Exhibit 10.3
LLC INTEREST AND WARRANT PURCHASE AGREEMENT
THIS LLC INTEREST AND WARRANT PURCHASE AGREEMENT, dated as of
October 16, 2000 (this "Agreement"), is made by and among Zecal Technology, LLC,
a Delaware limited liability company ("LLC"), HTI Z Corp. (f/k/a Zecal Corp.), a
Delaware corporation ("HTI") and LZ Partners, LLC, a Delaware limited liability
company ("LZ"). HTI and LZ are referred to herein collectively as the
"Purchasers" and individually as a "Purchaser." Except as otherwise indicated,
capitalized terms used herein are defined in Section 6 hereof.
Subject to the terms and conditions set forth herein, LLC
desires to sell, and LZ and HTI desire to purchase, certain securities and
warrants of LLC.
The parties hereto agree as follows:
Section 1. Authorization; Purchase and Sale.
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1A. On or before the date hereof, LLC will have authorized (i)
the sale to LZ of (a) Preferred Company Interests representing, immediately
following the consummation of the transactions contemplated hereunder,
approximately 24.7% of the entire Company Interest of LLC (the "LZ Preferred
Company Interests") and (b) Warrants, substantially in the form of Appendix A
hereof, to purchase $3,000,000 of Preferred Company Interests (the "First
Warrant" and, together with the LZ Preferred Company Interests, the "LZ
Equity"), for the aggregate purchase price of $3,000,000; and (ii) the sale to
HTI of Preferred Company Interests representing, immediately following the
consummation of the transactions contemplated hereunder, approximately 9.3% of
the entire Company Interest of LLC (the "HTI Preferred Company Interests" and,
together with the LZ Equity, the "Securities") for the aggregate purchase price
of $1,125,000.
1B. LLC agrees to sell and, subject to the terms and
conditions set forth herein, each of the Purchasers agrees, severally but not
jointly, to purchase (i) in the case of LZ, the LZ Equity and (ii) in the case
of HTI, the HTI Preferred Company Interests, in each case at the aggregate
purchase price set forth in Section 1A hereof.
1C. At the Closing (as defined in Section 2A below), the
Purchasers shall pay the purchase price set forth in Section 1A by certified
check or wire transfer of immediately available funds and (i) with respect to
the LZ Preferred Company Interests and HTI Preferred Company Interests, LLC will
register upon its books the purchase of such Preferred Company Interests by the
Purchasers and (ii) with respect to the First Warrant, LLC will deliver to LZ
the First Warrant executed by a duly authorized officer of LLC.
Section 2. Closing of the Transactions.
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2A. The Closing. The closing of the sale and purchase of
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the Securities (the "Closing") will occur at a place mutually agreeable to
Purchasers and LLC at 10:00 a.m., Chicago time, as of the date hereof (the
"Closing Date").
Section 3. Restrictions on Transfers.
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3A. Restrictions. THE TRANSFER OF ANY INTEREST IN LLC
IS SUBJECT TO THE CONDITIONS AND RESTRICTIONS ON TRANSFER CONTAINED IN THE LLC
AGREEMENT AND THE MEMBERS AGREEMENT, WHICH RESTRICTIONS ARE INCORPORATED HEREIN
BY REFERENCE.
Section 4. Representations and Warranties of LLC.
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LLC hereby represents and warrants to each Purchaser that as of the Closing:
4A. Organization, etc. LLC is a limited liability company duly
organized, validly existing and in good standing under the laws of Delaware. LLC
possesses all requisite power and authority necessary to carry out the
transactions contemplated by this Agreement.
4B. Authorization; No Breach. The execution, delivery and
performance of this Agreement and the other agreements contemplated hereby to
which LLC is a party have been duly authorized by LLC and no other limited
liability company act or proceeding on the part of LLC, its board or members is
necessary to authorize the execution, delivery or performance by LLC of this
Agreement or any other agreement contemplated hereby to which it is a party or
the consummation of the transactions contemplated hereby or thereby. This
Agreement has been duly executed and delivered by LLC and this Agreement
constitutes a valid and binding obligation of LLC, enforceable in accordance
with its terms. The execution and delivery by LLC of this Agreement and the
fulfillment of and compliance with the terms hereof by LLC does not and shall
not (i) conflict with or result in a breach of the terms, conditions or
provisions of, (ii) constitute a default under (whether with or without the
giving of notice, the passage of time or both), (iii) result in the creation of
any lien upon LLC's assets pursuant to, (iv) give any third party the right to
modify, terminate or accelerate any obligation under, (v) result in a violation
of or (vi) require any authorization, consent, approval, exemption or other
action by or notice or declaration to, or filing with, any court or
administrative or governmental body or agency pursuant to, the organizational
documents of LLC, or any law, statute, rule or regulation to which LLC is
subject, or any agreement, instrument, order, judgment or decree to which LLC is
subject.
