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EXHIBIT 10.1
GTI CORPORATION
VALOR ELECTRONICS, INC.
$2,500,000.00 Secured Promissory Note
due February 9, 1999
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PURCHASE AGREEMENT
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Dated as of February 10, 1997
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TABLE OF CONTENTS
Page
1. Authorization of Note. 4
2. Sale and Purchase of Note. 4
2.1 Initial Sale and Purchase. 4
2.2 Interest Rate. 4
2.3 Payment Terms. 4
3. Closing. 5
4. Conditions to Closing. 5
4.1 Closing Documents. 5
4.2 Representations and Warranties. 5
4.3 Performance; No Default. 5
4.4 Compliance Certificate. 5
4.5 Legal Investment. 5
4.6 Proceedings and Documents. 5
4.7 Consents. 6
5. Representations and Warranties of the Company. 6
5.1 Corporate Existence and Power. 6
5.2 Corporate Authority; Consents. 6
5.3 Binding Agreements. 6
5.4 Litigation. 6
5.5 Compliance With Other Agreements. 6
5.6 National Market System Status; Ownership of Valor. 7
6. Purchase for Investment. 7
7. Prepayment of Note. 7
7.1 Optional Prepayments of Note. 7
7.2 Allocation of Partial Optional Prepayments. 7
7.3 Required Prepayment. 7
8. Business and Financial Covenants. 7
8.1 Debt. 7
8.2 Liens. 7
8.3 Legal Existence. 8
8.4 Maintenance of Property; Insurance. 8
8.5 Taxes. 8
8.6 Financial Information 8
8.7 Approval for Listing. 8
8.8 Stockholder Approval. 9
9. Replacement and Transfer of Note. 9
9.1 Replacement of Note. 9
9.2 Transfer of Note. 9
10. Events of Default; Acceleration. 9
11. Definitions. 10
11.1 Certain Defined Terms. 10
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TABLE OF CONTENTS (Continued)
Page
12. Accounting Terms. 12
13. Expenses, Etc. 12
14. Survival of Representations and Warranties. 12
15. Amendments and Waivers. 12
16. Notices, etc. 13
17. Indemnification. 13
18. Miscellaneous. 13
19. Exhibit B-1 - Security Agreement 15
20. Exhibit B-2 - Financing Statements 25
21. Exhibit B-3 - Warrant 26
22. Exhibit B-4 - Investor's Rights Agreement 37
23. Schedule 5.4 - Litigation 46
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Dated as of February 10, 1997
Telemetrix PLC
Knaves Beech Estate
Loudwater, Xxxx Xxxxxxx
Xxxxx, XX00 0XX
Xxxxxx Xxxxxxx
Dear Sirs:
GTI Corporation, a Delaware corporation ("GTI") and Valor
Electronics, Inc., a California corporation ("Valor"), hereby agree with you as
follows:
1. Authorization of Note. Valor has authorized the issue and sale of a
Secured Promissory Note due 1999 (the "Note", such term to include any notes
issued in substitution therefore pursuant to this Agreement) in the principal
amount of $2,500,000.00, substantially in the form set forth in Exhibit A, to
bear interest as provided therein and to be paid in full on February 9, 1999.
The Note is to be issued and sold upon the terms and conditions of this
Agreement. Certain capitalized terms used in this Note Purchase Agreement (this
"Agreement") are defined in Section 11; references to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached
to this Agreement. Valor and GTI are collectively referred to herein from time
to time as the "Company"; to the extent referred to as the Company, the
obligations of Valor and GTI shall be joint and several.
2. Sale and Purchase of Note.
2.1. Initial Sale and Purchase. Subject to the terms and
conditions of this Agreement, Valor will issue and sell to you, and you will
purchase from Valor, at the Closing provided for in Section 3, the Note.
2.2. Interest Rate. The Note shall bear interest at a rate per
annum (the "Interest Rate") equal to (i) the greater of (a) the prime rate as
announced from time to time by the Bank of America, N.A. ("Prime Rate"), plus
four percentage points (4%) or (b) the interest rate paid under the Union Bank
Line of Credit plus one percentage point (1%) for the first twelve (12) months
from the date of this Note and (ii) thereafter at the greater of (a) the Prime
Rate plus six percentage points (6%) or (b) the Interest Rate paid under the
Union Bank Line of Credit plus one percentage point (1%); provided, however, in
the event of a Promptus Disposition on or before February 9, 1998, the Interest
Rate shall remain as set forth in clause (i) of this sentence or, if after such
date, revert to such rate effective on the date of such disposition, as
applicable.
2.3. Payment Terms. Interest on the Note shall be payable
semi-annually on August 9 and February 9 commencing August 9, 1997 and
continuing until payment in full of the Note. Principal shall be payable in
immediately available funds in four equal semi-annual installments commencing
August 9, 1997. Notwithstanding the foregoing, payments hereunder are subject to
the terms of the Subordination Agreement dated February 10, 1997 among Valor,
you and Union Bank (the "Subordination Agreement"). In the event that a
prohibition exists under such agreement with respect to the making of any
payments hereunder, then any payment so deferred shall be made on the first date
on which payments are not so prohibited.
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3. Closing. The sale of the Note shall take place at the offices of
Valor, 0000 Xxxxxxxx Xxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, commencing at
10:00 a.m., Pacific time, at a closing (the "Closing") on February 10, 1997 (the
"Closing Date"). At the Closing, Valor will deliver to you the Note to be
purchased by you, in the form of a single Note, dated the date of the Closing
and registered in your name (or the name of your nominee), against payment
thereto in immediately available funds in the amount of $2,500,000.00. If at the
Closing Valor shall fail to tender the Note to be purchased by you as provided
in this Section 3, or if any of the conditions specified in Section 4 shall not
have been fulfilled to your reasonable satisfaction, you shall, at your
election, be relieved of all further obligations under this Agreement, without
thereby waiving any other rights you may have by reason of such failure or such
nonfulfillment. In the event that Valor fails to tender the Note for any reason
other than the breach by you of your obligations hereunder, or if any of the
conditions are not met to your satisfaction, the Company shall reimburse you for
your reasonable expenses in connection with the preparation and negotiation of
the documentation contemplated herein.
4. Conditions to Closing. Your obligation to purchase and pay for the
Note, to be sold to you at the Closing is subject to the fulfillment to your
satisfaction, prior to or at the Closing, of the following conditions:
4.1. Closing Documents. Contemporaneously with the Closing,
Valor shall execute and deliver (a) the Security Agreement substantially in the
form set forth in Exhibit B-1, and (b) UCC Financing Statements substantially in
the form set forth in Exhibit B-2; GTI shall execute and deliver (a) the Warrant
substantially in the form set forth in Exhibit B-3, and (b) the Investor's
Rights Agreement substantially in the form set forth in Exhibit B-4; Valor,
Union Bank and you shall execute and deliver the Subordination Agreement in a
form satisfactory to you. In addition to the execution and delivery of the
foregoing documents, the Company shall deliver written evidence of all consents
necessary to the consummation of the transactions contemplated herein,
including, without limitation, all consents required pursuant to the Union Bank
Line of Credit, which consent shall be in a form and substance satisfactory to
you, and an agreement of Union Bank with respect to Valor's use of the proceeds
of the Note and waiver of defaults under the Union Bank Line of Credit, in a
form and substance satisfactory to you.
4.2. Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and correct
in when made and at the time of the Closing.
4.3. Performance; No Default. The Company shall have performed
and complied with all agreements and conditions contained in this Agreement
required to be performed or complied with by it prior to or at the Closing, and
at the time of the Closing (after giving effect to the sale of the Note and the
application of proceeds thereof) no Event of Default or Potential Event of
Default shall exist.
4.4. Compliance Certificate. Valor and GTI shall have each
delivered to you its respective Officers' Certificate, dated the date of the
Closing, certifying that the conditions specified in Sections 4.2 and 4.3 have
been fulfilled.
4.5. Legal Investment. At the time of the Closing, your
purchase of the Note (a) shall not be prohibited by any applicable law or
governmental regulation (including, without limitation, Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System), and (b) shall not
subject you to any penalty or, in your reasonable judgment, other onerous
condition by reason of any change or proposed change after the date of this
Agreement in any applicable law or governmental regulation.
4.6. Proceedings and Documents. All corporate and other
proceedings taken by the Company in connection with the transactions
contemplated by this Agreement and the other Financing Documents and all
documents
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and instruments incident to such transactions shall be satisfactory to you and
your special counsel, in your and their respective reasonable judgments, and you
and your special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request.
4.7. Consents. Except for the Stockholder Approval described
in Section 5.2 below, the Company shall have obtained all consents and approvals
of, or other actions by, any shareholder, any Governmental Body or any other
Person and any and all notices to or filings with any Governmental Body that are
required to authorize, or are required in connection with the execution delivery
and performance of, the Financing Documents or required as a condition to the
validity or enforceability of the Financing Documents.
5. Representations and Warranties of the Company. The Company
represents and warrants as follows:
5.1. Corporate Existence and Power. GTI is a corporation
validly existing and in good standing under the laws of the State of Delaware
and Valor is a corporation validly existing and in good standing under the laws
of the State of California, and each has all requisite corporate power and
authority to own its Property and to carry on its business as now conducted and
is in good standing and authorized to do business in each jurisdiction in which
the failure so to qualify would have a material adverse effect on its respective
financial condition, operations, business, prospects or Property of the Company.
5.2. Corporate Authority; Consents. The Company has the full
corporate power and authority to execute, deliver and perform the terms of the
Financing Documents to which it is a party and to incur the obligations provided
for therein, all of which have been duly authorized by all proper and necessary
corporate action are not prohibited by its certificate of incorporation or
by-laws; provided, however, that exercise of the Warrant shall be subject to
Stockholder Approval as defined in the Warrant. Subject to obtaining Stockholder
Approval, any and all consents and approvals of, or other actions by, any
shareholder, any Governmental Body or any other Person and any and all notices
to or filings with any Governmental Body that are required to authorize, or are
required in connection with the execution, delivery and performance of, the
Financing Documents, or are required as a condition to the validity or
enforceability of the Financing Documents, have been obtained, taken or filed,
as the case may be, and you and your special counsel have received copies
thereof.
5.3. Binding Agreements. This Agreement constitutes, and each
of the other Financing Documents, when executed and delivered, will constitute,
the valid and legally binding obligation of the Company, enforceable against the
Company, in accordance with their respective terms except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
5.4. Litigation. Except as set forth on Schedule 5.4 hereto,
there exist no litigation, arbitration proceedings or claims (whether or not
purportedly on behalf of the Company) pending or, to the best knowledge of the
Company, threatened, against the Company or maintained by the Company, at law or
in equity or before any Governmental Body which, if adversely determined, might
call into question the validity or enforceability of any of the Financing
Documents or, in any individual instance or in the aggregate, materially
adversely affect or impair the financial condition, operations, business,
prospects or Property of the Company.
