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EXHIBIT 4.13
MOBILITY ELECTRONICS, INC.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
APRIL 20, 1999
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MOBILITY ELECTRONICS, INC.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
This Series C Preferred Stock Purchase Agreement (the "Agreement") is
made as of the 20th day of April, 1999, by and among Mobility Electronics, Inc.,
a Delaware corporation (the "Company"), and the investors listed on Exhibit A
attached hereto (each a "Purchaser" and together the "Purchasers").
The parties hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED STOCK.
1.1 SALE AND ISSUANCE OF SERIES C PREFERRED STOCK.
(a) The Company has adopted and filed with the
Secretary of State of the State of Delaware a Certificate of the Designations,
Preferences, Rights and Limitations of Series C Preferred Stock of the Company,
a copy of which is attached hereto as Exhibit B (the "Certificate of
Designations").
(b) Subject to the terms and conditions of this
Agreement, each Purchaser agrees to purchase at the Closing (as defined below)
and the Company agrees to sell and issue to each Purchaser at the Closing that
number of shares of Series C Preferred Stock set forth opposite each such
Purchaser's name on Exhibit A attached hereto at a purchase price of $6.00 per
share; provided, however, that to the extent any shares of Series C Preferred
Stock are sold by the Company at a price less than $6.00 per share, each
Purchaser who purchased shares of Series C Preferred Stock at a price higher
than the lowest issuance price will receive, and the Company agrees to issue,
additional shares of Series C Preferred Stock so that such Purchaser receives
the benefit of such lower issuance price by issuing additional shares of Series
C Preferred Stock in an amount equal to the remainder of (i) the aggregate
amount of such Purchaser's original investment divided by such lower issuance
price minus (ii) the aggregate number of shares of Series C Preferred Stock then
issued to the Purchaser (subject to adjustment for all stock splits, stock
dividends, combinations, recapitalization and the like), and Exhibit A will be
amended accordingly (without any action on the part of the Purchasers). The
shares of Series C Preferred Stock issued to the Purchaser pursuant to this
Agreement shall be hereinafter referred to as the "Stock". The Stock and the
Common Stock issuable upon conversion of the Stock shall be hereinafter referred
to as the "Securities."
1.2 CLOSING; DELIVERY.
(a) The purchase and sale of the Stock shall take
place at the offices of Xxxxxxx Xxxxxx L.L.P., 000 Xxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx, at 10:00 a.m., on March 18,
SERIES C PREFERRED STOCK PURCHASE AGREEMENT - PAGE 1
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1999, or at such other time and place as the Company and the Purchasers mutually
agree upon, orally or in writing (which time and place are designated as the
"Closing").
(b) At the Closing, the Company shall deliver to each
Purchaser a certificate representing the Stock being purchased thereby against
payment of the purchase price therefor by check payable to the Company or by
wire transfer to the Company's bank account.
(c) The Company may sell up to the balance of the
authorized number of shares of Series C Preferred Stock not sold on or prior the
Closing to such purchasers as it shall select. Any such purchaser shall become a
party to this Agreement, that certain Investors' Rights Agreement (as defined
below), and shall have the rights and obligations hereunder and thereunder,
unless such purchaser enters into an acquisition agreement that provides
otherwise.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Purchaser that, except as set forth on a
Schedule of Exceptions attached hereto as Exhibit C, which exceptions shall be
deemed to be representations and warranties as if made hereunder:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to: (i) carry on its business as now conducted and proposed to be
conducted; (ii) execute and deliver this Agreement and, the Investors' Rights
Agreement in the form attached hereto as Exhibit D (the "Investors' Rights
Agreement") (together with this Agreement, the "Agreements") and (iii) issue and
sell the Stock and the Common Stock issuable upon conversion of the Stock
(together, the "Securities") and to carry out the provisions of the Agreements.
The Company is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure so to qualify would have a material
adverse effect on its business or properties. The jurisdictions in which the
Company is qualified to do business are listed on the Schedule of Exceptions set
forth in Exhibit C attached hereto.
