Exhibit 4.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of March 14, 2002,
by and between RAMTRON INTERNATIONAL CORPORATION, a Delaware corporation (the
"Company"), and INFINEON TECHNOLOGIES AG, a German stock corporation (the
"Purchaser").
The Company wishes to sell to the Purchaser, and the Purchaser wishes to
purchase, on the terms and subject to the conditions set forth in this
Agreement, a 5% Secured Convertible Debenture in the form attached hereto as
Exhibit A (the "Debenture") and a Warrant in the form attached hereto as
Exhibit B (the "Warrant"). The Warrant purchased by the Purchaser at the
Closing (as defined below) will entitle the Purchaser to purchase a number of
shares of common stock, par value $0.01 per share, of the Company (the "Common
Stock") equal to thirty percent (30%) of the original principal amount of the
Debenture purchased by the Purchaser at the Closing divided by the Closing
Price (as defined below). The Warrant will have an exercise price per share
equal to one hundred and twenty-five percent (125%) of the Closing Price.
The Debenture is convertible into shares of Common Stock (the "Conversion
Shares") in accordance with its terms. The Warrant is exercisable into shares
of Common Stock (the "Warrant Shares") in accordance with its terms. The
Debentures, the Conversion Shares, the Warrants and the Warrant Shares are
collectively referred to herein as the "Securities".
The Company's obligations under the Debenture, including without limitation
its obligation to make payments of principal thereof and interest thereon,
shall be secured by the Company's European Receivables and, in the event that
such security interest is insufficient to satisfy the Company's obligations
under the Debenture, by a security interests in the Company's Intellectual
Property (as defined below) pursuant to the terms of a Security Agreement in
the form to be agreed by the Company and the Purchaser prior to the Closing
(as defined below) containing the terms set forth on Exhibit C hereto (the
"Security Agreement").
The Company has agreed to effect the registration of the Conversion Shares and
the Warrant Shares under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to the Registration Rights Agreement dated as of
February 2, 2001 by and between the Company and the Purchaser (the
"Registration Rights Agreement"), as amended by Amendment No. 1 ("Amendment
No. 1") to the Registration Rights Agreement in the form attached as Exhibit D
hereto . The sale of the Debenture and the Warrant by the Company to the
Purchaser will be effected in reliance upon the provisions of Regulation S
("Regulation S"), as promulgated by the Securities and Exchange Commission
(the "Commission") under the Securities Act.
The Purchaser has also agreed to amend the Share Purchase Agreement (as
defined below) to extend the standstill period contained in Section 7.9(a)(i)
thereof for an additional period of eighteen (18) months in accordance with
Amendment No. 1 to the Share Purchase Agreement in the form attached as
Exhibit E hereto ("SPA Amendment No. 1").
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The Company and the Purchaser hereby agree as follows:
1. PURCHASE AND SALE OF DEBENTURE AND WARRANT.
1.1 Purchase of Debenture and Warrant. Upon the terms and subject to the
satisfaction or waiver of the conditions set forth herein, the Company agrees
to sell and the Purchaser agrees to purchase (i) the Debenture with a
principal amount of Three Million United States Dollars ($3,000,000) and
(ii) the Warrant. The purchase price for the Debenture and the Warrant being
purchased by the Purchaser (the "Purchase Price") shall be equal to the
principal amount of the Debenture, provided that the Purchase Price shall be
allocated between the Debenture and the Warrant as may be agreed between the
Company and the Purchaser. The date on which the closing of the purchase and
sale of the Debenture and Warrant occurs (the "Closing") is hereinafter
referred to as the "Closing Date". The Closing will be deemed to occur when
(A) all of the conditions set forth in this Agreement shall have been
satisfied or waived and (B) full payment of the Purchase Price has been made
by the Purchaser to the Company by wire transfer of immediately available
funds to the account of the Company (specified in writing to the Purchaser not
less than one (1) Business Day before the Closing) against physical delivery
by the Company of the Debenture and Warrant purchased by the Purchaser at the
Closing.
1.2 Certain Definitions. When used herein, the following terms shall have
the respective meanings indicated:
"Affiliate" means, as to any Person (the "subject Person"), any other Person
that directly or indirectly through one or more intermediaries controls or is
controlled by, or is under direct or indirect common control with, the subject
Person. For the purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, through representation on such Person's Board of Directors or
other management committee or group, by contract or otherwise.
"Business Day" means any day other than a Saturday, a Sunday or a day on which
banks are authorized by law to close in New York, New York or Frankfurt,
Germany .
"Closing Price" means the average of the daily VWAP for each of the five (5)
Trading Days immediately preceding, but not including, the date of this
Agreement.
"Conversion Price" has the meaning specified in the Debenture.
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"Debt" means, as to any Person at any time (without duplication), and except
as described on Schedule 1.2 hereof: (a) all indebtedness, liabilities and
obligations of such Person for borrowed money; (b) all indebtedness,
liabilities and obligations of such Person to pay the deferred purchase price
of Property or services, except trade accounts payable of such Person arising
in the ordinary course of business that are not past due by more than one
hundred twenty (120) days (other than trade accounts payable that have been
disputed in good faith); (c) all capital lease obligations of such Person;
(d) all Debt of others guaranteed by such Person; (e) all indebtedness,
liabilities and obligations secured by a Lien existing on Property owned by
such Person, whether or not the indebtedness, liabilities or obligations
secured thereby have been assumed by such Person or are non-recourse to such
Person; (f) all reimbursement obligations of such Person (whether contingent
or otherwise) in respect of letters of credit, bankers' acceptances, surety or
other bonds and similar instruments; and (g) all indebtedness, liabilities and
obligations of such Person to redeem or retire shares of capital stock of such
Person.
"Deed of Trust" has the meaning specified in the Joint Investor Securities
Purchase Agreement.
"Environmental Law" means any federal, state, provincial, local or foreign
law, statute, code or ordinance, principle of common law, rule or regulation,
as well as any Permit, order, decree, judgment or injunction issued,
promulgated, approved or entered thereunder, relating to pollution or the
protection, cleanup or restoration of the environment or natural resources, or
to the public health or safety, or otherwise governing the generation, use,
handling, collection, treatment, storage, transportation, recovery, recycling,
discharge or disposal of hazardous materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations and published interpretations thereunder.
"European Receivables" means the Company's receivables derived from the
conduct of the Company's business in Europe (as determined in accordance with
GAAP), including without limitation, sales to a customer of the Company
located in any European country or whose purchase of goods or services from
the Company is directed for use in such customer's European operations.
"Exchange Act" means the Securities Exchange Act of 1934, as amended (or any
successor act), and the rules and regulations thereunder (or respective
successors thereto).
"Exercise Price" shall have the meaning specified in the Warrant.
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"GAAP" means United States generally accepted accounting principles, applied
on a consistent basis, as set forth in (i) opinions of the Accounting
Principles Board of the American Institute of Certified Public Accountants,
(ii) statements of the Financial Accounting Standards Board and (iii)
interpretations of the Commission and the Staff of the Commission and/or each
of their respective successors and which are applicable in the circumstances
as of the date in question. Accounting principles are applied on a
"consistent basis" when the accounting principles applied in a current period
are comparable in all material respects to those accounting principles applied
in a preceding period.
"Governmental Authority" means any nation or government, any state, provincial
or political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including without limitation any stock exchange, securities
market or self-regulatory organization.
"Governmental Requirement" means any law, statute, code, ordinance, order,
rule, regulation, judgment, decree, injunction, franchise, license or other
directive or requirement of any federal, state, county, municipal, parish,
provincial or other Governmental Authority or any department, commission,
board, court, agency or any other instrumentality of any of them.
"Intellectual Property" means any U.S. or foreign intellectual property,
including, but not limited to, patents, patent rights, patent applications,
trademarks, trade names, service marks, brand names, logos and other trade
designations (including unregistered names and marks), trademark and service
xxxx registrations and applications, copyrights and copyright registrations
and applications, inventions, invention disclosures, protected formulae,
formulations, processes, methods, trade secrets, computer software, computer
programs and source codes, manufacturing research and similar technical
information, engineering know-how, customer and supplier information, assembly
and test data drawings or royalty rights.
"Joint Investor Closing" means the closing to occur under the Joint Investor
Securities Purchase Agreement.
"Joint Investor Debentures" means the debentures purchased by and/or issuable
to the Joint Investors pursuant to the Joint Investor Securities Purchase
Agreement.
"Joint Investor Documents" means the Joint Investor Securities Purchase
Agreement, the Joint Investor Debenture, the Joint Investor Registration
Rights Agreement, Joint Investor Warrant, the Deed of Trust, and all other
agreements, documents and other instruments executed and delivered by or on
behalf of the Company or any of its officers at the Closing (relating to the
Joint Investor Securities Purchase Agreement).
"Joint Investor Registration Rights Agreement" means the Registration Rights
Agreement, dated as of March 14, 2002, by and between the Company and each of
the entities whose names appear on the signature page thereto, as contemplated
by the Joint Investor Securities Purchase Agreement.
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"Joint Investors" means each of the entities (other than the Company) whose
names appear on the signature pages to the Joint Investor Securities Purchase
Agreement.
"Joint Investor Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of March 14, 2002, by and between the Company and each of
the entities whose names appear on the signature page thereto, which contains
substantially the same terms as this Agreement.
"Joint Investor Warrants" means the warrants purchased by and/or issuable to
the Joint Investors pursuant to the Joint Investor Securities Purchase
Agreement.
"Lien" means, with respect to any Property, and except as described on
Schedule 1.3 hereof, any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, security interest, tax lien, financing
statement, pledge, charge, or other lien, charge, easement (other than any
easement not materially impairing usefulness), encumbrance, preference,
priority, restriction or other security agreement or preferential arrangement
of any kind or nature whatsoever on or with respect to such Property
(including, without limitation, any conditional sale or other title retention
agreement having substantially the same economic effect as any of the
foregoing).
"Material Adverse Effect" means an effect that has material and adverse
consequences on (i) the consolidated business, operations, properties,
financial condition, prospects or results of operations of the Company and its
Subsidiaries taken as a whole or (ii) the ability of the Company to perform
its obligations under this Agreement or the other Transaction Documents (as
defined below).
"Material Contracts" means, as to the Company, any supply, purchase, service,
employment, tax, indemnity, stockholder or other agreement or contract for
which the aggregate amount or value of services performed or to be performed
for or by, or funds or other Property transferred or to be transferred to or
by, the Company is in excess of $50,000, or by which the Company or any of its
Properties is otherwise bound to an obligation in excess of $50,000 and any
and all amendments, modifications, supplements, renewals or restatements
thereof, provided that development, license and other agreements similar to
the types of agreements the Company has entered into from time to time
relating to the creation, development, and exploitation of the Company's
present or future Intellectual Property shall not be deemed to be Material
Contracts.
"Maturity Date" with respect to a Debenture shall mean the five-year
anniversary of the issue date for such Debenture, or such earlier date to
which the Maturity Date may be accelerated pursuant to the terms of such
Debenture.
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"Obligations" means any and all indebtedness, liabilities and obligations of
the Company to the Purchaser evidenced by and/or arising pursuant to any of
the Transaction Documents (including, without limitation, this Agreement, the
Debentures and the Warrants), now existing or hereafter arising, whether
direct, indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several or joint and several, including, without
limitation, the obligations of the Company to repay principal of the
Debentures, to pay interest on the Debentures (including, without limitation,
interest accruing after any, if any, bankruptcy, insolvency, reorganization or
other similar filing) and to pay all fees, indemnities, costs and expenses
(including attorneys' fees) provided for in the Transaction Documents.
"Pension Plan" means an employee benefit plan (as defined in ERISA) maintained
by the Company for employees of the Company or any of its Affiliates.
"Permitted Liens" means the following:
(a) encumbrances consisting of easements, rights-of-way, zoning restrictions
or other restrictions on the use of real Property or imperfections to
title that do not (individually or in the aggregate) materially impair
the ability of the Company or any of its Subsidiaries to use such
Property in its businesses, and none of which is violated in any material
respect by existing or proposed structures or land use;
(b) Liens for taxes, assessments or other governmental charges that are not
delinquent or which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the Property subject to such Liens, and for which
adequate reserves (as determined in accordance with GAAP) have been
established;
(c) Liens of mechanics, materialmen, warehousemen, carriers, landlords or
other similar statutory Liens securing obligations that are not yet due
and are incurred in the ordinary course of business or which are being
contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing the forfeiture or sale of the Property
subject to such Liens, and for which adequate reserves (as determined in
accordance with GAAP) have been established;
(d) Liens securing obligations that are not Debt.
"Person" means any individual, corporation, trust, association, company,
partnership, joint venture, limited liability company, joint stock
company, Governmental Authority or other entity.
"Property" means property and/or assets of all kinds, whether real,
personal or mixed, tangible or intangible (including, without limitation,
all rights relating thereto).
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"Purchaser Documents" means this Agreement, the Debenture, the Warrant,
Amendment No. 1, the Security Agreement and all other agreements,
documents and other instruments executed and delivered by or on behalf of
the Company or any of its officers at the Closing.
"Real Property" means all real Property owned by the Company and set
forth on Schedule 3.21 hereto.
"Restricted Payment" means (a) any dividend or other distribution
(whether in cash, Property or otherwise), direct or indirect, on account
of (or the setting apart of money for a sinking or other analogous fund
for) any shares of any class of capital stock of the Company or any of
its Subsidiaries now or hereafter outstanding, except a dividend payable
solely in shares of that class of stock to all of the holders of that
class, and except scheduled dividend payments with respect to the Series
A Preferred Stock; (b) any redemption, conversion, exchange, retirement,
sinking fund or similar payment, purchase or other acquisition for value,
direct or indirect, of any shares of any class of capital stock of the
Company or any of its Subsidiaries now or hereafter outstanding, except
the Debenture, Warrant, Joint Investor Warrants, Joint Investor
Debentures, and except the scheduled redemption of the Series A Preferred
Stock; (c) any payment or prepayment of principal of, premium, if any, or
interest on, or any redemption, conversion, exchange, purchase,
retirement or defeasance of, or payment with respect to, any Debt other
than with respect to the Debenture, Warrant, Joint Investor Warrants and
Joint Investor Debentures; and (d) any loan, advance or payment to any
officer, director or stockholder of the Company or any of its
Subsidiaries, exclusive of reasonable compensation and reimbursements
paid to officers or directors in the ordinary course of business.
Notwithstanding the foregoing, the issuance of securities upon exercise
or conversion of the Company's options, warrants or other convertible
securities outstanding as of the date hereof and set forth on Schedule
3.5 or the grant of additional options or warrants or the issuance of
additional securities, in each such case under any Company stock option
or restricted stock plan approved by the Board of Directors of the
Company, shall not be deemed to be a Restricted Payment.
"Series A Preferred Stock" means shares of the Company's Series A
Convertible Preferred Stock outstanding as of the date of this Agreement.
"Share Purchase Agreement" means the Share Purchase Agreement, dated
December 14, 2000, by and between the Purchaser and the Company.
"Subordinated Debt" means Debt of the Company which meets each of the
following requirements: (a) such Debt is wholly unsecured; and (b) such
Debt is contractually subordinated, as to payment, to the payment in full
of the Debentures and the Obligations on terms, and pursuant to written
agreements in form and substance, satisfactory to the Purchaser.
"Subordinated Debt Documents" means any and all agreements, documents and
instruments now or hereafter evidencing or governing the subordination of
any Subordinated Debt to the Obligations.
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"Subsidiary" means, with respect to any Person, any corporation or other
entity of which at least a majority of the outstanding shares of stock or
other ownership interests having by the terms thereof ordinary voting
power to elect a majority of the board of directors (or Persons
performing similar functions) of such corporation or entity (irrespective
of whether or not at the time, in the case of a corporation, stock of any
other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or
more of its Subsidiaries or by such Person and one or more of its
Subsidiaries.
"Trading Day" shall mean any day on which the Common Stock is purchased
and sold on the principal market on which the Common Stock is then
listed or traded.
"Transaction Documents" means the Purchaser Documents and the Joint
Investor Documents.
"VWAP" on a Trading Day means the volume weighted average price of the
Common Stock for such Trading Day as reported by Bloomberg Financial
Markets or, if Bloomberg Financial Markets is not then reporting such
prices, by a comparable reporting service of national reputation selected
by the holders of a majority of the principal amount of the then
outstanding Debentures.
1.3 Other Definitional Provisions. All definitions contained in this
Agreement are equally applicable to the singular and plural forms of the terms
defined. The words "hereof", "herein" and "hereunder" and words of similar
import referring to this Agreement refer to this Agreement as a whole and not
to any particular provision of this Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby makes the following representations and warranties to the
Company and agrees with the Company that, as of the date of this Agreement and
as of the date of each Closing:
2.1 Authorization; Enforceability. The Purchaser is duly organized, validly
existing and in good standing under the laws of the Federal Republic of
Germany with the requisite corporate power and authority to purchase the
Debentures and Warrants and to execute and deliver this Agreement. This
Agreement constitutes the Purchaser's valid and legally binding obligation,
enforceable against it in accordance with its terms, subject to (i) applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or
other similar laws of general application relating to or affecting the
enforcement of creditors' rights generally and (ii) general principles of
equity.
2.2 Not a U.S. Person. The Purchaser is not a U.S. Person (as defined in
Regulation S).
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2.3 Access to Information. The Purchaser has had access to information
regarding the business, operations and financial condition of the Company, and
the Company has granted to such Purchaser the opportunity to ask questions of
and receive answers from representatives of the Company, its officers,
directors, employees and agents concerning the Company and materials relating
to the terms and conditions of the purchase and sale of the Debenture and
Warrant hereunder.
2.4 Investment Purpose. The Purchaser is acquiring the Securities for its
own account, for investment purposes, and not with a view to obtaining control
of the Board of Directors of Ramtron.
2.5 Limitations on Disposition. The Purchaser acknowledges that, except as
provided in the Registration Rights Agreement, the Securities have not been
and are not being registered under the Securities Act and may not be
transferred or resold without registration under the Securities Act or in a
transaction exempt from or not subject to the Securities Act.
2.6 Legend. Such Purchaser understands that the certificates representing
the Securities may bear at issuance a restrictive legend in substantially the
following form:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or
the securities laws of any state, and may not be offered or sold unless a
registration statement under the Securities Act and applicable state
securities laws shall have become effective with regard thereto, or an
exemption from registration under the Securities Act and applicable state
securities laws is available in connection with such offer or sale."
Notwithstanding the foregoing, it is agreed that, as long as (A) the resale or
transfer (including without limitation a pledge) of any of the Securities is
registered pursuant to an effective registration statement, (B) such
Securities have been sold pursuant to Rule 144 under the Securities Act or any
successor provision ("Rule 144"), subject to receipt by the Company of
customary documentation in connection therewith, or (C) such Securities are
eligible for resale under Rule 144(k) or any successor provision, such
Securities shall be issued without any legend or other restrictive language
and, with respect to Securities upon which such legend is stamped, the Company
shall issue new certificates without such legend to the holder upon request.
2.7 No Trading in Company Securities. Neither the Purchaser nor any person
trading on its behalf or at its direction has engaged in any bids for, or
purchases or sales (whether covered or short) of, Common Stock or of any puts,
calls or other derivative securities of Common Stock during the period
beginning six (6) Trading Days prior to the date of this Agreement and ending
on the trading day immediately preceding the date of this Agreement.
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2.8 Fees. The Purchaser is not obligated to pay any compensation or other
fee, cost or related expenditure to any underwriter, broker, or finder in
connection with the transactions contemplated hereby. The Purchaser will
indemnify and hold harmless the Company from and against any claim by any
person or entity alleging that the Company is obligated to pay any such
compensation, fee, cost or related expenditure in connection with the
transactions contemplated hereby.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby makes
the following representations and warranties to the Purchaser and agrees with
the Purchaser that, as of the date of this Agreement and as of the date of the
Closing:
3.1 Organization, Good Standing and Qualification. Each of the Company and
its Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization and
has all requisite power and authority to carry on its business as now
conducted. Each of the Company and its Subsidiaries is duly qualified to
transact business and is in good standing in each jurisdiction in which it
conducts business except where the failure to so qualify has not had or would
not reasonably be expected to have a Material Adverse Effect.
