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EXHIBIT 10.12
IXIA COMMUNICATIONS
SUBSCRIPTION AGREEMENT
Ixia Communications
0000 Xxx Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
The undersigned ("Purchaser") understands that Ixia Communications, a
California corporation (the "Company"), proposes to offer and sell to Purchaser
100,000 shares of its Common Stock (the "Shares") set forth on the signature
page hereof for the aggregate purchase price of $85,000.00, payable in the form
of a promissory note payable to the Company.
Accordingly, Purchaser hereby agrees with the Company as follows:
SECTION 1
SUBSCRIPTION FOR SECURITIES
Subject to the terms and conditions hereof and upon acceptance of this
subscription by the Company, Purchaser hereby irrevocably subscribes to
purchase, and the Company will issue and sell to Purchaser, the Shares for the
aggregate purchase price of $85,000.00 (the "Purchase Price"). The Company has
the right to reject all or any portion of Purchaser's subscription.
SECTION 2
CLOSING; DELIVERY
2.1 CLOSING. Purchaser subscribes for the Shares being purchased
hereunder by executing and delivering to the Company, at the address set forth
above, this Subscription Agreement and the Purchase Price, and the closing and
the issuance of the Shares (the "Closing" and the date thereof the "Closing
Date") shall occur as soon as practicable following the Company's acceptance of
such subscription and on such date as shall be determined by the Company. The
Purchase Price shall be paid in the form of a promissory note in the form of
Exhibit A hereto (the "Note"), and by accepting and executing this Subscription
Agreement, the Company agrees to accept the Note as payment in full of the
Purchase Price.
2.2 DELIVERY. At the Closing, in consideration for the Purchase Price,
the Company will issue the Shares and deliver to the Secretary of the Company to
hold in escrow in accordance with Section 6.6 hereof a certificate or
certificates registered in Purchaser's name representing the Shares purchased
hereunder by Purchaser.
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SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized and existing under, and by virtue of, the laws of the State of
California and is in good standing under such laws. The Company has the
requisite corporate power to own and operate its properties and assets and to
carry on its business as presently conducted and as proposed to be conducted.
3.2 CORPORATE POWER. The Company will have, upon acceptance and
execution of this Subscription Agreement and at the Closing Date, all requisite
corporate power to execute and deliver this Subscription Agreement, to sell and
issue the Shares hereunder and to carry out and perform its obligations under
the terms of this Subscription Agreement. At the Closing Date, the Shares shall
be duly authorized, validly issued, fully paid and non-assessable.
3.3 AUTHORIZATION. All corporate action on the part of the Company, its
directors and shareholders necessary for the authorization, execution, delivery
and performance of this Subscription Agreement by the Company, the
authorization, sale, issuance and delivery of the Shares and the performance of
the Company's obligations hereunder has been taken or will be taken prior to the
Closing. This Subscription Agreement, when executed and delivered by the
Company, will constitute a valid and binding obligation of the Company
enforceable in accordance with its terms, subject to laws of general application
relating to specific performance, injunctive relief or other equitable remedies.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants as follows:
4.1 INVESTMENT. Purchaser is acquiring the Shares for investment for
Purchaser's own account and not with the view to, or for resale in connection
with, any distribution, assignment or resale within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), to others, and no
other person has a direct or indirect beneficial interest, in whole or in part,
in such Shares. Purchaser understands that the Shares have not been registered
under the Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act, which exemption depends upon, among other
things, the bona fide nature of the investment intent as expressed herein.
4.2 RELATIONSHIP TO COMPANY; SOPHISTICATION. Purchaser (i) has a
preexisting business or personal relationship with the Company and/or one or
more of its officers, directors or controlling persons or (ii) by reason of
Purchaser's business or financial experience or the business or financial
experience of Purchaser's personal representative(s), if any, who are
unaffiliated with and who are not compensated by the Company or any affiliate or
selling agent of the Company, directly or indirectly, has the capacity to
protect Purchaser's own interests in connection with Purchaser's acquisition of
the Shares.
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4.3 RESTRICTIONS ON TRANSFER. Purchaser acknowledges that the Shares
must be held indefinitely unless subsequently registered under the Securities
Act or the Company receives an opinion of counsel satisfactory to the Company
that such registration is not required. Purchaser is aware of the provisions of
Rule 144 promulgated under the Securities Act which permit limited resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer) in a non-public offering, subject
to the satisfaction of certain conditions, including, among other things, the
existence of a public market for the stock, the availability of certain current
public information about the Company, the resale occurring not less than one
year after a party has purchased and made full payment for, within the meaning
of Rule 144, the securities to be sold, the sale being through a "broker's
transaction" or in transactions directly with a "market maker" and the number of
shares of the stock being sold during any three-month period not exceeding
specified limitations; provided, however, that if the seller is not an affiliate
of the issuer and has held the securities for at least two years after payment
therefor, certain of the foregoing conditions under Rule 144 may not be
applicable. Purchaser further acknowledges and understands that the Company may
not be satisfying the current public information requirement of Rule 144 at the
time Purchaser wishes to sell the Shares; and, if so, Purchaser would be
precluded from selling the Shares under Rule 144 even if the one-year minimum
holding period had been satisfied.