2.2 CAPITALIZATION. The authorized capital of the Company
consists, or will consist, immediately prior to the Closing, of:
(a) 5,000,000 shares of Preferred Stock, of which (i)
2,500 shares have been designated Series A Preferred Stock, none of which are
issued and outstanding; (ii) 4,186 shares have been designated Series B
Preferred Stock, none of which are issued and outstanding; and (iii) 4,500,000
shares have been designated Series C Preferred Stock, 740,477 of which are
issued and outstanding immediately prior to the Closing. All of the outstanding
shares of Series C Preferred Stock have been duly and validly authorized, fully
paid and are nonassessable and issued in compliance with all applicable federal
and state securities laws.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT - PAGE 2
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(b) 75,000,000 shares of Common Stock, 9,127,612
shares of which are issued and outstanding immediately prior to the Closing. All
of the outstanding shares of Common Stock have been duly and validly authorized,
fully paid and are nonassessable and issued in compliance with all applicable
federal and state securities laws.
(c) The Company has reserved 1,197,282 shares of
Common Stock for issuance to officers, directors, employees and advisors of the
Company pursuant to the Company's Amended and Restated 1996 Long Term Incentive
(the "Stock Plan"), and has issued and outstanding options under the Stock Plan
to purchase 820,032 shares of Common Stock.
(d) The Company has issued and outstanding the
following other securities: (i) warrants to purchase 2,588,398 shares of Common
Stock (ii) options to purchase 294,396 shares of Common Stock and (iii)
approximately $95,000 of 12% Convertible Debentures, 60% of which is convertible
into shares of Common Stock at a conversion price of $3.86 per share.
(e) Except for (i) conversion privileges of the
Series C Preferred Stock, (ii) outstanding options issued pursuant to the Stock
Plan, (iii) conversion and exercise privileges of the securities described in
subsections (c) and (d) above, there are no outstanding options, warrants,
rights (including conversion or preemptive rights and rights of first refusal or
similar rights) or agreements, orally or in writing, for the purchase or
acquisition from the Company of any shares of its capital stock. The Company is
not a party or subject to any agreement or understanding, and there is no
agreement or understanding between any person and/or entities, which affects or
relates to the voting or giving of written consents with respect to any security
or by a director of the Company. The Company has outstanding the registration
rights set forth in Section 2.2 of Exhibit C.
2.3 SUBSIDIARIES. The Company does not currently own or
control, directly or indirectly, any interest in any other corporation,
association, or other business entity.
2.4 AUTHORIZATION. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of the Agreements, the performance of all
obligations of the Company under the Agreements and the authorization, issuance,
sale and delivery of the Securities has been taken or will be taken prior to the
Closing, and the Agreements, when executed and delivered by the Company, shall
constitute valid and legally binding obligations of the Company, enforceable
against the Company in accordance with their terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and other laws of general application affecting enforcement of
creditors' rights generally, as limited by laws relating to the availability of
specific performance, injunctive relief, or other equitable remedies, or (ii) to
the extent the indemnification provisions contained in the Investors' Rights
Agreement may be limited by applicable federal or state securities laws.
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2.5 VALID ISSUANCE OF SECURITIES. The Stock that is being
issued to the Purchasers hereunder, when issued, sold and delivered in
accordance with the terms hereof for the consideration expressed herein, will be
duly and validly issued, fully paid and nonassessable and free of restrictions
on transfer other than restrictions on transfer under the Agreements and
applicable state and federal securities laws. Based in part upon the
representations of the Purchasers in this Agreement, the Stock will be issued in
compliance with all applicable federal and state securities laws. The Common
Stock issuable upon conversion of the Stock has been duly and validly reserved
for issuance, and upon issuance in accordance with the terms of the Certificate
of Designations, shall be duly and validly issued, fully paid and nonassessable
and free of restrictions on transfer other than restrictions on transfer under
the Agreements, and applicable federal and state securities laws and will be
issued in compliance with all applicable federal and state securities laws.
2.6 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for filings pursuant to applicable state
securities laws and Regulation D of the Securities Act of 1933, as amended (the
"Securities Act") which filing will be effected within fifteen (15) days after
the sale of the Stock.