3.2 Authorization; Consents. The Company has the requisite corporate power
and authority to enter into and perform its obligations under the Transaction
Documents, to issue and sell the Debenture and the Warrant to the Purchaser in
accordance with the terms hereof and thereof, to issue the Conversion Shares
upon conversion of the Debenture and to issue the Warrant Shares upon exercise
of the Warrant. All corporate action on the part of the Company by its
officers, directors and stockholders necessary for the authorization,
execution and delivery of, and the performance by the Company of its
obligations under, the Transaction Documents has been taken, and no further
consent or authorization of the Company, its Board of Directors, its
stockholders, any Governmental Authority or organization (other than such
approval as may be required under the Securities Act and applicable state
securities laws in respect of the Registration Rights Agreement), or any other
person or entity is required (pursuant to any rule of the National Association
of Securities Dealers ("NASD") or otherwise). The Company's Board of Directors
has determined, at a duly convened meeting, that the issuance and sale of the
Securities, and the consummation of the transactions contemplated hereby and
by the other Transaction Documents (including without limitation the issuance
of Conversion Shares in accordance with the terms of the Debenture and Warrant
Shares in accordance with the terms of the Warrant) are in the best interests
of the Company.
3.3 Enforcement. Each of the Transaction Documents constitutes the valid and
legally binding obligation of the Company, enforceable against it in
accordance with its terms, subject to (i) applicable bankruptcy, insolvency,
fraudulent transfer, moratorium, reorganization or other similar laws of
general application relating to or affecting the enforcement of creditors'
rights generally and (ii) general principles of equity.
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3.4 Disclosure Documents; Agreements; Financial Statements; Other
Information. The Company has, on or after December 31, 2000, filed with the
Commission all reports, schedules, registration statements and definitive
proxy statements that the Company was required to file with the Commission
(collectively, the "Disclosure Documents"). The Company is not aware of any
event occurring on or prior to the date of the this Agreement (other than the
transactions effected hereby) that would require the filing of, or with
respect to which the Company intends to file, a Form 8-K after the Closing.
Each Disclosure Document, as of the date of the filing thereof with the
Commission, complied in all material respects with the requirements of the
Securities Act or Exchange Act, as applicable, and the rules and regulations
promulgated thereunder and, as of the date of such filing (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date
of such filing), such Disclosure Document (including all exhibits and
schedules thereto and documents incorporated by reference therein) did not
contain any untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. All
documents required to be filed as exhibits to the Disclosure Documents have
been filed as required. Except as set forth in the Disclosure Documents or any
schedule or exhibit attached hereto, the Company has no liabilities,
contingent or otherwise, other than liabilities incurred in the ordinary
course of business which, under GAAP, are not required to be reflected in such
financial statements and which, individually or in the aggregate, are not
material to the consolidated business or financial condition of the Company
and its Subsidiaries taken as a whole. As of their respective dates, the
financial statements of the Company included in the Disclosure Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto. Such financial statements have been prepared in accordance
with GAAP consistently applied at the times and during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto, or (ii) in the case of unaudited interim statements, to the
extent they may exclude footnotes or may be condensed or summary statements)
and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end adjustments). The Company has not made any
filings with the Commission after March 7, 2002.
3.5 Capitalization; Debt Schedule. The capitalization of the Company as of
the date hereof, including its authorized capital stock, the number of shares
issued and outstanding, the number of shares issuable and reserved for
issuance pursuant to the Company's stock option plans, the number of shares
issuable and reserved for issuance pursuant to securities (other than the
Debenture and Warrant) exercisable for, or convertible into or exchangeable
for any shares of Common Stock and the number of shares initially to be
reserved for issuance upon conversion of the Debenture and exercise of the
Warrant is set forth on Schedule 3.5 hereto. All of such outstanding shares
of capital stock have been, or upon issuance will be, validly issued, fully
paid and non-assessable. Except as disclosed on Schedule 3.5 hereto, no shares
of the capital stock of the Company are subject to preemptive rights or any
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other similar rights of the stockholders of the Company or any Liens created
by or through the Company. Except as disclosed on Schedule 3.5, or as
contemplated herein, as of the date of this Agreement and as of the date of
such Closing, there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its Subsidiaries, or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
Subsidiaries (whether pursuant to anti-dilution, "reset" or other similar
provisions). Schedule 3.5 identifies all currently outstanding Debt of the
Company, all of which constitutes Subordinated Debt.
3.6 Due Authorization; Valid Issuance. The Debenture is duly authorized and,
when issued, sold and delivered in accordance with the terms hereof, (i) will
be duly and validly issued, fully paid and nonassessable, free and clear of
any Liens imposed by or through the Company and (ii) assuming the accuracy of
the Purchaser's representation in Section 2.2, will be issued, sold and
delivered in compliance with all applicable Federal and state securities laws.
The Warrant is duly authorized and, when issued, sold and delivered in
accordance with the terms hereof, (i) will be duly and validly issued, fully
paid and nonassessable, free and clear of any Liens imposed by or through the
Company and (ii) assuming the accuracy of the Purchaser's representation in
Section 2.2, will be issued, sold and delivered in compliance with all
applicable Federal and state securities laws. The Conversion Shares are duly
authorized and reserved for issuance and, when issued in accordance with the
terms of the Debenture, will be duly and validly issued, fully paid and
nonassessable, free and clear of any Liens imposed by or through the Company.
The Warrant Shares are duly authorized and reserved for issuance and, when
issued in accordance with the terms of the Warrant, will be duly and validly
issued, fully paid and nonassessable, free and clear of any Liens imposed by
or through the Company.
3.7 No Conflict with Other Instruments. Neither the Company nor any of its
Subsidiaries is in violation of any provisions of its Certificate of
Incorporation, Bylaws or any other governing document or in default (and no
event has occurred which, with notice or lapse of time or both, would
constitute a default) under any provision of any instrument or contract to
which it or any of its Property is a party or by which it is bound, or in
violation of any provision of any Governmental Requirement applicable to the
Company, except for violations of any provision of a Governmental Requirement
that which has not had or would not reasonably be expected to have a Material
Adverse Effect. The (i) execution, delivery and performance of this Agreement
and the other Transaction Documents and (ii) consummation of the transactions
contemplated hereby and thereby (including without limitation, the issuance of
the Debenture and the Warrant and the reservation for issuance and issuance of
the Conversion Shares and the Warrant Shares) will not result in any violation
referred to in the previous sentence or be in conflict with or constitute,
with or without the passage of time and giving of notice, either a default
under any such provision, instrument or contract or an event which results in
Page-12
the creation of any Lien upon any assets of the Company or of any of its
Subsidiaries or the triggering of any preemptive or anti-dilution rights
(including without limitation pursuant to any "reset" or similar provisions)
or rights of first refusal or first offer, or any other rights that would
allow or permit the holders of the Company's securities to purchase shares of
Common Stock or other securities of the Company (whether pursuant to a
shareholder rights plan provision or otherwise), on the part of holders of the
Company's securities, other than such rights as are disclosed on Schedule 3.7
hereto.
3.8 Financial Condition; Taxes; Litigation.
3.8.1 Except as disclosed on Schedule 3.8 hereto, the Company's financial
condition is as described in the Disclosure Documents, except for
changes in the ordinary course of business and normal year-end
adjustments that are not, in the aggregate, materially adverse to
the consolidated business or financial condition of the Company
and its Subsidiaries taken as a whole. Except as otherwise
described in the Disclosure Documents, there has been no (i)
material adverse change to the Company's business, operations,
properties, financial condition, prospects or results of
operations since the date of the Company's most recent audited
financial statements contained in the Disclosure Documents or (ii)
change by the Company in its accounting principles, policies and
methods except as required by changes in GAAP.
3.8.2 The Company and each of its Subsidiaries has prepared in good
faith and duly and timely filed all tax returns required to be
filed by it and all such tax returns are complete and accurate in
all material respects and the Company and each of its Subsidiaries
has paid all taxes required to have been paid by it, except for
taxes which it reasonably disputes in good faith or the failure of
which to pay which has not had or would not reasonably be expected
to have a Material Adverse Effect. The Company has no liability
with respect to taxes that accrued on or before December 31, 2000
in excess of the amounts accrued with respect thereto that are
reflected in the financial statements included in the Disclosure
Documents filed prior to the date hereof.
3.8.3 Neither the Company nor any of its Subsidiaries is the subject of
any pending or, to the Company's knowledge, threatened inquiry,
investigation or administrative or legal proceeding by the
Internal Revenue Service, the taxing authorities of any state or
local jurisdiction, the Commission or any state securities
commission or other governmental or regulatory entity.
Page-13
3.8.4 Except as described in the Disclosure Documents, there is no
material claim, litigation or administrative proceeding pending,
or, to the Company's knowledge, threatened or contemplated,
against the Company or any of its Subsidiaries, or against any
officer, director or employee of the Company or any such
Subsidiary in connection with such person's employment therewith.
Neither the Company nor any of its Subsidiaries is a party to or
subject to the provisions of, any order, writ, injunction,
judgment or decree of any court or government agency or
instrumentality which has had or would reasonably be expected to
have a Material Adverse Effect.
3.9 Reporting Company; Form S-3. The Company is subject to the reporting
requirements of the Exchange Act, has a class of securities registered under
Section 12 of the Exchange Act, and has filed all reports required thereby in
compliance with the Exchange Act. The Company is eligible to register
securities on a registration statement on Form S-3 under the Securities Act.
To the Company's knowledge, there exist no facts or circumstances (including
without limitation any required approvals or waivers of any circumstances that
may delay or prevent the obtaining of accountant's consents) that could
reasonably be expected to prohibit or delay the preparation and filing of a
registration statement on Form S-3 that will be available for the resale of
all Conversion Shares and Warrant Shares by the Purchaser.
3.10 Acknowledgement of Dilution. The Company acknowledges that the issuance
of the Conversion Shares upon conversion of the Debenture and the issuance of
the Warrant Shares upon exercise of the Warrant may result in dilution of the
outstanding shares of Common Stock, which dilution may be substantial under
certain market conditions. The Company further acknowledges its obligation to
issue Conversion Shares upon conversion of the Debenture in accordance with
the terms of the Debenture, and to issue Warrant Shares upon exercise of the
Warrants in accordance with the terms of the Warrants, regardless of the effect
of any such dilution.
3.11 Intellectual Property. Except as described in the Disclosure Documents,
the Company and its Subsidiaries each owns or possesses all Intellectual
Property that is necessary or appropriate for the operation of its businesses
as presently conducted and as proposed to be conducted, without any known
conflict with the rights of others. The consummation of the transactions
contemplated by this Agreement and the other Transaction Documents will not
materially alter or impair, individually or in the aggregate, any of such
rights of the Company. To the Company's knowledge, except as described in the
Disclosure Documents, none of its planned or current products or services
infringes upon any Intellectual Property of any other Person, and no claim or
litigation is pending or, to the knowledge of the Company, threatened against
the Company contesting its right to sell or otherwise use any product or
material or service which has had or would reasonably be expected to have a
Material Adverse Effect. Except as described in the Disclosure Documents,
there is no violation by the Company with respect to any material Intellectual
Property owned or used by the Company. Except as described in the Disclosure
Documents, the Company's rights to such Intellectual Property are valid and
enforceable and no registration relating thereto has lapsed, expired or
terminated or is the subject of any claim or proceeding that could result in
any such lapse, expiration or termination. The Company and its Subsidiaries
each has complied in all material respects with its obligations pursuant to any
agreement relating to the Intellectual Property Rights that are the subject of
licenses granted by third parties.
Page-14
3.12 Registration Rights; Rights of Participation. Except as described on
Schedule 3.12 hereto and in the Joint Investor Registration Rights Agreement,
(A) the Company has not granted or agreed to grant to any person or entity any
rights (including "piggy-back" registration rights) to have any securities of
the Company registered with the Commission or any other governmental authority
which has not been satisfied and (B) no person or entity, including, but not
limited to, current or former stockholders of the Company, underwriters,
brokers, agents or other third parties, has any right of first refusal,
preemptive right, right of participation, anti-dilutive right or any similar
right to participate in, or to receive securities of the Company or other
consideration as a result of, the transactions contemplated by this Agreement
or the other Transaction Documents.
3.13 Solicitation; Other Issuances of Securities. Neither the Company nor
any of its Subsidiaries or Affiliates, nor any person acting on its or their
behalf, (i) has engaged in directed selling efforts (within the meaning of
Regulation S) in connection with the offer or sale of the Securities,
(ii) has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under any circumstances that would
require registration of the Securities under the Securities Act or (iii) has
issued any shares of Common Stock or shares of any series of preferred stock
or other securities or instruments convertible into, exchangeable for or
otherwise entitling the holder thereof to acquire shares of Common Stock which
would be integrated with the sale of the Securities to the Purchaser or the
issuance of the Conversion Shares for purposes of the Securities Act or of any
applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of the NASD, nor will the Company or any of
its Subsidiaries or Affiliates take any action or steps that would require
registration of any of the Securities under the Securities Act or cause the
offering of the Securities to be so integrated with other offerings.
3.14 Fees. Except as described on Schedule 3.14 hereto, the Company is not
obligated to pay any compensation or other fee, cost or related expenditure to
any underwriter, broker, agent or other representative in connection with the
transactions contemplated hereby. The Company will indemnify and hold harmless
the Purchaser from and against any claim by any person or entity alleging that
the Purchaser is obligated to pay any such compensation, fee, cost or related
expenditure in connection with the transactions contemplated hereby.
3.15 Foreign Corrupt Practices. To the knowledge of the Company, neither the
Company, nor any of its Subsidiaries nor any director, officer, agent,
employee or other person acting on behalf of the Company or any Subsidiary,
has (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity,
(ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee, or (iii) violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign
or domestic government official or employee.
Page-15
3.16 Key Employees. Each person whose name is set forth on Schedule 3.16
(each, a "Key Employee") is currently serving in the capacity indicated on
such schedule on a full-time basis. The Company has no knowledge of any fact
or circumstance (including without limitation (i) the terms of any agreement
to which such person is a party or any litigation in which such person is or
may become involved and (ii) any illness or medical condition that could
reasonably be expected to result in the disability or incapacity of such
person) that would limit or prevent any such person from serving in such
capacity on a full-time basis in the foreseeable future, or of any intention
on the part of any such person to limit or terminate his or her employment
with the Company. No Key Employee has borrowed money pursuant to a currently
outstanding loan that is secured by Common Stock or any right or option to
receive Common Stock.
3.17 Environment. Except as disclosed in the Disclosure Documents (i) the
Company and its Subsidiaries have no environmental liabilities, nor do any
factors exist that are reasonably likely to give rise to any environmental
liability, affecting any of the properties of the Company or any of its
Subsidiaries that, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect and (ii) neither the
Company nor any of the Subsidiaries has violated any environmental law
applicable to it now or previously in effect, other than such violations or
infringements that, individually or in the aggregate, have not had and would
not reasonably be expected to have a Material Adverse Effect.
3.18 ERISA. Except as described on Schedule 3.18, the Company does not
maintain or contribute to, or have any obligation under, any Pension Plan.
The Company is in compliance in all material respects with the presently
applicable provisions of ERISA and the United States Internal Revenue Code of
1986, as amended, with respect to each Pension Plan except in any such case
for any such matters that, individually or in the aggregate, have not had, and
would not reasonably be expected to have, a Material Adverse Effect.
3.19 Disclosure. No written statement, information, report, representation
or warranty made by the Company in any Transaction Document or furnished to
such Purchaser by or on behalf of the Company in connection with (i) the
Transaction Documents, (ii) any transaction contemplated hereby or thereby, or
(iii) such Purchaser's due diligence investigation of the Company contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements herein or therein, in light of the
circumstances in which made, not misleading. There is no fact known to the
Company which has had a Material Adverse Effect, and there is no fact known to
the Company which could reasonably be expected to have a Material Adverse
Effect except as may have been disclosed in writing to such Purchaser. The
Company has not disclosed to such Purchaser any event, circumstance or fact
that would constitute material non-public information as of the date of this
Agreement.
Page-16
3.20 Insurance. The Company maintains insurance for itself and its
Subsidiaries in such amounts and covering such losses and risks as is
reasonably prudent and customary in the businesses in which the Company and
its Subsidiaries are engaged. No notice of cancellation has been received for
any of such policies and the Company is in compliance with all of the terms
and conditions thereof. The Company has no reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business without a significant increase in cost.
Without limiting the generality of the foregoing, the Company maintains
Director's and Officer's insurance in an amount not less than $5 million for
each covered occurrence.
3.21 Property. The Company and its Subsidiaries have good and marketable
title in fee simple to all Real Property and good and marketable title to all
personal Property owned by them which is material to the business of the
Company and its Subsidiaries, in each case free and clear of all Liens, except
for Permitted Liens and the Deed of Trust. Any Property held under lease by
the Company and its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made or proposed to be made of such Property by the
Company and its Subsidiaries. Schedule 3.21 sets forth all of the real
Property owned by the Company or any of its Subsidiaries.
3.22 Regulatory Permits. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
4. COVENANTS OF THE COMPANY AND THE PURCHASER.
4.1 The Company agrees with the Purchaser that it will, following the
Closing:
(a) take such action as the Company reasonably determines upon the
advice of counsel is necessary to qualify the Debenture and Warrant
issued at the Closing for sale under applicable state or "blue-sky"
laws or obtain an exemption therefrom, and shall provide evidence of
any such action to the Purchaser at the Purchaser's request; and
(b) (i) issue a press release describing the transactions contemplated
by this Agreement and the other Transaction Documents on or before
the Business Day following the date of this Agreement and (ii) file
with the Commission a Form 8-K describing the terms of the
transactions contemplated by this Agreement and the other
Transaction Documents, with this Agreement attached to such Form 8-K
as an exhibit thereto, on or before the third (3rd) Business Day
following the Closing Date in the form required by the Exchange Act;
provided, that the Purchaser shall have a reasonable opportunity to
review and comment on any and all such press releases or Current
Reports on Form 8-K prior to the issuance or filing thereof.
Page-17
4.2 The Company agrees that it will, as long as the Purchaser or any
Affiliate of the Purchaser beneficially owns any Securities:
(a) maintain its corporate existence in good standing;
(b) maintain, keep and preserve all of its Properties necessary in the
proper conduct of its businesses in good repair, working order and
condition (ordinary wear and tear excepted) and make all necessary
repairs, renewals and replacements and improvements thereto, except
where the failure to do so would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
(c) pay or discharge before becoming delinquent (a) all taxes, levies,
assessments and governmental charges imposed on it or its income or
profits or any of its Property and (b) all lawful claims for labor,
material and supplies, which, if unpaid, might become a Lien upon
any of its Property, except where the failure to do so would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect; provided, however, that the Company shall
not be required to pay or discharge any tax, levy, assessment or
governmental charge, or claim for labor, material or supplies, whose
amount, applicability or validity is being contested in good faith
by appropriate proceedings being diligently pursued and for which
adequate reserves have been established under GAAP;
(d) comply with all Governmental Requirements applicable to the
operation of its business, except for instances of noncompliance
that would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect;
(e) comply with all agreements, documents and instruments binding on it
or affecting its Properties or business, including, without
limitation, all Material Contracts, except for instances of
noncompliance that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
(f) provide such Purchaser with copies of all materials sent to its
stockholders, in each such case promptly after the filing thereof
with the Commission; and
(g) timely file with the Commission all reports required to be filed
pursuant to the Exchange Act and refrain from terminating its status
as an issuer required by the Exchange Act to file reports thereunder
even if the Exchange Act or the rules or regulations thereunder
would permit such termination.
