Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of May 3,
2002, by and among Pemstar Inc., a Minnesota corporation, with headquarters
located at 0000 Xxxxxxxxxx Xxxxx, X.X., Xxxxxxxxx, Xxxxxxxxx 00000 (the
"Company"), and the investors listed on the Schedule of Buyers attached hereto
(individually, a "Buyer" and collectively, the "Buyers").
WHEREAS:
A. The Company and each Buyer is executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");
B. The Company has authorized (i) a new series of convertible notes of
the Company in the form attached hereto as Exhibit A (together with any
convertible notes issued in replacement thereof in accordance with the terms
thereof, the "Initial Notes"), which Initial Notes shall be convertible into
shares of the Company's Common Stock, par value $0.01 per share (the "Common
Stock") (as converted, the "Initial Conversion Shares"), in accordance with the
terms of the Initial Notes, (ii) a new series of convertible notes of the
Company in the form attached hereto as Exhibit B (together with any convertible
notes issued in replacement thereof in accordance with the terms thereof, the
"Subsequent Notes"), which Subsequent Notes shall be convertible into shares of
Common Stock (as converted, the "Subsequent Conversion Shares"), in accordance
with the terms of the Subsequent Notes and (iii) a new series of convertible
notes of the Company in the form attached hereto as Exhibit C (together with any
convertible notes issued in replacement thereof in accordance with the terms
thereof, the "Additional Notes" and, collectively with the Initial Notes and the
Subsequent Notes, the "Notes"), which Additional Notes shall be convertible into
shares of Common Stock (as converted, the "Additional Conversion Shares" and,
collectively with the Initial Conversion Shares and the Subsequent Conversion
Shares, the "Conversion Shares"), in accordance with the terms of the Additional
Notes. The Notes bear interest which at the option of the Company, subject to
certain conditions, may be paid in shares of Common Stock ("Interest Shares");
C. Each Buyer wishes to purchase, upon the terms and conditions stated
in this Agreement, (i) that aggregate principal amount of Initial Notes set
forth opposite such Buyer's name in column (3) on the Schedule of Buyers (which
aggregate principal amount for all Buyers shall be $5,000,000) (the "Initial A-1
Notes") and (ii) warrants, in substantially the form attached hereto as Exhibit
I (the "Initial A-1 Warrants"), to acquire that number of shares of Common Stock
for each $1,000 of principal amount of Initial A-1 Notes purchased equal to the
quotient of (a) $300 divided by (b) the Market Price (as defined in Section
1(i)) with respect to the Initial Closing Date (as defined below) (as exercised,
collectively, the "Initial A-1 Warrant Shares");
D. Upon the terms and conditions stated in this Agreement, each Buyer
may be required to purchase, and the Company may be required to sell, (i) up to
that aggregate principal amount of Initial Notes set forth opposite such Buyer's
name in column (4) on the Schedule of Buyers (which aggregate principal amount
for all Buyers shall be up to$5,000,000) (the "Initial A-2 Notes") and (ii)
warrants, in substantially the form attached hereto as Exhibit I (the "Initial
A-2 Warrants" and, collectively with the Initial A-1 Warrants, the "Initial
Warrants"), to acquire that number of shares of Common Stock for each $1,000 of
principal amount of Initial
A-2 Notes purchased equal to the quotient of (a) $300 divided by (b) the greater
of the Market Price with respect to the Second Closing Date (as defined below)
and the Pricing Condition Floor (as defined in Section 1(i)) with respect to
such Buyer with respect to the Second Closing Date (as exercised, collectively,
the "Initial A-2 Warrant Shares" and, collectively with the Initial A-1 Warrant
Shares, the "Initial Warrant Shares");
E. Upon the terms and conditions stated in this Agreement, each Buyer
may be required to purchase, and the Company may be required to sell, at
multiple closings (i) up to such Buyer's Subsequent Closing Percentage (as
defined in Section 1(i)) of an aggregate principal amount of $30,000,000 of
Subsequent Notes (as increased with respect to such Buyer for any principal
amount of Initial A-2 Notes set forth opposite such Buyer's name in column (4)
of the Schedule of Buyers not purchased by such Buyer at the Second Closing (as
defined below)) and (ii) warrants, in substantially the form attached hereto as
Exhibit I (the "Subsequent Warrants"), to acquire that number of shares of
Common Stock for each $1,000 of principal amount of Subsequent Notes purchased
equal to the quotient of (a) $300 divided by (b) the greater of the Market Price
with respect to the applicable Subsequent Closing Date (as defined below) and
the Pricing Condition Floor with respect to such Buyer with respect to the
applicable Subsequent Closing Date (as exercised, collectively, the "Subsequent
Warrant Shares");
F. Upon the terms and conditions stated in this Agreement, each Buyer
may have the right to purchase, and the Company may be required to sell, (i) up
to such Buyer's Subsequent Closing Percentage of an aggregate principal amount
of $10,000,000 of Additional Notes and (ii) warrants, in substantially the form
attached hereto as Exhibit I (the "Additional Warrants" and, collectively with
the Initial A-1 Warrants, the Initial A-2 Warrants, and the Subsequent Warrants,
the "Warrants"), to acquire that number of shares of Common Stock for each
$1,000 of principal amount of Additional Notes purchased equal to the quotient
of (a) $300 divided by (b) the Market Price with respect to the Additional
Closing Date (as defined below) (as exercised, collectively, the "Additional
Warrant Shares" and, collectively with the Initial A-1 Warrant Shares, the A-2
Warrant Shares and the Subsequent Warrant Shares, the "Warrant Shares"); and
G. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit D (the "Registration Rights
Agreement") pursuant to which the Company has agreed to provide certain
registration rights with respect to the Conversion Shares and the Warrant Shares
under the 1933 Act and the rules and regulations promulgated thereunder, and
applicable state securities laws. The Notes, the Conversion Shares, the Interest
Shares, the Warrants and the Warrant Shares collectively are referred to herein
as the "Securities".
NOW THEREFORE, the Company and each Buyer hereby agree as follows:
1. PURCHASE AND SALE OF NOTES AND WARRANTS.
(a) Purchase of Notes and Warrants.
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(i) Initial Closing. Subject to the satisfaction (or
waiver) of the conditions set forth in Sections 6(a) and 7(a)
below, the Company shall issue and sell to each Buyer, and
each Buyer severally, but not jointly, agrees to purchase from
the Company, a principal amount of the Initial A-1 Notes as is
set forth opposite such Buyer's name in column (3) on the
Schedule of Buyers, along with Initial A-1 Warrants to acquire
that number of Initial A-1 Warrant Shares for each $1,000 of
principal amount of Initial A-1 Notes purchased equal to the
quotient of (a) $300 divided by (b) the Market Price with
respect to the Initial Closing Date (the "Initial Closing").
(ii) Second Closing. Subject to the satisfaction (or
waiver) of the conditions set forth in Sections 6(b) and 7(b),
the Company shall issue and sell to each Buyer, and each Buyer
severally, but not jointly, agrees to purchase from the
Company, the principal amount of Initial A-2 Notes, if any,
equal to such Buyer's Second Closing Amount (as defined in
Section 1(i)), along with Initial A-2 Warrants to acquire that
number of Initial A-2 Warrant Shares for each $1,000 of
principal amount of Initial A-2 Notes purchased equal to the
quotient of (a) $300 divided by (b) the greater of the Market
Price with respect to the Second Closing Date and the Pricing
Condition Floor with respect to such Buyer with respect to the
Second Closing Date (the "Second Closing").
(iii) Subsequent Closings. Subject to the
satisfaction (or waiver) of the conditions set forth in
Sections 6(b) and 7(b) and in accordance with Section 1(d),
the Company shall issue and sell to each Buyer, and each Buyer
severally, but not jointly, agrees to purchase from the
Company, at multiple closings (each a "Subsequent Closing"
and, collectively, the "Subsequent Closings"), such Buyer's
Subsequent Closing Percentage of an aggregate principal amount
of Subsequent Notes equal to $30,000,000 plus the aggregate
principal amount of Initial A-2 Notes set forth opposite such
Buyer's name in column (4) on the Schedule of Buyers which
were not issued to such Buyer at the Second Closing, along
with Subsequent Warrants to acquire that number of Subsequent
Warrant Shares for each $1,000 of principal amount of
Subsequent Notes purchased equal to the quotient of (a) $300
divided by (b) the greater of the Market Price with respect to
the applicable Subsequent Closing Date and the Pricing
Condition Floor with respect to such Buyer with respect to the
applicable Subsequent Closing Date. Subject to the
satisfaction (or waiver) of the conditions set forth in
Sections 6(b) and 7(b) and in accordance with Section 1(d), at
each Subsequent Closing each Buyer shall purchase, and the
Company shall sell to such Buyer, such Buyer's Subsequent
Closing Amount (as defined in Section 1(i)) with respect to
such Subsequent Closing, along with the related Subsequent
Warrants determined in accordance with the preceding sentence.
(iv) Additional Closing. Subject to the satisfaction
(or waiver) of the conditions set forth in Sections 1(e), 6(b)
and 7(b), at the option of each Buyer, the Company shall issue
and sell to each Buyer, at multiple closings, if applicable,
and each Buyer severally, but not jointly, may purchase from
the Company, up to the principal amount of Additional Notes,
if any, equal to such Buyer's Subsequent Closing Percentage of
$10,000,000 (but not in excess of such Buyer's Remaining
Principal Share Amount unless the Shareholder Approval (as
defined in Section 4(n)) has been obtained), along with
Additional Warrants to acquire that number of Additional
Warrant Shares for each $1,000 of principal amount of
Additional Notes purchased equal to the quotient of (a) $300
divided by (b) $7.50 (as appropriately adjusted for any stock
splits, stock dividends, stock combinations and other similar
transactions of the Common Stock
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which occur after the date of this Agreement and, on the terms
of Section 7 of the Additional Notes in proportion to
adjustments that would be made to the initial Conversion Price
thereunder, for any issuances or deemed issuances of
securities by the Company which occur after the date of this
Agreement) (the "Additional Closing" and, collectively with
the Initial Closing, the Second Closing and the Subsequent
Closings, the "Closings" and each, a "Closing").
(v) Purchase Price. The purchase price for each Buyer
(the "Purchase Price") of the Notes and the related Warrants
to be purchased by each such Buyer at each of the Closings
shall be equal to $1.00 for each $1.00 of principal amount of
Notes being purchased by such Buyer at such Closing.
(b) Initial Closing Date. The date and time of the Initial
Closing (the "Initial Closing Date") shall be 10:00 a.m., Central Time,
on May 7, 2002, subject to notification of satisfaction (or waiver) of
the conditions to the Initial Closing set forth in Sections 6(a) and
7(a) below (or such other earlier or later date as is mutually agreed
to by the Company and each Buyer).
(c) Second Closing Date. The date and time of the Second
Closing (the "Second Closing Date") shall be 10:00 a.m., Central Time,
on the third (3rd) Business Day (as defined in Section 1(i)) following
the last Trading Day (as defined in Section 1(i)) of the Initial
Pricing Period (as defined in Section 1(i)), subject to notification of
satisfaction (or waiver) of the conditions to Closing set forth in
Sections 6(b) and 7(b) below (or such other date as is mutually agreed
to by the Company and each Buyer).
