Exhibit 99.1
MODIFICATION AGREEMENT, dated as of December 23, 2003 (this
"Modification Agreement"), by and among Sipex Corporation, a Delaware
corporation (the "Company") (of the First Part); and Rodfre Lending LLC, a
Delaware limited liability company ("Rodfre Lending"), and Rodfre Holding LLC, a
Delaware limited liability company ("Rodfre Holding") (of the Second Part).
WHEREAS, pursuant to a statutory merger, the Company has changed its
jurisdiction of incorporation from Massachusetts to Delaware, and all references
to the Company herein shall mean the successor Delaware corporation and its
predecessor Massachusetts corporation;
WHEREAS, pursuant to a Securities Purchase Agreement dated as of May
27, 2003 between the Company and Alonim Investments Inc., a Canadian corporation
(the "Purchaser") (the "Purchase Agreement"), the Company has sold to the
Purchaser, and the Purchaser has purchased from the Company the 1.5% Convertible
Secured Note due June 30, 2007 in the aggregate principal amount of $10,560,000,
convertible into three million (3,000,000) shares of Common Stock at a
conversion price of $3.52 per share (the "2003 Note"). Each capitalized term
used and not otherwise defined herein shall have the meaning assigned to such
term in the Purchase Agreement or, if not defined therein, in the 2003 Note;
WHEREAS, pursuant to the Registration and Standstill Agreement dated
as of June 20, 2003 (the "Registration and Standstill Agreement") among the
Company, of the first part, and the Purchaser, S&F Financial Holding Inc.
("S&F"), and Future Electronics Inc. a New Brunswick (Canada) corporation
(collectively, the "Future Entities"), of the second part, the Company has
granted certain registration rights and the Future Entities have agreed to
certain restrictions on the acquisition and disposition of Common Stock;
WHEREAS, pursuant to the Voting Agreement dated as of June 20, 2003
(the "Voting Agreement") between the Company and the Purchaser, the Purchaser
has agreed to certain restrictions on the voting of the Company's Common Stock;
WHEREAS, pursuant to a Securities Purchase Agreement dated as of
September 27, 2002 by and among the Company and S&F (the "2002 Purchase
Agreement"), the Company has sold to S&F, and S&F has purchased from the Company
the 5.75% Convertible Secured Note due 2007 in the aggregate principal amount of
$12,000,000, convertible into one million and six hundred thousand (1,600,000)
shares of Common Stock at a conversion price of $7.50 per share of Common Stock
(the "2002 Note"), and a warrant to purchase nine hundred thousand (900,000)
shares of the Common Stock at an exercise price of $2.9458 per share of Common
Stock (the "Warrant");
WHEREAS, effective as of July 21, 2003, S&F has transferred to the
Purchaser and the Purchaser has assumed all of the assets and liabilities of S&F
including, but not limited to the 2002 Note and the Warrant, and S&F was
subsequently dissolved effective as of July 24, 2003;
WHEREAS, effective as of July 21, 2003, the Purchaser has
transferred to Future Electronics Inc., a Canadian corporation ("Future"), and
Future thereafter transferred to Rodfre
Investments Inc., a Canadian corporation ("Rodfre Investments"), and Rodfre
Investments thereafter transferred the 2002 Note, and the 2003 Note to Rodfre
Lending;
WHEREAS, effective as of July 21, 2003, the Purchaser has
transferred to Future and Future thereafter transferred to Rodfre Investments,
and Rodfre Investments thereafter transferred the Warrant to Rodfre Holding;
WHEREAS, effective as of July 21, 2003, the Purchaser has
transferred to Rodfre Investments, and Rodfre Investments thereafter transferred
to Rodfre Holding, all of the six million eighty five thousand two hundred
(6,085,200) shares of Common Stock, which the Purchaser held prior to such
transfer;
WHEREAS, the Purchaser has also transferred to Rodfre Investments,
and Rodfre Investments thereafter transferred unto Rodfre Holding all of the two
million sixty four thousand (2,064,000) shares of Common Stock that it acquired
after July 21, 2003;
