{"id":43376,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/conversion-agreement-mti-technology-corp-the-canopy-group-and.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"conversion-agreement-mti-technology-corp-the-canopy-group-and","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/conversion-agreement-mti-technology-corp-the-canopy-group-and.html","title":{"rendered":"Conversion Agreement &#8211; MTI Technology Corp., The Canopy Group and Caldera Systems Inc."},"content":{"rendered":"<pre>                              CONVERSION AGREEMENT\n\n        THIS CONVERSION AGREEMENT (this 'Agreement') is executed as of December\n30, 1999 (the 'Effective Date') by and among MTI TECHNOLOGY CORPORATION, a\nDelaware corporation ('MTI'), THE CANOPY GROUP, INC., a Utah corporation ('CGI')\nand CALDERA SYSTEMS, INC., a Utah corporation (the 'Company'). Each of the\ncapitalized terms used but not otherwise defined herein shall have the meaning\nassigned to such term under the Agreement (as defined below).\n\n        WHEREAS, the Company has authorized 6,596,146 shares of Series A\nPreferred Stock (the 'Series A Preferred') for issuance;\n\n        WHEREAS, MTI and CGI desire to convert the MTI Shares (as defined\nbelow) and the CGI Shares (as defined below), respectively, into an equal number\nof shares of the Series A Preferred all as set forth below; and\n\n        WHEREAS, in consideration for the Company granting to MTI and CGI the\nright to convert the MTI Shares and CGI Shares into shares of the Series A\nPreferred, MTI and CGI have agreed to enter into the Waiver of Investor Rights\nagreement, the Voting Agreement and the Amended and Restated Investor Rights\nAgreement, all dated as of the date hereof; and\n\n        WHEREAS, MTI, CGI and the Company desire to enter into this Agreement to\nprovide the terms and conditions upon which the MTI Shares and the CGI Shares\nwill be converted to shares of the Series A Preferred;\n\n        NOW THEREFORE, in exchange for good and valuable consideration, the\nreceipt and sufficiency of which are hereby acknowledged, MTI, CGI and the\nCompany agree as follows:\n\n        1.    Conversion. As of the Effective Date, CGI hereby elects to convert\n5,273,974 shares of the common stock of the Company (the 'Common Stock') held by\nCGI (the 'CGI Shares') into a number of shares of the Series A Preferred equal\nto the number of the CGI Shares and MTI hereby elects to convert 1,322,172\nshares of the Common Stock held by MTI (the 'MTI Shares') into the number of\nshares of the Series A Preferred equal to the number of the MTI Shares.\n\n        2.    Representations, Warranties and Covenants\n\n               (a)    Of the Company. The Company hereby makes the following\n        representations, warranties and covenants in favor of each of MTI and\n        CGI:\n\n                    (i)    Authorized Shares. The shares of the Series A\n               Preferred identified in Section 1 of this Agreement constitute\n               duly authorized shares of the capital stock of the Company the\n               issuance of which to MTI and CGI has been duly authorized by the\n               board of directors of the Company.\n\n                    (ii)    Validly Issued. Upon issuance of the shares of the\n               Series A Preferred identified in Section 1 of this Agreement and\n               receipt by the Company of the certificates representing the MTI\n               Shares and the CGI Shares properly endorsed and accompanied by\n               all instruments necessary to effect the transfer of such shares\n               of the Common Stock to the Company (collectively, the\n               'Certificates'), such shares of the Series A Preferred shall be\n               validly issued and\n   2\n\n\n     outstanding, fully paid, nonassessable and free and clear of all liens and\n     encumbrances arising through the actions of the Company or its directors,\n     officers, employees or agents.\n\n          (iii)  ISSUANCE OF SERIES A PREFERRED. Upon the Company's receipt of\n     the Certificates and the duly executed counterparts of this Agreement from\n     each of CGI and MTI, the Company shall issue the shares of the Series A\n     Preferred specified in Section 1 of this Agreement to the party identified\n     in Section 1 of this Agreement as electing to receive such shares.\n\n     (b)  Of MTI and CGI. Each of MTI and CGI (each being, individually, a\n'Shareholder') hereby make the following representations, warranties and\ncovenants with respect to such Shareholder in favor of the Company.\n\n          (i)    TITLE TO SHARES. Such Shareholder is the owner of record of the\nMTI Shares, in the case of MTI, or the CGI Shares, in the case of CGI, and owns\nsuch shares of the Common Stock free and clear of all liens, claims and\nencumbrances.\n\n          (ii)   AUTHORIZATION. Such Shareholder has full power and authority to\nenter into this Agreement, and this Agreement, when executed and delivered, will\nconstitute a valid and legally binding obligation of such Shareholder. The\nindividual signing this Agreement on behalf of such Shareholder is duly\nauthorized to execute this Agreement for and on behalf of such Shareholder. All\norganizational action required to be taken to authorize (i) the execution and\ndelivery of this Agreement by the undersigned individual for and on behalf of\nsuch Shareholder and (ii) the performance by such Shareholder of such\nShareholder's obligations hereunder has been taken.