(d) Subsequent Closing Dates. The date and time of each
Subsequent Closing (each a "Subsequent Closing Date") shall be 10:00
a.m., Central Time, on the third (3rd) Business Day following the last
Trading Day of each Subsequent Pricing Period (as defined in Section
1(i)), subject to notification of satisfaction (or waiver) of the
conditions to such Subsequent Closing set forth in Sections 6(b) and
7(b) below (or such other date as is mutually agreed to by the Company
and each Buyer), until each Buyer's Subsequent Closing Amount is equal
to zero (other than as a result of any Pricing Condition not being
met); provided, however, that no Subsequent Closing Date shall occur on
or after December 10, 2002.
(e) Additional Closing Date. The date and time of each
Additional Closing (an "Additional Closing Date" and, collectively with
the Initial Closing Date, the Second Closing Date and the Subsequent
Closing Dates, the "Closing Dates" and each a "Closing Date") shall be
10:00 a.m., Central Time, on the date specified in the Additional Note
Notice (as defined below), subject to notification of satisfaction (or
waiver) of the conditions to Closing set forth in Sections 6(b) and
7(b) and the conditions set forth in this Section 1(e) (or such other
date as is mutually agreed to by the Company and each Buyer purchasing
Additional Notes at the Additional Closing). At any time during the
period beginning on and including the earlier of December 11, 2002 and
the first date on which a Buyer's Remaining Principal Amount is zero
and ending on and including the later of December 18, 2002 and the date
which is five (5) Trading Days after such Buyer's receipt of the
Available Additional Note Notice (as defined in Section 1(h)(III)) (the
"Additional Note Notice Period"), such Buyer may purchase, at such
Buyer's option, Additional Notes (but not in excess of such Buyer's
Remaining Principal Share
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Amount unless the Shareholder Approval has been obtained) by delivering
written notice to the Company (an "Additional Note Notice") on any day
during the Additional Note Notice Period (the "Additional Note Notice
Date"). The Additional Note Notice shall set forth (A) the Additional
Closing Date, which shall be two (2) Business Days after the Additional
Note Notice Date, (B) the principal amount of Additional Notes (which
shall not exceed such Buyer's Remaining Principal Share Amount unless
the Shareholder Approval has been obtained) and the number of related
Additional Warrant Shares subject to the related Additional Warrant
such Buyer will purchase, and (C) the aggregate Purchase Price for the
Additional Notes and the related Additional Warrants to be purchased.
(f) Closing Location. Each Closing shall occur on the
applicable Closing Date at the offices of Xxxxxx Xxxxxx Xxxxx Xxxxxxxx,
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000-0000.
(g) Form of Payment. On each Closing Date, (i) each Buyer
shall pay its Purchase Price to the Company for the Notes and Warrants,
if any, to be issued and sold to such Buyer at such Closing, by wire
transfer of immediately available funds in accordance with the
Company's written wire instructions, and (ii) the Company shall deliver
to each Buyer, Notes (in the principal amounts as such Buyer shall
request) (with respect to each such Closing, the "Note Certificates")
representing such principal amount of the Notes which such Buyer is
then purchasing (as determined in accordance with Sections 1(a), 1(d)
and 1(e), as applicable) along with the Warrants such Buyer is
purchasing (as determined in accordance with Sections 1(a), 1(d) and
1(e), as applicable) hereunder, duly executed on behalf of the Company
and registered in the name of such Buyer or its designee.
(h) Closing and Pricing Notices.
(I) On the last Trading Day of each Subsequent
Pricing Period, the Company (or its designated agent) shall
deliver (by facsimile and e-mail) written notice (each a
"Pricing Period Notice") to each Buyer by 11:59 p.m., Central
Time, on such Trading Day, which Pricing Period Notice shall
set forth (i) such Buyer's Total Set Share Amount (as defined
in Section 1(i)) as of such Trading Day and (ii) the Company's
calculation of the Market Price and such Buyer's Subsequent
Closing Amount with respect to the Subsequent Closing Date
immediately following such Subsequent Pricing Period.
(II) Before 11:59 p.m., Central Time, on any Trading
Day during a Subsequent Pricing Period on which a Buyer's
Total Set Share Amount first exceeds such Buyer's Subsequent
Closing Percentage of the Maximum Principal Share Number (as
defined in Section 1(i)), the Company (or its designated
agent) shall deliver (by facsimile and e-mail) written notice
(with respect to each Buyer, each a "Limit Notice") to such
Buyer (i) stating that such Buyer's Total Set Share Amount has
exceeded such Buyer's Subsequent Closing Percentage of the
Maximum Principal Share Number and the Company's calculations
of such fact, including, without limitation, such Buyer's
Total Set Share Amount on such Trading Day and (ii) the
Company's calculation of the Market Price and such Buyer's
Subsequent Closing Amount with respect to the Subsequent
Closing Date immediately following such Subsequent Pricing
Period; provided, however, that the Company shall not be
required to deliver a Limit Notice after the date on which it
obtains
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the Shareholder Approval if the Company obtains the
Shareholder Approval prior to the first date on which the
Company was required, pursuant to this Section 1(h)(II), to
deliver a Limit Notice to any Buyer.
(III) On the first (1st) Business Day following the
earlier of December 10, 2002 and the first date on which a
Buyer's Remaining Principal Amount is zero, the Company (or
its designated agent) shall deliver (by facsimile and e-mail)
written notice (with respect to each Buyer, each an "Available
Additional Note Notice") to such Buyer setting forth the
Company's calculation of such Buyer's Remaining Principal
Share Amount and the aggregate principal amount of Additional
Notes which such Buyer is entitled to purchase pursuant to
Sections 1(a) and 1(e), or, if the Shareholder Approval has
been obtained, setting forth the Company's calculation of such
Buyer's Subsequent Closing Percentage of $10,000,000 of
Additional Notes.
(IV) On or before the first (1st) Business Day
following the last Trading Day of the Initial Pricing Period,
the Company (or its designated agent) shall deliver (by
facsimile and e-mail) to each Buyer a written notice setting
forth the Company's calculation of the Market Price with
respect to the Initial Closing Date and the Second Closing
Date and the Conversion Price of the Initial A-1 Notes and the
Initial A-2 Notes.
(V) If on any Trading Day during the Initial Pricing
Period the Company delivers a Trading Day Designation Notice
(as defined in the Initial A-1 Notes) to any Buyer by 7:30
a.m., Central Time, on such Trading Day, then the Company must
deliver in the same manner the same Trading Day Designation
Notice to all Buyers by 7:30 a.m., Central Time, on such
Trading Day.
(i) Certain Defined Terms. For purposes of this Agreement and
the Registration Rights Agreement and, unless otherwise defined
therein, the Notes and the Warrants, the following terms have the
following meanings:
(i) "Assumed Conversion Price" means (A) for purposes
of the term Remaining Principal Share Amount with respect to a
Buyer being used in the definition of Subsequent Closing
Amount as of any Subsequent Closing Date, 120% of the greater
of the Market Price with respect to such Subsequent Closing
Date and the Pricing Condition Floor with respect to such
Buyer with respect to such Subsequent Closing Date and (B) for
purposes of determining the principal amount of Additional
Notes a Buyer may purchase, if any, and for purposes of
setting forth the Remaining Principal Share Amount in an
Available Additional Note Notice, $9.00 (as appropriately
adjusted for any stock splits, stock dividends, stock
combinations and other similar transactions of the Common
Stock which occur after the date of this Agreement and, on the
terms of Section 7 of the Additional Notes, for any issuances
or deemed issuances of securities by the Company which occur
after the date of this Agreement).
(ii) "Business Day" means any day other than
Saturday, Sunday and any other day on which commercial banks
in The City of New York are authorized or required by law to
remain closed.
(iii) "Initial Pricing Period" means the period
beginning on and including the date which is three (3) Trading
Days after the Initial Closing Date and ending on
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and including the date which is 18 Trading Days after the
Initial Closing Date.
(iv) "Market Price" means (A) with respect to the
Initial Closing Date and the Second Closing Date, that price
which shall be computed as the arithmetic average of the
Weighted Average Price (as defined in the Initial A-1 Notes)
of the Common Stock on each Designated Trading Day (as defined
in the Initial A-1 Notes) during the Initial Pricing Period,
(B) with respect to any Subsequent Closing Date, that price
which shall be computed as the arithmetic average of the
Weighted Average Price of the Common Stock on each Trading Day
during the Subsequent Pricing Period immediately preceding
such Subsequent Closing Date (excluding, with respect to any
Buyer, those Trading Days (and the Weighted Average Prices on
such Trading Days) on and after the Trading Day on which the
Company is required, pursuant to Section 1(h)(II), to deliver
a Limit Notice to such Buyer) and (C) with respect to any
Additional Closing Date, $7.50 (as appropriately adjusted for
any stock splits, stock dividends, stock combinations and
other similar transactions of the Common Stock which occur
after the date of this Agreement and, on the terms of Section
7 of the Additional Notes in proportion to adjustments that
would be made to the initial Conversion Price thereunder, for
any issuances or deemed issuances of securities by the Company
which occur after the date of this Agreement). All such
determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar
transaction during such period.
(v) "Maximum Closing Amount" means, with respect to
each Buyer with respect to a Subsequent Closing Date: (A) if
the Pricing Condition was met with respect to the Closing Date
immediately preceding such Subsequent Closing Date (or, if
despite the Pricing Condition not being met with respect to
such preceding Closing Date, such Buyer elected to purchase
the maximum principal amount of Notes that such Buyer could
purchase on such preceding Closing Date) and is met with
respect to such Subsequent Closing Date, then such Buyer's
Subsequent Closing Percentage of $10,000,000; (B) if the
Pricing Condition was not met with respect to the Closing Date
immediately preceding such Subsequent Closing Date but is met
with respect to such Subsequent Closing Date, then the
difference of (I) such Buyer's Subsequent Closing Percentage
of $10,000,000 minus (II) the aggregate principal amount of
Notes purchased by such Buyer pursuant to this Agreement since
the last Target Day, or, if no Target Day has occurred, since
the date of this Agreement; or (C) if the Pricing Condition is
not met with respect to such Subsequent Closing Date, then
zero, unless within one (1) Business Day after the last
Trading Day of the Pricing Period immediately preceding such
Subsequent Closing Date such Buyer delivers written notice to
the Company of such Buyer's election to purchase Subsequent
Notes, in which case, the aggregate principal amount of
Subsequent Notes which such Buyer will purchase at such
Subsequent Closing Date shall be as set forth in such written
notice up to the amount determined pursuant to clause (A) or
(B), as applicable (assuming for purposes of such
determination the Pricing Condition had been met with respect
to such Subsequent Closing Date).
(vi) "Maximum Principal Share Number" means 5,372,058
(as appropriately adjusted for any stock splits, stock
dividends, stock combinations and other similar transactions
of the Common Stock which occur after the date of this
Agreement).
