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EXHIBIT 10.4
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is dated July 31, 2001, and
is between Xxxxxxxx Investments LLC ("Xxxxxxxx") and Hypercom Corporation
("Hypercom").
BACKGROUND
A. Xxxxxxxx recently loaned Hypercom $15 million (the "Loan"). In
connection with the Loan, Hypercom granted Xxxxxxxx a Series A Warrant (the
"Series A Warrant") to purchase shares of Hypercom's common stock.
B. By this Agreement, Xxxxxxxx agrees to purchase 2,475,248 shares of
Hypercom's common stock, in consideration for the reduction of the principal
amount of the Loan by $7,500,001.40. The remainder of the Loan, and all accrued
interest, is being paid off by Hypercom. The Series A Warrant will remain
outstanding and enable Xxxxxxxx to purchase 1,000,000 shares of common stock of
Hypercom, subject to adjustment in accordance with the terms thereof.
NOW, THEREFORE, in consideration of the promises herein, the parties hereto
agree as follows:
AGREEMENTS
1. PURCHASE AND SALE OF STOCK. Hypercom hereby issues and sells to
Xxxxxxxx, and Xxxxxxxx hereby purchases and acquires from Hypercom, 2,475,248
shares of Hypercom's common stock (the "Shares") for $3.03 per share. Payment
for the Shares is made through the reduction of the principal amount of the Loan
by $7,500,001.40.
2. REPAYMENT OF LOAN. Concurrently herewith, Hypercom is repaying the
balance of the Loan (after giving effect to the reduction of the Loan by
$7,500,001.40 pursuant to Section 1 hereof) together with all accrued interest
thereon, which amount the parties hereto agree is $6,336,004.42 as of July 26,
2001 plus an additional $2,880.70 for each day thereafter.
3. CONDITIONS; EFFECTIVENESS OF PURCHASE OF SHARES. Closing of the
issuance, sale, purchase and acquisition of the Shares is contingent upon the
following events occurring on or before August 15, 2001, which events Hypercom
agrees to use commercially reasonable efforts to cause to occur:
a. the repayment of the balance of the Loan together with all accrued
and unpaid interest thereon in accordance with Section 2 hereof; and
b. completion of the refinancing of Hypercom's principal credit
facility with Foothill Capital Corporation and Ableco Finance LLC.
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The issuance, sale, purchase and acquisition of the Shares shall be effective as
at the first time that these conditions are both satisfied.
4. REGISTRATION OF SHARES. Hypercom agrees that (i) it shall promptly
(but in no event later than September 4, 2001) prepare and file a registration
statement under the Securities Act of 1933, as amended (the "Securities Act")
for the registration of the Shares, and shall use commercially reasonable
efforts to cause such registration statement to become effective by December 3,
2001, (ii) the Shares shall be subject to the registration provisions of Article
5 of the Series A Warrant, including, without limitation, the provisions
relating to Hypercom's payment of expenses related to such registration, and
(iii) the Shares shall be "Registrable Securities" as defined in the Series A
Warrant.
5. EFFECT ON SERIES A WARRANT; AMENDMENT TO SERIES A WARRANT. The parties
hereto acknowledge and agree that (subject to adjustment as provided in Article
4 of the Series A Warrant) the maximum number of shares issuable upon exercise
of the Series A Warrant is fixed at 1,000,000 (with the parties further
acknowledging that the provisions of subsection (ii) under the definition of
"Warrant Shares" in the Series A Warrant are not capable of being achieved). The
parties further agree that the Series A Warrant is hereby amended by:
a. deleting the word "and" appearing immediately before the "(iv)" in
the second to last line of the definition of "Additional Stock"; and
b. inserting at the end of such definition, immediately after the word
"otherwise", the following words:
", (v) the Common Stock issued to Xxxxxxxx Investments LLC pursuant to
that certain Stock Purchase Agreement between the Company and Xxxxxxxx
Investments LLC dated July 31, 2001, (vi) the Common Stock (not to
exceed 2,500,000 shares in the aggregate) issued to Norton Family
Living Trust UTD 2-4-91, Norton Family Living Trust UTD 2-15-96,
Xxxxxxxxx Family Living Trust UTD 7/1/97, JR Norton Ventures Limited
Partnership, Xxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxx and Xxxxxxx X.