4.4 NO PUBLIC MARKET. Purchaser understands that no public market now
exists for the Shares, that there can be no assurance that a public market will
ever exist for the Shares and that the Company is under no obligation to
register the Shares.
4.5 EXEMPTION FROM REGISTRATION. Purchaser further acknowledges that, in
the event all of the requirements of Rule 144 are not met, compliance with
Regulation A under the Securities Act or some other registration exemption will
be required; and that, although Rule 144 is not exclusive, the staff of the
Commission has expressed its opinion that persons proposing to sell private
placement securities other than in a registered offering and other than pursuant
to Rule 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, that such
persons and the brokers who participate in the transactions do so at their own
risk, and that, therefore, there is no assurance that any exemption from
registration under the Securities Act will be available or, if available, will
allow Purchaser to dispose of, or otherwise transfer, all or any portion of the
Shares.
4.6 CERTAIN DISPOSITION REQUIREMENTS. Without in any way limiting
Purchaser's covenants, representations and warranties set forth herein,
Purchaser further agrees that he shall in no event make any disposition of all
or any portion of the Shares unless and until:
(i) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition
is made in accordance with said registration statement; or
(ii) Purchaser shall have (x) notified the Company of the
proposed disposition and furnished the Company with a detailed statement
of the circumstances
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surrounding the proposed disposition, and (y) furnished the Company with
an opinion of his own counsel to the effect that such disposition will
not require registration of such shares under the Securities Act, and
such opinion of his counsel shall have been concurred in by counsel for
the Company and the Company shall have advised Purchaser of such
concurrence.
4.7 ACCESS TO DATA. Purchaser has had an opportunity to discuss the
Company's business, management and financial affairs with the Company's
management and the opportunity to review the Company's facilities and books and
records.
4.8 EXPERIENCE. Purchaser and/or Purchaser's personal representative(s)
have such knowledge and experience in financial, tax and business matters so as
to enable Purchaser and/or them to utilize the information made available to
Purchaser and/or them in connection with the offering of the Shares, to evaluate
the merits and risks of the prospective investment and to make an informed
investment decision with respect thereto. Each personal representative, if any,
of Purchaser, in connection with Purchaser's investment in the Shares, has
confirmed in writing the specific details of any and all past, present or future
relationships, actual or contemplated, between Purchaser or Purchaser's
affiliates and the Company or any of the Company's affiliates.
4.9 PURCHASER'S LIQUIDITY. Purchaser (i) has adequate means of providing
for Purchaser's current needs and possible personal contingencies, (ii) has no
need for liquidity in Purchaser's investment, (iii) is able to bear the
substantial economic risks of an investment in the Shares for an indefinite
period and (iv) at the present time, can afford a complete loss of such
investment. Purchaser's commitment to investments which are not readily
marketable is not disproportionate to Purchaser's net worth and Purchaser's
investment in the Shares will not cause Purchaser's overall commitment to become
excessive.
4.10 OFFER AND SALE. Purchaser understands that the sale of the Shares
has not been registered under the Securities Act in reliance upon an exemption
therefrom. Purchaser was not offered or sold the Shares, directly or indirectly,
by means of any form of general solicitation or general advertisement, including
the following: (i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar medium or broadcast over
television or radio; or (ii) any seminar or other meeting whose attendees had
been invited by general solicitation or general advertising.
4.11 RISKS. Purchaser is experienced in evaluating and investing in high
risk, high technology companies such as the Company and by reason of Purchaser's
business and financial experience has the capacity to protect Purchaser's own
interests in connection with the acquisition of the Shares and has the ability
to bear the economic risk of Purchaser's investment. Purchaser is aware that an
investment in the Shares is highly speculative and that there can be no
assurance as to what return, if any, there may be on such investment. Purchaser
is aware that the Company may issue additional securities in the future which
could result in the dilution of Purchaser's ownership interest in the Company.
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4.12 RELIANCE. Purchaser has relied only upon the information provided
to Purchaser in writing by the Company, or information from books and records of
the Company. No oral representations have been made or oral information
furnished to Purchaser or Purchaser's advisor(s) in connection with the offering
of the Shares which were not contained therein or were inconsistent therewith.