5.5. Compliance With Other Agreements. The Company is not in
violation or default under any mortgage, indenture, lease, contract or other
agreement or instrument binding upon the Company, where such violation or
default might reasonably be expected to have a material adverse effect on the
operations or condition (financial or otherwise) of the Company; after giving
effect to the agreement of Union Bank required by Section 4.1, the execution,
delivery and performance of the Finance Documents will not conflict with or
result in any material breach of any of the terms, covenants, conditions or
provision of or constitute a default under any material indenture, mortgage,
deed of trust, agreement or other instrument to which the Company is a party or
by which the Company or its property or assets is bound.
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5.6. National Market System Status; Ownership of Valor. The
Common Stock of GTI is listed on the NASDAQ National Market System; Valor is a
wholly-owned subsidiary of GTI.
6. Purchase for Investment. You represent and warrant that you are
purchasing the Note for your own account for investment and not with a view to
the distribution thereof, or with any present intention of selling any of such
securities except in compliance with the Securities Act.
7. Prepayment of Note. The Note shall be subject to payment and
prepayment only as provided in the Note, Section 2 above and this Section 7.
7.1 Optional Prepayments of Note. At any time or from time to
time Valor may without penalty or premium, at its option, without notice, prepay
all or any part of the principal amount or accrued interest on the Note,
provided that each partial prepayment shall be in an aggregate amount not less
than $10,000.00.
7.2 Allocation of Partial Optional Prepayments. In the case of
each partial optional prepayment of the Note pursuant to Section 7.1, the
principal amount of Note to be prepaid shall be credited against the last
maturing installments of principal remaining unpaid on such Note.
7.3 Required Prepayment. In the event of the sale of the stock
or assets of Valor and subject to the terms of the Subordination Agreement,
Valor shall within ten (10) business days following such event prepay all
outstanding principal and accrued interest on the Note.
8. Business and Financial Covenants. The Company covenants with you
that from the date of this Agreement through the Closing and thereafter so long
as the Note is outstanding:
8.1. Debt. Valor will not directly or indirectly create,
incur, assume, guarantee, or otherwise become directly or indirectly liable with
respect to any indebtedness for borrowed money senior to the indebtedness
created by this Agreement other than the guarantee executed by Valor in respect
of the Union Bank Line of Credit.
8.2. Liens. Valor will not create, incur, assume or suffer to
exist any Lien upon any of its Fixed Assets, whether now owned or hereafter
acquired (whether or not provision is made for the equal and ratable securing of
the Note in accordance with the last sentence of this Section 8.2), except:
a. Liens for taxes or assessments and similar
charges, which are either (i) not delinquent or (ii) being contested diligently
and in good faith by appropriate proceedings, and as to which Valor has set
aside adequate reserves on its books;
b. statutory Liens, such as mechanic's,
materialman's, warehouseman's, carrier's or other like Liens, incurred in good
faith in the ordinary course of business, which are paid in the ordinary course
of business or which are bonded in order to remove such Lien of record within
sixty days after the moneys become due and owing;
c. zoning ordinances, easements, licenses,
reservations, provisions, covenants, conditions, waivers, restrictions on the
use of Property or minor irregularities of title, provided that none of the
foregoing, in the aggregate, materially impairs the value of such Property which
is material in the operation of Valor's business;
d. purchase money Liens, provided that such Liens
attach only to the Property so purchased or leased;
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e. Liens in respect of judgments or awards with
respect to which Valor shall, in good faith, be diligently prosecuting an appeal
of proceeding for review, so long as (i) while such appeal or proceeding for
preview is being so prosecuted, Valor has reserves adequate to pay such
judgments or awards, and (ii) within 30 days after the entry of any such
judgment or award, such judgment or award has been discharged or enforcement or
other realization thereof has been stayed pending an appeal or proceeding for
review and, if enforcement or realization of any such judgment or award has been
discharged within thirty (30) days after the expiration of any such stay;
f. pledges or deposits made in the ordinary course of
business to secure payment of worker's compensation, or to participate in any
fund in connection with worker's compensation, unemployment insurance, old-age
pensions or other social security programs;
g. (i) the Lien securing the Union Bank Line of
Credit, (ii) Liens existing on the date of this Agreement and the Lien created
by the Security Agreement.
The Liens described in the foregoing subdivisions 8.2.1 through 8.2.7 are
referred to herein collectively as "Permitted Liens."
8.3. Legal Existence. The Company will maintain its corporate
existence and shall remain in good standing and authorized to do business in
each jurisdiction in which the failure so to qualify would have material adverse
effect on the financial condition, operations, business, prospects or Property
of the Company.
8.4. Maintenance of Property; Insurance. The Company will
maintain or cause to be maintained in good repair, working order and condition
all Property used or useful in the business of the Company, and from time to
time will make or cause to be made all appropriate repairs, renewals and
replacements thereof. The Company will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its Property
and business against loss or damage of the kinds customarily insured against by
corporations of established reputation engaged in the same or similar business
and similarly situated, of such types and in such amounts as are customarily
carried under similar circumstances by such other corporations.
8.5. Taxes. The Company will pay all applicable taxes and
governmental charges except to the extent that any such payment is at the time
being contested by the Company in good faith and by appropriate means.
8.6. Financial Information. As soon as available and in any
event within ten (10) business days after the close of each business month,
commencing with the month ending February 28, 1997, the Company shall furnish to
Holder copies of the financial statements distributed internally within the
Company, including, without limitation, consolidated balance sheets, profit and
loss statements, and statements of cash flows covering operations for the
portion of the Company's fiscal year ending on the last day of such business
month. The Company further covenants and agrees to deliver to Holder such other
financial information as is reasonably requested by Holder and shall furnish to
Holder immediately upon receipt any notices of default received pursuant to the
Union Bank Line of Credit, notices of the institution of any litigation or other
judicial or administrative proceeding involving Holder and involving more than
One Hundred Thousand Dollars ($100,000.00) or involving the Financing Documents
or any other event which might materially adversely affect or impair the
financial condition, operation, business prospects or Property of the Company.
As a material inducement to the delivery of the financial information by the
Company, Holder hereby acknowledges its obligations under the federal securities
laws with respect to the use of information received by the Company.
8.7. Approval for Listing. The Company shall take such action
so that the Warrant Shares (as defined in the Warrant) will, upon issuance, be
approved for listing on the principal stock exchange on which the Common Stock
is listed or admitted to trading or, if the Common Stock is not listed or
admitted to trading on an exchange, on the NASDAQ National Market System.
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8.8. Stockholder Approval. The Company shall exert reasonable
best efforts to obtain the Stockholder Approval at the next annual general
meeting of GTI, including, without limitation, preparing, filing and
distributing appropriate proxy materials or other information statements
recommending such Stockholder Approval to the shareholders of GTI.
9. Replacement and Transfer of Note.
9.1 Replacement of Note. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of the
Note issued by it and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity bond in such reasonable amount as the Company may
determine, or, in the case of any such mutilation, upon the surrender of such
Note for cancellation at the principal office of the Company, the Company, at
your expense, will execute and deliver, in lieu thereof, a new Note of like
tenor, dated so that there will be no loss of interest on such lost, stolen,
destroyed or mutilated Note. Any Note in lieu of which any such new Note has
been so executed and delivered by the Company shall not be deemed to be an
outstanding Note for any purpose of this Agreement.
9.2 Transfer of Note. Upon surrender of the Note for
registration of transfer to the Company at its principal office, the Company
shall execute and deliver in exchange therefor, a new Note or Notes in
denominations of at least $100,000.00 (except one Note may be issued in a lesser
principal amount if the unpaid principal amount of the surrendered Note is not
evenly divisible by, or is less than $100,000.00), as may be requested by the
Holder, dated so that there will be no loss of interest on the Note.
Notwithstanding the foregoing, this Note may be transferred only to a
corporation or other entity controlling, controlled by or under common control
with you, including, without limitation, Telemetrix Investments Limited or
Telemetrix Overseas Investments B.V. For purposes of the foregoing sentence, the
term "control" shall mean (a) in respect of a corporation, that the controlling
entity owns or controls fifty percent (50%) or more of the voting power and has
the ability to elect at least a majority of the board of directors or similar
managing body, irrespective of whether or not a class or classes shall or might
have voting power by reason of the happening of any contingency, or (b) in
respect of an association, partnership, joint venture or other business entity,
that the controlling entity is entitled to share in fifty percent (50%) or more
of the profits and losses, however determined, and has voting control with
respect thereto.
10. Events of Default; Acceleration. If any of the following conditions
or events ("Event of Default") shall occur and be continuing:
10.1. if any default shall occur in the payment of any
principal of or interest on the Note when and as the same becomes due and
payable, and such default shall continue for more than fifteen (15) days;
10.2. if any default shall occur in the performance of or
compliance with any obligation incurred under this Agreement (other than a
default governed by the foregoing Section 10.1, or Section 10.8 below) or with
any provision of any Financing Document and such default shall continue for more
than forty-five (45) days; or
10.3. if GTI or Valor shall at any time be in default (as
principal or guarantor or other surety) in the payment of any principal of or
premium or interest on any indebtedness for borrowed money, other than the Note,
beyond the period of grace, if any, applicable thereto and the aggregate amount
of such payments then in default beyond the period of grace, if any, applicable
thereto shall exceed $100,000.00 or if any default shall occur in respect of any
issue of indebtedness for borrowed money outstanding in a principal amount of at
least $500,000.00, or in respect of any agreement or instrument relating to any
such issue of indebtedness for borrowed money, and such default shall continue
beyond the period of grace, if any, applicable thereto; or
10.4. if any Financing Document shall cease to be in full
force and effect (except upon satisfaction in full);
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10.5. if (i) as contemplated by Section 3a of that certain
Management Shares Agreement dated as of January 6, 1995 by and among GTI,
Promptus Communications, Inc. ("Promptus") and the individual Promptus
Shareholders named therein, as the same may be modified or amended from time to
time (the "Management Shares Agreement"), financial forecasts shall have been
presented to an arbitrator for selection of the forecast to be used in the
computations referred to in Section 3 of the Management Shares Agreement, or
(ii) the employment of a Shareholder (as defined in the Management Shares
Agreement) with Promptus shall be terminated by reason of death, Disability (as
defined in the Management Shares Agreement), termination without Cause (as
defined in the Management Shares Agreement) or termination with Good Reason (as
defined in the Management Shares Agreement);
10.6. if GTI or Valor shall (i) file, or consent by answer or
otherwise to the filing against it of, a petition for relief or reorganization
or arrangement or any other petition in bankruptcy or insolvency law of any
jurisdiction, (ii) make an assignment for the benefit of its creditors, (iii)
consent to the appointment of a custodian, receiver, trustee or other officer
with similar powers of itself or of any substantial part of its property, (iv)
be adjudicated insolvent or (v) take corporate action for the purpose of any of
the foregoing; or
10.7. if a court or governmental authority of competent
jurisdiction shall enter an order appointing, without consent by GTI or Valor, a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or if an order
for relief shall be entered in any case or proceeding for liquidation or
reorganization or otherwise to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or ordering the dissolution, winding up or liquidation
of GTI or Valor, or if any petition for any such relief shall be filed against
GTI or Valor, and such petition shall not be dismissed within ninety days;
10.8. if (i) on or prior to May 31, 1997 the Company shall not
have obtained the Stockholder Approval referred to in Section 3(b) of the
Warrant (provided, however, that it shall not constitute an Event of Default if
the Company shall have held a special meeting of its stockholders on or prior to
May 31, 1997 for the purpose of obtaining the Stockholder Approval but did not
obtain the Stockholder Approval solely because you failed to vote all shares of
Common Stock and preferred stock of the Company owned by you, or failed to cause
your subsidiaries to vote all shares of Common Stock and preferred stock of the
Company owned by them, in favor of the amendment of the certificate of
incorporation of the Company to increase the authorized number of shares of
Common Stock of the Company in the manner described in Section 3(b) of the
Warrant), or (ii) if on the day on which the Warrant becomes exercisable, the
Warrant Shares (as defined in the Warrant) are not approved for listing on the
principal stock exchange on which the Common Stock is listed or admitted to
trading or if the Common Stock is not listed or admitted to trading on an
exchange, approved for listing on the NASDAQ National Market System.
