Exhibit 4.2
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of March 14, 2002,
by and between RAMTRON INTERNATIONAL CORPORATION, a Delaware corporation (the
"Company"), and each of the entities whose names appear on the signature pages
hereof. Such entities are each referred to herein as a "Purchaser" and,
collectively, as the "Purchasers".
The Company wishes to sell to each Purchaser, and each Purchaser wishes to
purchase, on the terms and subject to the conditions set forth in this
Agreement, a 5% Secured Convertible Debenture that is in the form attached
hereto as Exhibit A (a "Debenture" and, collectively, the "Debentures") and a
Warrant that is in the form attached hereto as Exhibit B (a "Warrant" and,
collectively, the "Warrants"). Each Warrant purchased by a Purchaser at the
Closing (as defined below) will entitle such Purchaser to purchase a number of
shares of common stock, par value $0.01 per share, of the Company (the "Common
Stock") equal to thirty percent (30%) of the original principal amount of the
Debenture purchased by such Purchaser at such Closing divided by the Closing
Price (as defined below). The Warrants will have an exercise price equal to
one hundred and twenty-five percent (125%) of the Closing Price.
The Debentures are convertible into shares of Common Stock (the "Conversion
Shares") in accordance with their terms. The Warrants are exercisable into
shares of Common Stock (the "Warrant Shares") in accordance with their terms.
The Debentures, the Conversion Shares, the Warrants and the Warrant Shares are
collectively referred to herein as the "Securities".
The Company's obligations under the Debentures, including, without limitation,
its obligation to make payments of principal thereof and interest thereon,
shall be secured pursuant to the terms of a mortgage Deed of Trust that is in
form and substance satisfactory to the Company and the Purchasers (including
such modifications necessary to comport with Colorado law and Colorado real
estate practice) and substantially in the form attached hereto as Exhibit C
(the "Deed of Trust"). The Deed of Trust shall be entered into by and between
the Company and Public Trustee of El Paso County, Colorado, for the benefit of
the entities named therein as original beneficiaries.
The Company has agreed to effect the registration of the Conversion Shares and
the Warrant Shares under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Rights Agreement to be entered
into by and between the Company and each Purchaser that is in the form
attached hereto as Exhibit D (the "Registration Rights Agreement"). The sale
of the Debentures and the Warrants by the Company to the Purchasers will be
effected in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the
Securities and Exchange Commission (the "Commission") under the Securities
Act.
The Company and each Purchaser hereby agree as follows:
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1. PURCHASE AND SALE OF DEBENTURES AND WARRANTS.
1.1 Purchase of Debentures and Warrants. Upon the terms and subject to the
satisfaction or waiver of the conditions set forth herein, the Company agrees
to sell and each Purchaser agrees to purchase (i) a Debenture with a principal
amount equal to the amount set forth below such Purchaser's name on the
signature pages hereof and (ii) a Warrant. The purchase price for the
Debenture and Warrant being purchased by a Purchaser (the "Purchase Price")
shall be equal to the principal amount of such Debenture, provided that the
Purchase Price shall be allocated between such Debenture and Warrant as may be
agreed between the Company and such Purchaser. The aggregate Purchase Price to
be paid by all of the Purchasers for the Debentures and Warrants shall be
equal to Five Million Dollars ($5,000,000). The date on which the closing of
the purchase and sale of the Debentures and Warrants occurs (the "Closing") is
hereinafter referred to as the "Closing Date". The Closing will be deemed to
occur when (A) all of the conditions set forth in this Agreement have been
satisfied or waived, and (B) full payment of each Purchaser's Purchase Price
has been made by such Purchaser to the Company by wire transfer of immediately
available funds against physical delivery by the Company of duly executed
certificates representing the Debenture and Warrant purchased by such Purchaser
at the Closing.
1.2 Certain Definitions. When used herein, the following terms shall have
the respective meanings indicated:
"Affiliate" means, as to any Person (the "subject Person"), any other Person
(a) that directly or indirectly through one or more intermediaries controls or
is controlled by, or is under direct or indirect common control with, the
subject Person, (b) that directly or indirectly beneficially owns or holds ten
percent (10%) or more of any class of voting equity of the subject Person, or
(c) ten percent (10%) or more of the voting equity of which is directly or
indirectly beneficially owned or held by the subject Person, provided,
however, that Infineon (as defined below) shall not be deemed to be an
Affiliate of the Company. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, through representation on such Person's Board of
Directors or other management committee or group, by contract or otherwise.
"Business Day" means any day other than a Saturday, a Sunday or a day on which
banks are authorized by law to close in New York, New York.
"Closing Price" means the average of the daily VWAP for each of the five
Trading Days immediately preceding the date of this Agreement, such average
being $3.42644.
"Conversion Price" has the meaning specified in the Debentures.
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"Debt" means, as to any Person at any time (without duplication), and except
as described on Schedule 1.2 hereof: (a) all indebtedness, liabilities and
obligations of such Person for borrowed money; (b) all indebtedness,
liabilities and obligations of such Person to pay the deferred purchase price
of Property or services, except trade accounts payable of such Person arising
in the ordinary course of business that are not past due by more than one
hundred twenty (120) days (provided, however, payables that are past due by
more one hundred twenty (120) days but are actively being contested by the
Company in good faith shall not constitute Debt); (c) all capital lease
obligations of such Person; (d) all Debt of others guaranteed by such Person;
(e) all indebtedness, liabilities and obligations secured by a Lien existing
on Property owned by such Person, whether or not the indebtedness, liabilities
or obligations secured thereby have been assumed by such Person or are
non-recourse to such Person; (f) all reimbursement obligations of such Person
(whether contingent or otherwise) in respect of letters of credit, bankers'
acceptances, surety or other bonds and similar instruments; and (g) all
indebtedness, liabilities and obligations of such Person to redeem or retire
shares of capital stock of such Person.
"Environmental Law" means any federal, state, provincial, local or foreign
law, statute, code or ordinance, principle of common law, rule or regulation,
as well as any permit, order, decree, judgment or injunction issued,
promulgated, approved or entered thereunder, relating to pollution or the
protection, cleanup or restoration of the environment or natural resources, or
to the public health or safety, or otherwise governing the generation, use,
handling, collection, treatment, storage, transportation, recovery, recycling,
discharge or disposal of hazardous materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations and published interpretations thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as amended (or any
successor act), and the rules and regulations thereunder (or respective
successors thereto).
"Exercise Price" shall have the meaning specified in the Warrants.
"GAAP" means generally accepted accounting principles, applied on a consistent
basis, as set forth in (i) opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (ii) statements of the
Financial Accounting Standards Board, (iii) interpretations of the Commission
and the Staff of the Commission and each of their respective successors and
which are applicable in the circumstances as of the date in question.
Accounting principles are applied on a "consistent basis" when the accounting
principles applied in a current period are comparable in all material respects
to those accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any state, provincial
or political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including without limitation any stock exchange, securities
market or self-regulatory organization.
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"Governmental Requirement" means any law, statute, code, ordinance, order,
rule, regulation, judgment, decree, injunction, franchise, license or other
directive or requirement of any federal, state, county, municipal, parish,
provincial or other Governmental Authority or any department, commission,
board, court, agency or any other instrumentality of any of them.
"Infineon" means Infineon Technologies AG.
"Infineon Closing" means the closing to occur under the Infineon Securities
Purchase Agreement.
"Infineon Debenture" means the debenture purchased by and/or issuable to
Infineon pursuant to the Infineon Securities Purchase Agreement.
"Infineon Documents" means the Infineon Debenture, Infineon Securities
Purchase Agreement, Infineon Warrant, and all other agreements, documents and
other instruments executed and delivered by or on behalf of the Company or any
of its officers at the Infineon Closing.
"Infineon Securities Purchase Agreement" means the Securities Purchase
Agreement to be entered into by and between the Company and Infineon, which
contains substantially the same terms as this Agreement.
"Infineon Registration Rights Agreement" means the Registration Rights
Agreement dated as of February 2, 2001, as amended, by and between the Company
and Infineon.
"Infineon Warrant" means the warrant purchased by and/or issuable to Infineon
pursuant to the Infineon Securities Purchase Agreement.
"Intellectual Property" means any U.S. or foreign patents, patent rights,
patent applications, trademarks, trade names, service marks, brand names,
logos and other trade designations (including unregistered names and marks),
trademark and service xxxx registrations and applications, copyrights and
copyright registrations and applications, inventions, invention disclosures,
protected formulae, formulations, processes, methods, trade secrets, computer
software, computer programs and source codes, manufacturing research and
similar technical information, engineering know-how, customer and supplier
information, assembly and test data drawings or royalty rights.
"Lien" means, with respect to any Property, and except as described on
Schedule 1.2 hereof, any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, security interest, tax lien, financing
statement, pledge, charge, or other lien, charge, easement (other than any
easement not materially impairing usefulness), encumbrance, preference,
priority, restriction or other security agreement or preferential arrangement
of any kind or nature whatsoever on or with respect to such Property
(including, without limitation, any conditional sale or other title retention
agreement having substantially the same economic effect as any of the
foregoing).
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"Material Adverse Effect" means an effect that has material and adverse
consequences on (i) the consolidated business, operations, properties,
financial condition, or results of operations of the Company and its
Subsidiaries taken as a whole or (ii) the ability of the Company to perform
its obligations under this Agreement or the other Transaction Documents (as
defined below).
"Material Contracts" means, as to the Company, any supply, purchase, service,
employment, tax, indemnity, stockholder or other agreement or contract for
which the aggregate amount or value of services performed or to be performed
for or by, or funds or other Property transferred or to be transferred to or
by, the Company is in excess of $50,000 or by which the Company or any of its
Properties is otherwise bound to an obligation in excess of $50,000 and any
and all amendments, modifications, supplements, renewals or restatements
thereof; provided that development, license and other agreements similar to
the types of agreements the Company has entered into from time to time
relating to the creation, development, and exploitation of the Company's
present or future Intellectual Property shall not be deemed to be Material
Contracts.
"Maturity Date" with respect to a Debenture shall mean the five-year
anniversary of the issue date for such Debenture, or such earlier date to
which the Maturity Date may be accelerated pursuant to the terms of such
Debenture.
"Obligations" means any and all indebtedness, liabilities and obligations of
the Company to a Purchaser evidenced by and/or arising pursuant to any of the
Transaction Documents (including, without limitation, this Agreement and the
Debentures), now existing or hereafter arising, whether direct, indirect,
related, unrelated, fixed, contingent, liquidated, unliquidated, joint,
several or joint and several, including, without limitation, the obligations
of the Company to repay principal of the Debentures, to pay interest on the
Debentures (including, without limitation, interest accruing after any, if
any, bankruptcy, insolvency, reorganization or other similar filing) and to
pay all fees, indemnities, costs and expenses (including attorneys' fees)
provided for in the Transaction Documents.
"Pension Plan" means an employee benefit plan (as defined in ERISA) maintained
by the Company for employees of the Company or any of its Affiliates.
"Permitted Liens" means the following:
(a) encumbrances consisting of easements, rights-of-way, zoning restrictions
or other restrictions on the use of real Property or imperfections to
title that do not (individually or in the aggregate) materially impair
the ability of the Company or any of its Subsidiaries to use such
Property in its businesses, and none of which is violated in any material
respect by existing or proposed structures or land use;
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(b) Liens for taxes, assessments or other governmental charges that are not
delinquent or which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the Property subject to such Liens, and for which
adequate reserves (as determined in accordance with GAAP) have been
established;
(c) Liens of mechanics, materialmen, warehousemen, carriers, landlords or
other similar statutory Liens securing obligations that are not yet due
and are incurred in the ordinary course of business or which are being
contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing the forfeiture or sale of the Property
subject to such Liens, and for which adequate reserves (as determined in
accordance with GAAP) have been established; and
(d) Liens arising from securing indebtedness that does not constitute Debt.
"Person" means any individual, corporation, trust, association, company,
partnership, joint venture, limited liability company, joint stock company,
Governmental Authority or other entity.
"Property" means property and/or assets of all kinds, whether real, personal
or mixed, tangible or intangible (including, without limitation, all rights
relating thereto).
"Purchaser Documents" means this Agreement, the Debentures, the Registration
Rights Agreement, the Warrants, the Deed of Trust, and all other agreements,
documents and other instruments executed and delivered by or on behalf of the
Company or any of its officers at the Closing.
"Real Property" means all real Property owned by the Company and set forth on
Schedule 3.21 hereto.
"Restricted Payment" means (a) any dividend or other distribution (whether in
cash, Property or obligations), direct or indirect, on account of (or the
setting apart of money for a sinking or other analogous fund for) any shares
of any class of capital stock of the Company or any of its Subsidiaries now or
hereafter outstanding, except a dividend payable solely in shares of that
class of stock to all of the holders of that class, and except scheduled
dividend payments with respect to the Series A Preferred Stock; (b) any
redemption, conversion, exchange, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of capital stock of the Company or any of its Subsidiaries now or
hereafter outstanding, except the Debentures, the Warrants, the Infineon
Debenture and the Infineon Warrant, and except the scheduled redemption of the
Series A Preferred Stock; (c) any payment or prepayment of principal of,
premium, if any, or interest on, or any redemption, conversion, exchange,
purchase, retirement or defeasance of, or payment with respect to, any Debt
other than with respect to the Debentures, the Warrants, the Infineon
Debenture and the Infineon Warrant; and (d) any loan, advance or payment to
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any employee, officer, director or stockholder of the Company or any of its
Subsidiaries, exclusive of reasonable compensation and reimbursements paid to
officers or directors in the ordinary course of business. Notwithstanding the
foregoing, the issuance of securities upon exercise or conversion of the
Company's options, warrants or other convertible securities outstanding as of
the date hereof and set forth on Schedule 3.5 or the grant of additional
options or warrants or the issuance of additional securities, in each such
case under any Company stock option or restricted stock plan approved by the
Board of Directors of the Company, shall not be deemed to be a Restricted
Payment.
"Series A Preferred Stock" means shares of the Company's Series A Convertible
Preferred Stock outstanding as of the date of this Agreement.
"Subordinated Debt" means Debt of the Company which meets each of the
following requirements: (a) such Debt is wholly unsecured; and (b) such Debt
is contractually subordinated, as to payment, to the payment in full of the
Debentures and the Obligations on terms, and pursuant to written agreements in
form and substance, satisfactory to each Purchaser.
"Subordinated Debt Documents" means any and all agreements, documents and
instruments now or hereafter evidencing or governing the subordination of any
Subordinated Debt to the Obligations.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which at least a majority of the outstanding shares of stock or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors (or Persons performing similar
functions) of such corporation or entity (irrespective of whether or not at
the time, in the case of a corporation, stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or
controlled by such Person or one or more of its Subsidiaries or by such Person
and one or more of its Subsidiaries.
"Trading Day" shall mean any day on which the Common Stock is purchased and
sold on the principal market on which the Common Stock is then listed or
traded.
"Transaction Documents" means any and all of the Purchaser Documents and the
Infineon Documents.
