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EXHIBIT 4.1
SUBORDINATED NOTES AND WARRANT PURCHASE AGREEMENT
This Subordinated Notes and Warrant Purchase Agreement (this
"Agreement"), dated as of August 13, 2001, among Xxxxxxxx, Inc., a Minnesota
corporation (the "Company) and, the purchasers listed on Schedule I attached
hereto (sometimes referred to herein as a "Purchaser" and collectively as the
"Purchasers").
Preliminary statement
Subject to the terms and conditions set forth in this Agreement, the
Company desires to issue and sell to the Purchasers and the Purchasers severally
desire to purchase from the Company 12% Senior Subordinated Notes in an
aggregate principal amount of $3,000,000 (the "Notes"). In consideration for the
agreement of the Purchasers to purchase the Notes, the Company desires to issue
to the Purchasers and the Purchasers desire to acquire from the Company warrants
(the "Warrants") to purchase in the aggregate 702,000 shares of common stock,
par value $.25 per share, of the Company, all subject to the terms and
conditions of this Agreement.
Accordingly, the Company and the Purchasers agree as follows:
ARTICLE I
ISSUANCE OF THE NOTES AND THE WARRANTS
1.1 Authorization of Issuance.
(a) $3,000,000, such Notes to be substantially in the form of
Exhibit A attached hereto.
(b) The Company has authorized the issuance of Warrants to
purchase an aggregate of 702,000 shares of Common Stock, such Warrants to be
substantially in the form of Exhibit B attached hereto.
(c) Each Purchaser shall be entitled to receive Warrants at
the rate of 234,000 Warrants per $1,000,000 principal amount of Notes actually
purchased.
(d) The Notes and the Warrants are sometimes collectively
referred to herein as the "Securities." As used herein, the term "Warrant"
refers to a warrant to purchase one share of Common Stock (or such other number
of shares of Common Stock as a result of any adjustments made pursuant to the
anti-dilution provisions of the Warrants) and a designated number of Warrants
refers to warrants to purchase the same number of shares of Common Stock (or
such other number of shares of Common Stock as a result of any adjustments made
pursuant to the anti-dilution provisions of the Warrants).
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1.2 Purchase Commitments.
(a) Xxxxxxxxxxxx Venture Partners V, L.P. ("Xxxxxxxxxxxx")
agrees to purchase in accordance with and subject to the terms and conditions
hereof Notes in the aggregate principal amount of $1,500,000 and a corresponding
number of Warrants determined in accordance with Section 1.1(c) hereof.
(b) Molex Incorporated ("Molex") agrees to purchase in
accordance with and subject to the terms and conditions hereof Notes in the
aggregate principal amount of $1,500,000 and a corresponding number of Warrants
determined in accordance with Section 1.1(c) hereof.
1.3 The Closing.
(a) The closing of the purchase and sale of the Notes and
Warrants (the "Closing") shall take place at the offices of Xxxxxxxxx & Xxxxxx
P.L.L.P., 4200 IDS Center, 00 Xxxxx 0xx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx. The date
of the Closing is hereinafter referred to as the "Closing Date."
(b) At the Closing:
(1) the Company shall deliver or caused to be
delivered to each Purchaser (A) Notes in the principal amount
set forth below the name of such Purchaser on Schedule I
attached hereto, dated the Closing Date and duly executed by
the Company; (B) the number of Warrants set forth below the
name of such purchaser on Schedule I attached hereto, dated
the Closing Date and duly executed by the Company, and (C) all
other documents, instruments and writings required to have
been delivered at or prior to the Closing by the Company to
the Purchasers pursuant to this Agreement, and
(2) each Purchaser shall deliver to the Company the
purchase price set forth below the name of such Purchaser on
Schedule I attached hereto by wire transfer of same day funds
to an account designated by the Company in writing two (2)
business days before the Closing.
(c) The Purchasers' obligation to purchase Securities
hereunder shall be several, not joint, but it shall be a condition to each
Purchasers' obligation to purchase Securities hereunder that all Securities to
be purchased hereunder are purchased simultaneously.
ARTICLE II
PROVISIONS OF THE NOTES
2.1 Interest Payments.
(a) The Company shall pay interest on the outstanding
principal balance of the Notes at a rate equal to 12% per annum payable
quarterly in arrears on the thirteenth (13th) day of each February, May, August
and November, and computed on the basis of a 360-day year of twelve months.
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(b) In the event the interest on the Notes is payable at a
rate that exceeds the maximum rate of interest permissible under any applicable
law (the "Maximum Legal Rate") at any time, the interest on the Notes shall be
payable at a rate equal to the Maximum Legal Rate at such time.
2.2 Default Interest. If the Company defaults in the payment of the
principal of, premium, if any, or accrued interest on, the Notes, or on any
other amount due hereunder, the Company shall, on or upon demand from time to
time, pay interest on such overdue amount from the date when due up to and
including the date of actual payment (before as well as after judgment) at a
rate equal to the lower of 15% per annum or the Maximum Legal Rate.
2.3 Payments.
(a) Subject to the provisions for redemption in Section 2.4
hereof and Article VIII hereof, the aggregate principal amount of the Notes,
together with all interest accrued thereon, shall be due and payable on the
fifth anniversary of the Closing Date or earlier in accordance with the terms
hereof if permitted pursuant to the terms of the Credit Agreement and the
Subordination Agreement as defined herein (such date being referred to herein as
the "Maturity Date"). As used herein, the term "Credit Agreement" shall mean the
Credit and Security Agreement, dated as of June 19, 1998, by and among the
Company, the lenders party thereto, and Xxxxx Fargo Bank, National Association
f/k/a Norwest Bank Minnesota, National Association, as amended or restated from
time to time (with such lenders under the Credit Agreement being referred to as
"Senior Lenders").
(b) The Company shall make payment of principal of and
premium, if any, or accrued interest on the Notes, or any other amount due to
the Purchasers under this Agreement, as provided herein or in the Notes. All
payments hereunder shall be in United States dollars by wire transfer of same
day funds. If any payment hereunder shall be due on a day that is not a business
day, the date for payment shall be extended to the next succeeding business day,
and in the case of any payment accruing interest, interest thereon shall be
payable for the period of such extension. If at any time any payment made by the
Company hereunder is rescinded or must otherwise be restored or returned upon
the insolvency, bankruptcy or reorganization of the Company or otherwise, such
payment obligations of the Company hereunder shall be reinstated as though such
payment had been due but not made when due.
2.4 Optional Redemption of the Notes. Upon notice given as provided in
Section 2.6 below, the Company, at its option, but subject to the terms of the
Credit Agreement and the Subordination Agreement, may redeem the Notes as a
whole, or from time to time in part (in a minimum amount of $100,000 and
otherwise in multiples of $100,000), in each case at the principal amount so to
be prepaid, together with interest accrued thereon to the date fixed for such
prepayment.
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2.5 Mandatory Redemption.
(a) Except as otherwise provided in Section 2.7 hereof,
concurrently with the receipt by the Company or any of its subsidiaries of the
cash proceeds from (i) the issuance of any shares, interests, participations or
other equivalents of corporate stock or membership interests ("Capital Stock")
of any of the Company's subsidiaries or options or warrants to acquire Capital
Stock of any of the Company's subsidiaries or (ii) any sale or other disposition
of assets by the Company or any of its subsidiaries (excluding granting any
Permitted Liens as defined in Section 7.2 hereof), the Company shall apply such
cash proceeds (net of expenses payable by the Company or any of its subsidiaries
to any person other than an affiliate of the Company in connection with the
issuance thereof and net of accrued interest as a result of such redemption) to
the redemption of Notes, together with interest accrued thereon to the date of
such prepayment; provided, however, that the Company shall first apply such cash
proceeds to repay the Company's obligations, in the following order of priority,
under: (w) the Credit Agreement, (x) May Debt Agreement (y) the Notes as
provided in this Section 2.5(a) and (z) the December Debt Agreement; provided,
further, that the Company shall have no obligation to apply to such redemption
of Notes hereunder or under the May Debt Agreement or December Debt Agreement
the first $1,000,000 of net cash proceeds received by the Company or any
subsidiary from all such issuances of Capital Stock subsequent to the Closing
Date.