then, (x) upon the occurrence of any Event of Default described in subdivision
10.6 or 10.7 of this Section 10, the Note shall automatically mature and become
due and payable, together with interest accrued thereon, without presentment,
demand, protest or notice of any kind, all of which are hereby waived by the
Company, or (y) upon the occurrence of any other Event of Default, any holder or
holders of a majority in principal amount of the Note at the time outstanding
may at any time (unless all Events of Default shall theretofore have been
remedied) at its or their option, by written notice or notices to the Company,
declare the Note at the time outstanding to be due and payable, together with
interest accrued thereon without presentment, demand, protest or notice, which
are hereby waived by the Company.
11. Definitions.
11.1. Certain Defined Terms. As used in this Agreement, the
following terms shall have the respective meanings indicated below (such
meanings to be applicable equally to both the singular and plural forms of such
terms).
Business Day means any day except a Saturday, a Sunday
or other day on which commercial banks in San Diego are required or authorized
by law to be closed.
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Closing has the meaning specified in Section 3.
Closing Date has the meaning specified in Section 3.
Company means, collectively, GTI and Valor.
Event of Default has the meaning specified in Section
10.
Financing Documents means this Agreement, the Note,
the Security Agreement, the Investor's Rights Agreement, and the Warrant.
Fixed Assets means all of the furniture, fixtures and
Equipment as such term is defined in the Security Agreement of Valor.
GAAP means generally accepted accounting principles
as from time to time in effect, which shall include the official interpretations
thereof by the Financial Accounting Standards Board, consistently applied.
Governmental Body means any foreign, federal, state,
municipal or other government, or any department, commission, board, bureau,
agency, public authority or instrumentality thereof or any court or arbitrator.
GTI means GTI Corporation, a Delaware corporation.
Lien means any mortgage, pledge, assignment, lien,
charge, encumbrance or security interest of any kind, or the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement.
Note has the meaning specified in Section 1.
Officers' Certificate means a certificate executed on
behalf of the Company by its President or one of its Vice Presidents and its
chief financial officer.
Permitted Liens has the meaning specified in Section
8.2.
Person means any individual, firm, corporation,
business enterprise, trust, association, joint venture, partnership,
Governmental Body or other entity, whether acting in an individual, fiduciary or
other capacity.
Potential Event of Default means any condition or
event which, with notice or lapse of time or both, would become an Event of
Default.
Promptus Disposition means the closing of the sale of
either (1) all of the capital stock of Promptus Communications Inc, a Rhode
Island corporation ("Promptus") owned by it, or (2) the
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sale of substantially of all of the assets of Promptus, or (3) the sale of
substantially all of the assets of the Promptus NIC Card business.
Property means all types of real, personal or mixed
property, including money.
Securities Act means the Securities Act of 1933 or
any similar federal statute, and the rules and regulations of the Securities and
Exchange Commission (or any other Governmental Body at the time administering
such statute) thereunder, all as in effect at the time. References to a
particular section of any such statute, rule or regulation shall include a
reference to the comparable section, if any, of such successor federal statute,
rule or regulation.
Security Agreement means the Agreement dated as of
February 10, 1997 between Valor and Telemetrix PLC.
Union Bank Line of Credit means the working capital
line of credit provided to GTI by Union Bank or any substantially similar credit
facility provided to the Company by a reputable financial institution other than
Union Bank offering equivalent or better terms.
Valor means Valor Electronics, Inc., a California
corporation.
Warrant means the Common Stock Purchase warrant dated
as of February 10, 1997 to purchase shares of common stock of GTI issued to
Telemetrix PLC.
12. Accounting Terms. Unless otherwise expressly stated herein, all
accounting terms used in this Agreement which are not otherwise defined herein
shall be construed in accordance with GAAP.
13. Expenses, Etc. Except as set forth in Section 3 above, each party
agrees to pay their respective costs and expenses in connection with the
negotiation, preparation, delivery and performance of this Agreement, the Note
and the other Financing Documents.
14. Survival of Representations and Warranties. All representations and
warranties contained in this Agreement or otherwise made in writing by or on
behalf of the Company in connection with the transactions contemplated herein
shall survive the execution and delivery of this Agreement, any investigation at
any time made by you or on your behalf, the purchase of the Note, and any
disposition of the same or payment of the Note. All statements contained in any
Officers' Certificate or certificate delivered by or on behalf of the Company
pursuant to this Agreement or in connection with the transactions contemplated
herein shall be deemed representations and warranties of the Company under this
Agreement.
15. Amendments and Waivers. Any term of this Agreement or of the Note
may be amended or modified and the observance of any term of this Agreement or
of the Note may be waived (either generally or in a particular instance and
either retroactively or prospectively) only with the written consent of the
Company and the Holder. Any amendment, modification or waiver effected in
accordance with this Section 15 shall be binding upon each holder of the Note
issued and sold pursuant to this
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Agreement, each future holder of the Note or shares of Common Stock, as the case
may be, and the Company.
16. Notices, etc. All notices and other communications under this
Agreement shall be in writing and shall be delivered, or mailed by overnight
delivery, telex or telecopy, addressed, (a) if to you, at Telemetrix PLC, Knaves
Beech Estate, Loudwater, Xxxx Xxxxxxx, Xxxxx, XX00 0XX, Xxxxxx Xxxxxxx,
Attention: Company Secretary, with a copy (which shall not constitute notice) to
Xxxxxxx X. Xxxx, Xxxxxx & Xxxxxxx, Xxxxx 0000, 000 Xxxx Xxxxxx Xxxxx, Xxxxx
Xxxx, Xxxxxxxxxx 00000-0000, or (b) if to the Company, to GTI Corporation, 0000
Xxxxxxxx Xxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, Attention: General Counsel,
and to Valor Electronics, 0000 Xxxxxxxx Xxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx
00000, Attention: Chief Financial Officer, or at such other address, or to the
attention of such other officer, as the Company shall have furnished to you in
writing. All such notices and other communications shall be effective if
telexed, when answer back received; if telecopied, with receipt acknowledged
delivered, except that notices to you pursuant to Section 15, and notices to the
Company, pursuant to Section 15, shall not be effective until received by you or
the Company, as the case may be.
17. Indemnification. The Company shall indemnify, save, and hold
harmless you and your successors and assigns (collectively, "Holder") and each
of them, and directors, officers, agents, attorneys and employees (collectively,
the "Indemnitees") from and against: (i) any and all claims, demands, actions,
or causes of action that are asserted against any Indemnitee by any Person if
the claim, demand, action, or cause of action arises out of or relates to a
claim, demand, action, or cause of action that the Person asserts or may assert
against Company or any officer or director as the case may be, of Company in
their capacity as such, (ii) any and all claims, demands, actions or causes of
action that are asserted against any Indemnitee (other than by Company or by
another Indemnitee) if the claim, demand, action or cause of action arises out
of or relates to the relationship of Holder and Company under this Agreement, or
any transaction contemplated pursuant to this Agreement, (iii) any
administrative or investigative proceeding by any governmental agency arising
out of or related to a claim, demand, action or cause of action described in
clauses (i) or (ii) above; and (iv) any and all liabilities, losses, costs, or
expenses (including reasonable outside attorneys' fees, in-house counsel fees
and disbursements) that any Indemnitee suffers or incurs as a result of any of
the foregoing; provided, that Company shall have no obligation under this
Section 17 to Indemnitees with respect to any of the foregoing arising out of
the gross negligence or willful misconduct of Holder. The Company agrees that
upon the written request of any Indemnitee in connection with the assertion of
such a claim, demand, action or cause of action, Company shall assume full
responsibility for the defense thereof.
18. Miscellaneous. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective successors and assigns of
the parties hereto, whether so expressed or not, and, in particular, shall inure
to the benefit of and be enforceable by any holder or holders at the time of the
Note sold hereunder. This Agreement, the Note and the other Financing Documents
embody the entire agreement and understanding between you and the Company and
supersede all prior agreements and understandings relating to the subject matter
hereof and thereof. This Note is to be governed by and construed in accordance
with the internal laws of the State of California. In any action brought under
or arising out of this Note, the undersigned hereby consents to the jurisdiction
of any competent court sitting in the County of San Diego, California, consents
to venue in any such court and waives objection to such venue, and consents to
service of process by any means authorized by California law.
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If you are in agreement with the foregoing, please sign the
form of agreement on the accompanying counterparts of this letter and return one
of the same to the Company, whereupon this letter shall become a binding
agreement between you and the Company.
Very truly yours,
GTI Corporation
By: Xxxxxx Xxxx-Xxxxxxxx
Title: President & Chief Executive Officer
VALOR ELECTRONICS, INC.
By: Xxxxxx Xxxx-Xxxxxxxx
Title: President & Chief Executive Officer
The foregoing Agreement is
hereby agreed to as of the
date thereof.
TELEMETRIX PLC
By: \s\ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Director
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EXHIBIT B-1
Dated as of February 10, 1997
SECURITY AGREEMENT
Dated as of February 10, 1997
between
VALOR ELECTRONICS, INC.
and
TELEMETRIX PLC
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SECURITY AGREEMENT
This Security Agreement (this "Agreement") dated as of
February 10, 1997 is made between Valor Electronics, Inc., a California
corporation (the "Company"), and Telemetrix PLC, a corporation agreement under
the laws of the United Kingdom (the "Secured Party").
The Company and GTI Corporation, a Delaware corporation
("GTI") have entered into a Note Purchase Agreement dated as of February 10,
1997, (as amended or otherwise modified from time to time, the "Note Purchase
Agreement"), by and between the Company, GTI and the Secured Party providing,
subject to its terms and conditions, for the sale to and the purchase by the
Secured Party of a $2,500,000 Secured Promissory Note due February 9, 1999 (the
"Note").