4.13 INVESTOR INFORMATION. All information which Purchaser has provided
to the Company concerning Purchaser, Purchaser's investor status, financial
position and knowledge and experience in financial and business matters, or, in
the case of a corporation, partnership, trust or other entity, the knowledge and
experience in financial and business matters of the person making the investment
decision on behalf of such entity, is correct and complete as of the date set
forth herein, and if there should be any adverse change in such information
prior to this subscription being accepted, Purchaser will immediately provide
the Company with such information.
4.14 INVESTOR STATUS. Purchaser represents and warrants that Purchaser
either (i) is an "accredited investor," as that term is defined in Rule 501 of
Regulation D as promulgated under the Securities Act, and hereby agrees to
furnish such further assurances of such status as may be reasonably requested by
the Company or (ii) has a net worth (exclusive of housing, furnishing and
automobiles) of at least $200,000. Purchaser, if an individual, is at least 21
years of age.
4.15 INVESTMENT ENTITY. Purchaser, if a corporation, partnership, trust
or other entity, is authorized and otherwise duly qualified to purchase and hold
the Shares, such entity has its principal place of business as set forth on the
signature page hereof and such entity has not been formed for the specific
purpose of acquiring the Shares.
SECTION 5
CONDITIONS TO CLOSING OF COMPANY
The Company's obligation to sell and issue the Shares at the Closing is
subject to the fulfillment or waiver by the Company of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by Purchaser in Section 4 hereof shall be true and correct when made and
shall be true and correct on the Closing Date as if made on and as of such
Closing Date.
5.2 BLUE SKY LAW COMPLIANCE. The Company shall have obtained all
necessary blue sky law permits and qualifications for the offer and sale of the
Shares required by any state in which any Purchaser resides.
5.3 CONSENTS AND WAIVERS. The Company shall have obtained any and all
consents and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement.
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SECTION 6
LAPSING REPURCHASE RIGHT
AND RIGHT OF FIRST REFUSAL
6.1 LAPSING REPURCHASE RIGHT.
(a) Lapsing Repurchase Right. If Purchaser ceases to serve as an
employee of the Company for any reason, including death or permanent and total
disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended (the "Code")), then the Company shall have the right, in its
sole discretion, to repurchase (referred to herein as the "Lapsing Repurchase
Right") from Purchaser or Purchaser's personal representative, as the case may
be, at a price of $0.85 per Share all or any portion of the Shares that have not
yet vested pursuant to Section 6.1(c) below. The Company may exercise the
Lapsing Repurchase Right at any time within 180 days after the last day of
Purchaser's employment by the Company.
(b) Exercise of Lapsing Repurchase Right. The Lapsing Repurchase
Right shall be exercised by written notice signed by an officer of the Company
and delivered to Purchaser or Purchaser's representative, as the case may be, in
accordance with Section 8.5 hereof. The repurchase price shall be payable, at
the Company's option, in cash, by check or by the cancellation of any
outstanding indebtedness of Purchaser to the Company under the Note or
otherwise, or any combination thereof.
(c) Vesting of the Shares. On each of September 30, 1999 and the
last day of each of the seven calendar quarters thereafter and provided that
Purchaser has not then terminated his continuous employment with the Company,
12,500 Shares shall vest and no longer be subject to the Lapsing Repurchase
Right; provided, however, that in the event that at any time before the Shares
are fully vested the Company terminates Purchaser's employment for any reason
other than "for cause" (as defined in Section 6.1(d)) or Purchaser terminates
his employment for "good reason" (as defined in Section 6.1(e)), all of the
unvested Shares shall on the date of termination of Purchaser's employment with
the Company vest and no longer be subject to the Lapsing Repurchase Right.
(d) Definition of "For Cause." For purposes of Section 6.1(c), the
termination of Purchaser's employment "for cause" shall mean termination as a
result of:
(i) death or long-term disability;
(ii) a course of persistent conduct amounting to gross
incompetence;
(iii) any absence (excluding vacations, illnesses or leaves of
absence) from work for more than ten consecutive work days or chronic
absences from work (also excluding vacations, illnesses or leaves of
absence), all of which are neither authorized, justified nor excused;
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(iv) willful and persistent refusal or failure, after multiple
explicit written notices and reasonable time to comply, to perform
material, appropriate duties or to follow important Company policies;
(v) refusal, after explicit multiple written notices and
reasonable time to comply, to obey any lawful resolution of the
Company's Board of Directors;
(vi) embezzlement or other unlawful appropriation of property or
other asset of the Company or unlawful appropriation of a corporate
opportunity of the Company;
(vii) offer, payment, solicitation or acceptance of any unlawful
bribe or kickback with respect to the Company's business;
(viii) indictment or conviction of Purchaser for or the entering
of a plea of nolo contendere with respect to any felony whatsoever or
for any misdemeanor involving moral turpitude;
(ix) any act or failure to act by Purchaser that is widely
reported in the general or trade press or otherwise and which achieves a
general notoriety and which act or failure to act involves conduct that
is illegal or generally considered immoral or scandalous;
(x) any intentional material breach of Purchaser's obligations to
the Company under any nondisclosure or proprietary agreement with or on
behalf of the Company or any material unauthorized disclosure of any
important and confidential information of the Company; or
(xi) unlawful use (including being under the influence) or
possession of illegal drugs on the Company's premises.