(b) "December Debt Agreement" shall mean the indebtedness and
other obligations of the Company pursuant to that certain Subordinated Notes and
Warrant Purchase Agreement dated as of November 10, 2000 by and among the
Company and the Purchasers party thereto, as amended by the Amended and Restated
Subordinated Note and Warrant Purchase Agreement dated December 29, 2000, as
amended from time to time and related documents. "May Debt Agreement" shall mean
the indebtedness and other obligations of the Company pursuant to that certain
Subordinated Secured Notes Purchase Agreement dated as of May 23, 2001 by and
among the Company and the Purchasers party thereto and related documents.
(c) Notwithstanding the foregoing, if the Company or any of
its subsidiaries sells or disposes of equipment in the ordinary course of
business, the Company shall not be obligated to use such cash proceeds to redeem
the Notes pursuant to this Section 2.5.
(d) On September 1, 2001, September 30, 2001, November 1, 2001
and January 2, 2002, or at such time as the Company refinances the indebtedness
owed to a Senior Lender, and subject to any subordination agreement in force
with any Senior Lender of the Company, any Purchaser may require the Company to
redeem all or any portion of such Purchaser's Note at face value plus accrued
interest, provided however that (i) the Purchaser may only require redemption
with respect to a portion of the Note obtained by multiplying the face vale of
the Note by the percentage of total Warrants issued to such Purchaser which have
not been exercised (ii) the Purchaser must tender to the Company for
cancellation a number of Warrants equal to (w) all of Purchaser's unexercised
Warrants in the case of a redemption required on or before September 1, 2001,
(x) 75% of Purchaser's unexercised Warrants in the case of a redemption required
on or before September 30, 2001, (y) 50% of Purchaser's unexercised Warrants in
the case of a redemption required on or before November 1, 2001, (z) 25% of
Purchaser's unexercised Warrants in the case of a redemption required on or
before January 2, 2002.
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2.6 Notice of Redemption. The Company shall give the holder of each
Note irrevocable written notice of any redemption pursuant to Section 2.4 hereof
not less than five (5) days nor more than twenty (20) days prior to the date
specified for such redemption, specifying such date and the principal amount of
the Notes held by such holder to be redeemed on such date and stating that such
redemption is to be made pursuant to Section 2.4 hereof. Notice of redemption
having been given as aforesaid, the principal amount of the Notes specified in
such notice, together with accrued and unpaid interest thereon through the
redemption date with respect thereto, shall become due and payable (i) in the
case of an event of redemption under Section 2.5(a)(ii), within ninety (90) days
of the redemption date (ii) in all other cases, on such redemption date.
2.7 Change in Control.
(a) In the event of any Change in Control (as hereinafter
defined), each holder of Note or Notes shall have the right, at its option,
subject to the terms of the Subordination Agreement to require the Company to
purchase all or any portion of such holder's Note(s) (at a purchase price equal
to the principal amount of Note(s) to be so purchased plus accrued interest
thereon) on the date (the "Change in Control Payment Date") which is twenty (20)
business days after the date the Change in Control Notice (as hereinafter
defined) is required to be mailed.
(b) For purposes of this Agreement, the term "Change in
Control" means the occurrence of any of the following: (i) the sale, lease,
transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its subsidiaries, taken as a
whole, to any "person" or "group" (as such terms are used in Section 13(d)(3)
and Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than Xxxxxxxxxxxx and its affiliates, Ampersand IV
Limited Partnership and its affiliates, Ampersand IV Companion Fund Limited
Partnership and its affiliates or Molex and its affiliates (collectively, the
"Permitted Holders"); (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company; (iii) any person or group (as defined above), other
than the Permitted Holders, becomes the "beneficial owner" (as such term is used
in Section 13(d)(3) of the Exchange Act) of 35% or more of the voting power of
the voting stock of the Company; or (iv) during any consecutive two-year period,
individuals, who at the beginning of such period constituted the Board of
Directors (together with any new directors whose election by the Board of
Directors or whose nomination for election by the stockholders of the Company
was approved by a vote of a majority of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office. For so long as
the Permitted Holders hold a majority of the outstanding shares of the Company's
Series G Convertible Preferred Stock (the "Series G Stock"), those directors
elected by the holders of the Series G Stock shall not be considered in applying
clause (iv) above. In addition, any change in the identity of a person occupying
a board seat resulting from the loss by the holders of the Series G Stock of the
right to elect one or more directors shall not be considered in applying clause
(iv) above.
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(c) The Company shall send all holders of the Notes, within
five (5) business days after the occurrence of any Change in Control, a notice
of the occurrence of such Change in Control (the "Change in Control Notice") and
each holder of Notes who wishes to have its Notes repurchased pursuant to this
Section 2.7 shall so indicate by written notice delivered to the Company within
ten (10) business days of receipt of the Change in Control Notice. Each Change
in Control Notice shall state:
(1) the Change in Control Payment Date;
(2) the date by which the right to have Notes purchased
must be exercised;
(3) that such right is conditioned on receipt of notice
from the holders;
(4) the purchase price, if the right to have Notes
purchased is exercised;
(5) a description of the procedure which the holders of
Notes must follow to exercise the right to have Notes
purchased;
(6) that the purchase is being made pursuant to this
Section 2.7;
(7) that any Note not tendered will continue to accrue
interest if interest is then accruing; and
(8) that, unless the Company defaults in making payment
therefor, any Note purchased shall cease to accrue interest
after the Change in Control Payment Date.
(d) No failure of the Company to give the Change in Control
Notice shall limit any holder's right to exercise a right to have Notes
purchased.
(e) If any indebtedness is outstanding under the Credit
Agreement, or any amounts are owing thereunder or in respect thereof, at the
time of the occurrence of a Change in Control, prior to the mailing of the
Change in Control Notice to holders of the Notes, but in any event within ten
(10) business days after the date the Change in Control Notice is required to be
mailed, the Company shall (i) repay in full all obligations and terminate all
commitments under or in respect of such indebtedness under the Credit Agreement
or (ii) obtain the requisite consents under the Credit Agreement to permit the
repurchase of the Notes as described above. The Company must first comply with
the covenant described in the preceding sentence before it shall be required to
purchase Notes pursuant to this Section 2.7 in the event of a Change in Control;
provided, however, that the Company's failure to timely comply with the covenant
described in the preceding sentence shall constitute an Event of Default as
described in Section 8.1(c) hereof.
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2.8 Redemptions Pro Rata. Upon any partial redemption of the Notes
pursuant to Section 2.4 or 2.5 hereof, the principal amount so redeemed shall be
allocated to all Notes at the time outstanding in proportion to the respective
outstanding principal amounts thereof.
