EXHIBIT 4.3
QUALMARK CORPORATION
AGREEMENT AND PLAN OF RECAPITALIZATION
THIS AGREEMENT AND PLAN OF RECAPITALIZATION ("Agreement") is entered
into on the 27th day of March, 2002, by and between QualMark Corporation, a
Colorado corporation ("Company") and The Xxxxx Partnership III, SBIC, LP, a
Colorado limited partnership ("Shareholder") (collectively referred to as the
"Parties").
WHEREAS, on March 11, 2002, the Company entered into a binding
agreement with Shareholder pursuant to which it agreed to issue 1,000 shares of
Series C Convertible Preferred Stock, no par value, to Shareholder for a
purchase price of $1,000 per share (the "Investment"); and
WHEREAS, as a condition to the Investment, the Company agreed to
provide for the exchange of each share of Series A Convertible Preferred Stock
of the Company (the "Series A Preferred") held by Shareholder for one share of a
new series of convertible preferred stock of the Company (the "Series B
Preferred"); and
WHEREAS, Shareholder holds all issued and outstanding shares of the
Company's Series A Preferred; and
WHEREAS, the Company has executed and filed with the Colorado Secretary
of State a Certificate of Designation of Series B Convertible Preferred Stock;
NOW, THEREFORE, the Parties agree as follows:
1. Recapitalization Exchange. On March 27, 2002, Shareholder will
exchange 571,013 shares of the Series A Preferred, representing all issued and
outstanding shares of this series (including all payment in kind dividends
payable or accrued under its terms) for 571,013 shares of the Series B
Preferred. At the time of this exchange, Shareholder will receive a stock
certificate evidencing its ownership of the Series B Preferred. Upon the
exchange of the Series A Preferred for the Series B Preferred, all shares of the
Series A Preferred shall be cancelled and shall revert to the status of
authorized, but unissued shares of undesignated preferred stock, all dividends
shall cease to accrue and all rights of the Shareholder under the terms of the
Series A Preferred shall cease. Shareholder agrees that the number of shares set
forth in this paragraph accurately and properly reflects the number of shares to
which it is entitled.
2. Authorization. On March 26, 2002, the Board of Directors of the
Company adopted a resolution by written consent in lieu of a meeting duly
authorizing this Agreement, the issuance of the Series B Preferred in exchange
for the Series A Preferred, and reserving sufficient shares of Common Stock for
issuance upon conversion of the Series B Preferred, a copy of which is attached
hereto as Exhibit A.
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3. Reorganization Treatment. The Parties intend that the exchange
contemplated under this Agreement shall qualify as a tax-deferred
"reorganization," as such term is defined in Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code") and the Treasury Regulations
promulgated thereunder. This Agreement shall constitute a "plan of
reorganization," as such term is defined in the Treasury Regulations promulgated
under Section 368 of the Code. Each of the Parties hereby agrees to take all
actions that are reasonably necessary to treat the exchange contemplated under
this Agreement as a tax-deferred "reorganization," including making any filings
with the Internal Revenue Service reflecting such treatment.
4. Counterparts. This Agreement may be executed in counterparts, all of
which when taken together shall be deemed a single, fully executed and delivered
document. This Agreement may be executed by facsimile and any Party's signature
so transmitted shall be deemed to have the effect as an original signature.
5. Authority. The Parties hereto each hereby represents to the other
Party that all necessary corporate or partnership action necessary for the
authorization of this Agreement and the performance of the obligations hereunder
has been taken. This Agreement, when executed by the Parties hereto, will be
valid and binding obligations of the Parties enforceable against the Parties in
accordance with their terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights, and general principles of equity that restrict
the availability of equitable remedies.
6. Further Actions. The Parties hereto each hereby agrees to take all
such further actions as are reasonably necessary to fulfill the purposes and
intentions of the Parties hereto with respect to this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date written above.
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QUALMARK CORPORATION
A Colorado corporation
By:
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Xxxxxxx Xxxxxxxx, President
THE XXXXX PARTNERSHIP III, SBIC, LP,
A Colorado limited partnership
By: Xxxxx Ventures, SBIC, LLC
Its: General Partner
By:
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Xxxx X. Xxxxxxx, Treasurer
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