(vii) "Pricing Condition" means, with respect to a
Buyer with respect to a Closing Date (other than the Initial
Closing Date), that the Market Price with respect to such
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Closing Date is greater than or equal to the Pricing Condition
Floor with respect to such Buyer with respect to such Closing
Date.
(viii) "Pricing Condition Floor" means, with respect
to a Buyer with respect to a Closing Date (other than the
Initial Closing Date) (A) on or prior to the First Target Day
(as defined below), $5.42 (as appropriately adjusted for any
stock splits, stock dividends, stock combinations and other
similar transactions of the Common Stock which occur after the
date of this Agreement, (B) after the First Target Date and on
or prior to the Second Target Day (as defined below), $5.84
(as appropriately adjusted for any stock splits, stock
dividends, stock combinations and other similar transactions
of the Common Stock which occur after the date of this
Agreement) or (C) after the Second Target Day, $6.25 (as
appropriately adjusted for any stock splits, stock dividends,
stock combinations and other similar transactions of the
Common Stock which occur after the date of this Agreement).
(ix) "Pricing Period" means the Initial Pricing
Period or any Subsequent Pricing Period, as applicable.
(x) "Remaining Principal Amount" means, with respect
to a Buyer as of any date of determination, the difference of
(A) such Buyer's Subsequent Closing Percentage of $40,000,000
minus (B) the aggregate principal amount of Notes purchased by
such Buyer pursuant to this Agreement prior to such date of
determination.
(xi) "Remaining Principal Share Amount" means, with
respect to a Buyer as of any date of determination, that
principal amount of Notes which would be convertible, at the
Assumed Conversion Price, into a number of Conversion Shares
equal to the difference between (A) such Buyer's Subsequent
Closing Percentage of the Maximum Principal Share Number minus
(B) the aggregate number of Conversion Shares issuable upon
conversion of the aggregate principal amount of Notes
purchased by such Buyer prior to such date of determination,
assuming each such Note had been converted in full on its
applicable Closing Date at the Conversion Price for such Note
as of such Closing Date (without regard to any limitations on
conversions or the accrual of any Interest (as defined in the
Notes) on such Notes).
(xii) "Second Closing Amount" means, with respect to
each Buyer: (i) if the Pricing Condition is met with respect
to the Second Closing Date, then the aggregate principal
amount of Initial A-2 Notes set forth opposite such Buyer's
name in column (4) on the Schedule of Buyers; or (ii) if the
Pricing Condition is not met with respect to the Second
Closing Date, then zero, unless within one (1) Business Day
after the last Trading Day of the Initial Pricing Period such
Buyer delivers written notice to the Company of such Buyer's
election to purchase Initial A-2 Notes, in which case, the
aggregate principal amount of Initial A-2 Notes in such
written notice (which amount shall in no event exceed the
aggregate principal amount of Initial A-2 Notes set forth
opposite such Buyer's name in column (4) on the Schedule of
Buyers).
(xiii) "Subsequent Closing Amount" means, with
respect to a Buyer with respect to a Subsequent Closing Date,
the least of (A) the Maximum Closing Amount, (B) the Remaining
Principal Amount and (C) the Remaining Principal Share Amount
immediately preceding such Subsequent Closing Date; provided,
however, that if the Company has obtained the Shareholder
Approval prior to the first date on which the Company is
required, pursuant to
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Section 1(h)(II), to deliver a Limit Notice to any Buyer, then
"Subsequent Closing Amount" shall mean, with respect to a
Buyer with respect to a Subsequent Closing Date after the
receipt of the Shareholder Approval, the lesser of (I) the
Maximum Closing Amount and (II) the Remaining Principal Amount
immediately preceding such Subsequent Closing Date.
(xiv) "Subsequent Closing Percentage" means, with
respect to a Buyer, the percentage set forth opposite such
Buyer's name in column (5) on the Schedule of Buyers.
(xv) "Subsequent Pricing Period" means each period
beginning on and including the date which is 4 Trading Days
after the last Trading Day of the immediately preceding
Pricing Period and ending on and including the date which is
13 Trading Days after the last Trading Day of the immediately
preceding Pricing Period.
(xvi) "Target Day" means, with respect to a Buyer,
each of (A) the first (1st) day as of which the aggregate
principal amount of Notes purchased by such Buyer pursuant to
this Agreement equals such Buyer's Subsequent Closing
Percentage of $10,000,000 (the "First Target Day"), (B) the
first (1st) day as of which the aggregate principal amount of
Notes purchased by such Buyer pursuant to this Agreement
equals such Buyer's Subsequent Closing Percentage of
$20,000,000 (the "Second Target Day"), (C) the first (1st) day
as of which the aggregate principal amount of Notes purchased
by such Buyer pursuant to this Agreement equals such Buyer's
Subsequent Closing Percentage of $30,000,000 and (D) the first
(1st) day as of which the aggregate principal amount of Notes
purchased by such Buyer pursuant to this Agreement equals such
Buyer's Subsequent Closing Percentage of $40,000,000.
(xvii) "Total Set Share Amount" means, with respect
to a Buyer as used in a Pricing Period Notice, the sum of (A)
the aggregate number of Conversion Shares issuable upon
conversion of the aggregate principal amount of Notes
purchased by such Buyer prior to such date of determination,
assuming each such Note had been converted in full on its
applicable Closing Date at the Conversion Price for such Note
as of such Closing Date (without regard to any limitations on
conversions or the accrual of any Interest (as defined in the
Notes) on such Notes) and (B) the result of (I) the product of
(x) the number of Trading Days during the period beginning on
and including the first day of the Pricing Period during which
such Pricing Period Notice is being delivered and ending on
and including the date such Pricing Period Notice is being
delivered, multiplied by (y) one-tenth (1/10) of the lower of
such Buyer's Maximum Closing Amount (assuming for purposes of
such determination that the Pricing Condition were met with
respect to such Closing Date immediately following such
Pricing Period) and such Buyer's Remaining Principal Amount,
divided by (II) 120% of the arithmetic average of the Weighted
Average Price of the Common Stock on each Trading Day during
the period beginning on and including the first day of the
Pricing Period during which such Pricing Period Notice is
being delivered and ending on and including the date such
Pricing Period Notice is being delivered.
(xiii) "Trading Day" shall have the meaning set forth
in the Notes.
(xix) "Weighted Average Price" shall have the meaning
set forth in the Notes.
-9-
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself that:
(a) No Public Sale or Distribution. Such Buyer (i) is
acquiring the Notes and the Warrants and (ii) upon exercise of the
Warrants (other than pursuant to a Cashless Exercise (as defined in
Section 1(d) of the Warrants)), will acquire the Warrant Shares
issuable upon exercise thereof, for its own account and not with a view
towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered or exempted
under the 1933 Act; provided, however, that by making the
representations herein, such Buyer does not agree to hold any of the
Securities for any minimum or other specific term and reserves the
right to dispose of the Securities at any time in accordance with or
pursuant to a registration statement or an exemption under the 1933
Act.
(b) Accredited Investor Status. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D.
(c) Reliance on Exemptions. Such Buyer understands that the
Securities are being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying in part upon
the truth and accuracy of, and such Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and
understandings of such Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of such Buyer to
acquire the Securities.
(d) Experience of Buyer. Such Buyer, either alone or together
with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the
Securities. Such Buyer is able to bear the economic risk and complete
loss of its investment in the Securities.
(e) Information. Such Buyer and its advisors, if any, have
been furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer and
sale of the Securities which have been requested by such Buyer. Such
Buyer and its advisors, if any, have been afforded the opportunity to
ask questions of the Company. Neither such inquiries nor any other due
diligence investigations conducted by such Buyer or its advisors, if
any, or its representatives shall modify, amend or affect such Buyer's
right to rely on the Company's representations and warranties contained
herein. Such Buyer understands that its investment in the Securities
involves a high degree of risk. Such Buyer has sought such accounting,
legal and tax advice as it has considered necessary to make an informed
investment decision with respect to its acquisition of the Securities.
(f) No Governmental Review. Such Buyer understands that no
United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or
endorsement of the Securities or the fairness or suitability of the
investment in the Securities nor have such authorities passed upon or
endorsed the merits of the
-10-
offering of the Securities.
(g) Transfer or Resale. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Securities have
not been and are not being registered under the 1933 Act or any state
securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, (B) such
Buyer shall have delivered to the Company an opinion of counsel, in a
generally acceptable form, to the effect that such Securities to be
sold, assigned or transferred may be sold, assigned or transferred
pursuant to an exemption from such registration, or (C) such Buyer
provides the Company with reasonable assurance that such Securities can
be sold, assigned or transferred pursuant to Rule 144 promulgated under
the 1933 Act, as amended, (or a successor rule thereto) ("Rule 144");
(ii) any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 and further, if Rule
144 is not applicable, any resale of the Securities under circumstances
in which the seller (or the Person (as defined in Section 3(r)) through
whom the sale is made) may be deemed to be an underwriter (as that term
is defined in the 0000 Xxx) may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (iii) neither the Company nor any other Person is under
any obligation to register the Securities under the 1933 Act or any
state securities laws or to comply with the terms and conditions of any
exemption thereunder.
(h) Legends. Such Buyer understands that the certificates or
other instruments representing the Notes and the Warrants and, until
such time as the sale of the Conversion Shares, the Interest Shares and
the Warrant Shares have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement, the stock
certificates representing the Conversion Shares, the Interest Shares
and the Warrant Shares, except as set forth below, shall bear any
legend required by the "blue sky" laws of any state and a restrictive
legend in substantially the following form (and a stop-transfer order
may be placed against transfer of such stock certificates):
[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE BEEN] [THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN]
REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT EITHER
(I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY
APPLICABLE STATE SECURITIES LAWS, (II) AN OPINION OF COUNSEL,
IN A GENERALLY ACCEPTABLE FORM, THAT SUCH TRANSFER MAY BE MADE
WITHOUT REGISTRATION OR QUALIFICATION UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR (III) SUCH TRANSFER BEING
MADE PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, [THIS [NOTE/ WARRANT] AND THE SECURITIES INTO WHICH
THIS [NOTE/WARRANT] IS [CONVERTIBLE/EXERCISABLE]] [THE
SECURITIES] MAY BE PLEDGED
-11-
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of the Securities upon
which it is stamped, if, unless otherwise required by state securities
laws, (i) such Securities are registered for sale under the 1933 Act,
(ii) in connection with a sale, assignment or other transfer, such
holder provides the Company with an opinion of counsel, in a generally
acceptable form, to the effect that such sale, assignment or transfer
of the Securities may be made without registration under the 1933 Act,
(iii) following any sale of such Securities pursuant to Rule 144, or
(iv) if such Securities are eligible for resale under Rule 144(k).
(i) Validity; Enforcement. Such Buyer is a validly existing
corporation, partnership, limited liability company or other entity and
has the requisite corporate, partnership, limited liability or other
organizational power and authority to invest in the Securities pursuant
to this Agreement. This Agreement has been, and as of the Initial
Closing the Registration Rights Agreement shall have been, duly and
validly authorized, executed and delivered on behalf of such Buyer and
this Agreement is, and as of the Initial Closing the Registration
Rights Agreement shall be, a valid and binding obligation of such
Buyer, enforceable against such Buyer in accordance with its terms,
except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights
and remedies.