2.9 Retirement of the Notes. The Company shall not redeem or otherwise
retire in whole or in part prior to the Maturity Date (other than by redemption
pursuant to Section 2.4, 2.5 or 2.7 hereof or upon acceleration of such Maturity
Date pursuant to Section 8.1 hereof), or purchase or otherwise acquire, directly
or indirectly, Notes held by any holder unless the Company shall have offered to
redeem or otherwise retire, purchase or acquire, as the case may be, the same
proportion of the aggregate principal amount of Subordinated Notes held by each
holder of Subordinated Notes at the time outstanding upon the same terms and
conditions. Any Subordinated Notes so redeemed or otherwise retired, purchased
or acquired by the Company shall not be deemed to be outstanding for any purpose
under this Agreement.
2.10 Subordination. The Purchasers agree to subordinate their interest
in and to the unpaid principal amount of and interest on the Notes to the
interest of the Senior Lenders pursuant to the terms of a Subordination
Agreement among the Purchasers, the Senior Lenders and the Company substantially
in the form of Exhibit C attached hereto (the "Subordination Agreement");
provided however, that the holders of the Notes will not be obligated to
subordinate their interests to more than an aggregate of $45,000,000 of
Indebtedness owed to such Senior Lenders. To the extent that any provisions in
this Agreement or the Notes conflict with the provisions of such Subordination
Agreement, the provisions of such Subordination Agreement shall govern. If any
Purchaser has not requested redemption pursuant to Section 2.5(d) and if
requested by the Company, such Purchaser must subordinate its interest in and to
the unpaid principal amount of and interest on the Notes to the interest of any
of senior lenders of the Company that may refinance the Credit Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchasers as follows:
(a) Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Minnesota.
Each of the subsidiaries of the Company is a corporation or limited liability
company duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization. Each of the Company and
its subsidiaries has the requisite corporate power and authority to own, operate
or lease its properties and to carry on its business as it is now being
conducted, and is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction in which the nature of its business or the
properties owned, operated or leased by it makes such qualification, licensing
or good standing necessary, except where the failure to have such power or
authority,
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or the failure to be so qualified, licensed or in good standing, would not have
a Material Adverse Effect (as defined in Section 5.1(c) hereof) on the Company.
The term "subsidiary" or "subsidiaries" means, with respect to the Company, any
person, corporation, partnership, joint venture or other legal entity of which
the Company (either alone or through or together with any other subsidiary),
owns, directly or indirectly, stock or other equity interests the holders of
which are generally entitled to more than 50% of the vote for the election of
the Board of Directors or other governing body of such corporation or other
legal entity.
(b) Authorization. The Company has the requisite corporate
power and authority to enter into and perform its obligations hereunder and
under the other Loan Documents (as hereinafter defined). The execution, delivery
and performance by the Company of each Loan Document has been duly authorized by
all requisite corporate action by the Company, and each of the Loan Documents
constitutes a valid and binding obligation of the Company, enforceable in
accordance with its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting creditors' rights generally
and to general principles of equity. As used herein, the term "Loan Documents"
means, collectively, this Agreement, each of the Notes, and each of the Warrants
and each of the other instruments, documents or certificates delivered in
connection herewith.
(c) Conflicts. The execution and delivery of each of the Loan
Documents by the Company, the consummation of the transactions contemplated
thereby and the compliance with the provisions thereof by the Company and the
issuance, sale and delivery of the Notes and Warrants by the Company, will not:
(1) violate any provision of law, statute, rule or
regulation, or any ruling, writ, injunction, order, judgment
or decree of any court, administrative agency or other
governmental body applicable to the Company; or
(2) conflict with or result in any breach of any of
the terms, conditions or provisions of, or constitute (with
due notice or lapse of time, or both) a default (or give rise
to any right of termination, cancellation or acceleration)
under, the certificate of incorporation or by-laws of the
Company, or under any note, indenture, mortgage, lease,
purchase or sales order or other material contract, agreement
or instrument to which the Company is a party or by which it
or any of its property is bound or affected; or
(3) result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or
assets of the Company.
(d) Securities Laws Compliance. The Company has not offered
the Securities or any other security the offering of which would be integrated
(as that term is used in Rule 502 of Regulation D promulgated under the
Securities Act of 1933, as amended (the "Securities Act")) with the offer or
sale of the Securities for sale to, or solicited any offers to buy any of the
foregoing from, or otherwise approached or negotiated in respect thereof, with
any Person other than a limited number of institutional or other sophisticated
investors deemed to be "accredited investors" as such term is defined in rule
501(a) of Regulation D adopted under the Securities Act.
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(e) No Consent or Approval Required. Except as provided herein
and except for the filing of any notice subsequent to the date hereof that may
be required under applicable federal or state securities laws (which, if
required, shall be filed on a timely basis as may be so required), no permit,
consent, approval or authorization of, or declaration to, or filing with, any
person (governmental or private) is required for the valid authorization,
execution, delivery and performance by the Company of this Agreement or for the
valid authorization, issuance, sale and delivery by the Company of the Notes or
the Warrants, or the carrying out by the Company of the transactions
contemplated hereby which has not been obtained.
(f) No Default or Violation. Neither the Company nor any
subsidiary (i) is in default under or in violation of any indenture, loan or
credit agreement or any other agreement or instrument to which it is a party or
by which it or any of its properties is bound, other than the Credit Agreement;
or (ii) is in violation of any order of any court, arbitrator or governmental
body, except for purposes of clauses (i) or (ii) as could not reasonably be
expected to, in any such case (individually or in the aggregate) have or result
in a Material Adverse Effect.
(g) Compliance with Laws. The Company and its respective
subsidiaries are in compliance, in all material respects, with any applicable
law, rule or regulation of any United States federal, state, local, or foreign
government or agency thereof which affects the business, properties or assets of
the Company and its respective subsidiaries, the non-compliance with which would
have a Material Adverse Effect on the Company and no notice, charge, claim,
action or assertion has been received by the Company or any of its subsidiaries
or has been filed, commenced or, to the Company's knowledge, threatened against
the Company or any of its subsidiaries alleging any such violation.
(h) Use of Proceeds; Margin Stock. None of the proceeds of the
sale of the Securities will be used for the purpose of purchasing or carrying
any "margin stock" as defined in Regulations U, T, or X of the Board of
Governors of the Federal Reserve System, or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry
"margin stock," or for any other purpose which might constitute transactions
contemplated by this Agreement a "purpose credit" within the meaning of
Regulations U, T or X. The Company is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stocks. The Company has
not taken and will not take any action which might cause any violation of
Regulations U, T or X or any other regulations of the Board of Governors of the
Federal Reserve System or any violation of Section 7 of the Exchange Act, or any
rule or regulation promulgated thereunder, in each case as now in effect or as
the same may hereinafter be in effect.
(i) Disclosure. The representations, warranties and other
statements of the Company contained in this Agreement and the other certificates
furnished to the Purchasers by the Company pursuant hereto, taken as a whole, do
not contain any untrue statement of a material fact or, to the best of the
knowledge of the Company, omit to state a material fact necessary in order to
make the statements contained herein and therein, in light of the circumstances
made, not materially misleading as of the date hereof.
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(j) Knowledge. Whenever a representation or warranty made by
the Company refers to the best of the knowledge of the Company or its
subsidiaries, such knowledge shall be deemed to consist only of the actual
knowledge of the executive officers of the Company or its subsidiaries.
3.2 Representations, Warranties and Agreements of the Purchasers.
Each Purchaser severally and not jointly, hereby represents and warrants to the
Company as follows:
(a) Authorization. The execution, delivery and performance by
Purchaser of this Agreement has been duly authorized by all requisite entity
action by Purchaser, and this Agreement constitutes a valid and binding
obligation of Purchaser, enforceable in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency, moratorium and similar laws
affecting creditors' rights generally and to general principles of equity.
