Document:

Exhibit 10.60

Exhibit 10.60

Execution Copy

TEXAS EMERGING TECHNOLOGY FUND

AWARD AND SECURITY AGREEMENT

BETWEEN THE STATE OF TEXAS

AND

1ST DETECT CORPORATION

THIS TEXAS EMERGING TECHNOLOGY FUND AWARD AND SECURITY AGREEMENT (this “Agreement”)
shall be effective as of the last date of execution hereof by the parties hereto, as reflected on
the signature page hereto (the “Effective Date”), and is by and between the State of Texas,
acting by and through the Office of the Governor Economic Development and Tourism (the
“OOGEDT”) and 1st Detect Corporation, a Delaware corporation (the
“Company”).

RECITALS

A. Pursuant to Texas Government Code Chapter 490, the State of Texas has allocated $300
million, to be used with the express written approval of the Governor, Lieutenant Governor, and
Speaker of the House of Representatives to develop and diversify the economy of the State of Texas
by expediting innovation and commercialization of research; attracting, creating, or expanding
private sector entities that will promote a substantial increase in high-quality jobs; and
increasing higher education applied technology research capabilities.

B. Article III, Section 52-a of the Texas Constitution expressly authorizes the State of Texas
to use public funds for the public purposes of development and diversification of the economy of
the State of Texas, the elimination of unemployment or underemployment in the State of Texas, or
the development of commerce in the State of Texas.

C. The Governor, Lieutenant Governor, and Speaker have each approved the
Award (as defined below) from the Emerging Technology Fund to the Company, as evidenced in the
letter attached as Exhibit A hereto.

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D. To ensure that the benefits the OOGEDT provides under this Agreement are utilized in a
manner consistent with Article III, Section 52-a of the Texas Constitution, and other applicable
laws, the Company has agreed to comply with certain conditions and deliver certain performance, in
exchange for receiving the benefits associated with the Award to the Company.

E. The Company and the OOGEDT desire to set forth herein the provisions relating to the
awarding of such monies and the disbursement thereof to the Company.

IN CONSIDERATION of the Award and the premises, covenants, agreements and provisions contained
in this Agreement, the parties to this Agreement, intending to be legally bound, agree as follows:

Article I

DEFINITIONS

Section 1.01 Defined Terms. As used in this Agreement, the following terms shall have the
meanings set out respectively after each such term (the meanings to be equally applicable to both
the singular and plural forms of the terms defined), unless the context specifically indicates
otherwise:

	 	A.	 	“Additional Amount” — has the meaning set forth in Section 3.03.

	 
	 	B.	 	“Agreement” — has the meaning set forth in the preamble.

	 
	 	C.	 	“Application” — has the meaning set forth in Section 2.02.

	 
	 	D.	 	“Award” — means an award of monies from the OOGEDT to the Company in an amount
equal to the sum of the Initial Amount plus the Additional Amount that may be disbursed
pursuant to the terms and conditions of this Agreement.

	 
	 	E.	 	“Collateral” — has the meaning set forth in Section 4.01.

	 
	 	F.	 	“Common Stock” — has the meaning set forth in the Unit.

	 
	 	G.	 	“Company” — has the meaning set forth in the preamble.

	 
	 	H.	 	“Company Affiliate” means a person who or that directly, or indirectly through
one or more intermediaries, controls the Company or is controlled by, or is under common
control with, such a person.

	 
	 	I.	 	“Company Associate” means, as of any particular date, a current shareholder of
the Company (including a holder of common stock, preferred stock or other capital stock of
the Company), a current debtholder of the Company, and a current holder of convertible
securities or holder of any right to purchase or acquire any capital stock of the Company.

	 
	 	J.	 	“Compliance Verification” — has the meaning set forth in Section 5.05.

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	 	K.	 	“Effective Date” — has the meaning set forth in the preamble.

	 
	 	L.	 	“Event of Default” — has the meaning set forth in Section 2.07.

	 
	 	M.	 	“GAAP” — has the meaning set forth in Section 1.01(U)(vi).

	 
	 	N.	 	“Initial Amount” — has the meaning set forth in Section 3.02.

	 
	 	O.	 	“Lien” — means, with respect to any asset, any mortgage, deed of trust, pledge,
hypothecation, assignment, charge, deposit arrangement, encumbrance, easement, lien
(statutory or other), security interest or other security arrangement relating to such
asset and any other preference, priority or preferential arrangement of any kind or nature
whatsoever relating to such asset.

	 
	 	P.	 	“Note” — has the meaning set forth in Section 3.04(B).

	 
	 	Q.	 	“Office of the Governor Economic Development and Tourism” — means the Economic
Development and Tourism Division within the Office of the Governor, and any designated
representatives thereof.

	 
	 	R.	 	“OOGEDT” — has the meaning set forth in the preamble.

	 
	 	S.	 	“Opinion Letter” — has the meaning set forth in Section 3.04(C).

	 
	 	T.	 	“Permitted Liens” — means, with respect to any Person, any of the following:

	 	(i)	 	Liens (1) with respect to the payment of taxes, fees, assessments or
other governmental charges or levies or (2) of suppliers, carriers, materialmen,
warehousemen, workmen or mechanics and other similar Liens, in each case imposed by
law or arising in the ordinary course of business, and, for each of the Liens in
clauses (1) and (2) above for amounts that are not yet due or that
are being contested in good faith by appropriate proceedings diligently conducted
and with respect to which adequate reserves or other appropriate provisions are
maintained on the books of such Person;

	 
	 	(ii)	 	Liens of a collection bank on items in the course of collection arising
under Section 4.208 of the Texas UCC or any similar section under the Uniform
Commercial Code of any other applicable state;

	 
	 	(iii)	 	Liens, pledges or cash deposits made in the ordinary course of
business (1) in connection with workers’ compensation, unemployment insurance or
other
types of social security benefits (other than any Lien imposed by ERISA), (2) to
secure the performance of bids, tenders, leases, sales or other trade contracts
(other than for the repayment of borrowed money) or (3) made in lieu of, or to
secure the performance of, surety, customs, reclamation or performance bonds (in
each case not related to judgments or litigation);

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	 	(iv)	 	judgment liens (not including those for the payment of taxes,
assessments or other governmental charges covered in (i) above) securing judgments
and other proceedings not greater than $25,000 and pledges or cash deposits made in
lieu of, or to secure the performance of, judgment or appeal bonds in respect of
such judgments and proceedings;

	 
	 	(v)	 	Liens (1) arising by reason of zoning restrictions, easements,
licenses, reservations, restrictions, covenants, rights-of-way, encroachments,
minor defects or irregularities in title (including leasehold title) and other
similar encumbrances, restrictions or limitations on the use of real property or
(2) consisting of leases, licenses or subleases granted by a lessor, licensor,
sublessor or sublicensor on its property (in each case other than capital leases)
otherwise permitted hereunder that, for each of the Liens in clauses (1)
and (2) above, do not, in the aggregate, materially (x) impair the value or
marketability of such real property or (y) interfere with the ordinary conduct of
the business conducted and proposed to be conducted at such real property;

	 
	 	(vi)	 	Liens of landlords and mortgagees of landlords (1) arising by statute
or under any lease or related contractual obligation entered into in the ordinary
course of business, (2) on fixtures and movable tangible property located on the
real property leased or subleased from such landlord, (3) for amounts not yet due
or that are being contested in good faith by appropriate proceedings diligently
conducted and (4) for which adequate reserves or other appropriate provisions are
maintained on the books of such Person to the extent required by generally accepted
accounting principals (“GAAP”);

	 
	 	(vii)	 	Liens arising by virtue of any statutory or common law provisions
relating to banker’s Liens, rights of set-off or similar rights and remedies as to
deposit accounts or other funds maintained with a depositary or financial
institution; and

	 
	 	(viii)	 	the title and interest of a lessor, sublessor, licensor or sublicensor in and to
personal property leased, subleased, licensed or sublicensed, in each case
extending only to such personal property and any Liens arising from UCC Financing
Statements filed in connection therewith.

	 	U.	 	“Person” — means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or governmental
agency or body.

	 
	 	V.	 	“Qualifying Liquidation Event” means (a) the sale, conveyance, or other
disposition of all or substantially all of the assets of the Company and its subsidiaries
(taken as a whole) to persons who are not then Company Associates (as hereinafter defined)
or Company Affiliates (as hereinafter defined), or (b) the sale of the Company’s
then-outstanding equity securities by the Company’s stockholders or the Company’s merger
into or consolidation with any other entity, in each such case, in which more than fifty
percent (50%) of the voting power of the Company is transferred to persons who are not then
Company Associates or Company Affiliates.

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	 	W.	 	“Right to Purchase” — has the meaning set forth in Section 3.04(B).

	 
	 	X.	 	“SEC” — means the United States Securities and Exchange Commission.

	 
	 	Y.	 	“Secured Obligations” — means all obligations of the Company and its successors
and assigns now or hereafter existing under this Agreement and the Unit (including the
Note), whether (i) for the prompt payment when due, whether at stated maturity or
otherwise) of principal, interest, costs, fees, expenses or otherwise (including the
payment of amounts which would become due but for the operation of the automatic stay under
Section 362 of the United States Bankruptcy Code, 11 U.S.C. § 362), and/or (ii) for the
prompt performance or payment when due of any other obligation of the Company and its
successors and assigns to the OOGEDT, now or hereafter owing, whether direct or indirect,
primary or secondary, fixed or contingent, joint or several, regardless of how created,
evidenced or arising.

	 
	 	Z.	 	“Security Term” — means the period commencing on the date of the disbursement
of the Initial Amount and ending on the earliest of the date on which (i) the Company has
paid all principal and interest due under the Note pursuant to the terms of this Agreement
and the Unit; (ii) the OOGEDT has fully exercised the Right to Purchase under the Unit; and
(iii) the OOGEDT’s Right to Purchase expires pursuant to the terms of the Unit.

	 
	 	AA.	 	“Texas Emerging Technology Fund” — means the “fund” as defined under the
Chapter 490 of the Texas Government Code.

	 
	 	BB.	 	“Texas UCC” — means the Uniform Commercial Code as from time to time in effect
in the State of Texas.

	 
	 	CC.	 	“Unit” — has the meaning set forth in Section 3.04(B).

	 
	 	DD.	 	“Unit Amendment” — has the meaning set forth in Section 3.02.

	 
	 	EE.	 	The following terms have the meanings given to them in the Texas UCC and terms used
herein without definition that are defined in the Texas UCC have the meanings given to them
in the Texas UCC (such meanings to be equally applicable to both the singular and plural
forms of the terms defined): “account”, “account debtor”, “as-extracted collateral”,
“certificated security”, “chattel paper”, “commercial tort claim”, “commodity contract”,
“deposit account”, “electronic chattel paper”, “equipment”, “farm products”, “fixture”,
“general intangible”, “goods”, “health-care-insurance receivable”, “instruments”,
“inventory”, “investment property”, “letter-of-credit right”, “proceeds”, “record”,
“securities account”, “security”, “supporting obligation” and “tangible chattel paper”.