(j) Residency. Such Buyer is a resident of that country
specified in its address on the Schedule of Buyers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that:
(a) Organization and Qualification. The Company and its
"Subsidiaries" (which for purposes of this Agreement means any entity
in which the Company, directly or indirectly, owns capital stock or
holds an equity or similar interest) are corporations duly organized
and validly existing in good standing under the laws of the
jurisdiction in which they are incorporated, and have the requisite
corporate power and authorization to own their properties and to carry
on their business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which its ownership of
property or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse
Effect. As used in this Agreement, "Material Adverse Effect" means any
material adverse effect on the business, properties, assets,
operations, results of operations, financial condition or prospects of
the Company and its Subsidiaries, if any, taken as a whole, or on the
transactions contemplated hereby or by the agreements and instruments
to be entered into in connection herewith, or on the authority or
ability of the Company to perform its obligations under the Transaction
Documents (as defined below). The Company has no Subsidiaries except as
set forth on Schedule 3(a).
-12-
(b) Authorization; Enforcement; Validity. The Company has the
requisite corporate power and authority to enter into and perform this
Agreement, the Notes, the Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions (as defined in Section 5(b)),
the Warrants and each of the other agreements entered into by the
parties hereto in connection with the transactions contemplated by this
Agreement (collectively, the "Transaction Documents") and to issue the
Securities in accordance with the terms hereof and thereof. The
execution and delivery of the Transaction Documents by the Company and
the consummation by the Company of the transactions contemplated hereby
and thereby, including, without limitation, the issuance of the Notes
and the Warrants and the reservation for issuance and the issuance of
the Conversion Shares and the Warrant Shares issuable upon conversion
or exercise thereof, as the case may be, have been duly authorized by
the Company's Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
shareholders. This Agreement and the other Transaction Documents of
even date herewith have been duly executed and delivered by the
Company, and constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting
generally, the enforcement of creditors' rights and remedies. As of
each Closing, the Transaction Documents dated after the date hereof
required to have been executed and delivered with respect to such
Closing shall have been duly executed and delivered by the Company, and
shall constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by general principles of equity
or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
(c) Issuance of Securities. The Notes are duly authorized and,
upon issuance in accordance with the terms hereof, shall be free from
all taxes, liens and charges with respect to the issue thereof. As of
the applicable Closing, a number of shares of Common Stock shall have
been duly authorized and reserved for issuance which equals the sum of
120% of the number of shares of Common Stock issuable upon conversion
of, or as payment for interest on, the Notes to be issued at such
Closing and 100% of the number of shares of Common Stock issuable upon
exercise of the Warrants to be issued at such Closing (subject to
adjustment pursuant to the Company covenants set forth in the Notes and
the Warrants). Upon conversion or exercise in accordance with the Notes
or the Warrants, as the case may be, and upon issuance of the Interest
Shares as interest on the Notes, the Conversion Shares, the Warrant
Shares and the Interest Shares, respectively, will be validly issued,
fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issue thereof, with the holders being entitled to
all rights accorded to a holder of Common Stock. Subject to the
accuracy as to factual matters of the Buyers' representations in
Section 2, the issuance by the Company of the Securities is exempt from
registration under the 1933 Act.
(d) No Conflicts. Except as disclosed in Schedule 3(d), the
execution, delivery and performance of the Transaction Documents by the
Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the
reservation for issuance and issuance of the Conversion Shares, the
Interest Shares
-13-
and the Warrant Shares) will not (i) result in a violation of the
Articles of Incorporation, any Certificate of Designations, Preferences
and Rights of any outstanding series of preferred stock of the Company
or the Bylaws or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party,
or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and
regulations and the rules and regulations of the Principal Market (as
defined below)) applicable to the Company or any of its Subsidiaries or
by which any property or asset of the Company or any of its
Subsidiaries is bound or affected.
(e) Consents. Except as disclosed in Schedule 3(e), the
Company is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court, governmental
agency or any regulatory or self-regulatory agency or any other Person
in order for it to execute, deliver or perform any of its obligations
under or contemplated by the Transaction Documents, in each case in
accordance with the terms hereof or thereof other than filings that
will have been made pursuant to applicable state securities laws and
post-sale filings pursuant to applicable state and federal securities
laws and the additional listing application requirements of The Nasdaq
Stock Market, Inc., which the Company undertakes to file within the
applicable time periods. All consents, authorizations, orders, filings
and registrations which the Company is required to obtain pursuant to
the preceding sentence have been obtained or effected on or prior to
the date hereof. The Company and its Subsidiaries are unaware of any
facts or circumstances which might prevent the Company from obtaining
or effecting any of the foregoing.
(f) Acknowledgment Regarding Buyer's Purchase of Securities.
The Company acknowledges and agrees that each Buyer is acting solely in
the capacity of arm's length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby and thereby, and
that no Buyer is (i) an officer or director of the Company, (ii) to the
knowledge of the Company, an "affiliate" of the Company (as defined in
Rule 144) or (iii) to the knowledge of the Company, a "beneficial
owner" of more than 10% of the Common Stock (as defined for purposes of
Rule 13d-3 of the 1934 Act (as defined below)). The Company further
acknowledges that no Buyer is acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to
the Transaction Documents and the transactions contemplated hereby and
thereby, and any advice given by a Buyer or any of its representatives
or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to
such Buyer's purchase of the Securities. The Company further represents
to each Buyer that the Company's decision to enter into the Transaction
Documents has been based solely on the independent evaluation by the
Company and its representatives.
(g) No General Solicitation; Placement Agent. Neither the
Company, nor any of its affiliates, nor any Person acting on its or
their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection
with the offer or sale of the Securities. The Company acknowledges that
it has engaged Xxxxxx Brothers Inc. as placement agent (the "Agent") in
connection with the sale of the Notes and the Warrants, which Agent may
have formally or informally engaged other agents on its behalf. Other
than the
-14-
Agent, the Company has not engaged any placement agent, broker, dealer,
finder or other agent in connection with the sale of the Notes and the
Warrants.
(h) No Integrated Offering. None of the Company, its
Subsidiaries, any of their affiliates, and any Person acting on their
behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under
circumstances that would require registration of any of the Securities
under the 1933 Act or cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the 1933
Act or any applicable shareholder approval provisions, including,
without limitation, under the rules and regulations of any exchange or
automated quotation system on which any of the securities of the
Company are listed or designated. None of the Company, its
Subsidiaries, their affiliates and any Person acting on their behalf
will take any action or steps referred to in the preceding sentence
that would require registration of any of the Securities under the 1933
Act or cause the offering of the Securities to be integrated with other
offerings.
(i) Dilutive Effect. The Company understands and acknowledges
that the number of Conversion Shares issuable upon conversion of the
Notes and the Warrant Shares issuable upon exercise of the Warrants
will increase in certain circumstances. The Company further
acknowledges that its obligation to issue Conversion Shares upon
conversion of the Notes in accordance with this Agreement and the Notes
and its obligation to issue the Warrant Shares upon exercise of the
Warrants in accordance with this Agreement and the Warrants, is, in
each case, absolute and unconditional regardless of the dilutive effect
that such issuance may have on the ownership interests of other
shareholders of the Company.
(j) Application of Takeover Protections; Rights Agreement. The
Company and its Board of Directors have taken all necessary action, if
any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a
rights agreement) or other similar anti-takeover provision under the
Articles of Incorporation or the laws of the state of its incorporation
which is or could become applicable to any Buyer as a result of the
transactions contemplated by this Agreement, including, without
limitation, the Company's issuance of the Securities and any Buyer's
ownership of the Securities. The Company specifically represents,
warrants and agrees that, in accordance with Section 1 of the rights
agreement, dated August 11, 2000, between the Company and Xxxxx Fargo
Bank Minnesota, N.A. (the "Rights Plan"), regardless of the number of
Conversion Shares, Interest Shares and Warrant Shares of which each
Buyer is deemed the Beneficial Owner (as defined in the Rights Plan),
none of the Buyers is intended to be or will be deemed to be an
Acquiring Person within the meaning of the Rights Plan because of the
acquisition of the Securities (including the Conversion Shares,
Interest Shares and the Warrant Shares) pursuant to this Agreement, and
the acquisition of the Securities (including the Conversion Shares,
Interest Shares and the Warrant Shares) pursuant to this Agreement,
shall not, under any circumstances, trigger a Distribution Date within
the meaning of the Rights Plan; provided, however, that only Securities
(including the Conversion Shares, Interest Shares and the Warrant
Shares) acquired pursuant to this Agreement, upon conversion of the
Notes or upon exercise of the Warrants, as the case may be, shall be
deemed excluded from the number of shares of Common Stock deemed
beneficially owned by each Buyer in determining whether such Buyer is
an Acquiring Person within the meaning of the Rights Plan.
-15-
(k) SEC Documents; Financial Statements. Since August 7, 2000,
the Company has filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as
amended (the "1934 Act") (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the "SEC Documents"). A complete and
accurate list of all the SEC Documents is set forth in Schedule 3(k)
and all such SEC Documents were filed on the SEC's Xxxxx System. As of
their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed
with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in
the SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except
(i) as may be otherwise indicated in such financial statements or the
notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments). No
other written information provided by or on behalf of the Company to
the Buyers which is not included in the SEC Documents, including,
without limitation, information referred to in Section 2(e) of this
Agreement, contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements
therein, in the light of the circumstance under which they are or were
made, not misleading.
(l) Absence of Certain Changes. Except as disclosed with
reasonable specificity in the SEC Documents filed at least ten days
prior to the date of this Agreement or as disclosed in Schedule 3(l),
since March 31, 2001 there has been no material adverse change and no
material adverse development in the business, properties, operations,
financial condition, results of operations or prospects of the Company
or its Subsidiaries. During the period beginning on and including April
1, 2001 and ending on and including March 31, 2002, the Company has not
(i) declared or paid any dividends, (ii) sold any assets, individually
or in the aggregate, in excess of $5,000,000 outside of the ordinary
course of business or (iii) had capital expenditures, individually or
in the aggregate, in excess of $40,000,000. The Company has not taken
any steps to seek protection pursuant to any bankruptcy law nor does
the Company or any of its Subsidiaries have any knowledge or reason to
believe that its creditors intend to initiate involuntary bankruptcy
proceedings or any actual knowledge of any fact which would reasonably
lead a creditor to do so. The Company is not as of the date hereof, and
after giving effect to the transaction contemplated hereby, will not be
Insolvent (as defined below). For purposes of this Section 3(l),
"Insolvent" means (i) the present fair saleable value of the Company's
assets is less than the amount required to pay the Company's total
indebtedness, contingent or otherwise, (ii) the Company is unable to
pay its debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured, (iii) the
-16-
Company intends to incur or believes that it will incur debts that
would be beyond its ability to pay as such debts mature or (iv) the
Company has unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and
is proposed to be conducted.