"VWAP" on a Trading Day means the volume weighted average price of the Common
Stock for such Trading Day as reported by Bloomberg Financial Markets or, if
Bloomberg Financial Markets is not then reporting such prices, by a comparable
reporting service of national reputation selected by the holders of a majority
of the principal amount of the then outstanding Debentures.
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1.4 Other Definitional Provisions. All definitions contained in this
Agreement are equally applicable to the singular and plural forms of the terms
defined. The words "hereof", "herein" and "hereunder" and words of similar
import referring to this Agreement refer to this Agreement as a whole and not
to any particular provision of this Agreement.
2. REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER.
Each Purchaser hereby makes the following representations and warranties to
the Company and agrees with the Company that, as of the date of this Agreement
and as of the date of each Closing:
2.1 Authorization; Enforceability. Such Purchaser is duly and validly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization as set forth below such
Purchaser's name on the signature page hereof with the requisite corporate
power and authority to purchase the Debenture and Warrant being purchased by
it and to execute and deliver this Agreement. This Agreement constitutes such
Purchaser's valid and legally binding obligation, enforceable in accordance
with its terms, subject to (i) applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or other similar laws of general
application relating to or affecting the enforcement of creditors' rights
generally and (ii) general principles of equity.
2.2 Accredited Investor. Such Purchaser is an accredited investor as that
term is defined in Rule 501 of Regulation D, and is acquiring the Debenture
and Warrant being purchased by it solely for its own account as a principal
and not with a present view to the public resale or distribution of all or any
part thereof, except pursuant to sales that are exempt from the registration
requirements of the Securities Act and/or sales registered under the
Securities Act; provided, however that in making such representation, such
Purchaser does not agree to hold the Securities for any minimum or specific
term and reserves the right to sell, transfer or otherwise dispose of the
Securities at any time in accordance with the provisions of this Agreement and
with Federal and state securities laws applicable to such sale, transfer or
disposition.
2.3 Information. The Company has provided such Purchaser with information
regarding the business, operations and financial condition of the Company, and
has granted to such Purchaser the opportunity to ask questions of and receive
answers from representatives of the Company, its officers, directors,
employees and agents concerning the Company and materials relating to the
terms and conditions of the purchase and sale of the Debentures and Warrants
hereunder. Neither such information nor any other investigation conducted by
such Purchaser or any of its representatives shall modify, amend or otherwise
affect such Purchaser's right to rely on the Company's representations and
warranties contained in this Agreement.
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2.4 Limitations on Disposition. Such Purchaser acknowledges that, except as
provided in the Registration Rights Agreement, the Securities have not been
and are not being registered under the Securities Act and may not be
transferred or resold without registration under the Securities Act or unless
pursuant to an exemption therefrom.
2.5 Legend. Such Purchaser understands that the certificates representing
the Securities may bear at issuance a restrictive legend in substantially the
following form:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or
the securities laws of any state, and may not be offered or sold unless a
registration statement under the Securities Act and applicable state
securities laws shall have become effective with regard thereto, or an
exemption from registration under the Securities Act and applicable state
securities laws is available in connection with such offer or sale."
Notwithstanding the foregoing, it is agreed that, as long as (A) the
resale or transfer (including without limitation a pledge) of any of the
Securities is registered pursuant to an effective registration statement,
(B) such Securities have been sold pursuant to Rule 144 under the
Securities Act or any successor provision ("Rule 144"), subject to
receipt by the Company of customary documentation in connection
therewith, or (C) such Securities are eligible for resale under Rule
144(k) or any successor provision, such Securities shall be issued
without any legend or other restrictive language and, with respect to
Securities upon which such legend is stamped, the Company shall issue new
certificates without such legend to the holder upon request.
2.6 Reliance on Exemptions. Such Purchaser understands that the Securities
are being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws
and that the Company is relying upon the truth and accuracy of the
representations and warranties of such Purchaser set forth in this Section 2
in order to determine the availability of such exemptions and the eligibility
of such Purchaser to acquire the Securities.
2.7 Non-Affiliate Status; Common Stock Ownership. Such Purchaser is not an
affiliate or an associate (as such terms are defined in Rule 12b-2 promulgated
under the Exchange Act) of the Company or of any other Purchaser and is not
acting in association or concert with any other Purchaser in regard to the
purchase of the Debenture and Warrant being purchased by it or otherwise in
regard to the Company. Such Purchaser's investment in its Debenture and
Warrant is not for the purpose of acquiring, directly or indirectly, control
of, and it has no intent to acquire or exercise control of, the Company or to
influence the decisions or policies of the Company's Board of Directors.
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2.8 No Trading in Company Securities. Neither such Purchaser nor any person
trading on its behalf or at its direction has engaged in any bids for, or
purchases or sales (whether covered or short) of, Common Stock or of any puts,
calls or other derivative securities of Common Stock during the period
beginning six (6) Trading Days prior to the date of this Agreement and ending
on the Trading Day immediately preceding the date of this Agreement.
2.9 Fees. Such Purchaser is not obligated to pay any compensation or other
fee, cost or related expenditure to any underwriter, broker, agent or other
representative in connection with the transactions contemplated hereby, other
than such compensation, fee, cost or expenditure for which the Company is not,
and shall not be, liable. Such Purchaser will indemnify and hold harmless the
Company from and against any claim by any person or entity alleging that the
Company is obligated to pay any such compensation, fee, cost or related
expenditure in connection with the transactions contemplated hereby.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby makes
the following representations and warranties to each Purchaser and agrees with
each Purchaser that, as of the date of this Agreement and as of the date of
the Closing:
3.1 Organization, Good Standing and Qualification. Each of the Company and
its Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization and
has all requisite power and authority to carry on its business as now
conducted. Each of the Company and its Subsidiaries is duly qualified to
transact business and is in good standing in each jurisdiction in which it
conducts business except where the failure so to qualify has not had or would
not reasonably be expected to have a Material Adverse Effect.
3.2 Authorization; Consents. The Company has the requisite corporate power
and authority to enter into and perform its obligations under the Transaction
Documents, to issue and sell the Debentures and the Warrants to the Purchasers
in accordance with the terms hereof and thereof, to issue the Conversion
Shares upon conversion of the Debentures and to issue the Warrant Shares upon
exercise of the Warrants. All corporate action on the part of the Company by
its officers, directors and stockholders necessary for the authorization,
execution and delivery of, and the performance by the Company of its
obligations under, the Transaction Documents has been taken, and no further
consent or authorization of the Company, its Board of Directors, its
stockholders, any Governmental Authority or organization (other than such
approval as may be required under the Securities Act and applicable state
securities laws in respect of the Registration Rights Agreement), or any other
person or entity is required (pursuant to any rule of the National Association
of Securities Dealers ("NASD") or otherwise). The Company's Board of Directors
has determined, at a duly convened meeting, that the issuance and sale of the
Securities, and the consummation of the transactions contemplated hereby and
by the other Transaction Documents (including without limitation the issuance
of Conversion Shares in accordance with the terms of the Debentures and
Warrant Shares in accordance with the terms of the Warrants) are in the best
interests of the Company.
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3.3 Enforcement. Each of the Transaction Documents constitutes the valid and
legally binding obligation of the Company, enforceable against it in
accordance with its terms, subject to (i) applicable bankruptcy, insolvency,
fraudulent transfer, moratorium, reorganization or other similar laws of
general application relating to or affecting the enforcement of creditors'
rights generally and (ii) general principles of equity.
3.4 Disclosure Documents; Agreements; Financial Statements; Other
Information. The Company filed with the Commission all periodic, current and
other reports, schedules, registration statements and definitive proxy
statements that the Company was required to file with the Commission on or
after December 31, 2000 (collectively, the "Disclosure Documents"). The
Company has not been required to file, and has not filed, any Disclosure
Document with the Commission on or after March 7, 2002. The Company is not
aware of any event occurring on or prior to the date of the Closing (other
than the transactions effected hereby) that would require the filing of, or
with respect to which the Company intends to file, a Form 8-K after the
Closing. Each Disclosure Document, as of the date of the filing thereof with
the Commission, complied in all material respects with the requirements of the
Securities Act or Exchange Act, as applicable, and the rules and regulations
promulgated thereunder and, as of the date of such filing (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date
of such filing), such Disclosure Document (including all exhibits and
schedules thereto and documents incorporated by reference therein) did not
contain an untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. All
documents required to be filed as exhibits to the Disclosure Documents have
been filed as required. Except as set forth in the Disclosure Documents or any
schedule or exhibit attached hereto, the Company has no liabilities,
contingent or otherwise, other than liabilities incurred in the ordinary
course of business which, under GAAP, are not required to be reflected in such
financial statements and which, individually or in the aggregate, are not
material to the consolidated business or financial condition of the Company
and its Subsidiaries taken as a whole. As of their respective dates, the
financial statements of the Company included in the Disclosure Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto. Such financial statements have been prepared in accordance
with GAAP consistently applied at the times and during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto, or (ii) in the case of unaudited interim statements, to the
extent they may exclude footnotes or may be condensed or summary statements)
and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end adjustments).
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3.5 Capitalization; Debt Schedule. The capitalization of the Company as of
the date hereof, including its authorized capital stock, the number of shares
issued and outstanding, the number of shares issuable and reserved for
issuance pursuant to the Company's stock option plans, the number of shares
issuable and reserved for issuance pursuant to securities (other than the
Debentures and Warrants) exercisable for, or convertible into or exchangeable
for any shares of Common Stock and the number of shares initially to be
reserved for issuance upon conversion of the Debentures and exercise of the
Warrants is set forth on Schedule 3.5 hereto. All of such outstanding shares
of capital stock have been, or upon issuance will be, validly issued, fully
paid and non-assessable. Except as disclosed on Schedule 3.5 hereto, no shares
of the capital stock of the Company are subject to preemptive rights or any
other similar rights of the stockholders of the Company or any Liens created
by or through the Company. Except as disclosed on Schedule 3.5, or as
contemplated herein, as of the date of this Agreement and as of the date of
such Closing, there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its Subsidiaries, or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
Subsidiaries (whether pursuant to anti-dilution, "reset" or other similar
provisions). Schedule 3.5 identifies all currently outstanding Debt of the
Company, all of which constitutes Subordinated Debt.
3.6 Due Authorization; Valid Issuance. The Debentures are duly authorized
and, when issued, sold and delivered in accordance with the terms hereof,
(i) will be duly and validly issued, fully paid and nonassessable, free and
clear of any Liens imposed by or through the Company and (ii) assuming the
accuracy of each Purchaser's representations in this Agreement, will be
issued, sold and delivered in compliance with all applicable Federal and state
securities laws. The Warrants are duly authorized and, when issued, sold and
delivered in accordance with the terms hereof, (i) will be duly and validly
issued, fully paid and nonassessable, free and clear of any Liens imposed by
or through the Company and (ii) assuming the accuracy of each Purchaser's
representations in this Agreement, will be issued, sold and delivered in
compliance with all applicable Federal and state securities laws. The
Conversion Shares are duly authorized and reserved for issuance and, when
issued in accordance with the terms of the Debentures, will be duly and
validly issued, fully paid and nonassessable, free and clear of any Liens
imposed by or through the Company. The Warrant Shares are duly authorized and
reserved for issuance and, when issued in accordance with the terms of the
Warrants, will be duly and validly issued, fully paid and nonassessable, free
and clear of any Liens imposed by or through the Company.
3.7 No Conflict with Other Instruments. Neither the Company nor any of its
Subsidiaries is in violation of any provisions of its Certificate of
Incorporation, Bylaws or any other governing document or in default (and no
event has occurred which, with notice or lapse of time or both, would
constitute a default) under any provision of any instrument or contract to
Page-12
which it is a party or by which it or any of its Property is bound, or in
violation of any provision of any Governmental Requirement applicable to the
Company, except for violations of any provision of a Governmental Requirement
that has not had or would not reasonably be expected to have a Material
Adverse Effect. The (i) execution, delivery and performance of this Agreement
and the other Transaction Documents and (ii) consummation of the transactions
contemplated hereby and thereby (including without limitation, the issuance of
the Debentures and the Warrants and the reservation for issuance and issuance
of the Conversion Shares and the Warrant Shares) will not result in any
violation referred to in the previous sentence or be in conflict with or
constitute, with or without the passage of time and giving of notice, either a
default under any such provision, instrument or contract or an event which
results in the creation of any Lien upon any assets of the Company or of any
of its Subsidiaries or the triggering of any preemptive or anti-dilution
rights (including without limitation pursuant to any "reset" or similar
provisions) or rights of first refusal or first offer, or any other rights
that would allow or permit the holders of the Company's securities to purchase
shares of Common Stock or other securities of the Company (whether pursuant to
a shareholder rights plan provision or otherwise), on the part of holders of
the Company's securities, other than such rights as are disclosed on Schedule
3.7 hereto.
3.8 Financial Condition; Taxes; Litigation.
3.8.1 Except as disclosed on Schedule 3.8 hereto, the Company's
financial condition is, in all material respects, as described in
the Disclosure Documents, except for changes in the ordinary
course of business and normal year-end adjustments that are not,
in the aggregate, materially adverse to the consolidated business
or financial condition of the Company and its Subsidiaries taken
as a whole. Except as otherwise described in the Disclosure
Documents, there has been no (i) material adverse change to the
Company's business, operations, properties, financial condition,
prospects or results of operations since the date of the
Company's most recent audited financial statements contained in
the Disclosure Documents or (ii) change by the Company in its
accounting principles, policies and methods except as required by
changes in GAAP.
3.8.2 The Company and each of its Subsidiaries has prepared in good
faith and duly and timely filed all tax returns required to be
filed by it and such returns are complete and accurate in all
material respects and the Company and each of its Subsidiaries
has paid all taxes required to have been paid by it, except for
taxes which it reasonably disputes in good faith or the failure
of which to pay has not had or would not reasonably be expected
to have a Material Adverse Effect. The Company has no liability
with respect to taxes that accrued on or before December 31, 2000
in excess of the amounts accrued with respect thereto that are
reflected in the financial statements included in the Disclosure
Documents filed prior to the date hereof.
Page-13
3.8.3 Neither the Company nor any of its Subsidiaries is the subject of
any pending or, to the Company's knowledge, threatened inquiry,
investigation or administrative or legal proceeding by the
Internal Revenue Service, the taxing authorities of any state or
local jurisdiction, the Commission or any state securities
commission or other governmental or regulatory entity.
3.8.4 Except as described in the Disclosure Documents, there is no
material claim, litigation or administrative proceeding pending,
or, to the Company's knowledge, threatened or contemplated,
against the Company or any of its Subsidiaries, or against any
officer, director or employee of the Company or any such
Subsidiary in connection with such person's employment therewith.
Neither the Company nor any of its Subsidiaries is a party to or
subject to the provisions of, any order, writ, injunction,
judgment or decree of any court or government agency or
instrumentality which has had or would reasonably be expected to
have a Material Adverse Effect.
3.9 Reporting Company; Form S-3. The Company is subject to the reporting
requirements of the Exchange Act, has a class of securities registered under
Section 12 of the Exchange Act, and has filed all reports required thereby.
