Exhibit 4.3
PREFERRED STOCK PURCHASE AGREEMENT
BETWEEN
SEMX CORPORATION
AND
ACI CAPITAL AMERICA FUND, LP
AND
EXETER VENTURE LENDERS, L.P.
DATED AS OF JUNE 1, 2000
TABLE OF CONTENTS
PAGE
ARTICLE I
AUTHORIZATION, PURCHASE AND SALE OF PREFERRED SHARES......................1
1.01 Authorization of the Preferred Shares and the Warrants..............1
1.02 Purchase and Sale of Preferred Shares...............................1
(a) The Closing....................................................1
(b) Use of Proceeds................................................2
(c) Allocation of Purchase Price...................................2
ARTICLE II
PREFERRED SHARE CERTIFICATES; CERTAIN TERMS OF THE PREFERRED
SHARES....................................................................2
2.01 Form of Preferred Shares............................................2
2.02 Replacement of Preferred Share Certificates.........................2
2.03 Registration; Transfer; Registration of Transfer and Exchange
of Preferred Shares.................................................3
2.04 Taxes...............................................................4
ARTICLE III
CONDITIONS TO CLOSING.....................................................4
3.01 Conditions to Purchaser's Obligations...............................4
(a) Representations and Warranties.................................4
(b) Performance....................................................4
(c) All Proceedings to be Satisfactory.............................4
(d) Legal Opinion..................................................4
(e) Necessary Consents.............................................5
(f) No Material Adverse Effect.....................................5
(g) Payment of Fees and Expenses...................................5
(h) No Injunctions, Restraining Order or Adverse Litigation........5
(i) Side Letter....................................................6
(j) Issuance of Warrants...........................................6
(k) Rights Plan....................................................6
(l) Documentation at Closing.......................................6
3.02 Conditions to the Company's Obligations.............................7
(a) Representations and Warranties.................................7
(b) Purchasers' Certificates.......................................7
(c) Injunction.....................................................7
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PAGE
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................8
4.01 Organization........................................................8
4.02 Capitalization......................................................8
4.03 Authorization; Validity of Agreement; Company Action................9
4.04 Consents and Approvals; No Violations; Licenses....................10
4.05 SEC Reports and Financial Statements...............................10
4.06 No Undisclosed Liabilities.........................................11
4.07 Absence of Certain Changes.........................................12
4.08 Employee Benefit Plans; ERISA; Labor...............................12
4.09 Litigation.........................................................12
4.10 No Default; Compliance with Applicable Laws........................13
4.11 Taxes..............................................................13
4.12 Environmental Matters..............................................13
4.13 Insurance..........................................................14
4.14 Transactions with Affiliates.......................................14
4.15 Patents and Other Intangible Assets................................14
4.16 Brokers............................................................15
4.17 Nasdaq Approvals...................................................16
4.18 Rights Plan Not Triggered..........................................16
4.19 Certain Payments...................................................16
ARTICLE V
COVENANTS OF THE COMPANY.................................................16
5.01 Financial and Business Information.................................16
5.02 Notice of Certain Events...........................................18
5.03 Public Announcement................................................18
5.04 Expiration of Covenants............................................19
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE PURCHASERS........................................................19
6.01 Representations by Purchaser.......................................19
ARTICLE VII
CERTAIN SECURITIES LAW MATTERS; RESTRICTIONS ON TRANSFER.................19
7.01 Representations by Purchasers......................................19
7.02 (a) Restrictions on Transfer......................................20
(b) Securities Legend.............................................20
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PAGE
(c) Termination of Restriction....................................20
ARTICLE VIII
MISCELLANEOUS............................................................21
8.01 Indemnification....................................................21
8.02 No Waiver: Cumulative Remedies.....................................21
8.03 Amendments, Waiver and Consents....................................22
8.04 Notices............................................................22
8.05 Expenses...........................................................23
8.06 Binding Effect; Assignment.........................................23
8.07 Survival of Representations and Warranties.........................23
8.08 Severability.......................................................23
8.09 Prior Agreements...................................................23
8.10 Governing Law......................................................24
8.11 Arbitration........................................................24
8.12 Headings...........................................................24
8.13 Counterparts.......................................................24
8.14 Further Assurances.................................................24
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Index of Defined Terms
PAGE
Agreement..................................................................1, 10
Basic Documents................................................................1
CERCLA........................................................................14
Certificate of Designation.....................................................1
Closing........................................................................1
environment...............................................................13, 14
Environmental Law ............................................................13
Exchange Act..................................................................11
GAAP..........................................................................11
Governmental Entity...........................................................10
Indemnified Liabilities.......................................................21
Indemnitees...................................................................21
Material Adverse Effect........................................................5
Materials of Environmental Concern............................................14
Person.........................................................................3
Preferred Share................................................................1
Purchase Price.................................................................1
release.......................................................................14
Restricted Securities.........................................................20
SEC...........................................................................10
Securities.....................................................................1
Subsidiary.....................................................................5
Voting Debt....................................................................8
Warrant Shares.................................................................1
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PREFERRED STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is made as of
June 1, 2000, between SEMX CORPORATION, a Delaware corporation (the "Company"),
and the parties listed on the Schedule of Purchasers attached to this Agreement
as Exhibit A (each hereinafter individually referred to as a "Purchaser" and
collectively referred to as the "Purchasers").
ARTICLE I
AUTHORIZATION, PURCHASE AND SALE OF PREFERRED SHARES
1.01 Authorization of the Preferred Shares and the Warrants. Pursuant
to its Certificate of Incorporation, as amended, the Company has established a
class of preferred stock designated as "Series B Preferred Stock" and authorized
the issuance of up to100,000 shares of such preferred stock (each such share, a
"Preferred Share") in accordance with the terms of the Certificate of
Designation, Number, Powers, Preferences and Relative, Participating, Optional
and Other Rights of Series B Preferred Stock, attached as Exhibit B hereto (the
"Certificate of Designation"). The Company has authorized the issuance and sale
to the Purchasers of an aggregate amount of 100,000 Preferred Shares and the
issuance to the Purchasers of warrants (the "Warrants") to purchase an aggregate
amount of 1,000,000 shares of the Company's common stock, $.10 par value (the
"Common Stock"). The terms of the Warrants are set forth in the form of Warrant
attached as Exhibit C hereto. The shares of Common Stock issuable upon exercise
of the Warrants are referred to as the "Warrant Shares." The Preferred Shares,
the Warrants and the Warrant Shares are sometimes referred to herein as the
"Securities." This Agreement, the Certificate of Designation, the Warrants, the
Registration Rights Agreement (as hereinafter defined) and the amendment to the
Rights Plan required under Section 3.01(k), including the schedules and exhibits
attached hereto and thereto, are referred to herein as the "Basic Documents."
1.02 Purchase and Sale of Preferred Shares.
(a) The Closing. The Company agrees to issue and sell to each
Purchaser, and, subject to and in reliance upon the representations, warranties,
terms and conditions of this Agreement, each Purchaser agrees, severally and not
jointly, to purchase the number of Preferred Shares set forth beside such
Purchaser's name on Exhibit A, at a purchase price (the "Purchase Price") of
$100.00 per Preferred Share. Such purchase and sale shall take place at a
closing (the "Closing") to be held contemporaneous with the execution of this
Agreement as of the date first written above (the "Closing Date"). At the
Closing, the Company will issue to each Purchaser a certificate or certificates
("Preferred Share Certificates") representing the number of Preferred Shares
purchased by such Purchaser. At the Closing, each Purchaser will deliver to the
Company, by wire transfer of immediately available funds to an account
designated by the Company by written notice to the Purchasers, the Purchase
Price for such Purchaser's Preferred Shares. If at the Closing, the Company
shall fail to issue any
Preferred Shares to the Purchasers as provided above in this Section 1.02(a), or
any of the conditions specified in Article III shall not have been fulfilled,
the Purchasers shall, at their election, be relieved of all further obligations
under this Agreement.