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Article II

AWARD

Section 2.01 Award of Monies. The OOGEDT shall issue the Award to the Company and disburse
the proceeds in accordance with the conditions subsequent to its retention contained herein and the
other provisions of this Agreement.

Section 2.02 Use of Award Proceeds. The Company shall use the Award to expedite
commercialization that is intended to lead to an increase in high-quality jobs in the State of
Texas by adding the Award to its working capital and using the Award in the development of its
business, through acquisition of capital assets and/or reasonable and appropriate business expenses
only in furtherance of the commercialization of miniaturized chemical detectors as described in the
application previously submitted by the Company the OOGEDT (the “Application”).
Notwithstanding the foregoing, the Award shall not be used for repayment of debt, in any form,
including but not limited to (i) repayment to any members of the Company’s board of directors, its
officers, its investors, its shareholders or any other affiliates of the Company, (ii) any
restructuring of any existing debt (other than repayment of the Note pursuant to the terms of this
Agreement and the terms of the Unit, and other than accounts payable (excluding capital leases)
incurred in the ordinary course of business upon customary industry terms) or (iii) payment on any
capital leases.

Section 2.03 Commercialization Milestones. The Company commits to using all of its
reasonable efforts to meet the commercialization milestones attached as Exhibit C hereto
as promptly as practicable. Promptly following the attainment of any such milestone, the Company
shall provide the OOGEDT with sufficient evidence, to the satisfaction of the OOGEDT, that the
milestones have been met by the date listed for each milestone.

Section 2.04 Guarantee of Commercialization or Manufacturing/Principal Place of Business.
The Company agrees that a substantial percentage of any new or expanded commercialization or
manufacturing of any real or intellectual product by the Company resulting from the Award shall be
established in the State of Texas. New or expanded commercialization may include, but shall not
be limited to, the occurrence of the following in the State of Texas: employment, capital
investment, intellectual property development, manufacturing production, business expansion, and
university collaboration. Further, the Company agrees that it shall maintain its principal place
of business and its principal executive offices headquartered in the State of Texas throughout the
term of this Agreement.

Section 2.05 Use and Retention of Texas Suppliers. The Company shall use reasonable efforts
to use qualified Texas-based suppliers to provide products and services under this Agreement;
provided, however, that the Company may in its sole discretion select suppliers
and contractors based on program needs, scientific criteria, and industry standards.

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Section 2.06 Company Representations, Warranties and Covenants. Without limiting the
covenants, representations and warranties provided in other sections of this Agreement, including
without limitation those provided under Article IV hereof, the Company further covenants
with, and represents and warrants to the OOGEDT as of the Effective Date as follows:

A. The Company has all necessary corporate and legal authority to enter into, execute,
and deliver this Agreement, the Unit and all other documents referred to herein, and it has
taken all actions necessary to duly execute and deliver all such agreements, instruments and
documents.

B. The Company shall comply with all of the terms, conditions, provisions, covenants,
requirements, and warranties in this Agreement and all other documents referred to herein.

C. The Company has made no material false statement or misstatement of fact in connection
with its receipt of the Award, and all of the information it previously submitted to the
OOGEDT or which it shall submit to the OOGEDT in the future relating to the Award or the
disbursement of any of the Award is and shall be true and correct as of the date such
information is submitted to the OOGEDT.

D. The Company is not in violation of any provisions of its certificate of formation or
bylaws (or other charter documents) or of the laws of the State of Texas, the laws of the
state in which it was formed or any other federal, state or local statutes, laws, ordinances
and regulations applicable to the Company and its business, and there are no actions, suits,
or proceedings pending, or to its knowledge threatened, before any judicial body or
governmental authority against or affecting it, other than those specifically disclosed in the
Application, and it is not in default with respect to any order, writ, injunction, decree, or
demand of any court or any governmental authority which would impair its ability to enter into
this Agreement, execute and issue the Unit, or perform any of its obligations hereunder or
thereunder or as required by the transactions contemplated hereby.

E. Neither the execution and delivery of this Agreement, or any document referred to
herein, nor compliance with any of the terms, conditions, requirements, or provisions
contained in this Agreement or any documents referred to herein is prevented by, constitutes a
breach of, or shall result in a breach of, any term, condition, or provision of any agreement
or document to which the Company is now a party or by which it is bound.

F. The Company is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and any other jurisdiction in which it is
qualified to transact business as a foreign corporation, and has provided the OOGEDT
sufficient evidence of such, and certifies that it owes no delinquent taxes to any taxing
entity of the State of Texas as of the Effective Date.

G. Except as set forth on Schedule 2.06(G), the Company, directly or indirectly,
owns and has good title to or, in the case of leased or licensed property and assets, has
valid
leasehold or license interests in, all property and assets necessary for the conduct of
the Company’s business, in each case free and clear of all Liens and other encumbrances other
than Permitted Liens.

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H. Except as set forth on Schedule 2.06(H), there are no existing or
contemplated transactions of a material nature involving the Company by and between the
members of the Company’s board of directors, its officers, and/or its investors, shareholders
or other affiliates of the Company.

I. The Company is not reasonably susceptible, and shall not in the future be reasonably
susceptible, of being substantively consolidated with another Person in the context of
bankruptcy or insolvency proceedings.

J. The Company has no subsidiaries as of the Effective Date and the Company hereby
covenants and agrees that it shall not, without the prior written consent of the OOGEDT (such
consent to be granted or withheld in the sole discretion of the OOGEDT), create or acquire any
subsidiary during the Security Term. If the OOGEDT shall consent to the formation or
acquisition of a subsidiary (in its sole discretion), the Company shall provide the OOGEDT
with a written supplement to Schedule 2.06(J) to this Agreement providing in
reasonable detail the following information regarding such subsidiary: (i) its name, (ii) its
jurisdiction of formation and (iii) the shares of capital stock (number of shares and
percentage) of such subsidiary that are beneficially owned, directly or indirectly, by the
Company. The Company shall promptly provide the OOGEDT with an amended Schedule
2.06(J) to reflect any change with respect to any such subsidiary that occurs during the
Security Term.

K. The Company’s jurisdiction of formation, legal name and organizational identification
number, if any, and the location of the Company’s chief executive office or sole place of
business, in each case as of the Effective Date, are specified on Schedule 2.06(K),
and such Schedule 2.06(K) also lists any jurisdictions of incorporation, legal names
and locations of the Company’s chief executive office or sole place of business for the five
(5) years preceding the Effective Date. The Company hereby covenants and agrees that it shall
not change its jurisdiction of formation, legal name, organizational identification number (if
any) or the location of the Company’s chief executive office or sole place of business without
first providing the OOGEDT with thirty (30) days prior written notice of the same, and then
only in accordance with the other terms and conditions of this Agreement.

L. The Company shall furnish a certificate executed by the Chief Executive Officer or
Chief Financial Officer of the Company on behalf of the Company certifying that the
representations and warranties made by Company in this Section 2.06 (as modified by
the disclosure in any schedule or exhibit hereto) shall be true and correct in all material
respects as of the Effective Date.

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Section 2.07 Event(s) of Default. The following events shall, unless waived in writing by the
OOGEDT, constitute an event of default (each, an “Event of Default”) under this
Agreement upon the OOGEDT giving the Company thirty (30) days written notice of such event,
and the Company’s failure to cure such event during such thirty (30) day time period for those
Events of Default that can be cured within thirty (30) days or within whatever time period is
needed to cure those Events of Default that cannot be cured within thirty (30) days as long as the
Company is using its best efforts to cure and is making reasonable progress in curing such Events
of Default; provided, however, that in no event shall the time period to cure any
Event of Default exceed three (3) months; provided, further, that notwithstanding
the foregoing, any of the following events that cannot be cured shall, unless waived in writing by
the OOGEDT, constitute an Event of Default under this Agreement immediately upon the OOGEDT giving
the Company written notice of such event:

A. The Company’s failure, for any reason, to commercialize miniaturized chemical
detectors as described in the Application, including but not limited to an inability to
continue business operations for any reason.

B. The Company’s failure to maintain its principal place of business or its principal
executive offices headquartered in the State of Texas throughout the term of this Agreement
(other than in connection with the consummation of a bona fide Qualifying Liquidation Event).

C. The Company or any business, branch, division, or department of the Company being
convicted of a violation under Section 1324a(f) of the Immigrant and Nationality Act,
8 U.S.C. § 1324a(f).

D. Except for the Company’s failure to maintain its principal place of business or its
principal executive offices headquartered in the State of Texas throughout the term of this
Agreement (other than in connection with the consummation of a bona fide Qualifying
Liquidation Event), which shall solely be governed by Section 2.07(B), the Company’s
failure to fully comply with any provision, term, condition or covenant contained in this
Agreement, the Unit, the Application, or any other document referred to herein.

E. Except for the Company’s failure to maintain its principal place of business or its
principal executive offices headquartered in the State of Texas throughout the term of this
Agreement (other than in connection with the consummation of a bona fide Qualifying
Liquidation Event), which shall solely be governed by Section 2.07(B), if any
representation, covenant, or warranty made by the Company herein, or in the Application for
funding, in any other document furnished by Company pursuant to this Agreement, or in order
to induce the OOGEDT to disburse any of the Award, shall prove to have been untrue or
incorrect in any material respect or materially misleading as of the time such
representation, covenant or warranty was made.

Section 2.08 Remedies. Subject to the notice and cure provisions in Section 2.07
hereof, upon the occurrence of an Event of Default and at any time thereafter until such Event of
Default is cured to the satisfaction of the OOGEDT, the OOGEDT may enforce any or all of the
following remedies (such rights and remedies being in addition to and not in lieu of any
rights or remedies set forth in Section 4.10 below).

A. Notwithstanding anything in the Fund Agreement or the Unit to the contrary, the
OOGEDT, in its sole discretion, may, as its sole remedy with respect to an Event of Default
under Section 2.07(b), require repayment of the full outstanding amount of the Award
disbursed to the Company at such time of such Event of Default be repaid with interest
pursuant to the terms of the Note, but in no event shall the OOGEDT have the right to
exercise such remedy (or otherwise make a claim for damages based upon the outstanding amount
of the Award rather than on the amount of the damages themselves) with respect to any other
Event of Default under Section 2.07.

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B. If the Company fails to repay the full amount under the Note as specified in
Section 2.08(A) hereof within thirty (30) days of demand by the OOGEDT, then such
amount may, unless precluded by law, be taken from or off-set against any aids or other monies
that the Company is otherwise entitled to receive from the State of Texas.

C. Unless otherwise limited herein, the OOGEDT may enforce any additional remedies it
has in law or equity.

D. Unless otherwise limited herein, the rights and remedies herein specified are
cumulative and not exclusive of any rights or remedies that the OOGEDT would otherwise
possess.