(m) Certain Financial Matters. As of the date hereof and as of
the Initial Closing Date, the Company has no knowledge that the
aggregate amount of all charges related to restructuring, impairment of
assets (including write-offs of inventory and accounts receivable) and
other non-recurring items (other than non-cash charges for write-offs
of goodwill and related non-cash charges with respect to deferred tax
assets) to be recorded by the Company in the quarter ended March 31,
2002 will exceed $10,000,000, on a pre-tax basis.
(n) Conduct of Business; Regulatory Permits. Neither the
Company nor its Subsidiaries is in violation of any term of or in
default under the Articles of Incorporation, any Certificate of
Designations, Preferences and Rights of any outstanding series of
preferred stock of the Company, Bylaws or such Subsidiaries'
organizational charter or bylaws, respectively. Except as disclosed in
Schedule 3(n), neither the Company nor any of its Subsidiaries is in
violation of any judgment, decree or order or any statute, ordinance,
rule or regulation applicable to the Company or its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries
is bound or affected, and neither the Company nor any of its
Subsidiaries will conduct its business in violation of any of the
foregoing, except for possible violations which would not, individually
or in the aggregate, have a Material Adverse Effect. Without limiting
the generality of the foregoing, the Company is not in violation of any
of the rules, regulations or requirements of the Nasdaq National Market
(the "Principal Market") and has no knowledge of any facts or
circumstances which would reasonably lead to delisting or suspension of
the Common Stock by the Principal Market. Since August 7, 2000, (i) the
Common Stock has been designated for quotation or listed on the
Principal Market, (ii) trading in the Common Stock has not been
suspended by the SEC or the Principal Market and (iii) the Company has
received no communication, written or oral, from the SEC or the
Principal Market regarding the suspension or delisting of the Common
Stock from the Principal Market. The Company and its Subsidiaries
possess all certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary
to conduct their respective businesses, except where the failure to
possess such certificates, authorizations or permits would not have,
individually or in the aggregate, a Material Adverse Effect, and
neither the Company nor any such Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
(o) Foreign Corrupt Practices. Neither the Company, nor any of
its Subsidiaries, nor any director, officer, agent, employee or other
Person acting on behalf of the Company or any of its Subsidiaries has,
in the course of its actions for, or on behalf of, the Company, (i)
used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political
activity, (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate
funds, (iii) violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended or (iv) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or
employee.
-17-
(p) Transactions With Affiliates. Except as set forth on
Schedule 3(p) or in the SEC Documents filed at least ten days prior to
the date of this Agreement and other than the grant of stock options
disclosed on Schedule 3(q), none of the officers or directors of the
Company is presently a party to any transaction with the Company or any
of its Subsidiaries (other than for services as officers or directors
of the Company), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental
of real or personal property to or from, or otherwise requiring
payments to or from any such officer or director or employee or, to the
knowledge of the Company, any corporation, partnership, trust or other
entity in which any such officer, director, or employee has a material
interest or is an officer or director, trustee or partner.
(q) Equity Capitalization. As of the date hereof, the
authorized capital stock of the Company consists of (x) 150,000,000
shares of Common Stock, of which as of the date hereof, 36,715,255
shares are issued and outstanding, 3,791,508 shares are reserved for
issuance pursuant to the Company's stock option and purchase plans and
none are reserved for issuance pursuant to securities (other than the
Notes and the Warrants) exercisable or exchangeable for, or convertible
into, shares of Common Stock, and (y) 5,000,000 shares of preferred
stock, of which as of the date hereof, none are issued and outstanding,
and, except with respect to the Rights Plan, none are reserved for
issuance. All of such outstanding shares have been, or upon issuance
will be, validly issued and are fully paid and nonassessable. Except as
disclosed in Schedule 3(q): (i) no shares of the Company's capital
stock are subject to preemptive rights or any other similar rights or
any liens or encumbrances suffered or permitted by the Company; (ii)
there are no outstanding options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable
for, any shares of capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements
by which the Company or any of its Subsidiaries is or may become bound
to issue additional shares of capital stock of the Company or any of
its Subsidiaries or options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of
the Company or any of its Subsidiaries; (iii) there are no agreements
or arrangements under which the Company or any of its Subsidiaries is
obligated to register the sale of any of their securities under the
1933 Act (except the Registration Rights Agreement); (iv) there are no
outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions, and
there are no contracts, commitments, understandings or arrangements by
which the Company or any of its Subsidiaries is or may become bound to
redeem a security of the Company or any of its Subsidiaries; (v) there
are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Securities;
and (vi) the Company does not have any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or agreement.
The Company has furnished to each Buyer true, correct and complete
copies of the Company's Articles of Incorporation, as amended and as in
effect on the date hereof (the "Articles of Incorporation"), and the
Company's Bylaws, as amended and as in effect on the date hereof (the
"Bylaws"), and the terms of all securities convertible into or
exercisable or exchangeable for Common Stock, other than securities
issued pursuant to the Company's stock option plans, and the material
rights of the holders thereof in respect thereto.
(r) Indebtedness. As of the date hereof and as of the Initial
Closing Date,
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except as disclosed in Schedule 3(r), neither the Company nor any of
its Subsidiaries has any outstanding Indebtedness (as defined below).
As of the date hereof and as of the applicable Closing Date, neither
the Company nor any of its Subsidiaries (i) is in violation of any term
of or in default under any Indebtedness, except where such violations
and defaults would not result, individually or in the aggregate, in a
Material Adverse Effect, or (ii) is a party to any Indebtedness the
performance of which, in the judgement of the Company's officers, has
or is expected to have, individually or in the aggregate, a Material
Adverse Effect, assuming that the Company and its Subsidiaries remain
in compliance in all material respects with the terms and conditions of
such Indebtedness. Schedule 3(r) identifies whether all Indebtedness
listed thereon is secured or unsecured. For purposes of this Agreement:
(x) "Indebtedness" of any Person means, without duplication (A) all
indebtedness for borrowed money, (B) all obligations issued, undertaken
or assumed as the deferred purchase price of property or services
(other than trade payables entered into in the ordinary course of
business), (C) all reimbursement or payment obligations with respect to
letters of credit, surety bonds and other similar instruments, (D) all
obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other
title retention agreement, or incurred as financing, in either case
with respect to any property or assets acquired with the proceeds of
such indebtedness (even though the rights and remedies of the seller or
bank under such agreement in the event of default are limited to
repossession or sale of such property), (F) all monetary obligations
under any leasing or similar arrangement which, in connection with
generally accepted accounting principles, consistently applied for the
periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by
(or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any mortgage, lien, pledge,
change, security interest or other encumbrance upon or in any property
or assets (including accounts and contract rights) owned by any Person,
even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and (H)
all Contingent Obligations in respect of indebtedness or obligations of
others of the kinds referred to in clauses (A) through (G) above; (y)
"Contingent Obligation" means, as to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person if
the primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the obligee
of such liability that such liability will be paid or discharged, or
that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part)
against loss with respect thereto; and (z) "Person" means an
individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof. The Company has
furnished to each Buyer true, correct and complete copies of the
Original Facilities (as defined in the Notes), as amended and as in
effect on the date hereof, including the Credit Facility Amendments (as
defined in Section 4(i)).
(s) Absence of Litigation. There is no action, suit,
proceeding, inquiry or investigation before or by the Principal Market,
any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company,
threatened against or affecting the Company, the Common Stock or any of
the Company's Subsidiaries or any of the Company's or the Company's
Subsidiaries' officers or directors in their capacities as such which,
if determined adversely to the Company, would have, either individually
or in the
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aggregate, a Material Adverse Effect, except as set forth in Schedule
3(s).
(t) Insurance. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such
losses and risks and in such amounts as management of the Company
believes to be prudent and customary in the businesses in which the
Company and its Subsidiaries are engaged. Neither the Company nor any
of its Subsidiaries has any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a
Material Adverse Effect, taken as a whole.
(u) Employee Relations. Except as set forth in Schedule 3(u),
Neither the Company nor any of its Subsidiaries is a party to a
collective bargaining agreement or employs any member of a union. No
material labor dispute with the employees of the Company or its
Subsidiaries exists or, to the knowledge of the Company is imminent. No
executive officer (as defined in Rule 501(f) of the 0000 Xxx) of the
Company has notified the Company that such officer intends to leave the
Company or otherwise terminate such officer's employment with the
Company. No executive officer of the Company, to the knowledge of the
Company, is, or is now expected to be, in violation of any material
term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any
other contract or agreement or any restrictive covenant, and the
continued employment of each such executive officer does not subject
the Company or any of its Subsidiaries to any liability with respect to
any of the foregoing matters.
(v) Title. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is
material to the business of the Company and its Subsidiaries, in each
case free and clear of all liens, encumbrances and defects except such
as are described in Schedule 3(v) or such as do not materially affect
the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and any of its
Subsidiaries. Any real property and facilities held under lease by the
Company and any of its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its Subsidiaries.
(w) Intellectual Property Rights. The Company and its
Subsidiaries own or possess adequate rights or licenses to use all
trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and
other intellectual property rights ("Intellectual Property Rights")
necessary to conduct their respective businesses as now conducted.
Except as set forth in Schedule 3(w), none of the Company's
Intellectual Property Rights have expired or terminated, or are
expected to expire or terminate within three years from the date of
this Agreement. The Company does not have any knowledge of any
infringement by the Company or its Subsidiaries of Intellectual
Property Rights of others. Except as set forth in Schedule 3(w), there
is no claim, action or proceeding being made or brought, or to the
knowledge of the Company, being threatened, against the Company or its
Subsidiaries regarding its Intellectual Property Rights. The Company is
unaware of any facts or circumstances which
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might give rise to any of the foregoing infringements or claims,
actions or proceedings. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality
and value of all of their intellectual properties.
(x) Environmental Laws. The Company and its Subsidiaries (i)
are in compliance with any and all applicable foreign, federal, state
and local laws and regulations relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) have
received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions of
any such permit, license or approval where, in each of the foregoing
clauses (i), (ii) and (iii), the failure to so comply would have,
individually or in the aggregate, a Material Adverse Effect.
(y) Tax Status. The Company and each of its Subsidiaries has
made or filed all federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is
subject, and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on
such returns, reports and declarations, except those being contested in
good faith and has set aside on its books provision reasonably adequate
for the payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing authority
of any jurisdiction, and the officers of the Company know of no basis
for any such claim.
(z) Other Contracts. Except as disclosed in Schedule 3(z),
neither the Company nor any of its Subsidiaries is (i) subject to any
charter, corporate or other legal restriction, or any judgment, decree,
order, rule or regulation which in the judgment of the Company's
officers has or could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect, (ii) a party to any
contract, agreement or instrument which in the judgment of the
Company's officers has or is expected to have, individually or in the
aggregate, a Material Adverse Effect, assuming that the Company and its
Subsidiaries remain in compliance in all material respects with the
terms and conditions of such contracts and agreements, (iii) a party to
any contract, agreement or instrument, the violation of which, or
default under which, by the other party(ies) to such contract,
agreement or instrument would, individually or in the aggregate, result
in a Material Adverse Effect, or (iv) is in violation of any term of or
in default under any contract, agreement or instrument, except where
such violations and defaults would not result, either individually or
in the aggregate, in a Material Adverse Effect. Pursuant to the terms
of substantially all the manufacturing service agreements with the
significant customers of the Company and its Subsidiaries (the
"Significant MSA's"), the Company and/or its Subsidiaries have the
unqualified right to cause such customer to purchase any or all of the
inventory acquired by the Company and/or its Subsidiaries on behalf of
such customer at a price equal to the cost incurred by the Company
and/or Subsidiary in acquiring such inventory. As of the date hereof,
substantially all of the inventory that the Company plans to record on
its consolidated balance sheet for purposes of its Form 10-K for the
2002 fiscal year is inventory acquired pursuant to the Significant
MSA's.