(e) Definition of "Good Reason." For purposes of Section 6.1(c),
"good reason" means, without the written consent of Purchaser:
(i) a reduction in Purchaser's annual base salary as in effect on
the date hereof;
(ii) the Company requiring Purchaser to be based for one month or
more at a Company office more than 30 miles from the Company's offices
as of the date hereof except for required and appropriate travel on the
Company's business to an extent substantially consistent with
Purchaser's business travel obligations as of the date hereof;
(iii) the assignment to Purchaser of duties significantly
inconsistent with his position in the Company as of the date hereof or a
significantly adverse change
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in the nature or status of Purchaser's responsibilities or the
conditions of Purchaser's employment from those in effect as of the date
hereof;
(iv) the failure by the Company to continue in effect any
compensation or benefit plan or perquisites in which Purchaser
participates as of the date hereof, which plan or perquisites are
material to Purchaser's total compensation, unless an at least equally
beneficial arrangement (embodied in an ongoing, substitute or
alternative plan) has been made with respect to such plan or
perquisites, or the failure by the Company to continue Purchaser's
participation therein (or in such ongoing, substitute or alternative
plan) on a basis at least as favorable, both in terms of the amount of
benefits provided and the level of Purchaser's participation relative to
comparably situated participants, as exist on the date hereof; or
(v) the failure by the Company to continue to provide Purchaser
with benefits substantially similar to those enjoyed by Purchaser under
any of the Company's life insurance, medical, dental, accident or
disability plans in which Purchaser is participating as of the date
hereof or the taking of any action by the Company which would directly
or indirectly materially reduce any of such benefits.
(f) Restrictions on Shares Subject to Lapsing Repurchase Right. In
addition to, and not in lieu of, such other restrictions or limitations that may
apply to the transfer or other disposition of the Shares by virtue of this
Subscription Agreement or applicable securities laws, Purchaser may not sell,
assign, transfer or hypothecate or in any other way dispose of any Shares if
such Shares are subject to the Lapsing Repurchase Right, without the express
written waiver of the Lapsing Repurchase Right by the Company with respect to
such Shares and the Company's prior written consent, to be given or withheld in
its sole discretion, to such sale, assignment, transfer, hypothecation or other
disposition.
6.2 RIGHT OF FIRST REFUSAL.
(a) Before any Shares registered in the name of Purchaser may be
sold or transferred (including transfer by operation of law), such Shares shall
first be offered to the Company at the same price, and upon the same terms (or
terms as similar as reasonably possible), in the following manner:
(i) Purchaser shall deliver a notice (a "Notice") to the Company
stating (A) Purchaser's bona fide intention to sell or transfer such
Shares, (B) the number of such Shares to be sold or transferred, (C) the
price for which Purchaser proposes to sell or transfer such Shares, and
(D) the name of the proposed purchaser or transferee.
(ii) Within 30 days after receipt of the Notice, the Company or
its assignee may elect to purchase any or all Shares to which the Notice
refers, at the price per share and on the same terms (or terms as
similar as reasonably possible) specified in the Notice.
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(iii) If all or a portion of the Shares to which the Notice
refers are not elected to be purchased pursuant to Section 6.2(a)(ii)
hereof, Purchaser may sell the Shares not purchased by the Company to
any person named in the Notice at the price and terms specified in the
Notice or at a higher price, provided that such sale or transfer is
consummated within 60 days of the date of said Notice to the Company
and, provided further, that any such sale is in accordance with all the
terms and conditions hereof.
In the event of any transfer by operation of law or other involuntary transfer
(including, but not limited to, by will or by the laws of descent or
distribution) where there is no price established as a matter of law, the
Company shall have the right to repurchase all of the Shares purchased by
Purchaser hereunder, at a per Share price equal to the greater of (i) $0.85 or
(ii) the fair market value per share ("FMV per Share") as determined in good
faith by the Board of Directors of the Company (the "Board") after taking into
consideration all relevant factors. In such event, Purchaser (or Purchaser's
estate) shall notify the Company promptly after the happening of the event
giving rise to the involuntary transfer. Within 30 days after receipt of such
notice, the Company or its assignee, subject to Section 6.2(b) below, may elect
to purchase any or all Shares to which the notice refers.