Xxxxxxxx, all pursuant to that certain Stock Purchase Agreement among
the Company and such parties dated July 30, 2001, (vii) the issuance
of up to 1,875,00 shares of Common Stock (subject to adjustment as
provided therein) to Abelco Holding LLC pursuant to a Series C Warrant
to be granted to it, on or after the date hereof; (viii) the issuance
of up to 350,000 shares of Common Stock (subject to adjustment as
provided therein) to Xxxx Capital Corporation pursuant to a Series D
Warrant to be granted to it, on or after the date hereof; and (ix) the
options or warrants to purchase common stock described above."
6. DELIVERIES. The parties hereby deliver (or undertake to deliver
promptly hereafter):
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a. As to Hypercom:
(i) Certificate(s) representing the Shares, with each such
certificate bearing the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE SECURITIES
LAW, AND ACCORDINGLY, MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED, DIRECTLY OR INDIRECTLY IN THE ABSENCE OF (i) AN
EFFECTIVE REGISTRATION STATEMENT RELATING THERETO, OR (ii) AN OPINION
OF COUNSEL FOR THE REGISTERED HOLDER OF THIS CERTIFICATE, REASONABLY
SATISFACTORY TO HYPERCOM CORPORATION, THAT SUCH REGISTRATION IS NOT
REQUIRED.
(ii) Payment of the balance of the Loan (including all accrued
and unpaid interest thereon) by wire transfer or cashier's check.
b. As to Xxxxxxxx:
(i) The Promissory Note or Notes representing the Loan, marked
"Cancelled and Paid In Full"; and
(ii) Releases of all security interests related to the Loan in
form and substance acceptable to Hypercom.
7. REPRESENTATIONS AND WARRANTIES OF HYPERCOM. Hypercom represents and
warrants that:
a. Legal Status: Qualification. Hypercom is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is qualified or licensed to do business in all other countries,
states and provinces in which the laws thereof require Hypercom to qualify
and/or be licensed, except where failure to qualify or be licensed would not
have a material adverse effect on the business or assets of Hypercom taken as a
whole;
b. Authority. Hypercom has the right and power, and is duly authorized
and empowered, to enter into, execute, deliver and perform this Agreement;
c. Binding Effect. This Agreement has been duly authorized, executed
and delivered and constitutes a valid and binding obligation of Hypercom
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity);
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d. No Conflict. The execution, delivery and/or performance by Hypercom
of this Agreement shall not, by the lapse of time, the giving of notice or
otherwise, constitute a violation of any applicable law or a breach of any
provision contained in Hypercom's Certificate of Incorporation or By-laws or
contained in any agreement, instrument, or document to which Hypercom is a party
or by which it is bound;
e. Consents. Except for filings required pursuant to applicable
securities laws, no consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental body is
required for the execution and delivery by Hypercom of this Agreement or the
performance of any of Hypercom's obligations hereunder;
f. Offering. Neither Hypercom nor any agent acting on its behalf has
or will sell or offer for sale, or dispose of or attempt or offer to dispose of,
the Shares or any part thereof to, or solicit any offers to buy any securities
of like tenor from, or otherwise approach or negotiate in respect thereof, with
any person or persons so as thereby to bring the issuance of the Shares within
the provisions of Section 5 of the Securities Act;
g. Registration. Subject to Hypercom's reliance on the truth and
accuracy of Michelle's representations and warranties in Section 8 hereof, it is
not necessary in connection with the issuance and sale of the Shares to Xxxxxxxx
to register the Shares under the Securities Act; and
h. Fully Paid Shares. Upon payment therefor in accordance with this
Agreement, the Shares will be validly and legally issued, fully paid and
non-assessable.
