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EXHIBIT 1
AMENDED AND RESTATED LOAN AGREEMENT
This Amended and Restated Loan Agreement ("Agreement") is entered into
and effective as of April 8, 1999 by and between Dense-Pac Microsystems, Inc., a
California corporation ("Borrower"), Euroventures Benelux II B.V., a Netherlands
corporation ("Euroventures"), and Xxxxx X. Xxxxxx, an individual (individually,
a "Lender" and jointly, the "Lenders").
RECITALS
WHEREAS, Borrower has previously borrowed from Lenders the aggregate sum
of $1,900,000 (the "Original Loan") pursuant to a Loan Agreement dated as of
October 12, 1994 (the "1994 Loan Agreement"); and
WHEREAS, Borrower and Euroventures modified the terms of the 1994 Loan
Agreement pursuant to an Addendum to Loan Agreement dated as of October 23, 1995
(together with the 1994 Loan Agreement, the "Prior Loan Agreements"); and
WHEREAS, the parties have agreed that Euroventures shall convert a
portion of its outstanding loan into Common Stock of the Borrower and that the
terms of the remaining outstanding portion of the loan shall be amended as
stated herein.
AGREEMENT
NOW, THEREFORE, it is agreed as follows:
SECTION 1. PARTIAL CONVERSION OF LOAN.
Euroventures hereby agrees to convert $1.2 million of the
outstanding principal amount of indebtedness due it from Borrower pursuant to
the Prior Loan Agreements into an aggregate of 662,069 shares of the Common
Stock of Borrower (the "Shares") and Borrower agrees to issue and sell the
Shares to Euroventures. Borrower shall promptly issue and deliver to
Euroventures a certificate representing the Shares.
SECTION 2. TERMS OF LOAN.
The $600,000 and $100,000 remaining outstanding principal amount
due Euroventures and Xxxxx Xxxxxx, respectively, pursuant to the Prior Loan
Agreements (individually or in the aggregate, the "Loan") shall have the
following terms:
2.1 INTEREST. Accrued and unpaid interest on the Original Loan
computed in accordance with the Prior Loan Agreements through April 7, 1999
shall be paid within 10 days hereof. The principal balance from time to time
actually outstanding under the Loan shall bear interest, calculated on a daily
basis, including the first day but excluding the last day, based on a 365-day
year, at the rate of eight and three-quarters percent (8.75%) per annum, from
the date hereof
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until the Loan and all interest thereon is repaid in full. Interest shall be
paid quarterly, beginning on June 30, 1999. Any interest not paid on the
Original Loan or the Loan when due shall be added to the principal and
thereafter bear interest as principal.
2.2 REPAYMENT. The outstanding principal balance of the Loan and
all accrued and unpaid interest thereon shall be due and payable in full on
December 31, 2000. Upon 45 days' prior written notice to the Lenders, Borrower
may at any time prepay, without penalty, all or any portion of the Loan plus
accrued and unpaid interest on the amount prepaid to the date of such
prepayment. Upon 45 days' prior written notice to the Lenders, Borrower shall
apply the net proceeds from any sale of debt (other than Equipment Financing as
defined in Section 4.1 and Bank Debt as defined in Section 8 hereof) or equity
securities (except pursuant to employee benefit plans (whether now in effect or
adopted in the future) or warrants which are outstanding on the date hereof) to
prepay the outstanding interest and principal of the Loan. All payments of the
Loan and accrued and unpaid interest shall be in U.S. Dollars.
2.3 APPLICATION OF PAYMENTS. Payments on the Loan shall be
applied first to accrued and unpaid interest and then to principal, and upon
such payment interest shall cease to accrue on the principal so repaid. Payments
of principal shall be made to each Lender, pro rata based the outstanding
principal amount of each Lender's Loan. Payments shall be sent to the Lenders at
their addresses set forth in Section 9.3 hereof or to such other address or bank
account as a Lender may from time to time advise Borrower in writing.
SECTION 3. CONVERSION OF LOAN.
3.1 VOLUNTARY CONVERSION. Each Lender shall have the right, at
its option, at any time prior to payment in full of the outstanding principal
balance of each such Lenders' Loan (or prior to any prepayment date set forth in
the Borrower's notice pursuant to Section 2.2 hereof) to convert the outstanding
principal balance of such Loan, in whole or in part, into fully paid and
non-assessable shares of Common Stock of the Borrower. The number of shares of
Common Stock to be issued upon conversion of the Loan ("Conversion Shares")
shall be determined by dividing the principal amount so converted by the
Conversion Price (as defined below) in effect at the time of such conversion.