(b) In the event that Purchaser (or Purchaser's estate) does not
agree with the Board's determination of the FMV per Share and Purchaser (or
Purchaser's estate) and the Board are unable to agree mutually on the FMV per
Share within ten days from the date on which notice of the Board's determination
under the last paragraph of Section 6.2(a) is delivered to Purchaser (or
Purchaser's estate), then the FMV per Share will be determined by one or more
Qualified Appraisers (as defined below) selected in accordance with the
procedures in this Section. If the FMV per Share is to be determined by
Qualified Appraisers, then Purchaser (or Purchaser's estate) and the Company
will each have the opportunity to appoint, at his or its own expense, a
Qualified Appraiser, within five days following the expiration of the ten-day
period within which the Purchaser (or Purchaser's estate) and the Company could
not mutually agree on the FMV per Share. If either party shall fail to appoint a
Qualified Appraiser within this five-day period, then the other Qualified
Appraiser shall unilaterally establish the FMV per Share by a written opinion.
If both parties appoint Qualified Appraisers within this five-day period, these
two Qualified Appraisers shall establish the FMV per Share in a single written
opinion agreed to by both of them. If these two Qualified Appraisers cannot
agree on the FMV per Share within 30 days of the appointment of the latter of
them, these two Qualified Appraisers shall together appoint a third Qualified
Appraiser whose sole written opinion shall establish the FMV per Share. Any
action to be taken by the Company under this Section 6.2 shall be taken by the
Board, except that Purchaser (or Purchaser's estate) shall not vote, as a
director or shareholder of the Company, and either directly or through an agent
or subordinate, with respect to such actions. If a third Qualified Appraiser is
appointed, the fees and expenses charged by such Qualified Appraiser shall be
borne equally by Purchaser (or Purchaser's estate) and the Company. The Company
will provide such data as any Qualified Appraiser deems necessary or useful in
connection with such Appraiser's determination of the FMV per Share. A
"Qualified Appraiser" is a professional appraiser or independent certified
public accountant who is qualified by experience and ability to appraise the
Shares. Within 30 days after the determination of the FMV
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per Share in accordance with this Section 6.2(b), the Company or its assignee
may elect to purchase any or all Shares subject to the Company's right of first
refusal pursuant to this Section 6.2.
6.3 TERMINATION OF LAPSING REPURCHASE RIGHT AND RIGHT OF FIRST REFUSAL.
Purchaser's obligations and the Company's rights under the Lapsing Repurchase
Right shall terminate with respect to any portion of the Shares when and to the
extent that such Shares are vested in accordance with Section 6.1(c).
Purchaser's obligations and the Company's rights under the right of first
refusal set forth in Section 6.2 hereof shall also terminate upon the earlier of
(i) the first sale of Common Stock by the Company to the public which raises an
aggregate of not less than $5,000,000 and which is effected pursuant to a
registration statement filed with, and declared effective by, the Securities and
Exchange Commission (the "SEC") under the Securities Act or (ii) the merger or
consolidation of the Company into, or the sale of all or substantially all of
the Company's assets to, another corporation, if immediately after such merger,
consolidation or sale of assets, at least 50% of the capital stock of the
Company or such other corporation is owned by persons who are not holders of
capital stock of the Company immediately prior to such merger, consolidation or
sale.
6.4 ASSIGNMENT. Notwithstanding anything to the contrary in this
Agreement, the Company may assign its rights under this Section 6 to one or more
persons or entities who shall have the right to exercise such rights in his, her
or its own name and for his, her or its own account. If the exercise of any such
right requires the consent of the California Securities Commissioner or the
consent of the Securities Commissioner, or the equivalent, of another state, the
parties agree to cooperate in requesting such consent.
6.5 ADJUSTMENT. If, from time to time during the term of the Lapsing
Repurchase Right or the right of first refusal available pursuant to Section 6.2
hereof:
(a) There is any stock dividend or liquidating dividend of cash
and/or property, stock split or other change in the character or amount of any
of the outstanding securities of the Company; or
(b) There is any consolidation, merger or sale of all or
substantially all of the assets of the Company;
then, in such event, any and all new, substituted or additional securities or
other property to which Purchaser is entitled by reason of Purchaser's ownership
of Shares shall be immediately subject to such Lapsing Repurchase Right and
right of first refusal and be included in the word "Shares" for all purposes
with the same force and effect as the Shares presently subject to such Lapsing
Repurchase Right and right of first refusal (provided, however, if such
consolidation, merger or sale of all, or substantially all, of the assets of the
Company causes a termination of such Lapsing Repurchase Right and right of first
refusal, then such new, substituted or additional securities or other property
shall not be included in the word "Shares" for the purposes of this Section),
and the repurchase price per Share as set forth in Sections 6.1(a) and 6.2(a)
hereof shall
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be proportionately adjusted for any increase or decrease in the number of Shares
resulting from such event.