The Company is eligible to register the Conversion Shares and Warrant Shares
for resale in a secondary offering by each Purchaser on a registration
statement on Form S-3 under the Securities Act. To the Company's knowledge,
there exist no facts or circumstances (including without limitation any
required approvals or waivers of any circumstances that may delay or prevent
the obtaining of accountant's consents) that could reasonably be expected to
prohibit or delay the preparation and filing of a registration statement on
Form S-3 that will be available for the resale of all Conversion Shares and
Warrant Shares by each Purchaser.
3.10 Acknowledgement of Dilution. The Company acknowledges that the issuance
of the Conversion Shares upon conversion of the Debentures and the issuance of
the Warrant Shares upon exercise of the Warrants may result in dilution of the
outstanding shares of Common Stock, which dilution may be substantial under
certain market conditions. The Company further acknowledges its obligation to
issue Conversion Shares upon conversion of the Debentures in accordance with
the terms thereof, and to issue Warrant Shares upon exercise of the Warrants
in accordance with the terms thereof, regardless of the effect of any such
dilution.
3.11 Intellectual Property. Except as described on Schedule 3.11 hereto,
the Company and its Subsidiaries each owns or possesses all Intellectual
Property that is necessary or appropriate for the operation of its businesses
as presently conducted and as proposed to be conducted, without any known
conflict with the rights of others. The consummation of the transactions
contemplated by this Agreement and the other Transaction Documents will not
materially alter or impair, individually or in the aggregate, any of such
rights of the Company. To the Company's knowledge, except as described on
Schedule 3.11 hereto, none of its planned or current products or services
Page-14
infringes upon any Intellectual Property of any other Person, and no claim or
litigation is pending or, to the knowledge of the Company, threatened against
the Company contesting its right to sell or otherwise use any product or
material or service which has had or would reasonably be expected to have a
Material Adverse Effect. Except as described on Schedule 3.11 hereto, there
is no violation by the Company with respect to any material Intellectual
Property owned or used by the Company. Except as described on Schedule 3.11
hereto, the Company's rights to such Intellectual Property are valid and
enforceable and no registration relating thereto has lapsed, expired or
terminated or is the subject of any claim or proceeding that could result in
any such lapse, expiration or termination. The Company and its Subsidiaries
each has complied in all material respects with its obligations pursuant to
any agreement relating to the Intellectual Property Rights that are the
subject of licenses granted by third parties.
3.12 Registration Rights; Rights of Participation. Except as described on
Schedule 3.12 hereto, and in the Infineon Registration Rights Agreement,
(A) the Company has not granted or agreed to grant to any person or entity any
rights (including "piggy-back" registration rights) to have any securities of
the Company registered with the Commission or any other governmental authority
which has not been satisfied and (B) no person or entity, including, but not
limited to, current or former stockholders of the Company, underwriters,
brokers, agents or other third parties, has any right of first refusal,
preemptive right, right of participation, anti-dilutive right or any similar
right to participate in, or to receive securities of the Company or other
consideration as a result of, the transactions contemplated by this Agreement
or the other Transaction Documents.
3.13 Solicitation; Other Issuances of Securities. Neither the Company nor
any of its Subsidiaries or Affiliates, nor any person acting on its or their
behalf, (i) has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offer
or sale of the Securities, (ii) has, directly or indirectly, made any offers
or sales of any security or solicited any offers to buy any security, under
any circumstances that would require registration of the Securities under the
Securities Act or (iii) has issued any shares of Common Stock or shares of any
series of preferred stock or other securities or instruments convertible into,
exchangeable for or otherwise entitling the holder thereof to acquire shares
of Common Stock which would be integrated with the sale of the Securities to
such Purchaser or the issuance of the Conversion Shares for purposes of the
Securities Act or of any applicable stockholder approval provisions,
including, without limitation, under the rules and regulations of the NASD,
nor will the Company or any of its Subsidiaries or Affiliates take any action
or steps that would require registration of any of the Securities under the
Securities Act or cause the offering of the Securities to be so integrated
with other offerings.
Page-15
3.14 Fees. Except as described on Schedule 3.14 hereto, the Company is not
obligated to pay any compensation or other fee, cost or related expenditure to
any underwriter, broker, agent or other representative in connection with the
transactions contemplated hereby. The Company will indemnify and hold harmless
such Purchaser from and against any claim by any person or entity alleging
that such Purchaser is obligated to pay any such compensation, fee, cost or
related expenditure in connection with the transactions contemplated hereby.
3.15 Foreign Corrupt Practices. To the knowledge of the Company, neither the
Company, nor any of its Subsidiaries nor any director, officer, agent,
employee or other person acting on behalf of the Company or any Subsidiary,
has (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity,
(ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee, or (iii) violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign
or domestic government official or employee.
3.16 Key Employees. Each person whose name is set forth on Schedule 3.16
(each, a "Key Employee") is currently serving in the capacity indicated on
such schedule on a full-time basis. The Company has no knowledge of any fact
or circumstance (including without limitation (i) the terms of any agreement
to which such person is a party or any litigation in which such person is or
may become involved and (ii) any illness or medical condition that could
reasonably be expected to result in the disability or incapacity of such
person) that would limit or prevent any such person from serving in such
capacity on a full-time basis in the foreseeable future, or of any intention
on the part of any such person to limit or terminate his or her employment
with the Company. No Key Employee has borrowed money pursuant to a currently
outstanding loan that is secured by Common Stock or any right or option to
receive Common Stock.
3.17 Environment. Except as described on Schedule 3.17 (i) the Company and
its Subsidiaries have no environmental liabilities, nor do any factors exist
that are reasonably likely to give rise to any environmental liability,
affecting any of the properties of the Company or any of its Subsidiaries
that, individually or in the aggregate, has had or would reasonably be
expected to have a Material Adverse Effect and (ii) neither the Company nor
any of the Subsidiaries has violated any environmental law applicable to it
now or previously in effect, other than such violations or infringements that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect.
3.18 ERISA. Except as described on Schedule 3.18, the Company does not
maintain or contribute to, or have any obligation under, any Pension Plan.
The Company is in compliance in all material respects with the presently
applicable provisions of ERISA and the United States Internal Revenue Code of
1986, as amended, with respect to each Pension Plan except in any such case
for any such matters that, individually or in the aggregate, have not had, and
would not reasonably be expected to have, a Material Adverse Effect.
Page-16
3.19 Disclosure. No written statement, information, report, representation
or warranty made by the Company in any Transaction Document or furnished to
such Purchaser by or on behalf of the Company in connection with (i) the
Transaction Documents, (ii) any transaction contemplated hereby or thereby, or
(iii) such Purchaser's due diligence investigation of the Company contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements herein or therein, in light of the
circumstances in which made, not misleading. There is no fact known to the
Company which has had a Material Adverse Effect, and there is no fact known to
the Company which could reasonably be expected to have a Material Adverse
Effect except as may have been disclosed in writing to such Purchaser. The
Company has not disclosed to such Purchaser any event, circumstance or fact
that would constitute material non-public information as of the date of this
Agreement.
3.20 Insurance. The Company maintains insurance for itself and its
Subsidiaries in such amounts and covering such losses and risks as is
reasonably prudent and customary in the businesses in which the Company and
its Subsidiaries are engaged. No notice of cancellation has been received for
any of such policies and the Company is in compliance with all of the terms
and conditions thereof. The Company has no reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business without a significant increase in cost.
Without limiting the generality of the foregoing, the Company maintains
Director's and Officer's insurance in an amount not less than $5 million for
each covered occurrence.
3.21 Property. The Company and its Subsidiaries have good and marketable
title in fee simple to all Real Property and good and marketable title to all
personal Property owned by them which is material to the business of the
Company and its Subsidiaries, in each case free and clear of all Liens, except
for Permitted Liens. Any Property held under lease by the Company and its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use
made or proposed to be made of such Property by the Company and its
Subsidiaries. Schedule 3.21 sets forth all of the real Property owned by the
Company or any of its Subsidiaries.
3.22 Deed of Trust. Upon the filing of the Deed of Trust with the County
Clerk of El Paso County, Colorado, the Deed of Trust will constitute and grant
to such Purchaser a valid, perfected first lien on the Real Property, not
subject to any other Lien (other than those described on Schedule 3.22 hereto
and those created by the Deed of Trust), or any claim by any third party that
would adversely affect the security interest granted thereby.
3.23 Regulatory Permits. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
Page-17
4. COVENANTS OF THE COMPANY AND THE PURCHASERS.
4.1 The Company agrees with each Purchaser that it will, following the
Closing:
(a) file a Form D with respect to the Securities issued at the Closing as
required under Regulation D and provide a copy thereof to such
Purchaser promptly after such filing;
(b) take such action as the Company reasonably determines upon the advice
of counsel is necessary to qualify the Debentures and Warrants issued
at the Closing for sale under applicable state or "blue-sky" laws or
obtain an exemption therefrom, and shall provide evidence of any such
action to such Purchaser at such Purchaser's request; and
(c) (i) issue a press release describing the transactions contemplated by
this Agreement and the other Transaction Documents on or before the
Business Day following the date of this Agreement and (ii) file with
the Commission a Form 8-K describing the terms of the transactions
contemplated by this Agreement and the other Transaction Documents,
with this Agreement attached to such Form 8-K as an exhibit thereto,
on or before the third (3rd) Business Day following the Closing Date
in the form required by the Exchange Act; provided, that each
Purchaser shall have a reasonable opportunity to review and comment
on any such press release or Form 8-K prior to the issuance or filing
thereof.
4.2 The Company agrees that it will, as long as any Purchaser or any
Affiliate of such Purchaser beneficially owns any Securities:
(a) maintain its corporate existence in good standing;
(b) maintain, keep and preserve all of its Properties necessary in the
proper conduct of its businesses in good repair, working order and
condition (ordinary wear and tear excepted) and make all necessary
repairs, renewals and replacements and improvements thereto, except
where the failure to do so would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
(c) pay or discharge before becoming delinquent (i) all taxes, levies,
assessments and governmental charges imposed on it or its income or
profits or any of its Property, (ii) all lawful claims for labor,
material and supplies, which, if unpaid, might become a Lien upon any
of its Property, except where the failure to do so would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect and (iii) all of its obligations, if any,
under (A) an agreement between Northgate and the City of Colorado
Springs relating to the annexation of certain property then owned by
Northgate and that constitutes all or a portion of the Real Property
and (B) the Northgate Owners Association Declaration; provided,
Page-18
however, that the Company shall not be required to pay or discharge
any tax, levy, assessment or governmental charge, or claim for labor,
material or supplies, whose amount, applicability or validity is
being contested in good faith by appropriate proceedings being
diligently pursued and for which adequate reserves have been
established under GAAP;
(d) comply with all Governmental Requirements applicable to the operation
of its business, except for instances of noncompliance that would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect;
(e) comply with all agreements, documents and instruments binding on it
or affecting its Properties or business, including, without
limitation, all Material Contracts, except for instances of
noncompliance that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
(f) provide such Purchaser with copies of all materials sent to its
stockholders, in each such case promptly after the filing thereof
with the Commission; and
(g) timely file with the Commission all reports required to be filed
pursuant to the Exchange Act and refrain from terminating its status
as an issuer required by the Exchange Act to file reports thereunder
even if the Exchange Act or the rules or regulations thereunder would
permit such termination.
4.3 Reservation of Common Stock. The Company shall, on the Closing Date,
have authorized and reserved for issuance, free from any preemptive rights, a
number of shares of Common Stock at least equal to one hundred and fifty
percent (150%) of the maximum number of shares of Common Stock issuable upon
(A) conversion of the outstanding Debentures and Infineon Debenture
(collectively, the "Investment Debentures") in full at the Conversion Price
then in effect and (B) exercise of the outstanding Warrants and Infineon
Warrant (collectively, the "Investment Warrants") in full at the Exercise
Price then in effect, in each such case without regard to any limitation or
restriction on such conversion or exercise that may be set forth in the
Investment Debentures or the Investment Warrants (the "Reserved Amount"). In
the event that, as a result of an adjustment to the Conversion Price of the
Investment Debentures or the Exercise Price for the Investment Warrants
(pursuant to anti-dilution adjustments or otherwise), the Reserved Amount is
less than 125% of the number of shares of Common Stock then issuable upon
conversion of all of the Investment Debentures and exercise of all of the
Investment Warrants then outstanding (without regard to any limitation or
restriction on such conversion or exercise that may be set forth in the
Investment Debentures or the Investment Warrants), the Company shall as soon
as practicable (but in no event later than the tenth (10th) business day or,
in the event that stockholder approval is required, the ninetieth (90th) day
following such date) increase the Reserved Amount to no less than 150% of the
number of shares of Common Stock into which such outstanding Investment
Debentures are then convertible and such outstanding Investment Warrants are
Page-19
exercisable without regard to any limitation or restriction on such conversion
or exercise that may be set forth in the Investment Debentures or the
Investment Warrants. The Company shall not reduce the number of shares
reserved for issuance hereunder without the written consent of the holders of
seventy-five percent (75%) of the Registrable Securities into which all of the
Investment Debentures and Investment Warrants then outstanding are convertible
or exercisable (without regard to any limitation on such conversion or
exercise). The initial Reserved Amount shall be allocated pro rata among the
Purchasers and the Purchaser (as defined in the Infineon Securities Purchase
Agreement and, together with the Purchasers, the "Investors") based on the
principal amount of the Investment Debentures issued to each Investor at the
Closing. Any increase in the Reserved Amount shall be allocated pro rata
among the Investors based on the principal amount of the Investment Debentures
held by each by each Investor at the time of such increase. In the event any
Purchaser shall sell or otherwise transfer any of such Investor's Investment
Debentures, each transferee shall be allocated a pro rata portion of such
transferor's Reserved Amount. Any portion of the Reserved Amount which remains
allocated to any person or entity which does not hold any Investment
Debentures shall be reallocated to the remaining Investors pro rata based on
the principal amount of the Investment Debentures then held by such Investors.
4.4 Use of Proceeds. Subject to Section 4.6, the Company shall use the
proceeds from the sale of the Debentures and Warrants for general corporate
purposes only, in the ordinary course of its business and consistent with past
practice.
4.5 No Debt, Liens. At all times following the date of this Agreement and
while any Obligation is outstanding, the Company shall refrain, and shall
ensure that each of its Subsidiaries refrains, from (i) other than as set
forth on Schedule 4.5, incurring any Debt or increasing the amount of any
existing line of credit or other Debt facility beyond the amount outstanding
on the date hereof (other than, in either such case, with respect to
Subordinated Debt) and (ii) other than as set forth on Schedule 4.5, granting,
establishing or maintaining any Lien on any of its assets, including without
limitation any pledge of securities owned or held by it (including without
limitation any securities issued by any such Subsidiary), other than Permitted
Liens (including the imposition of any mechanic's, tax or similar statutory
lien after the Closing Date, provided that, upon the imposition of any such
lien, the Company shall notify the Purchaser thereof and shall use
commercially reasonable efforts to remove such lien as soon as practicable
(including without limitation contesting such lien in good faith by
appropriate proceedings)).