It is a condition to the obligations of the Secured Party
under the Note Purchase Agreement that the Company shall have executed and
delivered and granted the Liens provided for in, this Agreement.
To induce the Secured Party to enter into the Note Purchase
Agreement and to extend credit thereunder, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company has agreed to pledge and grant a security interest in the Collateral as
security for the Secured Obligations. Accordingly, the Company agrees with the
Secured Party as follows:
1. Definitions and Interpretation.
1.1. Certain Defined Terms. Unless otherwise defined, all
capitalized terms used in this Agreement that are defined in the Note Purchase
Agreement (including those terms incorporated by reference) shall have the
respective meanings assigned to them in the Note Purchase Agreement. In
addition, the following terms shall have the following meanings under this
Agreement:
"Collateral" shall have the meaning assigned to that term in
Section 2.1.
"Documents" shall have the meaning assigned to that term in
Section 2.1.2.
"Equipment" shall have the meaning assigned to that term in
Section 2.1.1.
"Secured Obligations" any and all obligations of the Company
under the Note, the Note Purchase Agreement, and this Agreement, as each may be
amended or modified from time to time.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect in the State of California from time to time or, by reason of
mandatory application, any other applicable jurisdiction.
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1.2. Interpretation. In this Agreement, unless otherwise
indicated, the singular includes the plural and plural the singular; words
importing either gender include the other gender; references to statutes or
regulations are to be construed as including all statutory or regulatory
provisions consolidating, amending or replacing the statute or regulation
referred to; references to "writing" include printing, typing, lithography and
other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation"; references to articles, sections (or subdivisions of
sections), exhibits, annexes or schedules are to this Agreement; references to
agreements and other contractual instruments shall be deemed to include all
subsequent amendments, extensions and other modifications to such instruments
(without, however, limiting any prohibition on any such amendments, extensions
and other modifications by the terms of any such agreements); and references to
Persons include their respective permitted successors and assigns.
2. Collateral.
2.1 Grant. As collateral security for the prompt payment in
full when due (whether at stated maturity, by acceleration or otherwise) and
performance of the Secured Obligations, the Company hereby pledges and grants to
the Secured Party a security interest second in priority to the Union Bank Line
of Credit (as defined in the Note Purchase Agreement) in all of the Company's
right, title and interest in and to the following, whether now owned or
hereafter acquired by the Company and whether now existing or hereafter coming
into existence (collectively the "Collateral"):
a. all equipment (as defined in the Uniform
Commercial Code) and all other goods of the Company that are used or bought for
use primarily in its business, including all spare parts and related supplies,
all goods obtained by the Company in exchange for any such goods, all
substances, if any, commingled with or added to such goods and all upgrades and
other improvements to such goods, in each case to the extent not constituting
Inventory (collectively, the "Equipment");
b. all documents of title (as defined in the Uniform
Commercial Code) or other receipts of the Company covering, evidencing or
representing Equipment (collectively, the "Documents");
c. all contracts and other agreement of the Company
relating to the sale or other disposition of all or any part of the Equipment or
Documents and all rights, warranties, claims and benefits of the Company against
any Person arising out of, relating to or in connection with all or any part of
the Equipment or Documents of the Company, including any such rights,
warranties, claims or benefits against any Person storing or transporting any
such Equipment or issuing any such Documents;
2.2. Perfection. Concurrently with the execution and delivery
of this Agreement, the Company shall (i) file such financing statements and
other documents in such offices as shall be necessary or as the Secured Party
may request to perfect and establish the priority (subject to the Liens to
secure the Union Bank Line of Credit as defined in the Note Purchase Agreement)
of the Liens granted by this Agreement, and (ii) take all such other actions as
shall be necessary or as the Secured Party may request to perfect and establish
the priority of the Liens granted by this Agreement.
2.3. Preservation and Protection of Security Interests. The
Company shall give, execute, deliver, file or record any and all financing
statements, notices or other instruments, obtain any and all governmental
consents or approvals and take any and all steps that may be reasonably
necessary or as the Secured Party may reasonably request to create, perfect,
establish the priority (subject to the Liens to secure the Union Bank Line of
Credit) of, or to preserve the validity, perfection or priority (subject to such
permitted Liens) of, the Liens granted by this Agreement or to enable the
Secured Party to exercise and enforce its rights, remedies, powers and
privileges under this Agreement with respect to such Liens.
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2.4 Use of Collateral. So long as no Event of Default shall
have occurred and be continuing, the Company shall be entitled to use and
possess the other Collateral and to exercise its rights, title and interest in
all contracts, agreements and licenses), subject to the rights, remedies, powers
and privileges of the Secured Party under Section 5 and to such use, possession
or exercise not otherwise constituting a Default.
2.5 Termination. When all Secured Obligations shall have been
paid in full, this Agreement shall terminate, and the Secured Party shall
forthwith cause to be assigned, transferred and delivered, against receipt but
without any recourse, warranty or representation whatsoever, any remaining
Collateral and money received in respect of the Collateral, to or on the order
of the Company. The Secured Party shall also execute and deliver to the Company
upon such termination such Uniform Commercial Code termination statements and
such other documentation as shall be reasonably requested by the Company to
effect the termination and release of the Liens granted by this Agreement on the
Collateral.
3. Representations and Warranties. As of the date hereof, the Company
represents and warrants to the Secured Party as follows:
3.1 Title. The Company is the sole beneficial owner of the
Collateral in which it purports to xxxxx x Xxxx pursuant to this Agreement, and
such Collateral is free and clear of all Liens, except for Permitted Liens (as
defined in the Note Purchase Agreement).
3.2 Corporate Authority. The Company has the full corporate
power and authority to execute, deliver and perform the terms of this Agreement
and to incur the obligations provided for herein, all of which have been duly
authorized by all proper and necessary corporate action and are not prohibited
by its certificate of incorporation or by-laws.
3.3 Compliance With Other Agreements. The Company is not in
violation or default under any mortgage, indenture, lease, contract or other
agreement or instrument binding upon the Company, where such violation or
default might reasonably be expected to have a material adverse effect on the
operations or condition (financial or otherwise) of the Company. The execution,
delivery and performance of this Agreement will not conflict with or result in
any material breach of any of the terms, covenants, conditions or provision of
or constitute a default under any material indenture, mortgage, deed of trust,
agreement or other instrument to the Company is a party or by which the Company
or its property or assets is bound.
3.4 Location of Collateral. The Collateral is located at the
locations identified in Annex 1, unless otherwise noted therein. The Company's
chief executive office is identified in Annex 1.
4. Covenants.
4.1. Books and Records. The Company shall keep full and
accurate books and records relating to the Collateral, and permit
representatives of the Secured Party, upon reasonable notice, at any time during
normal business hours to inspect and make abstracts from its books and records
pertaining to the Collateral.
4.2. Removals, Etc. Without at least 30 days' prior written
notice to the Secured Party, the Company shall not (i) maintain any of its books
and records with respect to the Collateral at any office or maintain its
principal place of business at any place, or, except in the ordinary course of
business, permit any Equipment to be located anywhere other than at the address
initially indicated for notices to it under Section 6, at one of the locations
identified in Annex 1, or in transit from one of such locations to another or
(ii) change its name or corporate structure. The Company shall maintain the
Collateral in the condition in which it was on the date hereof, reasonable wear
and tear excepted, and shall maintain
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insurance on the Collateral in type and amount reasonably sufficient to insure
it against risk of loss. The Company shall provide the Secured Party with
evidence of such insurance upon reasonable request.
4.3. Sales and Other Liens. Without the prior written consent
of the Secured Party, the Company shall not dispose of any Collateral, except in
the ordinary course of business, create, incur, assume or suffer to exist any
Lien upon any Collateral or file or suffer to be on file or authorize to be
filed, in any jurisdiction, any financing statement or like instrument with
respect to all or any part of the Collateral in which the Secured Party is not
named as a secured party for its own benefit.
4.4. Further Assurances. The Company agrees that, from time to
time upon the written request of the Secured Party, the Company will execute and
deliver such further documents and do such other acts and things as the Secured
Party may reasonably request in order fully to effect the purposes of this
Agreement. If the Note is transferred as permitted under the Note Purchase
Agreement, Company will execute, deliver and record amendments to all UCC
filings and deliver evidence thereof to Secured Party.
5. Remedies. Subject to the terms and conditions of the Subordination
Agreement:
5.1. Events of Default, Etc. If any Event of Default under and
as defined in the Note Purchase Agreement shall have occurred and be continuing:
a. The Secured Party in its discretion may require
the Company to, and the Company shall, assemble the Collateral owned by it at
such place or places, reasonably convenient to both the Secured Party and the
Company, designated in the Secured Party's request;
b. the Secured Party in its discretion may make any
reasonable compromise or settlement it deems desirable with respect to any of
the Collateral and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, all or any part of the
Collateral;
c. the Secured Party in its discretion may, in its
name or in the name of the Company or otherwise, demand, xxx for, collect or
receive any money or property at any time payable or receivable on account of or
in exchange for all or any part of the Collateral, but shall be under no
obligation to do so;
d. the Secured Party in its discretion may, upon ten
business days' prior written notice to the Company of the time and place, with
respect to all or any part of the Collateral which shall then be or shall
thereafter come into the possession, custody or control of the Secured Party or
any of its agents, sell, lease or otherwise dispose of all or any part of such
Collateral, at such place or places as the Secured Party deems best, for cash,
for credit or for future delivery (without thereby assuming any credit risk) and
at public or private sale, without demand of performance or notice of intention
to effect any such disposition or of time or place of any such sale (except such
notice as is required above or by applicable statute and cannot be waived), and
the Secured Party or any other Person may be the purchaser, lessee or recipient
of any or all of the Collateral so disposed of at any public sale (or, to the
extent permitted by law, at any private sale). The Secured Party may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
the sale, and such sale may be made at any time or place to which the sale may
be so adjourned;
e. the Secured Party shall have, and its discretion
may exercise, all of the rights, remedies, powers and privileges with respect to
the Collateral of a secured party under the Uniform Commercial Code (whether or
not the Uniform Commercial Code is in effect in the jurisdiction where such
rights, remedies, powers and privilege are asserted) and such additional rights,
remedies, powers and
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privilege to which a secured party is entitled under the laws in effect in any
jurisdiction where any rights, remedies, powers and privileges in respect of
this Agreement or the Collateral may be asserted, including the right, to the
maximum extent permitted by law, to exercise all voting, consensual and other
powers of ownership pertaining to the Collateral (and the Company agrees to take
all such action as may be appropriate to give effect to such right).
The proceeds of, and other realization upon, the Collateral by virtue of the
exercise of remedies under this Section 5.1 shall be applied in accordance with
Section 5.4.
5.2. Deficiency. If the proceeds of, or other realization
upon, the Collateral by virtue of the exercise of remedies under Section 5.1 are
insufficient to cover the costs and expenses of such exercise and the payment in
full of the other Secured Obligations, the Company shall remain liable for any
deficiency.
