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EXHIBIT 10(d)
AETHERWORKS CORPORATION
1998 NOTE PURCHASE AGREEMENT
This Agreement is made and entered into as of May 12, 1998 by and between
AetherWorks Corporation, a Minnesota corporation (the "Company") and Digi
International Inc., a Delaware corporation ("Digi"), sometimes referred to
individually as a "Party" and collectively as the "Parties."
WHEREAS, On or about October 14, 1997 the Parties entered into the following
agreements: 1997 Note Purchase Agreement, Note A, Note B, 1997 Shareholder
Voting Agreement, 1997 Security Agreement, and Co-Sale Agreement (collectively,
referred to herein as the "1997 Agreements"); and
WHEREAS, On or about September 12, 1997, the Parties entered into an Equipment
Lease; and
WHEREAS, In order to facilitate a restructuring of the debt, and other rights
and responsibilities contemplated by the 1997 Agreements;
NOW THEREFORE, in consideration of the foregoing premises and the Parties' other
rights and obligations set forth in this Agreement, the Parties hereby agree as
follows:
1. Rescission of Certain Agreements; Releases
The 1997 Note Purchase Agreement, 1997 Shareholder Voting Agreement, and Co-Sale
Agreement are hereby rescinded and shall be of no further force or
effect. Each Party hereby releases the other Party, and each of its
officers, directors and employees, from any obligations and all causes
of action that are owed now or may arise in the future.
2. Amendment and Restatement of Certain Agreements and Instruments
2.1 Note A and Note B shall be amended and restated by issuance of a
new note to Digi dated May 12, 1998 (the "1998 Note"), in the amount of
Eight Million Dollars ($8,000,000) in the form of Exhibit 1, which
shall fully satisfy the Company's obligations under Note A and Note B.
2.2 In the event the 1998 Note is lost, stolen or destroyed, and upon
receipt of evidence of that fact and a bond of indemnity, reasonably
satisfactory to the Company, the Company will issue a replacement note
to Digi.
2.3 The Equipment Lease shall be amended and restated in the form of
Exhibit 2 and shall be known as the "Amended and Restated Equipment
Lease."
2.4 The 1997 Security Agreement shall be amended and restated in the
form of Exhibit 3, and shall be known as the "1998 Amended and Restated
Security Agreement." On or prior to the Closing Date, the Company and
Digi agree to (i) terminate all documents and filings made in
connection with the 1997 Security Agreement, (ii) execute all documents
deemed necessary to release Digi's security interest in the collateral
thereunder, and (iii) file all documents and filings necessary to
perfect Digi's security interest in the Collateral as defined in the
1998 Amended and Restated Security
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Agreement and Amended and Restated Equipment Lease, in form and
substance mutually satisfactory to the Parties.
3. Release of Certain Guarantees
3.1 Schedule A attached hereto, includes a complete and correct list of
all indebtedness, leases and other liabilities and obligation of the
Company which have been previously guaranteed by Digi as of the date of
this Agreement.
3.2 Digi shall be released by the Company from its obligation under the
1997 Documents to guarantee the obligation of the Company to Carlton
Corporation, Xxxx Real Estate Company, and Central Computer Systems
Inc.
3.3 In the case of the Company's obligations to Sanwa Leasing
Corporation, Digi's guarantee shall remain in place, but shall be
subordinated to the guarantee of a third party mutually agreed upon by
the Parties (the "Third Party").
4. Non Competition Agreement
An Agreement (the "Non Competition Agreement") in the form of Exhibit
4, shall be executed by Xxxxxxxx X. Xxxxx on or before the execution of
this Agreement.
5. Closing
The closing of the issuance of the 1998 Note by the Company to Digi and
execution and exchange of other relevant documents to the satisfaction
of the Parties, shall occur at the offices of Digi on May 12, 1998 (the
"Closing Date"). At the Closing, the Company will deliver to Digi the
executed 1998 Note, the Non Competition Agreement, and an executed
agreement between the Company and Third Party, expressly assuming the
guaranties defined in paragraph 3 above. At the Closing, Digi will
deliver the 1997 Note Purchase Agreement, 1997 Shareholder Voting
Agreement, 1997 Co-Sale Agreement for rescission and cancellation, as
well as Note A and Note B, and partial releases for all previous UCCs,
documents and other filings made in connection with the 1995 and 1997
Security Agreements.