Page-18
4.3 Reservation of Common Stock. The Company shall, on the Closing Date,
have authorized and reserved for issuance, free from any preemptive rights, a
number of shares of Common Stock at least equal to one hundred and fifty
percent (150%) of the maximum number of shares of Common Stock issuable upon
(A) conversion of the outstanding Debenture and Joint Investor Debentures
(collectively, the "Investment Debentures") in full at the Conversion Price
then in effect and (B) exercise of the outstanding Warrant and Joint Investor
Warrants (collectively, the "Investment Warrants") in full at the Exercise
Price then in effect, in each such case without regard to any limitation or
restriction on such conversion or exercise that may be set forth in the
Investment Debentures or the Investment Warrants (the "Reserved Amount"). In
the event that, as a result of an adjustment to the Conversion Price of the
Investment Debentures or the Exercise Price for the Investment Warrants
(pursuant to anti-dilution adjustments or otherwise), or both, the Reserved
Amount is less than 125% of the number of shares of Common Stock then issuable
upon conversion of all of the Investment Debentures and exercise of all of the
Investment Warrants then outstanding (without regard to any limitation or
restriction on such conversion or exercise that may be set forth in the
Investment Debentures or the Investment Warrants), the Company shall as soon
as practicable (but in no event later than the tenth (10th) Business Day or,
in the event that stockholder approval is required, the ninetieth (90th) day
following such date) increase the Reserved Amount to no less than 150% of the
number of shares of Common Stock into which such outstanding Investment
Debentures are then convertible and such outstanding Investment Warrants are
exercisable. The Company shall not reduce the number of shares reserved for
issuance hereunder and allocated to the Purchaser without the written consent
of the Purchaser. The initial Reserved Amount shall be allocated pro rata among
the Purchaser and the Joint Investors (together with the Purchaser, the
"Investors") based on the principal amount of the Investment Debentures. Any
increase in the Reserved Amount shall be allocated pro rata among the Investors
based on the principal amount of the Investment Debentures held by each
Investor at the time of such increase. In the event that any Investor shall
sell or otherwise transfer any of such Investor's Investment Debenture, each
transferee shall be allocated a pro rata portion of such transferor's Reserved
Amount. Any portion of the Reserved Amount which remains allocated to any
person or entity which does not hold any Investment Debentures shall be
reallocated to the remaining Investors pro rata based on the principal amount
of the Debentures then held by such Investors.
4.4 Use of Proceeds. The Company shall use the proceeds from the sale of the
Debentures and Warrants for general corporate purposes only, in the ordinary
course of its business and consistent with past practice
4.5 No Debt, Liens. At all times following the date of this Agreement and
while any Obligation is outstanding, the Company shall refrain, and shall
ensure that each of its Subsidiaries refrains, from (i) other than as set
forth on Schedule 4.5, incurring any Debt or increasing the amount of any
existing line of credit or other Debt facility beyond the amount outstanding
on the date hereof (other than, in either such case, with respect to
Subordinated Debt) and (ii) other than as set forth on Schedule 4.5, granting,
Page-19
establishing or maintaining any Lien on any of its assets, including without
limitation any pledge of securities owned or held by it (including without
limitation any securities issued by any such Subsidiary), other than Permitted
Liens (including the imposition of any mechanic's, tax or similar statutory
lien after the Closing Date, provided that, upon the imposition of any such
lien, the Company shall notify the Purchaser thereof and shall use
commercially reasonable efforts to remove such lien as soon as practicable
(including without limitation contesting such lien in good faith by
appropriate proceedings)).
4.6 Restricted Payments. As long as any Obligations are outstanding, the
Company will not, nor will it permit any Subsidiary of the Company to, make
any Restricted Payments, except that:
(a) the Company may make regularly scheduled payments of principal and
interest accrued on any Subordinated Debt if and to the extent (but
only if and to the extent) permitted by the express terms of the
Subordinated Debt Documents governing such Subordinated Debt, which
terms shall have been expressly approved in writing by the
Purchaser; and
(b) Subsidiaries of the Company may make Restricted Payments to the
Company; provided, however, that no Restricted Payments may be made
pursuant to clause (a) or (b) preceding if a Default exists at the
time of such Restricted Payment or would result therefrom.
4.7 Transactions with Affiliates. As long as any Obligations are
outstanding, the Company will not, nor will it permit any Subsidiary of the
Company to, enter into any transaction, including, without limitation, the
purchase, sale or exchange of Property or the rendering of any service, with
any Affiliate of the Company (other than Enhanced Memory Systems, Inc. and
Mushkin Inc.) except with the prior written approval of the Purchaser.
4.8 Disposition of Property. As long as any Obligations are outstanding, the
Company will not, nor will it permit any Subsidiary of the Company to, sell,
lease, assign, transfer or otherwise dispose of any of its Property, except
(i) dispositions of inventory by the Company and its Subsidiaries in the
ordinary course of business, (ii) expenditures of money (including, without
limitation, money held in deposit accounts) made in the ordinary course of
business or for the purpose of making Restricted Payments expressly permitted
in accordance with this Agreement or investments expressly permitted in
accordance with this Agreement and (iii) licenses granted and development
agreements entered into with respect to its Intellectual Property to third
parties in the ordinary course of business and consistent with past practice.
4.9 Certain Transactions. As long as any Obligations are outstanding, and
except as may be expressly permitted or required by the Transaction Documents,
the Company will not, nor will it permit any Subsidiary of the Company to,
create or otherwise cause or permit to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of the
Company or any Subsidiary of the Company to (a) pay dividends or make any
Page-20
other distribution to the Company or any Subsidiary of the Company in respect
of capital stock or with respect to any other interest or participation in, or
measured by, its profits, (b) pay any indebtedness owed to the Company or any
Subsidiary of the Company, (c) make any loan or advance or capital
contribution to the Company or any Subsidiary of the Company, (d) sell, lease
or transfer any of its Property to the Company or any Subsidiary of the
Company, or (e) xxxxx x Xxxx on any of its Properties.
4.10 Modification of Certain Agreements. As long as any Obligations are
outstanding, the Company will not, nor will it permit any of its Subsidiaries
to, consent to or implement any termination, amendment, modification,
supplement or waiver of (a) the certificate or articles of incorporation,
articles of organization, bylaws, regulations or other constitutional
documents of the Company or any such Subsidiary or (b) any Material Contract
to which it is a party; provided, however, that any of such documents may be
amended or modified if and to the extent that such amendment or modification
is not materially adverse to the Company or any Purchaser.
4.11 Transactions with Affiliates. The Company agrees that any transaction or
arrangement between it or any of its Subsidiaries and any Affiliate or
employee of the Company shall be effected on an arms' length basis and shall
be approved by a majority of the Company's independent directors (provided
that the directors designated by the Purchaser shall be deemed to be an
independent director for purposes of this Section 4.11).
4.12 Quotation on Nasdaq. The Company shall (i) promptly following the
Closing, take such action as may be necessary to include all of the Conversion
Shares and Warrant Shares that may be issued by the Company (or such surviving
entity) under the Debentures and Warrants on the Nasdaq National Market, and
(ii) use its commercially reasonable efforts to maintain the designation and
quotation, or listing, of the Common Stock on the Nasdaq Stock Market or the
New York Stock Exchange for a minimum of five (5) years following the Closing
Date.
4.13 Management Restrictions. During the period beginning on the date of this
Agreement and ending on the tenth (10th) Business Day following the first
Effective Date (as defined in the Joint Investor Registration Rights
Agreement) to occur following such date, no Key Employee may, directly or
indirectly, sell, transfer or otherwise dispose of (whether through the
writing or purchase of options, futures or derivative instruments), or
publicly announce (whether through the filing of a notice or otherwise) such
individual's intention to dispose of, any Common Stock held or beneficially
owned by such individual.
4.14 Use of Purchaser Name. Except as may be required by applicable law, the
Company shall not use, directly or indirectly, the Purchaser's name or the
name of any of its affiliates in any advertisement, announcement, press
release or other similar communication unless it has received the prior
written consent of any Purchaser for the specific use contemplated or as
otherwise required by applicable law or regulation.
Page-21
4.15 Company's Instructions to Transfer Agent. On or prior to the Closing
Date, the Company shall execute and deliver irrevocable written instructions
to the transfer agent for its Common Stock (the "Transfer Agent"), and provide
the Purchaser with a copy thereof, directing the Transfer Agent (i) to issue
certificates representing Conversion Shares upon conversion of the Debentures
and receipt of a valid Conversion Notice (as defined in the Debentures) from a
Purchaser, in the amount specified in such Conversion Notice, in the name of
such Purchaser or its nominee, (ii) to issue certificates representing Warrant
Shares upon exercise of the Warrants and (iii) to deliver such certificates to
such Purchaser no later than the close of business on the third (3rd) Business
Day following the related Conversion Date (as defined in the Debentures) or
Exercise Date (as defined in the Warrant), as the case may be. Such
certificates may bear legends pursuant to applicable provisions of this
Agreement or applicable law. As long as the Company shall instruct the
transfer agent that, in lieu of delivering physical certificates representing
shares of Common Stock to a Purchaser upon conversion of the Debentures, or
exercise of the Warrants, and as long as the Transfer Agent is a participant
in the Depository Trust Company ("DTC") Fast Automated Securities Transfer
program, and such Purchaser has not informed the Company that it wishes to
receive physical certificates therefor, and no legend is required to appear on
any physical certificate if issued, the transfer agent may effect delivery of
Conversion Shares or Warrant Shares, as the case may be, by crediting the
account of such Purchaser or its nominee at DTC for the number of shares for
which delivery is required hereunder within the time frame specified above for
delivery of certificates. The Company represents to and agrees with the
Purchaser that it will not give any instruction to the Transfer Agent that
will conflict with the foregoing instruction or otherwise restrict such
Purchaser's right to convert the Debentures or to receive Conversion Shares in
accordance with the terms of the Debentures or to exercise the Warrant or to
receive Warrant Shares upon exercise of the Warrants. In the event that the
Company's relationship with the Transfer Agent should be terminated for any
reason, the Company shall use its best efforts to cause the Transfer Agent to
continue acting as transfer agent pursuant to the terms hereof until such time
that a successor transfer agent is appointed by the Company and receives the
instructions described above.
4.16 Right of First Refusal. Prior to any offer or sale by the Company of
Common Stock (or any securities convertible or exercisable into or
exchangeable for Common Stock) during the one (1) year period following the
Closing Date (the "First Offer Period"), the Company must first deliver to the
Purchaser written notice describing the proposed issuance, including the terms
and conditions thereof, and provide such Purchaser with an option (the "Right
of First Refusal") during the five (5) Business Day period following delivery
of such notice to purchase up to its proportionate share (based on the
principal amount of the Investment Debentures purchased by the Purchaser
hereunder and by the Joint Investors under the Joint Investor Securities
Purchase Agreement) of the securities being offered on the same terms as
contemplated by such issuance. In the event that the Purchaser either does
not give notice within such five Business Day period that it intends to
exercise the foregoing option or informs the Company in writing that it does
Page-22
not intend to participate in such issuance, the Company may offer to a third
party the option to purchase up to, in the aggregate, the amount of securities
which were declined by the Purchaser, on the same terms as were offered to the
Purchaser. The Right of First Refusal is in addition to any other rights of
the Purchaser granted to it pursuant to the Share Purchase Agreement and shall
not apply to any transaction involving the issuance of Common Stock in a
firm-commitment underwritten registered public offering or pursuant to the
exercise of any option or warrant outstanding prior to the date hereof or to
the issuance of Common Stock, or options or rights exercisable into Common
Stock, pursuant to a stock plan or stock option plan duly adopted by the
Company prior to the date hereof.
4.17 No Adverse Action. The Company and its Subsidiaries shall refrain, while
any Debentures are outstanding, from taking any action or entering into any
arrangement which in any way materially and adversely affects (i) the rights,
privileges or benefits available to a holder of a Debenture or (ii) the
rights, privileges or benefits available to a holder of a Warrant.
5. CONDITIONS TO CLOSING.
5.1 Conditions to Purchaser's Obligations at the Closing. The Purchaser's
obligations to effect the Closing, including without limitation its obligation
to purchase a the Debenture and Warrant at the Closing, are conditioned upon
the fulfillment (or waiver by such Purchaser) of each of the following events
as of the Closing Date:
5.1.1 the representations and warranties of the Company set forth in
this Agreement shall be true and correct in all respects as of
such date as if made on such date (except that to the extent that
any such representation or warranty relates to a particular date,
such representation or warranty shall be true and correct in all
respects as of that particular date);
5.1.2 the Company shall have complied with or performed in all material
respects all of the agreements, obligations and conditions set
forth in this Agreement and the Joint Investor Securities Purchase
Agreement that are required to be complied with or performed by
the Company on or before such Closing;
5.1.3 the Closing Date shall occur on a date that is not later than
March 25, 2002;
5.1.4 the Company shall have delivered to the Purchaser a certificate,
signed by the Chief Executive Officer and Chief Financial Officer
of the Company, certifying that the conditions specified in this
paragraph 5.1 have been fulfilled as of the Closing, it being
understood that the Purchaser may rely on such certificate as
though it were a representation and warranty of the Company made
herein;
Page-23
5.1.5 the Company shall have delivered to the Purchaser an opinion of
counsel for the Company, dated as of such date, in substantially
the form set forth on Exhibit 5.1.5 hereto;
5.1.6 the Company shall have delivered to the Purchaser the Debenture
and the Warrant;
5.1.7 the Company shall have executed and delivered Amendment No. 1;
5.1.8 the Company shall have executed and delivered the Security
Agreement in the form satisfactory to the Purchaser and made any
requisite filings with respect thereto with the appropriate
Governmental Authorities, and shall have provided such purchaser
with reasonable evidence thereof, and the Purchaser shall have
received an opinion of counsel satisfactory to the Purchaser with
respect to the validity of the Security Agreement;
5.1.9 the Common Stock shall be quoted and actively traded on the Nasdaq
National Market System;
5.1.10 there shall have been no material adverse change in the Company's
consolidated business or financial condition since the date of
the Company's most recent audited financial statements contained
in the Disclosure Documents;
5.1.11 the Company shall have authorized and reserved for issuance at
least one hundred and fifty percent (150%) of the aggregate
number of shares of Common Stock issuable upon conversion of all
of the Investment Debentures and exercise of all of the
Investment Warrants to be issued at the Initial Closing (such
number to be determined using the Conversion Price and Exercise
Price in effect on the Initial Closing Date and without regard to
any restriction on the ability of a holder to convert the
Investment Debentures or exercise the Investment Warrants as of
such date);
5.1.12 there shall be no injunction, restraining order or decree of any
nature of any court or Government Authority of competent
jurisdiction that is in effect that restrains or prohibits the
consummation of the transactions contemplated hereby and by the
Transaction Documents; and
5.1.13 each of the Company's executive officers shall have executed and
delivered a letter agreement addressed to such Purchaser
regarding such person's agreement to refrain from selling such
person's holdings of Common Stock consistent with the Company's
covenant contained in Section 4.13 hereof.
5.2 Conditions to Company's Obligations at the Closing. The Company's
obligations to effect the Closing are conditioned upon the fulfillment or
waiver by the Company of each of the following events as of the date of such
Closing:
Page-24
5.2.1 the representations and warranties of the Purchaser shall be true
and correct in all respects as of such date as if made on such
date (except that to the extent that any such representation or
warranty relates to a particular date, such representation or
warranty shall be true and correct in all respects as of that
particular date);
5.2.2 the Purchaser shall have complied with or performed all of the
agreements, obligations and conditions set forth in this Agreement
that are required to be complied with or performed by the
Purchaser on or before such Closing;
5.2.3 the Conversion Price (as defined in the Debentures) shall not be
less than four dollars ($4.00);
5.2.4 the Closing Date shall occur on a date that is not later than
March 25, 2002;
5.2.5 the Purchaser shall have executed and delivered SPA Amendment
No. 1; and
5.2.6 there shall be no injunction, restraining order or decree of any
nature of any court or Government Authority of competent
jurisdiction that is in effect that restrains or prohibits the
consummation of the transactions contemplated hereby and by the
Transaction Documents.
6. INDEMNIFICATION
6.1 Indemnification of the Company. Subject to the limitations contained in
this Section, Purchaser shall defend, indemnify and hold harmless the Company
and its respective officers, directors, stockholders, employees and agents
from and against any and all losses, claims, judgments, liabilities, demands,
charges, suits, penalties, costs or expenses, including court costs and
attorneys' fees ("Claims and Liabilities") with respect to or arising from
(i) the breach of any warranty or any inaccuracy of any representation made by
Purchaser in this Agreement, or (ii) the breach of any covenant or agreement
made by Purchaser in this Agreement.
6.2 Indemnification of Purchaser. Subject to the limitations contained in
this Section, the Company shall defend, indemnify and hold harmless Purchaser
and its respective officers, directors, stockholders, employees and agents
from and against any and all Claims and Liabilities with respect to or arising
from (i) the breach of any warranty or any inaccuracy of any representation
made by the Company in this Agreement, or (ii) the breach of any covenant or
agreement made by the Company in this Agreement.
6.3 Limitations on Indemnification.
Page-25
6.3.1 Notwithstanding anything to the contrary contained herein, neither
Purchaser, on the one hand, nor the Company, on the other hand,
shall indemnify the other, as applicable, or any of their
respective subsidiaries or any directors, officers, employees or
agents of any of the foregoing, as applicable, for any Claims and
Liabilities which such party(ies) would otherwise be entitled to
indemnification pursuant to Section 6.1 or 6.2, unless the
aggregate amount of all such Claims and Liabilities incurred by
such party(ies) exceeds $100,000 (the "Deductible Amount"), in
which event such party(ies) shall be liable only for the amount of
such Claims and Liabilities which exceeds the Deductible Amount;
provided, that the aggregate liability of Purchaser, on the one
hand, and the Company, on the other hand, under this Section
(other than with respect to any intentional or willful breach or
failure to perform) shall in no event exceed $3,000,000.
6.3.2 Anything to the contrary notwithstanding, neither Purchaser, on
the one hand, nor the Company, on the other hand, shall indemnify
the other, as applicable, or any of their respective subsidiaries
or any directors, officers, employees or agents of any of the
foregoing, as applicable, in respect of any Claims and Liabilities
which are covered by insurance owned by such party(ies) to the
extent that any net loss is reduced by such insurance. To the
extent quantifiable, the parties shall make appropriate
adjustments to take into account the tax benefits or costs in
determining the amount of indemnification to be provided
hereunder.
6.4 Claims Procedure. In respect of any third-party claims for which
indemnification is sought hereunder, promptly after the receipt by any
indemnified party (the "Indemnitee") of notice of the commencement of any
action or proceeding against such Indemnitee, such Indemnitee shall, if a
claim with respect thereto is or may be made against any indemnifying party
(the "Indemnifying Party") pursuant to this Section, give such Indemnifying
Party written notice of the commencement of such action or proceeding and give
such Indemnifying Party a copy of such claim and/or process and all legal
pleadings in connection therewith. The failure to give such notice shall not
relieve any Indemnifying Party of any of its indemnification obligations
contained in this Section 6, except where, and solely to the extent that, such
failure actually and materially prejudices the rights of such Indemnifying
Party. Such Indemnifying Party shall have, upon request within thirty (30)
days after receipt of such notice, but not in any event after the settlement
or compromise of such claim, the right to defend, at his or its own expense
and by his or its own counsel reasonably acceptable to the Indemnitee, any
such matter involving the asserted liability of the Indemnitee. In any event,
the Indemnitee, such Indemnifying Party and its counsel shall cooperate in the
defense against, or compromise of, any such asserted liability, and in cases
where the Indemnifying Party shall have assumed the defense, the Indemnitee
shall have the right to participate in the defense of such asserted liability
at the Indemnitee's own expense. In the event that such Indemnifying Party
Page-26
shall decline to participate in or assume the defense of such action, prior to
paying or settling any claim against which such Indemnifying Party is, or may
be, obligated under this Section to indemnify an Indemnitee, the Indemnitee
shall first supply such Indemnifying Party with a copy of a final court
judgment or decree holding the Indemnitee liable on such claim or, failing
such judgment or decree, the terms and conditions of the settlement or
compromise of such claim. An Indemnity's failure to supply such final court
judgment or decree or the terms and conditions of a settlement or compromise
to such Indemnifying Party shall not relieve such Indemnifying Party of any of
its indemnification obligations contained in this Section 6, except where, and
solely to the extent that, such failure actually and materially prejudices the
rights of such Indemnifying Party. If the Indemnitee is defending the claim as
set forth above, the Indemnitee shall have the right to settle or compromise
any claim against it after consultation with, but without the prior approval
of, any Indemnifying Party; provided, however, that such settlement or
compromise shall not, unless consented to in writing by such Indemnifying
Party, which shall not be unreasonably withheld, be conclusive as to the
liability of such Indemnifying Party to the Indemnitee. If the Indemnifying
Party is defending the claim as set forth above, the Indemnifying Party shall
have the right to settle the claim only with the consent of the Indemnitee;
provided, however, that if the Indemnitee shall fail to consent to the
settlement of such a claim by the Indemnifying Party, which settlement (i) the
claimant has indicated it will accept, and (ii) includes an unconditional
release of the Indemnitee and its affiliates by the claimant and imposes no
material restrictions on the future activities of the Indemnitee and its
affiliates, the Indemnifying Party shall have no liability with respect to any
payment required to be made to such claimant in respect of such claim in
excess of the proposed amount of settlement.
