EXHIBIT 10.13
CONVERSION AGREEMENT
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AGREEMENT entered into as of the 2nd day of February, 1994, by and among
Vivid Technologies, Inc., a Massachusetts corporation (the "Company"), and the
purchasers listed on Exhibit A hereto (collectively, the "Investors").
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WHEREAS, pursuant to a Convertible Subordinated Demand Note and Warrant
Purchase Agreement dated as of March 18, 1992, as amended by the First Amendment
to Convertible Subordinated Demand Note and Warrant Purchase Agreement dated as
of May 12, 1992 and the Second Amendment to Convertible Subordinated Demand Note
and Warrant Purchase Agreement dated as of July 8, 1992 (the "Purchase
Agreement"), the Company has issued to the Investors convertible notes (the
"Convertible Notes") and warrants (the "Original Warrants") to purchase shares
of Company Series D Common Stock, $.01 par value (the "Common Stock");
WHEREAS, the number of shares of Common Stock subject to purchase under the
Original Warrants was subject to increase each month that the Convertible Notes
remained outstanding as set forth in the Purchase Agreement;
WHEREAS, the Company and the Investors desire that the Convertible Notes
cease to accrue additional interest as of July 13, 1993 and be converted in
Series C Preferred Stock, $.01 par value (the "Series C Preferred Stock"), and
Series D Preferred Stock, $.01 par value (the "Series D Preferred Stock"), as
set forth herein.
WHEREAS, the Company and the Investors further desire that the Original
Warrants cease to accrue additional shares as of July 15, 1993 and be restated
as set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the parties hereto agree as follows:
1. Conversion of Convertible Notes.
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(a) Outstanding Balance of Convertible Notes. The parties agree that
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the aggregate outstanding balance of the Convertible Notes, including all
interest accrued thereon as of July 13, 1993, was $1,818,773, consisting of the
aggregate initial principal amount of $1,700,000 and accrued and unpaid interest
of $118,773, allocated among the Investors as set forth on Exhibit A. The
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parties further agree that interest shall have ceased to have accrued on the
Convertible Notes as of July 13, 1993.
(b) Conversion. The parties agree that the Convertible Notes,
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including with all interest accrued thereon as of July 13, 1993, shall be
converted into (i) an aggregate of 163,690 shares of Series C Preferred Stock
(the "Series C Shares") at a purchase price of approximately $10.00 per share
(an aggregate of approximately $1,636,900) and (ii) an aggregate of 121,252
shares of Series D Preferred Stock (the "Series D Shares"; collectively with the
Series C Shares, the "Shares") at a purchase price of approximately $1.50 per
share (an aggregate of approximately $181,878), such that each Investor will
receive the number of Series C Preferred Shares and Series D Preferred Shares as
set forth opposite such Investor's name on Exhibit A.
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2. Restatement of Warrants.
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(a) Warrant Accruals. The parties agree that the aggregate number of
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shares of Common Stock subject to purchase under the Original Warrants, as
adjusted as of July 15, 1993, was 361,000 shares, allocated among the Investors
as set forth on Exhibit A. The parties further agree that the Original
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Warrants shall have ceased to have accrued additional shares from and after July
15, 1993.
(b) Restatement of Warrants. The parties agree that in order to
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simplify the Company's capital structure, the outstanding warrants held by each
Investor shall be combined into one Warrant Agreement for that Investor in the
form set forth as Exhibit B (the "Replacement Warrants") covering that number of
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shares of Common Stock set forth opposite such Investors name as set forth on
Exhibit A.
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3. Closing. The Closing of the purchase and sale of the Notes
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contemplated by this Agreement (herein the "Closing") shall take place at the
offices of Brown, Rudnick, Freed & Gesmer, Xxx Xxxxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, simultaneously with the execution and delivery of this
Agreement, or at such other time and place as shall be mutually agreed by the
Investors and the Company. At the Closing, the Company shall deliver to each
Investor certificates representing the Series C Shares and the Series D Shares,
and the Replacement Warrant to be issued to such Investor as set forth in
Sections 1 and 2 above, against delivery by the Investor to the Company for
cancellation of the Convertible Notes and the Original Warrants.