(b) Use of Proceeds. The Company agrees to use the full proceeds
from the sale of the Preferred Shares for acquisitions and the Company's working
capital, capital expenditures and other corporate purposes.
(c) Allocation of Purchase Price. Under both generally accepted
accounting principles and the regulations promulgated under the Internal Revenue
Code of 1986, as amended (the "Code"), the purchase of Preferred Shares and the
Warrants for an aggregate Purchase Price may require an allocation of the
Purchase Price between the Preferred Shares and the Warrants. Accordingly, on or
as soon as practicable following the Closing Date, the Company and the
Purchasers shall mutually agree in writing upon the aggregate value allocated to
the Preferred Shares and the aggregate value allocated to the Warrants (which
values shall be used by the Company and the Purchasers for all purposes,
including the preparation of tax returns and the preparation of financial
statements of the Company and its Subsidiaries).
ARTICLE II
PREFERRED SHARE CERTIFICATES; CERTAIN TERMS OF THE PREFERRED SHARES
2.01 Form of Preferred Shares. The Preferred Share Certificates shall
be substantially in the form of Exhibit D hereto, and may have such letters,
numbers or other marks of identification and such legends printed, lithographed
or engraved upon them as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement or the Certificate of
Designation.
2.02 Replacement of Preferred Share Certificates. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any Preferred Share Certificate, and, if requested in the case
of any such loss, theft or destruction, upon delivery of an indemnity bond or
other agreement or security reasonably satisfactory to the Company, or, in the
case of any such mutilation, upon surrender and cancellation of any such
Preferred Share Certificate, the Company will issue a new Preferred Share
Certificate, of like tenor and amount, in lieu of such lost, stolen, destroyed
or mutilated Preferred Share Certificate; provided, however, if any Preferred
Share Certificate of which a Purchaser, its nominee, or any of its officers or
principals is the registered holder is lost, stolen or destroyed, the affidavit
of such principal or officer of such holder setting forth the circumstances with
respect to such loss, theft or destruction, together with an agreement by ACI
Capital America Fund, LP or ACI Capital Co., Inc. to indemnify the Company with
respect thereto, shall be accepted as satisfactory evidence thereof, and no bond
or other security shall be required as a condition to the execution and delivery
by the Company of a new Preferred Share Certificate in replacement of such lost,
stolen or destroyed Preferred Share Certificate.
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2.03 Registration; Transfer; Registration of Transfer and Exchange of
Preferred Shares. The Preferred Shares shall be issued in registered form only.
The Company, or a transfer agent appointed by the Company (the Company or such
designated agent, in such capacity, the "Preferred Share Agent"), shall number
and list each Preferred Share Certificate, as it is issued, in a register (the
"Preferred Share Register") which the Company or such agent shall maintain at
the principal executive offices of the Company or at such office specified in a
notice to the registered holders (the "Holders") of the Preferred Shares
pursuant to Section 8.04 of this Agreement (the "Office").
At the option of any Holder of Preferred Shares, any Preferred Share
Certificate may be exchanged at the Office for a new Preferred Share Certificate
(or new Preferred Share Certificates, in the same or different denominations),
upon payment of the charges (if any) hereinafter provided. Whenever any
Preferred Share Certificates are so surrendered for exchange the Company shall
execute, and, if applicable, the Preferred Share Agent shall countersign and
deliver, the Preferred Share Certificates that the Holder making the exchange is
entitled to receive.
Subject to compliance with the restrictions set forth in this Agreement
(including, without limitation, Section 7.02 hereof), the Preferred Share
Certificates shall be transferable only on the Preferred Share Register, upon
delivery thereof duly endorsed by the Holder or by his duly authorized attorney
or representative, or accompanied by proper evidence of succession, assignment
or authority to transfer. In all cases of transfer by an attorney, the original
power of attorney, duly approved, or a copy thereof, duly certified, shall be
deposited and remain with the Company or the Preferred Share Agent. In case of
transfer by executors, administrators, guardians or other legal representatives,
duly authenticated evidence of their authority shall be produced, and may be
required to be deposited and to remain with the Preferred Share Agent in its
discretion. Upon any registration of transfer, the Company shall execute and, if
applicable, the Preferred Share Agent shall countersign and deliver, a new
Preferred Share Certificate(s) to the Persons entitled thereto. As used in this
Agreement, "Person" means any natural person, corporation, partnership, joint
venture, limited liability company, firm, association, joint-stock company,
trust, unincorporated organization, government or governmental agency or
political subdivision or any other entity, whether acting in an individual,
fiduciary or other capacity.
All Preferred Share Certificates issued upon any registration of
transfer or exchange of Preferred Share Certificates shall be the valid
obligations of the Company, evidencing the same obligations, and entitled to the
same benefits under this Agreement, as the Preferred Share Certificates
surrendered for such registration of transfer or exchange.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Preferred Share Certificates. The Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Preferred Share Certificates.
Any Preferred Share Certificate when duly endorsed in blank shall be
deemed negotiable, and when a Preferred Share Certificate shall have been so
endorsed, the Holder
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thereof may be treated by the Company, the Preferred Share Agent and all other
Persons dealing therewith as the absolute owner thereof for any purpose and as
the Person entitled to exercise the rights represented thereby, or the transfer
thereof on the Preferred Share Register, any notice to the contrary
notwithstanding, but until such transfer on the Preferred Share Register, the
Company and the Preferred Share Agent may treat the registered Holder thereof as
the owner for all purposes.
2.04 Taxes. The Company will pay all taxes (including interest and
penalties), other than taxes imposed on the income of the Purchasers, which may
be payable in respect of the execution and delivery of this Agreement or of the
issuance and delivery (but not the transfer) of any of the Securities.
ARTICLE III
CONDITIONS TO CLOSING
3.01 Conditions to Purchasers' Obligations. The obligation of the
Purchasers to purchase and pay for the Preferred Shares at the Closing is
subject to the fulfillment by the Company or waiver by the Purchasers of each of
the following conditions:
(a) Representations and Warranties. Each of the representations
and warranties of the Company set forth in Article IV hereof and in the Basic
Documents shall have been true and correct in all material respects when made
and, except for representations expressly stated to have been made as of a
specific date, shall be true and correct in all material respects on the Closing
Date as if made on the Closing Date.
(b) Performance. The Company shall have performed and complied in
all material respects with all covenants and agreements contained herein and
received any and all consents, approvals or waivers necessary in order to
complete the transactions required to be performed or complied with by it or
prior to or at the Closing.
(c) All Proceedings to be Satisfactory. All corporate and other
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be satisfactory in
form and substance to the Purchasers, including, without limitation, the filing
of the duly adopted Certificate of Designation with the Secretary of State of
the State of Delaware. The Purchasers shall have received all such counterpart
originals or certified or other copies of such documents as it reasonably may
request.
