STOCK PURCHASE AGREEMENT by and between ZOOM TELEPHONICS, INC. and the INVESTORS IDENTIFIED BELOW
Exhibit 10.1
CONFIDENTIAL
by and
between
and
the
INVESTORS IDENTIFIED BELOW
W I T N E S S E T H:
WHEREAS, Zoom Telephonics, Inc., a
Delaware corporation (“Zoom”), is seeking to
raise up to $5,000,000 through the sale of shares (the
“Common Stock
Offering”) of the Company’s common
stock, par value $0.01 per share (“Common Stock”), at a per
share purchase price equal to $1.10;
WHEREAS, the Company will provide
certain registration rights to the investors participating in the
Common Stock Offering (the “Investors”) as provided
herein;
WHEREAS, Zoom has given each Investor
the opportunity to conduct an independent investigation of the
Company and ask pertinent questions regarding an investment in the
Company, and officers of the Company have made themselves available
to each Investor for such purposes; and
WHEREAS, with full consideration of the
risk factors involved in an investment in the Company, each
Investor desires to acquire the shares of Common Stock as provided
herein.
1. Purchase
of Shares. On the terms and subject to the conditions set
forth in this Agreement, the Company hereby agrees to sell to each
Investor, and each Investor hereby agrees to purchase from the
Company, that number of shares of Common Stock as set forth on the
signature page for such Investor.
2. Closing;
Delivery of Shares.
(a)
Acceptance; Closing. The
closing of the purchase and sale of the shares of Common Stock (the
“Closing”) shall occur
promptly following the execution of this Agreement. A given
Investor’s purchase is conditioned upon the Company’s
receipt of that Investor’s purchase price from that Investor
as set forth on the signature page for such Investor (the
“Purchase
Price”) and approval of the issuance of the shares of
Common Stock by the Company’s Board of
Directors.
(b)
Form of Payment; Issuance of
Certificate. At Closing, each Investor shall pay the
Purchase Price for the shares of Common Stock to be issued and sold
to it by wire transfer of immediately available funds to the
Company, in accordance with the Company’s written wiring
instructions. The Company shall deliver a stock certificate
representing the Common Stock, to each Investor, against delivery
of such Purchase Price, or shall deposit such shares electronically
with DTC through its Deposit Withdrawal Agent Commission (DWAC)
system based on instructions received by the applicable
Investor.
(c)
Documents Received at Closing.
At or prior to Closing, the Company shall have delivered to each
Investor:
(i)
A certificate of
good standing for the Company issued by the Secretary of State for
the State of Delaware dated within the five (5) Business Days prior
to the Closing.
(ii)
A certificate of
the Secretary of the Company certifying that attached thereto are
true and complete copies of all resolutions adopted by the Board of
Directors of the Company authorizing the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby, and that all such resolutions are
in full force and effect and are all the resolutions adopted in
connection with the transactions contemplated hereby.
(iii)
A legal opinion of
counsel to the Company, in substantially the form attached hereto
as Annex
B.
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3. Representations
and Warranties of the Investors. Each investor represents
and warrants to the Company, only with respect to such Investor, as
follows:
(a)
Accredited Investor. Such
Investor is an “accredited investor” as defined under
Rule 501 under the Securities Act of 1933 (the “Securities Act”). Such
Investor has completed the accredited investor questionnaire
attached hereto as Annex
C and has provided true and accurate responses on such
questionnaire.
(b)
Reliance on Exemptions. Such
Investor understands that the shares of Common Stock are being
offered and sold to it in reliance upon specific exemptions from
the registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and
accuracy of, and such Investor’s compliance with, the
representations, warranties, agreements, acknowledgments and
understandings of such Investor set forth herein in order to
determine the availability of such exemptions and the eligibility
of such Investor to acquire the shares of Common
Stock.
(c)
Residency. Such Investor is a
resident of the jurisdiction set forth on such Investor’s
signature page.
(d)
Investment. Such Investor is
purchasing the shares of Common Stock for such Investor’s own
account for investment and not with a view to the distribution or
sale thereof. Such Investor is not acting as a nominee or agent for
any other person and is not purchasing the shares of Common Stock
for the account of any other person or other entity. Such Investor
is not obligated to transfer the shares of Common Stock to any
other person, nor does such Investor intend to sell, grant a
participation in or otherwise distribute or dispose of the shares
of Common Stock.
(e)
Governmental Review. Such
Investor understands that no United States federal or state agency
or any other government or governmental agency has passed upon or
made any recommendation or endorsement of the shares of Common
Stock. Such Investor has been given the opportunity to request and
obtain any information necessary to fully evaluate the investment
and has been furnished all information requested.
(f)
No Registration of Shares. Such
Investor has been advised that the shares of Common Stock have not
been registered under the Securities Act and may not be sold,
transferred or otherwise disposed of without registration under the
Securities Act or an exemption therefrom.
(g)
Legend. To the extent
applicable, each certificate or other document evidencing any of
the shares of Common Stock shall be endorsed with the legend in the
form set forth below:
“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS REGISTERED
UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT AN
EXEMPTION THEREFROM IS AVAILABLE.”
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(h)
Authorization. Such Investor
has full power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Such Investor and constitutes a
valid and legally binding obligation of Such Investor, enforceable
in accordance with its respective terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of
creditors’ rights generally, and (ii) as limited by laws
relating to the availability of specific performance, injunctive
relief or other equitable remedies.
(i)
Investor
Sophistication and Ability to Bear Risk of Loss. Such Investor acknowledges that such Investor
can bear the economic risk of investment in such securities for the
foreseeable future without producing a material adverse change in
such Investor’s financial condition, has no present need for
liquidity in such investment and can afford a complete loss of such
investment. Such Investor otherwise has such knowledge and
experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the shares of
Common Stock.
(j)
Transfer or Re-sale. Such
Investor understands that (i) the sale or re-sale of the shares of
Common Stock has not been and is not being registered under the
Securities Act or any applicable state securities laws, and the
shares of Common Stock may not be transferred unless (a) such
shares are sold pursuant to an effective registration statement
under the Securities Act, or (b) such shares are sold or
transferred pursuant to an exemption from such registration. In the
event shares of Common Stock are sold or transferred pursuant to an
exemption from registration, such Investor shall have delivered to
the Company, at the cost of such Investor, an opinion of counsel
that shall be in form, substance and scope customary for opinions
of counsel in comparable transactions to the effect that the shares
of Common Stock to be sold or transferred may be sold or
transferred pursuant to an exemption from such
registration.