The initial Conversion Price shall be equal to $1.8125.
3.2 CONVERSION PROCEDURE. Before a Lender shall be entitled to
convert its Loan into Conversion Shares, it shall give written notice of the
election to convert to the Borrower, which notice shall state the principal
amount of the Loan to be converted and the name or names in which the
certificate or certificates for the Conversion Shares are to be issued. The
Borrower shall, as soon as practicable thereafter, issue and deliver to such
Lender a certificate or certificates for the full number of Conversion Shares to
which the Lender shall be entitled. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of the notice of
conversion and the person or persons entitled to receive the Conversion Shares
shall be treated for all purposes as the record holder of holders of such shares
as of such date. No fractional shares of Common Stock shall be issued upon
conversion of the Loan. In lieu thereof, the Borrower shall pay to the
converting Lender the amount of outstanding principal that is not so converted
by check, payable concurrently with delivery of the certificates for the
Conversion Shares. Upon conversion of any portion of the
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Loan, the Borrower shall be released from its obligations and liabilities under
this Agreement with respect to that principal amount which is converted
hereunder, except that the Borrower shall be obligated to pay to the converting
Lender, within ten (10) days of the date of such conversion, any interest
accrued and unpaid with respect to the principal amount converted, through the
date of such conversion.
3.3 ADJUSTMENT TO CONVERSION PRICE FOR DILUTING ISSUES.
(a) Special Definitions. For purposes of this Section
3.3, the following definitions shall apply:
(1) "Convertible Securities" shall mean any
evidences of indebtedness (other than the Loan), shares of capital stock (other
than Common Stock) or other securities convertible into or exchangeable for
Common Stock.
(2) "Options" shall mean rights, options or
warrants to subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities.
(3) "Additional Shares of Common Stock" shall
mean all shares of Common Stock issued or, pursuant to Section 3.3(c), deemed to
be issued by the Borrower after the date hereof; other than shares of Common
Stock issued or deemed to be issued (A) to officers or employees of, or
consultants to, the Borrower pursuant to stock option plans or incentive
agreements approved by Borrower's Board of Directors; (B) in connection with
Equipment Financings or Bank Debt; (C) to the sellers of a corporation pursuant
to the acquisition of such corporation by the Borrower by merger, purchase of
substantially all of the assets, or other reorganization whereby the Borrower
owns not less than fifty-one percent (51%) of the voting power of such
corporation; (D) upon exercise or conversion of options, warrants and other
convertible securities outstanding on the date hereof; (E) upon conversion of
the Loan; (F) in connection with any transaction for which adjustment is made
pursuant to Section 3.4 hereof; and (G) by way of dividend or distribution on
securities described in the foregoing clauses.
(b) No Adjustment of Conversion Price. No adjustment in
the Conversion Price shall be made in respect of the issuance of Additional
Shares of Common Stock unless the consideration per share (determined in
accordance with Section 3.3(e) hereof) for an Additional Share of Common Stock
issued or deemed to be issued is less than the Conversion Price in effect on the
date of, and immediately prior to, such issuance.
(c) Deemed Issue of Additional Shares of Common Stock.