Section 2.09 Notification of Event of Default. The Company shall notify the OOGEDT in
writing, as soon as possible and in any event within five (5) days after its executive officers
have obtained knowledge of the occurrence of each Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event of Default. The
Company shall include a statement setting forth details of each Event of Default or condition,
occurrence or event which, after notice or lapse of time or both, would constitute an Event of
Default, and the action which the Company proposes to take with respect thereto.

Section 2.10 Termination/Modification of Award. If the Company does not meet all conditions
precedent in Section 3.04 below to the satisfaction of the OOGEDT, and does not request in
writing the first disbursement in Section 3.02 by the date that is three (3) months after
the Effective Date, then the OOGEDT’s obligation to disburse any of the Award shall terminate as
of such day, and this Agreement shall become null and void. If the Company does not request in
writing the second disbursement in Section 3.03 by the date that is nine (9) months after
the Effective Date, then the OOGEDT’s obligation to disburse any portion of the Additional Amount
shall terminate as of such date and the OOGEDT shall have no further obligations to provide any
additional funding of the Award and, if the OOGEDT does not terminate this Agreement, this
Agreement shall remain in full force and effect but shall be modified and amended to reflect the
amount of the Award that was actually disbursed as of such date.

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Section 2.11 Effect of Event of Default/Termination. If an Event of Default occurs and the
Company is required to and does repay the amount specified in Section 2.08(A) to the
OOGEDT under the Note, then this Agreement shall automatically terminate as of the date full
repayment of the Note is received by the OOGEDT. Further, in any event OOGEDT may terminate this
Agreement at any time following an Event of Default following the opportunity to cure as provided
by Section 2.07.

Section 2.12 Right to Notice of Intellectual Property and/or Business Status. Upon any
business dissolution, sale, merger, liquidation of assets, bankruptcy of the Company or the
occurrence of any material adverse effect regarding the Company or its business (or the existence
of facts that would reasonably be expected to result in a material adverse effect regarding the
Company or its business), the Company shall provide the OOGEDT with full business information as
necessary to fully inform the OOGEDT, and provide an opportunity to participate in assisting the
Company in finding other avenues for fully developing and using the Company’s intellectual
property if appropriate. However, the Company shall not be obligated to provide any information
that it reasonably considers in good faith to constitute a trade secret or other confidential
information under this Section 2.12.

Section 2.13 Right to Terminate upon Repayment. Unless terminated earlier pursuant to
Section 5.01(B), the Company may at any time following eighteen (18) months after the
Effective Date, terminate this Agreement and be released from its obligations hereunder by paying
the OOGEDT an amount equal to the full amount of the principal and interest (and any other
amounts) due under the Note pursuant to the terms of the Unit.

Section 2.14 Survival of Right to Purchase. Anything herein to the contrary notwithstanding,
the Unit and the Right to Purchase under the Unit shall survive any termination of this Agreement
and any repayment of the Note in accordance with the terms of the Unit.

Article III

DISBURSEMENT OF AWARD PROCEEDS

Section 3.01 Disbursement of Award. OOGEDT shall disburse the Award to the Company in
accordance with Sections 3.02 and 3.03 below, and only after all conditions
precedent have been complied with to the satisfaction of the OOGEDT in Section 3.04 below.
Under no circumstance shall the OOGEDT be required to disburse funds in excess of the amount
requested by the Company under the provisions contained in Sections 3.02 and 3.03
below, and the Company may not request less than the full amount of each disbursement outlined in
Sections 3.02 and 3.03 below.

Section 3.02 Initial Disbursement. The OOGEDT shall disburse to the Company the initial
disbursement of the Award in the amount of Nine Hundred Thousand Dollars ($900,000) (the
“Initial Amount”) as soon as practicable following the Effective Date provided that all
other requirements prior to receiving any disbursements pursuant to this Agreement have been
satisfied.

Section 3.03 Second Disbursement. Provided that all other requirements prior to receiving
any disbursements pursuant to this Agreement have been satisfied, the OOGEDT shall disburse to the
Company the second half of Award disbursement in the amount of Nine Hundred Thousand Dollars
($900,000) (the “Additional Amount”) seven (7) months after the Effective Date, unless the
Company demonstrates to the OOGEDT’s satisfaction that the disbursement of the Additional Amount
should occur sooner based on significant completion of the commercialization milestones set forth
on Exhibit C hereto. However, in no event shall the disbursement of the Additional Amount
occur sooner than four (4) months after the Effective Date.

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Section 3.04 Conditions Precedent to Disbursement of Award. All of the following conditions
precedent shall be met to the reasonable satisfaction of the OOGEDT prior to any disbursement of
the Award:

A. Prior to the Company receiving a disbursement outlined in Sections 3.02 or
3.03 above, the OOGEDT shall have received a written request for disbursement of the
Award.

B. Prior to the disbursement of the Initial Amount, the OOGEDT shall have received
evidence, in form and substance acceptable to the OOGEDT, showing that the Company has issued
the OOGEDT a duly executed Investment Unit in the form attached hereto as Exhibit B
(the “Unit”) providing OOGEDT with (i) a promissory note pursuant to which the
Company promises to repay the OOGEDT, in accordance with the terms of this Agreement and the
Unit, the full amount of the Award disbursed prior to the “First Qualifying Financing
Transaction” (as defined in the Unit) with interest (the “Note”) and (ii) a right to
acquire (the “Right to Purchase”) shares of the Company’s capital stock that shall as
of the date of the disbursement of the Initial Amount represent 64.29% of the Common Stock as
determined on a fully diluted basis (for purposes of this clause (ii) only, such
percentage assumes that the total number of shares of capital stock represented by the Right
to Purchase under the Unit as of the date of the disbursement of the Initial Amount equals
18,000 shares of Common Stock). Notwithstanding the preceding clause (ii), the
number and type of shares represented by the Right to Purchase under the Unit at any given
time is determined pursuant to the terms of the Unit.

C. Prior to the disbursement of the Initial Amount, the OOGEDT shall have received an
outside counsel opinion letter provided by Company’s counsel (the “Opinion Letter”).
The Opinion Letter shall provide that the Company is in compliance with the following:

	 	1.	 	The Company is a corporation validly existing and in good
standing under the laws of its state of incorporation.

	 
	 	2.	 	The Company has the requisite corporate power and
authority to own, operate and lease its properties and to carry on its
business as presently conducted.

	 
	 	3.	 	The Company is duly qualified to transact business (as
either a domestic corporation or a foreign corporation) in the State of
Texas.

	 
	 	4.	 	The Company has the corporate power to enter into this
Agreement and to issue the Unit and the securities issuable upon exercise of
the Right to Purchase under the Unit.

	 
	 	5.	 	All issued and outstanding equity securities of the
Company have been duly authorized and validly issued and are fully-paid and
non-assessable.

	 
	 	6.	 	The execution and delivery of the Award and Security
Agreement and the Investment Unit does not violate the Company’s certificate
of formation and bylaws (or other similar governing documents) or any of the
material agreements specifically identified in the opinion as “Reviewed
Agreements.”

	 
	 	7.	 	Assuming timely filing of all relevant federal and state
securities filings necessary to perfect any relevant registration
exemptions, the issuance of the Unit and the equity securities issuable upon
exercise of the Right to Purchase under the Unit do not require registration
under applicable state and federal securities laws and regulations.

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D. No Event of Default under this Agreement or event which would constitute an Event of
Default but for the requirement that notice be given or that a period of grace or time elapse
shall have occurred and be continuing.

E. The Company has supplied to the OOGEDT all other documentation that the OOGEDT may
reasonably require.

F. If the “First Qualifying Financing Transaction” (as defined in the Unit) occurs prior
to the disbursement of the Additional Amount, then prior to the disbursement of the
Additional Amount, the Company shall:

	 	(i)	 	Prepare for execution by the parties an amendment to the Unit in the
form attached hereto as Exhibit D (the “Unit Amendment”)
reflecting the Additional Amount;

	 
	 	(ii)	 	furnish the OOGEDT with a statement containing the information
required in Section 3.04(B)(ii) above with respect to the percentage as of
the date of the disbursement of the Additional Amount of the Common Stock that the
amended Right to Purchase represents as determined on a fully diluted basis; and

	 
	 	(iii)	 	furnish the OOGEDT with a certificate executed by the Chief Executive
Officer or Chief Financial Officer of the Company on behalf of the Company
certifying, as of the date of the disbursement of the Additional Amount, that (1)
the percentage set forth in the statement provided pursuant to Section
3.04(F)(ii) above is true and correct and (2) the representations and
warranties made by the Company in Section 2.06 (as modified in any
schedule or exhibit hereto) are true and correct in all material respects.

Except as context requires otherwise in this Section 3.04, after the issuance of
any Additional Unit, each reference in this Agreement to the “Unit” shall be deemed to
include the Unit (as amended by any Unit Amendments), each reference to the “Note” shall be
deemed to include the Note (as amended by any Unit Amendments), and each reference to the
“Right to Purchase” shall be deemed to include the Right to Purchase (as amended by any Unit
Amendments). Prior to any disbursement of any Additional Amount for which the execution of a
Unit Amendment is required, the Company agrees to execute and deliver such further
instruments and take such further actions as the OOGEDT may reasonably request in order to
carry out the intent of this Section 3.04(F).

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Article IV

MISCELLANEOUS

Section 5.01 Term of Agreement. Unless terminated earlier pursuant to the terms of this
Agreement, except for Section 5.18 hereof and the Unit which shall survive any termination
of this Agreement, this Agreement shall terminate on the earlier of (A) the date ten (10) years
after the Effective Date and (B) the date of consummation of a bona fide Qualifying Liquidation
Event.

Section 5.02 Record Keeping and Reporting. The Company shall maintain or cause to be
maintained books, records, documents and other evidence pertaining to compliance with the
requirements contained in this Agreement, and upon request shall allow the OOGEDT, or auditors for
the OOGEDT, including the State Auditor for the State of Texas, to inspect, audit, copy, or
abstract, all of its books, records, papers, or other documents relevant to the Award. The Company
shall use GAAP in the maintenance of such books and records, and shall retain or cause to be
retained all of such books, records, documents and other evidence for a period of seven (7) years
from and after the later of (A) the date that this Agreement is terminated or this Agreement’s term
expires and (B) unless the Right to Purchase under the Unit (as it may be amended hereunder)
expires without having been exercised, the date on which the OOGEDT fully divested all rights and
ownership of all stock that was issued upon the OOGEDT’s exercise of its Right to Purchase under
the Unit.

Section 5.03 Unit Records/Information. If at any point following the execution and issuance
of the Unit the OOGEDT becomes obligated to file disclosure reports with the SEC pursuant to
Section 13 or Section 16 of the Securities Exchange Act of 1934, as amended, by virtue of the
OOGEDT holding the Unit or securities issuable upon exercise of the Right to Purchase under the
Unit, the Company agrees to provide any and all information reasonably necessary to assist the
OOGEDT in making any such timely filings with the SEC.