(k)
Information. Such Investor and
its advisors, if any, have been furnished with materials relating
to the business, finances and operations of the Company. Such
Investor and its advisors, if any, have been afforded the
opportunity to ask questions of the Company. Notwithstanding any
due diligence or other investigation or review by such Investor or
its advisors, such Investor shall be entitled to rely upon all
representations and warranties made by the Company.
(l)
Tax Matters. If any Investor is
a pension plan, ▇▇▇ or other tax-exempt entity, it is aware that it
may be subject to federal income tax on any unrelated business
taxable income from its investment in the Company.
4. Representations
and Warranties of the Company. The Company represents and
warrants to each Investor that:
(a) Organization
and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware, with full power and authority (corporate and
other) to own, lease, use and operate its properties and to carry
on its business as and where now owned, leased, used, operated and
conducted.
(b) Authorization.
The Company has all requisite corporate power and authority to
enter into and perform this Agreement. This Agreement has been duly
and validly executed and delivered by the Company and constitutes a
valid and legally binding obligation of the Company, enforceable in
accordance with its respective terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of
creditors’ rights generally, and (ii) as limited by laws
relating to the availability of specific performance, injunctive
relief or other equitable remedies.
(c) Issuance
of Shares. The shares of Common Stock issuable hereunder are
duly authorized and will be validly issued, fully paid and
non-assessable, and free from all taxes, liens, claims and
encumbrances with respect to the issue thereof and shall not be
subject to preemptive rights or other similar rights of
shareholders of the Company and will not impose personal liability
upon the holder thereof.
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(d) No
Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby will not (i) conflict
with or result in a violation of any provision of the
Company’s Certificate of Incorporation or By-laws, or (ii)
violate or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which with notice or lapse
of time or both could become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation
of, any material agreement, indenture or instrument to which the
Company or any of its subsidiaries, is a party, or (iii) result in
a violation of any material law, rule, regulation, order, judgment
or decree (including federal and state securities laws and
regulations and regulations of any self-regulatory organizations to
which the Company or its securities are subject.
(e) Consents.
Except for a Form D filing with the U.S. Securities and Exchange
Commission (the “SEC”) and notice filings
with applicable state securities regulators, the Company is not
required to obtain any consent, authorization or order of, or make
any filing or registration with, any court, governmental agency or
any regulatory or self-regulatory agency or any other person or
entity in order for it to execute, deliver or perform any of its
respective obligations under or contemplated by this Agreement,
except for the Company’s obligations pursuant to Section
5.
(f) No
General Solicitation. Neither the Company nor any person or
entity acting on its or their behalf, has engaged in any form of
general solicitation or general advertising (within the meaning of
Regulation D as promulgated by the SEC under the Securities Act) in
connection with the offer or sale of the shares of Common Stock
hereunder.
(g) No
Integration. To the knowledge of the Company, the issuance
of the shares of Common Stock to the Investors will not be
integrated with any other issuance of the Company’s
securities (past, current or future) for purposes of any
shareholder approval provisions applicable to the Company or its
securities.
(h) No
Brokers. The Company has taken no action which would give
rise to any claim by any person for brokerage commissions,
transaction fees or similar payments relating to this Agreement or
the transactions contemplated hereby.
(i) Equity Capitalization. As of
April 26, 2019, the authorized capital stock of the Company
consists of 25,000,000 shares of common stock, of which 16,162,181
shares are issued and outstanding, and 8,837,819 shares are
reserved for issuance pursuant to securities exercisable or
exchangeable for, or convertible into, common stock, and 2,000,000
shares of preferred stock, of which no shares are issued and
outstanding. No shares of common stock are held in treasury. All of
such outstanding shares are duly authorized and have been, or upon
issuance will be, validly issued and are fully paid and
non-assessable. Except for compensatory equity grants made to the
Company’s officers, directors and consultants consistent with
past practice and except as disclosed in in the reports, schedules,
forms, statements and other documents required to be filed by the
Company with the SEC pursuant to the reporting requirements of the
Securities Exchange Act of 1934 (the “Exchange Act”) (all of
the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements, notes and schedules
thereto and documents incorporated by reference therein along with
all statements, filings and exhibits filed pursuant to the
registration requirements of the Securities Act, being hereinafter
referred to as the “SEC Documents”): (i) none
of the Company’s or any of its subsidiary’s capital
stock is subject to preemptive rights or any other similar rights
or any liens or encumbrances suffered or permitted by the Company
or any of its subsidiaries; (ii) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital
stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or
any of its subsidiaries is or may become bound to issue additional
capital stock of the Company or any of its subsidiaries or options,
warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital
stock of the Company or any of its subsidiaries; (iii) there are no
agreements or arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any of their
securities under the Securities Act; (iv) there are no outstanding
securities or instruments of the Company or any of its subsidiaries
which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which
the Company or any of its subsidiaries is or may become bound to
redeem a security of the Company or any of its subsidiaries; and
(v) there are no securities or instruments containing anti-dilution
or similar provisions that will be triggered by the issuance of the
shares of Common Stock hereunder.
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(j) Indebtedness. Except as
disclosed in the SEC Documents, including but not limited to the
Company’s existing revolving line of credit with ▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇▇, Inc., the balance on which may vary on a daily
basis, neither the Company nor any of its subsidiaries has any
outstanding Indebtedness (as defined below) “Indebtedness” of any
person or entity means, without duplication, all indebtedness for
borrowed money and all obligations evidenced by notes, bonds,
debentures or similar instruments.
(k) Absence of Litigation. Except
as set forth in the SEC Documents, there is no action, suit,
proceeding, inquiry or investigation before any court, public
board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its subsidiaries, its common stock
or any of the Company’s or its subsidiaries’ officers
or directors which individually or in the aggregate would have a
material adverse effect on the Company.
(l) SEC Filings. The Company has timely filed with or furnished to,
as applicable, the SEC all registration statements, prospectuses,
reports, schedules, forms, statements, and other documents
(including exhibits and all other information incorporated by
reference) required to be filed or furnished by it with the SEC
since January 1, 2018 (the “Company SEC
Documents”). True,
correct, and complete copies of all Company SEC Documents are
publicly available in the Electronic Data Gathering, Analysis, and
Retrieval database of the SEC (“▇▇▇▇▇”).