6.5 Treatment of Indemnity Payments. Any payments pursuant to this Section
shall be made by wire transfer of immediately available funds.
6.6 Exclusive Remedy. Each of the parties hereto acknowledges and agrees
that, from and after the Closing Date, its sole and exclusive monetary remedy
with respect to any and all claims relating to the subject matter of this
Agreement shall be pursuant to the indemnification provisions set forth in
this Section, except that nothing in this Agreement shall be deemed, to
constitute a waiver of (A) any injunctive or other equitable remedies or (B)
any tort claims of, or causes of action arising from, intentional or
fraudulent misrepresentation or deceit.
7. MISCELLANEOUS.
7.1 Survival; Severability. The representations, warranties, covenants and
indemnities made by the parties herein shall survive each Closing
notwithstanding any due diligence investigation made by or on behalf of the
party seeking to rely thereon. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force
and effect without said provision; provided that in such case the parties
shall negotiate in good faith to replace such provision with a new provision
which is not illegal, unenforceable or void, as long as such new provision
does not materially change the economic benefits of this Agreement to the
parties.
Page-27
7.2 Successors and Assigns. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement. The Purchaser may assign its rights and
obligations hereunder, in connection with any private sale or transfer of the
Debenture or Warrant in accordance with the terms hereof, as long as, as a
condition precedent to such transfer, the transferee executes an
acknowledgment agreeing 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. The
Company may not assign it rights or obligations under this Agreement.
7.3 No Reliance. Each party acknowledges that (i) it has such knowledge in
business and financial matters as to be fully capable of evaluating this
Agreement, the other Transaction Documents and the transactions contemplated
hereby and thereby, (ii) it is not relying on any advice or representation of
any other party in connection with entering into this Agreement, the other
Transaction Documents or such transactions (other than the representations
made in this Agreement or the other Transaction Documents), (iii) it has not
received from such party any assurance or guarantee as to the merits (whether
legal, regulatory, tax, financial or otherwise) of entering into this
Agreement or the other Transaction Documents or the performance of its
obligations hereunder and thereunder, and (iv) it has consulted with its own
legal, regulatory, tax, business, investment, financial and accounting
advisors to the extent that it has deemed necessary, and has entered into this
Agreement and the other Transaction Documents based on its own independent
judgment and on the advice of its advisors as it has deemed necessary, and not
on any view (whether written or oral) expressed by such other party.
7.4 Injunctive Relief. The Company acknowledges and agrees that a breach by
it of its obligations hereunder will cause irreparable harm to the Purchaser
and that the remedy or remedies at law for any such breach will be inadequate
and agrees, in the event of any such breach, in addition to all other
available remedies, such Purchaser shall be entitled to an injunction
restraining any breach and requiring immediate and specific performance of
such obligations without the necessity of showing economic loss.
7.5 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed under the laws of the State of New York applicable to contracts made
and to be performed entirely within the State of New York, except for matters
related to authorization by the Purchaser which shall be governed by the laws
of the Federal Republic of Germany. Each party hereby irrevocably submits to
the non-exclusive jurisdiction of the state and federal courts sitting in the
City of New York, borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
Page-28
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law.
7.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
7.7 Headings. The headings used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this
Agreement.
7.8 Notices. Any notice, demand or request required or permitted to be given
by the Corporation or a Purchaser pursuant to the terms of this Agreement
shall be in writing and shall be deemed delivered (i) when delivered
personally or by verifiable facsimile transmission, unless such delivery is
made on a day that is not a Business Day, in which case such delivery will be
deemed to be made on the next succeeding Business Day or (ii) on the next
Business Day after timely delivery to an overnight courier, addressed as
follows:
If to the Company:
Ramtron International Corporation
0000 Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attn: XxXxx X. Xxxxxx, Chief Financial Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Coudert Brothers LLP
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. St. Clair, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
Page-29
If to the Purchaser:
Infineon Technologies AG
M&A Department
Xx.Xxxxxx-Xxxxxxx 00
X-00000 Xxxxxx
Fax: 00 00 000 0 0000
Attention: Xxxx Xxxxxxxx
with copies to:
Infineon Technologies AG
Xx.Xxxxxx-Xxxxxxx 00
X-00000 Xxxxxx
Fax: 00 00 000 0 0000
Attention: Finanzvorstand and General Counsel
And
Xxxxxxxx & Xxxxxxxx
Neue Xxxxxxx Xxxxxxx 00
00000 Xxxxxxxxx xx Xxxx
Xxxxxxx
Fax: 00 00 0000 0000
Attention: Xxxxx X. Xxxxxxxx
7.9 Expenses. The Company and the Purchaser each shall pay all costs and
expenses that it incurs in connection with the negotiation, execution,
delivery and performance of this Agreement, provided, however, that the
Company shall reimburse the Purchaser for all out-of-pocket expenses
(including without limitation legal fees and expenses) incurred by it in
connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the other Transaction Documents in an amount
not to exceed fifty thousand dollars ($50,000).
7.10 Entire Agreement; Amendments; Acknowledgements. This Agreement and the
other Purchaser Documents constitute the entire agreement between the parties
with regard to the subject matter hereof and thereof, superseding all prior
agreements or understandings, whether written or oral, between or among the
parties. Except as expressly provided herein, neither this Agreement nor any
term hereof may be amended except pursuant to a written instrument executed by
the Company and the Purchaser, and no provision hereof may be waived other
than by a written instrument signed by the party against whom enforcement of
any such waiver is sought. Notwithstanding the foregoing and any other
provision of this Agreement, except as expressly contemplated by this
Agreement and the Transaction Documents, nothing in this Agreement and the
Transaction Documents shall be deemed to constitute a waiver or amendment of,
or in any way affect any rights, obligations, agreements or covenants
contained in, the Share Purchase Agreement; provided, however, that the
Purchaser acknowledges that its rights pursuant to this Agreement satisfy any
Page-30
and all obligations the Company has pursuant to Section 7.5 of the Share
Purchase Agreement with respect to the Joint Investor Securities Purchase
Agreement, the Joint Investor Warrants and the Joint Investor Debentures. The
Company acknowledges and agrees that this Agreement and the transactions
contemplated hereby do not violate Section 7.9 of the Share Purchase Agreement
and constitutes an invitation, request and solicitation to Infineon to
increase its beneficial ownership of shares of Common Stock in accordance with
the terms thereof.
7.11 Most Favored Nations. Notwithstanding anything to the contrary
contained in this Agreement or any of the other Transaction Documents, if, at
any time during the period commencing after the date of this Agreement and
ending on the five (5) year anniversary of the Closing Date, the Company
amends any of the Joint Investor Securities Purchase Agreement, the Joint
Investor Debentures or the Joint Investor Warrants or otherwise modifies or
changes any of the rights granted to the Joint Investors or obligations of the
Company thereunder (any such amendment being an "MFN Change"), the Purchaser
shall have the right to receive, exercise or otherwise incorporate into this
Agreement, the Debenture and/or Warrant, as applicable, any and all such MFN
Changes in accordance with this Section 7.11. In the event that the Company
intends to effect an MFN Change, the Company shall give ten (10) Business
Days' prior written notice ("MFN Notice") to the Purchaser specifying in
reasonable detail the terms of such MFN Change, and promptly provide such
other information and documents as may be reasonably requested by the
Purchaser relating to such MFN Change (including, without limitation, any
proposed agreements and amendments to be entered into with respect to the
Joint Investor Securities Purchase Agreement, the Joint Investor Debentures
and/or Joint Investor Warrants). On or prior to the expiration of the five
(5) Business Day period (the "MFN Review Period") after the Purchaser has
received the MFN Notice, the Purchaser shall notify the Company in writing
(the "MFN Response") specifying which, if any, of the MFN Changes that they
elect to exercise, receive or otherwise incorporate into this Agreement, the
Debenture and/or Warrant, as applicable. If the Purchaser fails to send an
MFN Response prior to the expiration of the MFN Review Period, the Purchaser
shall be deemed to have waived its rights under this Section 7.11 solely with
respect to the MFN Changes specified in the MFN Notice relating to such MFN
Review Period. Each MFN Change that the Purchaser elects to exercise, receive
or otherwise incorporate into this Agreement, the Debenture and/or Warrant, as
applicable, shall be deemed effective in all respects contemporaneously with
the effectiveness of such MFN Change with respect to the Joint Investor
Securities Purchase Agreement, Joint Investor Debentures and/or Joint Investor
Warrants. The Company shall cooperate with the Purchaser to promptly enter
into such agreements, certificates, instruments and other documents that are
necessary or reasonably requested by the Purchaser to reflect any and all of
the MFN Changes that the Purchaser elects to exercise, receive or otherwise
incorporate into this Agreement, the Debenture and/or the Warrant.
Page-31
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first-above written.
RAMTRON INTERNATIONAL CORPORATION
By: /S/ Xxxxxxx X. Xxxxxxxx, III
------------------------------
Name: Xxxxxxx X. Xxxxxxxx, III
Title: CEO
INFINEON TECHNOLOGIES AG
By: /S/ Xxxxx Xxxxxxxxxxx
---------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Sr. Director
By: /S/ Xxxxx Xxxxx
-------------------------
Name: Xxxxx Xxxxx
Title: Corporate Legal Counsel
Page-32
Exhibit A to Purchase Agreement
THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE
OFFERED FOR SALE OR SOLD UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER OR SALE. SUBJECT TO
COMPLIANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, THIS DEBENTURE AND THE SECURITIES ISSUABLE UPON CONVERSION OF
THIS DEBENTURE MAY BE PLEDGED IN CONNECTION WITH A BONAFIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY THIS DEBENTURE OR ANY OF THE SECURITIES ISSUABLE UPON
CONVERSION OF THIS DEBENTURE.
THIS DEBENTURE DOES NOT REQUIRE PHYSICAL SURRENDER HEREOF IN THE EVENT OF A
PARTIAL PAYMENT, REDEMPTION OR CONVERSION. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT OF THIS DEBENTURE MAY BE LESS THAN THE PRINCIPAL AMOUNT
INDICATED BELOW.
RAMTRON INTERNATIONAL CORPORATION
5% SECURED CONVERTIBLE DEBENTURE
New York, New York $XXXXXXXXX
Issue Date: March XX, 2002
FOR VALUE RECEIVED, RAMTRON INTERNATIONAL CORPORATION, a Delaware corporation
(the "Corporation"), hereby promises to pay to the order of ---------------
-----------------------------------------, or its permitted successors or
assigns (the "Holder") the sum of XXXXXXXXXX ($XXXXXXXX) in same day funds, on
or before the five-year anniversary of the Issue Date (the "Maturity Date").
The Holder may convert amounts of principal of this Debenture into shares
("Conversion Shares") of the Corporation's common stock, par value $.01 per
share (the "Common Stock"), on the terms and subject to the conditions set
forth herein.
The Corporation has issued this Debenture pursuant to a Securities Purchase
Agreement, dated as of March 14, 2002 (the "Purchase Agreement") by and
between the Corporation and Infineon Technologies AG, a German stock
corporation. This Debenture is sometimes referred to herein as the
"Debenture," and the warrant issued by the Corporation pursuant to the
Purchase Agreement is sometimes referred to herein as the "Warrant."
The Corporation's obligations hereunder, including without limitation its
obligation to make payments of principal hereof and interest hereon, are
secured pursuant to the terms of the Security Agreement , dated as of
March XX, 0000, by and between the Corporation and the Purchaser (the
"Security Agreement").
Page A-1
The following terms shall apply to this Debenture:
1. DEFINITIONS.
"Business Day" means any day other than a Saturday, a Sunday or a day on which
banks are authorized by law to close in New York, New York.
"Change of Control Transaction" means the existence or occurrence of any of
the following: (a) the sale, conveyance or disposition of all or substantially
all of the assets of the Corporation; (b) the effectuation of a transaction or
series of transactions in which more than fifty percent (50%) of the voting
power of the Corporation is disposed of; (c) the consolidation, merger or
other business combination of the Corporation with or into any other entity,
immediately following which the prior stockholders of the Corporation fail to
own, directly or indirectly, at least fifty percent (50%) of the voting power
of the surviving entity; (d) a transaction or series of transactions in which
any Person or group (as such term is defined for purposes of Rule 13d-5 or any
successor rules promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") acquires more than fifty percent (50%) of the
voting power of the Corporation; (e) a transaction or series of transactions
in which any Person (other than the Corporation or a wholly owned subsidiary
of the Corporation) or group (as such term is defined for purposes of Rule
13d-5 or any successor rules promulgated under the Exchange Act) acquires more
than fifty percent (50%) of the voting power of any subsidiary of the
Corporation; and (f) the individuals who, as of the Issue Date, (i) constitute
the Board of Directors of the Corporation (the "Current Directors"), (ii) are
individuals nominated to the Board of Directors of the Corporation by the
Current Directors or (iii) are individuals nominated by the Corporation for
election at an annual meeting of the Corporation's stockholders cease for any
reason to constitute at least a majority of the Board of Directors of the
Corporation.
"Closing Bid Price" means the closing bid price for the Common Stock occurring
on a given Trading Day on the principal securities exchange or trading market
where such security is listed or traded as reported by Bloomberg Financial
Markets or, if Bloomberg Financial Markets is not then reporting such prices,
by a comparable reporting service of national reputation selected by the Holder
and reasonably acceptable to the Corporation (collectively, "Bloomberg") or if
the foregoing does not apply, the last reported bid price of such security in
the over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg, or, if no bid price is reported for such security by
Bloomberg, the average of the bid prices of all market makers for such security
as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the
Closing Bid Price cannot be calculated for such security on any of the
foregoing bases, the Closing Bid Price of such security shall be the fair
market value as reasonably determined by an investment banking firm selected by
the Holder, and reasonably acceptable to the Corporation, with the costs of
such appraisal to be borne by the Corporation.
"Closing Date" has the meaning set forth in the Purchase Agreement.
Page A-2
"Closing Price" means the average of the daily VWAP for each of the five
Trading Days immediately preceding, but not including, the date of the Purchase
Agreement, such average being $3.42644.
"Conversion Price" means $3.7690 (subject to adjustment as provided herein).
"Debt" means as to any Person at any time (without duplication): (a) all
indebtedness, liabilities and obligations of such Person for borrowed money;
(b) all indebtedness, liabilities and obligations of such Person to pay the
deferred purchase price of Property or services, except trade accounts payable
of such Person arising in the ordinary course of business ; (c) all capital
lease obligations of such Person; (d) all Debt of others guaranteed by such
Person; (e) all indebtedness, liabilities and obligations secured by a Lien
existing on Property owned by such Person, whether or not the indebtedness,
liabilities or obligations secured thereby have been assumed by such Person or
are non-recourse to such Person; (f) all reimbursement obligations of such
Person (whether contingent or otherwise) in respect of letters of credit,
bankers' acceptances, surety or other bonds and similar instruments; and
(g) all indebtedness, liabilities and obligations of such Person to redeem or
retire shares of capital stock of such Person.
"Default Interest Rate" means the lower of twenty-four percent (24%) and the
maximum rate permitted by applicable law or by the applicable rules or
regulations of any governmental agency or of any stock exchange or other
self-regulatory organization having jurisdiction over the Corporation or the
trading of its securities.
"EBITDA" means, for any period, on a consolidated basis for the Corporation
and its Subsidiaries, the sum of the amounts for such period of (i) Net Income
plus (ii) Interest Expense plus (iii) tax expense plus (iv) depreciation
expense plus (v) amortization expense, including, without limitation,
amortization of goodwill and other intangible assets plus (vi) to the extent
deducted in computing Net Income, other non-cash charges (without any
adjustment for cash charges deducted in computing Net Income), including,
without limitation, any restructuring charges, charge-offs for in-process
research and development costs, writeoff of any amounts associated with the
acquisition of treasury stock and writeoff of goodwill and licensing
agreements minus (vii) to the extent not already deducted in computing Net
Income, ordinary and customary expenses that are due and payable during such
period to the Corporation's vendors and service providers, the actual payment
of which is deferred until a future period minus (viii) extraordinary gains
minus (ix) to the extent included in computing Net Income, non-cash income
including without limitation non-cash income that would constitute "prepaid
pension expense" on the financial statements of the Corporation in accordance
with GAAP.
"Governmental Authority" means any nation or government, any state, provincial
or political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including without limitation any stock exchange, securities
market or self-regulatory organization.
Page A-3
"Interest Expense" means, for any period, the total interest expense of the
Corporation and its consolidated Subsidiaries, whether paid or accrued
(including the interest component of capitalized leases and any implied
interest components of any off-balance sheet liabilities), including interest
expense not payable in cash (including amortization or writeoff of debt
discount and debt issuance costs and commissions and discounts and other fees
and charges associated with any Debt (including the Debenture)), all as
determined in conformity with GAAP.
"Issue Date" means March XX, 0000.
"Junior Securities" means all securities of the Corporation issued and
outstanding at any time.
"Liquidation Event" has the meaning specified in Section 7 hereof.
"Market Price" means, as of any date, the average Closing Bid Price for the
Common Stock during the period of five (5) Trading Days immediately preceding
(but not including) such date.
"Net Income" means, for any period, the net earnings (or loss) after taxes of
the Company and its Subsidiaries on a consolidated basis for such period taken
as a single accounting period determined in conformity with GAAP; provided,
that when calculating Net Income the following items shall be excluded from
such calculation: (i) the earnings (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting, except
to the extent of the amount of dividends or distributions paid in cash to the
Company or a consolidated Subsidiary; (ii) the earnings of a Subsidiary to the
extent that the declaration or payment of dividends or similar distributions
by such Subsidiary to the Company with respect to such earnings is not, at the
date of determination, permitted without the prior approval of a Governmental
Authority (and such approval has not been obtained), or is prohibited,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Subsidiary or the holders of its capital stock;
(iii) the cumulative effect of a change in accounting principles;
(iv) nonrecurring items, such as gains or losses on the sale of assets; and
(v) earnings derived from revenues that are recognized during such period as a
result of the acceleration of customer sponsored research and development
projects to the extent that such revenues are in excess of direct costs
incurred by the Corporation in connection with any such research and
development project; but when calculating Net Income such calculation shall
include historical audited Net Income (as calculated above) for such period of
any Person (or division of such Person) that became a Subsidiary of the
Company during such period or was merged into or was consolidated with the
Company or any of its Subsidiaries during such period, or where the assets of
such Person (or division of such Person) were acquired by the Company or any
of its Subsidiaries during such period, whether accrued prior or subsequent to
the date of such acquisition, merger or consolidation.
Page-4
"Person" means any individual, corporation, trust, association, company,
partnership, joint venture, limited liability company, joint stock company,
Governmental Authority or other entity.
"Registration Statement" has the meaning set forth in the Registration Rights
Agreement or the Joint Investor Registration Rights Agreement, as applicable.
"Scheduled Interest Payment Date" means each July 1 and January 1 following the
Issue Date.
"Subsidiary" has the meaning set forth in the Purchase Agreement.
"Trading Day" means any day on which the Common Stock is purchased and sold on
the principal securities exchange or market on which the Common Stock is then
listed or traded.
"VWAP" on a Trading Day means the volume weighted average price of the Common
Stock for such Trading Day as reported by Bloomberg Financial Markets or, if
Bloomberg Financial Markets is not then reporting such prices, by a comparable
reporting service of national reputation selected by the Holder and reasonably
satisfactory to the Corporation.
All definitions contained in this Debenture are equally applicable to the
singular and plural forms of the terms defined. The words "hereof", "herein"
and "hereunder" and words of similar import referring to this Debenture refer
to this Debenture as a whole and not to any particular provision of this
Debenture. Capitalized terms used herein and not otherwise defined shall have
the respective meanings set forth in the Purchase Agreement.