(aa) Internal Accounting Controls. The Company and each of its
Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations,
-21-
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain asset and liability accountability, (iii)
access to assets or incurrence of liabilities is permitted only in
accordance with management's general or specific authorization and (iv)
the recorded accountability for assets and liabilities is compared with
the existing assets and liabilities at reasonable intervals and
appropriate action is taken with respect to any difference.
4. COVENANTS.
(a) Best Efforts. Each party shall use its best efforts timely
to satisfy each of the conditions to be satisfied by it as provided in
Sections 6 and 7 of this Agreement.
(b) Form D and Blue Sky. The Company agrees to file a Form D
with respect to the Securities as required under Regulation D and to
provide a copy thereof to each Buyer promptly after such filing. The
Company shall, on or before each Closing Date, take such action as the
Company shall reasonably determine is necessary in order to obtain an
exemption for or to qualify the Securities for sale to the Buyers
pursuant to this Agreement under applicable securities or "Blue Sky"
laws of the states of the United States, and shall provide evidence of
any such action so taken to the Buyers on or prior to the applicable
Closing Date. The Company shall make all filings and reports relating
to the offer and sale of the Securities required under applicable
securities or "Blue Sky" laws of the states of the United States
following each of the Closing Dates.
(c) Reporting Status. Until the date on which the Investors
(as defined in the Registration Rights Agreement) shall have sold all
the Conversion Shares, the Interest Shares and the Warrant Shares, none
of the Notes or Warrants is outstanding and no obligation to purchase
Subsequent Notes or right to purchase Additional Notes exists (the
"Reporting Period"), the Company shall file all reports required to be
filed with the SEC pursuant to the 1934 Act, and the Company shall not
terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder
would otherwise permit such termination.
(d) Use of Proceeds. The Company will use the proceeds from
the sale of the Securities for general corporate purposes, including
growth initiatives, capital expenditures and potential acquisitions.
(e) Financial Information. The Company agrees to send the
following to each Investor during the Reporting Period (i) unless the
following are filed with the SEC through XXXXX and are available to the
public through XXXXX, within one Business Day after the filing thereof
with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly
Reports on Form 10-Q, any Current Reports on Form 8-K and any
registration statements (other than on Form S-8) or amendments filed
pursuant to the 1933 Act, (ii) on the same day as the release thereof,
facsimile copies of all press releases issued by the Company or any of
its Subsidiaries, and (iii) copies of any notices and other information
made available or given to the shareholders of the Company generally,
contemporaneously with the making available or giving thereof to the
shareholders.
(f) Listing. The Company shall promptly secure the listing of
all of the
-22-
Registrable Securities (as defined in the Registration Rights
Agreement) upon each national securities exchange and automated
quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and shall maintain, so
long as any other shares of Common Stock shall be so listed, such
listing of all Registrable Securities from time to time issuable under
the terms of the Transaction Documents. The Company shall maintain the
Common Stock's authorization for quotation on the Nasdaq National
Market or obtain a listing on The New York Stock Exchange, Inc. (the
"NYSE"). If the Company obtains a listing of the Common Stock on the
NYSE and terminates its listing on the Nasdaq National Market,
references in this Agreement to the "Principal Market" shall mean, from
and after the date of the NYSE listing, the NYSE. The Company shall pay
all fees and expenses in connection with satisfying its obligations
under this Section 4(f).
(g) Expenses; Fees. Subject to Section 8 below, at the Initial
Closing, the Company shall pay a nonaccountable expense allowance of
$62,500 to Smithfield Fiduciary LLC (a Buyer) or its designee(s) (in
addition to any other expense amounts paid to any Buyer prior to the
date of this Agreement), which amount shall be withheld by such Buyer
from its Purchase Price at the Initial Closing. The Company shall be
responsible for the payment of any placement agent's fees or broker's
commissions relating to or arising out of the transactions contemplated
hereby, including, without limitation, any fees or commissions payable
to the Agent. Except as otherwise set forth in this Agreement or in the
Registration Rights Agreement, each party to this Agreement shall bear
its own expenses in connection with the sale of the Securities to the
Buyers.
(h) Pledge of Securities. The Company acknowledges and agrees
that the Securities may be pledged by an Investor (as defined in the
Registration Rights Agreement) in connection with a bona fide margin
agreement or other loan or financing arrangement that is secured by the
Securities. The pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and no
Investor effecting a pledge of Securities shall be required to provide
the Company with any notice thereof or otherwise make any delivery to
the Company pursuant to this Agreement or any other Transaction
Document, including, without limitation, Section 2(g) of this
Agreement; provided that an Investor and its pledgee shall be required
to comply with the provisions of Section 2(g) hereof in order to effect
a sale, transfer or assignment of Securities to such pledgee. At the
appropriate Investor's expense, the Company hereby agrees to execute
and deliver such reasonable documentation as a pledgee of the
Securities may reasonably request in connection with a pledge of the
Securities to such pledgee by an Investor.
(i) Disclosure of Transactions and Other Material Information.
On or before 8:30 a.m., New York Time, on the first Business Day
following the date of this Agreement, the Company shall file a Current
Report on Form 8-K describing the terms of the transactions
contemplated by the Transaction Documents in the form required by the
1934 Act, and attaching the material Transaction Documents (including,
without limitation, this Agreement (and all schedules to this
Agreement), the form of each of the Notes, the form of Warrant and the
Registration Rights Agreement) as exhibits to such filing (including
all attachments, the "8-K Filing"). At or before the time of the 8-K
Filing, the Company shall have disclosed the terms of the amendments
dated December 20, 2001, March 25, 2002 and May 3, 2002 to, and the
waiver letter dated February 13, 2002 relating to, the Loan and
Security Agreement dated June 28, 2001
-23-
between U.S. Bank National Association and the Company and the waivers
and/or amendments dated February 14, 2002, March 29, 2002 and May 3,
2002 to, and the consent letters dated April 12, 2002, April 19, 2002,
April 30, 2002 and May 3, 2002 (two letters) relating to, the Amended
and Restated Revolving Credit Agreement dated June 29, 2001 between IBM
Credit Corporation, the Company, Turtle Mountain Corporation and
Pemstar Pacific Consultants Inc. (the "Credit Facility Amendments") in
a filing with the SEC pursuant to the 1934 Act, and shall have attached
such amendments to such filing. On or before 8:30 a.m., New York Time,
on the first Business Day following each Closing Date, the Company
shall file a Current Report on Form 8-K disclosing the transactions
consummated at such Closing Date, including, without limitation the
aggregate principal amount of the Notes purchased on such Closing Date,
the Conversion Price of such Notes, the aggregate number of Warrant
Shares subject to the Warrants issued on such Closing Date and the
Exercise Price of such Warrants. From and after the filing of the 8-K
Filing with the SEC, no Buyer shall be in possession of any material
nonpublic information received from the Company, any of its
subsidiaries or any of its respective officers, directors, employees or
agents, that is not disclosed in the 8-K Filing. The Company shall not,
and shall cause each of its Subsidiaries and its and each of their
respective officers, directors, employees and agents, not to, provide
any Buyer with any material nonpublic information regarding the Company
or any of its Subsidiaries from and after the filing of the 8-K Filing
with the SEC without the express written consent of such Buyer. In the
event of a breach of the foregoing covenant by the Company, any of its
Subsidiaries, or any of its or their respective officers, directors,
employees and agents, in addition to any other remedy provided herein
or in the Transaction Documents, a Buyer shall have the right to make a
public disclosure, in the form of a press release, public advertisement
or otherwise, of such material nonpublic information without the prior
approval by the Company, its Subsidiaries, or any of its or their
respective officers, directors, employees or agents. No Buyer shall
have any liability to the Company, its Subsidiaries, or any of its or
their respective officers, directors, employees, shareholders or agents
for any such disclosure. Subject to the foregoing, neither the Company
nor any Buyer shall issue any press releases or any other public
statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the
prior approval of any Buyer, to make any press release or other public
disclosure with respect to such transactions (i) in substantial
conformity with the 8-K Filing and contemporaneously therewith and (ii)
as is required by applicable law and regulations (provided that in the
case of clause (i) each Buyer shall be consulted by the Company in
connection with any such press release or other public disclosure prior
to its release).
(j) Restrictions on the Company. So long as any Notes are
outstanding or any Buyer has a right to purchase Notes hereunder, the
Company shall not, directly or indirectly, redeem, or declare or pay
any cash dividend or distribution on, the Common Stock without the
prior express written consent of the holders of Notes representing not
less than a majority of the aggregate principal amount of the then
outstanding Notes. On and after the date of this Agreement, so long as
any Notes are outstanding or any Buyer has a right to purchase Notes
hereunder, the Company shall comply with Section 15(a) of the Notes as
though the Notes were outstanding.
(k) Corporate Existence. So long as any Buyer beneficially
owns any Notes or Warrants or has the right to purchase any Additional
Notes, the Company shall maintain its corporate existence and shall not
sell all or substantially all of the Company's assets, except in
-24-
the event of a merger or consolidation or sale of all or substantially
all of the Company's assets, where the surviving or successor entity in
such transaction (i) assumes the Company's obligations hereunder and
under the agreements and instruments entered into in connection
herewith and (ii) is a publicly traded corporation whose common stock
is quoted on or listed for trading on the Nasdaq National Market, Inc.
or the NYSE.
(l) Trading Activities. The Company acknowledges and agrees
that nothing in the Transaction Documents prohibits any Buyer (and any
of its affiliates) from engaging, directly or indirectly, in hedging
transactions involving the Securities (including, without limitation,
by way of short sales, purchases and sales of options, swap
transactions, synthetic transactions and other derivative transactions)
at any time.
(m) Voting. Each Buyer agrees that it shall not vote any
shares of Common Stock in connection with the Shareholder Approval.
(n) Shareholder Approval. The Company shall provide each
shareholder entitled to vote at the next meeting of shareholders of the
Company, which shall be not later than August 30, 2002, a proxy
statement, which has been previously reviewed by the Buyers and a
counsel of their choice, soliciting each such shareholder's affirmative
vote at such shareholder meeting for approval of the Company's issuance
of all of the Securities as described in this Agreement in accordance
with applicable law and the rules and regulations of the Principal
Market (such approval of such issuance of the Securities is referred to
as the "Shareholder Approval") and to cause the Board of Directors of
the Company to recommend to the shareholders that they approve such
proposal.