4. Representations and Warranties of the Company. The Company hereby
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represents and warrants to each Investor as follows:
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(a) Organization and Qualification. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts.
(b) Capitalization. As of the date hereof, after giving effect to the
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transactions to be effected hereby, the authorized capital stock of the Company
consists of 7,500,000 shares of Common Stock of which 1,545,750 shares are
issued and outstanding, and 1,082,650 shares of Preferred Stock, $.01 par value,
of which 234,375 shares are designated Series A Preferred Stock (the "Series A
Preferred Stock") all of which are issued and outstanding, 250,000 shares are
designated Series B Preferred Stock (the "Series B Preferred Stock") all of
which are issued and outstanding, 343,690 shares are designated Series C
Preferred Stock all of which are issued and outstanding, and 254,585 shares are
designated Series D Preferred Stock, all of which are issued and outstanding.
All of such issued and outstanding shares are validly issued, fully paid and
nonassessable. The Company has duly authorized and reserved for issuance (a)
1,212,520 shares of Common Stock for issuance upon conversion of the Series D
Shares and (b) 361,000 shares of Common Stock for issuance for issuance upon
exercise of the Replacement Warrants. The shares of Common Stock so reserved,
upon conversion or exercise, as the case may be, will be validly issued and
outstanding, fully paid and nonassessable.
(c) Authorization of Transaction. The execution, delivery and
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performance of this Agreement, and the Replacement Warrants have been duly
authorized by all necessary corporate or other action of the Company and they
are the valid and binding obligations of the Company, enforceable in accordance
with their terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and general principals of equity.
(d) Approvals; Compliance With Laws. The Company is not in violation
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of its Articles of Organization or by-laws. The execution, delivery and
performance of this Agreement, the Replacement Warrants and the transactions
contemplated hereby and thereby (i) do not require any approval or consent of,
or filing with, any governmental agency or authority in the United States of
America or otherwise which has not been obtained and which is not in full force
and effect as of the date hereof, (ii) will not conflict with or constitute a
breach or violation of the respective Articles of Organization or by-laws of the
Company, or of any agreement, instrument, judgement, decree, order, statute,
rule or governmental regulation applicable to the Company, or result in the
creation of any mortgage, lien, charge or encumbrance upon any of the properties
or assets of the Company pursuant to any such term.
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(e) Finders. No person is entitled, directly or indirectly, to
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compensation from the Company by reason of any contract or understanding or
contact with the Company, as a finder or broker in connection with the
transactions contemplated by this Agreement.
5. Representations and Warranties of Investors. Each Investor hereby
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represents, individually and not jointly, to the Company, as follows:
(a) Investment Intent. Each Investor is purchasing or acquiring the
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Shares and the Replacement Warrant to be acquired by it hereunder for its own
account for investment and not with a present view to, or for sale in connection
with, any distribution thereof in violation of the Act. Each Investor hereby
consents to the imposition of a legend substantially similar to the following on
each certificate for Shares and on the Replacement Warrant, and each share of
Common Stock issued upon conversion of the Series D Preferred Shares or the
exercise of the Replacement Warrant, and each Investor agrees to abide by the
restrictions contained therein:
[This Warrant] [The shares represented by this certificate
have] not been registered under the Securities Act of 1933, as
amended (the "Act") and may not be sold, transferred or
assigned unless registered under the Act or an opinion of
counsel, satisfactory to the corporation, is obtained to the
effect that such sale, transfer or assignment is exempt from
the registration requirements of the Act.
Nothing herein shall restrict the transfer of the Shares, the Replacement
Warrant, or the shares of Common Stock issuable upon the conversion or exercise
thereof, or any portion thereof by an Investor to any partner of the Investor,
any partnership affiliated with the Investor, or to any partner of such
affiliated partnership, provided such transfer may be made in compliance with
applicable federal and state securities laws.
(b) Authorization. Each Investor has the power and authority to enter
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into this Agreement and to perform all of its obligations hereunder, and no
consent, approval, authorization or order of any court or governmental agency or
board is required to consummate the same.