Section 5.04 Certification Relating to Undocumented Workers. By execution of this Agreement,
the Company, including any business, branch, division, and department of the Company, certifies
that it does not currently employ any undocumented worker (as defined in Texas Government Code
Section 2264.001(4)) and that the Company shall not knowingly employ an undocumented worker
hereafter.

Section 5.05 Compliance Verification Reporting. Each year throughout the term of this
Agreement, on each anniversary of the Effective Date, the Company shall deliver to the OOGEDT a
compliance verification report signed by a duly authorized representative of the Company that shall
verify the Company’s compliance with each of the Company’s agreements, covenants and obligations
under this Agreement (each, a “Compliance Verification”). Further, the Company shall
provide the OOGEDT reasonable access to the Company’s annual financial reports. In addition to
each annual Compliance Verification, the Company shall also provide the OOGEDT a Compliance
Verification on the earlier of (i) six (6) months after the Effective Date and (ii) the date on
which the Company makes a request to the OOGEDT for disbursement of an Additional Amount. Each
Compliance Verification that has become due shall be submitted prior
to the Company receiving any Additional Amounts. All Compliance Verifications shall be in a
form reasonably satisfactory to the OOGEDT and shall include appropriate back-up data.

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Section 5.06 Liability. In no event shall either party be liable to the other party for any
indirect, special, punitive, exemplary, incidental or consequential damages. This limitation shall
apply regardless of whether or not the other party has been advised of the possibility of such
damages.

Section 5.07 Indemnification by the Company and Hold Harmless. The Company agrees to
indemnify and hold the OOGEDT, the maker of the Award, and its agents, officers, employees and
assigns harmless for any and all losses, claims, suits, actions, and liability, including any
litigation costs, that arise from any act or omission of the Company or any of its officers, and
employees, agents, contractors, assignees, and affiliates relating to the project for which the
Award is made regardless of whether the act or omission is related to job creation or other stated
purpose of the Award.

Section 5.08 EXPRESS NEGLIGENCE. THE INDEMNITY SET FORTH IN THIS AGREEMENT IS INTENDED TO BE
ENFORCEABLE AGAINST THE COMPANY AND ITS SUCCESSORS AND ASSIGNS IN ACCORDANCE WITH THE EXPRESS TERMS
AND SCOPE HEREOF NOTWITHSTANDING TEXAS’ EXPRESS NEGLIGENCE RULE OR ANY SIMILAR DIRECTIVE THAT WOULD
PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE
OR PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF THE OOGEDT AND/OR ITS AGENTS, OFFICERS,
EMPLOYEES AND ASSIGNS.

Section 5.09 Relationship of the Parties. The parties shall perform their respective
obligations under this Agreement as independent contractors and not as agents, employees, partners,
joint venturers, or representatives of the other party. Neither party shall be permitted or
empowered to make representations or commitments that bind the other party. The Company is not a
“governmental body” by virtue of this Agreement or the use of the Award under the Texas Emerging
Technology Fund, any other funding, the issuance of the Unit or the issuance of capital stock upon
exercise of the Right to Purchase under the Unit.

Section 5.10 Binding Effect and Assignment. The Company may not assign this Agreement or any
of its rights or obligations hereunder without the prior written consent of the OOGEDT. The OOGEDT
may assign this Agreement and any of its rights or obligations hereunder without the consent of the
Company. Subject to the foregoing, this Agreement and all terms, provisions and obligations set
forth herein shall be binding upon and shall inure to the benefit of the parties and their
respective successors and assigns and all other state agencies and any other agencies, departments,
divisions, governmental entities, public corporations and other entities that shall be successors
to each of the parties or that shall succeed to or become obligated to perform or become bound by
any of the covenants, agreements or obligations hereunder of each of the parties hereto.

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Section 5.11 Waiver. Neither the failure by the Company or the OOGEDT, in any one or more
instances to insist upon the complete and total observance or performance of any term or provision
hereof, nor the failure of the Company or the OOGEDT to exercise any right, privilege, or remedy
conferred hereunder or afforded by law shall be construed as waiving any breach of such term,
provision, or the right to exercise such right, privilege, or remedy thereafter. In addition, no
delay on the part of either the Company or the OOGEDT, in exercising any right or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy
preclude other or further exercise thereof or the exercise of any other right or remedy.

Section 5.12 Entire Agreement. This Agreement, the Unit and the other documents referred to
and incorporated herein by reference embody the entire agreement between the Company and the
OOGEDT, and there are no other agreements, either oral or written, between the Company and the
OOGEDT on the subject matter hereof. This Agreement may be amended, modified and supplemented only
by written agreement between the parties hereto.

Section 5.13 Applicable Law and Venue. This Agreement is made and entered into in the State
of Texas, and this Agreement and all disputes arising out of or relating thereto shall be governed
by the laws of the State of Texas, without regard to any otherwise applicable conflict of law rules
or requirements.

The Company agrees that any action, suit, litigation or other proceeding (collectively
“litigation”) arising out of or in any way relating to this Agreement, or the matters referred to
therein, shall be commenced exclusively in the Travis County District Court or the United States
District Court for the Western District of Texas, Austin Division, and hereby irrevocably and
unconditionally consents to the exclusive jurisdiction of those courts for the purpose of
prosecuting and/or defending such litigation. The Company hereby waives and agrees not to assert
by way of motion, as a defense, or otherwise, in any suit, action or proceeding, any claim that (A)
the Company is not personally subject to the jurisdiction of the above-named courts, (B) the suit,
action or proceeding is brought in an inconvenient forum or (C) the venue of the suit, action or
proceeding is improper.

Section 5.14 Dispute Resolution.

A. Informal Meetings. The parties’ representatives shall meet as needed to
implement the terms of this Agreement and shall make a good faith attempt to informally
resolve any disputes.

B. Non-binding Mediation. Except to prevent irreparable harm for which there
is no adequate remedy at law, neither party shall file suit to enforce this Agreement
without first submitting the dispute to confidential, non-binding mediation before a
mediator mutually agreed upon by the parties.

Section 5.15 Publicity. The parties agree to cooperate fully to coordinate with each other in
connection with all press releases and publications regarding this Agreement. The Company shall
not issue any press releases or other publicity regarding this Agreement or the Award without the
prior written consent of OOGEDT.

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Section 5.16 No Waiver of Sovereign Immunity. Nothing in this Agreement may be construed to
be a waiver of the sovereign immunity of the OOGEDT to suit.

Section 5.17 Severability. If any provision of this Agreement is finally judged by any court
to be invalid, then the remaining provisions shall remain in full force and effect and they shall
be interpreted, performed, and enforced as if the invalid provision did not appear herein.

Section 5.18 Survival of Promises. Notwithstanding any expiration, termination or
cancellation of this Agreement, the rights and obligations pertaining to payment or repayment of
funds confidentiality, disclaimers and limitation of liability, indemnification, and any other
provision implying survivability shall remain in effect after this Agreement ends.

Section 5.19 Force Majeure. Except for the obligation to make payments under this Agreement
and the Unit when due and indemnification obligations arising hereunder, neither party shall be
required to perform any obligation under this Agreement or be liable or responsible for any loss or
damage resulting from its failure to perform so long as performance is delayed by force majeure or
acts of God, including but not limited to strikes, lockouts or labor shortages, embargo, riot, war,
revolution, terrorism, rebellion, insurrection, flood, natural disaster, or interruption of
utilities from external causes.

Section 5.20 Counterparts. This Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be an original, but such counterparts shall together
constitute one and the same instrument.

Section 5.21 Notices. All notices, requests, demands and other communications shall be in
writing and shall be deemed given and received (A) on the date of delivery when delivered by hand,
(B) on the following business day when sent by confirmed simultaneous telecopy, (C) on the
following business day when sent by receipted overnight courier or (D) three (3) business days
after deposit in the United States Mail when mailed by registered or certified mail, return receipt
requested, first class postage prepaid, as follows:

If to the OOGEDT to:

Financial Services

ETF Compliance

PO Box 12878

Austin, TX 78711-2878

Email: ETF.Compliance@governor.state.tx.us

with a concurrent copy to:

ATTN: Emerging Technology Fund Award Program

General Counsel

Office of the Governor

P.O Box 12428

Austin, Texas 78711

Phone: 512-463-1788

Fax: 512-463-1932

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If to Company to:

John Porter

Chief Executive Officer

First Detect

401 Congress Avenue, Suite 1650

Austin, Texas 78701

Phone: (512) 485-9530

Fax: (512) 485-9531

provided, however, that if any party shall have designated a different address by
written notice to the other party, then to the last address so designated.

Section 5.22 Construction. The language in all parts of this Agreement shall be construed, in
all cases, according to its fair meaning. The parties acknowledge that each party and its counsel
have reviewed this Agreement and that any rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the interpretation of this
Agreement. Whenever used herein, the terms “include,” “includes” and “including” shall be deemed
to be followed by the phrase, “without limitation,”.

Section 5.23 Headings. The headings of the sections and subsections of this Agreement are
inserted for convenience only and shall not be deemed to constitute a part hereof.

Section 5.24 Schedules and Exhibits. The schedules and exhibits referred to herein and
required to be delivered pursuant to the terms hereof are hereby incorporated fully herein by this
reference.

Section 5.25 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking
of any action or the expiration of any right required or granted herein shall be a Saturday or a
Sunday or shall be a legal holiday in the State of Texas, then such action may be taken or such
right may be exercised on the next succeeding day not a legal holiday in the State of Texas.

Section 5.26 Additional Requirements. The Company and the OOGEDT agree to comply with the
following additional requirements.

(If there are no additional requirements then insert the word “NONE”.)

NONE.

(THE REMAINING PORTION OF THIS PAGE WAS INTENTIONALLY LEFT BLANK)

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IN TESTIMONY HEREOF, the Company and the OOGEDT have executed this Texas Emerging Technology
Fund Award and Security Agreement on the day and date indicated immediately below their respective
signatures.

	 	 	 	 	 	 	 
	The State of Texas

	 	 	 	1st Detect Corporation
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Raymond C. Sullivan

	 	 	 	John Porter	 	 
	Chief of Staff

	 	 	 	Chief Executive Officer	 	 
	Office of the Governor
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Date

	 	 	 	Date	 	 

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Exhibits and Schedules

	 	 	 	 	 
	Exhibits
	 	 	 	 
	 
	 	 	 	 
	Exhibit A

	 	—
	 	Approval Letter from Governor, Lieutenant Governor and Speaker
	Exhibit B

	 	—
	 	Investment Unit
	Exhibit C

	 	—
	 	Milestones
	Exhibit D

	 	—
	 	Form of Unit Amendment
	 
	 	 	 	 
	Schedules
	 	 	 	 
	 
	 	 	 	 
	Schedule 2.06(G)

	 	—
	 	Title to Assets
	Schedule 2.06(H)

	 	—
	 	Related Party Transaction
	Schedule 2.06(J)

	 	—
	 	Subsidiaries
	Schedule 2.06(K)

	 	—
	 	Organizational Information
	Schedule 4.09

	 	—
	 	Financing Statements

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Exhibit A

Letter from Governor, Lieutenant Governor and Speaker Approving Award to the

Company from the Texas Emerging Technology Fund

See attached.