In the event the Borrower at any time or from time to time after the date hereof
shall issue any Options or Convertible Securities or shall fix a record date for
the determination of holders of any class of securities entitled to receive any
such Options or Convertible Securities, then the maximum number of shares (as
set forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock
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issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date; provided, however,
that Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Section 3.3(e)
hereof) of such Additional Shares of Common Stock would be less than the
Conversion Price in effect on the date of and immediately prior to such issue,
or such record date, as the case may be; and, provided, further, that in any
such case in which Additional Shares of Common Stock are deemed to be issued:
(1) no further adjustment in the Conversion
Price shall be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or conversion or
exchange of such Convertible Securities;
(2) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any increase or
decrease in the consideration payable to the Borrower or increase or decrease in
the number of shares of Common Stock issuable, upon the exercise, conversion or
exchange thereof, the Conversion Price computed upon the original issue thereof
(or upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such increase or decrease
becoming effective, be recomputed to reflect such increase or decrease, insofar
as it affects such Conversion Price, but no further change in the Conversion
Price shall be made upon the exercise, conversion or exchange of such Options or
Convertible Securities;
(3) if any such Options or Convertible
Securities shall expire or be canceled without having been exercised or
converted, the Conversion Price as adjusted upon the original issuance thereof
(or upon the occurrence of a record date with respect thereto) shall be
readjusted as if
(A) in the case of Convertible
Securities or Options for Common Stock, the only Additional Shares of Common
Stock so issued were shares of Common Stock, if any, actually issued or sold on
the exercise of such Options or the conversion or exchange of such Convertible
Securities, and such Additional Shares of Common Stock, if any, were issued or
sold for the consideration actually received by the Borrower upon such exercise,
plus the consideration, if any, actually received by the Borrower for the
granting of all such Options, whether or not exercised, plus the consideration
received for issuing or selling the Convertible Securities actually converted
plus the consideration, if any, actually received by the Borrower (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) on the conversion or exchange of such Convertible Securities; and
(B) in the case of Options for
Convertible Securities, only the Convertible Securities, if any, actually issued
upon the exercise thereof were issued at the time of issue of such Options, and
the consideration received by the Borrower for the Additional Shares of Common
Stock deemed to have been then issued was the consideration actually received by
the Borrower for the issue of all such Options, whether or not exercised, plus
the consideration deemed to have been received by the Borrower upon the issue of
the Convertible Securities with respect to which such Options were actually
exercised;
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(4) no readjustment pursuant to clauses (2) or (3) above
shall have the effect of increasing the Conversion Price to an amount which
exceeds the lower of (i) the Conversion Price on the original adjustment date
(immediately prior to the adjustment), or (ii) the Conversion Price that would
have resulted from any actual issuance of Additional Shares of Common Stock
between the original adjustment date and such readjustment date.
(d) Adjustment of Conversion Price Upon Issuance of Additional
Shares of Common Stock. In the event the Borrower shall at any time after the
date hereof issue Additional Shares of Common Stock, without consideration or
for a consideration per share less than the Conversion Price in effect on the
date of and immediately prior to such issue, then and in such event, such
Conversion Price shall be reduced, concurrently with such issue, to the price
(calculated to the nearest cent) determined by multiplying such Conversion Price
by a fraction (x) the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such issue plus the number of shares of
Common Stock which the aggregate consideration received by the Borrower for the
total number of Additional Shares of Common Stock so issued or deemed issued
would purchase at such Conversion Price, and (y) the denominator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
issue or deemed issued plus the number of such Additional Shares of Common Stock
so issued or deemed issued; provided, however, that all shares of Common Stock
issuable upon conversion of the Loan and any Additional Shares of Common Stock
deemed issued pursuant to Section 3.3(c) shall be deemed to be outstanding for
purposes hereof.
(e) Determination of Consideration. For purposes of this Section
3.3 the consideration received by the Borrower for the issuance of any
Additional Shares of Common Stock shall be computed, before deducting reasonable
selling discounts, commissions, expenses and fees, as follows:
(1) Cash and Property. Such consideration shall:
(A) insofar as it consists of cash, be computed
at the aggregate amount of cash received by the Borrower excluding amounts paid
or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other
than cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Borrower's Board of Directors; and
(C) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other assets of the
Borrower for consideration which covers both, by the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Borrower's Board of Directors.
(2) Options and Convertible Securities. The
consideration per share received by the Borrower for Additional Shares of Common
Stock deemed to have been issued pursuant to Section 3.3(c) shall be determined
by dividing:
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(A) the total amount, if any, received or
receivable by the Borrower as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provisions contained therein for a subsequent adjustment of such
consideration) payable to the Borrower upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, or in the case of Options
for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities, by
(B) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without regard to any
provisions contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
3.4 ADJUSTMENTS FOR STOCK DIVIDENDS, DISTRIBUTIONS,
SUBDIVISIONS, COMBINATIONS OR CONSOLIDATIONS OF COMMON STOCK.
(a) Stock Dividends, Distributions or Subdivisions. In
the event the Borrower shall issue Additional Shares of Common Stock pursuant to
a stock dividend, stock distribution or subdivision, the Conversion Price in
effect immediately prior to such stock dividend, stock distribution or
subdivision shall concurrently with such stock dividend, stock distribution or
subdivision, be proportionately decreased.