4.6 Restricted Payments. As long as any Obligations are outstanding, the
Company will not, nor will it permit any Subsidiary of the Company to, make
any Restricted Payments, except that:
Page-20
(a) the Company may make regularly scheduled payments of principal and
interest accrued on any Subordinated Debt if and to the extent (but
only if and to the extent) permitted by the express terms of the
Subordinated Debt Documents governing such Subordinated Debt, which
terms shall have been expressly approved in writing by the holders of
two-thirds of the Registrable Securities into which all of the
Debentures and Warrants then outstanding are convertible or
exercisable (without regard to any limitation on such conversion or
exercise); and
(b) Subsidiaries of the Company may make Restricted Payments to the
Company; provided, however, that no Restricted Payments may be made
pursuant to clause (a) or (b) preceding if a Default exists at the
time of such Restricted Payment or would result therefrom.
4.7 Transactions with Affiliates. As long as any Obligations are
outstanding, the Company will not, nor will it permit any Subsidiary of the
Company to, enter into any transaction, including, without limitation, the
purchase, sale or exchange of Property or the rendering of any service, with
any Affiliate of the Company (other than Enhanced Memory Systems, Inc. and
Mushkin Inc., to the extent that such Subsidiaries continue to be reported
with the Company on a consolidated basis) except with the prior written
approval of the holders of two-thirds of the Registrable Securities into which
all of the Debentures and Warrants then outstanding are convertible or
exercisable (without regard to any limitation on such conversion or exercise).
4.8 Disposition of Property. As long as any Obligations are outstanding, the
Company will not, nor will it permit any Subsidiary of the Company to, sell,
lease, assign, transfer or otherwise dispose of any of its Property, except
(i) dispositions of inventory by the Company and its Subsidiaries in the
ordinary course of business, (ii) expenditures of money (including, without
limitation, money held in deposit accounts) made in the ordinary course of
business or for the purpose of making Restricted Payments expressly permitted
in accordance with this Agreement, and (iii) licenses granted and development
agreements entered into with respect to its Intellectual Property to third
parties.
4.9 Certain Transactions. As long as any Obligations are outstanding, and
except as may be expressly permitted or required by the Transaction Documents,
the Company will not, nor will it permit any Subsidiary of the Company to,
create or otherwise cause or permit to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of the
Company or any Subsidiary of the Company to (a) pay dividends or make any
other distribution to the Company or any Subsidiary of the Company in respect
of capital stock or with respect to any other interest or participation in, or
measured by, its profits, (b) pay any indebtedness owed to the Company or any
Subsidiary of the Company, (c) make any loan or advance or capital
contribution to the Company or any Subsidiary of the Company, (d) sell, lease
or transfer any of its Property to the Company or any Subsidiary of the
Company, or (e) xxxxx x Xxxx on any of its Properties.
Page-21
4.10 Modification of Certain Agreements. As long as any Obligations are
outstanding, the Company will not, nor will it permit any of its Subsidiaries
to, consent to or implement any termination, amendment, modification,
supplement or waiver of (a) the certificate or articles of incorporation,
articles of organization, bylaws, regulations or other constitutional
documents of the Company or any such Subsidiary or (b) any Material Contract
to which it is a party; provided, however, that notwithstanding the foregoing,
any of such documents may be amended or modified if and to the extent that
such amendment or modification is not materially adverse to the Company or any
Purchaser.
4.11 Transactions with Affiliates. The Company agrees that any transaction
or arrangement between it or any of its Subsidiaries and any Affiliate or
employee of the Company shall be effected on an arms' length basis and shall
be approved by a majority of the Company's independent directors (provided
that the director designated by Infineon shall be deemed to be an independent
director for purposes of this Section 4.11).
4.12 Quotation on Nasdaq. The Company shall (i) promptly following the
Closing, take such action as may be necessary to include all of the Conversion
Shares and Warrant Shares that may be issued by the Company under the
Debentures and Warrants on the Nasdaq National Market, and (ii) use its
commercially reasonable efforts to maintain the designation and quotation, or
listing, of the Common Stock on the Nasdaq National Market, the Nasdaq Stock
Market, or the New York Stock Exchange for a minimum of five (5) years
following the Closing Date.
4.13 Management Restrictions. During the period beginning on the date of this
Agreement and ending on the tenth (10th) Business Day following the Effective
Date (as defined in the Registration Rights Agreement), no Key Employee may,
directly or indirectly, sell, transfer or otherwise dispose of (whether
through the writing or purchase of options, futures or derivative
instruments), or publicly announce (whether through the filing of a notice or
otherwise) such individual's intention to dispose of, any Common Stock held or
beneficially owned by such individual.
4.14 Use of Purchaser Name. Except as may be required by applicable law, the
Company shall not use, directly or indirectly, any Purchaser's name or the
name of any of its affiliates in any advertisement, announcement, press
release or other similar communication unless it has received the prior
written consent of any Purchaser for the specific use contemplated or as
otherwise required by applicable law or regulation.
4.15 Company's Instructions to Transfer Agent. On or prior to the Closing
Date, the Company shall execute and deliver irrevocable written instructions
to the transfer agent for its Common Stock (the "Transfer Agent"), and provide
each Purchaser with a copy thereof, directing the Transfer Agent (i) to issue
certificates representing Conversion Shares upon conversion of the Debentures
and receipt of a valid Conversion Notice (as defined in the Debentures) from a
Purchaser, in the amount specified in such Conversion Notice, in the name of
Page-22
such Purchaser or its nominee, (ii) to issue certificates representing Warrant
Shares upon exercise of the Warrants and (iii) to deliver such certificates to
such Purchaser no later than the close of business on the third (3rd) business
day following the related Conversion Date (as defined in the Debentures) or
Exercise Date (as defined in the Warrants), as the case may be. Such
certificates may bear legends pursuant to applicable provisions of this
Agreement or applicable law. As long as the Company shall instruct the
transfer agent that, in lieu of delivering physical certificates representing
shares of Common Stock to a Purchaser upon conversion of the Debentures, or
exercise of the Warrants, and as long as the Transfer Agent is a participant
in the Depository Trust Company ("DTC") Fast Automated Securities Transfer
program, and such Purchaser has not informed the Company that it wishes to
receive physical certificates therefor, and no legend is required to appear on
any physical certificate if issued, the transfer agent may effect delivery of
Conversion Shares or Warrant Shares, as the case may be, by crediting the
account of such Purchaser or its nominee at DTC for the number of shares for
which delivery is required hereunder within the time frame specified above for
delivery of certificates. The Company represents to and agrees with each
Purchaser that it will not give any instruction to the Transfer Agent that
will conflict with the foregoing instruction or otherwise restrict such
Purchaser's right to convert the Debentures or to receive Conversion Shares in
accordance with the terms of the Debentures or to exercise the Warrant or to
receive Warrant Shares upon exercise of the Warrants. In the event that the
Company's relationship with the Transfer Agent should be terminated for any
reason, the Company shall use its best efforts to cause the Transfer Agent to
continue acting as transfer agent pursuant to the terms hereof until such time
that a successor transfer agent is appointed by the Company and receives the
instructions described above.
4.16 Right of First Refusal. Prior to any offer or sale by the Company of
Common Stock (or any securities convertible or exercisable into or
exchangeable for Common Stock) during the one (1) year period following the
Closing Date (the "First Offer Period"), the Company must first deliver to
each Purchaser written notice describing the proposed issuance, including the
terms and conditions thereof, and provide such Purchaser with an option during
the five (5) Business Day period following delivery of such notice to purchase
up to its proportionate share (based on the principal amount of the Debentures
purchased by such Purchaser hereunder relative to the aggregate principal
amount of the Investment Debentures purchased by all of the Investors) of the
securities being offered on the same terms as contemplated by such issuance.
In the event that such Purchaser either does not give notice within such five
Business Day period that it intends to exercise the foregoing option or
informs the Company in writing that it does not intend to participate in such
issuance, the Company may offer to a third party the option to purchase up to,
in the aggregate, the amount of securities which were declined by such
Purchaser, on the same terms as were offered to such Purchaser. The Right of
First Refusal is subject to (and shall follow the exercise of) the rights of
Infineon under the Share Purchase Agreement, dated December 14, 2000, by and
between Infineon and the Company and shall not apply to any transaction
involving the issuance of Common Stock in a firm-commitment underwritten
Page-23
registered public offering or pursuant to the exercise of any option or
warrant outstanding prior to the date hereof or to the issuance of Common
Stock, or options or rights exercisable into Common Stock, pursuant to a stock
plan or stock option plan duly adopted by the Company prior to the date
hereof.
4.17 No Adverse Action. The Company and its Subsidiaries shall refrain, while
any Debentures are outstanding, from taking any action or entering into any
arrangement which in any way materially and adversely affects (i) the rights,
privileges or benefits available to a holder of a Debenture or (ii) the
rights, privileges or benefits available to a holder of a Warrant.
4.18 Registration Rights. From the date of this Agreement through and
including the Effective Date (as defined in the Registration Rights
Agreement), the Company will not file a registration statement (other than on
a Form S-8 or a Form S-4 and pursuant to the Registration Rights Agreement)
with the Commission with respect to any securities of the Company; provided,
however, the foregoing shall not prohibit (i) Infineon from exercising its
rights under the Infineon Registration Rights Agreement to include shares of
Common Stock for resale in any Registration Statement filed pursuant to the
Registration Rights Agreement or (ii) any entity named on Schedule 3.14 from
including shares of Common Stock issuable to such entity pursuant to warrants
issued in connection with the transactions contemplated hereby.
5. CONDITIONS TO CLOSING.
5.1 Conditions to Purchasers' Obligations at the Closing. Each Purchaser's
obligations to effect the Closing, including without limitation its obligation
to purchase a Debenture and Warrant at the Closing, are conditioned upon the
fulfillment or waiver by such Purchaser of each of the following events as of
the Closing Date:
5.1.1 the representations and warranties of the Company set forth in
this Agreement shall be true and correct in all material respects
as of such date as if made on such date (except that to the extent
that any such representation or warranty relates to a particular
date, such representation or warranty shall be true and correct in
all respects as of that particular date);
5.1.2 the Company shall have complied with or performed in all material
respects all of the agreements, obligations and conditions set
forth in this Agreement that are required to be complied with or
performed by the Company on or before such Closing;
5.1.3 the Closing Date shall occur on a date that is not later than
March 29, 2002;
Page-24
5.1.4 the Company shall have delivered to such Purchaser a certificate,
signed by the Chief Executive Officer and Chief Financial Officer
of the Company, certifying that the conditions specified in this
paragraph 5.1 have been fulfilled as of the Closing, it being
understood that such Purchaser may rely on such certificate as
though it were a representation and warranty of the Company made
herein;
5.1.5 the Company shall have delivered to such Purchaser one or more
opinions of counsel for the Company, dated as of such date, in
form and substance satisfactory to such Purchaser;
5.1.6 the Company shall have executed and delivered the Debenture and
the Warrant being purchased by such Purchaser;
5.1.7 the Company shall have executed and delivered the Registration
Rights Agreement;
5.1.8 the Company shall have executed and delivered the Deed of Trust
and recorded the Deed of Trust with the appropriate Governmental
Authority;
5.1.9 the Common Stock shall be quoted and traded on the Nasdaq National
Market System;
5.1.10 there shall have been no material adverse change in the Company's
consolidated business or financial condition since the date of
the Company's most recent audited financial statements contained
in the Disclosure Documents;
5.1.11 the Company shall have authorized and reserved for issuance at
least one hundred and fifty percent (150%) of the aggregate
number of shares of Common Stock issuable upon conversion of all
of the Investment Debentures and exercise of all of the
Investment Warrants to be issued at the Closing (such number to
be determined using the Conversion Price and Exercise Price in
effect on the Closing Date and without regard to any restriction
on the ability of a Purchaser or Infineon to convert Investment
Debentures or exercise the Investment Warrants as of such date);
5.1.12 there shall be no injunction, restraining order or decree of any
nature of any court or Government Authority of competent
jurisdiction that is in effect that restrains or prohibits the
consummation of the transactions contemplated hereby and by the
Purchaser Documents;
5.1.13 each of the Company's executive officers shall have executed and
delivered a letter agreement addressed to such Purchaser
regarding such person's agreement to refrain from selling such
person's holdings of Common Stock consistent with the Company's
covenant contained in Section 4.13 hereof;
Page-25
5.1.14 the Company shall have delivered to such Purchaser evidence
reasonably satisfactory to such Purchaser that no adverse
environmental conditions affect the Real Property, including,
without limitation that the Real Property does not contain any
underground storage tanks, asbestos, polychlorinated biphenyls,
petroleum products or any other toxic or hazardous wastes or
materials; and
5.1.15 the Company shall have furnished such Purchaser with (i) a
current survey of the Real Property certified to such Purchaser
and in form and substance reasonably satisfactory to such
Purchaser, (ii) written evidence reasonably satisfactory to such
Purchaser that the Company is not in default under any agreements
recorded against the Real Property and confirming the extent of
the Company's obligations thereunder and (iii) written evidence
reasonably satisfactory to such Purchaser that the improvements
constructed on Real Property comply with all applicable zoning
and use ordinances and restrictions.
5.2 Conditions to Company's Obligations at the Closing. The Company's
obligations to effect the Closing are conditioned upon the fulfillment or
waiver by the Company of each of the following events as of the Closing Date:
5.2.1 the representations and warranties of each Purchaser shall be true
and correct in all material respects as of such date as if made on
such date (except that to the extent that any such representation
or warranty relates to a particular date, such representation or
warranty shall be true and correct in all respects as of that
particular date);
5.2.2 each Purchaser shall have complied with or performed all of the
agreements, obligations and conditions set forth in this Agreement
that are required to be complied with or performed by each
Purchaser on or before such Closing;
5.2.3 there shall be no injunction, restraining order or decree of any
nature of any court or Government Authority of competent
jurisdiction that is in effect that restrains or prohibits the
consummation of the transactions contemplated hereby and by the
Purchaser Documents;
5.2.4 the Conversion Price (as defined in the Debentures) shall not be
less than four dollars ($4.00); and
5.2.5 the Closing Date shall occur on a date that is not later than
March 29, 2002.
Page-26
6. INDEMNIFICATION.
6.1 Indemnification of the Company. Subject to the limitations contained in
this Section, the Purchasers shall severally, and not jointly, defend,
indemnify and hold harmless the Company and its respective officers,
directors, stockholders, employees and agents from and against any and all
losses, claims, judgments, liabilities, demands, charges, suits, penalties,
costs or expenses, including court costs and attorneys' fees ("Claims and
Liabilities") with respect to or arising from (i) the breach of any warranty
or any inaccuracy of any representation made by the Purchasers in this
Agreement, or (ii) the breach of any covenant or agreement made by the
Purchasers in this Agreement.
6.2 Indemnification of the Purchasers. Subject to the limitations contained
in this Section, the Company shall defend, indemnify and hold harmless the
Purchasers and their respective officers, directors, partners, members,
stockholders, employees and agents from and against any and all Claims and
Liabilities with respect to or arising from (i) the breach of any warranty or
any inaccuracy of any representation made by the Company in this Agreement, or
(ii) the breach of any covenant or agreement made by the Company in this
Agreement.