WHEREAS, Future, Rodfre Lending, Rodfre Holding and Rodfre
Investments and each of them are wholly owned subsidiaries of the Purchaser, and
thus there has been no change in the Beneficial Ownership of the shares of
Common Stock held by the Purchaser, the Warrant, the 2002 Note and/or the 2003
Note;
WHEREAS, the Company acknowledges and consents, to the extent that
the same may be required, to the foregoing transfers of the shares of Common
Stock, the Warrant, the 2002 Note and the 2003 Note, and all parties, and the
Intervenors (as defined below), acknowledge that the 2002 Purchase Agreement ,
the Purchase Agreement, the Registration and Standstill Agreement and the Voting
Agreement are binding upon Rodfre Holding and Rodfre Lendingand that they shall
be deemed to be parties to the same, as if originally named therein;
WHEREAS, the Company, and Rodfre Lending desire to modify the terms
and conditions of the 2003 Note in accordance with the provisions of Section
11(b)(7) thereof, to allow the Holder to convert the entire principal amount of
the 2003 Note into shares of Common Stock and the Company and the Purchaser
desire for the Holder of the 2003 Note to convert the entire principal amount of
the 2003 Note as soon as legally practicable;
WHEREAS, the Company, and Rodfre Lending desire for the Holder of
the 2002 Note to convert as soon as legally practicable the entire principal
amount of the 2002 Note into shares of Common Stock in accordance with the
provisions of Section 3 of the 2002 Note;
WHEREAS, the Company shall be released from all pledges, liens and
other security interests arising from or associated with the 2002 Note and the
2003 Note, upon conversion thereof; and
WHEREAS, except as previously amended or provided for or
contemplated herein, the Company, Rodfre Holding, Rodfre Lending and the
Intervenors, desire to preserve in full force and effect the agreements set
forth in the Warrant, the Purchase Agreement, the 2002 Purchase Agreement, the
Registration and Standstill Agreement and the Voting Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Incorporation of Recitals. The Recitals of this Agreement
shall be deemed to constitute a part hereof;
Section 2. Conversion. Subject to the terms and conditions hereof,
the conversion of the 2002 Note and the 2003 Note, shall occur as soon as
reasonably practicable after the day on which all governmental approvals and
compliance with all regulatory requirements are secured in accordance with the
provisions of Section 3 hereof, or such later date and time as may be agreed by
the parties in writing.
Section 3. Governmental and Regulatory Approvals. The conversion of
the 2002 Note and the 2003 Note, is contingent upon securing all necessary
governmental approvals and compliance with regulatory requirements that, by
their terms, are to be secured or met, as the case may be, prior to conversion ,
including without limitation the expiration or termination of any applicable
waiting period (or any extension thereof) under the U.S. Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"). The parties
hereto declare that to their knowledge and belief, no such approvals or
compliance with requirements are applicable to the instant transactions, other
than the expiration of the aforementioned waiting period (or any extension
thereof) under the HSR Act.
Section 4. Payment to Company. Upon the execution hereof, Rodfre
Lending shall forgive interest due on both the 2002 Note and the 2003 Note for
the third and fourth quarter of the calendar year 2003, in the aggregate amount
of $436,366.04, as well as any other interest which may accrue thereon and
pursuant to the 2002 Note and the 2003 Note as and from January 1, 2004, and pay
to the Company an additional consideration of $3,000,000 by wire transfer of
immediately available funds in accordance with the wire instructions provided by
the Company to Purchaser or, if no such instructions have been provided, by U.S.
dollar check mailed to the address of the Company by overnight hand delivery.
Section 5. Amendments to the 2003 Note.