(b) Combinations or Consolidations. In the event the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Conversion Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
(c) Adjustments for Other Distributions. In the event
the Borrower at any time or from time to time makes or fixes a record date for
the determination of holders of Common Stock entitled to receive any
distribution payable in securities of the Borrower other than shares of Common
Stock and other than as otherwise adjusted in Sections 3.3 or 3.4, then, and in
each such event, provision shall be made so that the Lenders shall receive upon
conversion of the Loan, in addition to the number of shares of Common Stock
receivable thereupon, the amount of securities of the Borrower which they would
have received had the Loan been converted into Common Stock on the date of such
event and had they thereafter, during the period from the date of such event to
and including the date of conversion, retained such securities receivable by
them as aforesaid during such period, subject to all other adjustments called
for during such period under Sections 3.3 or 3.4 hereof.
(d) Adjustments for Reclassification, Exchange, and
Substitution. If the Common Stock issuable upon conversion of the Loan shall be
changed into the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization, reclas sification or
otherwise (other than a subdivision or combination of shares provided for
above), the applicable Conversion Price then in effect shall, concurrently with
the effectiveness of such
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reorganization or reclassification, be proportionately adjusted such that the
Loan shall be convertible into, in lieu of the number of shares of Common Stock
which the Lenders would otherwise have been entitled to receive, a number of
shares of such other class or classes of stock equivalent to the number of
shares of Common Stock that would have been subject to receipt by the Lenders
upon conversion of the Loan immediately before that change.
3.5 NO IMPAIRMENT. The Borrower will not, by amendment of its
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
other terms to be observed or performed hereunder by the Borrower but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 3 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the Lenders against
impairment.
3.6 RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Borrower
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
Loan such number of shares of its Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding principal of the Loan;
and if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of the entire Loan, in addition
to such other remedies as shall be available to the Lenders, the Borrower will
take such corporate actions as shall, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes.
3.7 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 3,
the Borrower at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each Lender a
certificate executed by its chief financial officer setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Borrower shall, upon the written
request at any time of any Lender, furnish or cause to be furnished to such
Lender a like certificate setting forth (i) all such adjustments and
readjustments, (ii) the Conversion Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of the Loan.
3.8 NOTICES OF RECORD DATE. In the event that the Borrower shall
propose at any time:
(a) to declare any dividend or distribution upon the
Common Stock, whether in cash, property, stock or other securities, whether or
not a regular cash dividend and whether or not out of earnings or earned
surplus; or
(b) to offer for subscription to the holders of any
class or series of its capital stock any additional shares of stock of any class
or series or any other rights; or
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(c) to effect any reclassification or recapitalization;
or
(d) to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up;
then, in connection with each such event, the Borrower shall send to the
Lenders:
(1) at least 20 days' prior written notice of
the date on which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of Common
Stock shall be entitled thereto) or for determining the rights to vote in
respect of the matters referred to in (c) and (d) above; and
(2) in the case of the matters referred to in
(c) and (d) above, at least 20 days' prior written notice of the date of a
shareholders meeting at which a vote on such matters shall take place or the
effective date of any written consent (and specifying the material terms and
conditions of the proposed transaction or event and the date on which the
holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon the occurrence of such event and
the amount of securities or other property deliverable upon such event).
The failure to provide such notice shall not affect the validity of such
actions.
SECTION 4. COVENANTS OF BORROWER.
4.1 ADDITIONAL DEBT. Until the Loan and all amounts due
hereunder have been paid in full, without the prior written consent of a Lender
or Lenders who have outstanding more than 50% of the principal amount of the
Loan then outstanding, Borrower will not incur, issue, assume or guarantee any
indebtedness except for Bank Debt or purchase money indebtedness incurred for
the purchase or lease of equipment and machinery in the ordinary course of
business ("Equipment Financing") and which indebtedness is secured solely by the
equipment or machinery so purchased or leased.
4.2 LIENS AND ENCUMBRANCES. Until the Loan and all amounts due
hereunder have been paid in full, without the prior written consent of a Lender
or Lenders who have outstanding more than 50% of the principal amount of the
Loan then outstanding, Borrower will not cause or permit or agree or consent to
cause or permit in the future (upon the happening of a contingency or
otherwise), any of its personal property whether now owned or hereafter
acquired, to be subject to a lien except:
(a) liens securing non-delinquent personal property
taxes or assessments;
(b) attachment, judgment and other similar liens arising
in connection with court proceedings, provided (and only for so long as) the
execution or other enforcement of such liens is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings;
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(c) the liens described in Exhibit A hereto; and
(d) liens securing Bank Debt or Equipment Financing.