(d) Legal Opinion. The Purchasers shall have received an
originally executed copy of the opinion of Salon, Marrow, Xxxxxxx & Xxxxxx, LLP,
special counsel for the Company, in form and substance reasonably satisfactory
to the Purchasers and their counsel, dated as of the Closing Date and setting
forth substantially the matters in the opinions designated in Exhibit E hereto,
and as to such other matters as the Purchasers may reasonably request.
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(e) Necessary Consents. On or before the Closing Date, the Company
shall have obtained any required governmental authorizations with respect to the
Basic Documents and shall have obtained all material consents to the
transactions contemplated under the Basic Documents, of any Person required
under any contractual obligation or any other obligations (including any
obligations imposed by law) of the Company or any of its Subsidiaries. As used
in this Agreement, the word "Subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which at least a majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries.
(f) No Material Adverse Effect. Since December 31, 1999, no
Material Adverse Effect shall have occurred. As used in this Agreement, any
reference to "Material Adverse Effect" means any event, change or effect that is
materially adverse to the consolidated financial condition, businesses, results
of operations, cash flows or prospects of the Company and its Subsidiaries,
taken as a whole, or that impairs the ability of the Company to perform or the
Purchasers to enforce the obligations of the Company under the Basic Documents.
(g) Payment of Fees and Expenses. Without limiting the provisions
of Section 8.05 hereof, the Company shall have paid to the Purchasers on or
before the Closing, a funding fee in the amount of $150,000, and all other
reasonable fees, charges and disbursements of the Purchasers, including the fees
and expenses of Xxxx, Scholer, Fierman, Xxxx & Handler, LLP, counsel to the
Purchasers, such payments not to exceed $75,000 in the aggregate.
(h) No Injunctions, Restraining Order or Adverse Litigation. No
order, judgment or decree of any Governmental Entity (as hereinafter defined)
shall purport to enjoin or restrain the Purchasers from acquiring Preferred
Shares on the Closing Date. As of the Closing Date, there shall not be pending
or, to the knowledge of Company, threatened, any action, suit, proceeding,
governmental investigation or arbitration against or affecting the Company or
any of its Subsidiaries or any property of the Company or any of its
Subsidiaries that has not been disclosed by the Company in writing pursuant to
Section 4.09, and there shall have occurred no development not so disclosed in
any such action, suit, proceeding, governmental investigation or arbitration so
disclosed, that, in either event, could reasonably be expected to have a
Material Adverse Effect; and no injunction or other restraining order shall have
been issued and no hearing to cause an injunction or other restraining order to
be issued shall be pending or noticed with respect to any action, suit or
proceeding seeking to enjoin or otherwise prevent the consummation of, or to
recover any damages or obtain relief as a result of, the transactions
contemplated by this Agreement or the other Basic Documents.
(i) Side Letter. The Company shall have signed and delivered to
the Purchasers an side letter in the form of Exhibit F attached hereto.
(j) Issuance of Warrants. The Warrants shall have been issued to
the Purchasers.
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(k) Rights Plan. The Company shall have complied with Section 18
of the Warrants with respect to the issuance of "Rights" to the holders of the
Warrants under the Rights Plan (as defined in Section 4.18 hereof), by amending
the Rights Plan.
(l) Documentation at Closing. The Purchasers shall have received
prior to or at the Closing all of the following, each in form and substance
satisfactory to the Purchasers:
(i) A Registration Rights Agreement executed by the Company,
substantially in the form attached as Exhibit G hereto (the "Registration Rights
Agreement");
(ii) The Certificate of Designation, adopted by the Board of
Directors of the Company, as attested by the Secretary or an Assistant Secretary
of the Company and filed with the Secretary of State of the State of Delaware;
(iii) A certified copy of the Company's Certificate of
Incorporation, as amended, and the Company's Bylaws; a certified copy of the
resolutions of the Board of Directors evidencing approval of the Basic
Documents, the Preferred Shares, the Warrants and other matters contemplated
hereby; and certified copies of all documents evidencing other necessary
corporate, shareholder or other action and governmental approvals, if any, with
respect to the execution, delivery and performance of the Basic Documents, the
Preferred Shares and the Warrants;
(iv) A certificate of the Secretary or an Assistant Secretary
of the Company which shall certify the names of the officers authorized to sign
this Agreement and the other Basic Documents and issue the Preferred Shares and
the Warrants on behalf of the Company, together with the true signatures of such
officers. The Purchasers may rely conclusively on such certificates until it
shall receive a further certificate of the Secretary or an Assistant Secretary
of the Company canceling or amending the prior certificate and submitting the
signatures of the officers named in such further certificate;
(v) A certificate from a duly authorized officer of the
Company stating that (a) the representations and warranties contained in Article
IV hereof and the other Basic Documents or otherwise made by the Company in
writing in connection with the transactions contemplated hereby were true and
correct in all material respects when made and, except for representations
expressly stated to have been made as of a specific date, are true and correct
in all material respects on the Closing Date as if made on the Closing Date; (b)
the Company has performed and complied with all covenants and agreements
contained herein in all material respects and has received any and all consents,
approvals or waivers necessary in order to complete the transactions required to
be performed or complied with by it prior to or on the Closing Date; (c) no
event shall have occurred and be continuing as of the Closing, or would result
from the consummation of the purchase of the Preferred Shares or the other
transactions contemplated by the Basic Documents, that would constitute a
"Triggering Event" under the Certificate of Designation or a breach or violation
of any Basic Document; and (d) the Company
6
has delivered to the Purchasers all documents and satisfied all conditions
referred to in Sec tions 3.01(e) and (h) hereof; and
(vi) other evidence reasonably requested by the Purchasers of
the satisfaction of the conditions set forth in this Article III.
3.02 Conditions to the Company's Obligations. The obligation of the
Company to issue and deliver the Securities on the Closing Date, as provided in
Article II hereof, is subject to the performance by the Purchasers of their
agreements theretofore to be performed hereunder and to the fulfillment, prior
thereto or concurrently therewith, of the following further conditions:
(a) Representations and Warranties. Each of the representations
and warranties of the Purchasers contained in this Agreement shall be true and
correct in all material respects when made and shall be true and correct in all
material respects on the Closing Date as if made on the Closing Date, except as
otherwise affected by the transactions contemplated hereby.
(b) Purchasers' Certificates. The Company shall have received a
certificate from each Purchaser, dated the Closing Date, signed by a duly
authorized representative of such Purchaser, certifying that (a) the
representations and warranties contained in Articles VI and VII hereof and the
other Basic Documents or otherwise made by such Purchaser in writing in
connection with the transactions contemplated hereby were true and correct in
all material respects when made and, except for representations expressly stated
to have been made as of a specific date, are true and correct in all material
respects on the Closing Date as if made on the Closing Date; and (b) such
Purchaser has performed and complied with all covenants and agreements contained
herein in all material respects and has received any and all consents, approvals
or waivers necessary in order to complete the transactions required to be
performed or complied with by it prior to or on the Closing Date.
(c) Injunction. There shall be no effective injunction, writ,
preliminary restraining order or any order of any nature issued by a court of
competent jurisdiction directing that the transactions provided for herein not
be consummated as herein provided.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Purchasers to enter into this Agreement and
purchase the Preferred Shares, the Company represents, warrants and covenants to
the Purchasers as follows:
4.01 Organization. (a) Each of the Company and its Subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its
7
business as now being conducted. The Company and each of its Subsidiaries is
duly qualified or licensed to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except where the failure to be so duly qualified or licensed and in good
standing could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect or prevent the Company from consummating any of
the transactions contemplated hereby.