(c) Restricted Securities. Each Investor understands that neither the
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Shares nor the Replacement Warrants, nor the shares of Common Stock issued upon
conversion or exercise thereof
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have been registered under the Act by reason of a specific exemption from the
registration provision of the Act which depends upon, among other things, the
bona fide nature of Investor's investment intent as expressed herein. Each
Investor acknowledges that the Shares, the Replacement Warrants and the shares
of Common Stock received upon conversion or exercise, when received, must be
held indefinitely unless they are subsequently registered under the Act or an
exemption from such registration is available. Each Investor has been advised of
or is aware of the provisions of Rule 144 promulgated under the Act, which rule
permits limited resale of securities purchased in a private placement subject to
the satisfaction of certain conditions contained therein.
(d) Access to Information. Each Investor has had an opportunity to ask
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questions of and receive answers from the Company or its officers and directors,
or any person or persons acting on its behalf, concerning the terms and
conditions of this investment and to obtain any additional information, to the
extent that the Company possesses such information or could acquire it without
unreasonable efforts or expense, necessary to verify the accuracy of the
information otherwise obtained by or furnished to the Investor in connection
with the offering of the Shares and the Replacement Warrants.
(e) Finders. No person is entitled, directly or indirectly, to
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compensation from any Investor by reason of any contract or understanding or
contact with such Investor, as a finder or broker in connection with the
transactions contemplated by this Agreement.
6. Coordination with Preferred Stock Purchase Agreement.
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(a) Definition of Preferred Stock Purchase Agreement. For purposes of
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this Agreement, the term Preferred Stock Purchase Agreement shall mean the
Company's Series C and Series D Preferred Stock Purchase Agreement dated January
25, 1991 (the "1991 Agreement").
(b) Pre-Emptive Rights. The Company hereby grants to the Investors the
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right to maintain its percentage ownership interest in the Company to the same
extent and in the same manner afforded to the Preferred Shareholders (as defined
in the 1991 Agreement) pursuant to Article 8 of the 1991 Agreement. For the
purposes said Article 8, each Investor's and Preferred Shareholders percentage
interest shall be determined immediately following the Closing hereunder.
(c) Registration Rights. The Company hereby grants to the Investors
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the Registration Rights set forth in Article 9 of
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the 1991 Agreement. In connection therewith, the shares of Common Stock to be
issued upon conversion of the Series D Shares and the exercise of the
Replacement Warrants shall be deemed to be "Registrable Shares" for all purposes
of the 1991 Agreement. Whenever reference is made in the 1991 Agreement to a
request or consent in writing from the holders of a certain percentage of the
Registrable Shares, such reference shall include shares of Common Stock issuable
upon conversion or exercise of the Series D Shares and the Replacement Warrants,
as the case may be, even though such conversion or exercise has not then been
effected.
(d) 1991 Investor Consents and Agreements. Each Investor, in its
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capacity as "Investors" under the 1991 Agreement (the "1991 Investors") hereby
(i) consents to the granting of the pre-emptive and registration rights pursuant
to Sections 6(b) and 6(c) hereof, respectively, (ii) agrees that any and all
preemptive rights that each Investor has or may have pursuant to Section 8 of
the 1991 Agreement are hereby waived with respect to the issuance of the Shares,
the Replacement Warrants and the shares of Common Stock issuable upon the
conversion or exercise thereof, and (iii) agrees that for purposes of the
Amended Shareholders Agreement dated January 25, 1991 with two holders of Common
Stock of the Company, namely S. Xxxxx Xxxxxxxxxx and Xxx X. Xxxxx, as further
amended by such stockholders as an addendum to that certain Waiver and Consent
dated January 31, 1992 (the "Amended Shareholders Agreement"), that the
Investor's pro rata share of the Company's capital stock shall be deemed to
include (A) the number of shares of Common Stock for which the Replacement
Warrants are exercisable and (B) the number of shares of Common Stock for which
shares of the Series D Preferred Stock issuable, all as of the date of any
transaction to which the provisions of the Amended Shareholders Agreement are
applicable.