(a) Section 3(a)(1) of the 2003 Note shall be amended and restated
to read as follows:
"Subject to compliance with applicable laws and regulations, including but
not limited to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the provisions of Section 4(a)(1) and Section 5, the
Holder of this Security shall, as soon as reasonably practicable after the
expiration or early termination of the waiting period (or any extension thereof)
under the HSR Act and other applicable regulatory requirements but in no event
prior to the expiration or early termination of the waiting period (or any
extension thereof) under the HSR Act (the "Conversion Date"), convert the
Principal Amount of this Security into Common Stock at the Conversion Price then
in effect. The number of shares of Common Stock into which all of the
Principal Amount may be converted upon any such conversion shall be a number of
shares equal to the quotient (rounded down to the nearest whole share) obtained
by dividing (A) the Principal Amount by (B) $3.52 (the "Conversion Price")
(subject to any adjustments pursuant to Section 3(b) (8)). To convert this
Security, the Holder hereof shall: (x) send by facsimile (or otherwise deliver)
prior to 5:00 p.m., San Francisco time, on the Conversion Date a copy of the
fully executed conversion notice in the form attached as Exhibit A hereto (the
"Conversion Notice") to the Company, (y) if required by Section 3(a)(4),
surrender this Security to a common carrier for delivery to the Company as soon
as practicable on or following such date (or an indemnification undertaking with
respect to this Security in the case of its loss, theft or destruction) and (z)
pay any transfer taxes or other applicable taxes or duties, if any, required in
connection with the issuance of shares of Common Stock in the name of someone
other than the Holder. Upon receipt by the Company of a facsimile copy of a
Conversion Notice from the Holder, the Company shall as soon as practicable, but
in any event on or before the second Business Day following the date of receipt
of the Conversion Notice, send, via facsimile, a confirmation to the Holder and
the transfer agent for the Common Stock stating that the Conversion Notice has
been received, the date upon which the Company expects to deliver the Common
Stock issuable upon such conversion and the name and telephone number of a
contact person at the Company regarding the conversion. The Company shall not be
obligated to issue shares of Common Stock upon a conversion unless the Holder
complies with the foregoing requirements set forth in this paragraph.
On or prior to the third Business Day after the Conversion Date (the
"Share Delivery Date"), the Company shall issue and deliver to the Holder or its
nominee (x) that number of shares of Common Stock issuable upon conversion of
this Security and (y) if applicable, cash in lieu of any fractional shares
pursuant to Section 3(a)(5). If the Company's transfer agent is participating in
DTC's Fast Automated Securities Transfer program, and so long as the certificate
for the Common Stock to be issued upon conversion of this Security is not
required to bear a legend and the Holder is not then required to return such
certificate for the placement of a legend thereon and the Holder has provided
the Company with the information required by DTC relating to the DTC account of
the Holder or such Holder's nominee, the Company shall cause its transfer agent
to electronically transmit the Common Stock issuable upon conversion to the
Holder by crediting the account of the Holder or its nominee with DTC through
its Deposit Withdrawal Agent Commission system. If the aforementioned conditions
for a DTC Transfer are not satisfied, the Company shall deliver to the Holder
physical certificates representing the Common Stock issuable upon conversion.
Further, even if the aforementioned conditions to a DTC Transfer are satisfied,
the Holder may instruct the Company in writing to deliver to the Holder physical
certificates representing the Common Stock issuable upon conversion in lieu of
delivering such shares by way of DTC Transfer."
(b) Section 5 of the 2003 Note shall be amended and restated to read
as follows:
"Subject to payment by Rodfre Lending to the Company of the
consideration set forth in Section 4 of the Modification Agreement
entered into by and between the Company and Rodfre Lending LLC, and
Rodfre Holding LLC, and assented to by the Purchaser and Future
Electronics Inc. on December 23, 2003, the Conversion Rights
associated with this Security shall vest in full as of December 23,
2003."
(c) Section 2(a) of the 2003 Note shall be amended to add the
following sentence: "Effective as of January 1, 2004, the rate of
interest payable upon the outstanding principal amount of the 2003
Note shall be 0% per annum."
(d) A Section 2(e) shall be added to the 2003 Note, which shall read
as follows:
"In the event that the Holder is unable to convert this Note as
contemplated by the Modification Agreement entered into on December
23, 2003 among the Company and Holder and other parties due to the
inability to receive the required regulatory approvals, then, the
Final Maturity Date shall be extended to June 30, 2010, and the
outside date on which the Conversion Rights shall be exercisable, to
June 30, 2010."
Section 6. Conversion of 2002 Note. On the Conversion Date (as
defined in Section 5 above) Rodfre Lending shall convert the entire principal
amount of the 2002 Note into shares of Common Stock in accordance with the
provisions of Section 3 of the 2002 Note.