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Exhibit B

Investment Unit

See attached.

Texas Emerging Technology Fund Award and Security Agreement

 

 

 

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Exhibit C

Milestones

	 	1.	 	Optimize ion trap architecture.

	 	•	 	Show that the mass range is greater than 50 — 400 Atomic Mass Units (“amu”).

	 
	 	•	 	Show that the resolution (Full Width Half Mass) is less than 1 amu.

	 	2.	 	Demonstrate prototype microntroller board.

	 	•	 	Show that on-board microcontroller can control Mass Spectrometer (“MS”).

	 
	 	•	 	MS can operate independent of laptop and generate spectra.

	 	3.	 	Demonstrate device control software.

	 	•	 	Show that user can input all parameters to control mass specifications.

	 	•	 	Voltages (trap, detector).

	 
	 	•	 	Timing points.

	 
	 	•	 	End cap tickle frequency.

	 	•	 	Show that instrument responds to user inputs.

	 	4.	 	Demonstrate detector amplifier.

	 	•	 	Show spectrum with S/N of greater than 10 using internal amplifier.

	 	5.	 	Build and demonstrate prototype ion trap.

	 	•	 	Demonstrate instrument in portable enclosure that meets specs above.

	 	6.	 	Demonstrate calibration hardware.

	 	•	 	Show that when instrument is calibrated (startup or user controlled) a spectra
for PFTBA (or given calibrant gas) is shown on instrument.

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Exhibit D

Form of Unit Amendment

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Schedule 2.06(G)

Title to Property

None.

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Schedule 2.06(H)

Related Party Transactions

None

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Schedule 2.06(J)

Subsidiaries

[If applicable, this schedule shall be added after the Effective Date as a supplemental
schedule pursuant to Section 2.06(J).]

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Schedule 2.06(K)

Organizational Information

State of Incorporation: Delaware

Legal Name: 1st Detect Corporation

State of Executive Offices: Texas

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Schedule 4.09

Financing Statements

None

Texas Emerging Technology Fund Award and Security AgreementExhibit 10.61

Exhibit 10.61

Execution Copy

NEITHER THIS INVESTMENT UNIT NOR THE PROMISSORY NOTE UNDER ARTICLE I OF THIS INVESTMENT UNIT OR THE
EQUITY SECURITIES ISSUABLE UPON EXERCISE OF THE RIGHT TO PURCHASE UNDER ARTICLE II OF THIS
INVESTMENT UNIT (COLLECTIVELY, THE “SECURITIES REPRESENTED HEREBY”) HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY
STATE. THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, TOGETHER WITH
QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAW, OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT
REQUIRED.

1st DETECT CORPORATION

INVESTMENT UNIT

                               , 2010

This Investment Unit (this “Unit”) has been issued by the undersigned,                     ,
Inc., a Delaware corporation (the “Company”), in connection with that certain Texas
Emerging Technology Fund Award and Security Agreement (the “Fund Agreement”), effective as
of the date hereof (the “Effective Date”), by and between the Company and the State of
Texas, acting by and through the Office of Governor Economic Development and Tourism, together with
its nominees or assigns (the “OOGEDT”), pursuant to which the Company is receiving from the
OOGEDT an award of funding under the Emerging Technology Fund subject to conditions which could,
upon satisfaction, require repayment. This Unit is subject to all of the terms and provisions of
the Fund Agreement.

This Unit consists of a promissory note (the “Note”) and a right to purchase equity
securities (the “Right to Purchase”).

ARTICLE I

NOTE

Section 1.1 Promissory Note. This Article I consists of the Note.

Section 1.2 Promise to Pay. FOR VALUE RECEIVED, the Company hereby promises to pay to
the order of the OOGEDT the principal sum equal to the full amount of all disbursements of the
Award (as defined in the Fund Agreement) that are made prior to the First Qualifying Financing
Transaction (as hereinafter defined) from time to time under the Fund Agreement (collectively, the
“Principal”) together with interest thereon at a rate of eight percent (8%) simple interest
per annum accruing daily from the date such amounts are disbursed under the Fund Agreement and
calculated on the basis of a 365 or 366 day year, as the case may be (“Interest”), as
hereinafter set forth in this Article I.

 

 

 

Section 1.3 General Payment Terms. Principal and Interest due hereunder shall be paid
in the lawful currency of the United States of America at such address as the OOGEDT may designate.

Section 1.4 Mandatory Repayment. The Principal, together with all accrued and unpaid
Interest on the Principal balance, shall be due and payable upon demand by the OOGEDT upon the
occurrence of an Event of Default (as hereinafter defined) in accordance with the terms hereinafter
set forth and the terms of the Fund Agreement. In the event of any conflict between the terms
hereof and the terms of the Fund Agreement with respect to mandatory repayment, the terms of the
Fund Agreement shall control.

Section 1.5 Optional Prepayment. The Company may pay, at its option, all sums of
unpaid Principal and accrued but unpaid Interest at any time on or after eighteen (18) months
following the Effective Date if the Company elects to terminate the Fund Agreement in accordance
with Section 2.13 of the Fund Agreement.

Section 1.6 Cancellation of Note. This Note shall be canceled, the Principal and
Interest evidenced hereby shall be forgiven in its entirety and the Company shall be released of
all covenants, liabilities and obligations under this Article I on and after the earlier of
(a) the date ten (10) years after the Effective Date and (b) the consummation of a Qualifying
Liquidation Event (as hereinafter defined).

Section 1.7 Qualifying Liquidation Event. “Qualifying Liquidation Event”
means (a) the sale, conveyance, or other disposition of all or substantially all of the assets of
the Company and its subsidiaries (taken as a whole) to persons who are not then Company Associates
(as hereinafter defined) or Company Affiliates, or (b) the sale of the Company’s then-outstanding
equity securities by the Company’s stockholders or the Company’s merger into or consolidation with
any other entity, in each such case, in which more than fifty percent (50%) of the voting power of
the Company is transferred to persons who are not then Company Associates or Company Affiliates.
“Company Affiliate” means a person who or that directly, or indirectly through one or more
intermediaries, controls the Company or is controlled by, or is under Common control with, such a
person.

Section 1.8 Events of Default.

(a) The occurrence or existence of any “Event of Default” under Section 2.07(B) of the
Fund Agreement shall constitute an “Event of Default” hereunder.

(b) Upon the occurrence of any Event of Default, the OOGEDT shall have the right to (i)
declare all sums of unpaid Principal and accrued but unpaid Interest and all other amounts properly
payable under the Note immediately due and payable and (ii) unless otherwise limited hereunder or
under the Fund Agreement, exercise any and all other rights available to it hereunder or under the
Fund Agreement or at law or in equity, all of which rights and powers may be exercised cumulatively
and not alternatively. Notwithstanding the foregoing, in the event that the OOGEDT shall receive
any amounts of compensatory damages as a result of a claim of an event of default under the Fund
Agreement, such amounts (“Damage Payments”) shall be

 

2

 

deemed to reduce the amount of Principal then
outstanding under the Note on a dollar for dollar basis. In the event that, following any Event of Default hereunder, the OOGEDT
receives a Damage Payment or payment of any sum of then unpaid Principal and accrued but unpaid
Interest on the Note, the OOGEDT hereby irrevocably elects to convert that number of shares of
Series B Preferred Stock then held by the OOGEDT into shares of Common Stock of the Company in an
amount equal to (1) the total number of the shares of Series B Preferred Stock then held by the
OOGEDT multiplied by (2) the quotient obtained by dividing the amount of (A) any such Damage
Payment or (B) any such repayment by the Company of Principal and interest on the Note, as the case
may be, by the aggregate amount of Principal and interest outstanding and unpaid under the Note
immediately prior to the receipt by the OOGEDT of such Damage Payment or Principal and interest
repayment, as the case may be.

Section 1.9 Usury. Notwithstanding any provision to the contrary contained herein,
the Fund Agreement or any other agreement entered into in connection with this Note or as security
therefor or otherwise, it is expressly provided that in no case or event shall the aggregate of (a)
all Interest on the unpaid balance of Principal, accrued or paid from the date hereof and (b) the
aggregate of any other amounts accrued or paid pursuant hereto, which under applicable laws are or
may be deemed to constitute interest upon the indebtedness evidenced hereby from the date hereof,
ever exceed the Ceiling Rate (as hereinafter defined). In this connection, the Company and the
OOGEDT stipulate and agree that it is their common and overriding intent to contract in strict
compliance with applicable usury laws. In furtherance thereof, none of the terms hereof shall ever
be construed to create a contract to pay, as consideration for the use, forbearance or detention of
money, interest at a rate in excess of the Ceiling Rate. The Company or other parties now or
hereafter becoming liable for payment of the indebtedness evidenced by the Note shall never be
liable for interest in excess of the Ceiling Rate. If, for any reason whatever, the interest paid
or received on the Note during its full term produces a rate which exceeds the Ceiling Rate, the
OOGEDT shall credit against the principal of this Note (or, if such indebtedness shall have been
paid in full, shall refund to the payor of such interest) such portion of said interest as shall be
necessary to cause the interest paid on this Note to produce a rate equal to the Ceiling Rate. All
sums contracted for, charged or received by the OOGEDT or the holder of this Note for the use,
forbearance or detention of the indebtedness evidenced hereby shall, to the extent required to
avoid or minimize usury and to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full stated term of this Note so that the interest rate does
not exceed the Ceiling Rate. The provisions of this Section 1.9 shall control all
agreements, whether now or hereafter existing and whether written or oral, between the Company and
any holder of this Note. As used herein, the term “Ceiling Rate” means, on any day, the
maximum nonusurious rate of interest permitted for that day by whichever of applicable federal or
Texas laws permits the higher interest rate, stated as a rate per annum.

Section 1.10 Cost of Collection. If the OOGEDT retains an attorney in connection with
any Event of Default or to collect, enforce or defend this Note or any papers intended to secure or
guarantee it in any lawsuit or in any probate, reorganization, bankruptcy or other proceeding, or
if the Company sues the OOGEDT in connection herewith or any such papers and does not prevail, then
the Company agrees to pay to the OOGEDT, in addition to the Principal and Interest, all reasonable
costs and expenses incurred by the OOGEDT in trying to collect this Note or in any such suit or
proceeding, including reasonable attorneys’ fees.