(e) Small Business Investment Corporation. If any Investor is a Small
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Business Investment Corporation ("SBIC"), the Replacement Warrant issued to such
Investor shall be modified to provide that the expiration date of the Warrant
will in no event be later than six years after the date hereof. The Company
shall also execute such other documents as may be reasonably requested by such
an Investor to comply with the rules and regulations regarding SBIC investments,
provided that such documents do not materially alter the transactions
contemplated herein to the detriment of the Company.
7. Miscellaneous.
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(a) Termination of Purchase Agreement. The parties hereby agree that the
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Purchase Agreement is terminated and of no further force and effect; provided,
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however, that the representations and
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warranties set forth in the Purchase Agreement shall survive such termination.
(b) Survival of Representations and Covenants. All representations,
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warranties, covenants, agreements and obligations made herein or in any
schedule, exhibit, notice, certificate or other document executed in connection
herewith or delivered by any party to another party incident hereto shall be
deemed to have been relied upon by the other party hereto and survive the
execution and/or delivery thereof, and all statements contained in any such
schedules, exhibit, notice, certificate or other document delivered by the
Company hereunder or in connection herewith shall be deemed to constitute
representations and warranties made by the Company herein.
(c) Notices. All notices, requests, demands and other communications
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called for or contemplated hereunder shall be in writing and shall be deemed
duly given when deposited in the U.S. mail, certified mail, or registered mail,
postage prepaid, with return receipt requested, when mailed by nationally
recognized commercial courier such as Federal Express, or when transmitted by
wire or telex, addressed to the parties at the following addresses, or at such
other addresses as the parties may designate by written notice in the manner
aforesaid:
If to Investors: At the addresses listed on
Exhibit A hereto.
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If to the Company: Vivid Technologies, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
(d) Assignment. This Agreement shall be binding upon and shall inure
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to the benefit of the Company and the Investors and their respective successors
and assigns.
(e) Succession to Rights. The rights and powers of each Investor
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hereunder are granted to such Investor as an owner of the Shares, the
Replacement Warrants and the shares of Common Stock issued upon the conversion
or exercise thereof (the "Securities"). Consequently, the parties agree that,
except as limited by Section 6.05 of the 1991 Agreement, such rights and powers
exist separately and distinctly with respect to each share of the Securities and
as to each such share shall pass with it so that any owner of any shares of the
Securities whether becoming such by transfer, assignment, operation of law or
otherwise, shall have all of the rights and powers of such Investor hereunder,
and shall be entitled to exercise them in full, with or without the agreement or
consent of other such owners, and no
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transfer or assignment shall divest such Investor or any subsequent owner of
such rights and powers unless all shares of the Securities owned by such persons
are transferred or assigned.
(f) Confidential Information. Each of the Investors agrees that it
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will treat all proprietary information received by it at any time concerning the
Company or its present or proposed business as confidential information and that
it will not, directly or indirectly, disclose such information to any third
party.
(g) Entire Agreement. This Agreement (including all exhibits or
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schedules appended to this Agreement and all documents delivered pursuant to or
referred to in this Agreement, all of which are hereby incorporated herein by
reference) constitutes the entire agreement between the parties, and all
promises, representations, understandings, warranties and agreements with
reference to the subject matter hereof and inducements to the making of this
Agreement relied upon by any party hereto, have been expressed herein or in the
documents incorporated herein by reference.
(h) Amendments and Waiver. Changes in or additions to this Agreement
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may be made or compliance with any term, covenant, agreement, condition or
provision set forth herein or therein may be omitted or waived (either generally
or in a particular instance and either retroactively or prospectively), upon
written consent of the Company and the Investors holding at least seventy
percent (70%) of the Series C Preferred Shares (including shares of Common Stock
into which such Shares have been converted). No breach of any covenant,
agreement, warranty or representation shall be deemed waived unless expressly
waived in writing by the party who might asset such breach. The provisions of
the 1991 Agreement shall control the amendment or waiver of any provisions of
that Agreement, including without limitation, Articles 8 and 9 thereof.