4.3 REGISTRATION RIGHTS AGREEMENT. Concurrently with the
execution hereof, Borrower shall execute and deliver to Lenders a Registration
Rights Agreement in form and substance satisfactory to Lenders.
4.4 LEGAL EXPENSES. Borrower shall reimburse Lenders for all
reasonable legal fees and costs incurred by Lenders in connection with this
Agreement and filings under Sections 13 and 16 of the Securities Exchange Act of
1934 required as a result of the transactions contemplated hereby, in an amount
not to exceed $5,000.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower hereby
represents and warrants to Lenders that:
5.1 Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the State of California and has the
requisite corporate power and authority to carry on its business as presently
conducted and to carry out the transactions contemplated hereunder.
5.2 All corporate action on the part of Borrower necessary for
the authorization, execution and delivery of this Agreement and the Registration
Rights Agreement and the performance of all obligations of Borrower under such
agreements has been taken.
5.3 No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of Borrower is
required in connection with the valid execution and delivery of this Agreement
and the Registration Rights Agreement or the performance of Borrower's
obligations hereunder or thereunder, except as has already been obtained or
filed.
5.4 The execution, delivery and performance of this Agreement
and the Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby will not result in any violation of, or default
under, any provision of the Articles of Incorporation or Bylaws of Borrower or,
any contract, agreement or instrument to which Borrower is a party or by which
it is bound.
5.5 Borrower has sufficient authorized and unissued shares of
Common Stock under its Articles of Incorporation to fulfill Borrower's
obligations under Section 3 of this Agreement and any other outstanding rights
to acquire Common Stock. Except as provided in the Registration Rights Agreement
and the Amended and Restated Warrant Agreement between Borrower and Euroventures
dated April 1, 1996, Borrower has not granted any contractual right in respect
to registration of its securities.
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5.6 The Shares are, and the Conversion Shares, when issued in
accordance with Section 3, shall be, validly issued, fully paid and
nonassessable and listed on the Nasdaq Stock Market or such exchange or
reporting system as the Borrower's Common Stock is then traded.
5.7 Each of this Agreement and the Registration Agreement has
been duly executed and delivered by, and constitutes the valid and binding
obligation of, the Borrower, enforceable against the Borrower in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or the principles governing the availability of equitable
remedies.
5.8 The Borrower is in material compliance with the provisions
of its Articles of Incorporation, as amended, and its Bylaws, as amended, and is
not in default under or in breach of any material agreement to which it is a
party. The Borrower's business is being conducted in material compliance with
all applicable laws, ordinances, codes, rules and regulations of any
governmental or administrative body, provided, however, that the Borrower's
representation and warranty regarding compliance with any such legal
requirements as they relate to environmental matters is subject to the
Borrower's actual knowledge.
5.9 Borrower has filed all reports (including, without
limitation, proxy statements) required to be filed with the Securities and
Exchange Commission ("SEC") since March 1, 1998 (collectively, the "SEC
Reports"), and has previously furnished or made available to the Lenders true
and complete copies of all SEC Reports. None of the SEC Reports, as of their
respective dates (as amended through the date hereof), contained any untrue
statement of material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the balance
sheets (including the related notes) included in the SEC Reports presents
fairly, in all material respects, the consolidated financial position of
Borrower and its subsidiaries as of the respective dates thereof, and the other
related statements (including the related notes) included therein present
fairly, in all material respects, the results of operations and the changes in
financial position of Borrower and its subsidiaries for the respective periods
set forth therein, all in conformity with generally accepted accounting
principles consistently applied during the periods involved, except as otherwise
noted therein and subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments and any other adjustments described
therein. All of the SEC Reports, as of their respective dates (as amended
through the date hereof), complied in all material respects with the
requirements of the Securities Exchange Act of 1934 and the applicable rules and
regulations thereunder.
5.10 Except as described in the SEC Reports, there is no pending
or, to the best knowledge of the Borrower, threatened action, suit, litigation
or investigation against the Borrower which would have a material adverse effect
on the Borrower, its business or its financial condition. The Borrower's
personal property is not the subject of any attachment, judgment or other
similar lien arising in connection with court proceedings.
5.11 Since the date of the last SEC Report and except as
described in the SEC Reports, to the best knowledge of the Borrower no fact,
event, condition or contingency exists or
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has occurred which has, or in the future can reasonably be expected to have, a
material adverse effect on the business or financial condition of the Borrower.