As of their respective filing dates or, if amended or superseded by
a subsequent filing prior to the date hereof, as of the date of the
last such amendment or superseding filing (and, in the case of
registration statements and proxy statements, on the dates of
effectiveness and the dates of the relevant meetings,
respectively), each of the Company SEC Documents complied as to
form in all material respects with the applicable requirements of
the Securities Act and the Exchange Act, and the rules and
regulations of the SEC thereunder applicable to such Company SEC
Documents. None of the Company SEC Documents, including any
financial statements, schedules, or exhibits included or
incorporated by reference therein at the time they were filed (or,
if amended or superseded by a subsequent filing prior to the date
hereof, as of the date of the last such amendment or superseding
filing), contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. To the
knowledge of the Company, none of the Company SEC Documents is the
subject of ongoing SEC review or outstanding SEC investigation.
There are no outstanding or unresolved comments received from the
SEC with respect to any of the Company SEC
Documents.
(m) Exemption from Registration; No
Disqualification Events. Assuming the accuracy of the
Investors’ representations and warranties set forth herein,
no registration under the Securities Act is required for the offer
and sale of the Common Stock by the Company to the Investors as
contemplated hereby. With respect to the Common Stock to be offered
and sold hereunder in reliance on Rule 506 under the Securities
Act, none of the Company, any of its predecessors, any affiliated
issuer, any director, executive officer, other officer of the
Company participating in the offering hereunder, any beneficial
owner of 20% or more of the Company’s outstanding voting
equity securities, calculated on the basis of voting power, nor any
promoter (as that term is defined in Rule 405 under the Securities
Act) connected with the Company in any capacity at the time of sale
(each, an "Issuer Covered
Person" and, together, "Issuer Covered Persons") is
subject to any of the "Bad Actor" disqualifications described in
Rule 506(d)(1)(i) to (viii) under the Securities Act (a
"Disqualification
Event"), except for a Disqualification Event covered by Rule
506(d)(2) or (d)(3).
(n) Subsidiaries. Except for MTRLC
LLC (“MTRLC”), the Company does
not have any subsidiaries. The Company owns all of the outstanding
equity interests in MTRLC. Except for
the equity interests in MTRLC, the Company does not own, directly
or indirectly, any capital stock of, or other equity or voting
interests in, any corporation, limited liability company,
partnership or other entity.
(o) Absence of Changes. Since
December 31, 2018, except in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby, the business of the Company and its sole
subsidiary has been conducted in the ordinary course of business
consistent with past practice and there has not been or occurred
any event, fact, condition, or change
that is, or would reasonably be expected to become, individually or
in the aggregate, materially adverse to the business, results of
operations, condition (financial or otherwise), or assets of the
Company and its subsidiary, taken as a whole.
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(p) Takeover Protections.
The Company and its Board of Directors
have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) or the
laws of its state of incorporation that is or could become
applicable to an Investor as a result of such Investor and the
Company fulfilling their obligations or exercising their rights
under the Transaction Documents, including without limitation as a
result of the Company’s issuance of the Common Stock and each
Investor’s ownership of the Common Stock purchased
hereunder.
(q) Real Property Holding
Corporation. The Company is not
and has never been a U.S. real property holding corporation within
the meaning of Section 897 of the Internal Revenue Code of 1986, as
amended, and the Company shall so certify upon any Investor’s
request.
(r) Compliance with Laws. The
Company and its subsidiary have complied, and are now complying,
with all laws applicable to their
respective businesses, properties or assets, including
without limitation OFAC, the Money Laundering Laws and FCPA.
Neither the Company nor any subsidiary
nor, to the Company's knowledge, any director, officer, agent,
employee or affiliate (such term “affiliate” as
used in this Agreement, shall mean any Person that, directly or
indirectly through one or more intermediaries, controls or is
controlled by or is under common control with the Person, as
defined under Rule 405 under the Securities Act) of the Company or any subsidiary is currently
subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department
(“OFAC”).
The operations of the Company and its subsidiary are and have been
conducted at all times in compliance with applicable financial
record-keeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, applicable
money laundering statutes and applicable rules and regulations
thereunder (collectively, the “Money Laundering
Laws”), and no action or
proceeding by or before any court or governmental agency, authority
or body or any arbitrator involving the Company or its subsidiary
with respect to the Money Laundering Laws is pending or, to the
knowledge of the Company, threatened. Neither the Company nor its
subsidiary, nor to the knowledge of the Company, any agent or other
person acting on behalf of the Company or its subsidiary, has: (i)
directly or indirectly, used any funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to foreign
or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any
foreign or domestic political parties or campaigns from corporate
funds, (iii) failed to disclose fully any contribution made by the
Company or its subsidiary (or made by any person acting on its
behalf of which the Company is aware) which is in violation of law
or (iv) violated in any material respect any provision of
Foreign Corrupt Practices Act of 1977, as amended (the
“FCPA”).
(s) Related Party Transactions.
Except as disclosed in the Company SEC
Documents, there are, and since January 1, 2018, there have been,
no contracts, transactions, arrangements, or understandings between
the Company or its subsidiary, on the one hand, and any affiliate
(including any director, officer, or employee) thereof or any
holder of 5% or more of the shares of Common Stock, but not
including any wholly-owned subsidiary of the Company, on the other
hand, that would be required to be disclosed pursuant to Item 404
of Regulation S-K promulgated by the SEC in the Company's Form 10-K
or proxy statement pertaining to an annual meeting of
stockholders.
(t) Intellectual Property.
The Company and its subsidiary have,
or have rights to use under license, all patents, patent
applications, trademarks (whether registered or unregistered),
trademark applications, service marks (whether registered or
unregistered), trade names (whether registered or unregistered),
trade secrets, trade dress (whether registered or unregistered),
inventions, know-how, processes, formulas, recipes, methods of
manufacture, data, copyrights, works of authorship, licenses and
other intellectual property rights and similar rights necessary or
required for use in connection with their respective businesses as
described in the Company SEC Documents (collectively, the
“Intellectual Property
Rights”). None of, and
neither the Company nor its subsidiary has received a notice
(written or otherwise) that any of the Intellectual Property Rights
has expired, terminated or been abandoned, or is expected to expire
or terminate or be abandoned, within two (2) years from the date of
this Agreement. Neither the Company nor its subsidiary has
received, since December 31, 2018, a written notice of a claim or
otherwise has any knowledge that the Intellectual Property Rights
violate or infringe upon the rights of any person. To the knowledge
of the Company, all such Intellectual Property Rights are valid and
enforceable, and there is no existing infringement by another
Person of any of the Intellectual Property Rights. The Company and
its subsidiary have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their intellectual
properties.