\n\n          (iii)  PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with\nsuch Shareholder in reliance upon such Shareholder's representation to the\nCompany, which, by such Shareholder's execution of this Agreement, such\nShareholder hereby confirms, that the shares of Series A Preferred to be\npurchased by such Shareholder and any securities issuable upon conversion\nthereof (such shares of the Series A Preferred and securities issuable upon\nconversion thereof being, collectively, the 'Securities') are being and will be\nacquired for investment for such Shareholder's own account, not as nominee or\nagent, and not with a view to the resale or distribution of any part thereof,\nand that neither such Shareholder nor any of its officers, members, managers or\nrepresentatives with the authority, responsibility or power to make a decision\nwith regard to the purchase or sale of the Securities or any portion thereof\n(collectively, such 'Shareholder's Representatives') has any present intention\nof selling, granting any participation in or otherwise distributing the same.\nSuch Shareholder and such Shareholder's Representatives are familiar with the\nphrase 'acquired for investment and not with a view to distribution' as it\nrelates to the Securities Act of 1933, as amended (the 'Securities Act') and\nstate securities laws and the special meaning given to such term by the\nSecurities and Exchange Commission (the 'SEC'). By executing this Agreement,\nsuch Shareholder further represents that such Shareholder does not have any\ncontract, undertaking, agreement or arrangement with any person to sell,\ntransfer or grant participations to such person or to any third person, with\nrespect to any of the Securities.\n\n\n                                       2\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n   3\n                (iv)    Reliance Upon Shareholder's Representations and\n        Warranties. Such Shareholder and such Shareholder's Representatives\n        understand that the Securities are not, and upon issuance of any of the\n        Securities on conversion of shares of the Series A Preferred, at the\n        time of issuance may not be, registered under the Securities Act on the\n        ground that the sale provided for in this Agreement and the issuance of\n        securities hereunder is exempt from registration under the Securities\n        Act, and that the Company's reliance on such exemption is predicated on\n        such Shareholder's representations and warranties set forth herein. Such\n        Shareholder and such Shareholder's Representatives realize that the\n        basis for the exemption may not be present if, notwithstanding such\n        representations and warranties, such Shareholder or any of such\n        Shareholder's Representatives has in mind merely acquiring the\n        Securities or any portion thereof for a fixed or determinable period in\n        the future, or for a market rise, or for sale if the market does not\n        rise. Neither such Shareholder nor any of such Shareholder's\n        Representatives has any such intention. Furthermore, such Shareholder\n        hereby covenants to indemnify the Company for and hold the Company\n        harmless from all losses, costs, damages, liabilities and expenses\n        arising out of or in connection with any breach or inaccuracy of any\n        representation, warranty or covenant made by such Shareholder in this\n        Letter.\n\n                (v)     Receipt of Information. Such Shareholder and such\n        Shareholder's Representatives have received all the information they\n        consider necessary or appropriate for deciding whether to purchase the\n        Securities and each portion thereof. Such Shareholder further\n        represents that such Shareholder and such Shareholder's Representatives\n        have had an opportunity to ask questions and receive answers from the\n        Company regarding the terms and conditions of the offering of the\n        Securities and each portion thereof and the business, properties,\n        prospects and financial condition of the Company and to obtain\n        additional information necessary to verify the accuracy of any\n        information furnished to such Shareholder or such Shareholder's\n        Representatives or to which such Shareholder or such Shareholder's\n        Representatives had access. Neither such Shareholder nor any of such\n        Shareholder's Representatives has received, or is relying upon, any\n        representations, written or oral, from the Company, or its officers,\n        directors, employees, attorneys or agents. In making the decision to\n        purchase the Securities and each portion thereof, such Shareholder and\n        such Shareholder's Representatives have relied solely upon their review\n        of this Agreement, the Articles