4C. No Registration. Assuming the truth and accuracy of
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the representations set forth in Section 5 hereof, the offer and sale of the
Securities pursuant to the terms hereof are not required to be registered under
the Securities Act or any state securities laws.
4D. Capitalization. Immediately following the
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consummation of the transactions contemplated hereunder, the capitalization of
LLC shall be as set forth in Schedule 4D hereof.
Section 5. Purchasers' Representations and Warranties.
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5A. Purchasers' Investment Representations. Each Purchaser
hereby represents, severally but not jointly, that it is acquiring the
Securities purchased by it hereunder for its own account and that it has no
present intention of selling such securities in a public distribution in
violation of the federal securities laws or any applicable state securities
laws; provided that nothing contained herein will prevent such Purchaser and the
subsequent holders of Securities from
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transferring such securities in compliance with the provisions of any law or
contract applicable to such Purchaser or holders, as applicable.
5B. Other Representations and Warranties of Purchasers.
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Each Purchaser hereby represents and warrants, severally but not jointly, to LLC
that:
(i) Such Purchaser (a) is an "accredited investor" as defined
in Rule 501(a) under the Securities Act or (b) by reason of its
business and financial experience, and the business and financial
experience of those retained by it to advise it with respect to its
investment in the Securities being purchased hereunder, it, together
with such advisors, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the
merits and risks of its prospective investment in such securities, is
able to bear the economic risk of such investment and, at the present
time, is able to afford a complete loss of such investment; and
(ii) (a) Such Purchaser has the requisite power and authority
to purchase the Securities to be purchased by it hereunder and has
authorized the purchase of such securities, (b) this Agreement and the
purchase of the Securities hereunder constitutes the legal, valid and
binding obligation of such Purchaser, enforceable in accordance with
its terms, and (c) the execution and delivery by such Purchaser of this
Agreement and the fulfillment of and compliance with the terms hereof
by such Purchaser does not and shall not (1) conflict with or result in
a breach of the terms, conditions or provisions of, (2) constitute a
default under (whether with or without the giving of notice, the
passage of time or both), (3) result in the creation of any lien upon
such Purchaser's assets pursuant to, (4) give any third party the right
to modify, terminate or accelerate any obligation under, (5) result in
a violation of or (6) require any authorization, consent, approval,
exemption or other action by or notice or declaration to, or filing
with, any court or administrative or governmental body or agency
pursuant to, the organizational documents of such Purchaser, or any
law, statute, rule or regulation to which such Purchaser is subject, or
any agreement, instrument, order, judgment or decree to which such
Purchaser is subject.
Section 6. Definitions.
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"Company Interest" is defined in the LLC Agreement.
"LLC Agreement" means that certain Limited Liability Company
Agreement, dated as of May 5, 2000, among the members of LLC listed therein.
"Members Agreement" means that certain Members Agreement,
dated as of May 5, 2000, among LLC and the members of LLC listed therein.
"Person" means an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
"Preferred Company Interests" is defined in the LLC Agreement.
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"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal law then in force.
Section 7. Miscellaneous.
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7A. Remedies. The holders of Securities acquired hereunder
(directly or indirectly) will have all of the rights and remedies set forth in
this Agreement, the LLC Agreement and the Members Agreement, and all of the
rights and remedies which such holders have been granted at any time under any
other agreement or contract, and all of the rights and remedies which such
holders have under any law. Any Person having any rights under any provision of
this Agreement will be entitled to enforce such rights specifically, to recover
damages by reason of any breach of any provision of this Agreement, and to
exercise all other rights granted by law.
7B. Additional LZ Investment. Each of the parties hereto
agrees and acknowledges that at any time on or before December 31, 2000, LZ
shall have the right (but not the obligation) to purchase an additional $375,000
of Preferred Company Interests of LLC (the "LZ Investment Option"). In the event
LZ exercises the LZ Investment Option, LZ shall receive Warrants, substantially
in the form of Appendix B hereof, to purchase $750,000 of Preferred Company
Interests (the "Second Warrant"). Notwithstanding anything to the contrary
contained herein or in the Members Agreement, the exercise of the LZ Investment
Option shall not entitle HTI to purchase any additional Company Interests of
LLC.
7C. Limited Waiver of Members Agreement Provisions.