(b) The Company has heretofore made available to the Purchasers a
complete and correct copy of its Certificate of Incorporation, as amended as of
the date hereof, and its By-Laws and the organizational documents of each of its
Subsidiaries, as currently in effect. Each such document is in full force and
effect and no other organizational documents are applicable to or binding upon
the Company or any Subsidiary.
(c) Schedule 4.01 identifies all Subsidiaries of the Company.
4.02 Capitalization. (a) The authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock, $.10 par value, 20,000 shares of
Series A Preferred Stock, $.10 par value and 980,000 shares of preferred stock,
$.10 par value, undesignated as to class or series. Schedule 4.02 sets forth the
(i) the number of issued and outstanding shares of Common Stock as of the date
hereof; (ii) a description of all unexpired options to purchase Common Stock
("Company Options"), including number of shares, exercise price, date of vesting
and exercise date as well as a statement describing outstanding Company options;
and (iii) all other shares of Common Stock issuable to any person pursuant to
any existing options, warrants, calls, preemptive (or similar) rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character. As of the date hereof and immediately prior to the Closing, no shares
of preferred stock are issued and outstanding or held in the treasury of the
Company, and no shares of Common Stock are held in the treasury of the Company.
The Company has taken all necessary corporate, shareholder and other action to
authorize and reserve and to permit it to issue shares of Common Stock which may
be issued pursuant to Company Options or the transactions contemplated hereby.
There are no bonds, debentures, notes or other indebtedness having general
voting rights (or convertible into securities having such rights) ("Voting
Debt") of the Company or any of its Subsidiaries issued and outstanding. Except
as set forth in Schedule 4.02, as of the date hereof, (i) there are no shares of
capital stock of the Company authorized, issued or outstanding, (ii) there are
no existing options, warrants, calls, preemptive (or similar) rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character, relating to the issued or unissued capital stock of the Company or
any of its Subsidiaries, obligating the Company or any of its Subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, the Company or any
of its Subsidiaries or securities convertible into or exchangeable for such
shares or equity interest or obligations of the Company or any of its
Subsidiaries, and (iii) there are no outstanding contractual obligations of the
Company or any of its Subsidiaries to register under the Securities Act of 1933,
as amended (the "Securities Act") or to repurchase, redeem or otherwise acquire
any shares or Common Stock, or capital stock of the Company or any Subsidiary or
affiliate of the Company.
8
(b) All of the outstanding shares of capital stock of each of the
Company's Subsidiaries are beneficially owned by the Company, directly or
indirectly, free and clear of all security interests, liens, claims, pledges,
agreements, limitations on voting rights, charges or other encumbrances of any
nature whatsoever.
(c) There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of its
Subsidiaries. None of the Company or its Subsidiaries is required to redeem,
repurchase or otherwise acquire shares of capital stock of the Company, or any
of its Subsidiaries, respectively, as a result of the transactions contemplated
by this Agreement.
(d) As of the Closing, the Preferred Shares and the Warrants will
be validly issued, fully paid and non-assessable and not subject to preemptive
(or similar) rights. The rights, privileges and preferences of the Preferred
Shares will be as set forth in the Certificate of Designation. If issued in
accordance with the terms of the Warrants, the Warrant Shares will be validly
issued, fully paid and non-assessable and not subject to preemptive (or similar)
rights.
(e) The Company has authorized and reserved 1,000,000 shares of
Common Stock for issuance upon exercise of the Warrants.
4.03 Authorization; Validity of Agreement; Company Action. The Company
has full corporate power and authority to execute and deliver each Basic
Document and the Warrants, to issue the Preferred Shares and the Warrants and to
consummate the transactions contemplated hereby and thereby. The Certificate of
Designation has been duly approved by the Company and filed with the Secretary
of State of the State of Delaware. The execution, delivery and performance by
the Company of each Basic Document and the Warrants and the consummation by it
of the transactions contemplated hereby and thereby have been duly authorized by
the Board of Directors of the Company and no other corporate or shareholder
action on the part of the Company is necessary to authorize the execution,
delivery or performance by the Company of any Basic Document or Warrant, the
issuance of any Preferred Shares or Warrants or the consummation by it of the
transactions contemplated hereby and thereby. This Agreement, the Warrants and
the Registration Rights Agreement have been duly executed and delivered by the
Company and (assuming due and valid authorization, execution and delivery hereof
by the other parties hereto and thereto) this Agreement and the other Basic
Documents are valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except that (i) such enforcement may
be subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
4.04 Consents and Approvals; No Violations; Licenses. (a) None of the
execution, delivery or performance of any Basic Document or Warrant by the
Company, the
9
issuance of any Preferred Shares or Warrants or the consummation by the Company
of the transactions contemplated hereby or thereby, nor compliance by the
Company with any of the provisions hereof or thereof will (i) conflict with or
result in any breach of any provision of the Certificate of Incorporation, as
amended, or the By-Laws or other organizational documents of the Company or of
any of its Subsidiaries, (ii) require on the part of the Company any filing
with, or permit, authorization, consent or approval of, any court, arbitral
tribunal, administrative agency or other governmental or regulatory authority or
agency (a "Governmental Entity"), including, without limitation, any consent or
approval of any federal, state, local or foreign insurance industry agency,
commission or other governing body, except for in the case of clause (ii)
filings, permits, authorizations, consents and approvals as may be required
under state securities or blue sky laws, and the laws of other states in which
the Company is qualified to do or is doing business, (iii) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any material
note, bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may be bound
(the "Material Agreements") or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their properties or assets.
(b) The Company or one of its Subsidiaries holds all material
licenses, permits, certificates, franchises, ordinances, registrations, or other
rights, applications, consents, approvals and authorizations filed with, granted
or issued by, or entered by any Governmental Entity, or any federal, state,
local or foreign regulatory authorities or any federal, state, local or foreign
public service commission, public utility commission or industry agency or
commission that are required for the conduct of the Company's and its
Subsidiaries' businesses as now being conducted.
4.05 SEC Reports and Financial Statements. (a) The Company and its
Subsidiaries have filed with the Securities and Exchange Commission ("SEC") all
forms, reports, schedules, statements, and other documents required to be filed
by them with the SEC (as such documents have been amended since the time of
their filing, collectively, the "SEC Documents"), and have filed all exhibits
required to be filed with the SEC Documents. As of their respective dates or, if
amended, as of the date of the last such amendment, the SEC Documents,
including, without limitation, any financial statements or schedules included
therein, complied in all material respects with the applicable requirements of
the Securities Act and the Securities Exchange Act of 1934 (the "Exchange Act"),
and did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the Company's Subsidiaries is required to file any
forms, reports or other documents with the SEC pursuant to Section 12 or 15 of
the Exchange Act. The financial statements of the Company included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999
(including the related notes thereto), copies of which have been furnished to
the Purchasers (together, the "Financial Statements"), have been prepared from,
and are in accordance with, the books and records of the Company and its
consolidated Subsidiaries, comply in all material respects with applicable
accounting requirements and with
10
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto and subject, in the case of unaudited interim
financial statements, to normal year-end adjustments), and fairly present the
consolidated financial position and the consolidated results of operations and
cash flows of the Company and its consolidated Subsidiaries as at the dates
thereof or for the periods presented therein. The Company and its Subsidiaries
have maintained a system of accounting established in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP.