(b) Conflicts. The consummation of the transactions
contemplated hereby and compliance with the provisions hereof by Purchaser,
will not:
(1) violate any provision of law, statute, rule or
regulation, or any ruling, writ, injunction, order, judgment
or decree of any court, administrative agency or other
governmental body applicable to Purchaser; or
(2) conflict with or result in any breach of any of
the terms or provisions of, or constitute a default (or give
rise to any right of termination, cancellation or
acceleration) under, the organizational documents of Purchaser
or under any note, indenture, agreement or instrument to which
Purchaser is a party or by which it or any of its properties
is bound or affected.
(c) Purchase for Investment. Purchaser is acquiring the
Securities for its own account, for investment and not with a view to the
distribution thereof within the meaning of the Securities Act.
(d) No Registration. Purchaser understands that the Securities
have not been, nor will it or they be, registered under the Securities Act, by
reason of its or their issuance by the Company in a transaction exempt from the
registration requirements of the Securities Act; and that the Notes must be held
by Purchaser indefinitely unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from registration.
(e) Restrictions on Resale. Purchaser understands that the
exemption from registration afforded by Rule 144 (the provisions of which are
known to Purchaser) promulgated under the Securities Act depends on the
satisfaction of various conditions, and that, if and when applicable, Rule 144
may only afford the basis for sales in limited amounts.
(f) Accredited Investor.
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(1) Purchaser is an "accredited investor" as defined
in Rule 501(a) of Regulation D promulgated under the
Securities Act and, by reason of its business and financial
experience and the business and financial experience of those
persons retained by it to advise it with respect to its
investment in the Securities, has such knowledge,
sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks
of the prospective investment, is able to bear the economic
risk of such investment and, at the present time, is able to
afford a complete loss of such investment; and
(2) Purchaser is familiar with the business of the
Company and has had the opportunity to ask questions of the
officers and directors of the Company and to obtain such
information about the financial condition of the Company as it
has requested.
(g) Reliance. Each Purchaser understands and acknowledges that
(i) the Securities are being offered and sold to the Purchaser without
registration under the Securities Act in a private placement that is exempt from
the registration provisions of the Securities Act under Section 4(2) of the
Securities Act or Regulation D promulgated thereunder; and (ii) the availability
of such exemption depends in part on, and the Company will rely upon the
accuracy and truthfulness of, the foregoing representations and such Purchaser
hereby consents to such reliance.
(h) No Affiliation. No Purchaser is an "interested
shareholder" of the Company or an "affiliate" or "associate" thereof, as such
terms are defined in Section 302A.011 of the MBCA resulting from any share
purchase, contract, arrangement or understanding, other than this Agreement and
the other Loan Documents, the December Debt Agreement, the Merger Agreement (as
defined in the December Debt Agreement), the May Debt Agreement or any
acquisition of shares approved by a committee of the Board of Directors of the
Company as required in Section 302A.673, subdivision 1(d) of the MBCA.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) If any Purchaser should decide to dispose of any of the
Securities held by it, such Purchaser understands and agrees that it may do so
only pursuant to an effective registration statement under the Securities Act or
pursuant to an available exemption from the registration requirements of the
Securities Act. In connection with any transfer of any Securities other than
pursuant to an effective registration statement or to the Company or to an
affiliate of such Purchaser or pursuant to Rule 144 under the Securities Act
("Rule 144"), the Company may require the transferor thereof to provide to the
Company a written opinion of counsel experienced in the area of United States
securities laws selected by the transferor, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred securities under the
Securities Act.
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(b) Each Purchaser agrees to the imprinting, so long as is
required, of the following legends on the Notes:
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS.
THIS NOTE IS SUBJECT TO THE TERMS OF A SUBORDINATION
AGREEMENT IN FAVOR OF XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, AS AGENT FOR CERTAIN SENIOR
LENDERS, DATED AS OF AUGUST __, 2001.
(c) Each Purchaser agrees to the imprinting, so long as is
required, of the following legends on the Warrants:
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS.
4.2 Use of Proceeds. The Company shall use the net proceeds from the
issuance of the Securities for working capital and other general corporate
purposes, but not for the repayment of indebtedness to any Senior Lender.
4.3 Commercially Reasonable Efforts. Subject to the terms and
conditions herein provided and to applicable legal requirements, each of the
parties hereto agrees to use its commercially reasonable efforts to take, or
cause to be taken, all action, and to do, or cause to be done, and assist and
cooperate with the other parties hereto in doing, as promptly as practicable,
all things necessary, proper or advisable under applicable laws and regulations
to ensure that the conditions set forth in Article V hereof are satisfied.
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4.4 Consents. Each of the parties will use its commercially reasonable
efforts to obtain as promptly as practicable all consents and approvals of any
governmental authority or other person necessary in connection with the
execution, delivery and performance of this Agreement and the Notes.
4.5 Waivers. Notwithstanding any terms to the contrary set forth in
this Agreement, the December Debt Agreement or the May Debt Agreement, the
Purchasers hereby consent to the transactions contemplated by this Agreement and
consent and agree that neither this Agreement, nor any of the transactions
contemplated herein, will constitute a default of or entitle any of the
Purchasers to accelerate any payment under the December Debt Agreement or the
May Debt Agreement or any document or instrument entered into in connection
herewith. Molex further consents and agrees, with respect to issuances of
Securities under this Agreement, to waive any preemptive rights or any right to
notice of preemptive rights it may have pursuant to that certain Amended and
Restated Agreement Relating to Xxxxxxxx dated as of November 10, 2000 by and
between the Company and Molex.
ARTICLE V
CONDITIONS
5.1 Conditions Precedent to the Obligation of the Purchasers to
Purchase the Securities on the Closing Date. The obligation of each Purchaser
hereunder to acquire and pay for the Securities is subject to the satisfaction
or waiver by such Purchaser, at or before the Closing, of each of the following
conditions:
(a) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company contained herein shall be true
and correct, in all material respects, as of the date hereof.
(b) Performance by the Company. The Company shall have
performed, satisfied and complied with in all material respects all covenants
and agreements required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing Date.
(c) No Material Adverse Effect. There shall not have occurred
any change, circumstance or event that has had or may reasonably be expected to
have (i) a material adverse effect on the business, financial condition, assets,
results of operations or prospects of the Company and its subsidiaries, taken as
a whole, or (ii) prevent or materially delay the ability of the Company to
consummate the transactions contemplated by this Agreement and the other Loan
Documents (a "Material Adverse Effect").
(d) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
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(e) Required Approvals. The Company shall have obtained the
consent or approval of the Senior Lenders under the Credit Agreement in
connection with the execution, delivery and performance of this Agreement and
the Notes.
(f) Delivery of Notes and Warrants. The Company shall have
delivered to such Purchaser or such Purchaser's designee duly executed Notes and
Warrants at the Closing to be received by each Purchaser, in the name of such
Purchaser or such Purchaser's designee, each in form satisfactory to such
Purchaser or such Purchaser's designee.
(g) Secretary's Certificate and Other Documents. The
Purchasers shall have received from the Company on the Closing Date (i) a copy
of the Company's certificate of incorporation, including all amendments thereto,
certified by the Secretary of State of its jurisdiction of incorporation and a
certificate as to the good standing of the Company in such jurisdiction as of no
more than five (5) days prior to the Closing Date, (ii) a certificate of an
officer of the Company dated as of the Closing Date certifying to the Purchasers
that the Purchasers have received (A) a correct and complete copy of the
Company's certificate of incorporation and bylaws as in effect on the Closing
Date and at all times subsequent to the date of the resolutions described in the
following clause (B), (B) a correct and complete copy of resolutions duly
adopted by the Board of Directors of the Company authorizing the execution,
delivery and performance of the Loan Documents, the sale of the Notes and
Warrants hereunder, and the other transactions contemplated hereby and thereby,
as applicable, and (C) as to the incumbency and specimen signature of each
officer of the Company who shall execute any Loan Document or any other document
delivered in connection therewith; and (iii) such other documents as the
Purchasers and their counsel may reasonably request.