6. Conditions to Closing
6.1 The representations and warranties of the Company in Section 7
shall be true in all material respects as of the Closing Date.
6.2 All registrations and qualifications required under applicable
state securities laws for the lawful execution and delivery of this
Agreement, and the offer, sale, issuance and delivery of the 1998 Note
shall have been obtained.
6.3 Xxxxxxxx X. Xxxxx shall have entered into the Non Competition
Agreement.
6.4 Concurrent with the execution of this Agreement, the Company will
execute an agreement with Third Party providing for at least $5,000,000
over 9 months, contingent
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upon the occurrence of certain events, with at least $1,000,000 payable
immediately to Company.
7. Representations and Warranties by Company
Except as disclosed in Schedule A hereto, the Company and its officers
represent and warrant to Digi that:
7.1 The Company is a corporation duly organized, validly existing and
in good standing under the laws of Minnesota. The Company has the
requisite corporate power and authority to issue the 1998 Note and
otherwise perform its obligations under this Agreement.
7.2 To the best of the Company's knowledge, except as contemplated by
this Agreement, neither the execution nor delivery of this Agreement
will result in any breach of, or constitute a default under, or result
in the imposition of any lien or encumbrance upon any asset or property
of the Company, pursuant to any applicable law, judgment, order or
decree, or other instrument to which the Company is a party or by which
it or any of its properties or assets or rights is bound or affected.
7.3 No consent, authorization, approval or filing with any governmental
authority is required in connection with the execution and delivery of
this Agreement and the offer, issuance, or delivery of the 1998 Note,
other than the qualification, if required, under applicable state
securities laws, which qualification has been or will be effected as a
condition of this sale. Based on the advice of the Company's counsel,
the 1998 Note will not under current laws and regulations require
compliance with the prospectus delivery or registration requirements of
the Securities Act of 1933, as amended (the Securities Act").
7.4 This Agreement has been duly authorized by all necessary corporate
action on behalf of the Company, and has been duly executed and
delivered by authorized officers of the Company. This Agreement is a
valid and binding Agreement of the Company, enforceable in accordance
with its terms.
7.5 Except as disclosed on Schedule A, there are not any legal actions
pending against the Company.
7.6 The Company will provide Digi as much advance written notice as is
possible in the event the Corporation expects to cease doing business
as a going concern or expects to file voluntarily, or have filed
against it involuntarily a petition for relief under the federal
Bankruptcy Code.
8. Representations and Warranties of Digi
Digi and its officers represent and warrant to the Company that:
8.1 The 1998 Note is being purchased for Digi's own account and not
with the view to, or for resale in connection with, any distribution or
public offering within the meaning of the Securities Act.
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8.2 Digi qualifies as an accredited investor under the Securities Act.
Digi has such knowledge and experience in financial and business
matters that Digi is capable of evaluating the merits and risks of the
investment to be made hereunder by Digi.
8.3 Digi has had access to all of the Company's material books and
records, and access to the Company's executive officers has been
regularly provided to Digi.
8.4 This Agreement has been duly authorized by all necessary corporate
action on behalf of Digi, and has been duly executed and delivered by
authorized officers of Digi. This Agreement is a valid and binding
Agreement of Digi, enforceable in accordance with its terms.
8.5 Digi agrees that it will make no public announcement or disclosure
of any kind which identifies the name of Third Party.
9. Restriction of Transfer of Securities
The 1998 Note is transferable only pursuant to an effective
registration under the Securities Act or an exemption therefrom and
shall be endorsed with a restrictive legend to that effect.
10. Miscellaneous
10.1 Any modification or amendment of any provision of this Agreement
must be in writing and signed by both of the Parties.
10.2 Neither this Agreement, nor any of the rights or obligations
hereunder, shall be assignable without the prior written consent of the
other Party.
10.3 The laws of Minnesota shall govern the validity of this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
DIGI INTERNATIONAL INC.
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Its: President and CEO
AETHERWORKS CORPORATION
By: /s/Xxxxxxxx X. Xxxxx
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Name: Xxxxxxxx X. Xxxxx
Its: President and CEO