 

3

 

Section 1.11 Waivers. Except for any notices that are specifically required by
another provision hereof, the Company and any and all endorsers, guarantors and sureties severally
waive notice (including, but not limited to, notice of intent to accelerate and notice of
acceleration, notice of protest and notice of dishonor), demand, presentment for payment, protest,
diligence in collecting and the filing of suit for the purpose of fixing liability and consent that
the time of payment hereof may be extended and re-extended from time to time without notice to any
of them. Each such person agrees that his, her or its liability on or with respect to this Note
shall not be affected by any release of or change in any guaranty or security at any time existing
or by any failure to perfect or maintain perfection of any lien against or security interest in any
such security or the partial or complete unenforceability of any guaranty or other surety
obligation, in each case in whole or in part, with or without notice and before or after the term
hereof.

Section 1.12 Federal Tax Classification. It is expressly provided that the promise to
pay to the order of the OOGEDT that is evidenced by this Note is not intended to be classified as
indebtedness for U.S. federal income purposes unless and until an Event of Default occurs and the
OOGEDT declares payable all sums of unpaid Principal. The Company and any and all endorsers,
guarantors and sureties agree to report the Note consistent with this Section 1.12 for all
U.S. federal income tax purposes except as otherwise required by law.

ARTICLE II

RIGHT TO PURCHASE

Section 2.1 Right to Purchase. This Article II consists of the Right to
Purchase, which certifies that, for the value received, the OOGEDT is entitled to purchase from the
Company up to the number of shares set forth in Section 2.3 below (subject to adjustment in
accordance with the provisions hereof) of either (a) shares of common stock of the Company, $0.001
par value per share (“Common Stock”), or (b) shares (“Next Financing Shares”) of
the same class of capital stock or series of preferred stock as shall be issued in the First
Qualifying Financing Transaction (as hereinafter defined).

Section 2.2 Purchase Price. The price per share (the “Purchase Price”) of
Common Stock or Next Financing Shares, as the case may be, purchased hereunder shall be $0.001 per
share.

Section 2.3 Number of Shares.

(a) The number of shares of Common Stock or Next Financing Shares (in the case of Sections
2.3(a)(ii)(A) and (B) below) to be issued upon the OOGEDT’s exercise of this Right to Purchase
shall be equal to the quotient obtained by dividing:

(i) The total amount of the Award disbursed as of the date of the exercise, by

 

4

 

(ii) Either:

(A) if the First Qualifying Financing Transaction is closed and consummated on or
before ninety (90) days after the Effective Date, then the Stock Price (as hereinafter
defined) of such First Qualifying Financing Transaction; or

(B) if the First Qualifying Financing Transaction is closed and consummated after
ninety (90) days following the Effective Date and on or prior to the date eighteen (18)
months after the Effective Date, then eight-tenths (0.80) multiplied by the Stock Price of
such First Qualifying Financing Transaction; or

(C) if no First Qualifying Financing Transaction is closed and consummated on or before
the date eighteen (18) months after the Effective Date or the OOGEDT exercises its Right to
Purchase prior to the closing and consummation of a First Qualifying Financing Transaction,
then $100.00.

(b) No fractional shares shall be issued upon the exercise of this Right to Purchase. Instead
of any fractional share that would otherwise be issuable upon a conversion hereunder, the Company
shall pay the OOGEDT a cash amount in respect of such fractional share based upon the applicable
Stock Price of the whole shares of Common Stock or Next Financing Shares, as the case may be,
issuable to the OOGEDT upon such exercise.

(c) The Company shall (i) notify the OOGEDT in writing of the terms of the First Qualifying
Financing Transaction as soon as practicable prior to the anticipated closing of such transaction;
(ii) deliver all material closing documentation regarding the First Qualifying Financing
Transaction to the OOGEDT so that the OOGEDT actually receives such documentation within three (3)
business days of the closing of the First Qualifying Financing Transaction; and (iii) and provide
promptly such additional information to the OOGEDT as the OOGEDT may reasonably request.

(d) “Stock Price” means, as applicable:

(i) With respect to Common Stock, (A) if Common Stock is sold in the First Qualifying
Financing Transaction, the price per share at which such Common Stock is sold in the First
Qualifying Financing Transaction; (B) if Common Stock is not sold in the First Qualifying
Financing Transaction, the price per share of capital stock that is sold in the First
Qualifying Financing Transaction as determined by dividing (1) the total amount received by
the Company as consideration for the sale of such capital stock, plus the minimum aggregate
amount of additional consideration payable to the Company upon the conversion or exchange of
all such capital stock into Common Stock, if any, by (2) the total maximum number of shares
of Common Stock issuable upon the conversion or exchange of such capital stock; or (C) if
there has been no First Qualifying Financing Transactions, then $100.00 per share; and

(ii) With respect to Next Financing Shares, the lesser of (i) the average price per
share of Next Financing Shares, if any, that are sold to Company Associates and/or Company
Affiliates in the First Qualifying Financing Transaction and (ii) the average price per
share of Next Financing Shares that are sold to investors other than
Company Associates and/or Company Affiliates in the First Qualifying Financing
Transaction.

 

5

 

(e) “Company Associates” means, as of any particular date, the shareholders of the
Company (including the holders of Common Stock, preferred stock, or other capital stock of the
Company), debtholders of the Company, and holders of convertible securities or holders of any right
to purchase or acquire any capital stock of the Company.

(f) “Company Affiliate” means a person who or that directly, or indirectly through one
or more intermediaries, controls the Company or is controlled by, or is under common control with,
such a person.

(g) “Associate Debt” means debt of the Company outstanding on the date of the First
Qualifying Financing Transaction (regardless of whether such debt is evidenced by a promissory
note, a convertible promissory note or any other form or instrument) that is owed to any Company
Affiliate or any person (or any affiliate of such person) that is purchasing capital stock from the
Company in the First Qualifying Financing Transaction.

(h) “Stock Acquisition” means the sale by the Company’s shareholders of all of the
issued and outstanding shares of capital stock of the Company to an acquiring person or entity.

(i) “First Qualifying Financing Transaction” means the earlier of (i) a Qualifying
Liquidation Event and (ii) the first issuance and sale of Common Stock of the Company or other
classes or series of authorized capital stock of the Company (excluding, however, (A) any
securities of the Company, other than capital stock, that are convertible into or exchangeable or
exercisable for capital stock of the Company, such as warrants, options, or convertible debt, and
(B) any capital stock issued in exchange for the retirement or partial retirement of any Associate
Debt, including without limitation any capital stock issued in exchange for any future promise to
retire or partially retire any Associate Debt) to occur following the Effective Date in a public
offering or private placement, for an aggregate amount of cash consideration received by the
Company from persons other than Company Associates or Company Affiliates equal to or greater than
Five Hundred Thousand Dollars ($500,000); provided, however, that, with respect to
clause (ii) above, the cash proceeds received as consideration by the Company in the First
Qualifying Financing Transaction shall not be directly used in any single transaction or any series
of related transactions to make payments on any Associate Debt (unless the Company receives cash
proceeds in the First Qualifying Financing Transaction in excess of Five Hundred Thousand Dollars
($500,000), in which case such excess amount may be used to make payments on Associate Debt).

 

6

 

Section 2.4 Purchase Procedure.

(a) The purchase rights represented by this Right to Purchase are exercisable by the OOGEDT or
its assignee, in whole or in part, at any time on or after the Vesting Date (as hereinafter
defined) and on or before the earlier of ninety (90) days after (a) the First Qualifying Financing
Transaction and (b) the date thirty (30) months after the Effective Date, by delivering to the
principal office of the Company, or at such other office or agency as the Company may
designate by notice in writing to the OOGEDT, a duly executed Notice of Purchase in the form
attached hereto as Exhibit A and, upon payment of the per share Purchase Price multiplied
by the total number of shares thereby purchased (the “Aggregate Purchase Price”) (at the
sole option of the OOGEDT, to be paid by cash or by check or bank draft payable to the order of the
Company, by cashless exercise as described below or by cancellation of indebtedness of the Company
to the OOGEDT), whereupon the OOGEDT shall be entitled to receive a certificate for the number of
shares of Common Stock or Next Financing Shares, as the case may be, so purchased. The OOGEDT, in
its sole discretion, shall elect whether to purchase Common Stock or Next Financing Shares upon its
exercise of the purchase rights hereunder.

(b) “Vesting Date” means the earlier of (i) the date eighteen (18) months after the
Effective Date; (ii) the date on which the First Qualifying Financing Transaction is closed and
consummated; or (iii) the date on which any of the following events occur: (A) any capital
reorganization or any reclassification of the capital stock of the Company; (B) any consolidation
or merger of the Company; (C) the disposition or transfer of assets of the Company other than in
the ordinary course of the Company’s business; (D) any dividend or other distribution to the
holders of capital stock of the Company in the form of any asset, including without limitation
securities of the Company; or (E) the dissolution, liquidation or winding up of the Company; or
(iv) the date of a Stock Acquisition.

Section 2.5 Cashless Exercise. In lieu of paying the Purchase Price, the OOGEDT may
exercise its purchase rights hereunder by cashless exercise, which shall be effected by converting
the Right to Purchase (the “Conversion Right”) into shares of Common Stock or Next
Financing Shares, as the case may be, as follows. Upon exercise of the Conversion Right with
respect to a particular number of shares of Common Stock or Next Financing Shares, as the case may
be (the “Converted Right”), the Company shall deliver to the OOGEDT (without payment by the
OOGEDT of any cash, cancellation of indebtedness or delivery of any other consideration) that
number of shares of Common Stock or Next Financing Shares, as the case may be, equal to the
quotient obtained by dividing (a) the difference between (i) the product of the Stock Price of a
share of Common Stock or Next Financing Shares, as the case may be, and the number of such shares
into which the Converted Right could have been exercised hereunder and (ii) the Aggregate Purchase
Price that would have been payable upon such exercise of the Converted Right, by (b) the applicable
Stock Price.

Section 2.6 Issuance of Shares. The issuance of Next Financing Shares upon exercise
of the purchase rights under this Right to Purchase shall be upon and subject to the same terms and
conditions (other than price and timing) applicable to the First Qualifying Financing Transaction
and, subject to Section 3.4 below, the OOGEDT shall be entitled to all the same rights and
preferences with respect to each share of Next Financing Shares held by the OOGEDT to which all
other holders of shares of the same class and series of stock are entitled. All shares of Common
Stock or Next Financing Shares, as the case may be, issued to the OOGEDT upon a purchase hereunder
shall be validly issued, fully paid, non-assessable and free from all taxes, liens and charges. In
case the OOGEDT shall exercise this Right to Purchase with respect to less than all of the shares
that may be purchased hereunder, or if future disbursements of the Award are made under the Fund
Agreement following any exercise hereof, this Right to Purchase shall thereafter represent the
right to purchase the balance of such shares and any additional shares represented by such
additional Award disbursement. The issuance of certificates for shares upon
exercise of this Right to Purchase shall be made without charge to the holder thereof for any
issuance tax in respect thereof or other cost incurred by the Company in connection with such
exercise and the related issuance of the shares. Notwithstanding anything to the contrary provided
herein, the OOGEDT shall not be required to execute, join or become a party to any other agreement,
including any shareholders agreement, in connection with the issuance to the OOGEDT of Next
Financing Shares or Common Stock.