2. INTEREST.
(a) Interest Accrual. This Debenture shall bear interest on the unpaid
principal amount hereof ("Interest") at an annual rate of five percent
(5%), computed on the basis of a 365-day year and calculated using the
actual number of days elapsed since the Issue Date or the day on which
interest was most recently paid, as the case may be, and, if not timely
paid as provided herein, compounded semi-annually, on each July 1 and
January 1 (each a "Scheduled Interest Payment Date"). The Corporation
shall pay accrued and unpaid Interest in cash (i) on each Scheduled
Interest Payment Date, (ii) on the Maturity Date and (iii) on any date on
which the entire principal amount of this Debenture is paid in full
(whether through conversion or otherwise) (each of (i), (ii) and (iii)
being referred to herein as an "Interest Payment Date").
(b) Default Interest. Any amount of Interest that is not paid on the
relevant Interest Payment Date shall bear interest at the Default
Interest Rate. The Corporation must pay interest at the Default Interest
Rate in cash on or before the fifth (5th) Business Day following the last
day of each calendar month in which such interest accrues.
Page A-5
3. CONVERSION.
(a) Right to Convert. Subject to the conditions and limitations specifically
provided herein, the Holder shall have the right to convert, at any time
and from time to time after the Issue Date, (i) all or any part of the
outstanding and unpaid principal amount of this Debenture and (ii) all
accrued and unpaid Interest hereon, into such number of fully paid and
non-assessable Conversion Shares as is determined in accordance with the
terms hereof (a "Conversion").
(b) Conversion Notice. In order to convert the principal of this Debenture,
the Holder shall send by facsimile transmission, at any time prior to
7:00 p.m., New York time, on the Business Day on which the Holder wishes
to effect such Conversion (the "Conversion Date"), a notice of conversion
to the Corporation, in the form set forth on Annex I hereto, stating the
amount of principal to be converted and a calculation of the number of
shares of Common Stock issuable upon such Conversion (a "Conversion
Notice"). The Holder shall not be required to physically surrender this
Debenture to the Corporation in order to effect a Conversion. The
Corporation shall maintain a record showing, at any given time, the
unpaid principal amount of this Debenture and the date of each Conversion
or other payment of principal hereof. The Holder shall amend Annex II
hereto upon any such Conversion or payment of principal to reflect the
unpaid principal amount hereof. In the case of a dispute as to the
number of Conversion Shares issuable upon a Conversion (including without
limitation as a result of adjustments to the Conversion Price made in
accordance with Section 4 below), the Corporation shall promptly issue to
the Holder the number of Conversion Shares that are not disputed and
shall submit the disputed calculations to its independent accountants of
national recognition within two (2) Business Days of receipt of the
Holder's Conversion Notice. The Corporation shall cause such accountants
to calculate the Conversion Price as provided herein and to notify the
Corporation and the Holder of the results in writing no later than two
(2) Business Days following the day on which such accountant received the
disputed calculations (the "Dispute Procedure"). Such accountant's
calculation shall be deemed conclusive absent manifest error. The fees
of any such accountant shall be borne by the party whose calculations are
most at variance with those of such accountant.
(c) Number of Conversion Shares; Conversion Price. The number of Conversion
Shares to be delivered by the Corporation pursuant to a Conversion shall
be equal to the principal amount of this Debenture being converted
divided by the Conversion Price.
Page A-6
(d) Delivery of Common Stock Upon Conversion. Upon receipt of a Conversion
Notice, the Corporation shall, no later than the close of business on the
third (3rd) Business Day following the Conversion Date set forth in such
Conversion Notice (the "Delivery Date"), issue and deliver or cause to be
delivered to the Holder the number of Conversion Shares determined
pursuant to paragraph 3(c) above, provided, however, that any Conversion
Shares that are the subject of a Dispute Procedure shall be delivered no
later than the close of business on the third (3rd) Business Day
following the determination made pursuant thereto. Such certificates
may bear legends pursuant to applicable provisions of this Agreement or
applicable law. The Corporation shall effect delivery of Conversion
Shares to the Holder, as long as the Corporation's designated transfer
agent or co-transfer agent in the United States for the Common Stock (the
"Transfer Agent") participates in the Depository Trust Company ("DTC")
Fast Automated Securities Transfer program ("FAST"), and no legend is
required to appear on any physical certificate if issued, by crediting the
account of the Holder or its nominee at DTC (as specified in the
applicable Conversion Notice) with the number of Conversion Shares
required to be delivered, no later than the close of business on such
Delivery Date. In the event that the Transfer Agent is not a participant
in FAST or if the Holder so specifies in a Conversion Notice or otherwise
in writing on or before the Conversion Date, the Corporation shall effect
delivery of Conversion Shares by delivering to the Holder or its nominee
physical certificates representing such Conversion Shares, no later than
the close of business on such Delivery Date. If any Conversion would
create a fractional Conversion Share, such fractional Conversion Share
shall be disregarded and the number of Conversion Shares issuable upon
such Conversion, in the aggregate, shall be the next higher whole number
of Conversion Shares. Conversion Shares delivered to the Holder shall
not contain any restrictive legend unless such legend is required
pursuant to the terms of the Purchase Agreement or applicable law.
(e) Failure to Deliver Conversion Shares.
In the event that the Corporation fails for any reason to deliver to the
Holder the number of Conversion Shares specified in a Conversion Notice
(without any restrictive legend to the extent permitted by the terms
hereof or pursuant to the terms of the Purchase Agreement) on or before
the Delivery Date therefor (a "Conversion Default"), the Holder shall
have the following rights:
(A) the right to receive from the Corporation an amount equal to
(i) (N/365) multiplied by (ii) the principal amount of, and Interest
accrued on, this Debenture represented by the Conversion Shares
(such amount, the "Conversion Default Amount") which remain the
subject of such Conversion Default multiplied by (iii) the Default
Interest Rate, where "N" equals the number of days elapsed between
the original Delivery Date of such Conversion Shares and the date on
which such Conversion Default has been cured; and, at the Holder's
option, either of the following:
Page A-7
(B) (1) the right to receive from the Corporation an amount equal to
(i) the aggregate amount paid by the Holder for shares of
Common Stock purchased by the Holder in order to make delivery
on a sale effected in anticipation of receiving Conversion
Shares upon such Conversion minus (ii) the aggregate amount of
net proceeds, if any, received by the Holder from the sale of
the Conversion Shares issued by the Corporation pursuant to
such Conversion; or
(B) (2) the right to require the Corporation to reinstate the principal
amount of this Debenture in an aggregate amount equal to the
Conversion Default Amount and deem the conversion resulting in
such Conversion Default rescinded, null and void.
In addition to its right to receive the foregoing amounts, the Holder
shall have the right to pursue all other remedies available to it at law
or in equity (including, without limitation, a decree of specific
performance and/or injunctive relief). Amounts payable under this
paragraph (e) shall be paid to the Holder in immediately available funds
on or before the fifth (5th) Business Day following written notice from
the Holder to the Corporation specifying the amount owed to it by the
Corporation pursuant to this paragraph (e).
(f) Limitations on Right to Convert. Subject to the terms of the Rights
Agreement, dated as of April 19, 2001, between the Corporation and
Citibank, N.A., in no event shall the Holder be permitted to convert
principal of this Debenture in excess of that amount upon the Conversion
of which (x) the number of Conversion Shares to be issued pursuant to
such Conversion plus (y) the number of shares of Common Stock
beneficially owned by the Holder (other than Common Stock which may be
deemed beneficially owned except for being subject to a limitation on
conversion or exercise analogous to the limitation contained in this
paragraph (f)) would exceed 49.9% of the number of shares of Common Stock
then issued and outstanding. Nothing contained herein shall be deemed to
restrict the right of the Holder to convert such excess principal amount
at such time as such Conversion will not violate the provisions of this
paragraph (f). As used herein, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules
thereunder. To the extent that the limitation contained in this paragraph
(f) applies (and without limiting any rights the Corporation may otherwise
have), the Corporation may rely on the Holder's determination of whether
this Debenture is convertible pursuant to the terms hereof, the
Corporation having no obligation whatsoever to verify or confirm the
accuracy of such determination, and the submission of a Conversion Notice
by the Holder shall be deemed to be the Holder's representation that this
Debenture is convertible pursuant to the terms hereof. Notwithstanding the
foregoing, this provision shall not apply to any determination of the
amount owed or securities to which the Holder is entitled to receive in
the event of a Change of Control Transaction or Liquidation Event.
Page A-8
4. ADJUSTMENTS TO CONVERSION PRICE.
(a) Adjustment to Conversion Price Due to Stock Split, Stock Dividend,
Dilutive Issuance. If, prior to the Conversion of all of the principal
amount of this Debenture, or payment in full of all amounts payable by
the Corporation hereunder, (A) the number of outstanding shares of Common
Stock is increased by a stock split, a reclassification of the Common
Stock, or other similar event, the Conversion Price shall be
proportionately reduced, which reduction shall be effected at the time
such event takes place; (B) the number of outstanding shares of Common
Stock is decreased by a reverse stock split, combination or
reclassification of shares or other similar event, the Conversion Price
shall be proportionately increased, which increase shall be effected at
the time such event takes place; (C) the number of shares of Common Stock
is increased by a stock dividend on the Common Stock, the Conversion
Price shall be proportionately reduced, which reduction shall be effected
on the record date for the determination of holders of Common Stock to
receive such dividend; provided, however, that if such record date is
fixed and such dividend is not fully paid or if such distribution is not
fully made on the date fixed therefor, the Conversion Price shall be
recomputed accordingly as of the close of business on such record date
and thereafter the Conversion Price shall be adjusted pursuant to this
Section 4(a) to reflect the actual payment of such dividend; (D) the
Corporation issues Common Stock, whether upon the exercise of rights,
warrants, securities convertible, exercisable or exchangeable into or for
Common Stock, or rights to purchase or receive shares of Common Stock
(collectively, "Convertible Securities") or otherwise, at a price per
share that is lower than the Conversion Price in effect on the date of
such issuance, the Conversion Price shall be reduced to such lower price;
(E) the Corporation issues Convertible Securities, and such Convertible
Securities have a conversion price, exercise price or exchange ratio that
is lower than the Conversion Price in effect on the date of such
issuance, or if the conversion price, exercise price or exchange ratio of
any Convertible Security (whether issued before or after the Closing
Date) is at any time lowered pursuant to "reset", anti-dilution or
similar provisions to a price that is lower than the Conversion Price in
effect on the date of such issuance, the Conversion Price shall be
reduced to such lower price; or (F) the Corporation (x) issues Common
Stock, whether upon the exercise of Convertible Securities or otherwise,
at a price per share, or (y) issues Convertible Securities, and such
Convertible Securities have a conversion price, exercise price or
exchange ratio, that is lower than the Market Price in effect on the date
of such issuance (but not lower than the Conversion Price in effect on
the date of such issuance, in which case the provisions of clause (D) or
(E) above, as applicable, will apply) (a "Dilutive Issuance"), the
Conversion Price in effect on the date of such issuance shall be adjusted
downward to a price determined by multiplying the Conversion Price in
effect immediately prior to the Dilutive Issuance by a fraction, (i) the
numerator of which is an amount equal to the sum of (x) the number of
shares of Common Stock actually outstanding immediately prior to the
Dilutive Issuance (excluding any shares of Common Stock held in the
Page A-9
treasury of the Corporation), plus (y) the quotient of the aggregate
consideration received by the Corporation upon such Dilutive Issuance
divided by the Market Price in effect immediately prior to the Dilutive
Issuance, and (ii) the denominator of which is the total number of shares
of Common Stock Deemed Outstanding (as defined below) immediately after
the Dilutive Issuance. "Common Stock Deemed Outstanding" shall mean the
number of shares of Common Stock actually outstanding excluding (A) any
shares of Common Stock held in the treasury of the Corporation but
including (B) in the case where the Dilutive Issuance comprises
Convertible Securities, the maximum total number of shares of Common
Stock issuable upon the exercise of the Convertible Securities for which
the adjustment is required.
(b) Adjustment to Conversion Price During Reference Period. If, prior to the
Conversion of all of the principal amount of this Debenture, or payment
in full of all amounts payable by the Corporation hereunder, the number
of outstanding shares of Common Stock is increased or decreased by a
stock split, a stock dividend on the Common Stock, a combination, a
reclassification of the Common Stock or other similar event, and such
event takes place during the reference period for the determination of
the Conversion Price, the Conversion Price shall be calculated giving
appropriate effect to the stock split, stock dividend, combination,
reclassification or other similar event for all Trading Days occurring
during such reference period.
(c) Adjustment Due to Merger, Consolidation, Etc. If, prior to the
Conversion of the entire principal amount of this Debenture, or payment
in full of all amounts payable by the Corporation hereunder, there shall
be any merger, consolidation, business combination, tender offer, exchange
of shares, recapitalization, reorganization, redemption or other similar
event, as a result of which shares of Common Stock shall be changed into
the same or a different number of shares of the same or another class or
classes of stock or securities of the Corporation or another entity (an
"Exchange Transaction"), then (A) the Holder shall have the right to
receive, with respect to any shares of Common Stock then held by the
Holder, or which the Holder is then entitled to receive pursuant to a
Conversion Notice previously delivered by the Holder (and without regard
to whether such shares contain a restrictive legend or are freely-
tradable), the same amount and type of consideration (including without
limitation, stock, securities and/or other assets) and on the same terms
as the Holder of shares of Common Stock would be entitled to receive in
connection with the consummation of such Exchange Transaction (the
"Exchange Consideration"), (B) the Holder shall have the right to exchange
all or part of this Debenture for the Exchange Consideration, on the same
terms as the Holder of shares of Common Stock would be entitled to receive
in connection with the consummation of such Exchange Transaction, in an
amount that the Holder would have been entitled to receive had this
Debenture been converted immediately prior to such Exchange Transaction at
the Conversion Price then in effect (without giving effect to any
limitations on such Conversion contained herein or otherwise), and (C) to
Page A-10
the extent that the Holder has not exercised its right under clause (B) to
exchange this Debenture for the Exchange Consideration, upon the
Conversion of this Debenture occurring after consummation of such Exchange
Transaction (a "Subsequent Conversion"), the Holder shall have the right
to receive the Exchange Consideration which the Holder would have been
entitled to receive in connection with such Exchange Transaction had this
Debenture been converted immediately prior to such Exchange Transaction at
the Conversion Price applicable to such Subsequent Conversion, and in any
such case appropriate provisions shall be made with respect to the rights
and interests of the Holder to the end that the provisions hereof shall
thereafter be applicable as nearly as may be practicable in relation to
any securities thereafter deliverable upon the Conversion of this
Debenture. The Corporation shall not effect any Exchange Transaction
unless it or the resulting successor or acquiring entity (if not the
Corporation) assumes by written instrument the obligations of the
Corporation hereunder, including the terms of this subparagraph 4(c), and
under the Purchase Agreement, the Mortgage, the Warrant and the
Registration Rights Agreement.
(d) Distribution of Assets. If, prior to the Conversion of the entire
principal amount of this Debenture, or payment in full of all amounts
payable by the Corporation hereunder, the Corporation or any of its
subsidiaries shall declare or make any distribution of cash, evidences of
indebtedness or other securities or assets, or any rights to acquire any
of the foregoing, to holders of Common Stock (or to the holder, other than
the Corporation, of the common stock of any such subsidiary), including
any dividend or distribution in shares of capital stock of a subsidiary of
the Corporation (collectively, a "Distribution"), the Corporation shall
give the Holder written notice of such Distribution at least ten (10)
Business Days prior to the effective date therefor, and the Holder shall
have the option of either (A) receiving from the Corporation the assets
that are the subject of such Distribution at the same time that the
Corporation distributes such assets to the holders of Common Stock (or to
the holders of the common stock of any such subsidiary), in which case the
Holder shall be entitled to receive such assets in an amount equal to the
amount of such assets that the Holder of the number of shares of Common
Stock into which this Debenture is convertible on the record date for such
Distribution would be entitled to receive (such number to be determined
using the Conversion Price in effect on such record date and without
regard to any restriction or limitation on such conversion or exercise
that might otherwise exist) or (B) for any Conversion occurring after the
record date for such Distribution, requiring the Corporation to reduce the
Conversion Price by an amount equal to the fair market value of the assets
so distributed with respect to each share of Common Stock, such fair
market value to be determined by an investment banking firm selected by
the Holder and reasonably acceptable to the Corporation, with the cost of
such determination to be borne by the Corporation.
Page A-11
(e) Adjustment Due to Major Announcement. If, prior to the Conversion of the
entire principal amount of this Debenture, or payment in full of all
amounts payable by the Corporation hereunder, the Corporation (i) makes a
public announcement that it intends to enter into a Change of Control
Transaction or (ii) any person, group or entity (including the
Corporation) publicly announces a tender offer, exchange offer or other
transaction to purchase 50% or more of the Common Stock (each such
announcement being referred to herein as a "Major Announcement" and the
date on which a Major Announcement is made, the "Announcement Date"),
then, in the event that the Holder seeks to convert this Debenture on or
following the Announcement Date, the Conversion Price shall, effective
upon the Announcement Date and continuing through the third (3rd) Business
Day following the earlier to occur of the consummation of the proposed
transaction or tender offer, exchange offer or other transaction and the
Abandonment Date (as defined below), be equal to the lowest of (x) the
Market Price for the Common Stock on the Trading Day immediately preceding
(but not including) the Announcement Date, (y) the average Closing Bid
Price for the Common Stock on the three (3) Trading Days immediately
following (but not including) the Announcement Date and (z) the Conversion
Price in effect on the applicable Conversion Date. "Abandonment Date"
means with respect to any proposed transaction or tender offer, exchange
offer or other transaction for which a public announcement as contemplated
by this paragraph 4(e) has been made, the date upon which the Corporation
(in the case of clause (i) above) or the person, group or entity (in the
case of clause (ii) above) publicly announces the termination or
abandonment of the proposed transaction or tender offer, exchange offer or
another transaction which caused this paragraph 4(e) to become operative.
(f) Adjustment Pursuant to Other Agreements. In addition to and without
limiting in any way the adjustments provided in this Section 4, the
Conversion Price shall be adjusted as may be required by the applicable
provisions, if any, of the Purchase Agreement and/or the Registration
Rights Agreement.
(g) No Fractional Shares. If any adjustment under this Section 4 would
create a fractional share of Common Stock or a right to acquire a
fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares of Common Stock issuable upon
Conversion shall be the next higher whole number of shares.
(h) Exceptions to Adjustment of Conversion Price. No adjustment to the
Conversion Price will be made pursuant to this Section 4, (i) upon the
exercise of any warrants, options or convertible securities granted,
issued and outstanding on the Closing Date (except in the case where the
price at which such warrant, option or security is exercised has
decreased since the Closing Date as a result of a reset, anti-dilutive
adjustment or similar occurrence); (ii) upon the grant or exercise of any
stock or options which may hereafter be granted or exercised under any
employee benefit plan, stock option plan or restricted stock plan of the
Corporation now existing or to be implemented in the future, so long as
Page A-12
the issuance of such stock or options is approved by a majority of the
Board of Directors of the Corporation; (iii) upon the exercise of the
Warrants or the conversion of the Debentures; (iv) upon the issuance of
securities pursuant to a firm-commitment, fixed-price underwritten
offering (which shall not include equity lines of credit or similar
transactions); and (v) upon the issuance of securities in connection with
a strategic investment made by the Corporation or a third party, the
primary purpose of which is not the raising of equity capital; provided,
that any and all such issuances do not exceed, in the aggregate, five
percent (5%) of the Common Stock outstanding as of the Issue Date.
5. MANDATORY CONVERSION.
(a) Mandatory Conversion. The Corporation shall have the right, upon the
satisfaction (or waiver by the Holder) of each of the Mandatory Conversion
Conditions as of the Mandatory Conversion Date (each as defined below), to
require conversion of this Debenture (a "Mandatory Conversion"). In the
event of a Mandatory Conversion, the Corporation and the Holder shall
follow the procedures for Conversion set forth in Section 3 above, with
the Mandatory Conversion Date (as defined below) deemed to be the
Conversion Date for purposes hereof, except that the Holder shall not be
required to send a Conversion Notice as contemplated by paragraph (b) of
Section 3.