5.3. Private Sale. The Secured Party shall incur no liability
as a result of the sale, lease or other disposition of all or any part of the
Collateral at any private sale pursuant to Section 5.1 conducted in a
commercially reasonable manner. The Company hereby waives any claims against the
Secured Party arising by reason of the fact that the price at which the
Collateral may have been sold at such a commercially reasonable private sale was
less than the price which might have been obtained at a public sale or was less
than the aggregate amount of the Secured Obligations.
5.4. Application of Proceeds. Except as otherwise expressly
provided in this Agreement and except as provided below in this Section 5.4, the
proceeds of, or other realization upon, all or any part of the Collateral by
virtue of the exercise of remedies under Section 5.1, and any other cash at the
time held by the Secured Party under this Section 5, shall be applied by the
Secured Party:
First, to the payment of the reasonable costs and
expenses of such exercise of remedies, including reasonable out-of-pocket costs
and expenses of the Secured Party, the reasonable fees and expenses of its
agents and counsel and all other reasonable expenses incurred and advances made
by the Secured Party in that connection;
Next, to the payment in full of the remaining Secured
Obligations in such manner as the Secured Party may determine; and
Finally, to the payment to the Company, or its
respective successors or assigns, or as a court of competent jurisdiction may
direct, of any surplus then remaining.
As used in this Section 5, "proceeds" of Collateral
shall mean cash, securities and other property realized in respect of, and
distributions in kind of, Collateral, including any property received under any
bankruptcy, reorganization or other similar proceeding as to the Company or any
issuer of, or account debtor or other obligor on, any of the Collateral.
6. Miscellaneous.
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6.1. Waiver. No failure on the part of the Secured Party to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, remedy, power or privilege under this Agreement shall operate as a
waiver of such right, remedy, power or privilege, nor shall any single or
partial exercise of any right, power or privilege under this Agreement preclude
any other or further exercise of any such right, remedy, power or privilege or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges provided in this Agreement are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
6.2. Notices. All notices and communications to be given under
this Agreement shall be given or made in writing to the intended recipient at
the address specified below or, as to any party, at such other address as shall
be designated by such party in a notice to each other party. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telex or telecopier, delivered to the telegraph
or cable office or personally delivered or, in the case of a mailed notice, upon
receipt, in each case, given or addressed as provided in this Section 6.2:
To the Company: Valor Electronics, Inc.
0000 Xxxxxxxx Xxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to: Xxxxx & XxXxxxxx
000 Xxxx Xxxxxxxx, Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
To the Secured Party: Telemetrix PLC
Knaves Beech Estate
Loudwater, Xxxx Xxxxxxx
Xxxxx XXX 000
Xxxxxx Xxxxxxx
Attention: The Company Secretary
Telephone: 000-00-0000-000-000
Telecopy: 011-44-1628-530-389
With a copy to: Xxxxxx & Xxxxxxx
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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6.3. Amendments, Etc. Any provision of this Agreement may be
modified, supplemented or waived only by an instrument in writing duly executed
by the Company and the Secured Party. Any such modification, supplement or
waiver shall be for such period and subject to such conditions as shall be
specified in the instrument effecting the same and shall be binding upon the
Secured Party and the Company, and any such waiver shall be effective only in
the specific instance and for the purposes for which given.
6.4. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Company and their respective successors and
permitted assigns. The Company shall not assign or transfer its rights under
this Agreement without the prior written consent of the Secured Party.
6.5. Agreements Superseded. This Agreement supersedes all
prior agreements and understandings, written or oral, among the parties with
respect to the subject matter of this Agreement.
6.6. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
6.7. Captions. The table of contents and captions and section
headings appearing in this Agreement are included solely for convenience of
reference and are not intended to affect the interpretation of any provision of
this Agreement.
6.8. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties to this Agreement may execute this
Agreement by signing any such counterpart.
6.9 Governing Law. This agreement shall be governed by, and
construed in accordance with, the law of the State of California. The courts
located in the County of San Diego, State of California, will have jurisdiction
over any dispute, controversy, or litigation relating to or arising under this
Agreement, and venue shall be proper in such courts.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
VALOR ELECTRONICS, INC.
By: Xxxxxx Xxxx-Xxxxxxxx
Name: Xxxxxx Xxxx-Xxxxxxxx
Title:President & Chief Executive Officer
TELEMETRIX PLC
By: Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title:Director
[SIGNATURE PAGE TO SECURITY AGREEMENT]
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ANNEX 1
LIST OF LOCATIONS
VALOR ELECTRONICS
LOCATION WITH SIGNIFICANT ASSETS
JANUARY 31, 1997
GTI CORPORATION AND VALOR ELECTRONICS, INC. - HEADQUARTERS OFFICES
0000 Xxxxxxxx Xxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
VALOR ELECTRONICS, INC. - SHIPPING AND RECEIVING WAREHOUSE
0000 Xxxxxxxx Xxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
VALOR EAST ELECTRONICS, LTD.
Unit 8, 11/F International Trademart
Xx. 0, Xxxx Xxxx Xxxxxx
Xxxxxxx Xxx, Xxxxxxx
XXXX XXXX
VALOR ELECTRONICS PHILIPPINES
Standard Xxxxxxx Xxxxxxxx 0
00 Xxxxxx Xxxxxx
Light Industry & Science Park
Boo Diezmo, Cabuyao, Laguna
PHILIPPINES 4025
VALOR EAST ELECTRONICS LTD.
District 23, Industrial Zone, Po On County
Shenzhen, Guangdong
PEOPLE'S REPUBLIC OF CHINA
VALOR ELECTRONICS, GMBH
Xxxxxxxxxxxx 00, 00000 Xxxxxx
XXXXXXX XXXXXXXX OF GERMANY
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EXHIBIT B-2
FINANCING STATEMENT
[INTENTIONALLY LEFT BLANK]
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EXHIBIT B-3
THE TRANSFER OF THIS WARRANT IS SUBJECT TO
RESTRICTIONS CONTAINED HEREIN. THIS WARRANT
HAS BEEN ISSUED IN RELIANCE UPON THE
REPRESENTATION OF THE HOLDER THAT IT HAS BEEN
ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH
A VIEW TOWARDS THE RESALE OR OTHER DISTRIBUTION
THEREOF. NEITHER THIS WARRANT NOR THE SHARES
ISSUABLE UPON THE EXERCISE OF THIS WARRANT,
HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS.
GTI CORPORATION
COMMON STOCK PURCHASE WARRANT
To Subscribe for and Purchase February 10, 1997
Shares of Common Stock
of GTI CORPORATION
THIS CERTIFIES that, for value received, Telemetrix PLC, or its
registered assigns (the "Holder"), is entitled to subscribe for and purchase
from GTI CORPORATION, a Delaware corporation (hereinafter called the
"Corporation"), up to One Hundred and Fifty Thousand (150,000) shares (subject
to adjustment as hereinafter provided) of fully paid and non-assessable Common
Stock, $.04 par value, of the Corporation, (the "Common Stock"), at the price
per share equal to Six Dollars ($6.00) per share (such price as from time to
time to be adjusted as hereinafter provided being hereinafter called the
"Warrant Price"), at any time subsequent to the initial exercise date specified
in Section 5(b) hereof and prior to the expiration date specified in that
Section (the "Exercise Period"), subject, however, to the provisions and upon
the terms and conditions hereinafter set forth. This Warrant and any Warrant or
Warrants subsequently issued upon exchange hereof are hereinafter collectively
called the "Warrant." The shares of Common Stock which Holder is entitled to
purchase pursuant to this Warrant, including the additional shares the Holder
may be entitled to purchase as provided in Section 5(a) hereof, are hereinafter
called the "Warrant Shares."
Section 1. Exercise of Warrant. The rights represented by this Warrant
may be exercised by the Holder during the Exercise Period, in whole or in part
(but not in increments less than 50,000 shares) at any time or from time to time
in part by the completion of the purchase form attached hereto and by the
surrender of this Warrant
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(properly endorsed) at the office of the Corporation as it may designate by
notice in writing to the Holder hereof at the address of the Holder appearing on
the books of the Corporation, and by payment to the Corporation of the Warrant
Price in cash or by certified or official bank check, for each share being
purchased. In the event of any exercise of the rights represented by this
Warrant, a certificate or certificates for the shares of Common Stock so
purchased, registered in the name of the Holder, or its nominee or other party
designated in the purchase form by the Holder hereof, will be delivered to the
Holder within ten (10) business days after the date in which the rights
represented by this Warrant will have been so exercised; and, unless this
Warrant has expired or has been exercised in full, a new Warrant representing
the number of shares (except a remaining fractional share), if any, with respect
to which this Warrant will not then have been exercised will also be issued to
the Holder within such time. The Holder will for all purposes be deemed to have
become the Holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Warrant Price, except that, if the date of such
surrender and payment is a date on which the stock transfer books of the
Corporation are closed, such person will be deemed to have become the Holder of
such shares at the start of business on the next succeeding date on which the
stock transfer books are open. No fractional shares will be issued upon exercise
of this Warrant and no payment or adjustment will be made upon any exercise on
account of any cash dividends on the Common Stock issued upon such exercise. If
any fractional interest in a share of Common Stock would, except for the
provision of this Section 1, be delivered upon such exercise, the Corporation,
in lieu of delivery of a fractional share thereof, will pay to the Holder an
amount in cash equal to the current market price of such fractional share as
determined in good faith by the Board of Directors of the Corporation (the
"Board").