of Amendment to the Company's Articles\n        of Incorporation designating the terms and conditions of the Series A\n        Preferred, and independent investigations made by such Shareholder or\n        such Shareholder's Representatives without assistance of the Company or\n        its officers, directors, employees, attorneys or agents. Such\n        Shareholder further represents and affirms that none of the following\n        information has ever been represented, guaranteed or warranted to such\n        Shareholder or any of its officers, members, managers or\n        representatives, expressly or by implication, by any person:\n\n                        (1)     The approximate or exact length of time that\n                such Shareholder will be required to remain a shareholder of the\n                Company,\n\n\n                                       3\n   4\n                (2)     The percentage of profit and\/or amount of or type of\n        consideration, profit or loss to be realized, if any, as a result of an\n        investment in the Company; or\n\n                (3)     The possibility that the past performance or experience\n        on the part of the Company or any affiliate, officer, director, employee\n        or agent of the Company, might in any way indicate or predict the\n        results of ownership of the Securities or the potential success of the\n        Company's operations.\n\n        (vi)    Investment Experience. Such Shareholder represents that it and\nsuch Shareholder's Representatives are experienced in evaluating and investment\nin private placement transactions of securities of companies in a similar stage\nof development as the Company and acknowledges that such Shareholder can bear\nthe economic risk of such Shareholder's investment and that such Shareholder's\nRepresentatives have such knowledge and experience in financial and business\nmatters that they are capable of evaluating the merits and risks of the\ninvestment in the Securities.\n\n        (vii)   Accredited Investor. Such Shareholder is an Accredited\nInvestor, as such term is defined in Regulation D promulgated under the\nSecurities Act.\n\n        (viii)  Restricted Securities. Such Shareholder and each of such\nShareholder's Representatives understands that neither the Securities nor any\nportion thereof may be sold, transferred or otherwise disposed of without\nregistration under the Securities Act or an exemption therefrom, and that in\nthe absence of an effective registration statement covering the Securities (or\nsuch portion thereof) or an available exemption from registration under the\nSecurities Act, the Securities and each portion thereof must be held\nindefinitely. Such Shareholder and each of such Shareholder's Representatives\nrealizes that the Securities and each portion thereof are unlikely to qualify\nfor sale or other disposition under Rule 144 issued by the SEC. Furthermore,\nsuch Shareholder and each of such Shareholder's Representatives is aware that\nneither the Securities nor any portion thereof may be sold pursuant to Rule 144\npromulgated under the Securities Act unless all of the conditions of that Rule\nare met. Among the conditions for use of Rule 144 may be the availability of\ncurrent information to the public about the Company. Such information is not\nnow available and the Company has no present plans to make such information\navailable. Such Shareholder further acknowledges that the Company is under no\nobligation to register the Securities or any portion thereof under the\nSecurities Act or under any state securities laws or to assist in complying\nwith any exemption from such registration if such Shareholder should at a later\ndate wish to dispose of the Securities or such portion.\n\n        (ix)    Legends. To the extent applicable, each certificate or other\ndocument evidencing any of the Securities shall be endorsed with the legends\nsubstantially in the form set forth below:\n\nThe following legend under the Securities Act:\n\n                                       4\n\n   5\n            THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE\n            SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,\n            TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL\n            REGISTERED UNDER SUCH ACT, OR UNLESS CALDERA SYSTEMS, INC. (THE\n            'COMPANY') HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE,\n            SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION\n            IS NOT REQUIRED.\n\n            Also the Company shall endorse such certificates with each legend\n      imposed or required by the Company's Articles of Incorporation , the\n      Company's Bylaws or applicable state securities laws.\n\n                  (x)   Public Sale. Such Shareholder agrees not to make,\n            without the prior written consent of the Company, any public\n            offering or sale of any of the Securities, although permitted to do\n            so pursuant to Rule 144(k) promulgated under the Securities Act,\n            until the earlier of (i) the date on which the Company effects its\n            initial registered public offering pursuant to the Securities Act or\n            (ii) the date on which it becomes a registered company pursuant to\n            Section 12(g) of the Securities Exchange Act of 1934, as amended, or\n            (iii) five years after the Effective Date.