2.7 LITIGATION. There is no action, suit, proceeding or
investigation pending or, to the best knowledge of the Company, currently
threatened against the Company or any of its subsidiaries that questions the
validity of the Agreements or the right of the Company to enter into them, or to
consummate the transactions contemplated hereby or thereby, or that might
result, either individually or in the aggregate, in any material adverse changes
in the assets, condition or affairs of the Company, financially or otherwise, or
any change in the current equity ownership of the Company, nor is the Company
aware that there is any basis for the foregoing. The foregoing includes, without
limitation, actions pending or to the best knowledge of the Company threatened
in writing involving the prior employment of any of the Company's employees,
their use in connection with the Company's business of any information or
techniques allegedly proprietary to any of their former employers. Neither the
Company nor any of its subsidiaries is a party or subject to the provisions of
any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality. There is no action, suit, proceeding or investigation
by the Company or any of its subsidiaries currently pending or which the Company
or any of its subsidiaries intends to initiate.
2.8 INTELLECTUAL PROPERTY. The Company owns or possesses
sufficient title and ownership of or licenses to all patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information and
proprietary rights and processes necessary for its business as conducted and
proposed to be conducted without any conflict with, or infringement of, the
rights of others. There are no outstanding options, licenses or agreements of
any kind relating to the foregoing, nor is the Company bound by or a party to
any options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets,
SERIES C PREFERRED STOCK PURCHASE AGREEMENT - PAGE 4
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licenses, information and other proprietary rights and processes of any other
person or entity other than such licenses or agreements arising from the
purchase of "off the shelf' or standard commercial products. The Company has not
received any communications alleging that the Company has violated or, by
conducting its business, would violate any of the patents, trademarks, service
marks, trade names, copyrights, trade secrets or other proprietary rights or
processes of any other person or entity. The Company, to the best of its
knowledge, is not aware that any of its employees is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of such employee's best
efforts to promote the interest of the Company or that would conflict with the
Company's business. To the best knowledge of the Company, neither the execution
or delivery of this Agreement, nor the carrying on of the Company's business by
the employees of the Company, nor the conduct of the Company's business as
proposed, will conflict with or result in a breach of the terms, conditions, or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any such employee is now obligated. The Company does not
believe it is or will be necessary to use any inventions of any of its employees
(or persons it currently intends to hire) made prior to their employment by the
Company.
2.9 COMPLIANCE WITH OTHER INSTRUMENTS.
(a) The Company is not in violation or default of any
provisions of (i) its Certificate of Incorporation or Bylaws (as such documents
are in force and effect as of the Closing Date) or (ii) any instrument,
judgment, order, writ, decree or contract to which it is a party or by which it
is bound, the violation of, or default, which would have a material adverse
effect on the Company, or, to the best knowledge of the Company, of any
provision of federal or state statute, rule or regulation applicable to the
Company. The execution, delivery and performance of the Agreements and the
consummation of the transactions contemplated hereby or thereby will not result
in any such violation or be in conflict with or constitute, with or without the
passage of time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract or an event which results
in the creation of any lien, charge or encumbrance upon any assets of the
Company.
(b) The Company has avoided every condition, and has
not performed any act, the occurrence of which would result in the Company's
loss of any right granted under any license, distribution agreement or other
agreement.
2.10 AGREEMENTS; ACTION.
(a) There are no agreements, understandings or
proposed transactions between the Company and any of its officers, directors,
affiliates, or any affiliate thereof.
(b) Except as created or incurred in the ordinary
course of business, as related to the Company's Universal Connectivity Station,
or for agreements explicitly contemplated
SERIES C PREFERRED STOCK PURCHASE AGREEMENT - PAGE 5
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by the Agreements, there are no agreements, understandings, instruments,
contracts or proposed transactions to which the Company or any of its
subsidiaries is a party or by which it is bound that involve (i) obligations
(contingent or otherwise) of, or payments to, the Company or any of its
subsidiaries in excess of, $100,000, (ii) the license of any patent, copyright,
trade secret or other proprietary right to or from the Company or any of its
subsidiaries, (iii) the grant of rights (excluding contract manufacturing rights
and relationships) to manufacture, produce, assemble, license, market, or sell
its products to any other person or affect the Company's exclusive right to
develop, manufacture, assemble, distribute, market or sell its products; or (iv)
indemnification by the Company with respect to infringement of proprietary
rights (other than indemnification obligations arising from purchase or sale
agreements entered into in the ordinary course of business).
(c) Neither the Company nor any of its subsidiaries
has (i) declared or paid any dividends, or authorized or made any distribution
upon or with respect to any class or series of its capital stock, (ii) incurred
any indebtedness for money borrowed or incurred any other liabilities
individually in excess of $25,000 or in excess of $100,000 in the aggregate,
other than in the ordinary course of business, (iii) made any loans or advances
to any person, other than ordinary advances for travel and relocation expenses
and the like, or (iv) sold, exchanged or otherwise disposed of any of its assets
or rights, other than the sale of its inventory in the ordinary course of
business.