Section 2. Adjustment of Purchase Price; Consolidation, Merger and Sale
a. In the event that after the issuance of this
Warrant, the Corporation shall (i) pay a dividend, or make a distribution, in
shares of capital stock of the Corporation, or (ii) subdivide its outstanding
shares of Common Stock, or (iii) combine its outstanding shares of Common Stock
into a smaller number of shares, or (iv) issue by reclassification of its shares
of Common Stock any shares of capital stock of the Corporation, the exercise
right and the Warrant Price in effect immediately prior to such action shall be
adjusted so that the Holder shall be entitled to receive the number of shares of
capital stock of the Corporation which he would have owned immediately following
such action had such Warrant been exercised immediately prior to the record date
of such action or, if there is no applicable record date, immediately prior to
such action. An adjustment made pursuant to this Section 2(a) shall, in the case
of a subdivision, combination or reclassification become effective retroactively
immediately after the effective date thereof and shall, in case of a dividend or
distribution, become effective retroactively immediately after the record date
thereof. If, as a result of an adjustment made pursuant to this Section 2(a),
the holder of any Warrant thereafter surrendered for exercise shall become
entitled to receive shares of two or more classes of capital stock of the
Corporation, the Board of Directors of the Corporation shall determine the
allocation of the adjusted Warrant Price between or among shares of such classes
of capital stock.
b. In case the Corporation after the date hereof
shall distribute to all the holders of Common Stock any dividend or other
distribution (other than a cash distribution made as a dividend payable out of
earnings or out of any earned surplus legally available for dividends under the
laws of the jurisdiction of incorporation of the Corporation) or any evidence of
indebtedness or any assets
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on or in respect to the Common Stock or rights to subscribe or purchase shares
of Common Stock at a price per share less than the current market price per
share of Common Stock (as defined below) at the record date set forth below,
then, and thereafter successively upon each such distribution, the Warrant Price
in effect immediately prior to such distribution shall forthwith be reduced to a
price determined by multiplying the Warrant Price in effect immediately prior to
such distribution by a fraction the numerator of which shall be the current
market price per share of Common Stock as defined below at the record date
mentioned below, less the then fair market value (as determined by the Board of
Directors of the Corporation, whose determination shall be conclusive) of the
portion of such evidences of indebtedness or such assets so distributed,
applicable to one share of Common Stock and the denominator of which shall be
such current market price per share of Common Stock. An adjustment made pursuant
to this Section 2(b) shall become effective retroactively immediately after the
record date for the determination of stockholders entitled to receive such
distribution.
c. After each adjustment of the Purchase Price
pursuant to Sections 2(a) and 2(b), the total number of shares of Common Stock
or fractional part thereof purchasable upon the exercise of each Warrant shall
be proportionately adjusted to such number of shares or fractional part thereof
as the total Warrant Price for the number of shares or fractional part thereof
purchasable immediately prior to such adjustment will buy at the adjusted
Warrant Price.
d. For the purposes of this Section 2, the term
"Common Stock" shall mean (i) the class of stock designated as the common stock,
par value $.04 per share, of the Corporation, at the date of this Agreement or
(ii) any other class of stock resulting from successive changes or
reclassifications of such common stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value. In
the event that at any time, as a result of an adjustment made pursuant to
Section 2(a), shares of the Corporation, other than shares of Common Stock are
issuable upon exercise of the Warrants, thereafter the number of such other
shares so issuable shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with respect
to the Common Stock contained in Section 2, and all other provisions of this
Agreement with respect to Common Stock shall apply on like terms to any such
other shares.
e. For the purposes of any computation under this
Section 2, the current market price per share of Common Stock at any date shall
be deemed to be the average of the daily closing prices for the 30 consecutive
business days commencing 45 business days before the day in question. The
closing price for each day shall be the last reported sale price regular way or,
in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case as officially
reported by the principal stock exchange on which the Common Stock is listed or
admitted to trading, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the average of the closing bid and
asked prices as furnished by the National Association of Securities Dealers,
Inc. through NASDAQ or similar organization if NASDAQ is no longer reporting
such information.
f. If there shall be effected any consolidation or
merger of the Corporation with another corporation, or a sale of all or
substantially all of the Corporation's assets to another corporation, then (1)
the Holder will receive no less than ten (10) days advance notice of the closing
of such transaction, (2) this Warrant will become exercisable in full
immediately prior to the closing of such transaction and (3) this Warrant will
terminate immediately after the closing of such transaction.
Section 3. Stock to Be Reserved.
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a. Subject to the receipt of the Stockholder Approval
described in subsection (b) below, the Corporation will at all times reserve and
keep available out of its authorized Common Stock, solely for the purpose of
issue upon the exercise of this Warrant as herein provided, such number of
shares of Common Stock as will then be issuable upon the exercise of this
Warrant. The Corporation covenants that all shares of Common Stock which will be
so issued will be duly and validly issued and fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof, and,
without limiting the generality of the foregoing, the Corporation will take all
such action as may be necessary to assure that all such shares of Common Stock
may be so issued without violation of any applicable law or regulation, or of
any requirements of any national securities exchange upon which shares of
capital stock of the Corporation may be listed.
b. The Holder understands and acknowledges that the
Corporation does not currently have enough authorized shares to enable it to
reserve Common Stock for issuance pursuant to exercise of the Warrant.
Accordingly, notwithstanding any other term and condition of this Warrant, the
Holder agrees that its right to exercise this Warrant will be conditioned upon
approval by the stockholders of the Corporation ("Stockholder Approval") of an
amendment of the Corporation's certificate of incorporation to increase the
number of authorized shares of Common Stock to at least 12,500,000 shares of
Common Stock creating at least 250,000 shares of authorized and unissued shares
of Common Stock which thereupon will be reserved for issuance upon exercise of
the Warrant as provided in subsection (a) above. The Corporation shall submit a
proposal to increase the authorized shares in the foregoing amount for
consideration by its shareholders at its upcoming annual general meeting
currently scheduled for May 15, 1997, but to be held not later than May 31,
1997, and shall recommend to its stockholders approval of such increase. The
Corporation shall cause the filing of an amendment to its certificate of
incorporation evidencing such increase, such filing to occur on the date of
Stockholder Approval or on the immediately following business day.
Section 4. Issue Tax. The issuance of certificates for shares of Common
Stock upon exercise of this Warrant will be made without charge to the Holders
of this Warrant for any issuance tax in respect thereof provided that the
Corporation will not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of Holder of this Warrant.
Section 5. Increase in Warrant Shares; Expiration Date.
a. The number of Warrant Shares shall be increased
automatically on April 1, 1997 from 150,000 shares to 250,000 shares unless one
of the following events occurs prior to April 1, 1997: (1) the Corporation
completes the sale to an independent third party for a fair value negotiated in
an arm's-length transaction and receives the full price payable by the purchaser
for the purchase of all of the capital stock which it owns of its majority-owned
subsidiary, Promptus Communications, Inc., a Rhode Island corporation
("Promptus"), (2) substantially all the assets of Promptus' NIC card business
are sold to an independent third party for a fair value negotiated in an
arm's-length transaction and the Corporation receives payment in full of the
purchase price, or (3) substantially all the assets of Promptus are sold to an
independent third party for a fair value negotiated in an arm's-length
transaction and the Corporation receives payment in full of the purchase price.
b. The rights to purchase shares of Common Stock set
forth in this Warrant shall commence on the date of Stockholder Approval and
shall expire on the later of (i) 30 days
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following the repayment in full of the $5,000,000 Secured Promissory Note, dated
as of date of issuance of this Warrant from the Company in favor of Holder or
(ii) 30 days following the date of Stockholder Approval.
Section 6. Notices of Record Dates. In the event of:
6.1. any taking by the Corporation of a record of the Holders
of any class of securities for the purpose of determining the Holders thereof
who are entitled to receive any dividend or other distribution (other than cash
dividends out of earned surplus), or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, or
6.2. any capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the Corporation or
any transfer of all or substantially all the assets of the Corporation to or
consolidation or merger of the Corporation with or into any other corporation,
or
6.3. any voluntary or involuntary dissolution, liquidation or
winding-up of the Corporation, then and in each such event the Corporation will
give notice to the Holder of this Warrant specifying (i) the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right and stating the amount and character of such dividend, distribution or
right, and (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the Holders of record of Common Stock will be entitled to exchange their shares
of Common Stock for securities or other property deliverable upon such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up. Such notice will be given at
least 15 days prior to the date therein specified.
Section 7. No Shareholder Rights or Liabilities. This Warrant will not
entitle the Holder hereof to any voting rights or other rights as a shareholder
of the Corporation. No provision hereof, in the absence of affirmative action by
the Holder hereof to purchase shares of Common Stock, and no mere enumeration
hereon of the rights or privileges of the Holder hereof, will give rise to any
liability of such Holder for the Warrant Price or as a shareholder of the
Corporation, whether such liability is asserted by the Corporation or by
creditors of the Corporation.
Section 8. Registration Rights Approval for Listing. The Holder will
have the registration rights and other rights set forth in the Investor's Rights
Agreement, dated February 10, 1997 (the "Investor's Rights Agreement"). The
Warrant Shares will, upon issuance, be approved for listing on the principal
stock exchange on which the Common Stock is listed or admitted to trading, or,
if the Common Stock is not listed or admitted to trading on an exchange, on the
NASDAQ National Market System.
Section 9. Representations of Holder.
The Holder hereby represents and acknowledges to the Corporation that:
9.1. this Warrant, the Warrant Shares, and any securities
issued with respect to any of them by way of a stock dividend or stock split or
in connection with a recapitalization, merger, consolidation or other
reorganization will be "restricted securities" as such term is used in the rules
and
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regulations under the Securities Act and that such securities have not been
registered under the Securities Act of 1933 (the "Securities Act") or any state
securities law, and that such securities must be held indefinitely unless
registration is effected or transfer can be made pursuant to appropriate
exemptions;
9.2. the Holder has read, and fully understands, the terms of
this Warrant set forth on its face and the attachments hereto, including the
restrictions on transfer contained herein;
9.3. the Holder is purchasing for investment for its own
account and not with a view to or for sale in connection with any distribution
of this Warrant or the Warrant Shares and it has no intention of selling such
securities in a public distribution in violation of the federal securities laws
or any applicable state securities laws; provided that nothing contained herein
will prevent Holder from transferring such securities in compliance with the
terms of this Warrant and the applicable federal and state securities laws.
9.4. the Holder is an "accredited investor" within the meaning
of paragraph (a) of Rule 501 of Regulation D promulgated by the Securities and
Exchange Commission (the "Commission") and an "excluded purchaser" within the
meaning of Section 25102(f) of the California Corporate Securities Law of 1968;
and
9.5. the Corporation may affix the following legend (in
addition to any other legend(s), if any, required by applicable state corporate
and/or securities laws) to certificates for shares of Common Stock (or other
securities) issued upon exercise of this Warrant:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") or
registered or qualified under any state securities laws
("State Securities Laws"). They may not be sold, offered for
sale, pledged or hypothecated in the absence of a registration
statement and/or qualification in effect with respect to the
sale of such securities under the Act and/or State Securities
Laws or an opinion of counsel satisfactory to the Company that
such registration and/or qualification is not required".
Section 10. Notice of Proposed Transfers, Transfer and Assignment. The
Holder, by acceptance hereof, agrees to comply in all respects with the
provisions of this Section 10. Prior to any proposed transfer of this Warrant or
any Warrant Shares, unless there is in effect a registration statement under the
Securities Act, covering the proposed transfer, the Holder of such securities
will give written notice to the Corporation of such Holder's intention to effect
such transfer. Each such notice will describe the manner and circumstances of
the proposed transfer in sufficient detail, and will be accompanied (except in a
transaction in compliance with Rule 144) by either (i) a written opinion of
legal counsel who will be satisfactory to the Corporation's counsel, to the
effect that the proposed transfer of the Warrant and/or Warrant Shares may be
effected without registration under the Securities Act, or (ii) a "no action"
letter from the Commission to the effect that the transfer of such securities
without registration will not result in a recommendation by the staff of the
Commission that enforcement action be taken with respect thereto, whereupon the
Holder of such securities will be entitled to transfer such
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securities in accordance with the terms of the notice delivered by the Holder to
the Corporation. Each new certificate evidencing the Warrant and/or Warrant
Shares so transferred will bear the appropriate restrictive legends set forth in
Section 9, except that such certificate will not bear such restrictive legend
if, in the opinion of counsel for the Corporation, such legend is not required
in order to establish or assist in compliance with any provision of the
Securities Act or any applicable state securities laws. Notwithstanding the
foregoing, this Warrant may be transferred only to a corporation or other entity
controlling, controlled by or under common control with Holder, including,
without limitation, Telemetrix Investments Limited or Telemetrix Overseas
Investments B.V. For purposes of the foregoing sentence, the term "control"
shall mean (a) in respect of a corporation, that the controlling entity owns or
controls fifty percent (50%) or more of the voting power and has the ability to
elect at least a majority of the board of directors or similar managing body of
the controlled entity, or (b) in respect of an association, partnership, joint
venture or other business entity, that the controlling entity is entitled to
share in fifty percent (50%) or more of the profits and losses of the controlled
entity, however determined and has voting control with respect thereto.