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Each of the Purchasers agrees and acknowledges that:
(i) notwithstanding the provisions of Section 11(a) of the
Members Agreement which permit each Member (as defined in the Members
Agreement) to provide all, but not less than all, of such Member's pro
rata share of any additional financing of LLC, HTI is providing
$1,125,000 of the $4,500,000 of additional financing called for in that
certain Call Notice, dated September 25, 2000 (the "Call Notice");
(ii) notwithstanding the provisions of Section 11(c) of the
Members Agreement which would entitle LZ to warrants for $9,000,000 of
Preferred Company Interests because HTI declined to provide all of its
pro rata share of additional financing called for in the Call Notice,
LZ has consented to receive warrants for $3,000,000 of Preferred
Company Interests (i.e., the First Warrant); and
(iii) each of the waivers of the aforementioned provisions of
the Members Agreement set forth in Section 7C(i) and (ii) hereof
represent a limited, one-time, and specific waiver of such provisions
and shall in no way be deemed to otherwise modify the terms and
conditions of the Members Agreement except with respect to the limited
waivers described above.
7D. Amendments and Waivers. Except as otherwise provided
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herein, no modification, amendment or waiver of any provision hereof shall be
effective against LLC or either Purchaser unless such modification, amendment or
waiver is approved in writing by LLC and any such affected Purchaser. The
failure of any party to enforce any provision of this Agreement or under any
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agreement contemplated hereby or under the LLC Agreement or the bylaws shall in
no way be construed as a waiver of such provisions and shall not affect the
right of such party thereafter to enforce each and every provision of this
Agreement, any agreement referred to herein, the certificate of formation, or
the bylaws in accordance with their terms.
7E. Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by any party
in connection herewith will survive the execution and delivery of this
Agreement, regardless of any investigation made by LLC or either Purchaser or on
its behalf.
7F. Successors and Assigns.
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(i) Except as otherwise expressly provided herein, all
covenants and agreements contained in this Agreement by or on behalf of
any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of such parties whether so expressed
or not. In addition, and whether or not any express assignment has been
made, the provisions of this Agreement which are for any Purchaser's
benefit as the purchaser or holder of Securities, as the case may be,
are also for the benefit of and enforceable by any subsequent holder of
such Purchaser's Securities.
(ii) If a sale, transfer, assignment or other disposition of
any Securities is made in accordance with the provisions of this
Agreement to any Person and such securities remain subject to the
transfer restrictions described herein, such Person shall, at or prior
to the time such securities are acquired, execute a counterpart of this
Agreement with such modifications thereto as may be necessary to
reflect such acquisition, and such other documents as are necessary to
confirm such Person's agreement to become a party to, and to be bound
by, all covenants, terms and conditions of this Agreement as
theretofore amended.
7G. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable under any applicable law or rule in any jurisdiction,
such provision will be ineffective only to the extent of such invalidity,
illegality or unenforceability in such jurisdiction, without invalidating the
remainder of this Agreement in such jurisdiction or any provision hereof in any
other jurisdiction.
7H. Counterparts. This Agreement may be executed
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simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
will constitute one and the same Agreement (any one of which may be delivered by
facsimile).
7I. Descriptive Heading. The descriptive headings of
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this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
7J. Governing Law. All issues concerning the
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enforceability, validity and binding effect of this Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware, without
giving effect to any choice of law or conflict of law provision or rule(whether
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of the State of Delaware or any other jurisdiction) that would cause the
application of the law of any jurisdiction other than the State of Delaware.
7K. Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when personally
delivered or received by certified mail, return receipt requested, or sent by
guaranteed overnight courier service. Notices, demands and communications will
be sent to any Purchaser at such Purchaser's address indicated in LLC's books
and records and to LLC at the addresses indicated below:
Notices to LLC:
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Zecal Technology, LLC
c/o Lamb Partners
000 X. Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Attn: Xxxx X. Xxxxx
With a copy to:
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Xxxxxxxx & Xxxxx
000 X. Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
or to such other address or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending party.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this LLC
Interest and Warrant Purchase Agreement on the day and year first above written.
ZECAL TECHNOLOGY, LLC
By: ___________________________
Its: ___________________________
LZ PARTNERS, LLC
By: ___________________________
Its: ___________________________
HTI Z CORP.
By: ___________________________
Its: ___________________________
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SCHEDULE 4D - CAPITALIZATION1
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Percent of Total
Holder Total Capital Contributions Company Interest Type of Company Interest
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LZ $ 7,000,000 57.7% Preferred
HTI $ 5,125,000 42.3% Common (33%), Preferred (9.3%)
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TOTAL $12,125,000 100%
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1 This Schedule 4D does not reflect the potential dilutive effect of the
exercise of the LZ Investment Option, the First Warrant or the Second Warrant
pursuant to the terms of this Agreement.
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