(b) No representation or warranty of the Company contained in any
Basic Document or in any other document, certificate or written statement
furnished to the Purchasers by or on behalf of the Company or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein when made not misleading in light of the circumstances in which the same
were made.
4.06 No Undisclosed Liabilities. Except (i) as disclosed in the SEC
Documents that have been delivered to the Purchasers prior to the date hereof,
(ii) as set forth in Schedule 4.06, and (iii) for liabilities incurred in the
ordinary course of business and consistent with past practice, and liabilities
incurred in connection with the consummation of the transactions contemplated
hereby (none of which, individually or in the aggregate, could reasonably have a
Material Adverse Effect) since December 31, 1999, neither the Company nor any of
its Subsidiaries has incurred any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) which would be required by
GAAP to be reflected on a consolidated balance sheet of the Company and its
Subsidiaries (including the notes thereto), or which individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
4.07 Absence of Certain Changes. Except as contemplated by this
Agreement and the other Basic Documents, or as disclosed in the SEC Documents
that have been delivered to the Purchasers prior to the date hereof or in
Schedule 4.07, since December 31, 1999, (i) the Company and its Subsidiaries
have conducted their respective businesses only in the ordinary course of
business and consistent with past practice, (ii) there has not been any change
in the business, properties, assets, liabilities, financial condition, cash
flows, operations, licenses, franchises, results of operations or prospects of
the Company or its Subsidiaries which could reasonably be expected to have a
Material Adverse Effect, (iii) the Company has not (A) declared, set aside or
paid any dividend or other distribution payable in cash, stock or property with
respect to its capital stock; (B) directly or indirectly, split, combined or
reclassified the outstanding shares of Common Stock; or (C) adopted a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of
its Subsidiaries.
4.08 Employee Benefit Plans; ERISA; Labor. Except as set forth on
Schedule 4.08, neither the Company nor any trade or business which, together
with the Company, is treated
11
as a single employer under the applicable provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA") or the Code, including but not limited to
Section 414 thereof, ("ERISA Affiliate") maintains, contributes or has any
obligation with respect to, and none of the employees of the Company or any
ERISA Affiliate is covered by, any "employee benefit plan" (as defined in
Section 3(1) of ERISA) or any plan that provides benefits following employment
or retirement that is not intended to be "qualified" within the meaning of
Section 401(a) of the Code (collectively, a "Plan"). Except as set forth on
Schedule 4.08, neither the Company nor any ERISA Affiliate has (1) ever
maintained or had an obligation to contribute to an "employee pension benefit
plan" (as defined in Section 3(2) of ERISA that is subject to Title IV of ERISA
("Pension Plan") or a "multiemployer plan" (as defined in Section 3(37) or
4001(a)(3) of ERISA ("Multiemployer Plan"), or (2) incurred any liability or
taken any action, and neither the Company nor any ERISA Affiliate has any
knowledge of any action or event, that could reasonably be expected to cause it
to incur any liability (A) with respect to any Pension Plan (including, without
limitation, any liability under Section 412 of the Code or Title IV of ERISA),
(B) on account of a partial or complete withdrawal (as such terms are defined in
Sections 4203 and 4205 of ERISA, respectively) with respect to any Multiemployer
Plan, or (C) on account of unpaid contributions to any Multiemployer Plan.
Except as set forth on Schedule 4.08, neither the Company nor any ERISA
Affiliate has any obligation to provide benefits to any employee or former
employee.
4.09 Litigation. Schedule 4.09 hereto sets forth each suit, action or
proceeding pending (as to which the Company has received notice), or, to the
knowledge of the Company, threatened against the Company, any of its
Subsidiaries, or their properties or assets on the date hereof, or to which the
Company or any of its Subsidiaries is a party. Except as set forth on Schedule
4.09 hereto, none of the foregoing, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect if resolved adversely
to the Company or its Subsidiaries. As of the date hereof, neither the Company
nor any of its Subsidiaries, nor any of their respective properties, is subject
to any material order, writ, judgment, injunction, decree, determination or
award.
4.10 No Default; Compliance with Applicable Laws. Neither the Company
nor any of its Subsidiaries is in default or violation in any material respect
of any term, condition or provision of (i) its respective Certificate of
Incorporation or By-laws or other organizational documents, (ii) any Material
Agreement or (iii) any federal, state, local or foreign statute, law, ordinance,
rule, regulation, judgment, decree, order, concession, grant, franchise, permit
or license or other governmental authorization or approval applicable to the
Company or any of its Subsidiaries or by which they or their respective assets
may be bound (other than matters addressed in Sections 4.04, 4.08, 4.11, and
4.12).
4.11 Taxes. The Company and its Subsidiaries have filed all tax
returns, reports, schedules and other documents which are required to be filed
by them with the Internal Revenue Service or any other domestic or foreign
governmental taxing authority. All such tax returns are accurate and complete in
all material respects and all taxes shown to be due and payable on such returns,
any charges, fees, levies or other assessments imposed, and all other taxes and
estimated payments ("Taxes") due and payable by the Company and each Subsidiary
12
on or before the Closing Date have been paid. The charges, accruals and reserves
on the books of the Company for all fiscal periods are adequate for the payment
of all Taxes not yet due and payable. The Company knows of no unpaid assessment
for additional Taxes for any period or any basis for any such assessment, except
for assessments the amount or the validity of which is currently being contested
in good faith by appropriate proceedings and with respect to which adequate
reserves in accordance with GAAP have been provided on the books of the Company.
There are no audits or other proceedings presently pending with regard to any
Taxes of the Company or its Subsidiaries. The Company and its Subsidiaries have
complied with all applicable laws and regulations relating to the payment and
withholding of Taxes. The Company and its Subsidiaries are not party to any tax
sharing agreement.
4.12 Environmental Matters. (a) The Company and its Subsidiaries have
complied in all material respects with all applicable Environmental Laws (as
defined below). There is no pending or, to the knowledge of the Company,
threatened, civil or criminal litigation, written notice or violation, formal
administrative proceeding or investigation, inquiry or information request by
any Governmental Entity relating to any Environmental Law involving the Company
or any of its Subsidiaries or any of their properties. For purposes of this
Agreement, "Environmental Law" means any foreign, federal, state or local law,
statute, rule or regulation or the common law relating to the environment or
occupational health and safety, including, without limitation, any statute,
regulation or order pertaining to (i) treatment, storage, disposal, generation
or transportation of industrial, toxic or hazardous substances or solid or
hazardous waste; (ii) air, water and noise pollution; (iii) groundwater and soil
contamination; (iv) the release or threatened release into the environment of
industrial, toxic or hazardous substances, or solid or hazardous waste,
including, without limitation, emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals; (v) the protection
of wildlife, marine sanctuaries and wetlands, including, without limitation, all
endangered and threatened species; (vi) storage tanks, vessels and containers;
(vii) underground and other storage tanks or vessels, abandoned, disposed or
discarded barrels, containers and other closed receptacles; (viii) health and
safety of employees and other persons; and (ix) manufacture, processing, use,
distribution, treatment, storage, disposal, transportation or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or oil or petroleum products or solid or hazardous waste. As used above, the
terms "release" and "environment" shall have the meaning set forth in the
federal Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA").
