
FOR PURPOSES OF SECTIONS 8 AND 10 ONLY:
XXXXXXX FAMILY LIMITED LIABILITY COMPANY
By:
----------------------------
Title
-17-
FOR PURPOSES OF THIS AGREEMENT AND THE
SHAREHOLDERS AGREEMENT, FIRST REFUSAL
AGREEMENT AND REGISTRATION RIGHTS
AGREEMENT:
ACCEPTED and AGREED TO:
KOPIN CORPORATION
By:
------------------------------
Title
-18-
FOR PURPOSES OF THIS AGREEMENT AND THE
SHAREHOLDERS AGREEMENT, FIRST REFUSAL
AGREEMENT AND REGISTRATION RIGHTS
AGREEMENT:
ACCEPTED and AGREED TO:
XXXXXXX AND XXXXX INC.
By:
-----------------------------
Title
-19-
FOR PURPOSES OF THIS AGREEMENT AND THE
SHAREHOLDERS AGREEMENT, FIRST REFUSAL
AGREEMENT AND REGISTRATION RIGHTS
AGREEMENT:
ACCEPTED and AGREED TO:
SF PARTNERS I LIMITED PARTNERSHIP
By:
-----------------------------
Title
-20-
FOR PURPOSES OF THIS AGREEMENT AND THE
SHAREHOLDERS AGREEMENT, FIRST REFUSAL
AGREEMENT AND REGISTRATION RIGHTS
AGREEMENT:
ACCEPTED and AGREED TO:
NS ASSOCIATES INC.
By:
---------------------------------
Title
-21-
FOR PURPOSES OF THIS AGREEMENT AND THE
SHAREHOLDERS AGREEMENT, FIRST REFUSAL
AGREEMENT AND REGISTRATION RIGHTS
AGREEMENT:
ACCEPTED and AGREED TO:
XXXX X. XXXX, TRUSTEE, U/I/T 6-28-91
XXXX X. XXXX TRUST
By:
--------------------------------
Title
-22-
FOR PURPOSES OF THIS AGREEMENT AND THE
SHAREHOLDERS AGREEMENT, FIRST REFUSAL
AGREEMENT AND REGISTRATION RIGHTS
AGREEMENT:
ACCEPTED and AGREED TO:
By:
----------------------------------
Title
-23-
Schedule 1
----------
Investor Series C Preferred Stock Purchase Price
-------- ------------------------ --------------
Kopin Corporation 833,333 shares $1,000,000.00 (by
000 Xxxxx Xxxxxxxx Xxxxxxxxx conversion of advances
Xxxxx Xxxxxxxx Industrial Park made in December 1995)
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
Xxxxxxx and Xxxxx Inc. 583,333 shares $700,000.00
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Patrick Corydon
(317-636-9800)
SF Partners I Limited Partnership 145,833 shares $175,000.00
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxx XxXxxx
NS Associates, Inc. 145,833 shares $175,000.00
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxx XxXxxx
Xxxx X. Xxxx, Trustee U/I/T 6-28-91 291,667 shares $350,000.00
Xxxx X. Xxxx, Trust
Xxxxxxx Management
000 Xxxxx Xxxxxxxx, Xxxxx 000
Xx. Xxxxx, XX 00000
(310-421-4600)
Diamond Consolidated Limited 41,667 shares $50,000.00
Partnership
000 Xxxxx Xxxxxxxx Xxx.
Xxx. 0000
Xxxxxxx, Xxxxxxxx
Diamond Family Foundation 41,677 shares $50,000.00
000 Xxxxx Xxxxxxxx Xxx.
Xxx. 0000
Xxxxxxx, Xxxxxxxx 00000
X.X. Xxxxx Investment Assoc. 250,000 shares $300,000.00
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Total 2,333,333 shares $2,800,000.00