 

7

 

Section 2.7 Reservation of Shares. The Company shall at all times reserve and keep
available out of its authorized but unissued Common Stock, and once designated, Next Financing
Shares, solely for the purpose of issuance upon the exercise of this Right to Purchase, the maximum
number of shares issuable upon the exercise of this Right to Purchase. If at any time the number
of authorized but unissued shares shall not be sufficient to permit exercise of this Right to
Purchase, the Company shall take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock and Next Financing Shares to such number of shares
as shall be sufficient for such purpose.

Section 2.8 Certain Adjustments. The number of shares of Common Stock or Next
Financing Shares, as the case may be, purchasable hereunder and the Purchase Price shall be subject
to adjustment from time to time as hereinafter provided.

(a) In case of (i) any capital reorganization or any reclassification of the capital stock of
the Company, (ii) any consolidation or merger of the Company, (iii) the disposition or transfer of
assets of the Company other than in the ordinary course of the Company’s business, (iv) any
dividend or other distribution to the holders of capital stock of the Company in the form of
additional shares of capital stock of the Company or its subsidiaries, property of the Company or
its subsidiaries (other than cash) or rights, options or warrants to purchase or otherwise acquire
shares of capital stock of the Company or its subsidiaries, or (v) the dissolution, liquidation or
winding up of the Company, this Right to Purchase shall thereafter be exercisable for and the
OOGEDT shall thereafter be entitled to purchase (and it shall be a condition to the consummation of
any such transaction or event that appropriate provision shall be made so that the OOGEDT shall
thereafter be entitled to purchase) the kind and amount of shares of stock and other securities and
property receivable in such transaction by a holder of the number of shares of Common Stock or Next
Financing Shares, as the case may be, for which this Right to Purchase entitled the OOGEDT to
purchase immediately prior to such capital reorganization, reclassification of capital stock,
non-surviving combination or disposition or other transaction; and in any such case appropriate
adjustments shall be made in the application of the provisions of this paragraph with respect to
rights and interests thereafter purchasable upon the exercise of this Right to Purchase and the
Purchase Price. In the case of a capital reorganization or reclassification, the number of shares
that the OOGEDT is entitled to purchase hereunder shall be proportionately increased in the case of
a split or subdivision or proportionately decreased in the case of a combination and the Purchase
Price shall be proportionately decreased in the case of a split or subdivision or proportionately
increased in the case of a combination.

 

8

 

(b) In the case of any cash dividends declared or paid on the Common Stock or the Next
Financing Shares, as the case may be, of the Company prior to the exercise of this Right to
Purchase, the OOGEDT shall be entitled, upon exercise of this Right to Purchase, to
receive the value of any such dividends to the full extent as if the OOGEDT had exercised this
Right to Purchase as of the date of declaration or payment of any such dividend. The OOGEDT, in
its sole discretion, shall elect one of the two following methods for the Company to pay the value
of such dividends to the OOGEDT: (i) in cash or (ii) by adjusting this Right to Purchase to
represent the right to acquire, in addition to the number of shares receivable upon exercise
hereof, and without payment of any additional consideration therefor, the amount of such other
shares of Common Stock or the Next Financing Shares, as the case may be, of the Company that such
holder could have purchased with such cash dividend at the Stock Price on the date of such exercise
had it received such cash dividends on the date of their distribution and had thereafter retained
such shares and/or all other additional stock available by it as aforesaid during such period,
giving effect to all adjustments called for during such period by the provisions hereof.

(c) Notice of Adjustments or Dividends. Upon any event that has the effect of causing
an adjustment of shares of securities purchasable (or payment of dividends) upon exercise of this
Right to Purchase, a certificate, signed by (i) an authorized officer of the Company or (ii) an
independent firm of certified public accountants selected by the Company at its own expense,
setting forth in reasonable detail the events requiring the adjustment and the method by which such
adjustment was calculated, shall promptly be mailed to the OOGEDT and shall specify the adjusted
Purchase Price and the number of shares of securities (and payment of dividends) purchasable upon
exercise of this Right to Purchase after giving effect to the adjustment.

Section 2.9 Stock Certificate Legend. Each certificate representing shares of Common
Stock or Next Financing Shares issued pursuant to this Right to Purchase shall be imprinted with a
legend in substantially the following form:

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, OR UNLESS SUCH OFFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS EXEMPT FROM REGISTRATION OR IS
OTHERWISE IN COMPLIANCE WITH THE ACT AND SUCH LAWS, AS THE SAME MAY BE AMENDED FROM
TIME TO TIME.

THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF AN INVESTMENT
UNIT AND AN EMERGING TECHNOLOGY FUND SECURITY AND AWARD AGREEMENT, EACH DATED AS OF
                    ,           , BY AND BETWEEN THE COMPANY AND THE STATE OF TEXAS, ACTING BY
AND THROUGH THE OFFICE OF GOVERNOR ECONOMIC DEVELOPMENT AND TOURISM, WHICH
INVESTMENT UNIT AND AGREEMENT CONTAIN, AMONG OTHER PROVISIONS, RESTRICTIONS ON THE
TRANSFER, SALE, OR OTHER DISPOSITION OF THE SHARES EVIDENCED BY THIS
CERTIFICATE. A COPY OF SUCH INVESTMENT UNIT AND AGREEMENT HAS BEEN FILED, AND IS
AVAILABLE FOR REVIEW BY THE RECORD HOLDER OF THIS CERTIFICATE, AT THE PRINCIPAL
OFFICE OF THE COMPANY.

 

9

 

Section 2.10 No Impairment. So long as this Right to Purchase is outstanding and
unexercised, the Company shall not, by amendment of its certificate of formation (or other
formation document) or bylaws or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action avoid or seek to
avoid the observance or performance of any of the terms to be observed or performed hereunder by
the Company, but shall at all times in good faith assist in the carrying out of all the provisions
of this section and in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the OOGEDT hereunder against impairment.

ARTICLE III

MISCELLANEOUS

Section 3.1 Representations and Covenants of the Company.

(a) The Company shall comply with the Act, all applicable state securities laws, and all other
applicable laws and regulations in respect of the issuance of this Unit and the issuance of any
securities issued or issuable under Article II hereof, and shall timely make all required
filings and reports under such laws and regulations.

(b) The Company represents that it has the power to issue this Unit and to carry out the
obligations hereunder, and the execution, delivery and performance by the Company of this Unit has
been duly authorized by all necessary corporate action.

(c) The Company shall maintain or cause to be maintained books, records, documents and other
evidence pertaining to compliance with the requirements contained in this Unit, and during all such
time when the OOGEDT is holding this Unit or any securities issued upon the exercise of the Right
to Purchase under Article II hereof, upon request shall allow or cause the entity which is
maintaining such items to allow the OOGEDT, or auditors for the OOGEDT, including the State Auditor
for the State of Texas, to inspect, audit, copy, or abstract, all of its books, records, papers, or
other documents relevant to this Unit and the securities issued or issuable upon exercise of the
Right to Purchase under Article II hereof. The Company shall use or cause the entity that
is maintaining such books and records to use generally accepted accounting principles in the
maintenance of such books and records, and shall retain or cause to be retained all of such books,
records, documents and other evidence for a period of seven (7) years from and after the later of
(i) the date that the Fund Agreement is terminated or the Fund Agreement’s term expires and (ii)
unless the Right to Purchase hereunder expires without having been exercised, the date on which the
OOGEDT fully divested all rights and ownership of all stock that was issued upon the OOGEDT’s
exercise of its Right to Purchase under Article II hereof.

 

10

 

Section 3.2 Representations and Covenants of the OOGEDT. The OOGEDT, by acceptance of
this Right to Purchase, agrees that the right to purchase shares of Common Stock, Next Financing
Shares or other securities to be issued upon exercise hereof are being acquired for the OOGEDT’s
own account to be held on behalf of the State of Texas pursuant to the provisions of Chapter 490 of
the Texas Government Code and that the OOGEDT shall not offer, sell or otherwise dispose of this
Right to Purchase or any shares issuable hereunder except under circumstances that will not result
in a violation of the Act or any securities laws of any state. Otherwise, the OOGEDT is permitted
at any time and without limitation to offer, sell or otherwise dispose of this Right to Purchase
and any securities issued hereunder in a manner that is in compliance with the Act and any
applicable state securities laws of, including making such offers, sales or dispositions under Rule
144 of the Act. Prior to any offer, sale, or other disposition of this Right to Purchase and any
securities issued hereunder, the OOGEDT shall provide the Company with fifteen (15) days written
notice thereof.

Section 3.3 Notices. Any notice, request or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been duly given if personally delivered
or mailed by registered or certified mail, postage prepaid, or by recognized overnight courier or
personal delivery at the respective addresses of the parties as set forth herein or on the register
maintained by Company. The Company and the OOGEDT may by notice so given change the OOGEDT’s and
Company’s respective address for future notice hereunder. Notice shall conclusively be deemed to
have been given when received. The current addresses for notice are as follows:

	 	 	 	 	 
	 

	 	To OOGEDT:
	 	Financial Services
	 

	 	 	 	ETF Compliance
	 

	 	 	 	PO Box 12878
	 

	 	 	 	Austin, TX 78711-2878
	 

	 	 	 	Email: ETF.Compliance@governor.state.tx.us
	 
	 	 	 	 
	 

	 	 	 	with a concurrent copy to:
	 
	 	 	 	 
	 

	 	 	 	ATTN: Emerging Technology Fund Award Program
	 

	 	 	 	General Counsel
	 

	 	 	 	Office of the Governor
	 

	 	 	 	P.O Box 12428
	 

	 	 	 	Austin, Texas 78711
	 

	 	 	 	Phone: 512-463-1788
	 

	 	 	 	Fax: 512-463-1932
	 
	 	 	 	 
	 

	 	To Company:
	 	John Porter
	 

	 	 	 	Chief Executive Officer
	 

	 	 	 	First Detect
	 

	 	 	 	401 Congress Avenue, Suite 1650
	 

	 	 	 	Austin, Texas  78701
	 

	 	 	 	Phone: (512) 485-9530
	 

	 	 	 	Fax: (512) 485-9531

 

11

 

