Exhibit 10.17
Execution Copy
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WARRANT SUBSCRIPTION AGREEMENT
This WARRANT SUBSCRIPTION AGREEMENT is made as of May 18, 2000 between
SMTC Corporation, a Delaware corporation (the "Company"), and each of the
investors listed on Schedule 1 hereto (each a "Subscriber", and collectively,
the "Subscribers").
Recitals
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The Subscribers are willing to purchase, and the Company is willing to
issue and sell to such Subscribers, warrants (the "Warrants") to purchase the
number of units (the "Units") set forth opposite the name of such Subscriber on
Schedule 1 hereto, all on the terms and subject to the conditions set forth
herein.
Agreement
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In consideration of the foregoing, and the representations, warranties,
covenants and conditions set forth below, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. Sale and Purchase of Subscription Securities
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1.1 On the terms and subject to the conditions hereof, the Company
hereby agrees to sell to each Subscriber, and by its acceptance hereof each
Subscriber agrees to purchase from the Company for investment, at the
Closing hereinafter referred to, a Warrant to purchase the number of Units
set forth opposite the name of such Subscriber on Schedule 1 hereto, for
United States Sixty Dollars (US$ 60.00) per Unit. Each Unit shall consist
of, subject to adjustment as provided in the Warrants, nine (9) shares of
the Company's Class A-1 Common Stock, par value $0.001 per share (the
"Class A Stock") and one (1) share of the Company's Class L Common Stock,
par value $0.001 per share (the "Class L Stock" and, together with the
Class A Stock, the "Common Stock"). The Warrants and the shares of Common
Stock issuable upon the exercise of the Warrants are collectively referred
to herein as the "Subscription Securities".
1.2 The sale and purchase of the Warrants (the "Closing") shall take
place at the same time and location as the Closing and shall be
substantially contemporaneous with the closing pursuant to, the Senior
Subordinated Loan Agreement dated as of May __, 2000 between the Company
and the Lenders (as defined therein) (the "Loan Agreement").
If, prior to the Closing hereunder, the Loan Agreement shall be terminated,
this Agreement shall automatically terminate and be without further force
and effect; provided, however, that no such termination of this Agreement
shall relieve any party from liability for breach prior to such
termination.
1.3 At the Closing, against payment by a Subscriber to the Company of
such Subscriber's Warrant Purchase Price (as set forth opposite the name of
such Subscriber on Schedule 1 hereto) by wire transfer of immediately
available federal funds, the Company will deliver a Warrant registered in
the respective name of such Subscriber.
2. Representations and Warranties of the Company. The Company represents
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and warrants to each Subscriber that:
2.1 The Company is duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Company has made
available to the Subscribers true and complete copies of the Amended and
Restated Certificate of Incorporation and By-Laws of the Company and the
Stockholders Agreement as in effect on the date hereof. Such documents
will be in effect in such form on the date of the Closing (the "Closing
Date").
2.2 The Company has or prior to the Closing Date will have taken all
corporate action required to authorize the execution and delivery of this
Agreement and the issuance of the Subscription Securities.
2.3 The shares of Common Stock issuable upon the exercise of the
Warrants, when issued and upon payment of the purchase price therefor, will
be duly authorized, validly issued, fully paid and non-assessable.
2.4 Each of the Loan Agreement and this Agreement is a legal, valid
and binding obligation of the Company, enforceable in accordance with its
respective terms subject to the effect of bankruptcy, insolvency and
similar laws affecting creditors' rights generally and to general equitable
principles.
2.5 Assuming the accuracy of each Subscriber's representations, the
offer and sale of the Warrants does not require registration under the
Securities Act of 1933, as amended.
3. Representations and Warranties of the Subscribers. Each Subscriber
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individually (but not on behalf of any other Subscriber) represents and warrants
that:
3.1 Such Subscriber has full legal capacity, power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement has been
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duly executed and delivered by such Subscriber and is the legal, valid and
binding obligation of such Subscriber enforceable against it in accordance
with the terms hereof.
3.2 Such Subscriber has been advised that the Subscription Securities
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act") or any state securities laws and, therefore, cannot be
resold unless they are registered under the Securities Act and applicable
state securities laws or unless an exemption from such registration
requirements is available. Such Subscriber is aware that the Company is
under no obligation to effect any such registration with respect to the
Subscription Securities (except solely to the extent provided in Section 6
of the Stockholders Agreement) dated as of July 30, 1999 among the Company
and the stockholders of the Company party thereto (the "Stockholders
Agreement") or to file for or comply with any exemption from registration.