Section 11. Lost, Stolen, Mutilated or Destroyed Warrant. If this
Warrant is lost, stolen, mutilated or destroyed, the Corporation may, on such
terms as to indemnity or otherwise as it may in its discretion reasonably impose
(which will, in the case of a mutilated Warrant, include the surrender thereof),
issue a new Warrant of like denomination and tenor as the Warrant so lost,
stolen, mutilated or destroyed. Any such new Warrant will constitute an original
contractual obligation of the Corporation, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant will be at any time enforceable by
anyone.
Section 12. Presentment. Prior to due presentment of this Warrant
together with a completed assignment form attached hereto for registration of
transfer, the Corporation may deem and treat the Holder as the absolute owner of
the Warrant, notwithstanding any notation of ownership or other writing thereon,
for the purpose of any exercise thereof and for all other purposes, and the
Corporation will not be affected by any notice to the contrary.
Section 13. Notice. Notice or demand pursuant to this Warrant will be
sufficiently given or made, if sent by first-class mail, postage prepaid,
addressed, if to the Holder of this Warrant, to the Holder at its last known
address as it will appear in the records of the Corporation, and if to the
Corporation, at 0000 Xxxxxxxx Xxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000,
Attention: Secretary. The Corporation may alter the address to which
communications are to be sent by giving notice of such change of address in
conformity with the provisions of this Section 13 for the giving of notice.
Section 14. Governing Law. The validity, interpretation and performance
of this Warrant will be governed by the laws of the State of California without
regard to principles of conflicts of laws. In any action brought under or
arising out of this Warrant,
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the undersigned hereby consents to the jurisdiction of any competent court
within the State of California and consents to service of process by any means
authorized by California law.
Section 15. Amendment; Majority In Interest. This Warrant may be
modified, amended or terminated only by a writing signed by the Corporation and
Holder hereof; (or if Warrants have been issued upon exchange or transfer
hereof, the holders of Warrants representing the majority of the Warrant Shares
covered by the outstanding Warrants ("Majority in Interest") thereof. Any action
relating to the Warrants approved by a Majority in Interest will be binding upon
all of the holders of the Warrants irrespective of whether any holder
individually acted to approve or disapprove such action.
Section 16. Severability. Should any part but not the whole of this
Warrant for any reason be declared invalid, such decision will not affect the
validity of any remaining portion, which remaining portion will remain in force
and effect as if this Warrant had been executed with the invalid portion thereof
eliminated, and it is hereby declared the intention of the parties hereto that
they would have executed the remaining portion of this Warrant without including
therein any such part which may, for any reason, be hereafter declared invalid.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Corporation has caused this Warrant to be duly
executed and delivered on and as of the day and year first above written by one
of its officers thereunto duly authorized.
GTI CORPORATION, a Delaware corporation
Dated: February 10, 1997 By: /s/ Xxxxxx Xxxx-Xxxxxxxx
------------------------------
Xxxxxx Xxxx-Xxxxxxxx
Chief Executive Officer
The undersigned Holder agrees and accepts this Warrant and acknowledges
that it has read and confirms each of the representations contained in Section
9.
TELEMETRIX PLC
Dated: February 10, 1997 By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Xxxxx X. Xxxxxxx
Director
[SIGNATURE PAGE TO GTI CORPORATION
COMMON STOCK PURCHASE WARRANT]
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GTI CORPORATION
COMMON STOCK
PURCHASE WARRANT
EXERCISE FORM
(To be executed by the Warrant Holder if it desires to exercise the Warrant in
whole or in part)
To: GTI Corporation
The undersigned, whose taxpayer identification number is
_______________ , hereby irrevocably elects the right of purchase represented by
the within Warrant for, and to purchase thereunder, __________________________
shares of securities provided for therein and tenders payment herewith to the
order of
GTI Corporation
in the amount of
$
The undersigned requests that certificates for such shares be issued as follows:
Name:
Address:
Deliver to:
Address:
and, if said number of shares will not be all the shares purchasable hereunder,
that a new Warrant for the balance remaining of the shares purchasable under the
within Warrant be registered in the name of, and delivered to, the undersigned
at the address stated below:
__________________________________________
__________________________________________
__________________________________________
Dated: ___________ , 19__
___________________________________
(Signature must conform in all
respects to the name of the Warrant
Holder as specified on the face of
the Warrant, without alteration,
enlargement or any change
whatsoever. If the Warrant Holder
is other than an individual, the
signatory must indicate his or her
title.)
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ASSIGNMENT
(To be executed by the Warrant Holder if he desires to effect a transfer of the
Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assign and transfers
unto ___________________________________ whose Social Security or other
identification number is ___________________ [residing/located] at
________________ the attached Warrant, and appoints ________________________
residing at ____________________________ the undersigned's attorney-in-fact to
transfer said Warrant on the books of the Corporation, with full power of
substitution in the premises.
Dated: , 199___
In the presence of:
___________________________
___________________________________
(Signature must conform in all
respects to the name of the Warrant
Holder as specified on the face of
the Warrant, without alteration,
enlargement or any change
whatsoever. If the Warrant Holder
is other than an individual, the
signatory must indicate his or her
title.)
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EXHIBIT B-4
GTI CORPORATION
INVESTOR'S RIGHTS AGREEMENT
FEBRUARY 10, 1997
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INVESTOR'S RIGHTS AGREEMENT
THIS INVESTOR'S RIGHTS AGREEMENT, dated as of February 10, 1997, is
among GTI CORPORATION, a Delaware corporation (the "Company"), and Telemetrix
PLC, a company incorporated under the laws of England (the "Holder").
RECITALS
WHEREAS, the Holder, the Company and Valor Electronics, Inc., a
California corporation and wholly-owned subsidiary of the Company ("Valor") are
parties to a Note Purchase Agreement of even date herewith (the "Note Purchase
Agreement"); and
WHEREAS, in order to induce the Holder to invest funds in Valor
pursuant to the Note Purchase Agreement, the Company issued to the Holder a
common stock purchase warrant dated the same date (the "Warrant") pursuant to
which the Holder can purchase shares of the Company's common stock, $.04 par
value (the "Common Stock"); and
WHEREAS, the Holder and the Company hereby agree that this Agreement
will govern the rights of the Holder to cause the Company to register shares of
the Common Stock issued or issuable to the Holder pursuant to the Warrant (the
"Warrant Shares");
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
ARTICLE I
REGISTRATION RIGHTS
1.1. Definition. For purposes of this Agreement:
a. the term "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Act"), and the declaration or ordering of effectiveness of such registration
statement or document;
b. the term "Registrable Securities" means the Common Stock
issued or issuable upon exercise of the Warrant;
c. the term "Form S-3" means such form under the Act as is in
effect on the date of this Agreement or any registration form under the Act
subsequently adopted by the Securities and Exchange Commission ("SEC") which
permits inclusion or incorporation of substantial information by reference to
other documents filed by the Company with the SEC.
1.2. Request for Registration
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a. If the Company receives at any time after the Warrant
becomes exercisable a written request from the Holder that the Company file a
registration statement under the Act covering the registration of the
Registrable Securities, then the Company will use its best efforts to (1) file
within 60 days (or 30 days if the Company is eligible to file on Form S-3) of
the receipt of such request, a registration statement under the Act covering the
sale by the Holder of a portion or all of the Registrable Securities in
accordance with Section 3.5 and (2) cause such registration statement to be
effective as soon as reasonably practicable thereafter.
b. The Company is obligated to effect only one such
registration pursuant to this Section 1.2.
c. Notwithstanding the foregoing, if the Company furnishes to
the Holder a certificate signed by the President of the Company stating that in
the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, the Company will have the right to defer such filing one
time for a period of not more than 60 days after receipt of the request of the
Holder. In the event of such a deferral, Holder shall have the right to withdraw
the registration request and thereupon its right to effect a registration
pursuant to this Section 1.2 shall be reinstated.
1.3. Company Registration. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for shareholders other than the Holder) any of its stock or other
securities under the Act in connection with a public offering of such securities
solely for cash (other than a registration relating solely to the sale of
securities to participants in a Company stock plan, or a registration on any
form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities), the Company will, at such time, promptly give the
Holder written notice of such proposed registration. Upon the written request of
the Holder given within 20 days after receipt of such notice by the Holder, the
Company will, subject to the provisions of Section 1.7, cause to be registered
under the Act all of the Registrable Securities that the Holder has requested to
be registered.
1.4. Obligations of the Company. Whenever required under this Article I
to effect the registration of any Registrable Securities, the Company will, as
expeditiously as reasonably possible and within the time period, if any,
specified in this Article 1:
a. Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its reasonably best efforts to
cause such registration statement to become effective, and, upon the request of
the Holder of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for up to 120 days.(or up to 180 days
in the event a registration statement is filed on Form S-3).
b. Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
c. Furnish to the Holder such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities.
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d. Use its reasonably best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as will be reasonably requested by the
Holder, provided that the Company will not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
e. In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. The Holder will
also enter into and perform its obligations under such an agreement. All costs
related to the negotiation and preparation of such underwriting agreement in
respect of a Company registration pursuant to Section 1.3 shall be the sole
expense of the Company. In the event that a registration is requested by the
Holder pursuant to Section 1.2 in respect of an underwritten offering of
Registrable Securities, Holder shall reimburse the Company for all costs related
to the negotiation and preparation of any underwriting agreement in respect of
the sale of Registrable Securities covered by the registration.
f. Notify the Holder at any time when a prospectus relating
thereto is required to be delivered under the Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
1.5. Furnish Information. It will be a condition precedent to the
obligations of the Company to take any action pursuant to this Article I with
respect to the Registrable Securities of the Holder that the Holder will furnish
to the Company such information regarding itself, the Registrable Securities
held by it, and the intended method of disposition of such securities as will be
required to effect the registration of the Holder's Registrable Securities.