6.6 ESCROW. As security for Purchaser's faithful performance of the
terms of this Agreement and to insure the availability for delivery of
Purchaser's Shares upon exercise of the Company's Lapsing Repurchase Right or
right of first refusal herein provided for, Purchaser agrees to deliver to and
deposit with the Secretary of the Company or the Secretary's nominee (in either
case, the "Escrow Agent"), as Escrow Agent in this transaction, three
Assignments Separate From Certificate duly endorsed (with date and number of
shares blank) in the form attached hereto as Exhibit B, together with the
certificate or certificates evidencing the Shares; said documents are to be held
by the Escrow Agent and delivered to said Escrow Agent pursuant to the Joint
Escrow Instructions of the Company and Purchaser set forth in Exhibit C attached
hereto and incorporated herein by this reference, which instructions shall also
be delivered to the Escrow Agent at the closing hereunder.
6.7 RESTRICTION ON ALIENATION. Purchaser agrees that Purchaser will not
sell, transfer, gift, pledge, hypothecate, assign or otherwise dispose of any of
the Shares or any right or interest therein, whether voluntary, by operation of
law or otherwise, without the prior written consent of the Company, except a
transfer which meets the requirements of this Subscription Agreement and
complies with all applicable law. Any sale, transfer, gift, pledge,
hypothecation, assignment or purported sale, transfer or other disposition of
such Shares by Purchaser shall be null and void unless the terms, conditions and
provisions of this Agreement are strictly observed.
6.8 LOCKUP AGREEMENT. Purchaser, if requested by the Company and an
underwriter of Common Stock or other securities of the Company, agrees not to
sell or otherwise transfer or dispose of any Common Stock (or other securities)
of the Company held by Purchaser during the period not to exceed 180 days as
requested by the managing underwriter following the effective date of a
registration statement of the Company filed under the Securities Act, provided
that all officers and directors of the Company are required or agree to enter
into similar agreements. Such agreement shall be in writing in a form
satisfactory to the Company and such underwriter. The Company may impose
stop-transfer instructions with respect to the shares or other securities
subject to the foregoing restriction until the end of such period.
SECTION 7
LEGENDS
All certificates representing any Shares of the Company subject to the
provisions of this Subscription Agreement shall have endorsed thereon legends in
substantially the following form unless in the opinion of the Company's counsel
such legends are no longer necessary:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A SUBSCRIPTION AGREEMENT
BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR THE REGISTERED HOLDER'S
PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY."
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(b) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR
IN CONNECTION WITH, THE SALE, TRANSFER OR DISTRIBUTION THEREOF. NO SUCH SALE,
TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED."
SECTION 8
MISCELLANEOUS
8.1 OBLIGATIONS OF TRANSFEREES. Each transferee of any Shares, or of any
interest in such Shares, shall hold the Shares or interest subject to all of the
provisions of this Subscription Agreement. Any such transferee shall make no
further transfers except as permitted by this Subscription Agreement.
8.2 TRANSFERS IN VIOLATION OF SUBSCRIPTION AGREEMENT. The Company shall
not be required (i) to transfer on its books any Shares which shall have been
sold or transferred in violation of any of the provisions set forth in this
Agreement, or (ii) to treat as owner of such Shares or to accord the right to
vote as such owner or to pay dividends to any transferee to whom such Shares
shall have been so transferred.
8.3 SHAREHOLDER RIGHTS. Subject to the provisions of this Subscription
Agreement, Purchaser shall, during the term of this Subscription Agreement,
exercise all rights and privileges of a shareholder of the Company with respect
to the purchased Shares.
8.4 FURTHER ASSURANCES. The parties agree to execute such further
instruments and to take such further actions as may reasonably be necessary to
carry out the intent of this Subscription Agreement.
8.5 NOTICE. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to the other party hereto at such party's
address hereinafter shown below such party's signature or at such other address
as such party may designate by ten days advance written notice to the other
party hereto.
8.6 SUCCESSORS AND ASSIGNS. This Subscription Agreement shall inure to
the benefit of the successors and assigns of the Company and, subject to all
compliance with the restrictions on transfer herein set forth, be binding upon
Purchaser and Purchaser's heirs, executors, administrators and permitted
successors and assigns.