6.3 Limitations on Indemnification.
6.3.1 Notwithstanding anything to the contrary contained herein, neither
the Purchasers, on the one hand, nor the Company, on the other
hand, shall indemnify the other, as applicable, or any of their
respective subsidiaries or any directors, officers, employees or
agents of any of the foregoing, as applicable, for any Claims and
Liabilities which such party(ies) would otherwise be entitled to
indemnification pursuant to Section 6.1 or 6.2, unless the
aggregate amount of all such Claims and Liabilities incurred by
such party(ies) exceeds $100,000 (the "Deductible Amount"), in
which event such party(ies) shall be liable only for the amount of
such Claims and Liabilities which exceeds the Deductible Amount;
provided, that the aggregate liability of the Purchasers, on the
one hand, and the Company, on the other hand, under this Section
(other than with respect to any intentional or willful breach or
failure to perform) shall in no event exceed $5,000,000.
6.3.2 Anything to the contrary notwithstanding, neither the Purchasers,
on the one hand, nor the Company, on the other hand, shall
indemnify the other, as applicable, or any of their respective
subsidiaries or any directors, officers, employees or agents of
any of the foregoing, as applicable, in respect of any Claims and
Liabilities which are covered by insurance owned by such
party(ies) to the extent that any net loss is reduced by such
insurance. To the extent quantifiable, the parties shall make
appropriate adjustments to take into account the tax benefits or
costs in determining the amount of indemnification to be provided
hereunder.
Page-27
6.4 Claims Procedure. In respect of any third-party claims for which
indemnification is sought hereunder, promptly after the receipt by any
indemnified party (the "Indemnitee") of notice of the commencement of any
action or proceeding against such Indemnitee, such Indemnitee shall, if a
claim with respect thereto is or may be made against any indemnifying party
(the "Indemnifying Party") pursuant to this Section, give such Indemnifying
Party written notice of the commencement of such action or proceeding and give
such Indemnifying Party a copy of such claim and/or process and all legal
pleadings in connection therewith. The failure to give such notice shall not
relieve any Indemnifying Party of any of its indemnification obligations
contained in this Section 6, except where, and solely to the extent that, such
failure actually and materially prejudices the rights of such Indemnifying
Party. Such Indemnifying Party shall have, upon request within thirty (30)
days after receipt of such notice, but not in any event after the settlement
or compromise of such claim, the right to defend, at his or its own expense
and by his or its own counsel reasonably acceptable to the Indemnitee, any
such matter involving the asserted liability of the Indemnitee. In any event,
the Indemnitee, such Indemnifying Party and its counsel shall cooperate in the
defense against, or compromise of, any such asserted liability, and in cases
where the Indemnifying Party shall have assumed the defense, the Indemnitee
shall have the right to participate in the defense of such asserted liability
at the Indemnitee's own expense. In the event that such Indemnifying Party
shall decline to participate in or assume the defense of such action, prior to
paying or settling any claim against which such Indemnifying Party is, or may
be, obligated under this Section to indemnify an Indemnitee, the Indemnitee
shall first supply such Indemnifying Party with a copy of a final court
judgment or decree holding the Indemnitee liable on such claim or, failing
such judgment or decree, the terms and conditions of the settlement or
compromise of such claim. An Indemnity's failure to supply such final court
judgment or decree or the terms and conditions of a settlement or compromise
to such Indemnifying Party shall not relieve such Indemnifying Party of any of
its indemnification obligations contained in this Section 6, except where, and
solely to the extent that, such failure actually and materially prejudices the
rights of such Indemnifying Party. If the Indemnitee is defending the claim as
set forth above, the Indemnitee shall have the right to settle or compromise
any claim against it after consultation with, but without the prior approval
of, any Indemnifying Party; provided, however, that such settlement or
compromise shall not, unless consented to in writing by such Indemnifying
Party, which shall not be unreasonably withheld, be conclusive as to the
liability of such Indemnifying Party to the Indemnitee. If the Indemnifying
Party is defending the claim as set forth above, the Indemnifying Party shall
have the right to settle the claim only with the consent of the Indemnitee;
provided, however, that if the Indemnitee shall fail to consent to the
settlement of such a claim by the Indemnifying Party, which settlement (i) the
claimant has indicated it will accept, and (ii) includes an unconditional
release of the Indemnitee and its affiliates by the claimant and imposes no
material restrictions on the future activities of the Indemnitee and its
affiliates, the Indemnifying Party shall have no liability with respect to any
payment required to be made to such claimant in respect of such claim in
excess of the proposed amount of settlement.
Page-28
6.5 Treatment of Indemnity Payments. Any payments pursuant to this Section
shall be made by wire transfer of immediately available funds.
6.6 Exclusive Remedy. Each of the parties hereto acknowledges and agrees
that, from and after the Closing Date, its sole and exclusive monetary remedy
with respect to any and all claims relating to the subject matter of this
Agreement shall be pursuant to the indemnification provisions set forth in
this Section, except that nothing in this Agreement shall be deemed to
constitute a waiver of (A) any injunctive or other equitable remedies or
(B) any tort claims of, or causes of action arising from, intentional or
fraudulent misrepresentation or deceit; provided, however, none of the
foregoing shall be deemed to limit in any way the rights of a Purchaser or the
obligations of the Company under the Deed of Trust.
7. MISCELLANEOUS.
7.1 Survival; Severability. The representations, warranties, covenants and
indemnities made by the parties herein shall survive the Closing
notwithstanding any due diligence investigation made by or on behalf of the
party seeking to rely thereon. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force
and effect without said provision; provided that in such case the parties
shall negotiate in good faith to replace such provision with a new provision
which is not illegal, unenforceable or void, as long as such new provision
does not materially change the economic benefits of this Agreement to the
parties.
7.2 Successors and Assigns. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement. The Purchaser may assign its rights and
obligations hereunder, in connection with any private sale or transfer of a
Debenture or Warrant (or part thereof) in accordance with the terms hereof, as
long as, as a condition precedent to such transfer, the transferee executes an
acknowledgment agreeing to be bound by the applicable provisions of this
Agreement, in which case the term "Purchaser" shall be deemed to refer to such
transferee as though such transferee were an original signatory hereto. The
Company may not assign it rights or obligations under this Agreement.
7.3 No Reliance. Each party acknowledges that (i) it has such knowledge in
business and financial matters as to be fully capable of evaluating this
Agreement, the other Purchaser Documents and the transactions contemplated
hereby and thereby, (ii) it is not relying on any advice or representation of
any other party in connection with entering into this Agreement, the other
Purchaser Documents or such transactions (other than the representations made
in this Agreement or the other Purchaser Documents), (iii) it has not received
Page-29
from such party any assurance or guarantee as to the merits (whether legal,
regulatory, tax, financial or otherwise) of entering into this Agreement or
the other Purchaser Documents or the performance of its obligations hereunder
and thereunder, and (iv) it has consulted with its own legal, regulatory, tax,
business, investment, financial and accounting advisors to the extent that it
has deemed necessary, and has entered into this Agreement and the other
Purchaser Documents based on its own independent judgment and on the advice of
its advisors as it has deemed necessary, and not on any view (whether written
or oral) expressed by such other party.
7.4 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser hereunder are several and not joint with the
obligations of the other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at the Closing, and no action taken by any Purchaser
pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this
Agreement. Each Purchaser shall be entitled to protect and enforce its
rights, including without limitation the rights arising out of this Agreement
or out of the other Purchaser Documents, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose.
7.5 Injunctive Relief. The Company acknowledges and agrees that a breach by
it of its obligations hereunder will cause irreparable harm to each Purchaser
and that the remedy or remedies at law for any such breach will be inadequate
and agrees, in the event of any such breach, in addition to all other
available remedies, such Purchaser shall be entitled to an injunction
restraining any breach and requiring immediate and specific performance of
such obligations without the necessity of showing economic loss.
7.6 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed under the laws of the State of New York applicable to contracts made
and to be performed entirely within the State of New York. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that
the venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address in effect for notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by law.
Page-30
7.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
7.8 Headings. The headings used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this
Agreement.
7.9 Notices. Any notice, demand or request required or permitted to be given
by the Company or a Purchaser pursuant to the terms of this Agreement shall be
in writing and shall be deemed delivered (i) when delivered personally or by
verifiable facsimile transmission, unless such delivery is made on a day that
is not a Business Day, in which case such delivery will be deemed to be made
on the next succeeding Business Day, (ii) on the next Business Day after
timely delivery to an overnight courier and (iii) on the Business Day actually
received if deposited in the U.S. mail (certified or registered mail, return
receipt requested, postage prepaid), addressed as follows:
If to the Company:
Ramtron International Corporation
0000 Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attn: XxXxx X. Xxxxxx, Chief Financial Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Coudert Brothers LLP
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. St. Clair, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
and if to any Purchaser, to such address for such Purchaser as shall appear on
the signature page hereof executed by such Purchaser, or as shall be
designated by such Purchaser in writing to the Company.
7.10 Expenses. The Company and each Purchaser each shall pay all costs and
expenses that it incurs in connection with the negotiation, execution,
delivery and performance of this Agreement, provided, however, that the
Company shall reimburse Halifax Fund, L.P. for (i) all out-of-pocket expenses
(including without limitation legal fees and expenses) incurred by it in
connection its due diligence investigation of the Company and the negotiation,
preparation, execution, delivery and performance of this Agreement and the
other Transaction Documents in an amount not to exceed fifty thousand dollars
($50,000); and (ii) all of the costs of obtaining a base ALTA title policy for
the Real Property (including, without limitation, the cost of all title
endorsements and any other cost of obtaining so-called "extended title
coverage" and all other title charges and all recording fees charged by the
title company).
Page-31
7.11 Entire Agreement; Amendments. This Agreement and the other Purchaser
Documents constitute the entire agreement between the parties with regard to
the subject matter hereof and thereof, superseding all prior agreements or
understandings, whether written or oral, between or among the parties. Except
as expressly provided herein, neither this Agreement nor any term hereof may
be amended except pursuant to a written instrument executed by the Company and
the holders of at least two-thirds (2/3) of the principal amount of the
Debentures then outstanding, and no provision hereof may be waived other than
by a written instrument signed by the party against whom enforcement of any
such waiver is sought.
7.12 Most Favored Nations Clause. Notwithstanding anything to the contrary
contained in this Agreement or any of the other Transaction Documents, if, at
any time during the period commencing after the date of this Agreement and
ending on the five (5) year anniversary of the Closing Date, the Company
amends the Infineon Securities Purchase Agreement, the Infineon Debenture or
the Infineon Warrant or otherwise modifies or changes any of the rights
granted to Infineon or obligations of the Company thereunder (any such
amendment, modification or change being an "MFN Change"), each Purchaser shall
have the right to receive, exercise or otherwise incorporate into its
Purchaser Documents any and all such MFN Changes in accordance with this
Section 7.12. In the event that the Company intends to effect an MFN Change,
the Company shall give ten (10) Business Days' prior written notice ("MFN
Notice") to each Purchaser specifying in reasonable detail the terms of such
MFN Change, and promptly provide such other information and documents as may
be reasonably requested by such Purchaser relating to such MFN Change
(including, without limitation, any proposed agreements and amendments to be
entered into with Infineon). On or prior to the expiration of the five (5)
Business Day period (the "MFN Review Period") after each Purchaser has
received the MFN Notice, each Purchaser shall notify the Company in writing
(the "MFN Response") specifying which of the MFN Changes that it elects to
exercise, receive or otherwise incorporate into its Purchaser Documents. If a
Purchaser fails to send an MFN Response prior to the expiration of the MFN
Review Period, such Purchaser shall be deemed to have waived its rights under
this Section 7.12 solely with respect to the MFN Changes specified in the MFN
Notice relating to such MFN Review Period. For purposes of this Agreement and
any of the other Purchaser Documents, each MFN Change that a Purchaser elects
to exercise, receive or otherwise incorporate into its Purchaser Documents
shall be deemed effective in all respects contemporaneously with the
effectiveness of such MFN Change with respect to Infineon or the Infineon
Documents. The Company shall cooperate with each Purchaser to promptly enter
into such agreements, certificates, instruments and other documents that are
necessary or reasonably requested by such Purchaser to reflect any and all of
the MFN Changes that such Purchaser elects to exercise, receive or otherwise
incorporate into its Purchaser Documents.
Page-32
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first-above written.
RAMTRON INTERNATIONAL CORPORATION
By: /S/ Xxxxxxx X. Xxxxxxxx, III
-------------------------
Name: Xxxxxxx X. Xxxxxxxx, III
Title: CEO
HALIFAX FUND, L.P.
By: /S/ Xxxxxxx Xxxxxxx
-----------------------
Name: Xxxxxxx Xxxxxxx
Title: Counsel, The Palladin Group, L.P.
Investment Adviser and Attorney-in-Fact
ADDRESS:
c/o The Palladin Group, L.P.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx Xxxxxxx
with a copy to:
Xxxxx & Stachenfeld
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
Principal Amount of Debenture to be Purchased: $2,500,000
Page-33
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first-above written.
RAMTRON INTERNATIONAL CORPORATION
By: /S/ Xxxxxxx X. Xxxxxxxx, III
-------------------------
Name: Xxxxxxx X. Xxxxxxxx, III
Title: CEO
XXXXXXXX CAPITAL CORP.
By: /S/ Xxxxxxx X. Xxxxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Attorney-in-fact
ADDRESS:
c/x Xxxxxxx Capital Corp.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Mor Sagi
with a copy to:
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000 and (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
Principal Amount of Debenture to be Purchased: $2,500,000
Page-34
Exhibit A to Stock Purchase Agreement
THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE
OFFERED FOR SALE OR SOLD UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER OR SALE. SUBJECT
TO COMPLIANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, THIS DEBENTURE AND THE SECURITIES ISSUABLE UPON CONVERSION OF
THIS DEBENTURE MAY BE PLEDGED IN CONNECTION WITH A BONAFIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY THIS DEBENTURE OR ANY OF THE SECURITIES ISSUABLE UPON
CONVERSION OF THIS DEBENTURE.
THIS DEBENTURE DOES NOT REQUIRE PHYSICAL SURRENDER HEREOF IN THE EVENT OF A
PARTIAL PAYMENT, REDEMPTION OR CONVERSION. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT OF THIS DEBENTURE MAY BE LESS THAN THE PRINCIPAL AMOUNT
INDICATED BELOW.
RAMTRON INTERNATIONAL CORPORATION
5% SECURED CONVERTIBLE DEBENTURE
New York, New York $XXXXXX
Issue Date: -------------------
FOR VALUE RECEIVED, RAMTRON INTERNATIONAL CORPORATION, a Delaware corporation
(the "Corporation"), hereby promises to pay to the order of ----------------
or its permitted successors or assigns (the "Holder") the sum of XXXXXXXX
($XXXXXXX) in same day funds, on or before --------- (the "Maturity Date").
The Holder may convert amounts of principal of this Debenture into shares
("Conversion Shares") of the Corporation's common stock, par value $.01 per
share (the "Common Stock"), on the terms and subject to the conditions set forth
herein.