1.6. Expenses of Registration. Holder will be responsible for payment
of all of Holder's expenses in respect of the registration and sale of
Registrable Securities, including (i) underwriting discounts and commissions and
(ii) expenses of Holder's legal counsel and other advisors to Holder. Subject to
the provisions of Section 1.4 (e), the Company shall be responsible for and
shall pay all other expenses, including all registration, filing and
qualification fees, printers' and accounting fees, and fees and disbursements of
counsel for the Company; provided, however, that the Company will not be
required to pay for (and the Holder will reimburse the Company for) any expenses
of any registration proceeding begun pursuant to Section 1.2 if the registration
request is subsequently withdrawn at the request of the Holder (in which case
the Holder will bear such expenses), unless (i) the Holder agrees to forfeit its
right to one demand registration pursuant to Section 1.2, (ii) such withdrawal
was caused by a material adverse change in the Company that has arisen
subsequent to the time of the request, or (iii) such withdrawal was made by
Holder as contemplated by Section 1.2(c) hereof.
1.7. Underwriting Requirements. In connection with any underwritten
offering of shares of the Company's capital stock, the Company will not be
required under Section 1.3 to include any of the Holder's securities in the
underwritten offering unless Holder accepts the underwriting terms as agreed
upon between the Company and the underwriters selected by it (or by other
persons entitled to select the underwriters). If the total amount of securities
proposed to be included in the offering, including Registrable Securities,
exceeds the maximum amount of securities (the "Maximum Amount") that the
managing underwriter in the offering determines in good faith can be included in
the offering without adversely affecting the marketing of securities in the
offering, then the Company will reduce the amount of securities included in the
offering (other than the Registrable Securities and securities proposed to be
sold by and for the account of the Company (the "Company Securities")) until the
aggregate number of securities included in the offering equals the Maximum
Amount. If after eliminating from the offering all securities other than
Registrable Securities and Company Securities, the aggregate amount of the
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Registrable Securities and Company Securities proposed to be included in the
offering exceeds the Maximum Amount, the Registrable Securities and Company
Securities shall be reduced pro rata (based upon the relative amounts of the
Registrable Securities and Company Securities) until the sum of the Registrable
Securities and Company Securities included in the offering equals the Maximum
Amount.
1.8. Indemnification. If any Registrable Securities are included in a
registration statement under this Article I:
a. The Company will indemnify and hold harmless the Holder,
any underwriter (as defined in the Act) for the Holder, each person, if any, who
controls the Holder or underwriter within the meaning of the Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
respective officers, directors, partners, employees, representatives and agents
of the Holder, underwriter or person who controls the Holder or any underwriter
against any losses, claims, damages, or liabilities (joint or several)
(including, without limitation, and as incurred, reimbursement of all costs of
investigation, preparing, pursuing or defending any claim or action, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel) to which they
may become subject under the Act or the Exchange Act, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act the Exchange Act, or any rule or regulation
promulgated under the Act, or the Exchange Act; provided, however, that the
indemnity agreement contained in this subsection 1.8(a) will not apply to
amounts paid in settlement of any such loss, claim, damage, liability, or action
if such settlement is effected without the consent of the Company (which consent
will not be unreasonably withheld), nor will the Company be liable in any such
case for any such loss, claim, damage, liability, or action to the extent that
it arises out of or is based upon a Violation which is based solely upon an
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information relating to the Holder
furnished in writing to the Company by the Holder expressly for use in the
registration statement.
b. The Holder will indemnify and hold harmless the Company,
each of its directors, each of its officers who has signed the registration
statement, and each person, if any, who controls the Company within the meaning
of the Act, against any losses, claims, damages, or liabilities (joint or
several) including, without limitation, and as incurred, reimbursement of all
costs of investigating, preparing, pursuing or defending any claim or action, or
any investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel, to which any
of the foregoing persons may become subject under the Act or the Exchange Act
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation is based solely upon an
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information relating to the Holder
furnished in writing to the Company by the Holder expressly for use in the
registration statement; provided, however, that the indemnity agreement
contained in this subsection 1.8(b) will not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder, which consent will not be
unreasonably withheld; provided, that, in no event will any indemnity under this
subsection 1.8(b) exceed the proceeds from the offering net of sales commission,
if any, received by the Holder.
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c. Promptly after receipt by an indemnified party under this
Section 1.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.8, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party will have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) will have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party is inappropriate due to actual differing interests between
such indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, will relieve such indemnifying party of
any liability to the indemnified party under this Section 1.8, but the omission
so to deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 1.8.
d. If the indemnification provided for in this Section 1.8 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party to this Agreement, will contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party will be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
e. Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement will control.
f. The obligations of the Company and the Holder under this
Section 1.8 will survive the completion of any offering of Registrable
Securities in a registration statement under this Article I, and otherwise.
1.9. "Market Stand-Off" Agreement. Notwithstanding the rights granted
pursuant to Section 1.2(a), the Holder hereby agrees that, during the period of
duration (not to exceed 90 days) specified by the Company and an underwriter of
Common Stock or other securities of the Company, following the effective date of
a registration statement of the Company filed under the Act, it will not, to the
extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company
held by it at any time during such period except Common Stock included in such
registration. In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of the
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
1.10. Termination of Registration. No Holder will be entitled to
exercise any right provided for in this Article I after the date three (3) years
from the initial date of exercise of the Warrant.
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ARTICLE II.
MISCELLANEOUS
2.1. Successors and Assigns. Except as otherwise provided in this
Agreement, the terms and conditions of this Agreement will inure to the benefit
of and be binding upon the respective successors and assigns of the parties
(including transferees of any shares of Registrable Securities). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties to this Agreement or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
2.2. Governing Law. This Agreement will be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California. In any action brought under or arising out of this Agreement, the
undersigned hereby consents to the jurisdiction of any competent court within
the State of California and consents to service of process by any means
authorized by California law.
2.3. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
2.4. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
2.5. Notices. All notices and other communications under this Agreement
shall be in writing and shall be delivered, or mailed by first-class mail,
postage prepaid, addressed, (a) if to you, at Telemetrix PLC, Knaves Beech
Estate, Loudwater, Xxxx Xxxxxxx, Xxxxx, XX00 0XX, Xxxxxx Xxxxxxx, Attention:
Company Secretary, with a copy to Xxxxxxx X. Xxxx, Xxxxxx & Xxxxxxx, Xxxxx 0000,
000 Xxxx Xxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000-0000, or (b) if to the
Company, to GTI Corporation, 0000 Xxxxxxxx Xxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx
00000, Attention: General Counsel, or at such other address, or to the attention
of such other officer, as the Company shall have furnished to you in writing.
All such notices and other communications shall be effective, (i) if mailed,
upon receipt or fifteen Business Days after mailing, whichever is earlier, (ii)
if telegraphed, when delivered to the telegraph company, or (iii) if delivered,
when delivered.
2.6. Expense. If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party will be entitled
to reasonable attorneys' fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.
2.7. Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision will be excluded from
this Agreement and the balance of the Agreement will be interpreted as if such
provision were so excluded and will be enforceable in accordance with its terms.
2.8. Entire Agreement; Amendment;. This Agreement (including the
Exhibits to this Agreement, if any) constitutes the full and entire
understanding and agreement between the parties with regard to the subjects of
this Agreement and thereof.
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2.9. Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities pursuant to this Agreement may be assigned
(but only with all related obligations) by a Holder to the transferee or
assignee of the Warrant or the Warrant Shares, provided the Company is, within a
reasonable time after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned; and provided further, that
such assignment will be effective only if immediately following such transfer
the further disposition of such securities by the transferee or assignee is
restricted under the Act. Notwithstanding the foregoing, this Agreement may be
transferred only to a corporation or other entity controlling, controlled by or
under common control with Investor, including, without limitation, Telemetrix
Investments Limited or Telemetrix Overseas Investments B.V. For purposes of the
foregoing sentence, the term "control" shall mean (a) in respect of a
corporation, that the controlling entity owns or controls fifty percent (50%) or
more of the voting power and has the ability to elect at least a majority of the
board of directors or similar managing body of the controlled entity, or (b) in
respect of an association, partnership, joint venture or other business entity,
that the controlling entity is entitled to share in fifty percent (50%) or more
of the profits and losses of the controlled entity, however determined and has
voting control with respect thereto.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE COMPANY:
GTI CORPORATION
By: /s/ Xxxxxx Xxxx-Xxxxxxxx
---------------------------
Name: Xxxxxx Xxxx-Xxxxxxxx
Title: Chief Executive Officer
THE INVESTOR:
TELEMETRIX PLC
By: /s/Xxxxx X. Xxxxxxx
---------------------------
Name: Xxxxx X. Xxxxxxx
Title: Director
[SIGNATURE PAGE TO INVESTOR'S RIGHTS AGREEMENT]
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SCHEDULE 5.4 - LITIGATION
Xxxxxxxxx Associates of Mass. v. Valor Electronics, Inc.
- Claim of unfair act in conduct of trade/commerce with a demand of
$800,000.
- Motion to dismiss filed. This matter will be vigorously defended as
Valor's contract with this rep company was terminated in January 1994
pursuant to the terms of the contract based on their non-performance.
Capital Electronics v. Valor
- Complaint served 1/22/97 for breach of contract and open book account
claiming Valor owes $93,357 for non-payment for parts supplied by
plaintiff.
- Valor will settle this matter due to a recent discovery of a portion of
the parts previously thought to have been returned. Value of the case
is less than half of demand with additional off-sets for over charging
by plaintiff.
Unitek Equipment, Inc. v. Valor Electronics, Inc.
- Complaint filed 6/24/96 for breach of contract, open book account,
account stated and goods, wares and merchandise never sold claiming
damages of $92,813.25.
- Mediation scheduled for 2/18/97.
- Case will be vigorously defended. Plaintiff claims Valor purchased two
lasers which they returned as they did not meet the specifications
required.
Master Metals, Inc. Site, Cleveland, Ohio
- GTI was identified by the EPA as a potential responsible party under
the CERCLA. Amount of claim as to GTI is unknown.
- Response completed 9/13/96. The E-Group, previously sold by GTI, did
send various materials to Master Metals site but the volume and nature
of said material is still under investigation.
Reserve Environmental Services v. Detrex Corp
- GTI named under a CERCLA action. A de minimis Settlement and Release in
the amount of $35,000 is under review and will be signed within a week.
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Valor Electronics, Inc. v. InNet Technologies, Inc, Xxxx X Xxxxxx, Xxxxxxx X.
Xxxxxxx, Xxxxxx X. Xxxx, Xxxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxxxx
First Amended Complaint filed August 27, 1996 against six former Valor
employees who are now officers and/or employees of InNet Technologies,
Inc., asserting claims for misappropriation of trade secrets, unfair
competition and breach of contract.
Case is being actively litigated and is in the discovery phase. This
matter will be vigorously litigated as Valor contends InNet and its
employees are actively competing with Valor using know how, proprietary
technical information, customer and supplier information gained while
under Valor's employment.
InNet Technologies, Inc. Xxxx X Xxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxx,
Xxxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxxxx v. Valor Electronics, Inc.
Cross-complaint filed against Valor Electronics, Inc. on August 23,
1996 for abuse of process, defamation and defamation per se, unfair
competition and declaratory relief. Valor's demurrer was sustained as
to the abuse of process cause of action.
This case is being vigorously defended.
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