(b) Mandatory Conversion Notice. In order to effect a Mandatory Conversion
hereunder, the Corporation must deliver to the Holder written notice
thereof (a "Mandatory Conversion Notice") on or before 5:00 p.m. (New York
time) on a Business Day (the "Mandatory Conversion Notice Date") that is
at least twenty (20) Trading Days prior to the date on which such
Mandatory Conversion is to be effected (the "Mandatory Conversion Date")
and, at the same time that it delivers such notice, the Corporation shall
use reasonable efforts to confirm delivery thereof with the Holder by
telephone. Notwithstanding the delivery by the Corporation of a Mandatory
Conversion Notice, nothing contained herein shall be deemed to limit in
any way (i) the right of the Holder to convert this Debenture prior to
the Mandatory Conversion Date or (ii) the availability of any and all
remedies that are provided to the Holder hereunder, including without
limitation in the event that the Corporation fails to deliver Conversion
Shares upon a Mandatory Conversion as required by the terms of Section 3
hereof.
(c) Mandatory Conversion Conditions. The Mandatory Conversion Conditions are
as follows:
(i) at least eighteen (18) months shall have elapsed since the Issue
Date;
Page A-13
(ii) VWAP shall have been greater than the Conversion Price as of the
Issue Date (as such Conversion Price may have been adjusted in
accordance with clause (A), (B) or (C) of paragraph 4(a), but
without giving effect, solely for the purposes of this paragraph
(c)(ii), to any adjustment required or permitted by any other
provision of Section 4 hereof) by at least two hundred percent
(200%) for at least twenty (20) Trading Days during any period of
thirty (30) consecutive Trading Days occurring after the seventeen
(17) month anniversary of the Issue Date;
(iii) the Corporation shall have authorized and reserved for issuance the
number of shares of Common Stock required to be reserved under
paragraph 4.3 of the Securities Purchase Agreement, and shall have
provided the Holder with reasonable evidence thereof, and the resale
of such shares of Common Stock by the Holder shall be the subject of
an effective registration statement under the Securities Act;
(iv) the Common Stock shall have been listed on the Nasdaq Stock Market,
the American Stock Exchange or the New York Stock Exchange at all
times following the Issue Date and trading in the Common Stock on
such market or exchange shall not have been suspended at any time
following the Issue Date for more than three (3) consecutive
Business Days;
(v) an Event of Default (as defined below), or an event that with the
passage of time or giving of notice, or both, would constitute an
Event of Default, shall not have occurred and be continuing as of
the Mandatory Conversion Date or as of the date of the Mandatory
Conversion Notice;
(vi) the Corporation shall have exercised its right of mandatory
conversion pursuant to the Joint Investor Securities Purchase
Agreement, delivered a Mandatory Conversion Notice (as such term is
defined in the Joint Investor Securities Purchase Agreement) to the
holders of the Joint Investor Debentures and satisfied all of the
Mandatory Conversion Conditions (as such term is defined in the
Joint Investor Securities Purchase Agreement) contained in the Joint
Investor Debenture; and
(vii) the conversion of this Debenture pursuant to the Mandatory
Conversion would not violate the provisions of Section 3(f) hereof.
6. REDEMPTION.
(a) Mandatory Redemption. In the event that an Event of Default (as defined
below) occurs, the Holder shall have the right, upon written notice to
the Corporation (a "Mandatory Redemption Notice"), to have all or any
portion of the unpaid principal amount of this Debenture, plus all
accrued and unpaid Interest thereon, redeemed by the Corporation (a
"Mandatory Redemption") at the Mandatory Redemption Price (as defined
Page A-14
below) in same day funds. The Mandatory Redemption Notice shall specify
the effective date of such Mandatory Redemption (the "Mandatory
Redemption Date"), which date must be at least five (5) Business Days
following the Business Day on which the Mandatory Redemption Notice is
delivered to the Corporation, and the amount of principal and Interest to
be redeemed. In order to effect a Mandatory Redemption hereunder, the
Holder must deliver a Mandatory Redemption Notice no later than the close
of business on the Business Day immediately following the Business Day on
which an Event of Default is no longer continuing; provided, however,
that with respect to a Change of Control Transaction, the Holder must
deliver a Mandatory Redemption Notice no later than the close of business
on the third (3rd) Business Day following the date on which the Change of
Control Transaction is effected.
(b) Mandatory Redemption Price. For purposes hereof, "Mandatory Redemption
Price" shall mean the greater of (A) the unpaid principal hereof and all
accrued and unpaid Interest hereon multiplied by one hundred and twenty
percent (120%) and (B) the unpaid principal hereof and all accrued and
unpaid Interest hereon divided by the Conversion Price in effect at the
time of the Conversion Default multiplied by the Market Price on the
Mandatory Redemption Date.
(c) Payment of Mandatory Redemption Price.
(i) The Corporation shall pay the Mandatory Redemption Price to the
Holder within five (5) Business Days of the Mandatory Redemption
Date. In the event that the Corporation redeems the entire
remaining unpaid principal amount of this Debenture, and pays to the
Holder all Interest accrued thereon and all other amounts due in
connection therewith, the Holder shall return this Debenture to the
Corporation for cancellation.
(ii) If the Corporation fails to pay the Mandatory Redemption Price to
the Holder within five (5) Business Days of the Mandatory Redemption
Date, the Holder shall be entitled to interest thereon at the
Default Interest Rate from the Mandatory Redemption Date until the
date on which Mandatory Redemption Price has been paid in full.
(iii) Notwithstanding the foregoing, if, prior to the payment of the
Corporation of the Mandatory Redemption Price pursuant to any
Mandatory Redemption Notice, the Corporation receives written
notice from the Holder rescinding such Mandatory Redemption Notice,
such Mandatory Redemption Notice shall immediately thereafter be
deemed revoked and the Corporation shall not effect the Mandatory
Redemption contemplated by such Mandatory Redemption Notice.
(d) Events of Default. Each of the following events shall be deemed an
"Event of Default":
(i) the Common Stock is no longer eligible for trading on the Nasdaq
Stock Market, or is not otherwise listed or quoted on the American
Stock Exchange or the New York Stock Exchange;
Page A-15
(ii) a Change of Control Transaction or Liquidation Event occurs or is
publicly announced;
(iii) a Registration Statement filed pursuant to the Registration Rights
Agreement or the Joint Investor Registration Rights Agreement is not
declared effective by the Securities and Exchange Commission on or
before the one hundred and eightieth (180th) day following the Issue
Date or, following such effectiveness, is unavailable to the Holder,
except during an Allowed Delay (as defined in the Joint Investor
Registration Rights Agreement);
(iv) the Corporation grants any Lien on or with respect to any of its
assets or the assets of any of its wholly-owned subsidiaries, other
than a Permitted Lien;
(v) the Corporation breaches or provides notice of its intent to breach,
in a material respect, any covenant or other material term or
condition of this Debenture (including without limitation any
payment obligation thereunder), the Purchase Agreement, the Warrant,
the Mortgage, the Registration Rights Agreement or any other
agreement, document, certificate or other instrument delivered by
the Corporation in connection with the transactions contemplated
hereby and thereby, including but not limited to the failure to
deliver Conversion Shares and Warrant Shares on or before the
Delivery Date therefor, and such breach continues for a period of
five (5) Business Days;
(vi) any representation or warranty made by the Corporation contained in
this Debenture, the Purchase Agreement, the Mortgage, the
Registration Rights Agreement or any other agreement, document,
certificate or other instrument delivered in connection with the
transactions contemplated hereby or thereby is inaccurate or
misleading in any material respect as of the date such
representation or warranty was made;
(vii) a default occurs, after giving effect to any applicable grace or
cure period, under or with respect to the Joint Investor Debentures
or the Joint Investor Warrants;
(viii) a default occurs, after giving effect to any applicable grace or
cure period, under or with respect to any instrument that evidences
Debt of the Corporation;
(ix) the Corporation's EBITDA during an EBITDA Target Period (as defined
below) is less than the corresponding EBITDA Target (as defined
below) and at least thirty (30) days has elapsed since the last day
of such EBITDA Target Period;
Page A-16
(x) (A) the Corporation's aggregate capital expenditures for the year
ending December 31, 2002 exceed $1,500,000; or (B) the
Corporation's aggregate capital expenditures for the year
ending December 31, 2003 exceed three percent (3%) of the
Corporation's gross revenues generated such year from sales.
For purposes hereof, "capital expenditures" and "gross revenues
from sales" shall be as shown on the audited financial
statements of the Corporation for such fiscal year; and
(xi) the patent interference proceeding declared in 1991 in the United
States Patent and Trademark Office between the Corporation, National
Semiconductor Corporation and the Department of the Navy in regard
to one of the Corporations' issued United States patents is
adjudicated, settled or otherwise resolved in a manner that has, or
could reasonably be expected to have, a Material Adverse Effect.
(e) EBITDA Target Periods; EBITDA Targets. For purposes hereof, the terms
"EBITDA Target Period" and "EBITDA Target" shall have the following
meanings:
EBITDA Target Period EBITDA Target
Year Ending December 31, 2002 negative $2,000,000
Six Months Ending June 30, 2003 $750,000
Six Months Ending September 30, 2003 $750,000
Six Months Ending December 31, 2003 $750,000
Each Six Month Period Ending on the
Last Day of a Fiscal Quarter Occurring
After December 31, 2003 $937,500
Any Fiscal Quarter During 2003 negative $500,000
Any Fiscal Quarter During 2004 negative $250,000
(f) EBITDA Calculations.
(i) For purposes of calculating EBITDA of the Corporation for any EBITDA
Target Period, the Corporation shall promptly (but in no event later
than the second (2nd) Business Day following the public disclosure
of the Corporation's earnings for the reporting period ending on the
last day of such EBITDA Target Period (whether by press release, the
filing of a Form 10-K, 10-Q or 8-K with the Commission, or
otherwise)) deliver to the Holder a certificate (an "EBITDA
Certificate"), certified by the Chief Financial Officer of the
Corporation as being true and correct to the best of his or her
knowledge. Each EBITDA Certificate shall set forth (x) EBITDA of the
Corporation for the relevant EBITDA Target Period and (y) the
Page A-17
calculation of such EBITDA amount in reasonable detail. Upon
receipt by the Holder of any EBITDA Certificate, the Holder may,
within five (5) Business Days after the date of receiving such
EBITDA Certificate (the "EBITDA Review Period"), deliver to the
Corporation an objection notice setting forth the Holder's
objections to the EBIDTA calculations set forth in such EBITDA
Certificate together with a summary of the reasons for such
objections (each such notice delivered by the Holder, an "EBITDA
Objection Notice"). With respect to any EBITDA Certificate, if the
Holder does not deliver an EBITDA Objection Notice within the
applicable EBITDA Review Period, such EBITDA Certificate shall be
final and binding.
(ii) If, with respect to an EBITDA Certificate, the Holder delivers an
EBITDA Objection Notice to the Corporation within the applicable
EBITDA Review Period, the Corporation and the Holder shall use their
reasonable best efforts to resolve the objections described in such
EBITDA Objection Notice within five (5) Business Days by written
agreement (the "EBITDA Adjustments") and, if the Holder and the
Corporation so resolve any such differences, the EBITDA Certificate
in question, as adjusted pursuant to the EBITDA Adjustments, shall
be final and binding.
(iii) If any objections raised by the Holder in an EBITDA Objection Notice
are not resolved by EBITDA Adjustments within five (5) Business Days
following receipt by the Corporation of an EBITDA Objection Notice,
then the Holder shall submit the objections that are then unresolved
to a national accounting firm reasonably acceptable to the
Corporation (such firm, the "Accounting Firm"), and shall direct the
Accounting Firm to: (x) resolve the unresolved objections (based
solely on the presentations by the Corporation and the Holder and in
accordance with GAAP) as promptly as reasonably practicable and (y)
deliver written notice to each of the Corporation and the Holder
setting forth its resolution of the disputed matters. The EBITDA
Certificate in question, after giving effect to any EBITDA
Adjustments and to the resolution of disputed matters by the
Accounting Firm, shall be final and binding.
(iv) The Corporation shall make available to the Holder and, if
applicable, the Accounting Firm, such books, records and other
information (including work papers) as any of the foregoing may
reasonably request to prepare or review any EBITDA Certificate or
any matters submitted to the Accounting Firm. The fees and expenses
of the Accounting Firm hereunder shall be borne by the party whose
calculations were most at variance with those of the Accounting
Firm.
Page A-18
7. PRIORITY ON LIQUIDATION.
(a) In the event of (x) any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceedings in
connection therewith, relative to the Corporation or to its creditors, as
such, or to its assets or (y) the dissolution or other winding up of the
Corporation, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy proceedings, or (z) any assignment for
the benefit of creditors or any marshalling of the material assets or
material liabilities of the Corporation (each a "Liquidation Event"),
then, and in any such event, the Holder of this Debenture shall first be
entitled to receive payment in full of all principal of, and all Interest
and other amounts due or to become due on, this Debenture before any
payment on account of principal, premium, if any, interest, dividends or
any other amounts is made on any Debt of the Corporation or Junior
Securities, whether on account of any purchase, exchange or redemption or
other acquisition of such Debt or Junior Securities, at maturity or
otherwise. Notwithstanding the foregoing, the Debenture shall rank in
pari passu with the Joint Investor Debentures.
(b) In the event that, upon the occurrence of a Liquidation Event, the assets
of the Corporation are insufficient to pay all amounts due hereunder and
under the Joint Investor Debentures, subject to Infineon's first priority
security interest in certain assets of the Corporation pursuant to the
Security Agreement, such assets, or the proceeds thereof, shall be
distributed pro rata to the Holder and the holders of the Joint Investor
Debentures on a pro rata basis in accordance with the respective
principal amounts represented thereby.
8. MISCELLANEOUS.
(a) Failure to Exercise Rights not Waiver. No failure or delay on the part
of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude any other or
further exercise thereof. All rights and remedies of the Holder
hereunder are cumulative and not exclusive of any rights or remedies
otherwise available.
(b) Notices. Any notice, demand or request required or permitted to be given
by the Corporation or the Holder pursuant to the terms of this Debenture
shall be in writing and shall be deemed delivered (i) when delivered
personally or by verifiable facsimile transmission, unless such delivery
is made on a day that is not a Business Day, in which case such delivery
will be deemed to be made on the next succeeding Business Day and(ii) on
the next Business Day after timely delivery to an overnight courier,
addressed as follows:
Page A-19
If to the Corporation:
Ramtron International Corporation
0000 Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attn: XxXxx X. Xxxxxx, Chief Financial Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Coudert Brothers LLP
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. St. Clair, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
and if to the Holder, at such address as the Holder shall have furnished
the Corporation in writing.
(c) Amendments. No amendment, modification or other change to, or waiver of
any provision of, this Debenture may be made unless such amendment,
modification or change is set forth in writing and is signed by the
Corporation and the Holder . Notwithstanding anything to the contrary
contained in the Debenture, this Debenture may also be amended by
operation of Section 7.11 of the Purchase Agreement upon the satisfaction
of the conditions described therein.
(d) Transfer of Debenture. The Holder may sell, transfer or otherwise
dispose of all or any part of this Debenture (including without
limitation pursuant to a pledge) to any person or entity as long as such
sale, transfer or disposition is the subject of an effective registration
statement under the Securities Act of 1933, as amended, or is exempt from
registration thereunder. From and after the date of any such sale,
transfer or disposition, the transferee hereof shall be deemed to be the
Holder of a debenture in the principal amount acquired by such
transferee, and the Corporation shall, as promptly as practicable, issue
and deliver to such transferee a new debenture identical in all respects
to this Debenture, in the name of such transferee. The Corporation shall
be entitled to treat the original Holder as the holder of this entire
Debenture unless and until it receives written notice of the sale,
transfer or disposition hereof.
(e) Lost or Stolen Debenture. Upon receipt by the Corporation of evidence of
the loss, theft, destruction or mutilation of this Debenture, and (in the
case of loss, theft or destruction) of indemnity or security reasonably
satisfactory to the Corporation, and upon surrender and cancellation of
the Debenture, if mutilated, the Corporation shall execute and deliver to
the Holder a new Debenture identical in all respects to this Debenture.
Page A-20
(f) Governing Law. This Debenture shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts
made and to be performed entirely within the State of New York.
(g) Successors and Assigns. The terms and conditions of this Debenture shall
inure to the benefit of and be binding upon the respective successors
(whether by merger or otherwise) and permitted assigns of the Corporation
and the Holder. The Corporation may not assign its rights or obligations
under this Debenture except as specifically required or permitted pursuant
to the terms hereof.
(h) Most Favored Nations. The rights of the Purchaser and the obligations of
the Corporation set forth in Section 7.11 of the Purchase Agreement are
hereby incorporated by reference and made a part of this Agreement.
IN WITNESS WHEREOF, the Corporation has caused this Debenture to be signed in
its name by its duly authorized officer on the date first above written.
RAMTRON INTERNATIONAL CORPORATION
By:
------------------------
Name:
Title:
Page A-21
ANNEX I
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal of the 5% Secured
Convertible Debenture (the "Debenture") issued by RAMTRON INTERNATIONAL
CORPORATION (the "Company") into shares of common stock ("Common Stock") of the
Corporation according to the terms and conditions of the Debenture. Capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the Debenture.
Date of Conversion:
------------------------------
Principal Amount of
Debenture to be Converted:
------------------------------
Amount of Interest
to be Converted:
------------------------------
Number of Shares of
Common Stock to be Issued:
------------------------------
Name of Holder:
------------------------------
Address:
------------------------------
------------------------------
------------------------------
Signature:
-------------------------
Name:
------------------------------
Title:
------------------------------
Holder Requests Delivery to be made: (check one)
/ / By Delivery of Physical Certificates to the Above Address
/ / Through Depository Trust Corporation
(Account )
Page A-22
ANNEX II
Schedule of
Decreases
of Principal Amount
Principal Amount of
Balance Decrease Date
$XX,000,000
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
Page A-23
Exhibit B to Purchase Agreement
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE
OFFERED FOR SALE, SOLD OR TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT
THERETO, OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER,
SALE OR TRANSFER. SUBJECT TO COMPLIANCE WITH THE REQUIREMENTS OF THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, THIS WARRANT AND THE
SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE PLEDGED IN CONNECTION
WITH A BONAFIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THIS WARRANT OR ANY OF
THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARANT.
Warrant to Purchase Issue Date: March XX, 2002
XXXXXXXX Shares
WARRANT TO PURCHASE COMMON STOCK
of
RAMTRON INTERNATIONAL CORPORATION
THIS CERTIFIES that Infineon Technologies AG, a German stock corporation
("Infineon") or any subsequent holder hereof (the "Holder"), has the right to
purchase from RAMTRON INTERNATIONAL CORPORATION, a Delaware corporation (the
"Company"), up to XXXXXXXX fully paid and nonassessable shares of the
Company's common stock, par value $.01 per share (the "Common Stock"), subject
to adjustment as provided herein, at a price equal to the Exercise Price (as
defined below), at any time beginning on the date on which this Warrant is
issued (the "Issue Date") and ending at 5:00 p.m., New York time, on the date
that is the fifth (5th) anniversary of the Issue Date (the "Expiration Date").
This Warrant is issued pursuant to the Securities Purchase Agreement, dated as
of March 14, 2002, between the Company and Infineon (the "Securities Purchase
Agreement"). Capitalized terms used herein and not otherwise defined shall
have the respective meanings set forth in the Securities Purchase Agreement.
1. Exercise.
(a) Right to Exercise; Exercise Price. The Holder shall have the right to
exercise this Warrant at any time and from time to time during the period
beginning on the Issue Date and ending on the Expiration Date as to all or
any part of the shares of Common Stock covered hereby (the "Warrant
Shares"). The "Exercise Price" payable by the Holder in connection with
the exercise of this Warrant shall be equal to $XXXX (subject to
adjustment for the events specified in Section 6 below).
Page B-1
(b) Exercise Notice. In order to exercise this Warrant, the Holder shall send
by facsimile transmission, at any time prior to 7:00 p.m., New York time,
on the Business Day on which the Holder wishes to effect such exercise
(the "Exercise Date"), to the Company and to its designated transfer agent
for the Common Stock (the "Transfer Agent") a copy of the notice of
exercise in the form attached hereto as Exhibit A (the "Exercise Notice")
stating the number of Warrant Shares as to which such exercise applies and
the calculation therefor. The Holder shall thereafter deliver to the
Company the original Exercise Notice, the original Warrant and, in the
case of a Cash Exercise (as defined below), the Exercise Price. In the
case of a dispute as to the calculation of the Exercise Price or the
number of Warrant Shares issuable hereunder (including, without
limitation, the calculation of any adjustment pursuant to Section 6
below), the Company shall promptly issue to the Holder the number of
Warrant Shares that are not disputed and shall submit the disputed
calculations to the Company's independent accountant of national
recognition within two (2) Business Days following the date on which the
Exercise Notice is delivered to the Company. The Company shall cause such
accountant to calculate the Exercise Price and/or the number of Warrant
Shares issuable hereunder and to notify the Company and the Holder of the
results in writing no later than two (2) Business Days following the day
on which such accountant received the disputed calculations (the "Dispute
Procedure"). Such accountant's calculation shall be deemed conclusive
absent manifest error. The fees of any such accountant shall be borne by
the party whose calculations were most at variance with those of such
accountant.