Section 7. Amendment of the 2002 Note. The 2002 Note shall be
amended as follows:
(a) Section 2(a) of the 2002 Note shall be amended to add the
following sentence: "Effective as of January 1, 2004, the rate of
interest payable upon the outstanding principal amount of the 2002
Note shall be 0% per annum."
(b) A Section 2.1 shall be added to the 2002 Note, which shall read
as follows:
"In the event that the Holder is unable to convert this Note as
contemplated by the Modification Agreement entered into on December
23, 2003 among the Company and Holder and other parties due to the
inability to receive the required regulatory approvals, then, the
Final Maturity Date shall be extended to September 27, 2010, , and
the outside date on which the Conversion Rights shall be
exercisable, to September 27, 2010."
Section 8. Substitutions of Trustees and Reconveyances of Deeds of
Trust. Upon conversion of the 2002 Note and the 2003 Note on the Conversion
Date, the Purchaser and Rodfre Lending shall deliver the Substitutions of
Trustees and Reconveyances of Deeds of Trust in form and substance consistent
with the forms attached hereto as Exhibit A and Exhibit B, respectively, or in
such other form as may be satisfactory to the parties hereto which shall be
effective as of the Conversion Date.
Section 9. Termination and Release. Upon conversion of the 2003 Note
on the Conversion Date, the Purchaser and Rodfre Lending shall deliver the
Termination and Release in the form appended hereto as Exhibit C, which shall be
effective as of the Conversion Date.
Section 10. Amendment to Registration and Standstill Agreement. The
first sentence of Section 4(a)(i) of the Registration and Standstill agreement
shall be amended to read as follows:
"Prepare and file with the SEC a registration statement on Form S-3 (or
such other form as is then available for registration of such resale)
promulgated under the Securities Act (the "Initial Registration Statement")
within sixty (60) days after demand from the Holder(s) of the 2002 Note and/or
the 2003 Note, subject to receipt of the information called for by the
questionnaire attached to this Agreement as Exhibit A from said Holder(s), after
prompt written request from the Company to said Holder(s) to provide such
information."
Section 11. Covenants.
(a) HSR Act Filings. The Company and Rodfre Lending and Rodfre
Holding, as well as their respective affiliates, to the extent required, shall
file with the proper authorities all Notification Forms and other documents
necessary to be filed pursuant to the HSR Act, and the regulations promulgated
thereunder, as promptly as is practicable and shall cooperate with each other in
promptly producing such additional information as those authorities may
reasonably require to allow the earliest practicable termination of the waiting
period provided by the HSR Act or as otherwise necessary to comply with
statutory requirements of the HSR ACT and any information requests of the
Federal Trade Commission ("FTC") or the Department of Justice Antitrust Division
("DOJ"). The Company and Rodfre Lending shall each pay one half of the filing
fee associated with Rodfre Lending's filing of the HSR Act notification, up to a
maximum of $45,000.00 in the aggregate, and Rodfre Lending shall assume any
additional filing fee, as the case may be.
(b) Other Governmental Approvals. As soon as practicable after the
execution of this Agreement, the Company and the Future Entities shall file all
applications and reports and take such other action (in addition to filings
required under the HSR Act) which is reasonably required to be taken or filed
with any governmental authority in connection with the transactions contemplated
by this Agreement. The Company and the Future Entities shall give all additional
notices to third parties and take other action reasonably required to be taken
by each of them under any authorization, lease, note, mortgage, indenture,
agreement or other instrument or any law, rule, regulation, demand or court or
administrative order in connection with the transactions contemplated by this
Modification Agreement.
(c) Further Assurances. Each party agrees to cooperate with each
other and their respective officers, employees, attorneys, accountants and other
agents, and, generally, do such other acts and things in good faith as may be
reasonable or appropriate to timely effectuate the intents and purposes of this
Modification Agreement and the consummation of the transactions contemplated
hereby, including, but not limited to, execution of any additional document,
contract, deed, or other instrument, consistent with the terms and conditions
hereof, necessary or useful to give effect to the transactions contemplated
hereby; and taking any action to facilitate the filing of any document or the
taking of any action to assist the other parties hereto in complying with the
terms of
Sections 11(a) and 11(b) herein, and shall coordinate and cooperate with one
another and shall each use all reasonable efforts to comply with, and shall each
refrain from taking any action that would impede compliance with all regulatory
requirements, and, as promptly as practicable after the date hereof, each party
shall make all filings, notices, petitions, statements, submissions of
information, application or other documents required by the United States
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice as required by the HSR Act.