(b) There have been no releases of any Materials of Environmental
Concern (as defined below) into the environment by the Company or any of its
Subsidiaries, or, to the knowledge of the Company, by any other party at any
parcel of real property or any facility formerly or currently owned, operated or
controlled by the Company or any of its Subsidiaries. For purposes of this
Agreement, "Materials of Environmental Concern" means any chemicals, pollutants
or contaminants, hazardous substances (as such term is defined under CERCLA),
solid wastes and hazardous wastes (as such terms are defined under the federal
Resource Conservation and Recovery Act), toxic materials, oil or petroleum and
petroleum products, or any other material subject to regulation under any
Environmental Law.
13
4.13 Insurance. There is in full force and effect one or more policies
of insurance issued by insurers of recognized responsibility, insuring the
Company and its Subsidiaries and their properties and businesses against such
losses and risks, and in such amounts, as are customary in the case of
corporations of established reputation engaged in the same or similar businesses
and similarly situated. None of the Company or any of its Subsidiaries has been
refused any insurance coverage sought or applied for, and the Company and its
Subsidiaries have no reason to believe that they will be unable to renew their
existing insurance coverage as and when the same shall expire upon terms at
least as favorable as those presently in effect, other than possible increases
in premiums that do not result from any act or omission of the Company or any of
its Subsidiaries.
4.14 Transactions with Affiliates. Except as set forth in the SEC
Documents that have been delivered to the Purchasers prior to the date hereof or
on Schedule 4.14, since December 31, 1999, neither the Company nor any of its
Subsidiaries has entered into any transaction with any current director or
officer of the Company or any Subsidiary or any transaction which would be
subject to disclosure under the Exchange Act pursuant to the requirements of
Item 404 of Regulation S-K.
4.15 Patents and Other Intangible Assets.
(a) Except as set forth on Schedule 4.15, the Company and its
Subsidiaries (i) own or have the right to use, free and clear of any lien,
pledge, mortgage, security interest, encumbrance or charge of any kind
(collectively "Encumbrances"), and any other claim or restriction, all patents,
trademarks, service marks, trade names, internet domain names, copyrights,
licenses and rights with respect to the foregoing, used in or necessary for the
conduct of their businesses as now conducted or proposed to be conducted (all of
which are set forth on Schedule 4.15), (ii) are not infringing upon or otherwise
acting adversely to the right or claimed right of any Person under or with
respect to any patent, trademark, service xxxx, trade name, internet domain
name, copyright or license with respect thereto, and (iii) are not obligated or
under any liability whatsoever to make any payments by way of royalties, fees or
otherwise to any owner or licensee of, or other claimant to, any patent,
trademark, service xxxx, trade name, internet domain name, copyright or other
intangible asset, with respect to the use thereof or in connection with the
conduct of their businesses or otherwise.
(b) The Company and/or one or more of its Subsidiaries owns and
has the unrestricted right to use all material product rights, manufacturing
rights, trade secrets, including know-how, negative know-how, formulas,
patterns, compilations, programs, devices, methods, techniques, processes,
inventions, designs, computer programs and technical data and all information
that derives independent economic value, actual or potential, from not being
generally known or known by competitors and which the Company and its
Subsidiaries have taken reasonable steps to maintain in secret (all of the
foregoing of which are collectively referred to herein as "intellectual
property") required for or incident to the development, manufacture, operation
and sale of all products and services sold or proposed to be sold by the Company
or any of its Subsidiaries, free and clear of any right, Encumbrance or claim of
others, including without limitation former employers of its employees;
provided, however, that the
14
possibility exists that other Persons, completely independently of the Company
and its Subsidiaries or their employees or agents, could have developed trade
secrets or items of technical information similar or identical to those of the
Company and its Subsidiaries. The Company and its Subsidiaries are not aware of
any such development of similar or identical trade secrets or technical
information by others.
(c) Except as specifically disclosed in the SEC Documents, no
director, officer, employee, agent or stockholder of the Company or any of its
Subsidiaries owns or has any right in the intellectual property of the Company
and its Subsidiaries, or any patents, trademarks, service marks, trade names,
internet domain names, copyrights, licenses or rights with respect to the
foregoing, or any inventions, developments or discoveries used in or necessary
for the conduct of the Company's and its Subsidiaries' businesses as now
conducted or as proposed to be conducted.
(d) Except as set forth on Schedule 4.15, none of the Company or
any of its Subsidiaries has received any communication alleging or stating that
the Company or any of its Subsidiaries or any employee or agent has violated or
infringed, or by conducting business as proposed, would violate or infringe, any
patent, trademark, service xxxx, trade name, internet domain name, copyright,
trade secret, proprietary right, process or other intellectual property of any
other Person.
4.16 Brokers. Except as set forth on Schedule 4.16, no broker, finder
or investment banker is entitled to any brokerage, finder's or other fee or
commission from the Company in connection with the issuance and sale of
securities pursuant to this Agreement and the Company hereby indemnifies each of
the Purchasers against, and agrees that it will hold each Purchaser harmless
from, any claim, demand or liability for any such broker's or finder's fees
alleged to have been incurred in connection therewith and any expenses
(including reasonable fees, expenses and disbursements of counsel) arising in
connection with any such claim, demand or liability.
4.17 Nasdaq Approvals. The issuance by the Company of the Securities
will not require shareholder approval under the applicable rules of The Nasdaq
Stock Market.
4.18 Rights Plan Not Triggered. Neither (i) the execution of this
Agreement and the other Basic Documents, nor (ii) the exercise at any time of
any or all of the Warrants, nor (iii) the performance by the Company or the
Purchasers at any time of any or all of their other respective rights and
obligations under this Agreement or any of the other Basic Documents, shall
cause the Purchasers at any time to be deemed an "Acquiring Person" or
constitute a "Triggering Event" under that certain Rights Agreement dated as of
June 15, 1999, between the Company and Continental Stock Transfer & Trust
Company, Rights Agent (the "Rights Plan"). Other than the Rights Plan, the
Company is not a party to, and its Board of Directors has not adopted or
authorized the adoption of, any shareholder rights or similar agreement.
4.19 Certain Payments. To the best of the Company's knowledge, since
January 1, 1997, neither the Company nor any director, officer, agent or
employee of the
15
Company, nor any other Person associated with or acting for or on behalf of the
Company, has directly or indirectly (a) made any contribution, gift, bribe,
rebate, payoff, influence payment, kickback or other payment to any entity or
person, private or public, regardless of form, whether in money, property or
services (i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, (iii) to obtain special concessions or
for special concessions already obtained, for or in respect of the Company or
any affiliate of the Company or (iv) in violation of any federal, state, local
or foreign statute, law, ordinance, rule or regulation or (b) established or
maintained any fund or asset for such purposes that has not been recorded in the
books and records of the Company.