(u) Investment Company.
The Company is not, and is not an
affiliate of, and immediately after receipt of payment for the
shares of Common Stock hereunder, will not be or be an affiliate
of, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended. The Company shall
conduct its business in a manner so that it will not become an
“investment company” subject to registration under the
Investment Company Act of 1940, as amended.
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5.
Registration
Rights.
(a) Registration.
No later than thirty (30) days after the date on which the Company
has closed on an aggregate of at least $4,000,000 in the Common
Stock Offering (the “Closing
Date”), the Company
shall prepare and file with the Securities and Exchange Commission
(the “SEC”)
a registration statement (“Registration
Statement”) covering the
resale of all of the shares of Common Stock sold in the Common
Stock Offering (the “Registrable
Securities”) for an
offering to be made on a continuous basis pursuant to Rule 415 of
the Securities Act. For purposes of this Agreement, any substitute
or replacement registration statement shall mean the Registration
Statement. The Registration Statement filed hereunder shall be on
Form S-1. The Company shall use its commercially reasonable efforts
to cause such Registration Statement to be declared effective under
the Securities Act not later than 180 days after the Closing Date.
The Company shall use its commercially reasonable efforts to keep
such Registration Statement continuously effective under the
Securities Act until the earliest of: (i) such time as all
Registrable Securities covered by such Registration Statement have
been sold, thereunder or pursuant to Rule 144, (ii) such time after
the expiration of the Lock Up Period and all Registrable Securities
covered by such Registration Statement (other than Registrable
Securities held by persons who are affiliates of the Company) may
be sold without volume or manner-of-sale restrictions pursuant to
Rule 144 and without the requirement for the Company to be in
compliance with the current public information requirement under
Rule 144, or (iii) the five (5) year anniversary of the Closing
Date (such period, the “Effectiveness
Period”). The Company
shall promptly notify each Investor of the effectiveness of a
Registration Statement. In the event that, following the five (5)
year anniversary of the Closing Date, the Investors hold at least
the lesser of (x) an aggregate of $1,000,000 of Registrable
Securities and 909,000 shares of Common Stock (subject to adjustment for any
stock splits, stock dividends, recapitalizations and similar
events), Zulu may request that
the Company file a replacement Registration Statement for any such
remaining Registrable Securities on the terms set forth in this
Section 5, which the Company shall file within thirty (30) days
after such request and use its commercially reasonable to cause to
become effective as promptly as practicable after such filing,
provided that the Effectiveness Period for any such replacement
Registration Statement shall not extend beyond the thirty (30)
month anniversary of the date when such Registration Statement
becomes effective.
(b) Limitation
of Registration.
Notwithstanding the registration obligations set forth in Section
5(a), if the SEC informs the Company that all of the Registrable
Securities cannot, as a result of the application of Rule 415, be
registered for resale as a secondary offering on a single
registration statement, the Company agrees to promptly inform each
Investor thereof and use its commercially reasonable efforts to
file amendments to the Registration Statement as required by the
SEC, covering the maximum number of Registrable Securities
permitted to be registered by the SEC, on Form S-1 or such other
form as is available to register for resale the Registrable
Securities as a secondary offering.
(c) Indemnification.
(i) Indemnification
by the Company. The Company
will indemnify and hold harmless each Investor and its officers,
directors, members, shareholders, partners, employees, successors
and assigns, against any losses, obligations, claims, damages,
liabilities, contingencies, judgments, fines, penalties, charges,
costs (including, without limitation, court costs, reasonable
attorneys’ fees and costs of defense and investigation),
amounts paid in settlement or expenses, joint or several
(collectively, “Claims”)
reasonably incurred in investigating, preparing or defending any
action, claim, suit, inquiry, proceeding, investigation or appeal
taken from the foregoing by or before any court or governmental,
administrative or other regulatory agency, body or the SEC, whether
pending or threatened, whether or not an indemnified party is or
may be a party thereto, to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are
based upon: (1) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act or any state securities
law, or any rule or regulation thereunder, in connection with the
performance of its obligations under this Agreement; (2) any breach
or violation of this Agreement by the Company; or (3) any untrue
statement or alleged untrue statement of any material fact
contained in any Registration Statement, any preliminary prospectus
or final prospectus contained therein, or any amendment or
supplement thereof or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading; and will reimburse
such Investor, and each such officer, director or member and each
such controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any
such Claim or action; provided, however, that the Company will not
be liable in any such case if and to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by the
Investors or any such controlling person in writing specifically
for use in such Registration Statement or
prospectus.
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(ii) Indemnification
by Investor. Each Investor,
severally and not jointly, indemnify and hold harmless, to the
fullest extent permitted by law, the Company, its directors,
officers, employees, stockholders, partner, representatives and
each person who controls the Company (within the meaning of the
Securities Act) against any Claims resulting from any untrue
statement of a material fact or any omission of a material fact
required to be stated in the Registration Statement or prospectus
or preliminary prospectus or amendment or supplement thereto or
necessary to make the statements therein not misleading, to the
extent, but only to the extent that such untrue statement or
omission is contained in any information furnished in writing by
such Investor to the Company specifically for inclusion in such
Registration Statement or prospectus or amendment or supplement
thereto. In no event shall the aggregate liability under this
Section 5 of any such Investor be greater in amount than the dollar
amount of the proceeds (net of all underwriting fees, commissions
and selling expenses, all expenses paid by such Investor in
connection with any claim relating to this Section 5(c) and the
amount of any damages such Investor has otherwise been required to
pay by reason of such untrue statement or omission) received by
such Investor upon the sale of the Registrable Securities included
in the Registration Statement giving rise to such indemnification
obligation.