\n\n      3.    Governing Law. This Agreement shall be governed by the laws of the\nState of Utah, without reference to the choice of laws rules of such state.\n\n      4.    Attorneys' Fees. In the event any party hereto fails to perform any\nof its obligations under this Agreement or the transactions contemplated hereby\nor in the event a dispute arises concerning the meaning or interpretation of any\nprovision of this Agreement, the defaulting party or the party not prevailing in\nsuch dispute, as the case may be, shall pay any and all reasonable costs and\nexpenses incurred by the other party in enforcing or establishing its rights\nhereunder, including court costs and reasonable attorneys' fees.\n\n      5.    Successors and Assigns. This Agreement shall be binding upon each\nparty hereto and its respective successors and assigns.\n\n      6.    Severability. If any term of provision of this Agreement or any\napplication thereof shall be held invalid or unenforceable, the remainder of\nthis Agreement and any other application of such term or provision shall not be\naffected thereby.\n\n      7.    Entire Agreement. This Agreement constitutes the entire agreement of\nthe parties with respect to the subject matter hereof, and may not be changed or\nmodified except by an agreement in writing signed by the parties hereto. The\nCompany, MTI and CGI hereby agree that all prior or contemporaneous oral\nunderstandings, agreements or negotiations relative to the subject matter hereof\nare merged into and revoked by this Agreement.\n\n      8.    Interpretation. All provisions of this Agreement shall be\ninterpreted according to their fair meaning and shall not be strictly construed\nagainst any party.\n\n      9.    Counterparts; Facsimile Signature. This Agreement may be executed in\none or more counterparts, each of which shall be an original, but all of which,\ntaken together, shall\n\n\n                                       5\n   6\nconstitute one agreement. An original signature or copy thereof transmitted by\nfacsimile shall constitute an original signature for purposes of this Agreement.\n\n               [Signatures are set forth on the following page.]\n\n\n6\n   7\n     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the\nEffective Date.\n\n                                               COMPANY\n\n                                               CALDERA SYSTEMS, INC., a Utah\n                                               corporation\n\n                                               By: \/s\/ RANSOM H. LOVE\n                                                   --------------------------\n\n                                               Name: Ransom H. Love\n                                                     ------------------------\n\n                                               Title: President &amp; CEO\n                                                      -----------------------\n\n\n                                               CGI\n\n                                               THE CANOPY GROUP, INC., a Utah\n                                               corporation\n\n                                               By: \/s\/ RAYMOND J. NOORDA\n                                                   --------------------------\n\n                                               Name:\n                                                     ------------------------\n\n                                               Title:\n                                                      -----------------------\n\n\n                                               MTI\n\n                                               MTI TECHNOLOGY CORPORATION, a\n                                               Delaware corporation\n\n                                               By: \/s\/ DALE R. BOND\n                                                   --------------------------\n\n                                               Name: Dale R. Bond\n                                                     ------------------------\n\n                                               Title: Sr. Vice President &amp; Chief Financial Officer\n                                                      -----------------------\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6993],"corporate_contracts_industries":[9513],"corporate_contracts_types":[9622,9625],"class_list":["post-43376","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-caldera-systems-inc","corporate_contracts_industries-technology__software","corporate_contracts_types-planning","corporate_contracts_types-planning__exchange"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43376","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43376"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43376"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43376"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43376"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}