The Corporation has issued this Debenture pursuant to a Securities Purchase
Agreement, dated as of March 14, 2002 (the "Purchase Agreement"), between the
Corporation and the Purchasers. The debentures issued by the Corporation
pursuant to the Purchase Agreement, including this Debenture, are collectively
referred to herein as the "Debentures", and the warrants issued by the
Corporation pursuant to the Purchase Agreement are collectively referred to
herein as the "Warrants".
The Corporation's obligations hereunder, including, without limitation, its
obligation to make payments of principal hereof and interest hereon, and any
default interest accrued hereunder, are secured pursuant to the terms of the
Deed of Trust (as defined below). The Deed of Trust is intended to be duly
recorded in the public records of the county where the Corporation's Real
Property is located. All of the terms, covenants and conditions contained in
the Deed of Trust are hereby made part of this Debenture to the same extent
and with the same force as if they were fully set forth herein.
Page A-1
The following terms shall apply to this Debenture:
1. DEFINITIONS.
"Business Day" means any day other than a Saturday, a Sunday or a day on which
banks are authorized by law to close in New York, New York.
"Change of Control Transaction" means the existence or occurrence of any of
the following: (a) the sale, conveyance or disposition of all or substantially
all of the assets of the Corporation; (b) the effectuation of a transaction or
series of transactions in which more than fifty percent (50%) of the voting
power of the Corporation is disposed of; (c) the consolidation, merger or
other business combination of the Corporation with or into any other entity,
immediately following which the prior stockholders of the Corporation fail to
own, directly or indirectly, at least fifty percent (50%) of the surviving
entity; (d) a transaction or series of transactions in which any Person or
group (as such term is defined for purposes of Rule 13d-5 or any successor
rules promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), acquires more than fifty percent (50%) of the voting power
of the Corporation; (e) a transaction or series of transactions in which any
Person (other than the Corporation or a wholly-owned subsidiary of the
Corporation) or group (as such term is defined for purposes of Rule 13d-5 or
any successor rules promulgated under the Exchange Act) acquires more than
fifty percent (50%) of the voting power of any subsidiary of the Corporation;
and (f) the individuals who, as of the date of this Agreement, (i) constitute
the Board of Directors of the Corporation (the "Current Directors"), (ii) are
individuals nominated to the Board of Directors of the Corporation by the
Current Directors, or (iii) are individuals nominated by the Corporation for
election at an annual meeting of the Corporation's stockholders cease for any
reason to constitute at least a majority of the Board of Directors of the
Corporation.
"Closing Bid Price" means the closing bid price for the Common Stock occurring
on a given Trading Day on the principal securities exchange or trading market
where such security is listed or traded as reported by Bloomberg Financial
Markets or, if Bloomberg Financial Markets is not then reporting such prices,
by a comparable reporting service of national reputation selected by the Holder
and reasonably acceptable to the Corporation (collectively, "Bloomberg") or if
the foregoing does not apply, the last reported bid price of such security in
the over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg, or, if no bid price is reported for such security by
Bloomberg, the average of the bid prices of all market makers for such security
as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the
Closing Bid Price cannot be calculated for such security on any of the
foregoing bases, the Closing Bid Price of such security shall be the fair
market value as reasonably determined by an investment banking firm selected by
the Holder, and reasonably acceptable to the Corporation, with the costs of
such appraisal to be borne by the Corporation.
"Closing Date" has the meaning set forth in the Purchase Agreement.
Page A-2
"Closing Price" means the average of the daily VWAP for each of the five
Trading Days immediately preceding the Execution Date, such average being
$3.42644.
"Conversion Price" means $3.7690.
"Debt" means as to any Person at any time (without duplication): (a) all
indebtedness, liabilities and obligations of such Person for borrowed money;
(b) all indebtedness, liabilities and obligations of such Person to pay the
deferred purchase price of Property or services, except trade accounts payable
of such Person arising in the ordinary course of business that are not past
due by more than 120 days; (c) all capital lease obligations of such Person;
(d) all Debt of others guaranteed by such Person; (e) all indebtedness,
liabilities and obligations secured by a Lien existing on Property owned by
such Person, whether or not the indebtedness, liabilities or obligations
secured thereby have been assumed by such Person or are non-recourse to such
Person; (f) all reimbursement obligations of such Person (whether contingent
or otherwise) in respect of letters of credit, bankers' acceptances, surety or
other bonds and similar instruments; and (g) all indebtedness, liabilities and
obligations of such Person to redeem or retire shares of capital stock of such
Person.
"Deed of Trust" has the meaning set forth in the Purchase Agreement.
"Default Interest Rate" means the lower of twenty-four percent (24%) and the
maximum rate permitted by applicable law or by the applicable rules or
regulations of any governmental agency or of any stock exchange or other
self-regulatory organization having jurisdiction over the Corporation or the
trading of its securities.
"EBITDA" means, for any period, on a consolidated basis for the Corporation
and its Subsidiaries, the sum of the amounts for such period of (i) Net Income
plus (ii) Interest Expense plus (iii) tax expense plus (iv) depreciation
expense plus (v) amortization expense, including, without limitation,
amortization of goodwill and other intangible assets plus (vi) to the extent
deducted in computing Net Income, other non-cash charges (without any
adjustment for cash charges deducted in computing Net Income), including,
without limitation, any restructuring charges, charge-offs for in-process
research and development costs, writeoff of any amounts associated with the
acquisition of treasury stock and writeoff of goodwill and licensing
agreements minus (vii) to the extent not already deducted in computing Net
Income, ordinary and customary expenses that are due and payable during such
period to the Corporation's vendors and service providers, the actual payment
of which is deferred until a future period minus (viii) extraordinary gains
minus (ix) to the extent included in computing Net Income, non-cash income
including without limitation non-cash income that would constitute "prepaid
pension expense" on the financial statements of the Corporation in accordance
with GAAP;.
"Execution Date" means March 14, 2002.
Page A-3
"Governmental Authority" means any nation or government, any state, provincial
or political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including without limitation any stock exchange, securities
market or self-regulatory organization.
"Interest Expense" means, for any period, the total interest expense of the
Corporation and its consolidated Subsidiaries, whether paid or accrued
(including the interest component of capitalized leases and any implied
interest components of any off-balance sheet liabilities), including interest
expense not payable in cash (including amortization or writeoff of debt
discount and debt issuance costs and commissions and discounts and other fees
and charges associated with any Debt (including the Debentures)), all as
determined in conformity with GAAP.
"Issue Date" means March 28, 2002.
"Junior Securities" means all securities of the Corporation issued and
outstanding at any time.
"Lien" and "Permitted Lien" shall have the respective meanings set forth in
the Purchase Agreement.
"Liquidation Event" has the meaning specified in Section 7 hereof.
"Market Price" means, as of any date, the average Closing Bid Price for the
Common Stock during the period of five (5) Trading Days immediately preceding
(but not including) such date.
"Material Adverse Effect" has the meaning set forth in the Purchase Agreement.
"Net Income" means, for any period, the net earnings (or loss) after taxes of
the Company and its Subsidiaries on a consolidated basis for such period taken
as a single accounting period determined in conformity with GAAP; provided,
that when calculating Net Income the following items shall be excluded from
such calculation: (i) the earnings (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting, except
to the extent of the amount of dividends or distributions paid in cash to the
Company or a consolidated Subsidiary; (ii) the earnings of a Subsidiary to the
extent that the declaration or payment of dividends or similar distributions
by such Subsidiary to the Company with respect to such earnings is not, at the
date of determination, permitted without the prior approval of a Governmental
Authority (and such approval has not been obtained), or is prohibited,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Subsidiary or the holders of its capital stock;
(iii) the cumulative effect of a change in accounting principles;
(iv) nonrecurring items, such as gains or losses on the sale of assets; and
(v) earnings derived from revenues that are recognized during such period as a
result of the acceleration of customer sponsored research and development
Page A-4
projects to the extent that such revenues are in excess of direct costs
incurred by the Corporation in connection with any such research and
development project; but when calculating Net Income such calculation shall
include historical audited Net Income (as calculated above) for such period of
any Person (or division of such Person) that became a Subsidiary of the
Company during such period or was merged into or was consolidated with the
Company or any of its Subsidiaries during such period, or where the assets of
such Person (or division of such Person) were acquired by the Company or any
of its Subsidiaries during such period, whether accrued prior or subsequent to
the date of such acquisition, merger or consolidation.
"Person" means any individual, corporation, trust, association, company,
partnership, joint venture, limited liability company, joint stock company,
Governmental Authority or other entity.
"Purchasers" has the meaning set forth in the Purchase Agreement.
"Real Property" has the meaning specified in the Purchase Agreement.
"Registration Rights Agreement" means the agreement, dated as of March 28,
2002, between the Purchasers and the Corporation pursuant to which the
Corporation has agreed to register shares of Common Stock.
"Registration Statement" has the meaning set forth in the Registration Rights
Agreement.
"Scheduled Interest Payment Date" means each July 1 and January 1 following the
Issue Date.
"Subsidiary" has the meaning set forth in the Purchase Agreement.
"Trading Day" means any day on which the Common Stock is purchased and sold on
the principal securities exchange or market on which the Common Stock is then
listed or traded.
"VWAP" on a Trading Day means the volume weighted average price of the Common
Stock for such Trading Day as reported by Bloomberg Financial Markets or, if
Bloomberg Financial Markets is not then reporting such prices, by a comparable
reporting service of national reputation selected by the Holder and reasonably
satisfactory to the Corporation.
All definitions contained in this Debenture are equally applicable to the
singular and plural forms of the terms defined. The words "hereof", "herein"
and "hereunder" and words of similar import referring to this Debenture refer
to this Debenture as a whole and not to any particular provision of this
Debenture. Capitalized terms used herein and not otherwise defined shall have
the respective meanings set forth in the Purchase Agreement.
Page A-5
2. INTEREST.
(a) Interest Accrual. This Debenture shall bear interest on the unpaid
principal amount hereof ("Interest") at an annual rate of five
percent (5%), computed on the basis of a 365-day year and calculated
using the actual number of days elapsed since the Issue Date or the
day on which interest was most recently paid, as the case may be, and
if not timely paid as provided herein, compounded semi-annually on
each July 1 and January 1 (each a "Scheduled Interest Payment Date").
The Corporation shall pay accrued and unpaid Interest in cash (i) on
each Scheduled Interest Payment Date, (ii) on the Maturity Date and
(iii) on any date on which the entire principal amount of this
Debenture is paid in full (whether through conversion or otherwise)
(each of (i), (ii) and (iii) being referred to herein as an "Interest
Payment Date").
(b) Default Interest. Any amount of Interest that is not paid on the
relevant Interest Payment Date shall bear interest at the Default
Interest Rate. The Corporation must pay interest at the Default
Interest Rate in cash on or before the fifth (5th) Business Day
following the last day of each calendar month in which such interest
accrues.
3. CONVERSION.
(a) Right to Convert. Subject to the conditions and limitations
specifically provided herein, the Holder shall have the right to
convert, at any time and from time to time after the Issue Date, (i)
all or any part of the outstanding and unpaid principal amount of
this Debenture and (ii) all accrued and unpaid Interest hereon, into
such number of fully paid and non-assessable Conversion Shares as is
determined in accordance with the terms hereof (a "Conversion").
(b) Conversion Notice. In order to convert the principal of this
Debenture, the Holder shall send by facsimile transmission, at any
time prior to 7:00 p.m., eastern time, on the Business Day on which
the Holder wishes to effect such Conversion (the "Conversion Date"),
a notice of conversion to the Corporation, in the form set forth on
Annex I hereto, stating the amount of principal to be converted and a
calculation of the number of shares of Common Stock issuable upon
such Conversion (a "Conversion Notice"). The Holder shall not be
required to physically surrender this Debenture to the Corporation in
order to effect a Conversion. The Corporation shall maintain a
record showing, at any given time, the unpaid principal amount of
this Debenture and the date of each Conversion or other payment of
principal hereof. The Holder shall amend Annex II hereto upon any
such Conversion or payment of principal to reflect the unpaid
principal amount hereof. In the case of a dispute as to the number
of Conversion Shares issuable upon a Conversion (including without
limitation as a result of adjustments to the Conversion Price made in
Page A-6
accordance with Section 4 below), the Corporation shall promptly
issue to the Holder the number of Conversion Shares that are not
disputed and shall submit the disputed calculations to its
independent accountants of national recognition within two (2)
Business Days of receipt of the Holder's Conversion Notice. The
Corporation shall cause such accountants to calculate the Conversion
Price as provided herein and to notify the Corporation and the Holder
of the results in writing no later than two (2) Business Days
following the day on which such accountant received the disputed
calculations (the "Dispute Procedure"). Such accountant's calculation
shall be deemed conclusive absent manifest error. The fees of any
such accountant shall be borne by the party whose calculations are
most at variance with those of such accountant.
(c) Number of Conversion Shares; Conversion Price. The number of
Conversion Shares to be delivered by the Corporation pursuant to a
Conversion shall be equal to the principal amount of this Debenture
being converted divided by the Conversion Price.
(d) Delivery of Common Stock Upon Conversion. Upon receipt of a
Conversion Notice, the Corporation shall, no later than the close of
business on the third (3rd) Business Day following the Conversion
Date set forth in such Conversion Notice (the "Delivery Date"), issue
and deliver or cause to be delivered to the Holder the number of
Conversion Shares determined pursuant to paragraph 3(c) above,
provided, however, that any Conversion Shares that are the subject of
a Dispute Procedure shall be delivered no later than the close of
business on the third (3rd) Business Day following the determination
made pursuant thereto. Such certificates may bear legends pursuant to
applicable provisions of this Agreement or applicable law. The
Corporation shall effect delivery of Conversion Shares to the Holder,
as long as the Corporation's designated transfer agent or co-transfer
agent in the United States for the Common Stock (the "Transfer
Agent") participates in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer program ("FAST"), and no legend is
required to appear on any physical certificate if issued, by crediting
the account of the Holder or its nominee at DTC (as specified in the
applicable Conversion Notice) with the number of Conversion Shares
required to be delivered, no later than the close of business on such
Delivery Date. In the event that the Transfer Agent is not a
participant in FAST or if the Holder so specifies in a Conversion
Notice or otherwise in writing on or before the Conversion Date, the
Corporation shall effect delivery of Conversion Shares by delivering
to the Holder or its nominee physical certificates representing such
Conversion Shares, no later than the close of business on such
Delivery Date. If any Conversion would create a fractional Conversion
Share, such fractional Conversion Share shall be disregarded and the
number of Conversion Shares issuable upon such Conversion, in the
aggregate, shall be the next higher whole number of Conversion
Shares. Conversion Shares delivered to the Holder shall not contain
any restrictive legend unless such legend is required pursuant to the
terms of the Purchase Agreement or applicable law.
Page A-7
(e) Failure to Deliver Conversion Shares.