(iii) Conduct
of Indemnification Proceedings. Any person entitled to indemnification
hereunder shall (i) give prompt notice to the indemnifying party of
any claim with respect to which it seeks indemnification and (ii)
permit such indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified party;
provided that any person entitled to indemnification hereunder
shall have the right to employ separate counsel and to participate
in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (a) the
indemnifying party has agreed to pay such fees or expenses, or (b)
the indemnifying party shall have failed to assume the defense of
such claim or employ counsel reasonably satisfactory to such person
or (c) in the reasonable judgment of any such person, based upon
written advice of its counsel, a conflict of interest exists
between such person and the indemnifying party with respect to such
claims (in which case, if the person notifies the indemnifying
party in writing that such person elects to employ separate counsel
at the expense of the indemnifying party, the indemnifying party
shall not have the right to assume the defense of such claim on
behalf of such person); and provided, further, that the failure of
any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations hereunder, except
to the extent that such failure to give notice shall materially
adversely affect the indemnifying party in the defense of any such
claim or litigation. It is understood that the indemnifying party
shall not, in connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more than one
separate firm of attorneys at any time for all such indemnified
parties. No indemnifying party will, except with the consent of the
indemnified party, which consent shall not be unreasonably withheld
or delayed, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or
litigation.
(iv) Contribution.
If for any reason the indemnification provided for in the preceding
paragraphs (i) and (ii) is unavailable to an indemnified party or
insufficient to hold it harmless, other than as expressly specified
therein, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such Claim
in such proportion as is appropriate to reflect the relative fault
of the indemnified party and the indemnifying party, as well as any
other relevant equitable considerations. No person guilty of
fraudulent misrepresentation within the meaning of Section 11(f) of
the Securities Act shall be entitled to contribution from any
person not guilty of such fraudulent misrepresentation. In no event
shall the aggregate liability under this Section 5(iv) of the
holder of Registrable Securities be greater in amount than the
dollar amount of the proceeds (net of all underwriting fees,
commissions and selling expenses, all expenses paid by such holder
in connection with any claim relating to this Section 5(c) and the
amount of any damages such holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or
omission or alleged omission) received by it upon the sale of the
Registrable Securities giving rise to such contribution
obligation.
8
(d) Obligations
of each Investor. It shall be
a condition precedent to the obligations of the Company to register
the shares of Common Stock purchased pursuant to this Agreement
with respect to any Investor that such Investor furnish to the
Company such information regarding the Investor, the shares of
Common Stock purchased pursuant to this Agreement and the intended
method of disposition of the shares of Common Stock purchased
pursuant to this Agreement as shall be reasonably required to
effect the registration of the shares of Common Stock purchased
pursuant to this Agreement and shall execute such documents and
agreements in connection with such registration as the Company may
reasonably request. Each Investor shall cooperate as reasonably
requested by the Company in connection with the preparation of the
registration statement with respect to such registration, and for
so long as the Company is obligated to file and keep effective such
registration statement, shall provide to the Company, in writing,
for use in the registration statement, all such information
regarding the Investor and its plan of distribution of the
Registrable Securities included in such registration as may be
reasonably necessary to enable the Company to prepare such
registration statement, to maintain the currency and effectiveness
thereof and otherwise to comply with all applicable requirements of
law in connection therewith. At least ten (10) Business Days (as
hereinafter defined) prior to the first anticipated filing date of
the Registration Statement, the Company shall notify each Investor
of the information the Company requires from such Investor (the
“Requested
Information”) to have
the shares of Common Stock purchased pursuant to this Agreement
included in the Registration Statement. If within one (1) Business
Day of the filing date the Company has not received the Requested
Information from any Investor, then the Company may file the
Registration Statement without including the shares of Common Stock
purchased pursuant to this Agreement by such Investor. Each
Investor shall furnish to the
Company or the underwriter, as applicable, such information
regarding such Investor and the distribution proposed by it as the
Company may reasonably request in connection with any registration
or offering referred to in this Section 5. For the purposes of this
Agreement, the term “Business
Day” means any day other
than a Saturday, a Sunday or a day on which banks are required or
permitted to be closed in the Commonwealth of
Massachusetts.
(e) Expenses
of Registration. In connection
with any and all registrations pursuant to this Agreement, all
expenses other than underwriting discounts and commissions incurred
in connection with registration, filings or qualifications,
including, without limitation, all registration, listing, filing
and qualification fees, printing and accounting fees and costs, the
fees and disbursements of counsel for the Company shall be borne by
the Company.
(f) Reports
Under the Exchange Act. With a view to making available
to the Investors the benefits of Rule 144 promulgated under the
Securities Act or any other similar rule or regulation of the SEC
that may at any time permit the security holders to sell securities
of the Company to the public without registration
(“Rule
144”), the Company shall at all times:
(i) make
and keep public information available, as those terms are
understood and defined in Rule 144; and
(ii)
file with the SEC
in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act.
(g) Registration
Procedures. In connection with the Company’s
registration obligations hereunder, the Company agrees to the
following:
(i)
Not less than five
(5) trading days prior to the filing of each Registration Statement
and not less than one (1) trading day prior to the filing of any
related prospectus or any amendment or supplement thereto
(including any document that would be incorporated or deemed to be
incorporated therein by reference), the Company shall (A) furnish
to each Investor copies of all such documents proposed to be filed,
which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such
Investors, (B) cause its officers and directors, counsel and
independent registered public accountants to respond to such
inquiries as shall be necessary, in the reasonable opinion of
respective counsel to each Investor, to conduct a reasonable
investigation within the meaning of the Securities Act and (C)
deliver to such each Investor an accountant’s cold comfort
letter and opinion of counsel to the Company in a form customary
for underwritten registrations.
(ii)
The Company shall
not file a Registration Statement or any such prospectus or any
amendments or supplements thereto to which the holders of a
majority of the Registrable Securities shall reasonably object in
good faith, provided that, the Company is notified of such
objection in writing no later than five (5) trading days after the
Investors have been so furnished copies of a Registration Statement
or one (1) trading day after the Investors have been so furnished
copies of any related prospectus or amendments or supplements
thereto.