Section 3.4 No Rights as Shareholder. Nothing in the Unit shall be construed as
conferring on the OOGEDT or any other person any voting rights or other rights as a shareholder of
the Company. Further, from and after any exercise of the Right to Purchase under Article
II hereof, so long as the OOGEDT holds such capital stock, the OOGEDT shall grant a revocable
proxy (the “Proxy”) of all its voting rights to the then-current Chief Executive Officer
(or, if no Chief Executive Officer is then serving, President) of the Company with respect to each
matter that is presented for a vote to holders of capital stock held by the OOGEDT, substantially
in the form attached hereto as Exhibit B (which form shall provide, among other things,
that such Proxy shall be voted in proportionate accordance to the votes of such other holders
(holding shares of the same class and series of stock as the OOGEDT) on the matter). It is the
general intent of the OOGEDT not to revoke the Proxy unless the OOGEDT’s rights and interests would
be adversely and disproportionately effected in connection with a matter on which the OOGEDT
otherwise would have the right to vote, and any such determination regarding whether any such
matter has or would have an adverse or disproportionate effect on the OOGEDT’s rights and interests
shall be made in the sole discretion of the OOGEDT. Notwithstanding anything to the contrary
herein, in the Fund Agreement or in connection with the OOGEDT’s grant of the Proxy, upon exercise
of the Right to Purchase hereunder, the OOGEDT shall become the record holder of the Common Stock
or Next Financing Shares, as the case may be, and shall have all legal and beneficial ownership
rights thereto at all times (except as is specifically set forth in the Proxy). In addition,
notwithstanding the OOGEDT’s grant of the Proxy, the Company shall provide the OOGEDT with all
notices to which holders of Common Stock or Next Financing Shares, as the case may be, are
entitled, including without limitation all notices of shareholders’ meetings and all notices of any
votes upon any matters submitted for a vote of the holders of Common Stock or the Next Financing
Shares, as the case may be, which notices shall be delivered by the Company to the OOGEDT on or
before such date as shall provide the OOGEDT with adequate time to revoke the Proxy prior to such
meeting or vote if the OOGEDT so chooses.

Section 3.5 Right of First Offer. If the OOGEDT shall decide at any time that it
wants to sell, transfer or assign all or any portion of its Common Stock or Next Financing Shares
(as the case may be, the “Offered Shares”) to any person or entity that is not another
Texas state agency, the OOGEDT shall first provide the Company with a written offer to sell the
Offered Shares to the Company at a specified price per share. The Company shall then have thirty
(30) days to accept or reject such offer with respect to all but not less than all of the Offered
Shares. If the Company irrevocably accepts the offer within the applicable time period, the
Company shall have an additional thirty (30) days to complete the purchase of the Offered Shares.
The Company shall be permitted to assign its purchase right under this Section 3.5 to one
or more of its directors or executive officers, but this right shall be otherwise non-assignable by
the Company. If the Company rejects the offer or fails to accept the offer within the applicable
time period with respect to all of the Offered Shares, then the OOGEDT may sell all or a portion of
the Offered Shares that have been offered but not accepted for purchase by the Company within one
hundred eighty (180) days of such rejection or expiration of the time period for response to any
person or entity; provided, that the OOGEDT does not sell any of the Offered Shares for less than
one hundred percent (100%) of the per share price the OOGEDT offered to the Company. If the OOGEDT
does not sell the Offered Shares within the time period and for the price indicated above, it must
comply again with the provisions of this Section 3.5 before selling all or any portion of
the Offered Shares.

 

12

 

Section 3.6 Unit Register. The Company shall maintain at its principal executive
office books for the registration and the registration of transfer of the Unit. The Company may
deem and treat the OOGEDT as the absolute owner hereof (notwithstanding any notation of ownership
or other writing thereon made by anyone) for all purposes, and neither the Company nor the OOGEDT
shall be affected by any notice to the contrary.

Section 3.7 Transfers. The Company shall not close its books against the transfer of
this Unit or of any shares issued or issuable upon the exercise of the Right to Purchase under
Article II hereof in any manner which interferes with the timely exercise of the Right to
Purchase.

Section 3.8 Assignment. Except as specifically set forth in Section 3.5. the
Company shall not assign this Unit or any of its rights or obligations hereunder without the prior
written consent of the OOGEDT. Except as otherwise required by Section 3.5 above, the
OOGEDT may assign this Unit and any of its rights or obligations hereunder without the consent of
the Company but must first provide the Company with fifteen (15) days written notice of such
assignment. Subject to the foregoing, this Unit and all terms, provisions and obligations set
forth herein shall be binding upon and shall inure to the benefit of the parties and their
respective successors and assigns and all other state agencies and any other agencies, departments,
divisions, governmental entities, public corporations and other entities that shall be successors
to any of the parties or that shall succeed to or become obligated to perform or become bound by
any of the covenants, agreements or obligations hereunder of any of the parties hereto.

Section 3.9 Governing Law and Venue. This Unit shall be governed by and construed in
accordance with the laws of the State of Texas and the United States of America from time to time
in effect, without regard to any otherwise applicable conflict of law rules or requirements. The
Company and all endorsers, guarantors and sureties irrevocably agree that any action, claim, suit,
litigation or other proceeding (collectively, “Litigation”) arising out of or in any way
relating to this Unit, or the matters referred to therein, shall be commenced exclusively in the
Travis County District Court or the United States District Court for the Western District of Texas,
Austin Division, and hereby irrevocably and unconditionally consents to the exclusive jurisdiction
of those courts for the purpose of prosecuting and/or defending such Litigation. The Company and
all endorsers, guarantors and sureties hereby waive and agree not to assert by way of motion, as a
defense, or otherwise, in any Litigation that (a) the Company is not personally subject to the
jurisdiction of the above-named courts, (b) the Litigation is brought in an inconvenient forum or
(c) the venue of the Litigation is improper.

Section 3.10 Replacement. Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Unit and, in the case of any such
loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory to the
Company, or in the case of any such mutilation, upon surrender and cancellation of the mutilated
Unit, the Company shall execute and deliver, in lieu thereof, a new Unit of like date and tenor.

Section 3.11 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein shall be a Saturday
or a Sunday or shall be a legal holiday, then such action may be taken or such right may be
exercised on the next succeeding day not a legal holiday.

 

13

 

Section 3.12 Proceeds. This Unit, the securities issuable upon exercise of the Right
to Purchase under Article II hereof, and all amounts of cash or other benefits earned or
received by the OOGEDT hereunder or by sale hereof, are held for and on behalf of the State of
Texas. Any and all cash received by the OOGEDT under or by sale of this Unit or the securities
issuable under the Right to Purchase shall be deposited into the Emerging Technology Fund in
accordance with Chapter 490 of the Texas Government Code.

Section 3.13 Severability. If any one or more of the provisions contained herein, or
the application thereof in any circumstance, is held invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.

Section 3.14 Further Assurances. The Company and the OOGEDT shall execute such
documents and perform such further acts (including, without limitation, obtaining any consents,
exemptions, authorizations or other actions by, or giving any notices to, or making any filings
with, any governmental authority or any other person, and otherwise fulfilling, or causing the
fulfillment of, the various obligations made herein), as may be reasonably required or desirable to
carry out or to perform the provisions of this Unit and to consummate and make effective as
promptly as possible the transactions contemplated by this Unit.

Section 3.15 Agreement by OOGEDT. Receipt of this Unit by the OOGEDT shall constitute
acceptance of and agreement to the foregoing terms and conditions.

Section 3.16 Amendment. Any term of this Unit may be amended and the observance of
any term of this Unit may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and the OOGEDT.

Section 3.17 Headings. The section headings in this Unit are inserted for purposes of
convenience only and shall have no substantive effect.

Section 3.18 Survival. The warranties, representations and covenants contained in or
made pursuant to this Unit shall survive the execution and delivery of this Unit and shall survive
any breach, expiration or termination of the Fund Agreement. Notwithstanding anything herein to
the contrary, this Unit, including without limitation the Right to Purchase under Article
II hereof, shall survive the repayment of the Note.

Section 3.19 Exhibits. The exhibits referred to herein are hereby incorporated fully
herein by this reference.

[Remainder of page intentionally left blank.]

 

14

 

IN WITNESS WHEREOF, the Company has caused this Investment Unit to be signed by its duly
authorized officers in Austin, Texas as of the date and year first written above.

	 	 	 	 	 
	 

	 	1st Detect Corporation
	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	John Porter	 	 
	 

	 	Chief Executive Officer	 	 

 

15

 

EXHIBIT A

Notice of Purchase

The undersigned, representing the State of Texas, acting by and through the Office of Governor
Economic Development and Tourism, together with its nominees or assigns (the “OOGEDT”),
pursuant to the provisions of the Investment Unit, dated [                    ] (the “Unit”), issued
to the OOGEDT by 1st Detect Corporation, a Delaware corporation (the “Company”),
hereby agrees to subscribe for and purchase
                     shares of [Common Stock / Series            Preferred
Stock], par value $0.001 per share, of the Company covered by the Right to Purchase (as defined in
the Unit), and makes such payment therefor in full at the Purchase Price (as defined in the Unit)
either in cash, by cashless exercise or by other method as provided by the Unit.

	 	 	 	 	 
	Signature:

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 	 	 

INSTRUCTIONS FOR REGISTRATION OF STOCK:

	 	 	 	 	 
	Name
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	(please type or print in block letters)
	 
	 	 	 	 
	Address
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Address
	 	 	 	 
	 

	 	 	 	 

 

16

 

Exhibit B

Form of Revocable Proxy

CONTINUING REVOCABLE PROXY

The State of Texas, acting by and through the Office of the Governor Economic Development and
Tourism (the “undersigned”), hereby grants to the then-current Chief Executive Officer (or,
if no Chief Executive Officer is serving, President), of 1st Detect Corporation, a
Delaware corporation (the “Company”), a proxy with full power of substitution to vote, or
execute and deliver written consents or otherwise act with respect to the [INSERT NUMBER] shares of
Stock the undersigned owns, beneficially or of record, that were issued to the undersigned by the
Company on                           , 2     , in proportionate accordance to the votes on the applicable matter of
such other holders of the Company’s Stock who hold shares of the same class and series as held by
the undersigned, as fully, to the same extent and with the same effect as the undersigned
might or could do under any applicable laws or regulations governing the rights and powers of
shareholders of a Texas corporation, and in connection therewith to execute any documents which are
necessary or appropriate in order to effectuate the foregoing, on any matter requiring the vote of
the holders of the Stock, or by written consent in lieu of a meeting, or otherwise, or whether such
vote is to be cast in person, or by proxy, or as otherwise permitted by law. The proxy granted
herein (x) shall be revocable at any time by the undersigned upon notice by the undersigned to the
Company and, (y) notwithstanding Section 21.368 of the Texas Business Organizations Code, Article
2.29(C) of the Texas Business Corporation Act, or any similar or successor statute, shall remain
valid and in effect from the date hereof until the date it is revoked as described in
clause(x) preceding.

	 	 	 	 	 	 	 	 	 
	Date:                     ,       2     	 	THE STATE OF TEXAS
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 

	 	Title:
	 	 	 	Chief of Staff	 	 
	 

	 	 	 	 	 	Office of the Governor	 	 

 

17

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