(i) Governing Law; Severability. This Agreement shall be deemed a
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contract made under the laws of the Commonwealth of Massachusetts and, together
with the rights and obligations of the parties hereunder, shall be construed
under and governed by the laws of such Commonwealth. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision hereof.
(j) Counterparts. This Agreement may be executed in multiple
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counterparts, each of which shall be deemed in original but all of which
together shall constitute one and the same instrument.
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(k) Effect of Table of Contents and Headings. Any table of contents,
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title of an article or section heading herein contained is for convenience or
reference only and shall not affect the meaning of construction of any of the
provisions hereof.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by
the parties hereto or their duly authorized representatives effective as of the
date first above written.
VIVID TECHNOLOGIES, INC.
By:_________________________
S. Xxxxx Xxxxxxxxxx,
President
THE INVESTORS AND THE ALTA III Limited Partnership
1991 INVESTORS By: Alta III Management
Partners Limited
Partnership
By:____________________________
General Partner
XXXXXXX PARTNERS II
By: Golden Coins, N.V.,
Investment General Partner
By: ABN Trustcompany (Curacao)
N.V., Managing Director
By:____________________________
Attorney-in-Fact
XXXX XXXX C.V.
By: Golden Coins N.V., Managing General
Partner
By: ABN Trustcompany (Curacao)
N.V., Managing Director
By:____________________________
Under Power of Attorney
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C.V. SOFINNOVA PARTNERS FOUR
By: Sofinnova (International)
Four N.V., General Partner
By:____________________________
Under Power of Attorney
PIONEER VENTURES LIMITED
PARTNERSHIP
By:____________________________
XXXXXXX CAPITAL IV
By:____________________________
XXXXXXX CAPITAL V
BY:_____________________________
BETA PARTNERS LIMITED PARTNERSHIP
BY: Beta Management Partners
general partner
By:_____________________________
General Partner
MASSACHUSETTS CAPITAL RESOURCE
COMPANY
By:_____________________________
Xxxxxxx X. Xxxxxxxx,
Senior Vice President
GENEVA PARTNERSHIP
By:_____________________________
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Xxxxxxxxxxx X. Xxxxx, Partner
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EXHIBIT A
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INVESTORS
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Convertible Number of Number of Number of
Note Shares of Shares of Shares of
Principal Series C Series D Common Stock
and Interest Preferred Preferred Subject to
Name and Address Outstanding Stock Stock Warrants
---------------- ------------ --------- --------- ------------
Alta III $536,538 48,424 35,870 106,794
c/o Burr, Egan,
Deleage & Co., Inc.
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx
Xxxxxxx Partners II $ 83,664 7,686 5,694 16,952
c/o Burr, Egan,
Deleage & Co., Inc.
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx
Xxxx Xxxx C.V. $ 92,757 8,455 6,263 18,646
c/o Burr, Egan,
Deleage & Co., Inc.
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx
C.V. Sofinnova $138,227 12,298 9,110 27,122
Partners Four
c/o Burr, Egan,
Deleage & Co., Inc.
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx
Pioneer Ventures $269,178 24,340 18,030 53,680
Limited Partnership
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxxxxxx Xxxxx
Xxxxxxx Capital IV $80,026 7,117 5,272 15,695
00 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
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Attn: Xxxxxx X. Xxxxxxx
Convertible Number of Number of Number of
Note Shares of Shares of Shares of
Principal Series C Series D Common Stock
and Interest Preferred Preferred Subject to
Name and Address Outstanding Stock Stock Warrants
---------------- ------------ --------- --------- ------------
Xxxxxxx Capital V $32,738 2,847 2,109 6,278
00 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Beta Partners Limited $285,547 25,621 18,978 56,504
Partnership
c/o Beta Partners, Inc.
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Massachusetts Capital $285,547 25,621 18,978 56,504
Resource Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Geneva Partnership $14,550 1,282 949 2,827
c/o Pioneer Capital
Corporation
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000 ------------ --------- --------- ------------
$1,818,773 163,690 121,252 361,000
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