In the event that the Corporation fails for any reason to deliver to
the Holder the number of Conversion Shares specified in a Conversion
Notice (without any restrictive legend to the extent permitted by the
terms hereof or pursuant to the terms of the Purchase Agreement) on
or before the Delivery Date therefor (a "Conversion Default"), the
Holder shall have the following rights:
(A) the right to receive from the Corporation an amount equal to
(i) (N/365) multiplied by (ii) the principal amount of, and
Interest accrued on, this Debenture represented by the
Conversion Shares (such amount, the "Conversion Default Amount")
which remain the subject of such Conversion Default multiplied
by (iii) the Default Interest Rate, where "N" equals the number
of days elapsed between the original Delivery Date of such
Conversion Shares and the date on which such Conversion Default
has been cured; and, at the Holder's option, either of the
following:
(B) (1) the right to receive from the Corporation an amount equal to
(i) the aggregate amount paid by the Holder for shares of
Common Stock purchased by the Holder in order to make
delivery on a sale effected in anticipation of receiving
Conversion Shares upon such Conversion minus (ii) the
aggregate amount of net proceeds, if any, received by the
Holder from the sale of the Conversion Shares issued by the
Corporation pursuant to such Conversion; or
(B) (2) the right to require the Corporation to reinstate the
principal of this Debenture in an aggregate amount equal to
the Conversion Default Amount and deem the conversion
resulting in such Conversion Default rescinded, null and
void.
In addition to its right to receive the foregoing amounts, the Holder
shall have the right to pursue all other remedies available to it at law
or in equity (including, without limitation, a decree of specific
performance and/or injunctive relief). Amounts payable under this
paragraph (e) shall be paid to the Holder in immediately available funds
on or before the fifth (5th) Business Day following written notice from
the Holder to the Corporation specifying the amount owed to it by the
Corporation pursuant to this paragraph (e).
Page A-8
(f) Limitations on Right to Convert. In no event shall the Holder be
permitted to convert principal of this Debenture in excess of that
amount upon the Conversion of which (x) the number of Conversion
Shares to be issued pursuant to such Conversion plus (y) the number
of shares of Common Stock beneficially owned by the Holder (other
than Common Stock which may be deemed beneficially owned except for
being subject to a limitation on conversion or exercise analogous to
the limitation contained in this paragraph (f)) would exceed 9.99% of
the number of shares of Common Stock then issued and outstanding.
Nothing contained herein shall be deemed to restrict the right of the
Holder to convert such excess principal amount at such time as such
Conversion will not violate the provisions of this paragraph (f). As
used herein, beneficial ownership shall be determined in accordance
with Section 13(d) of the Exchange Act, and the rules thereunder. To
the extent that the limitation contained in this paragraph (f) applies
(and without limiting any rights the Corporation may otherwise have),
the Corporation may rely on the Holder's determination of whether this
Debenture is convertible pursuant to the terms hereof, the
Corporation having no obligation whatsoever to verify or confirm the
accuracy of such determination, and the submission of a Conversion
Notice by the Holder shall be deemed to be the Holder's representation
that this Debenture is convertible pursuant to the terms hereof. The
holders of Common Stock are to be deemed third-party beneficiaries of
the limitation imposed hereby and, accordingly, this paragraph may not
be amended without the consent of the holders of a majority of the
shares of Common Stock then outstanding. Notwithstanding the
foregoing, this provision shall not apply to any determination of the
amount owed or securities to which the Holder is entitled to receive
in the event of a Change of Control Transaction or Liquidation Event.
4. ADJUSTMENTS TO CONVERSION PRICE.
(a) Adjustment to Conversion Price Due to Stock Split, Stock Dividend,
Dilutive Issuance. If, prior to the Conversion of all of the
principal amount of this Debenture, or payment in full of all amounts
payable by the Corporation hereunder, (A) the number of outstanding
shares of Common Stock is increased by a stock split, a
reclassification of the Common Stock, or other similar event, the
Conversion Price shall be proportionately reduced, which reduction
shall be effected at the time such event takes place; (B) the number
of outstanding shares of Common Stock is decreased by a reverse stock
split, combination or reclassification of shares or other similar
event, the Conversion Price shall be proportionately increased, which
increase shall be effected at the time such event takes place; (C)
the number of shares of Common Stock is increased by a stock dividend
on the Common Stock, the Conversion Price shall be proportionately
reduced, which reduction shall be effected on the record date for the
determination of holders of Common Stock to receive such dividend;
provided, however, that if such record date is fixed and such
dividend is not fully paid or if such distribution is not fully made
Page A-9
on the date fixed therefor, the Conversion Price shall be recomputed
accordingly as of the close of business on such record date and
thereafter the Conversion Price shall be adjusted pursuant to this
Section 4(a) to reflect the actual payment of such dividend; (D) the
Corporation issues Common Stock, whether upon the exercise of rights,
warrants, securities convertible, exercisable or exchangeable into or
for Common Stock, or rights to purchase or receive shares of Common
Stock (collectively, "Convertible Securities") or otherwise, at a
price per share that is lower than the Conversion Price in effect on
the date of such issuance, the Conversion Price shall be reduced to
such lower price; (E) the Corporation issues Convertible Securities,
and such Convertible Securities have a conversion price, exercise
price or exchange ratio that is lower than the Conversion Price in
effect on the date of such issuance, or if the conversion price,
exercise price or exchange ratio of any Convertible Security (whether
issued before or after the Closing Date) is at any time lowered
pursuant to "reset", anti-dilution or similar provisions to a price
that is lower than the Conversion Price in effect on the date of such
issuance, the Conversion Price shall be reduced to such lower price;
or (F) the Corporation (x) issues Common Stock, whether upon the
exercise of Convertible Securities or otherwise, at a price per
share, or (y) issues Convertible Securities, and such Convertible
Securities have a conversion price, exercise price or exchange ratio,
that is lower than the Market Price in effect on the date of such
issuance (but not lower than the Conversion Price in effect on the
date of such issuance, in which case the provisions of clause (D) or
(E) above, as applicable, will apply) (a "Dilutive Issuance"), the
Conversion Price in effect on the date of such issuance shall be
adjusted downward to a price determined by multiplying the Conversion
Price in effect immediately prior to the Dilutive Issuance by a
fraction, (i) the numerator of which is an amount equal to the sum of
(x) the number of shares of Common Stock actually outstanding
immediately prior to the Dilutive Issuance (excluding any shares of
Common Stock held in the treasury of the Corporation), plus (y) the
quotient of the aggregate consideration received by the Corporation
upon such Dilutive Issuance divided by the Market Price in effect
immediately prior to the Dilutive Issuance, and (ii) the denominator
of which is the total number of shares of Common Stock Deemed
Outstanding (as defined below) immediately after the Dilutive
Issuance. "Common Stock Deemed Outstanding" shall mean the number of
shares of Common Stock actually outstanding excluding (I) any shares
of Common Stock held in the treasury of the Corporation but including
(II) in the case where the Dilutive Issuance comprises Convertible
Securities, the maximum total number of shares of Common Stock
issuable upon the exercise of the Convertible Securities for which
the adjustment is required.
Page A-10
(b) Adjustment to Conversion Price During Reference Period. If, prior to
the Conversion of all of the principal amount of this Debenture, or
payment in full of all amounts payable by the Corporation hereunder,
the number of outstanding shares of Common Stock is increased or
decreased by a stock split, a stock dividend on the Common Stock, a
combination, a reclassification of the Common Stock or other similar
event, and such event takes place during the reference period for the
determination of the Conversion Price, the Conversion Price shall be
calculated giving appropriate effect to the stock split, stock
dividend, combination, reclassification or other similar event for
all Trading Days occurring during such reference period.
(c) Adjustment Due to Merger, Consolidation, Etc. If, prior to the
Conversion of the entire principal amount of this Debenture, or
payment in full of all amounts payable by the Corporation hereunder,
there shall be any merger, consolidation, business combination, tender
offer, exchange of shares, recapitalization, reorganization,
redemption or other similar event, as a result of which shares of
Common Stock shall be changed into the same or a different number of
shares of the same or another class or classes of stock or securities
of the Corporation or another entity (an "Exchange Transaction"), then
(A) the Holder shall have the right to receive, with respect to any
shares of Common Stock then held by the Holder, or which the Holder is
then entitled to receive pursuant to a Conversion Notice previously
delivered by the Holder (and without regard to whether such shares
contain a restrictive legend or are freely-tradable), the same amount
and type of consideration (including without limitation, stock,
securities and/or other assets) and on the same terms as the Holder of
shares of Common Stock would be entitled to receive in connection with
the consummation of such Exchange Transaction (the "Exchange
Consideration"), (B) the Holder shall have the right to exchange all
or part of this Debenture for the Exchange Consideration, on the same
terms as the Holder of shares of Common Stock would be entitled to
receive in connection with the consummation of such Exchange
Transaction, in an amount that the Holder would have been entitled to
receive had this Debenture been converted immediately prior to such
Exchange Transaction at the Conversion Price then in effect (without
giving effect to any limitations on such Conversion contained herein
or otherwise), and (C) to the extent that the Holder has not exercised
its right under clause (B) to exchange this Debenture for the Exchange
Consideration, upon the Conversion of this Debenture occurring after
consummation of such Exchange Transaction (a "Subsequent Conversion"),
the Holder shall have the right to receive the Exchange Consideration
which the Holder would have been entitled to receive in connection
with such Exchange Transaction had this Debenture been converted
immediately prior to such Exchange Transaction at the Conversion Price
applicable to such Subsequent Conversion, and in any such case
appropriate provisions shall be made with respect to the rights and
interests of the Holder to the end that the provisions hereof shall
thereafter be applicable as nearly as may be practicable in relation
Page A-11
to any securities thereafter deliverable upon the Conversion of this
Debenture. The Corporation shall not effect any Exchange Transaction
unless the resulting successor or acquiring entity (if not the
Corporation) assumes by written instrument the obligations of the
Corporation hereunder, including the terms of this subparagraph 4(c),
and under the Purchase Agreement, the Deed of Trust, the Warrant and
the Registration Rights Agreement.
(d) Distribution of Assets. If, prior to the Conversion of the entire
principal amount of this Debenture, or payment in full of all amounts
payable by the Corporation hereunder, the Corporation or any of its
subsidiaries shall declare or make any distribution of cash, evidences
of indebtedness or other securities or assets, or any rights to
acquire any of the foregoing, to holders of Common Stock (or to the
holder, other than the Corporation, of the common stock of any such
subsidiary), including any dividend or distribution in shares of
capital stock of a subsidiary of the Corporation (collectively, a
"Distribution"), the Corporation shall give the Holder written notice
of such Distribution at least ten (10) Business Days prior to the
effective date therefor, and the Holder shall have the option of
either (A) receiving from the Corporation the assets that are the
subject of such Distribution at the same time that the Corporation
distributes such assets to the holders of Common Stock (or to the
holders of the common stock of any such subsidiary), in which case the
Holder shall be entitled to receive such assets in an amount equal to
the amount of such assets that the Holder of the number of shares of
Common Stock into which this Debenture is convertible on the record
date for such Distribution would be entitled to receive (such number
to be determined using the Conversion Price in effect on such record
date and without regard to any restriction or limitation on such
conversion that might otherwise exist) or (B) for any Conversion
occurring after the record date for such Distribution, requiring the
Corporation to reduce the Conversion Price by an amount equal to the
fair market value of the assets so distributed with respect to each
share of Common Stock, such fair market value to be determined by an
investment banking firm selected by the Holder and reasonably
acceptable to the Corporation, with the cost of such determination to
be borne by the Corporation.
(e) Adjustment Due to Major Announcement. If, prior to the Conversion of
the entire principal amount of this Debenture, or payment in full of
all amounts payable by the Corporation hereunder, the Corporation (i)
makes a public announcement that it intends to enter into a Change of
Control Transaction or (ii) any person, group or entity (including the
Corporation) publicly announces a tender offer, exchange offer or
other transaction to purchase 50% or more of the Common Stock (each
such announcement being referred to herein as a "Major Announcement"
and the date on which a Major Announcement is made, the "Announcement
Date"), then, in the event that the Holder seeks to convert this
Debenture on or following the Announcement Date, the Conversion Price
Page A-12
shall, effective upon the Announcement Date and continuing through the
third (3rd) Business Day following the earlier to occur of the
consummation of the proposed transaction or tender offer, exchange
offer or other transaction and the Abandonment Date (as defined
below), be equal to the lowest of (x) the Market Price for the Common
Stock on the Trading Day immediately preceding (but not including) the
Announcement Date, (y) the average Closing Bid Price for the Common
Stock on the three (3) Trading Days immediately following (but not
including) the Announcement Date and (z) the Conversion Price in
effect on the applicable Conversion Date. "Abandonment Date" means
with respect to any proposed transaction or tender offer, exchange
offer or other transaction for which a public announcement as
contemplated by this paragraph 4(e) has been made, the date upon which
the Corporation (in the case of clause (i) above) or the person, group
or entity (in the case of clause (ii) above) publicly announces the
termination or abandonment of the proposed transaction or tender
offer, exchange offer or another transaction which caused this
paragraph 4(e) to become operative.
(f) Adjustment Pursuant to Other Agreements. In addition to and without
limiting in any way the adjustments provided in this Section 4, the
Conversion Price shall be adjusted as may be required by the
applicable provisions, if any, of the Purchase Agreement and/or the
Registration Rights Agreement.
(g) No Fractional Shares. If any adjustment under this Section 4 would
create a fractional share of Common Stock or a right to acquire a
fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares of Common Stock issuable upon
Conversion shall be the next higher whole number of shares.
(h) Exceptions to Adjustment of Conversion Price. No adjustment to the
Conversion Price will be made pursuant to this Section 4, (i) upon
the exercise of any warrants, options or convertible securities
granted, issued and outstanding on the Closing Date (except in the
case where the price at which such warrant, option or security is
exercised has decreased since the Closing Date as a result of a
reset, anti-dilutive adjustment or similar occurrence); (ii) upon the
grant or exercise of any stock or options which may hereafter be
granted or exercised under any employee benefit plan, stock option
plan or restricted stock plan of the Corporation now existing or to
be implemented in the future, so long as the issuance of such stock
or options is approved by a majority of the Board of Directors of the
Corporation; (iii) upon the exercise of the Warrants or the
conversion of the Debentures; (iv) upon the issuance of securities
pursuant to a firm-commitment, fixed-price underwritten offering
(which shall not include equity lines of credit or similar
transactions); and (v) upon the issuance of securities in connection
with a strategic investment made by the Corporation or a third party,
the primary purpose of which is not the raising of equity capital.
Page A-13
5. MANDATORY CONVERSION.
(a) Mandatory Conversion. The Corporation shall have the right, upon the
satisfaction (or waiver by the Holder) of each of the Mandatory
Conversion Conditions as of the Mandatory Conversion Date (each as
defined below), to require conversion of this Debenture (a "Mandatory
Conversion"). In the event of a Mandatory Conversion, the Corporation
and the Holder shall follow the procedures for Conversion set forth in
Section 3 above, with the Mandatory Conversion Date (as defined below)
deemed to be the Conversion Date for purposes hereof, except that the
Holder shall not be required to send a Conversion Notice as
contemplated by paragraph (b) of Section 3.