2.11 DISCLOSURE. The Company has fully provided the Purchasers
with all the information that the Purchasers have requested for deciding whether
to acquire the Stock and all information that the Company believes is reasonably
necessary to enable the Purchasers to make such a decision, including certain of
the Company's projections describing its proposed business contained in the
Mobility Electronics Company and Business Summary dated March 5, 1999 (the
"Company Summary"). No representation or warranty of the Company contained in
this Agreement and the exhibits attached hereto, any certificate furnished or to
be furnished to Purchasers at the Closing, or the Company Summary (when read
together) 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 in light of the circumstances under which they were made.
To the extent the Company Summary was prepared by management of the Company, the
Company Summary and the financial and other projections contained in the Company
Summary and other written information provided to the Purchaser were prepared in
good faith (with the exception of information prepared by third party sources
and identified as such in the Company Summary or other written information and
to which the Company makes no representation except that it has no basis to
believe such sections are inaccurate); however, the Company does not warrant
that it will achieve such projections.
2.12 NO CONFLICT OF INTEREST. The Company is not indebted,
directly or indirectly, to any of its officers or directors or to their
respective spouses or children, in any amount whatsoever other than in
connection with expenses or advances of expenses incurred in the ordinary course
of business or relocation expenses of employees which amount does not in the
aggregate exceed
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$50,000. None of the Company's officers or directors, or any members of their
immediate families, are, directly or indirectly, indebted to the Company (other
than in connection with purchases of the Company's stock) or to the best
knowledge of the Company have any direct or indirect ownership interest in any
firm or corporation with which the Company is affiliated or with which the
Company has a business relationship, or any firm or corporation which competes
with the Company except that officers, directors and/or stockholders of the
Company may own stock in (but not exceeding two percent of the outstanding
capital stock of) any publicly traded company that may compete with the Company.
None of the Company's officers or directors or any members of their immediate
families are, directly or indirectly, interested in any material contract with
the Company. The Company is not a guarantor or indemnitor of any indebtedness of
any other person, firm or corporation.
2.13 RIGHTS OF REGISTRATION AND VOTING RIGHTS. Except as
contemplated in the Investors' Rights Agreement, the Company has not granted or
agreed to grant any registration rights, including piggyback rights, to any
person or entity. To the best knowledge of the Company, no stockholder of the
Company has entered into any agreements with respect to the voting of capital
shares of the Company.
2.14 TITLE TO PROPERTY AND ASSETS. The Company owns its
property and assets free and clear of all mortgages, liens, loans and
encumbrances, except such encumbrances and liens which arise in the ordinary
course of business and do not materially impair the Company's ownership or use
of such property or assets. With respect to the property and assets it leases,
the Company is in compliance with such leases and, to its knowledge, holds a
valid leasehold interest free of any liens, claims or encumbrances. The Company
is in compliance with all material terms of each material lease to which it is a
party or otherwise bound.
2.15 FINANCIAL STATEMENTS. The Company has made available to
each Purchaser the financial statements set forth in the Company Summary
(collectively, the "Financial Statements"). The Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated, except that the unaudited
Financial Statements may not contain all footnotes required by generally
accepted accounting principles. The Financial Statements fairly present the
financial condition and operating results of the Company as of the dates, and
for the periods, indicated therein, subject to normal year-end audit
adjustments. Except as set forth in the Financial Statements, the Company has no
material liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to January 1, 1999 and
(ii) obligations under contracts and commitments incurred in the ordinary course
of business and not required under generally accepted accounting principles to
be reflected in the Financial Statements, which, in both cases, individually or
in the aggregate are not material to the financial condition or operating
results of the Company.