8. REPRESENTATIONS AND WARRANTIES OF XXXXXXXX. Xxxxxxxx represents and
warrants that:
a. Purchase for Own Account. The Shares are being acquired for
investment for Michelle's own account, and not with a view to the resale or
distribution of any part thereof, and Xxxxxxxx has no present intention of
selling, granting any participation in, or otherwise distributing the Shares or
any part thereof. Xxxxxxxx does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participation to such
person with respect to the Shares or any part thereof.
b. Disclosure of Information. Xxxxxxxx is aware of Hypercom's business
affairs, financial condition, and status with its lenders, has received and
reviewed all information (including all reports, registrations and other
documents filed by Hypercom with the United States Securities and Exchange
Commission (the "Commission") up to the date hereof) it considers necessary or
appropriate for making an informed and knowledgeable decision as to whether to
acquire the Shares and further represents that it has had sufficient opportunity
to ask questions and receive answers from Hypercom regarding the nature and
affairs of Hypercom, including its business, properties, prospects and financial
condition.
c. Investment Experience. Xxxxxxxx is an investor in securities of
companies and acknowledges that it is capable of bearing the economic risk of
its investment in the Shares, including the risk of total loss of any or all of
such investment, and has such knowledge and
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experience in financial or business matters that it is capable of evaluating the
merits and risks of such investment.
d. Accredited Investor. Xxxxxxxx is an "accredited investor" within
the meaning of Commission Rule 501 of Regulation D, as presently in effect.
e. Restricted Securities. Xxxxxxxx understands and hereby acknowledges
that (i) the Shares will not initially be registered under the Securities Act,
and in such event will be issued in reliance upon a specific exemption from the
registration requirements under the Securities Act, which exemption depends
upon, among other things, the bona fide nature of Michelle's investment intent
as expressed herein, and (ii) the Shares must be held indefinitely unless
subsequently registered under the Securities Act or unless an exemption from
registration is otherwise available.
f. Rule 144 Restrictions. Xxxxxxxx is aware of the provisions of Rule
144, promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly, from
the issuer thereof (or from an affiliate of such issuer), in a non-public
offering subject to the satisfaction of certain conditions, if applicable,
including among other things: (i) the availability of certain public information
about Hypercom; (ii) the resale occurring not less than one (1) year after the
party has purchased and paid for the securities to be sold, unless registered;
(iii) the sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934, as amended), (iv) the amount
of securities being sold during any three-month period not exceeding the
specified limitations stated therein, and (v) the filing of Form 144 with the
Commission.
g. Rule 144 Limitations. Xxxxxxxx understands and acknowledges that at
the time it wishes to sell some or all of the Shares, there may not be an active
public market upon which to make such a sale, and that, even if such an active
public market upon which to make such a sale then exists, Hypercom may not be
satisfying the current public information requirements of Rule 144. In such
event, Xxxxxxxx understands that it may be precluded from selling the Shares
under Rule 144 even if the one-year minimum holding period has been satisfied or
the Shares registered. Xxxxxxxx further understands that (i) if all of the
requirements of Rule 144 are not satisfied, registration under the Securities
Act or some other registration exemption will be required to permit Xxxxxxxx to
sell the Shares, and (ii) notwithstanding the fact that Rule 144 is not
exclusive, the staff of the Commission has expressed its opinion that persons
proposing to sell private placement securities other than in a registered
offering and other than pursuant to Rule 144 will have a substantial burden of
proof in establishing that an exemption from registration is available for such
offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.
h. No Related Transaction. Xxxxxxxx is not related in any way to any
of Norton Family Living Trust UTD 2-4-91, Norton Family Living Trust UTD
2-15-96, Xxxxxxxxx Family Living Trust UTD 7/1/97, JR Norton Ventures Limited
Partnership, Xxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxxxx, or
to Abelco Holding LLC or Xxxx Capital Corporation, and Michelle's purchase and
acquisition of the Shares as contemplated in this Agreement is not related to
the purchase by any
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such parties of any other shares of Hypercom's common stock or other securities
exchangeable for or convertible into Hypercom's common stock. The transactions
set forth herein were negotiated separately from, and after, the prior
transactions between the parties described in the recitals hereto, and are not
related to such prior transactions. Xxxxxxxx owned less than 1,600,000 shares of
Hypercom's common stock immediately prior to the date hereof.