Section 12. Permissible Transfers. In the event that, at any time
after six (6) months have elapsed since the date on which Rodfre Lending has
filed its original HSR Act notification, Rodfre Lending reasonably determines
that it will not be practicable to obtain, without unreasonable effort or
expense, all authorizations, consents or approvals of, or expirations of waiting
periods imposed by, the HSR Act or other requirements of the FTC, DOJ or any
other governmental entity, Rodfre Lending shall have the right to transfer the
2002 Note, the 2003 Note and/or the Warrant to a third party, subject, in each
such case, to (i) prior written consent of the Company, which consent shall not
be unreasonably withheld or delayed, it being understood that it shall be
reasonable for the Company to withhold consent if Rodfre Lending proposes to
transfer the securities to a third party engaged in the business of design,
manufacture or marketing of integrated circuits that directly and materially
compete with the product lines of the Company and (ii) compliance with
applicable corporate and securities laws. The foregoing consent requirements
shall not be applicable, in the event that Rodfre Lending is tendering the 2002
Note and/or the 2003 Note, in response to a public take-over bid.
Section 13. Governing Law. This Amendment shall be
governed by, and construed in accordance with, the laws of the State of
Delaware.
Section 14. Captions. The captions and paragraph
headings of this Modification Agreement are solely for the convenience of
reference and shall not affect its interpretation.
Section 15. Counterparts. This Modification Agreement
may be signed in one or more counterparts, each of which shall be an original,
but all of which together shall constitute one instrument.
Section 16. Effect of Modification Agreement. Except as
expressly amended or as contemplated by this Modification Agreement, the
Warrant, the Purchase Agreement, the 2002 Purchase Agreement, the 2003 Note, the
2002 Note, the Registration and Standstill Agreement and the Voting Agreement
shall remain in full force and effect as the same were in effect immediately
prior to the effectiveness of this Modification Agreement. All references in the
Purchase Agreement or the Registration and Standstill Agreement to "this
Agreement" shall be deemed to refer to the Purchase Agreement or the
Registration and Standstill Agreement as modified by this Modification
Agreement.
Section 17. Successors and Assigns, Intervenors. This
Modification Agreement, as well as all other agreements and instruments
ancillary hereto, shall avail in favor of and be binding upon the parties hereto
and upon the Intervenors, and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Modification
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
SIPEX CORPORATION
By:
------------------------------------
Name: Walid Maghribi
Title: President and Chief Executive
Officer
RODFRE HOLDING LLC
By:
------------------------------------
Name: Xxxxxxx Xxxxx
Title: Director and Secretary
RODFRE LENDING LLC
By:
------------------------------------
Name: Xxxxxxx Xxxxx
Title: Director and Secretary
INTERVENTION
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, we, Alonim Investments Inc., a Canadian corporation,
and Future Electronics Inc., a New Brunswick corporation, (herein and in the
Agreement referred to as the "Intervenors") do hereby acknowledge, concur in and
consent to the transactions contemplated in this Modification Agreement, for all
intents and purposes, and agree to be bound by the terms and conditions of this
Modification Agreement as if we were each parties to this Modification Agreement
and to cause our subsidiaries and affiliates to be similarly bound if necessary
or useful to give effect to the transactions contemplated hereby.
IN WITNESS WHEREOF, the Intervenors have executed this Intervention to the
Modification Agreement, through their respective authorized officers as of the
day and year first above written.
FUTURE ELECTRONICS INC.
By:
------------------------------------
Name: Xxx Xxxxxxxx
Title: Attorney in Fact
ALONIM INVESTMENTS INC.
By:
------------------------------------
Name: Xxx Xxxxxxxx
Title: Attorney in Fact