(h) Officer's Certificate. The Company shall have delivered to
the Purchasers on the Closing Date a certificate signed on its behalf by its
President, Chief Executive Officer or Chief Financial Officer certifying that
the conditions specified in Sections 5.1(a) and (b) hereof have been fulfilled.
(i) Subordination Agreement. The Purchasers and the Senior
Lenders shall have executed a Subordination Agreement on terms consistent with
those contained herein, in the form of Exhibit C attached hereto.
5.2 Conditions Precedent to the Company's Obligations on the Closing
Date. The obligations of the Company to consummate the Closing hereunder are
subject to the following conditions:
(a) Accuracy of the Representations and Warranties of the
Purchasers. The representations and warranties of the Purchasers contained
herein shall be true and correct in all material respects as of the Closing
Date.
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(b) Performance by the Purchasers. The Purchasers shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Purchasers at or prior to the Closing Date.
(c) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
(d) Payment of Purchase Price. Each Purchaser shall have paid
the purchase price set forth below the Purchaser's name on Schedule I attached
hereto for the Securities being purchased by such Purchaser at the Closing.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees with the Purchasers that,
immediately after the Closing Date and for so long as any Note or any monetary
obligation under this Agreement remains outstanding, the Company shall comply
with the covenants set forth in this Article VI:
6.1 Payment of Principal, Premium, Interest, Fees and Expenses. The
Company shall duly and punctually pay the principal of (and premium, if any) and
interest on the Notes in accordance with the terms of the Notes, this Agreement
and the other Loan Documents and all fees and expenses due under this Agreement
when payable.
6.2 Corporate Existence. The Company shall and shall cause its
subsidiaries to do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its corporate existence and any necessary
state or other qualifications (other than any qualifications the absence of
which, in the aggregate, would not have a Material Adverse Effect).
6.3 Obligations and Taxes. The Company shall and shall cause its
subsidiaries to pay or discharge, or cause to be paid or discharged, before the
same shall become delinquent (a) all taxes, assessments and governmental charges
or levies imposed upon it or upon its income or profits or in respect of its
business or property unless such taxes, assessments or governmental charges are
being paid in accordance with the terms of an agreement with the applicable
taxing authority, (b) all lawful claims for labor, materials and supplies, (c)
all required payments under any Indebtedness and (d) all other obligations;
provided however, that, in each case, it shall not be required to pay or
discharge or to cause to be paid or discharged any such amount so long as the
validity or amount thereof shall be contested in good faith in an appropriate
manner and appropriate reserves and accruals have been made with respect
thereto.
6.4 Performance under Agreements. The Company shall perform its
obligations under this Agreement, each other Loan Document, and each other
contract to which it is a party; provided however, that the Company shall not be
required to so perform its obligations under
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any contract (other than this Agreement, any other Loan Document and the
December Debt Agreement) to the extent it is reasonably contesting such
obligations in good faith and in an appropriate manner and, if required by GAAP,
it has made appropriate reserves and accruals with respect thereto.
6.5 Access to Properties and Inspections. The Company shall and shall
cause its subsidiaries to maintain financial records in accordance with
accounting practices and controls sufficient to allow the Company to prepare the
financial statements, certificates and reports required by Section 6.10 hereof;
and, upon written notice, at all reasonable times and as often as the Purchasers
may reasonably request, permit any authorized representative or agent of any
Purchaser to visit and inspect their physical properties and reports and permit
any authorized representative or agent of any Purchaser to discuss their
affairs, finances and condition with such officers, key employees and
independent chartered accountants acting as auditors as the Purchasers shall
deem appropriate. Delivery of a copy of this Agreement to the respective
independent accountants acting as auditors shall constitute instructions to such
accountants to discuss the financial condition of the Company with the
Purchasers and their representatives, and to permit the Purchasers and their
representatives to inspect, copy and make extracts from all financial
statements, analyses, work papers and other documents and information (including
electronically stored documents and information) prepared by such accountants
with respect to the Company.
6.6 Defense of Claims. The Company shall and shall cause its
subsidiaries to diligently defend itself and its properties from and against any
lawsuits or claims.
6.7 Notice of Litigation, Claims, Etc. The Company shall promptly upon
obtaining notice of the occurrence thereof (but in no event more than ten (10)
days after obtaining notice of the occurrence thereof), provide the Purchasers
with written notice of any of the following events:
(a) the issuance by any governmental authority of any
injunction, order or decision involving the Company, any of its subsidiaries or
any of their respective properties;
(b) the filing or commencement of any action, suit or
proceeding against or affecting the Company, any of its subsidiaries or the
properties of the Company or its subsidiaries, whether at law or in equity or by
or before any court if such event might reasonably be interpreted to have a
Material Adverse Effect;
(c) the imposition of any lien which is not a Permitted Lien
(as defined in Section 7.2 hereof);
(d) any claim, demand or action impairing title to any of the
properties or assets of the Company or any of its subsidiaries;
(e) any other adverse action by or notice from a governmental
authority with respect to the Company or any of its respective properties;
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(f) any default by the Company under any contract of
indebtedness in excess of $250,000 other than a lease or conditional sales
contract for immaterial amounts; and
(g) any development in the business or affairs of the Company
which is likely, in the reasonable judgment of the Company, to have a Material
Adverse Effect.
Each notice shall specify, as applicable, (i) the nature and extent of
the subject matter being disclosed, (ii) any rights of any other parties thereto
with respect to termination, acceleration or similar provisions and (iii) any
corrective action taken or proposed to be taken with respect thereto.
6.8 Proceeds. The Company shall use the net proceeds from the issuance
of the Securities for general corporate purposes, including the retirement of
existing indebtedness.
6.9 Compliance. The Company shall and shall cause its subsidiaries to
comply in all material respects with all applicable laws and maintain all
required clearances, consents, permits and approvals of governmental
authorities.
6.10 Financial Statements and Reports. The Company shall furnish to
the Purchasers:
(a) as soon as available but in any event within ninety (90)
days after the end of each fiscal year, consolidated balance sheets, income
statements and cash flow statements of the Company and its subsidiaries, showing
its financial condition as at the end of such fiscal year and the results of its
operations for such fiscal year, all the foregoing financial statements (other
than any consolidating schedules) to be audited by independent chartered
accountants of nationally-recognized standing reasonably acceptable to the
Purchasers and prepared in accordance with GAAP.
(b) as soon as available but in any event within forty-five
(45) days after the end of each fiscal quarter, commencing with the fiscal
quarter including the Closing Date, the unaudited consolidated balance sheets,
income statements and cash flow statements (along with comparisons to budget),
showing the financial condition as at the end of such fiscal quarter, and the
results of operations for such fiscal quarter and for the then elapsed portion
of the fiscal year, for the Company and its subsidiaries in each case prepared
in accordance with GAAP, subject to normal year-end adjustments (none of which
alone or in the aggregate would result in a Material Adverse Effect) and the
absence of notes thereto;
(c) as soon as received, copies of any notice of potential
liability or charge or complaint received by the Company or any of its
subsidiaries from any governmental authority which could reasonably cause the
Company or any of their subsidiaries to incur liabilities in excess of $250,000;
(d) concurrently with the statements provided pursuant to
clauses (a) and (c) a certificate of the Chief Financial Officer of the Company
containing a narrative management discussion and analysis of the financial
condition and results of operations of the Company for the periods covered by
such statements;
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(e) promptly upon their becoming available, copies of any
statements, reports and other communications, if any, which the Company shall
have generally provided to its stockholders, or to the Senior Lenders, or
material statements, reports and other communications to particular stockholders
or to the Company's directors;
(f) promptly upon receipt thereof, copies of all financial and
management reports submitted to the Company by their independent auditors in
connection with each annual audit of the books of the Company;
(g) promptly, from time to time, such other information (in
writing if so requested) regarding the assets and properties and operations,
business affairs and financial condition of the Company as the Purchasers may
reasonably request; and
(h) all filings with the Securities and Exchange Commission.