(iii)
The Company shall
(A) prepare and file with the SEC such amendments, including
post-effective amendments, to a Registration Statement and the
prospectus used in connection therewith as may be necessary to keep
a Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and
prepare and file with the SEC such additional Registration
Statements in order to register for resale under the Securities Act
all of the Registrable Securities, (B) cause the related prospectus
to be amended or supplemented by any required prospectus supplement
(subject to the terms of this Agreement), and, as so supplemented
or amended, to be filed pursuant to Rule 424, (C) respond as
promptly as reasonably possible to any comments received from the
SEC with respect to a Registration Statement or any amendment
thereto, and (D) comply in all material respects with the
applicable provisions of the Securities Act and the Exchange Act
with respect to the disposition of all Registrable Securities
covered by a Registration Statement during the applicable period in
accordance (subject to the terms of this Agreement) with the
intended methods of disposition by the Investors thereof set forth
in such Registration Statement as so amended or in such Prospectus
as so supplemented.
9
(iv)
If during the
Effectiveness Period, the number of Registrable Securities at any
time exceeds 100% of the number of shares of Common Stock then
registered in a Registration Statement, then the Company shall file
as soon as reasonably practicable, but in any case prior to the
applicable Filing Date, an additional Registration Statement
covering the resale by the Holders of not less than the number of
such Registrable Securities.
(v)
The Company shall
notify the holders of Registrable Securities to be sold (which
notice shall, pursuant to clauses (C) through (F) hereof, be
accompanied by an instruction to suspend the use of the prospectus
until the requisite changes have been made) as promptly as
reasonably possible (and, in the case of (A)(1) below, not less
than one (1) trading day prior to such filing) and (if requested by
any such person) confirm such notice in writing no later than one
(1) trading day following the day (A) (1) when a prospectus or any
prospectus supplement or post-effective amendment to a Registration
Statement is proposed to be filed, (2) when the SEC notifies the
Company whether there will be a “review” of such
Registration Statement and whenever the SEC comments in writing on
such Registration Statement, and (3) with respect to a Registration
Statement or any post-effective amendment, when the same has become
effective, (B) of any request by the SEC or any other federal or
state governmental authority for amendments or supplements to a
Registration Statement or prospectus or for additional information,
(C) of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the
effectiveness of a Registration Statement covering any or all of
the Registrable Securities or the initiation of any proceedings for
that purpose, (D) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any
proceeding for such purpose, (E) of the occurrence of any event or
passage of time that makes the financial statements included in a
Registration Statement ineligible for inclusion therein or any
statement made in a Registration Statement or prospectus or any
document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any
revisions to a Registration Statement, prospectus or other
documents so that, in the case of a Registration Statement or the
prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading, and (F) of the occurrence or existence of any
pending corporate development with respect to the Company that the
Company believes may be material and that, in the determination of
the Company, makes it not in the best interest of the Company to
allow continued availability of a Registration Statement or
prospectus, provided, however, in no event shall any
such notice contain any information which would constitute
material, non-public information regarding the Company or any of
its subsidiaries.
(vi)
The Company shall
use its best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order stopping or suspending the
effectiveness of a Registration Statement, or (ii) any suspension
of the qualification (or exemption from qualification) of any of
the Registrable Securities for sale in any jurisdiction, at the
earliest practicable time.
(vii)
Subject to the
terms of this Agreement, the Company hereby consents to the use of
such prospectus and each amendment or supplement thereto by each of
the selling Investors in connection with the offering and sale of
the Registrable Securities covered by such prospectus and any
amendment or supplement thereto, except after the giving of any
notice pursuant to Section 5(g)(v).
(viii)
If requested by an
Investor, the Company shall cooperate with such Investor to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be delivered to a transferee
pursuant to a Registration Statement, and to enable such
Registrable Securities to be in such denominations and registered
in such names as any such Investor may request.
(ix)
The Company may
require each selling Investor to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially
owned by such Investor and, if required by the SEC, the natural
persons thereof that have voting and dispositive control over the
shares and the status of Investor as, or affiliation of Investor
with, a broker-dealer.
10
6. Lock
Up Agreement.
(a) Except
as stated in 6(b) below, during the period commencing on the date
hereof and ending on the thirty (30) month anniversary of the date
hereof (such period, the “Lock Up Period”), each
Investor acknowledges and agrees that it will not (1) offer, sell,
contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, pledge, hypothecate, grant any
option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, the shares of Common Stock
purchased by such Investor pursuant to this Agreement; or (2) enter
into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of
the shares of Common Stock purchased by such Investor pursuant to
this Agreement, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of the shares of
Common Stock, in cash or otherwise, at any time when the
Registration Statement is effective. Except as stated in 6(b)
below, each Investor further agrees not to enter into any Private
Transaction (as defined below) involving the shares of Common Stock
purchased pursuant to this Agreement unless the proposed transferee
agrees to be bound by all the provisions in this Section 6 prior to
any such Private Transaction. Any waiver or termination by the
Company of the requirements of this Section 6 shall apply to all
Investors, pro rata, based
on the number of shares of Common Stock purchased by such Investor
in the Common Stock Offering. “Private Transaction”
means any privately negotiated sale of shares of Common Stock by an
Investor that is not effected pursuant to a Registration
Statement.
(b) Notwithstanding
anything to the contrary contained herein, the lock-up restrictions
contained in this Section 6 shall not apply in the following
circumstances:
(i)
The transfer of the shares of Common Stock
purchased pursuant to this Agreement to any Permitted Transferee;
provided, however, that such Permitted Transferee agrees in writing
to be subject to the restrictions of this Section 6.
“Permitted
Transferee” means (i) an
affiliate (within the meaning of Rule 12b-2 under the Exchange Act)
of an Investor, (ii) any executor, administrator or testamentary
trustee of an Investor’s estate if such Investor dies, (iii)
any person or entity receiving the shares of Common Stock purchased
pursuant to this Agreement by an Investor by will, intestacy laws
or the laws of descent or survivorship, (iv) any trust (including
without limitation an inter vivos trust), partnership or limited
liability company for the direct or indirect benefit of any
Investor and/or the immediate family of such Investor for estate
planning purposes of which there are no principal beneficiaries
other than an Investor or one or more family members of such
Investor, or (v) any corporation, partnership, limited liability
company or similar entity controlled by such Investor and of which
there are no principal beneficiaries or owners other than such
Investor or one or more family members of such
Investor.