ARTICLE V
COVENANTS OF THE COMPANY
5.01 Financial and Business Information. The Company will maintain, and
cause each of its Subsidiaries to maintain, a system of accounting established
in accordance with sound business practices to permit preparation of financial
statements in conformity with GAAP. The Company during the term of this
Agreement will, and (where applicable) will cause its Subsidiaries to, deliver
to the Purchasers (provided that the Company shall not deliver to the Purchasers
any such information to the extent that the Purchaser have requested in writing
to the Company that such information not be delivered to the Purchasers):
(a) As soon as practicable and in any event within 90 days after
the close of each fiscal year of the Company, beginning with the current fiscal
year, a consolidated balance sheet of the Company and its Subsidiaries as of the
close of such fiscal year and consolidated statements of operations,
shareholders' equity and cash flows for the Company and its Subsidiaries for the
fiscal year then added, certified by the chief executive officer or chief
financial officer of the Company to be true and accurate in all material
respects (it being understood by the parties hereto that the delivery to the
Purchasers of the Company's annual report on Form 10-K will satisfy the
requirements of this Section 5.01(a));
(b) As soon as practicable and in any event within 45 days after
the end of each of the first three fiscal quarters of each fiscal year, the
consolidated and consolidating balance sheet of Company and its Subsidiaries as
at the end of such fiscal quarter and the related consolidated and consolidating
statements of operations, shareholders' equity and cash flows of Company and its
Subsidiaries for such fiscal quarter and for the period from the beginning of
the current fiscal year to the end of such fiscal quarter, all in reasonable
detail and certified by the chief financial officer of Company that they fairly
present the financial condition of Company and its Subsidiaries as at the dates
indicated and the results of its operations and its cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments (it being understood by the parties hereto that the delivery to the
Purchasers of the Company's quarterly report on Form 10-Q will satisfy the
requirements of this Section 5.01(b));
(c) As soon as practicable and in any event within 45 days after
the end of each fiscal quarter of each fiscal year, a written certificate from
the chief financial officer
16
of the Company certifying the Company's ratio of Indebtedness to Consolidated
EBITDA for such fiscal quarter.
For purposes of this Section 5.01(c), "Indebtedness" means, with
respect to any period, the aggregate amount of indebtedness for borrowed
money incurred by the Company and its Subsidiaries, without duplication,
including, without limitation, any capitalized lease obligations, accounts
receivable financing or other asset-backed financing, any guarantee or other
similar contingent obligation or any lease financing (whether a capitalized
lease, operating lease, pursuant to a sale leaseback arrangement or
otherwise), but excluding the incurrence of indebtedness the proceeds of
which are intended to be and are immediately used to redeem all of the
outstanding shares of Series B Preferred Stock in accordance with the terms
of the Certificate of Designation and to repurchase all of the outstanding
Warrants in accordance with the terms thereof. All issued and outstanding
shares of preferred stock (valued at the amount of the liquidation
preference of such preferred stock) shall be included in the calculation of
Indebtedness.
For purposes of this Section 5.01(c), "Consolidated EBITDA" means,
with respect to any period, the consolidated earnings before interest,
taxes, depreciation and amortization for the Company and its consolidated
subsidiaries for such period, determined in accordance with generally
accepted accounting principles, consistently applied;
(d) Prompt notice of any event having a Material Adverse Effect;
(e) Promptly upon their becoming available, copies of (i) all
financial statements, reports, notices and proxy statements sent or made
available generally by Company to its security holders, (ii) all regular and
periodic reports, if any, filed by Company or any of its Subsidiaries with any
securities exchange or with the SEC or any governmental or private regulatory
authority, and (iii) all press releases and other statements made available
generally by Company or any of its Subsidiaries to the public concerning
material developments in the business of Company or any of its Subsidiaries;
(f) Promptly upon any officer of Company or any of its
Subsidiaries obtaining knowledge of any condition or event that constitutes a
Triggering Event (as defined in the Certificate of Designation) or a violation
or default of any material term of any Basic Document or Warrant or an event of
default or potential event of default under any indebtedness of Company or any
of its Subsidiaries, or becoming aware that any person has given any notice or
taken any other action with respect to a claimed event of default or potential
event of default; and
(g) Within a reasonable time, such other information about the
property, financial condition and operations of the Company and its Subsidiaries
as the Purchasers may from time to time reasonably request.
17
5.02 Notice of Certain Events. Unless the Purchasers shall otherwise
request in writing, the Company during the term of this Agreement will, and will
cause its Subsidiaries to, promptly give notice in writing to the Purchasers of
any litigation or proceeding before any court or administrative body involving
the Company or any Subsidiary which, if determined adversely to the Company or
such Subsidiary, would be reasonably likely to have a Material Adverse Effect.
5.03 Public Announcement. Following the Closing, the Company will issue
a press release regarding the transactions contemplated hereby, which press
release shall be satisfactory in all respects to the Purchasers.
5.04 Expiration of Covenants. The Company's obligations under Sections
5.01 and 5.02 shall terminate at such time as the Purchasers and their
affiliates (as such term is defined in Rule 501 under the Securities Act of
1933) no longer hold in the aggregate at least 25% of the Preferred Shares.
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS
6.01 Representations by Purchasers. Each Purchaser represents and
warrants to the Company that:
(a) It has full power and authority to execute and deliver this
Agreement and the other Basic Documents to which it is a party and to perform
its obligations hereunder and thereunder.
(b) It has taken all action necessary for the authorization,
execution, delivery, and performance of this Agreement and the other Basic
Documents to which it is a party, and its obligations hereunder and thereunder,
and, upon execution and delivery by the Company, this Agreement and other Basic
Documents to which it is a party shall constitute the valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with their respective terms, except that (i) such enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and
(ii) the remedy of specific performance and injunctive and other relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(c) There are no claims for brokerage commissions or finder's fees
or similar compensation in connection with the issuance and sale of Preferred
Shares pursuant to this Agreement based on any arrangement made by or on behalf
of the Purchaser and the Purchaser agrees to indemnify and hold the Company
harmless against any costs or damages incurred as a result of any such claim.
18
ARTICLE VII
CERTAIN SECURITIES LAW MATTERS;
RESTRICTIONS ON TRANSFER
7.01 Representations by Purchasers. Each Purchaser represents and
warrants to the Company that:
(a) The Purchaser is an "Accredited Investor" within the meaning
of Rule 501 under the Securities Act.
(b) The Preferred Shares are being acquired for the Purchaser's
own account for the purpose of investment and not with a present view to or for
sale in connection with any distribution thereof; provided, that the disposition
of the Purchaser's property shall at all times be and remain within its control.
(c) The Purchaser understands that (i) none of the Preferred
Shares or the Warrants have been registered under the Securities Act, (ii) the
Preferred Shares and the Warrants must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act or an exemption from
registration is available under applicable securities laws then in effect, and
(iii) the Preferred Shares and the Warrants will bear a legend to such effect
and the Company will make a notation on its transfer books to such effect.
(d) The Purchaser understands that no public market now exists for
the Preferred Shares or the Warrants.
7.02 Restrictions on Transfer. (a) The Preferred Shares, the Warrants
and the Warrant Shares (collectively, the "Restricted Securities") shall be
transferable only if sold pursuant to a registration statement under the
Securities Act (as hereinafter defined), or pursuant to an exemption from the
registration requirements of the Securities Act.
(b) Securities Legend. The Warrant and certificates representing
the Warrant Shares shall bear legends in accordance with Section 10 of the
Warrants. Each certificate representing the Preferred Shares initially shall
bear a legend in substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or under the
securities or blue sky laws of any state, and may not be sold, or
otherwise transferred, in the absence of such registration or an
exemption therefrom under such Act and under any such applicable state
laws."
(c) Termination of Restriction. The restrictions imposed by Sec
tion 7.02(a) upon the transferability of the Restricted Securities shall cease
and terminate as to
19
any particular Restricted Securities and any securities issued in exchange
therefor or upon transfer thereof 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 when such Restricted Securities
have been registered under the Securities Act. Whenever any of such restrictions
shall cease and terminate as to any Restricted Securities, the holder thereof
shall be entitled to receive from the Company, without expense, new certificates
not bearing the legend set forth in Section 7.02(b).