Each certificate of the Chief Financial Officer of the Company
(and, in the case of year-end financial statements and reports, the independent
auditors of the Company) delivered under this Section 6.10 shall certify that
the statement or report to which such certificate relates fairly presents in all
material respects the financial position and results of operations of the
Company and its subsidiaries at the dates thereof and for the periods then ended
and has been prepared in accordance with GAAP, in the case of unaudited
financial statements, subject to normal year-end audit adjustments (none of
which alone or in the aggregate would result in a Material Adverse Effect) and
the absence of notes thereto, no Event of Default has occurred and is continuing
and to the best of the Chief Financial Officer's knowledge no event or condition
has occurred which would have a Material Adverse Effect on the Company. The
audit report with respect to the financial statements referred to in clause (a)
shall not contain a "going concern" or like qualification or exception or any
qualification arising out of the scope of the audit.
6.11 Insurance. The Company shall and shall cause its subsidiaries to
maintain insurance on its business and properties to such extent and against
such risks, including fire and other risks insured against by extended coverage,
and workers' compensation insurance and public liability insurance against
claims for personal injury or death or property damage occurring upon, in, about
or in connection with, the use of any properties owned, occupied or controlled
by the Company or any of its subsidiaries, in each case as is customary with
companies similarly situated and in the same or similar businesses, and shall
provide evidence to the Purchasers of such insurance upon their request.
6.12 Notification of Event of Default. The Company shall immediately
notify the Purchasers in writing of (a) the occurrence of any default or any
Event of Default hereunder or under the Credit Agreement of which it becomes
aware and (b) any event or condition which has or could reasonably be expected
to have a Material Adverse Effect and specify what steps, if any, are being
taken to cure the same.
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6.13 Fiscal Year. The Company shall maintain its current fiscal year
for financial reporting purposes; provided, however, that the Company may
without the consent of the Purchasers change its fiscal year as may be approved
by its Board of Directors so long as the Company delivers written notice to the
Purchasers of such change within thirty (30) days of Board approval of such
change.
6.14 Further Assurances. The Company shall duly execute and deliver, or
cause to be duly executed and delivered, at its own cost and expense, such
further instruments and documents and take or cause to be taken all such action,
in each case as may be necessary or proper in the reasonable judgment of the
Purchasers, to carry out the provisions and purposes of this Agreement and the
other Loan Documents and to better assure and confirm unto the Purchasers, its
rights and remedies under this Agreement and the other Loan Documents.
6.15 Maintenance of Properties. The Company shall and shall cause its
subsidiaries to keep and maintain all property material to the conduct of its
business as in good working order and condition, ordinary wear and tear
excepted, as such property is in as of the date hereof.
ARTICLE VII
NEGATIVE COVENANTS
The Company hereby covenants and agrees with the Purchasers that,
immediately after the Closing Date and for so long as any Note or any monetary
obligation under this Agreement remains outstanding, the Company shall, except
to the extent waived by the holders of the Required Percent (as defined below),
comply with the covenants set forth in this Article VII:
7.1 Indebtedness. The Company shall not, and shall not permit any of
its subsidiaries to, incur, create, assume or suffer or permit to exist any
indebtedness, except (a) indebtedness under and pursuant to the terms of this
Agreement and the other Loan Documents, (b) indebtedness under the December Debt
Agreement, (c) indebtedness under the May Debt Agreement (d) indebtedness under
capital or operating leases entered into within the ordinary course of the
Company' business consistent with past practice, and (e) indebtedness to the
Senior Lenders under the Credit Agreement in an amount not to exceed $45,000,000
in the aggregate.
7.2 Liens. Neither the Company nor its subsidiaries shall incur,
create, assume or suffer or permit to exist any lien on any of its property or
assets or on any income or rights in respect of any thereof, except (the
"Permitted Liens"):
(a) liens incurred and arising out of surety bonds, appeal
bonds, statutory obligations, bids, performance and return of money and similar
obligations and pledges or deposits made in the ordinary course of business in
connection with worker compensation, unemployment insurance, old age pensions
and other social security benefits;
(b) liens imposed by law, including carriers', warehousemen's,
mechanics', materialmen's and vendors' liens incurred in the ordinary course of
business and securing obligations which are not yet due or which are being
contested in good faith by appropriate proceedings, and in any such case as to
which it shall have set aside adequate cash reserves in accordance with GAAP;
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(c) liens securing the payment of taxes, assessments and
governmental charges or levies, either not yet due and payable or being
contested in good faith by appropriate legal or administrative proceedings, and
in any such case as to which it shall have set aside adequate cash reserves in
accordance with GAAP;
(d) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of property
or minor irregularities of title which do not in the aggregate impair the use of
any parcel of property material to the operation of the business of the Company
or its subsidiaries or the value of such property for the purpose of the
business of the Company or its subsidiaries;
(e) liens securing purchase money indebtedness; provided,
however, that each such lien does not secure any other indebtedness and does not
encumber any property other than that property acquired with the proceeds of
such indebtedness;
(f) extensions and renewals of liens permitted hereunder;
provided, however, that the indebtedness secured thereby is not increased and
the lien does not encumber any property not encumbered by the lien so extended
or renewed;
(g) liens securing capital or operating leases within the
ordinary course of business consistent with past practice;
(h) liens securing indebtedness under the Credit Agreement;
(i) liens existing on the date of the December Debt Agreement
and listed on Part 3.1(m) of the Disclosure Letter (as defined in the December
Debt Agreement); and
(j) Liens securing the notes under the May Debt Agreement.
7.3 Restricted Payments. The Company shall not declare nor make, nor
permit any of its subsidiaries to declare or make (a) any dividend or other
distribution on any shares of the capital stock of the Company or its
subsidiaries (other than (i) in the case of the Company, stock splits, stock
dividends or the distribution of shares of capital stock of the Company pursuant
to the exercise of warrants and dividends payable in the form of the Company's
common stock to holders of the Company's Series D, E, F and G Convertible
Preferred Stock and (ii) in the case of any subsidiary of the Company,
distributions to the Company), or (b) any payment on account of the purchase,
redemption, retirement or acquisition of (i) any shares of capital stock of the
Company or its subsidiaries or (ii) any option, warrant or other right to
acquire shares of the capital stock of the Company or its subsidiaries.
7.4 Nature of Business; Place of Business. The Company shall not
conduct, nor permit any of its subsidiaries to conduct any business or
operations other than the business or operations conducted on the date hereof;
provided, however, that the Company and its subsidiaries may engage in business
or operations which are complementary to the business and operations of the
Company and its subsidiaries. The Company shall not change, nor permit any
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of its subsidiaries to change its corporate structure or its principal place of
business. The Company shall not change its state of incorporation without
providing thirty (30) days prior written notice to the Purchasers.