(ii)
After the six (6) month anniversary of the Closing,
each Investor may offer, sell, contract to sell, pledge or
otherwise dispose of shares of Common Stock purchased hereunder
(subject to restrictions under applicable law, including the
Exchange Act and Rule 144), provided that (i) the aggregate sales by each Investor on
any given trading day shall not exceed the highest of (A) seven
percent (7%) of the average daily trading volume of the Common
Stock from the preceding five (5) trading days, (B) seven percent
(7%) of the average daily trading volume of the Common Stock from
the date of such sale and the preceding four (4) trading days, or
(C) the amount of shares such Investor would have been permitted to
sell pursuant to the applicable limitations of Rule 144, including
if applicable the volume limitation, had the Registration Statement
not been effective, and (ii) the aggregate sales by each investor
during any six (6) month period shall not exceed twenty-five
percent (25%) of the Common Stock originally purchased by such
Investor hereunder.
(iii)
Any
Private Transaction of at least 100,000 shares of Common Stock
(subject to adjustment for any stock splits, stock dividends,
recapitalizations and similar events) by any Investor or of shares
of Common Stock for a gross purchase price of at least $100,000 to
a single entity or to a broker for at most two
entities.
(iv)
Sales
made by Investors during any period when the last reported sale
price of the Common Stock on the applicable trading market is at
least $4.00 (subject to adjustment for any stock splits, stock
dividends, recapitalizations and similar events).
(v)
Sales
made by Investors in connection with any third party tender offer,
merger or similar transaction effected by third party that results
or is intended to result (in any one or series of transactions) in
a change in control of the Company, issuer tender offer,
liquidation, or in the event the Common Stock is no longer
registered pursuant to Section 12 of the Securities Exchange
Act.
(c) The
Company agrees that any other selling stockholders whose securities
are registered on the Registration Statement shall agree to lock-up
restrictions that are consistent in all respects with the
restrictions contained in this Section 6 with respect to all shares
of Common Stock held by such stockholders.
11
7. Board
Composition.
The Company agrees to
appoint ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and one person designated by Zulu Holdings
LLC (“Zulu”)
and approved by the Board of Directors of the Company (the
“Joint
Designee” and, together with ▇▇.
▇▇▇▇▇▇▇▇▇, the “Board
Designees”) to the Board of
Directors and agrees to cause to be created vacancies for such
purpose, to the extent necessary; provided, however,
that no such appointment of the Joint Designee shall be required
unless such Joint Designee shall be qualified and suitable to serve
as a member of the Board of Directors under all applicable legal,
regulatory and stock market requirements;
and provided,
further, that
no such appointments shall be required to be maintained upon Zulu
ceasing to own at least eight percent (8%) of the outstanding
shares of Common Stock of the Company on a fully diluted basis. As
soon as is reasonably practicable following the Closing, the
Company agrees to appoint ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as
the Joint Designee, if each of them remains willing, and agrees to
cause to be created vacancies for such purpose. In the event that
either ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ is unwilling or unable
to serve as a Joint Designee, then the Company shall appoint a
replacement Board Designee that is designated by Zulu, subject to
the approval of a majority of the independent members of the Board
of Directors of the Company other than the Board Designees,
replacement Board Designees, officers of the Company, and
representatives, designees or affiliates of beneficial owners of
more than 5% of the then outstanding Common Stock. The Company
further agrees to appoint ▇▇. ▇▇▇▇▇▇▇▇▇ to the Nominating Committee
of the Board of Directors for so long as he remains a member of the
Board of Directors, and to cause the Nominating Committee to hold
regular meetings during such period.
8. Covenants.
(a) During the Lock Up
Period, the Company shall not designate or issue any class or
series of capital stock with rights or preferences superior to the
Common Stock without the prior written consent of Zulu, provided that nothing in this Section
8(a) shall prohibit the Company from designating and issuing shares
of preferred stock (i) solely for purposes of imposing a beneficial
ownership limitation on certain investors, (ii) with equal voting
and economic rights to the Common Stock, and (iii) that
specifically exempt any shares of Common Stock (as well as any
securities designated or issued pursuant to stock splits, stock
dividends, recapitalizations and similar events) held by
Zulu from such beneficial
ownership limitation.
(b) The Company agrees
to use its commercially reasonable efforts to list its shares on
the New York Stock Exchange, the Nasdaq Stock Market or another
securities exchange approved by Zulu, provided that under no circumstances
shall the Company be required to conduct a reverse split in order
to effect such a listing, and shall have no obligation to list on
any exchange until it otherwise meets all applicable quantitative
standards with respect to such exchange.
(c) The Company agrees
to use its reasonable best efforts to enter into negotiations with
Motorola to extend the Company’s existing licensing agreement
with Motorola on terms reasonably satisfactory to the
Company.
(d) The
Company agrees that the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ may visit the company at
least once every two (2) months and meet with the Company’s
Chief Executive Officer and/or President on such
visits.
(e) The Company agrees
that so long as the Company is required to appoint the Board
Designees, the Company shall deliver to Zulu monthly flash reports to the extent
the Company prepares such reports in the ordinary course of
business and other existing documents relating to the
Company’s financial condition, business, prospects, or
corporate affairs as reasonably requested by Zulu.
(f) During the Lock Up
Period,1 if the Company proposes to issue Common
Stock or common stock equivalents for cash consideration of
$500,000 or greater, in one or more transactions, with the primary
purpose of raising capital (each, a “Subsequent Financing”),
Zulu shall have the right to
participate in each such Subsequent Financing in an amount
necessary to maintain Zulu’s pro-rata ownership of the
Company (calculated on a fully-diluted basis) on the same terms,
conditions and price provided for in such Subsequent Financing (the
“Participation
Rights”). The Company will provide Zulu written notice (the
“Subsequent
Financing Notice”) detailing the terms of the
Subsequent Financing at least ten (10) trading days prior to the
closing of a Subsequent Financing. Zulu will have the option to participate in
each Subsequent Financing for a period commencing on the date the
Subsequent Financing Notice is received by Zulu and ending on the date that is five
(5) trading days prior to the closing of a Subsequent Financing.