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2.16 CHANGES. Since January 1, 1999 there has not been:
(a) any change in the assets, liabilities, financial
condition or operating results of the Company from that reflected in the
Financial Statements, except actions contemplated in the Company Summary and
changes in the ordinary course of business that have not been, in the aggregate,
materially adverse;
(b) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the business,
properties, prospects, or financial condition of the Company;
(c) any waiver or compromise by the Company of a
valuable right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim,
or encumbrance or payment of any obligation by the Company, except in the
ordinary course of business and that is not material to the business,
properties, prospects or financial condition of the Company;
(e) any material change to a material contract or
agreement by which the Company or any of its assets is bound or subject;
(f) any material change in any compensation
arrangement or agreement with any employee, officer, director or stockholder;
(g) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;
(h) any resignation or termination of employment of
any officer or key employee of the Company; and the Company is not aware of any
impending resignation or termination of employment of any such officer or key
employee;
(i) any mortgage, pledge, transfer of a security
interest in, or lien, created by the Company, with respect to any of its
material properties or assets, except liens for taxes not yet due or payable;
(j) any loans or guarantees made by the Company to or
for the benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;
(k) any declaration, setting aside or payment or
other distribution in respect to any of the Company's capital stock, or any
direct or indirect redemption, purchase, or other acquisition of any of such
stock by the Company;
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(l) any declaration or payment of any dividend or
other distribution of the assets of the Company;
(m) receipt of notice by the Company that there has
been a loss of, or material order cancellation by, any major customer of the
Company;
(n) to the Company's knowledge, any other event or
condition of any character that might materially and adversely affect the
business, properties, prospects or financial condition of the Company; or
(o) any arrangement or commitment by the Company to
do any of the things described in this Section 2.16.
2.17 EMPLOYEE BENEFIT PLANS. The Company does not have any
Employee Benefit Plan as defined in the Employee Retirement Income Security Act
of 1974.
2.18 TAX RETURNS AND PAYMENTS. The Company has filed all tax
returns and reports as required by law. These returns and reports are true and
correct in all material respects. The Company has paid all taxes and other
assessments due. The Company has not made any elections pursuant to the Internal
Revenue Code of 1986, as amended (the "Code") (other than elections that relate
solely to methods of accounting, depreciation or amortization) that would have a
material effect on the Company, its financial condition, its business as
presently conducted or proposed to be conducted or any of its properties or
material assets. The Company had never had any tax deficiency proposed or
assessed against it and has not executed any waiver of any statute of
limitations on the assessment or collection of any tax or governmental charge.
None of the Company's federal income tax returns and none of its state income or
franchise tax or sales or use tax returns has ever been audited by governmental
authorities. Since the date of the Financial Statements, the Company has not
incurred any taxes, assessments or governmental charges other than in the
ordinary course of business and the Company has made adequate provisions on its
books of account for all taxes, assessments and governmental charges with
respect to its business, properties and operations for such period. The Company
has withheld or collected from each payment made to each of its employees, the
amount of all taxes (including, but not limited to, federal income taxes,
federal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes)
required to be withheld or collected therefrom, and has paid the same to the
proper tax receiving officers or authorized depositories.
2.19 INSURANCE. The Company has in full force and effect fire
and casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed.
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2.20 LABOR AGREEMENTS AND ACTIONS. The Company is not bound by
or subject to (and none of its assets or properties is bound by or subject to)
any written or oral, express or implied, contract, commitment or arrangement
with any labor union, and no labor union has requested or, to the best knowledge
of the Company, has sought to represent any of the employees, representatives or
agents of the Company. There is no strike or other labor dispute involving the
Company pending, or to the best knowledge of the Company threatened, which could
have a material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company, nor is the Company aware of any
labor organization activity involving its employees. The Company is not aware
that any officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company, nor does the Company have a present
intention to terminate the employment of any of the foregoing. The employment of
each officer and employee of the Company is terminable at the will of the
Company. The Company has complied in all material respects with all applicable
state and federal equal employment opportunity laws and with other laws related
to employment. The Company is not a party to or bound by any currently effective
employment contract, deferred compensation agreement, bonus plan, incentive
plan, profit sharing plan, retirement agreement, or other employee compensation
agreement.
2.21 CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT
AGREEMENTS. Substantially all current employees and officers of the Company have
executed an agreement with the Company regarding confidentiality and proprietary
information substantially in the form or forms delivered to the counsel for the
Purchasers. The Company is not aware that any of its employees or consultants is
in violation thereof.
2.22 PERMITS. The Company and each of its subsidiaries has all
franchises, permits, licenses and any similar authority necessary for the
conduct of its business, the lack of which could materially and adversely affect
the business, properties, prospects, or financial condition of the Company. The
Company is not in default in any material respect under any of such franchises,
permits, licenses or other similar authority.