7.5 Charter, Bylaw and Loan Document Amendment. The Company shall not
amend, modify or supplement its charter or bylaws in any manner that the
Purchasers deem will adversely affect the rights of the Purchasers under this
Agreement or any other Loan Document or their ability to enforce the same or
amend, modify or supplement the Loan Documents without the consent of the
Purchasers.
7.6 Transactions with Affiliates.
(a) The Company will not enter into, or permit any of its
subsidiaries to enter into, any transaction, including, without limitation, the
purchase, sale, lease or exchange of property, real or personal, the purchase or
sale of any security, the borrowing or lending of any money, or the rendering of
any service, with any person or entity affiliated with the Company or any of its
subsidiaries (including officers, directors and shareholders owning 3% (three
percent) or more of the Company's outstanding capital stock (other than the
holders of the Series G Stock)), except (i) a sale of the Company's Materials
Business or (ii) in the ordinary course of and pursuant to the reasonable
requirements of its business and upon fair and reasonable terms not less
favorable than would be obtained in a comparable arms-length transaction with
any other person or entity not affiliated with the Company.
(b) For purposes of this Agreement, "Materials Business" shall
mean the Company's adhesive-based tapes, laminates and composite materials
business, excluding the Company's Accentia, Comclad and lithium batteries
products and assets associated exclusively with these products. The Materials
Business shall also exclude the Company's flexible interconnect division,
including Novaclad, Novaflex and Flexbase products and assets associated
exclusively with that division.
7.7 Mergers. Neither the Company nor any subsidiary shall, in a single
transaction or through a series of related transactions, merge or consolidate
with another corporation or other business entity, except that any wholly-owned
subsidiary of the Company may merge with another wholly-owned subsidiary of the
Company or with the Company (so long as the Company is the surviving
corporation).
7.8 Asset Sales. Neither the Company nor subsidiary shall, directly or
indirectly, in a single transaction or a series of related transactions, sell,
lease, transfer or otherwise dispose of or suffer to be sold, leased,
transferred, abandoned or otherwise disposed of, all or any part of its assets
except: (i) assets related to the Company' Materials Business, (ii) inventory
sold in the ordinary course of business, (iii) equipment sold or disposed of in
the ordinary course of business and (iv) assets in transactions not otherwise
permitted by subsections (i), (ii) and (iii) so long as (A) the Company or
applicable subsidiary receives consideration at the time of such transaction
equal to at least the fair market value of the assets sold; (B) not less than
80% of the consideration received by the Company or such subsidiary was in the
form of cash or cash equivalents; and (C) the sale of such assets would not have
a Material Adverse Effect.
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7.9 Use of Proceeds. The Company shall not use the net proceeds from
the issuance of the Securities to purchase or carry "margin securities."
7.10 Contracts. The Company shall prohibit its subsidiaries from
entering into any contract, commitment, understanding, or arrangement by which
the subsidiaries are restricted from making distributions or other payments to
the Company. The Company will not, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement (other than this Agreement,
the Credit Agreement, the December Debt Agreement and the May Debt Agreement)
that prohibits, restricts or imposes any condition upon the ability of the
Company to create, incur or permit to exist any lien upon any of its property or
assets (other than Permitted Liens); provided that the foregoing shall not apply
to customary provisions in capital or operating leases but solely with respect
to the property being leased, and restrictions and conditions imposed by law or
by this Agreement, the Credit Agreement or the December Debt Agreement and the
May Debt Agreement.
7.11 Required Percent. As used in this Agreement, the term "Required
Percent" shall mean no less than sixty-six and two-thirds percent (66-2/3 %) of
the then outstanding principal amount of the Subordinated Notes.
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Events. In case of the happening of any of the following events
(each, an "Event of Default"):
(a) the Company shall fail to make any payment on principal of
the Notes when and as the same shall become due and payable, whether at the due
date thereof, by acceleration or otherwise (a "Principal Payment Default"). A
Principal Payment Default shall be deemed to have occurred notwithstanding the
fact that the Principal Payment Default results from compliance with or
enforcement of the subordination provisions of the Subordination Agreement; or
(b) the Company shall fail to pay any premium, interest, fee
or other obligation due hereunder or under the Notes when and as the same shall
become due and payable, whether at the due date thereof, by acceleration or
otherwise (an "Interest Payment Default"). An Interest Payment Default shall be
deemed to have occurred notwithstanding the fact that the Interest Payment
Default results from compliance with or enforcement of the subordination
provisions of the Subordination Agreement; or
(c) the Company shall fail timely to perform its obligations
under Section 2.7(e) hereof; or
(d) default shall be made in the due observance or performance
by the Company of any covenant or agreement contained in Section 6.1 or 6.2 or
Article VII of this Agreement, and such default shall continue unremedied for
thirty (30) days after written notice thereof to the Company by the Purchasers;
or
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(e) default shall be made in the due observance or performance
by the Company of any other covenant or agreement to be observed or performed
under this Agreement or any other Loan Document, and such default shall continue
unremedied for thirty (30) days (or such lesser period as may be required as a
result of such default) after written notice thereof to the Company by the
Purchasers; or
(f) any representation or warranty made by the Company
contained in this Agreement or in any other Loan Document or in any certificate,
financial statement or other instrument furnished by or on behalf of the Company
pursuant to this Agreement or such other Loan Document shall prove to have been
false or misleading in any material respect when made or furnished; or
(g) the Company or any of its subsidiaries shall (i)
voluntarily commence any proceeding or file any petition or proposal or any
notice of its intent to commence or file any such proceeding, petition or
proposal seeking relief under the U.S. Bankruptcy Code or any other federal or
state bankruptcy, insolvency or similar law, (ii) consent to the institution of,
or fail to controvert in a timely and appropriate manner, any such proceeding or
the filing of any such petition or proposal, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator or similar official
for any such person or for any substantial part of its property or assets, (iv)
file an answer admitting the material allegations of a petition filed against it
in any such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) fail generally to pay its debts as they become due or (vii) take
any corporate or stockholder action in furtherance of any of the foregoing; or
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of the Company or any of its subsidiaries or of any
substantial part of the property or assets thereof, under Title 11 of the United
States Code or any other federal, state bankruptcy, insolvency or similar law,
(ii) the appointment of a receiver, trustee, custodian, sequestrator or similar
official for the Company or any of its subsidiaries or for any substantial part
of their property or (iii) the winding-up or liquidation of the Company or any
of its subsidiaries, and such proceeding, petition or order shall continue
unstayed and in effect for a period of sixty (60) consecutive days; or
(i) a final judgment for the payment of money in an amount in
excess of $500,000 shall be rendered by a court or other tribunal against the
Company or any of its subsidiaries and shall remain undischarged for a period of
sixty (60) consecutive days during which such judgment and any levy or execution
thereof shall not have been effectively stayed or vacated; or
(j) any event shall occur or condition shall exist or fail to
occur or exist if the effect of such occurrence, existence or failure is to
accelerate the maturity of any indebtedness of the Company or any of its
subsidiaries in a principal amount in excess of $500,000 or any such
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indebtedness shall not be paid when due, whether at maturity, by acceleration or
otherwise, or the holder of any lien upon property of the Company shall commence
foreclosure of such lien; or
(k) any Loan Document shall cease to be in full force and
effect and enforceable against the Company in accordance with its terms; or
(l) there shall have occurred with respect to the Company a
Change in Control; or
(m) the Company or an ERISA Affiliate (as defined in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) shall
fail to pay when due an amount or amounts aggregating in excess of $500,000
which it shall have become liable to pay under Title IV of ERISA; or notice of
intent to terminate an "employee pension benefit plan" (a "Benefit Plan") shall
be filed under Title IV of ERISA by any ERISA Affiliate, any plan administrator
or any combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate, to impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Benefit Plan; or a condition shall exist by reason
of which the PBGC would be entitled to obtain a decree adjudicating that any
Benefit Plan must be terminated; or there shall occur a complete or partial
withdrawal from or a default, within the meaning of Section 4219 (c) (5) of
ERISA, with respect to, one or more multi-employer plans which could cause one
or more ERISA Affiliates to incur a payment obligation in excess of $500,000; or
(n) there shall occur a material breach by the Company of
its obligations under the Warrants; or
(o) payment of any amount due under the Notes is prevented
due to compliance with or enforcement of the subordination provisions of the
Subordination Agreement, or any amounts previously paid to the Purchasers must
be repaid or held in trust by the Purchasers due to compliance with or
enforcement of the subordination provisions contained in the Subordination
Agreement; or
(p) there shall have occurred any event which would constitute
a Material Adverse Effect;
then, and in any such event, and at any time thereafter during the continuance
of such event, subject to the terms of the Subordination Agreement or the
holders of the Required Percent, by notice to the Company, take any of the
following actions at the same or different times: (i) terminate forthwith the
commitment hereunder to purchase the Notes and (ii) declare the Notes (if
outstanding) to be forthwith due and payable, whereupon the entire unpaid
principal of the Notes, together with accrued interest thereon, the then
applicable redemption premium, if any, and all other obligations, shall become
forthwith due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the Company,
anything contained herein or in the Notes or the other Loan Documents to the
contrary notwithstanding (except for the Subordination Agreement), and (iii)
exercise any and all other remedies provided under any Loan Document upon the
occurrence and continuance of an Event of Default.
