Exhibit 10.1
[Pemstar letterhead]
May 8, 2002
Smithfield Fiduciary LLC
c/o Highbridge Capital Management, LLC
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Citadel Equity Fund Ltd.
c/o Citadel Investment Group, L.L.C.
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Gentlemen:
Reference is made to the Securities Purchase Agreement dated as of May
3, 2002 (the "Purchase Agreement") by and among Pemstar, Inc. (the "Company")
and Smithfield Fiduciary LLC and Citadel Equity Fund Ltd. (each, a "Buyer," and
together the "Buyers"). Capitalized terms used but not otherwise defined herein
shall have the respective meanings ascribed to such terms in the Purchase
Agreement.
In consideration of the premises and the covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged,, the Company hereby agrees to issue warrants ("Warrants")
to purchase 500,000 shares (the "Underlying Shares") of common stock, par value
$.01 per share of the Company ("Common Stock"), to each Buyer no later than
Friday, May 10, 2002. The Warrants will be evidenced by a form of warrant
agreement in substantially the form of Exhibit I to the Purchase Agreement,
except that (a) the exercise price of the Warrants will be $2.00 per Underlying
Share (as appropriately adjusted for any stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock which occur
after the date of this letter) and (b) the Company shall have the right to
redeem, upon not less than 20 trading days notice, the Warrants if, among other
things, (i) on each trading day during a 20 consecutive trading day period
(beginning 180 days after the issuance date of the Warrants) immediately
preceding the date of notice of redemption the Weighted Average Price of the
Common Stock is greater than $4.00 (as appropriately adjusted for any stock
splits, stock dividends, stock combinations and other similar transactions of
the Common Stock which occur after the date of this letter), (ii) a registration
statement covering the resale of the Underlying Shares is in effect from at
least the beginning of the 20 trading day period referred to in sub-clause (i)
above, (iiithe Company shall have obtained the Shareholder Approval or shall
have provided each Buyer with evidence reasonably satisfactory to such Buyer
that Shareholder Approval is not necessary to permit the exercise of all the
Warrants (assuming the conversion of all outstanding Notes, the exerecise of all
outstanding Warrants and the issuance and conversion of all the Additional Notes
and the issuance and exercise of all the Additional Warrants), (iv) on each day
during the period
Smithfield Fiduciary LLC
Citadel Equity Fund Ltd.
May 8, 2002
Page 2
beginning on the date hereof and ending on and including the date selected for
redemption, the Common Stock is designated for quotation on the Nasdaq National
Market or the New York Stock Exchange and shall not have been suspended from
trading on such market or exchange (other than suspensions of not more than one
day and occurring prior to the date of the Company's notice of redemption due to
business announcements by the Company) nor shall delisting or suspension by such
market or exchange been threatened or pending either (A) in writing by such
market or exchange or (B) by falling below the minimum listing maintenance
requirements of such market or exchange, (v) during the period beginning on the
date hereof and ending on and including the date selected for redemption , there
shall not have occurred (A) an event constituting a Triggering Event (as defined
in the Notes), (B) an event that with the passage of time and without being
cured would constitute a Triggering Event, or (C) the public announcement of a
pending, proposed or intended Change of Control (as defined in the Notes),
unless such pending, proposed or intended Change of Control has been terminated,
abandoned or consummated and the Company has publicly announced such
termination, abandonment or consummation of such Change of Control, and (vi) the
Company is otherwise in compliance with all of the Transaction Documents. [In
connection with the issuance of the Warrants, the Company further agrees (i) to
make on the date of issuance of the Warrants such representations, warranties,
covenants and agreements relating to the Warrants and the Underlying Shares as
if the Warrants were issued pursuant to the Purchase Agreement and the
Underlying Shares were "Warrant Shares" (as defined in the Purchase Agreement)
as such representations, warranties, covenants and agreements were made as of
the Initial Closing Date and (ii) concurrently with the issuance with the
Warrants, to enter into a registration rights agreement substantially in the
form of the Registration Rights Agreement attached as Exhibit D to the Purchase
Agreement (which would provide that the Company will include the Underlying
Shares in the Initial Registration Statement, that the filing deadline will be
the Initial Filing Deadline and that the effectiveness date will be the Initial
Effectiveness Date).
Please indicate your agreement to the foregoing by executing the acknowledgment
below.
Sincerely yours,
PEMSTAR, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------------
Xxxxx X. Xxxxxxx
Chairman, Chief Executive Officer and
President
Accepted and agreed to:
SMITHFIELD FIDUCIARY LLC CITADEL EQUITY FUND LTD.
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------ --------------------------------
Name: Xxxx X. Xxxxx Name: Xxxxxxx X. Xxxxxxx
Title: Authorized Signatory Title: Vice President