Such Subscriber is purchasing the Subscription Securities to be acquired by
such Subscriber hereunder for its own account and not with a view to, or
for resale in connection with, the distribution thereof in violation of the
Securities Act. Such Subscriber has such knowledge and experience in
financial and business matters that such Subscriber is capable of
evaluating the merits and risks of such investment, is able to incur a
complete loss of such investment and is able to bear the economic risk of
such investment for an indefinite period of time.
3.3 One of the following is true:
3.3.1 Such Subscriber is either (i) a "qualified institutional
buyer" as that term is defined in Rule 144A under the Securities Act
(a "QIB") or (ii) an "accredited investor" as that term is defined in
Regulation D under the Securities Act, in each case as set forth
opposite the name of such Subscriber on Schedule I hereto
; or
3.3.2 (i) such Subscriber is not a "U.S. person" (as such term
is defined in Rule 902(k) under the Securities Act) and is not
acquiring any Subscription Securities for the account or benefit of a
U.S. person, (ii) the offer and sale of Subscription Securities to
such Subscriber has been made in an "offshore transaction" (as such
term is defined in Rule 902(k) under the Securities Act), and (iii)
such Subscriber agrees that he will not (a) sell any Subscription
Securities unless such sale is in accordance with the provisions of
Regulation S, pursuant to registration under the Securities Act, or
pursuant to an available exemption from registration or (b) engage in
hedging transactions with regard to such securities unless in
compliance with the Securities Act.
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4. Conditions to Sale and Purchase of Warrants.
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4.1 The Company's obligation to issue and sell the Subscription
Securities shall be subject to the satisfaction of the following
conditions:
4.1.1 All representations and warranties of each Subscriber
contained in this Agreement shall be true and correct as of the
Closing, and consummation of the Closing shall constitute a
reaffirmation by each Subscriber that all representations and
warranties of such Subscriber contained in this Agreement are true and
correct as of the Closing.
4.1.2 On the Closing Date, substantially contemporaneously with
the issuance and sale of the Warrants hereunder, the closing shall
have occurred under the Loan Agreement.
4.2 Each Subscriber's obligation to purchase and pay for the Warrants
shall be subject to the satisfaction of the following conditions:
4.2.1 All representations and warranties of the Company
contained in this Agreement shall be true and correct as of the
Closing, and consummation of the Closing shall constitute a
reaffirmation that all the representations and warranties of the
Company contained in this Agreement are true and correct as of the
Closing.
4.2.2 On the Closing Date, substantially contemporaneously with
the issuance and sale of the Warrants hereunder, all conditions to the
closing under the Loan Agreement set forth in Section 6 thereof shall
have been satisfied (without giving effect to any waiver thereof other
than waivers consented to in writing by such Subscriber).
5. Covenants.
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5.1 The Company will furnish each registered holder from time to time
of any of the Subscription Securities representing not less than 10% of the
outstanding Common Stock (other than any holder of Subscription Securities
transferred in violation of the Stockholders Agreement or sold in a
registered public offering or to the public under Rule 144) (each, a
"Significant Holder"), the following:
5.1.1 As soon as available, and in any event within one
hundred and twenty (120) days after the end of each fiscal year of the
Company, the consolidated balance sheet of the Company and its
subsidiaries as at the end of each such fiscal year and the
consolidated statements of income, cash flows and changes in
stockholders' equity for such year of the Company and its
subsidiaries, setting
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forth in each case in comparative form the figures for the next
preceding fiscal year, accompanied by the report of independent
certified public accountants of recognized national standing, to the
effect that, except as set forth therein, such consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with prior years
and fairly present in all material respects the financial condition of
the Company and its Subsidiaries at the dates thereof and the results
of their operations and changes in their cash flows and stockholders'
equity for the periods covered thereby.
5.1.2 As soon as available and in any event within sixty (60)
days after the end of each fiscal quarter of the Company, the
consolidated balance sheet of the Company and its subsidiaries as at
the end of such quarter and the consolidated statements of income,
cash flows and changes in stockholders' equity for such quarter and
the portion of the fiscal year then ended of the Company and its
Subsidiaries, setting forth in each case the figures for the
corresponding periods of the previous fiscal year in comparative form,
all in reasonable detail.
5.2 The Company shall cause to be kept on an appropriate basis, and
each Significant Holder shall have access at reasonable times to,
appropriate books, records and accounts.