(d) The Restricted Securities shall be subject to other
restrictions on transferability set forth in Section 10.3 of the Warrant and
Section 9 of the Certificate of
20
Designation. In addition to the securities legend set forth in Section 7.02(b),
each certificate representing the Preferred Shares shall bear a legend in
substantially the following form:
"The securities represented by this certificate are subject to a
restriction on transfer as set forth in the Corporation's Certificate
of Designation, Number, Powers, Preferences and Relative,
Participating, Optional and Other Rights of Series B Preferred Stock,
as may be amended from time to time."
ARTICLE VIII
MISCELLANEOUS
8.01 Indemnification. In addition to the payment of expenses pursuant
to Section 8.05, the Company agrees to defend, indemnify, pay and hold harmless,
each Purchaser, and the officers, directors, partners, stockholders, members,
managers, employees, agents and affiliates of the Purchaser (collectively, the
"Indemnitees") from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including, without limitation,
the reasonable fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
be designated as a party or a potential party thereto), whether direct, indirect
or consequential and whether based on any federal, state or foreign laws,
statutes, rules or regulations (including, without limitation, securities and
commercial laws, statutes, rules or regulations), on common law or equitable
cause or on contract or otherwise, that may be imposed on, incurred by, or
asserted against any such Indemnitee, in any manner relating to or arising out
of this Agreement, the other Basic Documents, the Warrants or the transactions
contemplated hereby or thereby (including, without limitation, the Purchasers'
agreement to purchase the Preferred Shares or the use or intended use of the
proceeds of such purchase) or the statements contained in any letter of intent
delivered by any Purchaser to the Company with respect thereto (collectively
called the "Indemnified Liabilities"); provided that the Company shall not have
any obligation to any Indemnitee hereunder with respect to any Indemnified
Liabilities to the extent such Indemnified Liabilities arise from the gross
negligence or willful misconduct of that Indemnitee as determined by a final
judgment of a court or competent jurisdiction. To the extent that the
undertaking to defend, indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, the Company shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them.
8.02 No Waiver: Cumulative Remedies. No failure or delay on the part of
the Purchasers, or any other holder of any Security in exercising any right,
power or remedy hereunder or thereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise
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of any other right, power or remedy hereunder or thereunder. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
8.03 Amendments. Waiver and Consents. No amendment, modification or
addition to this Agreement, and no waiver of or consent to noncompliance with
any covenant or other provision of this Agreement shall be effective unless in
writing and duly executed by the party against whom enforcement of such
amendment, modification, addition, waiver or consent is sought. Any waiver or
consent may be given subject to satisfaction of conditions stated therein and
any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
8.04 Notices. All notices, demands, requests, or other communications
which may be or are required to be given, served, or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be mailed
by first-class, registered or certified mail, return receipt requested, postage
prepaid, or transmitted by hand delivery (including delivery by courier), or
facsimile transmission, addressed as follows:
(a) If to the Company:
SEMX Corporation
0 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Chairman, President and CEO
Facsimile: (000) 000-0000
with a copy to:
Xxxx Salon, Esquire
Salon, Marrow, Xxxxxxx & Xxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
(b) If to the Purchasers, to their respective addresses listed on
Exhibit A, with a copy to:
Xxxx, Scholer, Fierman, Xxxx
& Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand,
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request or communication shall be deemed to have been duly given five business
days after being deposited in the mail, postage prepaid, if mailed; when
delivered by hand, if personally delivered; or upon receipt, if sent by
facsimile (followed by a confirmation copy sent by either overnight or two (2)
day courier).
8.05 Expenses. The Company agrees to pay promptly (a) the fees,
expenses and disbursements of counsel to the Purchasers in connection with the
negotiation, preparation, execution and administration of the Basic Documents
and the Warrants, which payments by the Company shall not exceed $75,000 in the
aggregate, and any consents, amendments, waivers or other modifications hereto
or thereto and any other documents or matters requested by the Company; (b) the
funding fee in accordance with Section 3.01(g) hereof; and (c) all costs and
expenses, including reasonable attorneys' fees and costs of settlement, incurred
by the Purchasers in enforcing any obligations of or in collecting any payments
due from the Company hereunder or under the other Basic Documents or the
Warrants by reason of any breach or default by the Company or in connection with
any refinancing or restructuring of the arrangements provided under the Basic
Documents or the Warrants in the nature of a "work-out" or pursuant to any
insolvency or bankruptcy proceedings.
8.06 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the Company and the Purchasers and their respective
heirs, estates, personal representatives, successors and assigns, except that
the Company shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Purchasers.
8.07 Survival of Representations and Warranties. All representations
and war ranties made in this Agreement or any other Basic Document or Warrant,
shall survive the execution and delivery hereof and thereof and the issuance of
any of the Securities. Notwithstanding anything in this Agreement or implied by
law to the contrary, the agreements of the Company set forth in Sections 2.05,
4.16, 8.01 and 8.05 shall survive the payment or redemption of any Securities.
8.08 Severability. In case any provision in or obligation under this
Agreement or the Securities shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
8.09 Prior Agreements. This Agreement constitutes the entire agreement
between the parties and supersedes any prior understandings or agreements
concerning the subject matter hereof.
8.10 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without giving effect to
the conflict of laws principles thereof.
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8.11 Arbitration. Any claim or dispute between the parties hereto
arising out of or in connection with this Agreement or any of the provisions
hereof, or the interpretation, meaning or effect hereof, or the transactions
contemplated hereby, shall be submitted to and determined by arbitration in New
York, New York in accordance with the procedures, rules and regulations of the
American Arbitration Association as in effect at such time. The decision,
findings or award of the arbitrator(s) in the matter shall be final and
nonappealable and binding upon the parties (and their respective successors)
with respect to the subject matter herein concerned, and judgment thereon may be
entered in any court or forum having jurisdiction thereof.
8.12 Headings. Article, Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agree ment for any other purpose.
8.13 Counterparts. This Agreement may be executed in any number of
counter parts, all of which taken together shall constitute one and the same
instrument, and each of the parties hereto may execute this Agreement by signing
any such counterpart.
8.14 Further Assurances. From and after the date of this Agreement,
upon the request of the Purchasers, the Company and each Subsidiary shall
execute and deliver such instruments, documents and other writings as may be
necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement, the Preferred Shares, the Warrants, the
Registration Rights Agreement and the other agreements and instruments
contemplated hereby.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed on its behalf as of the date first above written.
SEMX CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman, President and CEO
ACI CAPITAL AMERICA FUND, LP
By: ACI Capital America GP, LLC, its
General Partner
By: /s/ Xxxxx X. Xxxx
----------------------------------
Name: Xxxxx X. Xxxx
Title: Managing Member
EXETER VENTURE LENDERS, L.P.
By: Exeter Venture Advisors, Inc., its
corporate General Partner
By: /s/ Xxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
25
EXHIBIT A
SCHEDULE OF PURCHASERS
Name and Address Number of Shares of Series B
of Purchaser Preferred Stock Purchased Purchase Price
------------ ------------------------- --------------
ACI Capital America Fund, LP 90,000 $9,000,000
00 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxx
Facsimile: (000) 000-0000
Exeter Venture Lenders, L.P. 10,000 $1,000,000
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
26