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Notwithstanding the foregoing, in the case of an Event of Default arising under
subsections (g) or (h) of Section 8.1 hereof with respect to the Company or any
subsidiary of the Company, all outstanding Notes will ipso facto become due and
payable without further action or notice.
8.2 All rights and remedies of the Agent and the Purchasers under this
Agreement and all covenants and obligations of the Company hereunder, are
subject to the terms and conditions of the Subordination Agreement. In the event
of any conflict between the terms of this Agreement and the terms of the
Subordination Agreement, the terms of the Subordination Agreement shall control.
ARTICLE IX
AMENDMENTS AND WAIVERS
The Company and the holders of the Notes may amend, supplement or waive
any provision of this Agreement and the Notes with the written consent of the
holders of the Required Percent. Notwithstanding the foregoing, without the
consent of each holder of the Notes affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting holder of Notes):
(a) reduce the aggregate principal amount of the Notes held by
any holder;
(b) reduce the principal of or change the fixed maturity of
any Note or alter the provisions with respect to the redemption of the Notes;
(c) reduce the rate of or change the time for payment of
interest on any Note;
(d) waive an Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the holders of the Required Percent and a waiver of
the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated
herein or in the Notes;
(f) make any change in the provisions of this Agreement
relating to waivers of past Events of Default or the rights of holders of Notes
to receive payments of principal of or interest on the Notes;
(g) waive a payment of a premium or mandatory redemption with
respect to any Note; or
(h) make any change in the foregoing amendment and waiver
provisions.
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ARTICLE X
MISCELLANEOUS
10.1 Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be deemed to have been
received (a) upon hand delivery (receipt acknowledged) or delivery by telex
(with correct answer back received), telecopy or facsimile (with transmission
confirmation report) at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered on a
business day after during normal business hours where such notice is to be
received); or (b) on the business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
If to the Company: Sheldahl, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxxx
Fax: (000) 000-0000 or
(000) 000-0000
With copies to: Xxxxxxxxx & Xxxxxx P.L.L.P.
0000 XXX Xxxxxx
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
If to a Purchaser: To the address set forth on Schedule I
attached hereto.
or such other address as may be designated in writing hereafter, in the same
manner, by such person.
10.2 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
10.3 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
Neither the Company nor any Purchaser may assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding anything to the contrary contained herein, each Purchaser may
assign its rights hereunder in connection with any sale or transfer of such
Purchaser's Securities to any "Affiliate" or "Associate" (as such terms are
defined in Rule 12b-2 under the Exchange Act) of such Purchaser as long as the
transferee Affiliate or Associate agrees in writing to be bound by the
applicable provisions of this Agreement, in which case the term "Purchaser"
shall be deemed to refer to such transferee as though such transferee were an
original signatory hereto.
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10.4 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
10.5 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Minnesota
without regard to the principles of conflicts of law thereof.
10.6 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become binding with respect to each Purchaser on the
date the acceptance form hereto is executed by such Purchaser and with respect
to the Company on the date executed by the Company, it being understood that
both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
10.7 Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
10.8 Survival of Representations and Warranties. The representations
and warranties made in this Agreement, or in any instrument delivered pursuant
to this Agreement shall survive indefinitely. All covenants and agreements shall
survive in accordance with their respective terms.
10.9 Entire Agreement. This Agreement, together with the Exhibits and
Schedules attached hereto and the other Loan Documents contains the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral or written, with
respect to such matters.
10.10 The Company agrees to reimburse Purchasers for paying all
reasonable out-of-pocket expenses incurred by Purchasers, including the
reasonable fees, charges and disbursements of its legal counsel in connection
with this Agreement and any Loan Document, which shall be paid, at the
Purchaser's election, thirty (30) days after the Closing Date or upon the
redemption of the Notes pursuant to Section 2.4 or 2.5 hereof.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its authorized representative and each Purchaser has caused this
Agreement to be executed by signing in counterpart the acceptance form attached
to this Agreement.
COMPANY:
XXXXXXXX, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President and Chief Executive
Officer
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ACCEPTANCE
The undersigned hereby accepts the terms and conditions set forth in
the Subordinated Notes and Warrant Purchase Agreement, dated August 13, 2001,
among Xxxxxxxx, Inc., a Minnesota corporation (the "Company"), and certain
Purchasers listed in Schedule I attached thereto, as the terms and conditions
applicable to the purchase of Notes and Warrants of the Company by the
undersigned. By execution of this Acceptance, the undersigned hereby makes each
of the representations contained in Section 3.2 of the Subordinated Notes and
Warrant Purchase Agreement.
PURCHASER:
XXXXXXXXXXXX VENTURE PARTNERS V, L.P.
By: /s/ Xxxx X. Xxxxx
-------------------------------------
Name: Xxxx X. Xxxxx
Title: General Partner
30
ACCEPTANCE
The undersigned hereby accepts the terms and conditions set forth in
the Subordinated Notes and Warrant Purchase Agreement, dated August 13, 2001,
among Xxxxxxxx, Inc., a Minnesota corporation (the "Company"), and certain
Purchasers listed in Schedule I attached thereto, as the terms and conditions
applicable to the purchase of Notes and Warrants of the Company by the
undersigned. By execution of this Acceptance, the undersigned hereby makes each
of the representations contained in Section 3.2 of the Subordinated Notes and
Warrant Purchase Agreement.
PURCHASER:
MOLEX INCORPORATED
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President,
Chief Financial Officer
31
SCHEDULE I
Schedule of Purchasers
Xxxxxxxxxxxx Venture Molex Incorporated
Partners V, L.P. 000 Xxxxxxxxxx Xxxxx
Xxxxxxxx Xxxxx Xxxxx, XX 00000
00 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, XX 00000
Principal Amount of Notes Purchased
at Closing $1,500,000 $1,500,000
Number of Warrants 351,000 351,000
State of Residence/Incorporation OH IL