8.7 GOVERNING LAW; ENTIRE AGREEMENT; AMENDMENT. This Subscription
Agreement shall be construed under the laws of the State of California and
constitutes the entire
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Subscription Agreement of the parties with respect to the subject matter hereof
superseding all prior written or oral agreements, and no amendment or addition
hereto shall be deemed effective unless agreed to in writing by the parties
hereto.
8.8 SPECIFIC PERFORMANCE. Purchaser agrees that, until a public market
for the Shares exists, the Shares cannot be readily purchased, sold or evaluated
in the open market, that they have a unique and special value, and that the
Company and its shareholders would be irreparably damaged if the terms of this
Subscription Agreement were not capable of being specifically enforced and, for
this reason, among others, Purchaser agrees that the Company shall be entitled
to a decree of specific performance of the terms hereof or an injunction
restraining violation of this Subscription Agreement, said right to be in
addition to any other remedies available to the Company.
8.9 SEVERABILITY. If any provision of this Subscription Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remaining provisions shall nevertheless continue in full force and effect
without being impaired or invalidated in any way and shall be construed in
accordance with the purposes and tenor and effect of this Subscription
Agreement.
8.10 NO EMPLOYMENT RELATIONSHIP. Nothing in this Subscription Agreement
shall be deemed to create any employment relationship between the Company and
Purchaser or to affect in any manner whatsoever the right or power of the
Company to terminate any employment of Purchaser by the Company, for any reason,
with or without cause.
8.11 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation and the Closing.
8.12 CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE COMMON STOCK
WHICH IS THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
COMMON STOCK OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF COMMON STOCK IS
EXEMPT FROM QUALIFICATION BY SECTIONS 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS SUBSCRIPTION AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS
SO EXEMPT.
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8.13 COUNTERPARTS. This Subscription Agreement may be executed in
counterparts, each of which shall be enforceable against the party actually
executing such counterpart, and which together shall constitute one instrument.
Dated: August 20, 1999
/s/ Xxxx Xxxxxxxxxxx
------------------------------------
Xxxx Xxxxxxxxxxx
Address: 00000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
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The foregoing Subscription Agreement is hereby confirmed and accepted as
of the date set forth below and the Company agrees to issue to Purchaser the
Common Stock listed above in accordance with the terms and conditions set forth
therein.
IXIA COMMUNICATIONS
By: /s/ Xxx X. Xxxxx
---------------------------------
Xxx X. Xxxxx, Director and
Chief Financial Officer
Date: August 20, 1999
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EXHIBIT B
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED _________________________________ hereby sells,
assigns and transfers unto ______________________________ (______) shares of the
Common Stock (the "Shares") of Ixia Communications, a California corporation
(the "Company"), standing in the undersigned's name on the books of the Company
represented by Certificate No. ________ herewith, and does hereby irrevocably
constitute and appoint __________________________________ attorney to transfer
the Shares on the books of the Company with full power of substitution in the
premises.
Dated:_______________________________________
Signature:___________________________________
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EXHIBIT C
JOINT ESCROW INSTRUCTIONS
August 20, 1999
Xxxxxx X. Xxxxxx, Secretary
Ixia Communications
0000 Xxx Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Dear Xx. Xxxxxx:
As Escrow Agent for both Ixia Communications, a California corporation
(the "Company"), and the undersigned purchaser of Common Stock of the Company
("Purchaser"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Subscription Agreement
(the "Agreement"), dated as of August 20, 1999, to which a copy of these Joint
Escrow Instructions is attached as Exhibit C, in accordance with the following
instructions:
1. In the event the Company and/or any assignee of the Company (referred
to collectively for convenience herein as the "Company") shall elect to exercise
any repurchase right or right of first refusal (collectively, the "Repurchase
Rights") set forth in the Agreement, the Company shall give to Purchaser and you
a written notice specifying the number of shares of stock to be purchased, the
purchase price and the time for a closing hereunder at the principal office of
the Company. Purchaser and the Company hereby irrevocably authorize and direct
you to close the transaction contemplated by such notice in accordance with the
terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company against the
simultaneous delivery to you of the purchase price (by cash, check, evidence of
cancellation of indebtedness of Purchaser to the Company, or some combination
thereof) for the number of shares of stock being purchased pursuant to the
exercise of the Repurchase Rights.
3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said stock as provided in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all stock certificates, stock assignments or other documents
necessary
C-1
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or appropriate to make such securities negotiable and to complete any
transaction herein contemplated.