(c) Holder of Record. The Holder shall, for all purposes, be deemed to have
become the holder of record of the Warrant Shares specified in an Exercise
Notice on the Exercise Date specified therein, irrespective of the date of
delivery of such Warrant Shares. Except as specifically provided herein,
nothing in this Warrant shall be construed as conferring upon the Holder
hereof any rights as a stockholder of the Company prior to the Exercise
Date.
(d) Cancellation of Warrant. This Warrant shall be canceled upon its exercise
and, if this Warrant is exercised in part, the Company shall, at the time
that it delivers Warrant Shares to the Holder pursuant to such exercise as
provided herein, issue a new warrant, and deliver to the Holder a
certificate representing such new warrant, with terms identical in all
respects to this Warrant (except that such new warrant shall be
exercisable into the number of shares of Common Stock with respect to
which this Warrant shall remain unexercised); provided, however, that the
Holder shall be entitled to exercise all or any portion of such new
warrant at any time following the time at which this Warrant is exercised,
regardless of whether the Company has actually issued such new warrant or
delivered to the Holder a certificate therefor.
Page B-2
2. Delivery of Warrant Shares Upon Exercise. Upon receipt of an Exercise
Notice pursuant to paragraph 1 above, the Company shall, (A) in the case of a
Cashless Exercise (as defined below), no later than the close of business on
the third (3rd) Business Day following the Exercise Date set forth in such
Exercise Notice, (B) in the case of a Cash Exercise (as defined below) no later
than the close of business on the later to occur of (i) the third (3rd)
Business Day following the Exercise Date set forth in such Exercise Notice and
(ii) such later date on which the Company shall have received payment of the
Exercise Price, and (C) with respect to Warrant Shares which are the subject of
a Dispute Procedure, the close of business on the third (3rd) Business Day
following the determination made pursuant to paragraph 1(b) (the "Delivery
Date"), issue and deliver or caused to be delivered to the Holder the number of
Warrant Shares as shall be determined as provided herein. The Company shall
effect delivery of Warrant Shares to the Holder by, as long as the Transfer
Agent participates in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer program ("FAST") and no legend is required to appear on any
physical certificate if issued, crediting the account of the Holder or its
nominee at DTC (as specified in the applicable Exercise Notice) with the number
of Warrant Shares required to be delivered, no later than the close of business
on such Delivery Date. In the event that the Transfer Agent is not a
participant in FAST, or if the Warrant Shares are not otherwise eligible for
delivery through FAST, or if the Holder so specifies in an Exercise Notice or
otherwise in writing on or before the Exercise Date, the Company shall effect
delivery of Warrant Shares by delivering to the Holder or its nominee physical
certificates representing such Warrant Shares, no later than the close of
business on such Delivery Date. Warrant Shares delivered to the Holder shall
not contain any restrictive legend as long as (x) the resale, transfer, pledge
or other disposition of such shares is covered by an effective registration
statement, (y) such shares have been publicly sold pursuant to Rule 144, or
(z) such shares can be sold pursuant to Rule 144(k), or any successor rule or
provision.
3. Failure to Deliver Warrant Shares.
In the event that the Holder has not received certificates (without any
restrictive legend in the circumstances described in clause (x), (y) or (z) of
paragraph 2 above) representing the number of Warrant Shares specified in the
applicable Exercise Notice on or before the Delivery Date therefor (an
"Exercise Default"), the Holder shall have the following rights:
(a) the right to receive from the Corporation an amount equal to (i) "N/365"
multiplied by (ii) the aggregate Exercise Price of the Warrant Shares
which are the subject of such Exercise Default (such amount, the "Exercise
Default Amount") multiplied by (iii) twenty four percent (24%), where "N"
equals the number of days elapsed between the Delivery Date and the date
on which such Exercise Default has been cured; and, at the Holder's
option, either of the following:
Page B-3
(b) (1) the right to receive from the Corporation an amount equal to (A) the
aggregate amount paid by the Holder for shares of Common Stock
purchased by the Holder in order to make delivery on a sale effected
in anticipation of receiving Warrant Shares upon such exercise minus
(B) the aggregate Exercise Price for such Warrant Shares; or
(2) the right to require the Corporation to reinstate the Warrant by an
amount equal to the Exercise Default Amount and deem the exercise
resulting in such Exercise Default rescinded, null and void.
In addition to its right to receive the foregoing amounts, the Holder shall
have the right to pursue all other remedies available to it at law or in
equity (including, without limitation, a decree of specific performance and/or
injunctive relief). Amounts payable under this paragraph 3 shall be paid to the
Holder in immediately available funds on or before the fifth (5th) Business Day
following written notice from the Holder to the Company specifying the amount
owed to it by the Company pursuant to this paragraph 3.
4. Exercise Limitations.
Subject to the terms of the Rights Agreement, dated as of April 19, 2001,
between the Corporation and Citibank, N.A., in no event shall the Holder be
permitted to exercise this Warrant, or part thereof, with respect to Warrant
Shares in excess of the number of such shares, upon the issuance of which,
(x) the number of shares of Common Stock beneficially owned by the Holder
(other than shares which would otherwise be deemed beneficially owned except
for being subject to a limitation on conversion or exercise analogous to the
limitation contained in this paragraph 4) plus (y) the number of shares of
Common Stock issuable upon such exercise would be equal to or exceed 49.9% of
the number of shares of Common Stock then issued and outstanding. As used
herein, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and the
rules thereunder. To the extent that the limitation contained in this paragraph
4 applies, the submission of an Exercise Notice by the Holder shall be deemed
to be the Holder's representation that this Warrant is exercisable pursuant to
the terms hereof and the Company shall be entitled to rely on such
representation without making any further inquiry as to whether this
Section 4 applies. Nothing contained herein shall be deemed to restrict the
right of a Holder to exercise this Warrant, or part thereof, at such time as
such exercise will not violate the provisions of this Section 4.
5. Payment of the Exercise Price; Cashless Exercise. The Holder may pay the
Exercise Price in either of the following forms or, at the election of Holder,
a combination thereof:
(a) through a cash exercise (a "Cash Exercise") by delivering immediately
available funds, or
Page B-4
(b) if all of the Warrant Shares issuable hereunder are not then eligible for
resale pursuant to an effective Registration Statement, through a
cashless exercise (a "Cashless Exercise") by surrendering this Warrant to
the Company and noting on the Exercise Notice that the Holder wishes to
effect a Cashless Exercise, in which event the Company shall issue to the
Holder the number of Warrant Shares determined as follows:
X = Y x (A-B)/A
where: X = the number of Warrant Shares to be issued to the Holder;
Y = the number of Warrant Shares with respect to which this
Warrant is being exercised;
A = the Market Price (as defined in the Debenture) on the Exercise
Date; and
B = the Exercise Price.
For purposes of Rule 144, it is intended and acknowledged that the Warrant
Shares issued in a Cashless Exercise transaction shall be deemed to have been
acquired by the Holder, and the holding period for the Warrant Shares required
by Rule 144 shall be deemed to have been commenced, on the Issue Date.
6. Anti-Dilution Adjustments; Distributions; Other Events. The Exercise Price
and the number of Warrant Shares issuable hereunder shall be subject to
adjustment from time to time as provided in this Section 6. In the event that
any adjustment of the Exercise Price or the number of Warrant Shares as
required herein results in a fraction of a cent or fraction of a share, as
applicable, such Exercise Price or number of Warrant Shares shall be rounded
up or down to the nearest cent or share, as applicable.
(a) Adjustment of Exercise Price upon Certain Issuances of Common Stock. In
the event that the Company (A) issues Common Stock, whether upon the
exercise of rights, warrants, securities convertible or exercisable into
Common Stock ("Convertible Securities")or otherwise, at a price per share
that is lower than the Exercise Price then in effect, or (B) issues
Convertible Securities with a conversion price, exercise price or
exchange ratio, that is lower than the Exercise Price, the Exercise Price
shall be reduced to such lower price. In the event that the Company (A)
issues Common Stock, whether upon the exercise of Convertible Securities
or otherwise, or (B) issues Convertible Securities with a conversion
price, exercise price or exchange ratio, in the case of either (A) or
(B), that is lower than the Market Price (but not lower than the Exercise
Price, in which case the immediately preceding sentence shall apply), the
Exercise Price shall be reduced to a price determined by multiplying the
Exercise Price in effect immediately prior to such issuance by a
fraction, (i) the numerator of which is an amount equal to the sum of (x)
the number of shares of outstanding (not including any shares of Common
Stock held in the treasury of the Company) immediately prior to the such
Page B-5
issuance, plus (y) the quotient of the aggregate consideration (if any)
received by the Company upon such issuance divided by the Market Price in
effect immediately prior to such issuance, and (ii) the denominator of
which is the total number of shares of Common Stock Deemed Outstanding
immediately after such issuance. "Common Stock Deemed Outstanding" shall
mean the number of shares of Common Stock actually outstanding excluding
any shares of Common Stock held in the treasury of the Company, but which
shall include, in the case where any such issuance comprises the issuance
of Convertible Securities, the maximum total number of shares of Common
Stock issuable upon the exercise of the Convertible Securities for which
the adjustment is required. No further adjustment of the Exercise Price
shall be made pursuant to this paragraph (a) upon the actual issuance of
Common Stock pursuant to such Convertible Securities, unless the price at
which such issuance is effected is less than the price used to make such
adjustment, in which case the Exercise Price shall be adjusted as though
such lesser price had been in effect as of the date on which such
Convertible Securities were issued.
(b) Subdivision or Combination of Common Stock. If the Company, at any time
after the Issue Date, subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) its
shares of Common Stock into a greater number of shares, then after the
date of record for effecting such subdivision, the Exercise Price in
effect immediately prior to such subdivision will be proportionately
reduced. If the Company, at any time after the initial issuance of this
Warrant, combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) its shares of Common Stock
into a smaller number of shares, then, after the date of record for
effecting such combination, the Exercise Price in effect immediately
prior to such combination will be proportionally increased.
(c) Distributions. If the Company or any of its Subsidiaries shall at any
time distribute to holders of Common Stock (or to a holder, other than the
Company, of the common stock of any such Subsidiary) cash, evidences of
indebtedness or other securities or assets including any dividend or
distribution in shares of capital stock of a Subsidiary of the Company
(collectively, a "Distribution") then, in any such case, the Holder of
this Warrant shall be entitled to receive, at the same time as such assets
are received by a holder of such stock, at the option of the Holder, (A)
an amount and type of such Distribution as though the Holder were a holder
on the record date therefor of a number of shares of Common Stock into
which this Warrant is exercisable as of such record date (such number of
shares to be determined at the Exercise Price then in effect and without
regard to any limitation on exercise of this Warrant that may exist
pursuant to the terms hereof or otherwise) and (B) a reduction in the
Exercise Price as of the record date for such Distribution, such
reduction to be effected by reducing the Exercise Price in effect on the
Business Day immediately preceding such record date by an amount equal to
the fair market value of the assets so distributed divided by the number
of shares of Common Stock to which such Distribution is made, such fair
market value to be reasonably determined in good faith by the Company's
Board of Directors.
Page B-6
(d) Major Transactions. In the event of a merger, consolidation, business
combination, tender offer, exchange of shares, recapitalization,
reorganization, redemption or other similar event, as a result of which
shares of Common Stock of the Company shall be changed into the same or a
different number of shares of the same or another class or classes of
stock or securities or other assets of the Company or another entity or
the Company shall sell all or substantially all of its assets (each of
the foregoing being a "Major Transaction"), then the holder of this
Warrant may, at its option, either (a) in the event that the Common Stock
remains outstanding or holders of Common Stock receive any common stock
or substantially similar equity interest, in each of the foregoing cases
which is publicly traded, retain this Warrant and this Warrant shall
continue to apply to such Common Stock or shall apply, as nearly as
practicable, to such other common stock or equity interest, as the case
may be, or (b) receive consideration, in exchange for this Warrant upon
the surrender thereof (without payment of any exercise price hereunder),
equal to the greater of, as determined in the sole discretion of the
Holder, (i) the number of shares of stock or securities or property of
the Company, or of the entity resulting from such Major Transaction (the
"Major Transaction Consideration"), to which a holder of the number of
shares of Common Stock delivered upon the exercise of this Warrant
(pursuant to the Cashless Exercise feature hereof) would have been
entitled upon such Major Transaction had the Holder so exercised this
Warrant (without regard to any limitations on exercise herein or
elsewhere contained) on the Trading Date immediately preceding the public
announcement of the transaction resulting in such Major Transaction and
had the Holder been the holder of record of such Common Stock at the time
of the consummation of such Major Transaction, and (ii) cash paid by the
Company in immediately available funds in an amount equal to the product
of the (x) Market Price (as defined in the Debenture) calculated as of
the date of the public announcement of the transaction resulting in such
Major Transaction, and (y) the maximum number of Warrant Shares issuable
to the Holder upon a Cashless Exercise of the Warrant as of such date
(without regard to any limitations on exercise herein contained), and the
Company shall make lawful provision for the foregoing as a part of such
Major Transaction and, in the case of (i) above, shall cause the issuer
of any security in such transaction to assume all of the Company's
obligations under the Securities Purchase Agreement, the Debenture and
the Registration Rights Agreement.
(e) Adjustments; Additional Shares, Securities or Assets. In the event that
at any time, as a result of an adjustment made pursuant to this paragraph
6, the Holder of this Warrant shall, upon exercise of this Warrant, become
entitled to receive securities or assets (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common Stock
shall be deemed to refer to and include such shares and/or other
securities or assets; and thereafter the number of such shares and/or
other securities or assets shall be subject to adjustment from time to
time in a manner and upon terms as nearly equivalent as practicable to the
provisions of this paragraph 6. Any adjustment made herein that results in
a decrease in the Exercise Price shall also effect a proportional increase
in the number of shares of Common Stock into which this Warrant is
exercisable.
Page B-7
(f) Exceptions to Adjustment of Exercise Price. No adjustment to the
Exercise Price will be made pursuant to this Section 6 (i) upon the
exercise of any warrants, options or convertible securities granted,
issued and outstanding on the Initial Closing Date (except in the case
where the price at which such warrant, option or security is exercised
has decreased since the Initial Closing Date as a result of a reset,
anti-dilutive adjustment or similar occurrence); (ii) upon the grant or
exercise of any stock or options which may hereafter be granted or
exercised under any employee benefit plan, stock option plan or
restricted stock plan of the Company now existing or to be implemented in
the future, so long as the issuance of such stock or options is approved
by a majority of the Board of Directors of the Company; (iii) upon the
exercise of the Warrants or the conversion of the Debentures; (iv) upon
the issuance of securities pursuant to a firm-commitment, fixed-price
underwritten offering; and (v) upon the issuance of securities in
connection with a strategic investment made by the Company or a third
party, the primary purpose of which is not the raising of equity capital;
provided, that any and all such issuances do not exceed, in the
aggregate, five percent (5%) of the Common Stock outstanding as of the
Issue Date. Notwithstanding the foregoing, no adjustment to the Exercise
Price shall be required unless such adjustment would require an increase
or decrease of at least one percent (1%) in such price; provided,
however, that any adjustments to the Exercise Price by reason of this
clause that are not made shall be carried forward and taken into account
in any subsequent adjustment of the Exercise Price that is required to be
made under this Warrant
7. Fractional Interests.
No fractional shares or scrip representing fractional shares shall be issuable
upon the exercise of this Warrant, but on exercise of this Warrant, the Holder
hereof may purchase only a whole number of shares of Common Stock. If, on
exercise of this Warrant, the Holder hereof would be entitled to a fractional
share of Common Stock or a right to acquire a fractional share of Common Stock,
such fractional share shall be disregarded and the number of shares of Common
Stock issuable upon exercise shall be rounded up or down to the nearest whole
number of shares of Common Stock.
8. Transfer of this Warrant.
The Holder may sell, transfer, assign, pledge or otherwise dispose of this
Warrant, in whole or in part, as long as such sale or other disposition is made
in the pursuant to an effective registration statement or an exemption to the
registration requirements of the Securities Act. Upon such transfer or other
disposition, the Holder shall deliver a written notice to the Company,
substantially in the form of the Transfer Notice attached hereto as Exhibit B
(the "Transfer Notice"), indicating the person or persons to whom this Warrant
shall be transferred and, if less than all of this Warrant is transferred, the
number of Warrant Shares to be covered by the part of this Warrant to be
transferred to each such person. Within three (3) Business Days of receiving a
Transfer Notice and the original of this Warrant, the Company shall deliver to
the each transferee designated by the Holder a Warrant or Warrants of like
tenor and terms for the appropriate number of Warrant Shares and, if less than
all this Warrant is transferred, shall deliver to the Holder a Warrant for the
remaining number of Warrant Shares.
Page B-8
9. Benefits of this Warrant.
This Warrant shall be for the sole and exclusive benefit of the Holder of this
Warrant and nothing in this Warrant shall be construed to confer upon any
person other than the Holder of this Warrant any legal or equitable right,
remedy or claim hereunder.
10. Loss, theft, destruction or mutilation of Warrant.
Upon receipt by the Company of evidence of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
indemnity reasonably satisfactory to the Company, and upon surrender of this
Warrant, if mutilated, the Company shall execute and deliver a new Warrant of
like tenor and date.
11. Notice or Demands.
Any notice, demand or request required or permitted to be given by the Company
or the Holder pursuant to the terms of this Warrant shall be in writing and
shall be deemed delivered (i) when delivered personally or by verifiable
facsimile transmission, unless such delivery is made on a day that is not a
Business Day, in which case such delivery will be deemed to be made on the
next succeeding Business Day and (ii) on the next Business Day after timely
delivery to an overnight courier, addressed as follows:
If to the Company:
Ramtron International Corporation
0000 Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attn: XxXxx X. Xxxxxx, Chief Financial Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Coudert Brothers LLP
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. St. Clair, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
and if to the Holder, to such address as shall be designated by the Holder in
writing to the Company.
Page B-9
12. Applicable Law.
This Warrant is issued under and shall for all purposes be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within the State of New York.
13. Most Favored Nations.
The rights of the Purchaser and the obligations of the Company set forth in
Section 7.11 of the Securities Purchase Agreement are hereby incorporated by
reference and made a part of this Warrant.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the XXth
day of March, 2002.
RAMTRON INTERNATIONAL CORPORATION
By:
-------------------------------
Name:
Title:
Page B-10
EXHIBIT A to WARRANT
EXERCISE NOTICE
The undersigned Holder hereby irrevocably exercises the right to purchase
of the shares of Common Stock ("Warrant Shares") of RAMTRON INTERNATIONAL
CORPORATION evidenced by the attached Warrant (the "Warrant"). Capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the Warrant.
1. Form of Exercise Price. The Holder intends that payment of the Exercise
Price shall be made as:
/ / a Cash Exercise with respect to XXXXXX Warrant Shares; and/or
/ / a Cashless Exercise with respect to XXXXXXX Warrant Shares, as
permitted by Section 5(b) of the attached Warrant.
2. Payment of Exercise Price. In the event that the Holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the Holder shall pay the sum of $XXXXXXXX to the Company in
accordance with the terms of the Warrant.
Date:
------------------------
------------------------------------------
Name of Registered Holder
By:
--------------------------------------
Name:
Title:
Page B-11
EXHIBIT B to WARRANT
TRANSFER NOTICE
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby
sells, assigns and transfers unto the person or persons named below the right
to purchase shares of the Common Stock of RAMTRON INTERNATIONAL
CORPORATION evidenced by the attached Warrant.
Date:
---------------------------
--------------------------------------
Name of Registered Holder
By:
---------------------------------
Name:
Title:
Transferee Name and Address:
---------------------------------
---------------------------------
---------------------------------
Page B-12
Exhibit C to the Purchase Agreement
Material Terms of the Security Agreement:
-- The Debenture shall be secured by the European Receivables.