2.23 CORPORATE DOCUMENTS. The Certificate of Incorporation and
Bylaws of the Company are in the form provided to counsel for the Purchasers.
The copy of the minute books of the Company provided to the Purchasers' counsel
contains minutes of all meetings of directors and stockholders and all actions
by written consent without a meeting by the directors and stockholders since the
date of incorporation and reflects all actions by the directors (and any
committee of directors) and stockholders with respect to all transactions
referred to in such minutes accurately in all material respects.
2.24 ENVIRONMENTAL AND SAFETY LAWS. The Company is not in
violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and to its knowledge, no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulation.
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2.25 OFFERING. Subject in part to the truth and accuracy of
each Purchaser's representations and warranties set forth in Section 3 of this
Agreement, the offer, sale and issuance of the Securities as contemplated by
this Agreement are exempt from the registration requirements of the Securities
Act and any applicable state securities laws, and neither the Company nor any
authorized agent acting on its behalf will take any action hereafter that would
cause the loss of such exemption.
2.26 SIGNIFICANT CUSTOMERS AND SUPPLIERS. No customer or
supplier that was significant to the Company during the period from January 1,
1998 to the date hereof has terminated, materially reduced or threatened to
terminate or materially reduce its purchases from or provision of products or
services to the Company, as the case may be.
2.27 OUTSTANDING CAPITAL STOCK. There are no issued and
outstanding shares of capital stock of the Company which have dividend or
redemption rights, liquidation preferences, conversion rights, voting rights or
otherwise which are superior to or on a party with the Series C Preferred Stock.
2.28 YEAR 2000 COMPLIANCE. To the best knowledge of the
Company, the Company's software, hardware and other computer and information
technology (collectively, "Information Technology") is Year 2000 Compliant (as
defined in the next sentence). "Year 2000 Compliant" shall mean that such
Information Technology is designed to be used prior to, during and after the
calendar year 2000 A.D., and such Information Technology used during each such
time period shall accurately receive, provide and process data/time data
(including, but not limited to. calculation, comparing and sequencing) from,
into and between the twentieth and twenty-first centuries, including the years
1999 and 2000, and leap year calculations and will not malfunction, cease to
function, or provide invalid or incorrect results as a result of data/time data,
to the extent that other information technology, used in combination of the
information technology being acquired, properly exchanges data/time data with
it.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby represents and warrants to the Company that:
3.1 AUTHORIZATION. Such Purchaser has full power and authority
to enter into this Agreement. The Agreements, when executed and delivered by the
Purchaser, will constitute valid and legally binding obligations of the
Purchaser, enforceable in accordance with their terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and any other laws of general application affecting enforcement of
creditors' rights generally, and as limited by laws relating to the availability
of a specific performance, injunctive relief, or other equitable remedies, or
(b) to the extent the indemnification provisions contained in the Investors'
Rights Agreement may be limited by applicable federal or state securities laws.
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3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
with the Purchaser in reliance upon the Purchaser's representation to the
Company, which by the Purchaser's execution of this Agreement the Purchaser
hereby confirms, that the Securities to be acquired by the Purchaser will be
acquired for investment for the Purchaser's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and that the Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, the Purchaser further represents that the Purchaser does not
presently have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to any of the Securities. The Purchaser has not been formed
for the specific purpose of acquiring the Securities.
3.3 DISCLOSURE OF INFORMATION. The Purchaser has had an
opportunity to discuss the Company's business, management, financial affairs and
the terms and conditions of the offering of the Stock with the Company's
management and has had an opportunity to review the Company's facilities. The
Purchaser understands that such discussions, as well as the Company Summary and
any other written information delivered by the Company to the Purchaser, were
intended to describe the aspects of the Company's business which it believes to
be material.
3.4 RESTRICTED SECURITIES. The Purchaser understands that the
Securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Purchaser's representations as
expressed herein. The Purchaser understands that the Securities are "restricted
securities" under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Purchaser must hold the Securities indefinitely
unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and
qualification requirements is available. The Purchaser acknowledges that the
Company has no obligation to register or qualify the Securities for resale
except as set forth in the Investors' Rights Agreement. The Purchaser further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Securities,
and on requirements relating to the Company which are outside of the Purchaser's
control, and which the Company is under no obligation and may not be able to
satisfy.