4. This escrow shall terminate at such time as there are no longer any
shares of stock subject to the Repurchase Rights under the Agreement.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities or other property belonging to Purchaser,
you shall deliver all of same to Purchaser and shall be discharged of all
further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith and
in the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and you are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree of any court,
you shall not be liable to either of the other parties hereto or to any other
person, firm or corporation by reason of such compliance, notwithstanding any
such order, judgment or decree being subsequently reversed, modified, annulled,
set aside, vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. You shall be entitled to employ such legal counsel and other experts
as you may deem necessary or proper to advise you in connection with your
obligations hereunder, you may rely upon the advice of such counsel, and you may
pay such counsel reasonable compensation therefor.
12. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be Secretary of the Company or if you shall resign by written
notice to each of the other
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parties hereto. In the event of any such termination, the Company shall appoint
any officer of the Company as successor Escrow Agent.
13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such dispute shall have been settled either by mutual written agreement of
the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses, or at such other address as a party may designate by ten
days advance written notice to each of the other parties hereto.
COMPANY: Ixia Communications
0000 Xxx Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Secretary
PURCHASER: Xxxx Xxxxxxxxxxx
00000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
ESCROW AGENT: Ixia Communications
0000 Xxx Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Secretary
16. By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not become
a party to the Agreement.
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17. This instrument shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
Very truly yours,
Ixia Communications,
a California corporation
By: /s/ Xxx X. Xxxxx
-----------------------------------------
Xxx X. Xxxxx
Title: Director and Chief Financial Officer
PURCHASER
/s/ Xxxx Xxxxxxxxxxx
--------------------------------------------
Signature
Print Name: Xxxx Xxxxxxxxxxx
---------------------------------
Agreed to and accepted as of the date set
forth above.
ESCROW AGENT
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Secretary
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FULL RECOURSE PROMISSORY NOTE
$85,000.00 August 20, 1999
FOR VALUE RECEIVED, the undersigned, Xxxx Xxxxxxxxxxx, promises to
pay to the order of Ixia Communications ("Ixia"), at the principal offices of
Ixia or at such other place as the holder may designate, on or before August 20,
2002 (the "Maturity Date"), the principal amount of Eighty Five Thousand Dollars
($85,000.00) (the "Principal Amount"), together with interest on said Principal
Amount at the rate and in the manner hereinafter provided.
The Principal Amount shall bear interest from the date hereof until
this Note is paid in full at the lesser of (i) the rate of 8.0% per annum or
(ii) the maximum rate allowed by law in the State of California. Interest shall
accrue on the outstanding Principal Amount and be payable annually in arrears on
each of the first and second anniversaries of the date of this Note and on the
Maturity Date (or on such earlier date as the entire Principal Amount shall be
due and payable through acceleration or otherwise). Interest shall be calculated
on the basis of a 365-day year and actual number of days elapsed.
If this Note shall have a Maturity Date or a date for the payment of
any interest due hereunder which is not a business day, all amounts otherwise
due on such date shall be payable on the first business day occurring after such
date, and such extension of time shall be included in computing any interest in
respect of such payment.
The undersigned hereby grants to Ixia a security interest in the
100,000 shares of Ixia Common Stock purchased by the undersigned on the date
hereof (the "Collateral") to secure payment of the undersigned's debt to Ixia as
evidenced by this Note.
In the event that (i) any sum owing hereunder is not paid as agreed,
(ii) a petition or application for a receiver or for any form of relief under
any provision of the Bankruptcy Code (Title 11, U.S.C.) or any law pertaining to
the reorganization, insolvency or readjustment of debts is filed by or against
the undersigned, or his assets or affairs, or (iii) the undersigned makes an
assignment for the benefit of creditors, admits in writing an inability to pay
debts as they become due or is adjudicated a bankrupt or insolvent, then all
obligations hereunder shall become immediately due and payable without
presentment for payment, diligence, grace, exhibition of this Note, protest,
dishonor, demand or notice of any kind, all of which are hereby expressly
waived.
Upon the default of the undersigned under this Note, the holder
hereof will have full recourse against the Purchaser and shall not be required
to proceed against the Collateral.
The undersigned hereby: (i) agrees to pay the holder hereof, upon
demand, any and all costs, expenses and fees, including reasonable attorneys'
fees incurred before or after suit is commenced, in enforcing payment hereof,
and, in the event suit is brought to enforce payment
22
hereof, that such costs, expenses and fees shall be determined by a court
sitting without a jury; (ii) waives all counterclaims and setoffs, and any and
all applicable exemption, valuation and appraisal rights; (iii) agrees to any
and all extensions and renewals hereof, from time to time, without notice; and
(v) expressly agrees that the acceptance by the holder of this Note of any
performance which does not strictly comply with the terms of this Note shall not
be deemed to be a waiver of any rights of the holder.
The interpretation, construction and enforcement of this Note shall
be governed by the laws of the State of California.
/s/ Xxxx Xxxxxxxxxxx
-----------------------------
Xxxx Xxxxxxxxxxx
2