5. REGISTER; TRANSFER AGENT INSTRUCTIONS.
(a) Register. The Company shall maintain at its principal
executive offices (or such other office or agency of the Company as it
may designate by notice to each holder of Notes or Warrants), a
register for the Notes and the Warrants, in which the Company shall
record the name and address of the Person in whose name the Notes and
the Warrants have been issued (including the name and address of each
transferee), the principal amount of Notes held by such Person and the
number of Warrant Shares issuable upon exercise of the Warrants held by
such Person. The Company shall keep the register open and available at
all times during business hours for inspection of any Buyer or its
legal representatives.
(b) Transfer Agent Instructions. The Company shall issue
irrevocable instructions to its transfer agent, and any subsequent
transfer agent, to issue certificates, registered in the name of each
Buyer or its respective nominee(s), for the Conversion Shares, the
Interest Shares and the Warrant Shares in such amounts as specified
from time to time by each Buyer to the Company upon conversion of the
Notes or exercise of the Warrants in the form of Exhibit F attached
hereto (the "Irrevocable Transfer Agent Instructions"). The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5(b) and stop transfer
instructions to give effect to Section 2(g) hereof will be given by the
Company to its transfer agent, and that the Securities shall otherwise
be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the Registration Rights
Agreement. If a Buyer effects a sale, assignment or transfer of the
-25-
Securities in accordance with Section 2(g), the Company shall permit
the transfer, and shall promptly instruct its transfer agent to issue
one or more certificates in such name and in such denominations as
specified by such Buyer to effect such sale, transfer or assignment. In
the event that such sale, assignment or transfer involves Conversion
Shares, Interest Shares or Warrant Shares sold, assigned or transferred
pursuant to an effective registration statement or pursuant to Rule
144, the transfer agent shall issue such Securities to the Buyer,
assignee or transferee, as the case may be, without any restrictive
legend. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to a Buyer. Accordingly, the
Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5(b) will be inadequate and agrees, in
the event of a breach or threatened breach by the Company of the
provisions of this Section 5(b), that a Buyer shall be entitled, in
addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer,
without the necessity of showing economic loss and without any bond or
other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
(a) The obligation of the Company hereunder to issue and sell
the Initial A-1 Notes and the related Initial A-1 Warrants to each
Buyer at the Initial Closing is subject to the satisfaction, at or
before the Initial Closing Date, of each of the following conditions,
provided that these conditions are for the Company's sole benefit and
may be waived by the Company at any time in its sole discretion by
providing each Buyer with prior written notice thereof:
(i) Such Buyer shall have executed each of the
Transaction Documents to which it is a party and delivered the
same to the Company.
(ii) Such Buyer shall have delivered to the Company
the Purchase Price (less, in the case of Smithfield Fiduciary
LLC, the amounts withheld pursuant to Section 4(g)) for the
Initial A-1 Notes and the related Initial A-1 Warrants being
purchased by such Buyer at the Initial Closing by wire
transfer of immediately available funds pursuant to the
written wire instructions provided by the Company.
(iii) The representations and warranties of such
Buyer shall be true and correct in all material respects as of
the date when made and as of the Initial Closing Date as
though made at that time (except for representations and
warranties that speak as of a specific date), and such Buyer
shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or
complied with by such Buyer at or prior to the Initial Closing
Date.
(b) The obligation of the Company hereunder to issue and sell
the applicable Notes and the related Warrants to each Buyer at each
Closing other than the Initial Closing is subject to the satisfaction,
at or before the applicable Closing Date, of each of the following
conditions, provided that these conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole
discretion by providing each Buyer with prior written notice thereof:
-26-
(i) Such Buyer shall have delivered to the Company
the Purchase Price for the applicable Notes and the related
Warrants being purchased by such Buyer at the applicable
Closing (as determined in accordance with Sections 1(a), 1(d)
and 1(e), as applicable) by wire transfer of immediately
available funds pursuant to the written wire instructions
provided by the Company.
(ii) The representations and warranties of such Buyer
shall be true and correct in all material respects as of the
date when made and as of the applicable Closing Date as though
made at that time (except for representations and warranties
that speak as of a specific date), and such Buyer shall have
performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by such
Buyer at or prior to the applicable Closing Date.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
(a) The obligation of each Buyer hereunder to purchase the
Initial A-1 Notes and the related Initial A-1 Warrants at the Initial
Closing is subject to the satisfaction, at or before the Initial
Closing Date, of each of the following conditions, provided that these
conditions are for each Buyer's sole benefit and may be waived by such
Buyer at any time in its sole discretion by providing the Company with
prior written notice thereof:
(i) The Company shall have executed and delivered to
such Buyer (A) each of the Transaction Documents and (B) the
Note Certificates (in such principal amounts as such Buyer
shall request) representing the Initial A-1 Notes and the
related Initial A-1Warrants being purchased by such Buyer
pursuant to this Agreement.
(ii) Such Buyer shall have received the opinion of
Xxxxxx & Xxxxxxx LLP, the Company's counsel, dated as of the
Initial Closing Date, in form, scope and substance reasonably
satisfactory to such Buyer and in substantially the form of
Exhibit E attached hereto.
(iii) The Company shall have delivered to such Buyer
a copy of the Irrevocable Transfer Agent Instructions, in the
form of Exhibit F attached hereto, which instructions shall
have been delivered to and acknowledged in writing by the
Company's transfer agent.
(iv) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of
the Company and each Subsidiary located in the United States
in such corporation's state of incorporation issued by the
Secretary of State of such state of incorporation as of a date
within 10 days of the Initial Closing Date.
(v) The Company shall have delivered to such Buyer a
certified copy of the Articles of Incorporation as certified
by the Secretary of State of the State of Minnesota within 10
days of the Initial Closing Date.
(vi) The Company shall have delivered to such Buyer a
certificate, executed by the
-27-
Secretary of the Company dated as of the Initial Closing Date,
as to (A) the resolutions described in Section 3 as adopted by
the Company's Board of Directors in a form reasonably
acceptable to such Buyer (the "Resolutions"), (B) the Articles
of Incorporation and (C) the Bylaws, each as in effect at the
Initial Closing, in the form attached hereto as Exhibit G.
(vii) The representations and warranties of the
Company shall be true and correct as of the date when made and
as of the Initial Closing Date as though made at that time
(except for representations and warranties that speak as of a
specific date) and the Company shall have performed, satisfied
and complied in all respects with the covenants, agreements
and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company at or
prior to the Initial Closing Date. Such Buyer shall have
received a certificate, executed by the Chief Executive
Officer of the Company, dated as of the Initial Closing Date,
to the foregoing effect in the form attached hereto as Exhibit
H.
(viii) The Company shall have delivered to such Buyer
a letter from the Company's transfer agent certifying the
number of shares of Common Stock outstanding as of a date
within five days of the Initial Closing Date.
(ix) The Common Stock shall be (A) designated for
quotation or listing on the Principal Market, and (B) trading
in the Common Stock on the Principal Market shall not have
been suspended by the SEC or the Principal Market nor shall
suspension by the SEC or the Principal Market have been
threatened.
(xi) The Company shall have delivered to such Buyer
copies of the executed Credit Facility Amendments and the
consents to the transactions contemplated by this Agreement
required from U.S. Bank National Association and I.B.M. Credit
Corporation, and such amendments and consents shall be in a
form, scope and substance reasonably satisfactory to such
Buyer.
(b) The obligation of each Buyer hereunder to purchase the
applicable Notes and the related Warrants at the applicable Closing
(other than the Initial Closing) is subject to the satisfaction, at or
before the applicable Closing Date, of each of the following
conditions, provided that these conditions are for each Buyer's sole
benefit and may be waived by such Buyer at any time in its sole
discretion by providing the Company with prior written notice thereof:
(i) The Company shall have executed and delivered to
such Buyer the Note Certificates (in such principal amounts as
such Buyer shall request) representing the Notes and the
related Warrants being purchased by such Buyer pursuant to
this Agreement at the applicable Closing (as determined in
accordance with Sections 1(a), 1(d) and 1(e), as applicable).
(ii) Such Buyer shall have received the opinion of
the Company's outside counsel dated as of the applicable
Closing Date, in form, scope and substance reasonably
satisfactory to such Buyer and in substantially the form of
Exhibit E attached hereto.
-28-
(iii) The Irrevocable Transfer Agent Instructions
shall remain in effect as of the applicable Closing Date and
the Company shall have caused its transfer agent to deliver a
letter to such Buyer to that effect.
(iv) The Company shall have delivered to such Buyer a
certificate evidencing the incorporation and good standing of
the Company and each Subsidiary located in the United States
in such corporation's state of incorporation issued by the
Secretary of State of such state of incorporation as of a date
within 10 days of the applicable Closing Date.
(v) The Company shall have delivered to such Buyer a
certified copy of the Articles of Incorporation as certified
by the Secretary of State of the State of Minnesota within 10
days of the applicable Closing Date.
(vi) The Company shall have delivered to such Buyer a
certificate, executed by the Secretary of the Company dated as
of the applicable Closing Date, as to (A) the Resolutions, (B)
the Articles of Incorporation and (C) the Bylaws, each as in
effect at the applicable Closing, in the form attached hereto
as Exhibit G.
(vii) The representations and warranties of the
Company shall be true and correct as of the date when made and
as of the applicable Closing Date as though made at that time
(except for representations and warranties that speak as of a
specific date) and the Company shall have performed, satisfied
and complied in all respects with the covenants, agreements
and conditions required by the Transaction Documents
(including, without limitation, the Notes and the Warrants
issued prior to the applicable Closing Date) to be performed,
satisfied or complied with by the Company at or prior to the
applicable Closing Date. Such Buyer shall have received a
certificate, executed by the Chief Executive Officer of the
Company, dated as of the applicable Closing Date, to the
foregoing effect in the form attached hereto as Exhibit H.
(viii) The Company shall have delivered to such Buyer
a letter from the Company's transfer agent certifying the
number of shares of Common Stock outstanding as of a date
within five days of the applicable Closing Date.
(ix) The Common Stock shall be (A) designated for
quotation or listing on the Principal Market, and (B) trading
in the Common Stock on the Principal Market shall not have
been suspended by the SEC or the Principal Market nor shall
suspension by the SEC or the Principal Market have been
threatened.
(x) During the period beginning on the Initial
Closing Date and ending on and including the applicable
Closing Date, neither the Company nor any of its Subsidiaries
shall have been in default under any mortgage, indenture or
instrument under which there may be issued or by which there
may be secured or evidenced any indebtedness for money
borrowed by the Company or any of its Subsidiaries or for
money borrowed the repayment of which is guaranteed by the
Company or any of its Subsidiaries, whether such indebtedness
or guarantee exists at the Initial Closing Date or is created
thereafter, nor shall there exist as of the applicable Closing
Date an event that with the passage of time or giving notice,
and assuming it were not cured, would constitute such a
default.