6. Indemnities. Each Subscriber agrees to indemnify and hold harmless
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the Company, and the Company agrees to indemnify and hold harmless each
Subscriber, from and against all losses, damages, liabilities and expenses
(including without limitation reasonable attorneys fees and charges) resulting
from any breach of any representation, warranty or covenant of such indemnifying
party or any misrepresentation by such indemnifying party in this Agreement.
7. Restrictions on Transfer.
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7.1 Restrictive Legend. The certificates or instruments representing
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all Subscription Securities shall bear a legend in substantially the
following form:
"The securities represented by this Certificate are subject to
additional restrictions on transfer and certain other agreements set forth
in a Stockholders Agreement dated as of July 30, 1999 among SMTC
Corporation and certain stockholders thereof, a copy of which may be
obtained without charge by the holder hereof at the Company's principal
place of business."
The certificates or instruments representing all Subscription Securities
sold to Subscribers making the warranty in Section 3.3.1 shall bear a
legend in substantially the following form:
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"The securities represented by this certificate were originally issued
on May 18, 2000, have not been registered under the Securities Act of
1933, as amended (the "Act"), or under any state securities laws and may
not be sold or transferred in the absence of an effective registration
statement under the Act and applicable state securities laws or an
exemption from registration thereunder."
The certificates or instruments representing all Subscription Securities
sold to Subscribers making the warranty in Section 3.3.2 shall bear a
legend in the following form:
"The securities represented by this certificate were originally issued
on May 18, 2000 in reliance on Regulation S under the Securities Act of
1933, as amended (the "Act"), and may not be sold or transferred except in
accordance with the provisions of Regulation S, or pursuant to an
available exemption from registration. Hedging transactions involving the
securities represented by this certificate may not be conducted unless in
compliance with the Act."
7.2 Termination of Restrictions. The restrictions imposed by Section
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7.1 hereof upon the transferability of Subscription Securities shall cease
and terminate as to any particular Subscription Securities (i) when, in
the opinion of counsel reasonably acceptable to the Company, such
restrictions are no longer required in order to assure compliance with the
Securities Act or (ii) when such Subscription Securities shall have been
registered under the Securities Act or transferred pursuant to Rule 144(k)
thereunder. Whenever (i) such restrictions shall cease and terminate as to
any Subscription Securities or (ii) such Subscription Securities shall be
transferable under paragraph (k) of Rule 144, the holder thereof shall be
entitled to receive from the Issuer, without expense, new certificates not
bearing the legend set forth in Section 7.1 hereof.
8. Miscellaneous.
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8.1 This Agreement and the other agreements referred to herein set
forth the entire understanding among the parties with respect to the
subject matter thereof.
8.2 This Agreement can be changed only by an instrument in writing
signed by the party against whom enforcement of such change is sought.
8.3 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors, assigns, heirs and
representatives; provided, however, that prior to the Closing, no
Subscriber may assign any of such Subscriber's rights hereunder and, after
the Closing, no Subscriber may assign any of such Subscriber's rights
hereunder except in connection with a transfer of the Subscription
Securities in compliance with the terms and conditions of the Stockholders
Agreement.
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8.4 All covenants, agreements, representations and warranties made
herein shall survive the execution and delivery hereof and transfer of any
Subscription Securities.
8.5 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original but all of which shall together
constitute one and the same instrument.
9. Governing Law; Arbitration.
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9.1 Governing Law. This Agreement shall be governed by and
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construed in accordance with the domestic substantive laws of the State of
Delaware, without giving effect to any choice or conflict of law provision
or rule that would cause the application of the domestic substantive laws
of any other jurisdiction; provided, however, that any dispute covered by
the provisions of Section 9.2 shall be governed by the United States
Arbitration Act as then in force.