For purposes hereof, any information regarding the Borrower known by or supplied
to Xxxxx Xxxxx shall be deemed to be known by Euroventures.
SECTION 6. REPRESENTATIONS OF LENDERS. Each Lender severally hereby
represents and warrants to Borrower with respect to himself or itself that:
6.1 Euroventures is a corporation duly organized, validly
existing and in good standing under the laws of the Netherlands and has the
requisite power and authority to execute and deliver this Agreement and the
Registration Rights Agreement and to carry out the transactions contemplated
hereby and thereby.
6.2 Xxxxx X. Xxxxxx has full legal capacity and the requisite
power and authority and is competent to execute and deliver this Agreement and
the Registration Rights Agreement and to carry out the transactions contemplated
hereby and thereby.
6.3 Each Lender has the business experience to analyze, and net
worth sufficient to assume, the risks associated with the Loan and the
acquisition of the Shares and the Conversion Shares. The Loan is being made, and
the Shares and Conversion Shares will be acquired, solely for such Lender's own
account for investment and not for the account of any other person and not for
distribution or assignment.
6.4 The Lenders understand and acknowledge that the Shares are
not, and the Conversion Shares will not be, registered under the Securities Act
of 1933 (the "Securities Act") on the grounds that the offering and sale of
securities contemplated by this Agreement are exempt from registration under the
Securities Act. The Lenders acknowledge and understand that the shares and the
Conversion Shares must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration and
such qualification is available. The Lenders acknowledge and agree that the
certificates representing the Shares and the Conversion Shares may be endorsed
with a legend restricting the transfer thereof except in accordance with the
Securities Act.
SECTION 7. EVENTS OF DEFAULT. Upon the occurrence of an Event of Default
(as defined herein), the entire unpaid balance of the Loan, including any
interest accrued thereon, shall, at the option of one or more Lenders holding,
individually or in the aggregate, fifty percent (50%) or more of the Loan then
outstanding (the "Majority Lender"), and without notice or demand of any kind to
the Borrower or any other person, immediately become due and payable. The
occurrence of any of the following events shall constitute an "Event of
Default":
(a) If Borrower fails to pay the principal of, or
interest on, the Loan within fifteen (15) days of the date such payment is due;
or
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(b) If Borrower fails to perform or observe any material
covenant contained herein or in the Registration Rights Agreement or breaches
any material representation or warranty contained herein and such failure or
breach continues for more than twenty (20) days after written notice from the
Majority Lender specifying such failure or breach; or
(c) The institution by the Borrower of proceedings to be
adjudicated as bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it or the filing by it of a
petition or answer or consent seeking reorganization or release under the
federal Bankruptcy Act, or any other applicable federal or state law, or the
consent by it to the filing of any such petition or the appointment of a
receiver, liquidator, assignee, trustee or other similar official of the
Borrower, or of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the taking of corporate action by
the Borrower in furtherance of any such action; or
(d) If, within sixty (60) days after the commencement of
an action against the Borrower (and service of process in connection therewith
on the Borrower) seeking any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, such action shall not have been resolved in favor of the
Borrower or all orders or proceedings thereunder affecting the operations or the
business of the Borrower stayed, or if the stay or any such order or proceeding
shall thereafter be set aside, or if, within sixty (60) days after the
appointment without the consent or acquiescence of the Borrower of any trustee,
receiver or liquidator of the Borrower or of all or any substantial part of the
properties of the Borrower, such appointment shall not have been vacated; or
(e) Any declared default of the Borrower under any
indebtedness of Borrower to banks, commercial finance lenders, insurance
companies or other financial institutions regularly engaged in the business of
lending money (whether secured or unsecured) that gives the holder of such
indebtedness the right to accelerate such indebtedness, and such indebtedness is
in fact accelerated by the holder.
SECTION 8. BANK DEBT. To facilitate Borrower's obtaining a bank line of
credit or accounts receivable factoring line for working capital purposes ("Bank
Debt"), the Lenders agree, upon receipt by Borrower of a commitment letter from
a lender to provide Bank Debt and approval of the terms thereof by Borrower's
Board of Directors, to terminate the Security Agreement between Borrower and the
Lenders dated as of October 12, 1994 and to execute UCC termination statements
and such other documents as Borrower and such lender shall reasonably request to
terminate the Lenders' security interest in Borrower's assets. Subject to the
foregoing, the parties hereby reaffirm the Security Agreement and acknowledge
that the security interest created thereby and evidenced by the financing
statements and other documents filed with public agencies with respect thereto
continue in full force and effect. Provided that Kredietbank N.V. agrees to
subordinate on the same terms and conditions, Lenders agree to execute and
deliver a subordination agreement or such other agreements or documents as shall
be necessary to cause the Loan to become subordinated in right of payment,
subject to Lenders' right of subrogation, to any Bank Debt.