-29-
(xi) During the period beginning on the Initial
Closing Date and ending on and including the applicable
Closing Date, there shall not have occurred (A) a Triggering
Event (as defined in the Notes) or an event that with the
passage of time or giving of notice, and assuming it were not
cured, would constitute a Triggering Event or (B) a
consummation of a Change of Control (as defined in Section
5(a) of the Notes) or a public announcement of a pending,
proposed or intended Change of Control which has not been
abandoned or terminated prior to the beginning of the Pricing
Period immediately prior to the applicable Closing Date,
provided that this clause (B) shall not apply to the
Additional Closing.
(xii) The aggregate amount of all charges related to
restructuring, impairment of assets (including write-offs of
inventory and accounts receivable) and other non-recurring
items (other than non-cash charges for write-offs of goodwill
and related non-cash charges with respect to deferred tax
assets) to be recorded by the Company in the quarter ended
March 31, 2002 did not exceed $10,000,000.
8. TERMINATION. In the event that the Initial Closing shall not have
occurred with respect to a Buyer on or before five Business Days from the date
hereof due to the Company's or such Buyer's failure to satisfy the conditions
set forth in Sections 6(a) and 7(a) above (and the nonbreaching party's failure
to waive such unsatisfied condition(s)), the nonbreaching party shall have the
option to terminate this Agreement with respect to such breaching party at the
close of business on such date without liability of any party to any other
party; provided, however, that if this Agreement is terminated pursuant to this
Section 8, the Company shall remain obligated to reimburse the nonbreaching
Buyers for the expenses described in Section 4(g) above.
9. MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State
of New York, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and
federal courts sitting in The City of New York, Borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action
or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action
or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party
at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by
law. Each party hereby irrevocably waives any right it may have, and
agrees not to request, a jury trial for the adjudication of any dispute
hereunder or in connection with or arising
-30-
out of this agreement or any transaction contemplated hereby.
(b) Counterparts. This Agreement may be executed in two or
more identical counterparts, all of which shall be considered one and
the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party; provided
that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as
if the signature were an original, not a facsimile signature.
(c) Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
(d) Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.
(e) Entire Agreement; Amendments. This Agreement supersedes
all other prior oral or written agreements between the Buyers, the
Company, their affiliates and Persons acting on their behalf with
respect to the matters discussed herein (including, without limitation,
the confidentiality agreements dated April 16, 2002 between the Company
and each of the Buyers), and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with
respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any
Buyer makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be amended
other than by an instrument in writing signed by the Company and the
holders of Notes representing a majority of the aggregate principal
amount of the Initial A-1 Notes on the Initial Closing Date, or if
prior to the Initial Closing Date, the Buyers listed on the Schedule of
Buyers as being obligated to purchase a majority of the aggregate
principal amount of the Initial A-1 Notes. No provision hereof may be
waived other than by an instrument in writing signed by the party
against whom enforcement is sought. No such amendment shall be
effective to the extent that it applies to less than all of the holders
of the Notes then outstanding. No consideration shall be offered or
paid to any Person to amend or consent to a waiver or modification of
any provision of any of the Transaction Documents unless the same
consideration also is offered to all of the parties to the Transaction
Documents, holders of the Notes or holders of the Warrants, as the case
may be. The Company has not, directly or indirectly, made any
agreements with any Buyers relating to the terms or conditions of the
transactions contemplated by the Transaction Documents except as set
forth in the Transaction Documents.
(f) Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been
delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission
is mechanically or electronically generated and kept on file by the
sending party); or (iii) one Business Day after deposit with an
overnight courier service, in each case properly addressed to the party
to receive the same. The addresses and facsimile numbers for such
communications shall be:
-31-
If to the Company:
Pemstar Inc.
0000 Xxxxxxxxxx Xxxxx X.X.
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Executive Vice President
and Chief Financial Officer
With a copy to:
Xxxxxx & Whitney LLP
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxxx, Esq.
If to a Buyer, to its address and facsimile number set forth on the
Schedule of Buyers, with copies to such Buyer's representatives as set
forth on the Schedule of Buyers, or to such other address and/or
facsimile number and/or to the attention of such other Person as the
recipient party has specified by written notice given to each other
party five days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing
the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by an overnight courier
service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from an overnight courier service in accordance
with clause (i), (ii) or (iii) above, respectively.
(g) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Notes or the
Warrants. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the holders
of Notes representing a majority of the aggregate principal amount of
the Notes then outstanding, including by merger or consolidation,
except pursuant to a Change of Control (as defined in Section 5 of the
Notes) with respect to which the Company is in compliance with Section
5 of the Notes and Section 4(b) of the Warrants. A Buyer may assign
some or all of its rights hereunder without the consent of the Company,
in which event such assignee shall be deemed to be a Buyer hereunder
with respect to such assigned rights; provided, however, that any such
assignment shall not release such Buyer from its obligations hereunder
unless such obligations are assumed by such assignee and the Company
has consented to such assignment and assumption, which consent shall
not be unreasonably withheld or delayed. Nothing in this Section 9(g)
shall be deemed to modify the provisions of Section 2(g) of this
Agreement.
-32-
(h) No Third Party Beneficiaries. Except for Section 9(k),
this Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other
Person.
(i) Survival. Unless this Agreement is terminated under
Section 8, the representations and warranties of the Company and the
Buyers contained in Sections 2 and 3, the agreements and covenants set
forth in Sections 4, 5 and 9 shall survive each Closing. Each Buyer
shall be responsible only for its own representations, warranties,
agreements and covenants hereunder.
(j) Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and
shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in
order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.
(k) Indemnification. In consideration of each Buyer's
execution and delivery of the Transaction Documents and acquiring the
Securities thereunder and in addition to all of the Company's other
obligations under the Transaction Documents, the Company shall defend,
protect, indemnify and hold harmless each Buyer and each other holder
of the Securities and all of their stockholders, members, partners,
officers, directors, employees and direct or indirect investors and any
of the foregoing Persons' agents or other representatives (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "Indemnitees") from
and against any and all actions, causes of action, suits, claims,
losses, costs, penalties, fees, liabilities and damages, and expenses
in connection therewith (irrespective of whether any such Indemnitee is
a party to the action for which indemnification hereunder is sought),
and including reasonable attorneys' fees and disbursements (the
"Indemnified Liabilities"), incurred by any Indemnitee as a result of,
or arising out of, or relating to (a) any misrepresentation or breach
of any representation or warranty made by the Company in the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction
Documents or any other certificate, instrument or document contemplated
hereby or thereby or (c) any cause of action, suit or claim brought or
made against such Indemnitee by a third party (including for these
purposes a derivative action brought on behalf of the Company) and
arising out of or resulting from (i) the execution, delivery,
performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby,
(ii) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the
Securities, (iii) any disclosure made by such Buyer pursuant to Section
4(i), or (iv) the status of such Buyer or holder of the Securities as
an investor in the Company. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. Except as otherwise set forth herein,
the mechanics and procedures with respect to the rights and obligations
under this Section 9(k) shall be the same as those set forth in Section
6 of the Registration Rights Agreement.
-33-
(l) No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will
be applied against any party.
(m) Remedies. Each Buyer and each holder of the Securities
shall have all rights and remedies set forth in the Transaction
Documents and all rights and remedies which such holders have been
granted at any time under any other agreement or contract and all of
the rights which such holders have under any law. Any Person having any
rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision
of this Agreement and to exercise all other rights granted by law.
(n) Payment Set Aside. To the extent that the Company makes a
payment or payments to the Buyers hereunder or pursuant to any of the
other Transaction Documents or the Buyers enforce or exercise their
rights hereunder or thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded,
repaid or otherwise restored to the Company, a trustee, receiver or any
other Person under any law (including, without limitation, any
bankruptcy law, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been made
or such enforcement or setoff had not occurred.
[Signature Page Follows]
-34-
IN WITNESS WHEREOF, each Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY: BUYERS:
PEMSTAR INC. SMITHFIELD FIDUCIARY LLC
By: /s/ Xx Xxxxxxx By: /s/ Xxxx X. Chill
------------------------------ ------------------------------------
Name: Xxxxx X. Xxxxxxx Name: Xxxx X. Chill
Title: Chairman, Chief Executive Title: Authorized Signatory
Officer and President
CITADEL EQUITY FUND LTD.
By: /s/ Xxxxxxx X. Simpler
-------------------------------------
Name: Xxxxxxx X. Simpler
Title: Vice President
SCHEDULE OF BUYERS
(1) (2) (3) (4) (5) (6)
Maximum
Aggregate Aggregate
Principal Principal
Amount of Amount of Subsequent
Initial Initial Closing Legal Representative's
Buyer Address and Facsimile Number A-1 Notes A-2 Notes Percentage Address and Facsimile Number
----- ---------------------------- --------- --------- ---------- ----------------------------
Smithfield Fiduciary LLC c/o Highbridge Capital $2,500,000 $2,500,000 50% Xxxxxxx Xxxx & Xxxxx LLP
Management, LLC 000 Xxxxx Xxxxxx
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx Xxx Xxxx, Xxx Xxxx 10022
Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxxxxx Xxxxx, Esq.
Attention: Xxx X. Xxxxxx Facsimile: (000) 000-0000
Xxxx X. Chill Telephone: (000) 000-0000
Facsimile: (000) 000-0000 e-mail: Xxxxxxx.xxxxx@xxx.xxx
Telephone: (000) 000-0000
e-mail: xxxx@xxxxx.xxx
xxxxx@xxxxx.xxx
Residence: Cayman Islands
Citadel Equity Fund Ltd. c/o Citadel Investment Group, $2,500,000 $2,500,000 50% Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
L.L.C. 000 X. Xxxxxx Xxxxxx
000 Xxxx Xxxxxxxxxx Xxxxxx Xxxxxxx, Xxxxxxxx 00000-0000
Xxxxxxx, Xxxxxxxx 00000 Attention: Xxxxxx X. Xxxxxxxx, Esq.
Attention: Xxxxxxx X. Simpler Facsimile: (000) 000-0000
Facsimile: (000) 000-0000 Telephone: (000) 000-0000
Telephone: (000) 000-0000 e-mail: xxxxxx.xxxxxxxx@xxxx.xxx
e-mail:
xxxxxxx.xxxxxxx@xxxxxxxxxxxx.xxx
Residence: Cayman Islands
SCHEDULES
---------
Schedule 3(a) Subsidiaries
Schedule 3(d) Conflicts
Schedule 3(e) Consents
Schedule 3(k) SEC Documents
Schedule 3(l) Material Changes
Schedule 3(n) Conduct of Business; Regulatory Permits
Schedule 3(p) Transactions with Affiliates
Schedule 3(q) Capitalization
Schedule 3(r) Indebtedness and Other Contracts
Schedule 3(s) Litigation
Schedule 3(u) Employee Relations
Schedule 3(v) Title
Schedule 3(w) Intellectual Property
Schedule 3(z) Other Contracts
EXHIBITS
--------
Exhibit A Form of Initial Note
Exhibit B Form of Subsequent Note
Exhibit C Form of Additional Note
Exhibit D Form of Registration Rights Agreement
Exhibit E Form of Company Counsel Opinion
Exhibit F Form of Irrevocable Transfer Agent Instructions
Exhibit G Form of Secretary's Certificate
Exhibit H Form of Officer's Certificate
Exhibit I Form of Warrant