-- In the event that the European Receivables are insufficient to satisfy the
Company's obligations under the Debenture, the Debenture shall be secured
by the Company's Intellectual Property and the Company shall execute and
deliver to Purchaser a security agreement in the form attached to the
Security Agreement to such effect.
Page C-1
Exhibit D to the Purchase Agreement
AMENDMENT NO. 1
TO REGISTRATION RIGHTS AGREEMENT
THIS AMENDMENT No. 1 (this "Amendment") to the Registration Rights Agreement
dated as of February 12, 2001 (the "Agreement") by and between Infineon
Technologies AG, a German stock corporation ("Infineon"), and Ramtron
International Corporation, a Delaware corporation (the "Company"), is dated as
of March XX, 0000, and is being entered into by and between Infineon and the
Company.
RECITALS
WHEREAS, Infineon and the Company entered into the Agreement in order to
provide Infineon with certain registration rights with respect to shares of
the Company's Common Stock purchased by Infineon pursuant to the Share
Purchase Agreement dated December 14, 2000 (the "Purchase Agreement"), by and
between Infineon and the Company;
WHEREAS, concurrently herewith, Infineon and the Company are consummating a
transaction pursuant to which Infineon has agreed, among other things, to
purchase additional securities of the Company which are, respectively,
convertible into and exercisable for shares of the Company's Common Stock and
the Company has agreed, among other things, to register such shares of Common
Stock on the same terms and conditions as the Company agreed to register the
shares of Common Stock purchased by Infineon under the Purchase Agreement; and
WHEREAS, Infineon and the Company wish hereby to amend the Agreement so that
the registration rights contained therein also apply to the shares of the
Company's Common Stock into and for which the securities being purchased by
Infineon concurrently herewith are, respectively, convertible and exercisable.
NOW, THEREFORE, in consideration of the foregoing recitals, the following
covenants and promises and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
amend the Agreement as follows:
AGREEMENT
1. Definitions
Unless otherwise defined herein, all capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in the
Agreement, and references to "Section" or "Sections" herein are references to
the specified sections of the Agreement.
2. Amendments
2.1 Section 1 - "Registrable Securities". The first sentence of the
definition of "Registrable Securities" in Section 1 of the Agreement
is hereby amended and restated to read in its entirety as follows:
Page D-1
"Registrable Securities" shall mean all or any portion of the Shares,
Conversion Shares, and Warrant Shares (each of the Conversion Shares
and Warrant Shares as defined in the Securities Purchase Agreement)
beneficially owned by a Holder of such shares.
2.2 Section 1 - "Securities Purchase Agreement". A new definition for
the term "Securities Purchase Agreement" is hereby added to Section 1
of the Agreement to read in its entirety as follows:
"Securities Purchase Agreement" shall mean the Securities Purchase
Agreement dated as of March 14, 2002, entered into by and between
Infineon and the Company.
3. Effect of Amendments
Except as expressly modified by the provisions of this Amendment, the
Agreement and all of the terms, provisions and conditions thereof shall for
all purposes remain unchanged, and in full force and effect, and are approved,
ratified and confirmed, and from and after the date hereof all references to
the Agreement in any other agreement to which any of the undersigned are
parties shall mean the Agreement as amended hereby.
4. Counterparts
This Amendment may be executed in any number of counterparts, each of which
will be deemed an original, but all of which together will constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment effective
as of the date set forth in the preamble hereof.
INFINEON TECHNOLOGIES AG RAMTRON INTERNATIONAL
CORPORATION
By By
------------------------- ----------------------------
Name: Name:
Title: Title:
By
-------------------------
Name:
Title:
Page D-2
Exhibit E to the Purchase Agreement
AMENDMENT NO. 1
TO SHARE PURCHASE AGREEMENT
THIS AMENDMENT No. 1 (this "Amendment") to the Share Purchase Agreement dated
as of December 14, 2000 (the "Agreement"), by and between Infineon
Technologies AG, a German stock corporation ("Infineon"), and Ramtron
International Corporation, a Delaware corporation (the "Company") is dated as
of March XX, 0000, and is being entered into by and between Infineon and the
Company.
RECITALS
WHEREAS, pursuant to the Agreement, Infineon purchased shares of the Company's
Common Stock and, subject to certain conditions, agreed to refrain from
acquiring any additional shares of the Company's Common Stock for a specified
period of time (the "Standstill Period"), which period is still in effect;
WHEREAS, concurrently herewith, Infineon and the Company are consummating a
transaction pursuant to which Infineon will, among other things, purchase
additional securities of the Company which are convertible and exercisable
into shares of the Company's Common Stock and Ramtron will, among other
things, waive its rights with respect to the applicability of the Standstill
to Infineon's purchase of such additional securities and Infineon will, among
other things, agree to amend the terms of the Standstill in accordance with
this Amendment,
WHEREAS, Infineon and the Company wish hereby to amend the Agreement in order
to extend the Lock-Up Period.
NOW, THEREFORE, in consideration of the foregoing recitals, the following
covenants and promises and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
amend the Agreement as follows:
AGREEMENT
1. Definitions
Unless otherwise defined herein, all capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in the
Agreement, and references to "Section" or "Sections" herein are references to
the specified sections of the Agreement.
2. Amendments
2.1 Section 7.9 - "Infineon Standstill". Subsection (a)(i) of Section
7.9 of the Agreement is hereby amended and restated to read in its
entirety as follows:
"(i) the date three (3) years after the Initial Closing Date,"
Page E-1
3. Effect of Amendments
Except as expressly modified by the provisions of this Amendment, the
Agreement and all of the terms, provisions and conditions thereof shall for
all purposes remain unchanged, and in full force and effect, and are approved,
ratified and confirmed, and from and after the date hereof all references to
the Agreement in any other agreement to which any of the undersigned are
parties shall mean the Agreement as amended hereby.
4. Counterparts
This Amendment may be executed in any number of counterparts, each of which
will be deemed an original, but all of which together will constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment effective
as of the date set forth in the preamble hereof.
INFINEON TECHNOLOGIES AG RAMTRON INTERNATIONAL
CORPORATION
By By
------------------------- ----------------------------
Name: Name:
Title: Title:
By
-------------------------
Name:
Title:
Page E-2
Ramtron International Corporation
Schedule 1.2 - Debt (subject to Schedule 4.5)
March 14, 2002
Indebtedness, liabilities and obligations to pay deferred purchase price of
property or services, other than trade accounts payable arising in the normal
course of business.
-----------------------------------------------------------------------------
None
Capital lease obligations
-------------------------
None
Debt of other guaranteed by Ramtron International Corp.
-------------------------------------------------------
Ramtron, the parent company, has guaranteed a 36-month equipment operating
lease its subsidiary, Enhanced Memory Systems, entered into with Cypress
Semiconductor on October 22, 2001. Payments on the lease are $75,733.32 per
month plus sales tax.
Liens, liabilities, and obligations secured by a lien existing on Ramtron's
property
---------------------------------------------------------------------------
None, other than exceptions 8-15 listed on Schedule B-2 of that certain title
insurance commitment dated February 28, 2002, and any liability in respect of
property taxes for the Real Property for the year 2002 and thereafter not yet
due or payable.
Reimbursement obligations of Ramtron in respect of letters of credit, banker's
acceptance, surety or other bonds and similar instruments
------------------------------------------------------------------------------
Outstanding letter of credit at US Bank for $150,000 for the benefit of
Comdisco should the Company fail to make operating lease payments. Monthly
lease payment is approximately $25,000 per month and expires in September
2002.
Indebtedness, liabilities and obligations of Ramtron to redeem or retire
shares of capital stock
------------------------------------------------------------------------
1,092 redeemable convertible preferred shares outstanding as of December 31,
2001, plus accrued dividends through July 31, 2002, must be redeemed July 31,
2002 if not converted to common stock by holders of these securities. Total
obligation approximates $1,174,453.
Page S-1
Ramtron International Corporation
Schedule 3.11 - Intellectual Property
March 14, 2002
A patent interference proceeding, which was declared in 1991 in the United
States Patent and Trademark Office (the "Patent Office") between the Company,
National Semiconductor Corporation ("National") and the Department of the Navy
in regard to one of the Company's issued United States patents, is continuing.
The patent involved covers a basic ferroelectric memory cell design invention
the Company believes is of fundamental importance to its FRAM business in the
United States. An interference is declared in the Patent Office when two or
more parties each claim to have made the same invention. The interference
proceeding is therefore conducted to determine which party is entitled to the
patent rights covering the invention. In the present interference contest,
the Company is the "senior" party, which means that it is in possession of the
issued United States Patent and retains all rights associated with such
patent. The other two parties involved in the interference are the "junior"
parties, and each has the burden of proof of convincing the Patent Office by a
preponderance of the evidence that it was the first to invent the subject
matter of the invention and thus is entitled to the corresponding patent
rights. Only the Company and National filed briefs in this matter. Oral
arguments were presented before the Patent Office on March 1, 1996.
The Patent Office decided the interference on May 6, 1997, holding that all of
the claims were patentable to National, one of the "junior" parties. The
other "junior" party, the Department of the Navy, was not granted any patent
claims pursuant to the interference proceedings. On June 20, 1997, the
Company filed a Request for Reconsideration with the Patent Office concerning
the interference decision. Pursuant to the Request for Reconsideration, the
Company requested that five separate issues be reconsidered because, from the
Company's perspective, they were either ignored or misconstrued in the
original decision. A decision on the Request for Reconsideration was issued
on November 19, 1998, again holding that all of the claims were patentable to
National. On January 9, 1999, the Company appealed the decision of the Patent
Office on one of the interference counts directly to the Court of Appeals for
the Federal Circuit. On February 2, 2000, the Court of Appeals vacated and
remanded the decision of the Patent Office for further proceedings. The
Company also filed complaints in Federal District Court seeking a review of
the decision of the Patent Office on the remaining interference counts. The
Company remains in possession of the issued United States Patent and retains
all rights associated with such patent while it pursues its appeal options.
The "junior" party has received no rights associated with this patent decision
and will not receive any such rights as long as the appeal process continues.
Under a Patent Office decision on August 13, 2001, the Company was found to be
the first to invent, however, the Patent Office concluded that the enablement
and best-mode requirements for patent issuance had not been met by the
Company. In October 2001, both the Company and National filed a Request for
Reconsideration with the Patent Office. The Patent Office response is still
pending. If the Company's Request for Reconsideration is denied, the Company
will appeal the decision of the Patent Office.
Page S-2
If the Company's patent rights that are the subject of the interference
proceeding are ultimately lost or significantly compromised, the Company would
be precluded from producing FRAM products in the United States using the
Company's existing design architecture, absent being able to obtain a suitable
license to exploit such rights. If such patent rights are ultimately awarded
to National, and if a license to such rights is not subsequently entered into
by the Company with National, National could use the patent to prevent the
manufacture, use or sale by the Company, and/or its licensees, within the
United States of any products that come within the scope of such patent
rights, which would include all FRAM products as currently designed, and which
would materially adversely affect the Company. The Company has vigorously
defended its patent rights in this interference contest and will continue such
efforts. The Company is uncertain as to the ultimate outcome of the
interference proceeding, as well as to the resulting effects upon the
Company's financial position or results of operations.
Page S-3
Ramtron International Corporation
Schedule 3.12 - Registration Rights; Rights of Participation
March 14, 2002
Entities or Individuals with Registration Rights
------------------------------------------------
Infineon Technologies, AG
National Electrical Benefit Fund
L. Xxxxx Xxxxx
Xxxxxxx Xxxxxxx
Xxxxxxxxx Xxxxx
Entities or Individuals with right of first refusal, preemptive right, right
of participation, or anti-dilutive right
----------------------------------------------------------------------------
Infineon Technologies AG, 20% shareholder of Ramtron, has a right of
participation to maintain a pro rata ownership position in Ramtron, pursuant
to a Securities Purchase Agreement dated December 14, 2000.
Page S-4
Ramtron International Corporation
Schedule 3.14 - Fees
March 14, 2002
Compensation and Fees Related to the Stock Purchase Transaction
---------------------------------------------------------------
Fees Payable To: Amount
--------------- ------
Cardinal Capital $225,000
TN Capital Equities, Ltd. $ 75,000
Cardinal Capital and TN Capital Equities, Ltd. are entitled to receive 5%
warrant coverage (73,099 warrants) on their respective portions of the funding
arrangement.
Page S-5
Ramtron International Corporation
Schedule 3.16 - Key Employees
March 14, 2002
Ramtron Key Employees
---------------------
L. Xxxxx Xxxxx
Xxxxxxx X. Xxxxxxxx
Xxxx X. Xxxxx
XxXxx X. Xxxxxx
Xxxxx X. Xxxxxxx
Page S-6
Ramtron International Corporation
Schedule 3.17 - Environment
March 14, 2002
None
Page S-7
Ramtron International Corporation
Schedule 3.18 - Pension Plan
March 14, 2002
Ramtron maintains a 401(K) plan for its employees, the Ramtron International
Corporation 401(K) Retirement Plan.
Ramtron maintains a standard employee benefit package that includes, health,
dental, life and disability insurance.
Page S-8
Ramtron International Corporation
Schedule 3.21 - Real Property Listing
March 14, 2002
Real Property Owned by Ramtron International Corporation
--------------------------------------------------------
All of that certain lot, piece or parcel of land, with buildings and
improvements thereon, situate, laying and being in El Paso County, Colorado
and being more particularly described as follows:
Xxx 0, Xxxxxxx Xxxxxx Xx. 0, Xxxxxx xx Xx Xxxx, Xxxxx of Colorado
Page S-9
Ramtron International Corporation
Schedule 3.5 - Capitalization
March 14, 2002
Authorized Capital: Shares
------------------ ------
Common stock 50,000,000
Preferred stock 10,000,000
Total Shares Outstanding:
------------------------
Common stock 22,081,443
Preferred stock 1,092,000
Expiration Exercise Currently
Holder Instrument Issue Date Date Price Shares Exercisable
------ ---------- ---------- ---------- -------- -------- -----------
Warrants:
--------
NEBF* Warrant 12/22/1999 09/30/2008 $2.25 805,697 805,697
NEBF* Warrant 12/22/1999 08/06/2009 $2.25 100,000 100,000
XXX Partners Warrant 02/11/2000 08/31/2002 $5.00 124,000 124,000
XXX Investments Warrant 02/12/2000 08/31/2002 $5.00 96,000 96,000
X. Xxxxxxxxxx Warrant 12/23/1997 12/23/2002 $5.00 8,059 8,059
Xxx Enterprises Warrant 12/23/1997 12/23/2002 $5.00 12,088 12,088
L. Xxxxx Xxxxx Warrant 01/18/2000 12/31/2007 $6.88 667,000 0
Xxx Xxxxxxx-Fine Warrant 03/09/2000 03/09/2003 $17.00 25,000 25,000
----------------------
Total Warrants 1,837,844 1,170,844
======================
*National Electrical Benefit Fund
Stock Options:
-------------
Key Employees:
L. Xxxxx Xxxxx Option 06/24/1992 06/24/2002 $20.75 10,000 10,000
Option 07/29/1994 07/29/2004 $20.75 1,750 1,750
Option 03/21/1995 03/21/2005 $20.75 40,000 40,000
Option 04/19/1996 04/19/2006 $32.50 10,000 10,000
Option 02/18/1997 02/18/2007 $34.70 10,000 10,000
Option 04/27/1998 02/18/2007 $22.50 20,000 15,000
Option 09/28/1999 02/18/2007 $2.25 200,000 200,000
Option 10/16/2001 02/18/2007 $1.88 25,000 25,000
Page S-10
Xxxxxxx X. Xxxxxxxx Option 12/14/2000 12/14/2010 $5.50 200,000 100,000
Option 10/16/2001 10/16/2011 $1.88 75,000 0
Xxxx X. Xxxxx Option 04/05/1995 04/05/2005 $20.75 8,000 8,000
Option 01/16/1996 01/16/2006 $32.50 9,000 9,000
Option 09/11/1996 09/11/2006 $34.45 20,000 20,000
Option 01/02/1998 01/02/2008 $28.44 9,000 9,000
Option 09/28/1999 09/28/2009 $2.25 100,000 100,000
Option 01/28/2000 01/28/2010 $7.44 125,000 62,500
Option 12/02/2000 12/02/2010 $5.47 75,000 18,750
Option 10/16/2001 10/16/2011 $1.88 50,000 0
XxXxx X. Xxxxxx Option 09/29/1993 09/29/2003 $20.75 550 550
Option 01/16/1996 01/16/2006 $32.50 3,449 3,449
Option 09/11/1996 09/11/2006 $34.45 4,000 4,000
Option 01/22/1998 01/22/2008 $25.08 3,000 3,000
Option 08/17/1999 08/17/2009 $2.19 13,199 13,199
Option 01/28/2000 01/28/2010 $7.44 50,000 25,000
Option 12/02/2000 12/02/2010 $5.47 75,000 18,750
Option 10/16/2001 10/16/2011 $1.88 50,000 0
Xxxxx X. Xxxxxxx Option 10/09/1995 10/09/2005 $40.10 2,000 2,000
Option 01/16/1996 01/16/2006 $32.50 6,485 6,485
Option 09/11/1996 09/11/2006 $34.45 20,000 20,000
Option 09/28/1999 09/28/2009 $2.25 75,000 75,000
Option 01/28/2000 01/28/2010 $7.44 75,000 37,500
Option 12/02/2000 12/02/2010 $5.47 75,000 18,750
Option 10/16/2001 10/16/2011 $1.88 50,000 0
Other employees Option Various Various $1.47-$1.90 743,425 127,600
Other employees Option Various Various $2.19-$2.99 341,393 271,093
Other employees Option Various Various $3.31-$5.59 339,307 67,730
Other employees Option Various Various $6.94-$7.63 440,173 259,309
Other employees Option Various Various $8.19-$17.81 63,930 31,309
Other employees Option Various Various $20.75-$28.45 87,165 87,165
Other employees Option Various Various $30.00-$40.95 232,495 232,495
----------------------
Total Options 3,738,321 1,943,384
======================
Remaining Shares Issuable Under
Existing Stock Option Programs:
------------------------------
1986 Stock Option Plan 0
1989 Stock Option Plan 0
1995 Stock Option Plan 1,827,402
1999 Stock Option Plan 7,361
Page S-11
Key Employee Stock Holdings:
---------------------------
L. Xxxxx Xxxxx 2,100 Shares
Xxxx X. Xxxxx 2,600 Shares
XxXxx X. Xxxxxx 100 Shares
Xxxxx X. Xxxxxxx 1,200 Shares
Redeemable Convertible Series A Preferred:
-----------------------------------------
Shares
Holder Held Par Value & Accrued Dividends
------ ------ -----------------------------
Xxxxxxxxxx X. Xxxxxx Trust 232 $237,867 Conversion price
$5.00, redeemable July 31, 2002
JMG Capital Partners, LP 430 $440,874 Conversion price
$5.00, redeemable July 31, 2002
Triton Capital Holdings, Inc. 430 $440,874 Conversion price
$5.00, redeemable July 31, 2002
Page S-12
Ramtron International Corporation
Schedule 3.7 - Third Party Rights
March 14, 2002
Infineon Technologies AG has contractual pre-emptive rights and other rights
as provided in the Share Purchase Agreement dated December 14, 2000, by and
between Infineon Technologies AG and Ramtron, a copy of which has been
provided to Purchasers and the Infineon Documents (as defined in the Security
Purchase Agreements) contain anti-dilution and other such rights.
Page S-13
Ramtron International Corporation
Schedule 3.8 - Changes in Financial Condition
March 14, 2002
The Company's liquidity has deteriorated from the most recent Disclosure
Document. Cash, cash equivalents and marketable equity securities have
decreased as a result of loan repayments to the National Electrical Benefit
Fund and the funding of operating losses.
Page S-14
Ramtron International Corporation
Schedule 4.5 - Debt
March 14, 2002
Ramtron retains the right to obtain debt secured by:
---------------------------------------------------
Accounts receivable of Ramtron and its subsidiaries
Inventory of Ramtron and its subsidiaries
Capital equipment under operating or capital lease obligations
Marketable securities Ramtron or its subsidiaries may acquire
Page S-15
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