9. HYPERCOM'S COVENANT. Hypercom covenants that, it shall, at its sole
expense, upon Michelle's written request, use commercially reasonable efforts to
cause the Shares to be listed for trading on the New York Stock Exchange, or if
Hypercom's common stock ceases to be traded on the New York Stock Exchange, on
such other national securities exchange, national market system or
over-the-counter market on which Hypercom's common stock is listed or quoted for
trading.
10. MISCELLANEOUS.
a. Certain Expenses. Subject to the registration rights provisions of
the Series A Warrant, Hypercom shall pay all stamp or issuance taxes (other than
stock transfer taxes) that may be imposed in respect of, the issuance, sale and
delivery of the Shares to Xxxxxxxx.
b. Enforcement Costs. If either party to this Agreement seeks to
enforce its rights hereunder by legal proceedings or otherwise, then the
non-prevailing party shall pay all reasonable costs and expenses incurred by the
prevailing party, including without limitation, all reasonable attorneys' fees.
The term "prevailing party" shall mean that party whose position is
substantially upheld in a final judgment rendered in such litigation or in a
final arbitration award, or if the final judgment or arbitration award is
appealed, that party whose final position is substantially upheld by the
decision of the final appellate body.
c. Nonwaiver; Cumulative Remedies. No course of dealing or any delay
or failure to exercise any right hereunder on the part of either party hereto
shall operate as a waiver of such right or otherwise prejudice the rights,
powers or remedies of such party. No single or partial waiver by a party hereto
of any provision of this Agreement or any breach or default hereunder or of any
other provision, breach, default right or remedy or the same provision, breach,
default, right or remedy on a future occasion. The rights and remedies provided
in this Agreement are cumulative and are in addition to all rights and remedies
which either party may have in law or in equity or by statute or otherwise.
d. Notices. Any notice, demand or delivery to be made pursuant to this
Agreement shall be deemed delivered and received (i) when personally delivered,
(ii) on the third business day following the day when deposited in the U.S.
mail, postage prepaid, certified or registered mail, return receipt requested,
addressed as set forth below or (iii) on the first business day after proper and
timely deposit for next day delivery, charges prepaid, with a nationally
recognized delivery service to the location of the recipient, to such party at
the address set forth below. Michelle's address shall be its last known address
appearing on the books of Hypercom maintained for such purpose. Hypercom's
address shall be its principal executive office. Xxxxxxxx and Hypercom may
designate a different address by notice to the other pursuant to this Subsection
10d.
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e. Successors and Assigns. This Agreement shall be binding upon,
Hypercom and any person succeeding Hypercom, by merger, consolidation or
acquisition of all or substantially all of Hypercom's assets, and all of the
obligations of Hypercom with respect to the Shares and all of the covenants and
agreements of Hypercom shall inure to the benefit of Xxxxxxxx and its successors
and assigns.
f. Severability.
(i) If, in any action before any court or agency legally
empowered to enforce any term of this Agreement, any term is found to be
unenforceable, then such term shall be deemed modified to the extent necessary
to make it enforceable by such court or agency.
(ii) If any term of this Agreement is not curable as set forth in
subsection (i) above, the unenforceability of such term shall not effect the
other provisions of this Agreement, and this Agreement shall be construed as if
such unenforceable term had never been contained herein.
g. Survival of Representations and Warranties. The representations and
warranties of Hypercom and Xxxxxxxx in this Agreement shall survive the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, notwithstanding any investigation by Xxxxxxxx
or its agents.
h. Amendment. This Agreement may not be modified or amended except by
written agreement of Hypercom and Xxxxxxxx.
i. Headings. The headings of the Sections and Subsections of this
Agreement are for the convenience of reference only and shall not, for any
purpose, be deemed a part of this Agreement.
j. Governing Law. This Agreement shall be governed by, and construed
in accordance with the laws of the State of Delaware, without regard to conflict
of law principles.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by its duly authorized officer as of July , 2001.
HYPERCOM CORPORATION
/s/ Xxxxxxxx X. Xxxxxxx
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Xxxxxxxx X. Xxxxxxx
Executive Vice President
XXXXXXXX INVESTMENTS L.L.C.
By: /s/ Xxx Xxxxxxxxxx
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Its: Manager
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