9.2 Arbitration.
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9.2.1 Generally. Except solely as set forth in Section 9.2.3, each
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dispute, difference, controversy or claim arising in connection with or
related or incidental to, or question occurring under, this Agreement or
the subject matter hereof shall be finally settled under the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA") by
an arbitral tribunal composed of three arbitrators, at least one of whom
shall be an attorney experienced in corporate transactions, appointed by
agreement of the parties in accordance with said Rules. In the event the
parties fail to agree upon a panel of arbitrators from the first list of
potential arbitrators proposed by the AAA, the AAA will submit a second
list in accordance with said Rules. In the event the parties shall have
failed to agree upon a full panel of arbitrators from said second list,
any remaining arbitrators to be selected shall be appointed by the AAA in
accordance with said Rules. If, at the time of the arbitration, the
parties agree in writing to submit the dispute to a single arbitrator,
said single arbitrator shall be appointed by agreement of the parties in
accordance with the foregoing procedure, or, failing such agreement, by
the AAA in accordance with said Rules. The arbitrator(s) will entertain
such presentation of sworn testimony and other evidence, written briefs,
and/or oral argument as the parties may wish to present; provided,
however, no testimony or exhibits will be admissible unless the adverse
party was afforded an opportunity to examine such witnesses and to inspect
and copy such exhibits during the pre-arbitration proceeding discovery
phase. Upon the request of either party, the arbitrator(s) will provide
both parties with written findings of fact and conclusions of law. The
foregoing arbitration proceedings may be commenced by any party by notice
to all other parties. In any arbitration proceedings under this Section 9,
the arbitrator(s) shall be instructed to begin such proceedings within 30
days of appointment, and
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to reach a decision within 45 days of the conclusion of the submission of
all evidence and, in the event that a decision is not so rendered, the
arbitrator shall lose all jurisdiction over such dispute.
9.2.2 Place of Arbitration. The place of arbitration shall be
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Boston, Massachusetts.
9.2.3 Recourse to Courts. The parties hereby exclude any right of
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appeal to any court on the merits of the dispute. The provisions of this
Section 9.2 may be enforced in any court having jurisdiction over the award
or any of the parties, jurisdiction pursuant to Section 9.3 below, or any
of their respective assets and judgment on the award (including without
limitation equitable remedies) granted in any arbitration hereunder may be
entered in any such court. Nothing contained in this Section 9 shall
prevent any party from seeking interim measures of protection in the form
of pre-award attachment of assets or preliminary or temporary equitable
relief.
9.3 Consent to Jurisdiction. Subject to the provisions of Section 9.2,
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each of the parties agrees that all actions, suits or proceedings arising out
of or based upon this Agreement or the subject matter hereof may be brought
and maintained in the federal and state courts of the State of Delaware.
Subject to the provisions of Section 9.2, each of the parties hereto by
execution hereof (i) hereby irrevocably submits to the jurisdiction of the
federal and state courts in the State of Delaware for the purpose of any
action, suit or proceeding arising out of or based upon this Agreement or the
subject matter hereof and (ii) hereby waives to the extent not prohibited by
applicable law, and agrees not to assert, by way of motion, as a defense or
otherwise, in any such action, suit or proceeding, any claim that he or it is
not subject personally to the jurisdiction of the above-named courts, that he
or it is immune from extraterritorial injunctive relief or other injunctive
relief, that his or its property is exempt or immune from attachment or
execution, that any such action, suit or proceeding may not be brought or
maintained in one of the above-named courts, that any such action, suit or
proceeding brought or maintained in one of the above-named courts should be
dismissed on grounds of forum non conveniens, should be transferred to any
court other than one of the above-named courts, should be stayed by virtue of
the pendency of any other action, suit or proceeding in any court other than
one of the above-named courts, or that this Agreement or the subject matter
hereof may not be enforced in or by any of the above-named courts. Each of
the parties hereto hereby consents to service of process in any such suit,
action or proceeding in any manner permitted by the laws of the State of
Delaware, agrees that service of process by registered or certified mail,
return receipt requested, at the address specified in or pursuant to Schedule
I hereto is reasonably calculated to give actual notice and waives and agrees
not to assert by way of motion, as a defense or otherwise, in any such action,
suit or proceeding any claim that such service of process does not constitute
good and sufficient service of process.
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9.4 Waiver of Jury Trial. To the extent not prohibited by applicable
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law which cannot be waived, each of the parties hereto hereby waives, and
covenants that it will not assert (whether as plaintiff, defendant, or
otherwise), any right to trial by jury in any forum in respect of any issue,
claim, demand, cause of action, action, suit or proceeding arising out of or
based upon this Agreement or the subject matter hereof, in each case whether
now existing or hereafter arising and whether in contract or tort or
otherwise. Any of the parties hereto may file an original counterpart or a
copy of this Section 9.4 with any court as written evidence of the consent of
each of the parties hereto to the waiver of his or its right to trial by jury.
9.5 Reliance. Each of the parties hereto acknowledges that he or it has
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been informed by each other party that the provisions of Section 9 constitute
a material inducement upon which such party is relying and will rely in
entering into this Agreement and the transactions contemplated hereby.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound by
the terms hereof, have caused this Agreement to be executed, under seal, as of
the date first above written by their officers or other representatives
thereunto duly authorized.