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SECTION 9. MISCELLANEOUS.
9.1 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof. This
Agreement supersedes and replaces the Prior Loan Agreements in their entirety.
None of the parties has relied upon any agreement or representation except as
set forth in this Agreement.
9.2 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California as applied to
contracts entirely executed and performed within said state and without regard
to choice of law or conflicts of law principles. Each party hereto expressly
consents to the jurisdiction of the California courts and agrees that any action
relating to or arising or of this Agreement shall be instituted and prosecuted
only in the Municipal or Superior Court of California sitting in the County of
Orange. Each party waives any right to a change in venue and any and all
objections to the jurisdiction of the California courts.
9.3 NOTICES. All notices and other communications pursuant to
this Agreement shall be in writing and delivered as set forth below. Notice
given to one Lender shall not be deemed to constitute notice to the other.
Notices shall be delivered personally, either by messenger, air courier or by
telecopy. Notices shall be deemed to have been given, if delivered personally or
by telecopy, on the date of delivery; or if transmitted by air courier, two (2)
business days after the date of delivery to the courier. The addresses for
notices set forth below may be changed by giving written notice of such change
in the manner provided herein for giving notice.
If to Lenders to: Euroventures Benelux II B.V.
X. Xxxxxxxxxxx 000
0000 Xxxxxxxx
Xxxxxxx
Attn: Xx. Xxxxx Xxxxx
Xx. Xxxxxx Xxxxxxxxx
Facsimile: 000-000-000-0000
With a Copy to:
Xxxxx X. Xxxxxx, Esq.
000 Xxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Xxxxx X. Xxxxxx
000 X. Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
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If to Borrower to: Dense-Pac Microsystems, Inc.
0000 Xxxxxxx Xxx
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
With a Copy to:
Xxxxxxxx X. Xxxxx
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Fax: (000) 000-0000
9.4 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provisions shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provisions were so excluded and shall be enforceable in
accordance with the remaining terms.
9.5 AMENDMENT. This Agreement and any provision hereof may not
be amended or terminated except by a statement in writing signed by the party
against whom enforcement of the amendment or termination is sought.
9.6 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall inure to the benefit of, and be binding upon, the successors and assigns
of the parties. No party shall be permitted to assign its rights or obligations
under this Agreement without the prior written consent of the other parties
hereto.
9.7 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, and all of which,
when taken together, shall constitute one and the same instrument.
9.8 ATTORNEYS' FEES. In the event of any dispute concerning the
terms or conditions of this Agreement, or in the event a Lender is required to
enforce said terms and conditions, the prevailing party in such dispute or
enforcement shall be entitled to recover all of its reasonable attorneys' fees
and costs incurred in connection with said dispute or enforcement, whether or
not litigation is commenced.
9.9 REMEDIES CUMULATIVE. No failure or delay on the part of
either Lender in exercising any right, power or privilege under this Agreement,
and no course of dealing between the Borrower and either Lender shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege under this Agreement preclude any other or further exercise thereof
or the exercise of any other right, power or privilege hereunder. The rights,
powers and remedies in
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the this Agreement expressly provided are cumulative and not exclusive of any
rights, powers or remedies which either Lender would otherwise have. No notice
to or demand on the Borrower in any case shall entitle the Borrower to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of Lender to any other or further action in any
circumstances without notice or demand, unless such demand or notice is
specifically required by this Agreement.
9.10 SURVIVAL. All representations and warranties made in this
Agreement shall survive the execution and delivery hereof until the Loan has
been paid in full.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the dates set forth below to be effective as of the date first set forth above.
DENSE-PAC MICROSYSTEMS, INC.,
A CALIFORNIA CORPORATION
BY:
-------------------------------------
XXXXXXX X. XXXXXXX
VICE PRESIDENT, FINANCE
EUROVENTURES BENELUX II B.V.
BY:
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----------------------------------------
XXXXX X. XXXXXX
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