Without first complying with the
foregoing provisions, the Company may conduct a Subsequent
Financing as long as the Company, within five (5) Business Days
following the closing of such Subsequent Financing, offers to sell
an additional amount of Common Stock or common stock equivalents to
Zulu on the same terms and conditions as issued to those
participants in the Subsequent Financing, in an amount and manner
which provides Zulu with the same purchase price (subject to
adjustment for any stock splits, stock dividends, recapitalizations
and similar events) and rights as were provided to other Investors
in such Subsequent Financing, and after giving effect to such sale
to Zulu, results in Zulu having the same pro rata holding of Common
Stock or common stock equivalents of the Company held by Zulu
immediately prior to such Subsequent Financing.
12
9. Use
of Proceeds. The Purchase Price received by the Company
pursuant hereto may be used for working capital and other general
corporate purposes, which may include, among other things, working
capital, product development, acquisitions, capital expenditures,
and other business opportunities.
Notwithstanding the foregoing, within ninety (90) days of the date
hereof, the Company and Zulu shall each use commercially reasonable
efforts to agree on an investment plan detailing the use of the
Purchase Price proceeds received hereunder and other investments
contemplated by the Company. In addition, subject to the
Company and Minim Inc. (“Minim”) reaching agreement on
costs, selling price, revenue sharing, product features/functions,
timing, and commercial terms, and subject to acceptable test
performance results, the Company will use its commercially
reasonable efforts to incorporate Minim value-add software
capability into one or more Motorola branded DOCSIS gateways or
routers to be sold into each of the E/Retail and Service Provider
channels and to use a portion of the Purchase Price received
hereunder for such purpose.
10. Benefit
of Agreement. This Agreement
shall inure to the benefit of and be binding upon each of the
parties hereto, and their heirs, beneficiaries, successors,
assignees and legal representatives, as may be applicable.
Zulu
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ are intended
third party beneficiaries of this Agreement and may each enforce
the Agreement as if they were originally a party to this
Agreement.
11. Successors
and Assigns. Except as
otherwise expressly provided herein, this Agreement shall bind and
inure to the benefit of the Company and each Investor and their
respective successors and assigns. Notwithstanding the foregoing,
the registration rights provided in Section 5 are personal to the
Investors and the board composition rights provided in Section 7
are personal to Zulu, and in each case are not transferable without
the prior consent of the Company. Any transfer of such rights
without the consent of the Company shall be
void.
12. Entire
Agreement. This Agreement is
the complete and entire understanding between the parties as to the
transactions contemplated hereby, and supersedes all prior
agreements with respect thereto. This Agreement may be executed in
any number of counterparts and may not be altered or amended other
than by written agreement signed by all the parties
hereto.
13. Amendments,
Waivers and Consents. Any
provision in this Agreement to the contrary notwithstanding,
amendments to, changes in or additions to this Agreement may be
made, and compliance with any covenant or provision set forth
herein may be omitted or waived, if the Company shall obtain
consent thereto in writing from Investors purchasing at least a
majority of the shares of Common Stock sold in the Common Stock
Offering.
14. Governing
Law. This Agreement shall be governed by the internal laws
of the State of Delaware. The parties (a) agree that any legal
suit, action or proceeding arising out of or relating to this
Agreement shall be instituted exclusively in the State of Delaware,
(b) waive any objection which such party may have now or hereafter
to the venue of any such suit, action or proceeding, and (c)
irrevocably consents to the jurisdiction of the State of Delaware
in any such suit, action or proceeding. The parties further agree
to accept and acknowledge service of any and all process which may
be served in any such suit, action or proceeding in the State of
Delaware. THE PARTIES HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT OR AGREEMENT
CONTEMPLATED HEREBY.
15. Survival.
The representations, warranties, covenants and agreements made
herein shall survive any investigation made by any Investor and for
a period of eighteen (18) months following the Closing, provided
that all covenants and agreements of the parties contained herein
shall survive the Closing indefinitely or for the period of time
explicitly specified therein.
16. Interpretation.
This Agreement shall be construed without regard to any presumption
or rule requiring construction or interpretation against the party
drafting an instrument or causing any instrument to be
drafted.
17. Confidential
Information. The information
contained in this Agreement is confidential and proprietary to the
Company and is being submitted to prospective investors in the
Company solely for such investors’ confidential use with the
express understanding that, without the prior express written
permission of the Company, such persons will not release this
Agreement, discuss the information contained herein or use this
Agreement for any purpose other than evaluating a potential
investment in the Company through the purchase of shares of Common
Stock. A prospective investor, by accepting delivery of this
Agreement, agrees to promptly return to the Company this Agreement
and any other documents or information furnished by the Company if
(a) the prospective investor elects not to purchase the shares of
Common Stock offered hereby, (b) the prospective investor’s
proposed purchase of Common Stock is not accepted by the Company,
or (c) the offering of the shares of Common Stock is terminated or
withdrawn.
[Signature
page follows]
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date provided below.
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By:
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Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title:
Chief Executive Officer
and
Acting Chief Financial Officer
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INVESTORS:
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The
Investors executing the Signature Page in the form attached hereto
as Annex A and delivering the same to the Company or its agents
shall be deemed to have executed this Agreement and agreed to the
terms hereof.
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4841-8309-9283.5
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14
Annex A
Investor Counterpart Signature Page
The
undersigned, desiring to: (i) enter into this Stock Purchase
Agreement dated as of May __, 2019 (the “Agreement”), with the undersigned,
Zoom Telephonics, Inc., a Delaware corporation (the
“Company”), in
or substantially in the form furnished to the undersigned and (ii)
purchase the shares of Common Stock as set forth below, hereby
agrees to purchase such shares of Common Stock from the Company as
of the Closing Date and further agrees to join the Stock Purchase
Agreement as a party thereto, with all the rights and privileges
appertaining thereto, and to be bound in all respects by the terms
and conditions thereof. The undersigned specifically acknowledges
having read the representations of the Investors in the Agreement
and hereby represents that the statements contained therein are
complete and accurate with respect to the undersigned as an
Investor.
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Name of
Investor:
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If an entity:
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Print
Name of Entity:
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By:
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Name:
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Title:
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If an individual:
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Print
Name:
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Signature:
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If joint individuals:
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Print
Name:
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Signature:
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All Investors:
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Address:
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Telephone
No.:
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Facsimile
No.:
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Email
Address:
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Taxpayer
ID Number:
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(SSN
for individuals)
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The
Investor hereby elects to purchase ________ Shares (to be completed by Investor) at a
purchase price of $1.10 per Share under the Agreement at a total
Purchase Price of
$______ (to be completed by
Investor)
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15