THE COMPANY: SMTC CORPORATION
By: /s/ Xxxxxxx Xxxxx
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Title: Vice President Finance and
Administration
THE SUBSCRIBERS: SMTC CORPORATION
By: /s/ Xxxxxxx Xxxxx
---------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President Finance and
Administration
XXXX CAPITAL FUND, VI L. P.
By: Xxxx Capital Partners VI, L. P..,
its general partner
By: Xxxx Capital Investors VI, Inc.
its general partner
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
BCIP ASSOCIATES II
BCIP ASSOCIATES II-B
BCIP ASSOCIATES II-C
By: Xxxx Capital, Inc.
their Managing Partner
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
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CELERITY PARTNERS III, L. P.
By: Celerity Management Co., Inc.
their Attorney-in-Fact
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxx
Title: President
VENTEURA LIMITED
By: /s/ Xxxxx X. Johann
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: Director
CFE, Inc.
By: /s/ Xxxx Xxxxxxx
---------------------------------
Name: Xxxx Xxxxxxx
Title: Duly Authorized Signatory
X. X. XXXXXX CONSULTING, INC.
By: /s/ Xxxx Xxxxxx
---------------------------------
Name: Xxxx Xxxxxx
Title: President
XXXXXX INC.
By: /s/ Xxxxx X'Xxxxxxx
---------------------------------
Name: Xxxxx X'Xxxxxxx
Title: President
/s/ Xxxxxx Xxxxxxx
---------------------------------
Xxxxxx Xxxxxxx
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XXXXXX ELECTRONICS GROUP LIMITED
By: /s/ Xxxxxxx Xxxxxxxxx
---------------------------------
Name: X. Xxxxxxxxx
Title: Secretary-Treasurer
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SCHEDULE 1
to Warrant Subscription Agreement
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QIB, large instiutional
Warrant accredited investor, or
Name of Subscriber Units Purchase Price Non-U.S. Person
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Xxxx Capital Fund VI, L.P. 9008.76 $540,525.90 Qualified Institutional
Xxxx Capital, Inc. Buyer
Two Xxxxxx Xxxxx, 0/xx/ Xxxxx
Xxxxxx, XX 00000
Attn:
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BCIP Associates II 3,286.21 $197,172.87 Qualified Institutional Buyer
Xxxx Capital, Inc.
Two Xxxxxx Xxxxx, 0/xx/ Xxxxx
Xxxxxx, XX 00000
Attn:
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BCIP Associates II-B 550.45 $ 33,027.16 Large Institutional
Xxxx Capital, Inc. Accredited Investor
Two Xxxxxx Xxxxx, 0/xx/ Xxxxx
Xxxxxx, XX 00000
Attn:
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BCIP Associates II-C 402.75 $ 24,165.12 Large Institutional
Xxxx Capital, Inc. Accredited Investor
Two Xxxxxx Xxxxx, 0/xx/ Xxxxx
Xxxxxx, XX 00000
Attn:
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Celerity Partners III, L.P. 7,987.67 $479,260.27 Large Institutional
Celerity Management Co., Inc. Accredited Investor
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx
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Venteura Limited 2,582.17 $154,930.38 Non-U.S. Person
c/o Jura Trust
Mitteldorf 1
Vaduz, Liechtenstein, FL-9490
Attention: Xxxxx X. Xxxxxx
Telephone: 00-00-000-0000
Facsimile: 00-00-000-0000
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QIB, large instiutional
Warrant accredited investor, or
Name of Subscriber Units Purchase Price Non-U.S. Person
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CFE, Inc. 601.29 $ 36,077.31 Qualified Institutional Buyer
c/o General Electric Capital Corporation
Commercial Finance
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Corporate Counsel
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Xxxxxx Electronics Group Limited 7,580.05 $454,802.88 Non-U.S. Person
Xxxxxx Van Nostrand Co. Limited
00 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxxx Xxxxxxxxx
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X. X. Xxxxxx Consulting 4,409.92 $264,595.34 Non-U.S. Person
c/o SMTC Corporation
000 Xxxx Xxxx
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
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Xxxxxx Inc. 4,409.92 $264,595.34 Non-U.S. Person
c/o SMTC Corporation
000 Xxxx Xxxx
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
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Xxxxxx Xxxxxxx 847.46 $ 50,847.42 Non-U.S. Person
c/o SMTC Corporation
000 Xxxx Xxxx
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
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