3.5 NO PUBLIC MARKET. The Purchaser understands that no public
market now exists for any of the securities issued by the Company, and that the
Company has made no assurances that a public market will ever exist for the
Securities.
3.6 LEGENDS. The Purchaser understands that the Securities,
and any securities issued in respect of or exchange for the Securities, may bear
one or all of the following legends (or substantially similar legends):
SERIES C PREFERRED STOCK PURCHASE AGREEMENT - PAGE 12
14
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933."
(b) Any legend set forth in the other Agreements.
(c) Any legend required by the Blue Sky laws of any
state to the extent such laws are applicable to the shares represented by the
certificate so legended.
3.7 ACCREDITED INVESTOR. The Purchaser is an accredited
investor as defined in Rule 5 01 (a) of Regulation D promulgated under the
Securities Act as presently in effect.
4. CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT CLOSING. The
obligations of each Purchaser to the Company under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 shall be true and correct on
and as of the Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Closing.
4.2 PERFORMANCE. The Company shall have performed and complied
with all covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.
4.3 COMPLIANCE CERTIFICATE. The President of the Company shall
deliver to the Purchasers at the Closing a Compliance Certificate certifying
that the conditions specified in Sections 4.1 and 4.2 have been fulfilled.
4.4 CONSENTS; QUALIFICATIONS. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreements (except for such
as may be properly obtained subsequent to the Closing Date). All authorizations,
approvals or permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in connection with the
lawful issuance and sale of the Stock pursuant to this Agreement shall be
obtained and effective as of the Closing.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT - PAGE 13
15
4.5 OPINION OF COMPANY COUNSEL. The Purchasers shall have
received from Xxxxxxx Xxxxxx L.L.P., counsel for the Company, an opinion, dated
as of the Closing, in substantially the form of Exhibit E.
4.6 RESERVATION OF COMMON STOCK ISSUABLE UPON CONVERSION OF
THE STOCK. The Common Stock issuable upon conversion of the Stock shall have
been duly authorized and reserved for issuance upon such conversion.
4.7 INVESTORS' RIGHTS AGREEMENT. The Company and each
Purchaser shall have executed and delivered the Investors' Rights Agreement in
substantially the form attached as Exhibit D.
4.8 DUE DILIGENCE. The Purchasers shall, in their sole
discretion have completed their legal and financial due diligence and the
results of such due diligence shall, in the sole discretion of the Purchasers,
be acceptable to the Purchasers and their legal counsel. The Schedule of
Exceptions delivered to the Purchasers by the Company shall contain no exception
deemed unacceptable by the Purchasers in their sole discretion.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations
of the Company to each Purchaser under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each Purchaser contained in Section 3 shall be true and correct on
and as of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
5.2 PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed by the Purchasers on or prior to the
Closing shall have been performed or complied with in all material respects.
5.3 QUALIFICATIONS. All authorizations, approvals or permits,
if any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and sale
of the Stock pursuant to this Agreement shall be obtained and effective as of
the Closing.
6. MISCELLANEOUS.
6.1 SURVIVAL OF WARRANTIES. Unless otherwise set forth in this
Agreement, the warranties and representations of the Company and the Purchasers
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Closing for a period of two (2) years
following the Closing, except for the warranties and representations in Section
2.8 which shall survive the execution and delivery of this Agreement and the
Closing for a
SERIES C PREFERRED STOCK PURCHASE AGREEMENT - PAGE 14
16
period of three (3) years following the Closing. The covenants set forth in this
Agreement shall survive until the consummation of an initial public offering of
the Company's common stock or the merger, acquisition or sale of substantially
all of the assets of the Company in which the stockholders of the Company
immediately prior to such event do not own a majority of the outstanding shares
of the surviving corporation.
6.2 TRANSFER; SUCCESSORS AND ASSIGNS. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
6.3 GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of Delaware, without giving effect to principles of conflicts of
law.
6.4 TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.5 NOTICES. Any notice required or permitted by this
Agreement shall be in writing and shall be deemed sufficient upon delivery, when
delivered personally or by overnight courier or sent by telegram or fax, or
forty-eight (48) hours after being deposited in the U.S. mail, as certified or
registered mail, with postage prepaid, addressed to the party to be notified at
such party's address as set forth on the signature page or Exhibit A hereto, or
as subsequently modified by written notice.
6.6 FINDER'S FEE. Except for a placement agent fees payable by
the Company to BancBoston Xxxxxxxxx Xxxxxxxx Inc. or other finders or
broker/dealers in connection with the sale of Series C Preferred Stock
hereunder, each party represents that it neither is nor will be obligated for
any finder's fee or commission in connection with this transaction. Each
Purchaser agrees to indemnify and to hold harmless the Company from any
liability for any commission or compensation in the nature of a finder's fee
(and the costs and expenses of defending against such liability or asserted
liability) for which each Purchaser or any of its officers, employees, or
representatives is responsible. The Company agrees to indemnify and hold
harmless each Purchaser from any liability for any commission or compensation in
the nature of a finder's fee (and the costs and expenses of defending against
such liability or asserted liability) for which the Company or any of its
officers, employees or representatives is responsible.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT - PAGE 15
17
6.7 FEES AND EXPENSES. Each party shall be responsible for any
fees or expenses, incurred by it with respect to this Agreement, the documents
referred to herein and the transactions contemplated hereby and thereby.
6.8 ATTORNEY'S FEES'. If any action at law or in equity
(including arbitration) is necessary to enforce or interpret the terms of any of
the Agreements, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
6.9 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived only with the written consent of the Company and the holders
of at least a majority of the Common Stock issued or issuable upon conversion of
the Stock. Any amendment or waiver effected in accordance with this Section 6.9
shall be binding upon the Purchasers and each transferee of the Stock (or the
Common Stock issuable upon conversion thereof), each future holder of all such
securities, and the Company.
6.10 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot
reach a mutually agreeable and enforceable replacement for such provision, then
(a) such provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
6.11 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such non-breaching or non-defaulting party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
6.12 ENTIRE AGREEMENT. This Agreement, and the documents
referred to herein constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof, and any and all other written or oral
agreements relating to the subject matter hereof existing between the parties
hereto are expressly canceled.
6.13 CONFIDENTIALITY. Each party hereto agrees that, except
with the prior written permission of the other parties hereto, it shall at all
times keep confidential and not divulge, sh
SERIES C PREFERRED STOCK PURCHASE AGREEMENT - PAGE 16
18
or make accessible to anyone any confidential information, knowledge or data
concerning or relating to the business or financial affairs of the other parties
to which such party has been or shall become privy by reason of this Agreement,
discussions or negotiations relating to this Agreement, the performance of its
obligations hereunder or the ownership of Stock purchased hereunder. The
provisions of this Section 6.13 shall be in addition to, and not in substitution
for, the provisions of any separate nondisclosure agreement executed by the
parties hereto with respect to the transactions contemplated hereby.
6.14 EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges
that it is not relying upon any person, firm or corporation, other than the
Company and its officers and directors, in making its investment or decision to
invest in the Company. Each Purchaser agrees that no Purchaser nor the
respective controlling persons, officers, directors, partners, agents, or
employees of any Purchaser shall be liable to any other Purchaser for any action
heretofore or hereafter taken or omitted to be taken by any of them in
connection with the purchase of the Securities.
6.15 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
The parties have executed this Series C Preferred Stock Purchase
Agreement as of the date first written above.
COMPANY:
MOBILITY ELECTRONICS, INC.
By: /s/ XXXXXXX X. XXXXX
-----------------------------------------
Xxxxxxx X. Xxxxx, Chief Executive Officer
Address: 00000 Xxxxxxxx-Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
SERIES C PREFERRED STOCK PURCHASE AGREEMENT - PAGE 17
19
SIGNATURE PAGE
TO
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
The undersigned has executed this Series C Preferred Stock Purchase
Agreement as of the date first written above.
PURCHASER:
VLSI TECHNOLOGY, INC.
By: /s/ XXXXXX X. XXXXXXXX
---------------------------------
Name: XXXXXX X. XXXXXXXX
-------------------------------
Title: SR. VICE PRESIDENT
------------------------------
Address: VLSI Technology
0000 XxXxx Xxxxx
Xxx Xxxx, XX 00000
20
SIGNATURE PAGE
TO
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
The undersigned has executed this Series C Preferred Stock Purchase
Agreement as of the date first written above.
PURCHASER:
J & W XXXXXXXX & COMPANY
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address: 000 Xxxxxxxxxx Xxx.
Xxxx Xxxx, XX 00000
(000) 000-0000