(b) Mandatory Conversion Notice. In order to effect a Mandatory Conversion
hereunder, the Corporation must deliver to the Holder written notice
thereof (a "Mandatory Conversion Notice") on or before 5:00 p.m.
(eastern time) on a Business Day (the "Mandatory Conversion Notice
Date") that is at least twenty (20) Trading Days prior to the date on
which such Mandatory Conversion is to be effected (the "Mandatory
Conversion Date") and, at the same time that it delivers such notice,
the Corporation shall use reasonable efforts to confirm delivery
thereof with the Holder by telephone. Notwithstanding the delivery by
the Corporation of a Mandatory Conversion Notice, nothing contained
herein shall be deemed to limit in any way (i) the right of the
Holder to convert this Debenture prior to the Mandatory Conversion
Date or (ii) the availability of any and all remedies that are
provided to the Holder hereunder, including without limitation in the
event that the Corporation fails to deliver Conversion Shares upon a
Mandatory Conversion as required by the terms of Section 3 hereof.
(c) Mandatory Conversion Conditions. The Mandatory Conversion Conditions
are as follows:
(i) at least eighteen (18) months shall have elapsed since the Issue
Date;
(ii) VWAP shall have been greater than the Conversion Price as of the
Issue Date (as such Conversion Price may have been adjusted in
accordance with clause (A), (B) or (C) of paragraph 4(a), but
without giving effect, solely for the purposes of this paragraph
(c)(ii), to any adjustment required or permitted by any other
provision of Section 4 hereof) by at least two hundred percent
(200%) for at least twenty (20) Trading Days during any period
of thirty (30) consecutive Trading Days occurring after the
seventeen (17) month anniversary of the Issue Date;
(iii) the Corporation shall have authorized and reserved for issuance
the number of shares of Common Stock required to be reserved
under paragraph 4.5 of the Purchase Agreement, and shall have
provided the Holder with reasonable evidence thereof;
Page A-14
(iv) the Registration Statement shall have been declared effective
and shall have been available to the Holder at all times since
its effectiveness (except during an Allowed Delay (as defined in
the Registration Rights Agreement), unless such Allowed Delay
occurs during the period between the date of the Mandatory
Conversion Notice and the Mandatory Conversion Date), and shall
cover the resale by the Holder of the number of Registrable
Securities required by the Registration Rights Agreement
(including without limitation all Conversion Shares to be issued
on the relevant Mandatory Conversion Date);
(v) the Common Stock shall have been listed on the Nasdaq Stock
Market, the American Stock Exchange or the New York Stock
Exchange at all times following the Issue Date and trading in
the Common Stock on such market or exchange shall not have been
suspended at any time following the Issue Date for more than
three (3) consecutive Business Days;
(vi) an Event of Default (as defined below), or an event that with
the passage of time or giving of notice, or both, would
constitute an Event of Default, shall not have occurred and be
continuing as of the Mandatory Conversion Date or as of the date
of the Mandatory Conversion Notice; and
(vii) the conversion of this Debenture pursuant to the Mandatory
Conversion would not violate the provisions of Section 3(f)
hereof.
6. REDEMPTION.
(a) Mandatory Redemption. In the event that an Event of Default (as
defined below) occurs, the Holder shall have the right, upon written
notice to the Corporation (a "Mandatory Redemption Notice"), to have
all or any portion of the unpaid principal amount of this Debenture,
plus all accrued and unpaid Interest thereon, redeemed by the
Corporation (a "Mandatory Redemption") at the Mandatory Redemption
Price (as defined below) in same day funds. The Mandatory Redemption
Notice shall specify the effective date of such Mandatory Redemption
(the "Mandatory Redemption Date"), which date must be at least five
(5) Business Days following the Business Day on which the Mandatory
Redemption Notice is delivered to the Corporation, and the amount of
principal and Interest to be redeemed. In order to effect a
Mandatory Redemption hereunder, the Holder must deliver a Mandatory
Redemption Notice no later than the close of business on the Business
Day immediately following the Business Day on which an Event of
Default is no longer continuing; provided, however, that with respect
to a Change of Control Transaction, the Holder must deliver a
Mandatory Redemption Notice no later than the close of business on
the third (3rd) Business Day following the date on which the Change
of Control Transaction is effected.
Page A-15
(b) Mandatory Redemption Price. For purposes hereof, "Mandatory
Redemption Price" shall mean the greater of (A) the unpaid principal
hereof and all accrued and unpaid Interest hereon multiplied by one
hundred and twenty percent (120%) and (B) the unpaid principal hereof
and all accrued and unpaid Interest hereon divided by the Conversion
Price in effect at the time of the Conversion Default multiplied by
the Market Price on the Mandatory Redemption Date.
(c) Payment of Mandatory Redemption Price.
(i) The Corporation shall pay the Mandatory Redemption Price to the
Holder within five (5) Business Days of the Mandatory Redemption
Date. In the event that the Corporation redeems the entire
remaining unpaid principal amount of this Debenture, and pays to
the Holder all Interest accrued thereon and all other amounts
due in connection therewith, the Holder shall return this
Debenture to the Corporation for cancellation.
(ii) If the Corporation fails to pay the Mandatory Redemption Price
to the Holder within five (5) Business Days of the Mandatory
Redemption Date, the Holder shall be entitled to interest
thereon at the Default Interest Rate from the Mandatory
Redemption Date until the date on which Mandatory Redemption
Price has been paid in full.
(iii) Notwithstanding the foregoing, if, prior to the payment by the
Corporation of the Mandatory Redemption Price pursuant to any
Mandatory Redemption Notice, the Corporation receives written
notice from the Holder rescinding such Mandatory Redemption
Notice, such Mandatory Redemption Notice shall immediately
thereafter be deemed revoked and the Corporation shall not
effect the Mandatory Redemption contemplated by such Mandatory
Redemption Notice.
(d) Events of Default. Each of the following events shall be deemed an
"Event of Default":
(i) the Common Stock is no longer eligible for trading on the Nasdaq
Stock Market, or is not otherwise listed or quoted on the
American Stock Exchange or the New York Stock Exchange;
(ii) a Change of Control Transaction or Liquidation Event occurs or
is publicly announced;
(iii) the Registration Statement (as defined in the Registration
Rights Agreement) is not declared effective by the Commission on
or before the one hundred and eightieth (180th) day following
the Issue Date or, following such effectiveness, is unavailable
to the Holder, except during an Allowed Delay (as defined in the
Registration Rights Agreement);
Page A-16
(iv) the Corporation grants any Lien on or with respect to any of its
assets or the assets of any of its wholly-owned subsidiaries,
other than a Permitted Lien;
(v) the Corporation breaches or provides notice of its intent to
breach, in a material respect, any covenant or other material
term or condition of this Debenture (including without
limitation any payment obligation thereunder), the Purchase
Agreement, the Warrant, the Deed of Trust, the Registration
Rights Agreement or any other agreement, document, certificate
or other instrument delivered by the Corporation in connection
with the transactions contemplated hereby and thereby, including
but not limited to the failure to deliver Conversion Shares and
Warrant Shares on or before the Delivery Date therefor, and such
breach continues for a period of five (5) Business Days;
(vi) any representation or warranty made by the Corporation contained
in this Debenture, the Purchase Agreement, the Deed of Trust,
the Registration Rights Agreement or any other agreement,
document, certificate or other instrument delivered in
connection with the transactions contemplated hereby or thereby
is inaccurate or misleading in any material respect as of the
date such representation or warranty was made;
(vii) a default occurs, after giving effect to any applicable grace or
cure period, under or with respect to the Infineon Debenture or
the Infineon Warrant;
(viii) a default occurs, after giving effect to any applicable grace or
cure period, under or with respect to any instrument that
evidences Debt of the Corporation;
(ix) the Corporation's EBITDA during an EBITDA Target Period (as
defined below) is less than the corresponding EBITDA Target (as
defined below) and at least thirty (30) days has elapsed since
the last day of such EBITDA Target Period;
(x) (A) the Corporation's aggregate capital expenditures for the
year ending December 31, 2002 exceed $1,500,000; or (B) the
Corporation's aggregate capital expenditures for the year ending
December 31, 2003 exceed three percent (3%) of the Corporation's
gross revenues generated such year from sales. For purposes
hereof, "capital expenditures" and "gross revenues from sales"
shall be as shown on the audited financial statements of the
Corporation for such fiscal year; and
(xi) the patent interference proceeding declared in 1991 in the
United States Patent and Trademark Office between the
Corporation, National Semiconductor Corporation and the
Department of the Navy in regard to one of the Corporation's
issued United States patents is adjudicated, settled or
otherwise resolved in a manner that has, or could reasonably be
expected to have, a Material Adverse Effect.
Page A-17
(e) EBITDA Target Periods; EBITDA Targets. For purposes hereof, the
terms "EBITDA Target Period" and "EBITDA Target" shall have the
following meanings:
EBITDA Target Period EBITDA Target
-------------------- -------------
Year Ending December 31, 2002 negative $2,000,000
Six Months Ending June 30, 2003 $750,000
Six Months Ending September 30, 2003 $750,000
Six Months Ending December 31, 2003 $750,000
Each Six Month Period Ending on the
Last Day of a Fiscal Quarter Occurring
After December 31, 2003 $937,500
Any Fiscal Quarter During 2003 negative $500,000
Any Fiscal Quarter During 2004 negative $250,000
(f) EBITDA Calculations.
(i) For purposes of calculating EBITDA of the Corporation for any
EBITDA Target Period, the Corporation shall promptly (but in no
event later than the second (2nd) Business Day following the
public disclosure of the Corporation's earnings for the
reporting period ending on the last day of such EBITDA Target
Period (whether by press release, the filing of a Form 10-K,
10-Q or 8-K with the Commission, or otherwise)) deliver to the
Holder a certificate (an "EBITDA Certificate"), certified by the
Chief Financial Officer of the Corporation as being true and
correct to the best of his or her knowledge. Each EBITDA
Certificate shall set forth (x) EBITDA of the Corporation for
the relevant EBITDA Target Period and (y) the calculation of
such EBITDA amount in reasonable detail. Upon receipt by the
Holder of any EBITDA Certificate, the Holder may, within five
(5) Business Days after the date of receiving such EBITDA
Certificate (the "EBITDA Review Period"), deliver to the
Corporation an objection notice setting forth the Holder's
objections to the EBIDTA calculations set forth in such EBITDA
Certificate together with a summary of the reasons for such
objections (each such notice delivered by the Holder, an "EBITDA
Objection Notice"). With respect to any EBITDA Certificate, if
the Holder does not deliver an EBITDA Objection Notice within
the applicable EBITDA Review Period, such EBITDA Certificate
shall be final and binding.
Page A-18
(ii) If, with respect to an EBITDA Certificate, the Holder delivers
an EBITDA Objection Notice to the Corporation within the
applicable EBITDA Review Period, the Corporation and the Holder
shall use their reasonable best efforts to resolve the
objections described in such EBITDA Objection Notice within five
(5) Business Days by written agreement (the "EBITDA
Adjustments") and, if the Holder and the Corporation so resolve
any such differences, the EBITDA Certificate in question, as
adjusted pursuant to the EBITDA Adjustments, shall be final and
binding.
(iii) If any objections raised by the Holder in an EBITDA Objection
Notice are not resolved by EBITDA Adjustments within five (5)
Business Days following receipt by the Corporation of an EBITDA
Objection Notice, then the Holder shall submit the objections
that are then unresolved to a national accounting firm
reasonably acceptable to the Corporation (such firm, the
"Accounting Firm"), and shall direct the Accounting Firm to: (x)
resolve the unresolved objections (based solely on the
presentations by the Corporation and the Holder and in
accordance with GAAP) as promptly as reasonably practicable and
(y) deliver written notice to each of the Corporation and the
Holder setting forth its resolution of the disputed matters.
The EBITDA Certificate in question, after giving effect to any
EBITDA Adjustments and to the resolution of disputed matters by
the Accounting Firm, shall be final and binding.
(iv) The Corporation shall make available to the Holder and, if
applicable, the Accounting Firm, such books, records and other
information (including work papers) as any of the foregoing may
reasonably request to prepare or review any EBITDA Certificate
or any matters submitted to the Accounting Firm. The fees and
expenses of the Accounting Firm hereunder shall be borne by the
party whose calculations were most at variance with those of the
Accounting Firm.
7. PRIORITY ON LIQUIDATION.
(a) In the event of (x) any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar
proceedings in connection therewith, relative to the Corporation or
to its creditors, as such, or to its assets, or (y) the dissolution
or other winding up of the Corporation, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy
proceedings, or (z) any assignment for the benefit of creditors or
any marshalling of the material assets or material liabilities of the
Corporation (each a "Liquidation Event"), then, and in any such
event, the Holder of this Debenture shall first be entitled to
receive payment in full of all principal of, and all Interest and
other amounts due or to become due on, this Debenture before any
Page A-19
payment on account of principal, premium, if any, interest, dividends
or any other amounts is made on any Debt of the Corporation or Junior
Securities, whether on account of any purchase, exchange or
redemption or other acquisition of such Debt or Junior Securities, at
maturity or otherwise. Notwithstanding the foregoing, this Debenture
shall rank pari passu with the Infineon Debenture.
(b) In the event that, upon the occurrence of a Liquidation Event, the
assets of the Corporation are insufficient to pay all amounts due
hereunder, under the other Debentures and under the Infineon
Debenture, subject to Infineon's first priority security interest in
certain assets of the Corporation pursuant to the Security Agreement,
dated as of March 28, 2002, between the Corporation and Infineon,
such assets, or the proceeds thereof, shall be distributed pro rata
to the Holder, the holders of the Debentures and the holder of the
Infineon Debenture on a pro rata basis in accordance with the
respective principal amounts represented thereby.
8. MISCELLANEOUS.
(a) Failure to Exercise Rights not Waiver. No failure or delay on the
part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude any
other or further exercise thereof. All rights and remedies of the
Holder hereunder are cumulative and not exclusive of any rights or
remedies otherwise available.
(b) Notices. Any notice, demand or request required or permitted to be
given by the Corporation or the Holder pursuant to the terms of this
Debenture shall be in writing and shall be deemed delivered (i) when
delivered personally or by verifiable facsimile transmission, unless
such delivery is made on a day that is not a Business Day, in which
case such delivery will be deemed to be made on the next succeeding
Business Day, (ii) on the next Business Day after timely delivery to
an overnight courier and (iii) on the Business Day actually received
if deposited in the U.S. mail (certified or registered mail, return
receipt requested, postage prepaid), addressed as follows:
If to the Corporation:
Ramtron International Corporation
0000 Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attn: XxXxx X. Xxxxxx, Chief Financial Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
Page A-20
with a copy to:
Coudert Brothers LLP
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. St. Clair, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
and if to the Holder, at such address as the Holder shall have
furnished the Corporation in writing.
(c) Amendments. No amendment, modification or other change to, or waiver
of any provision of, this Debenture may be made unless such
amendment, modification or change is (A) set forth in writing and is
signed by the Corporation and the Holder and (B) agreed to in writing
by the Holders who hold at least sixty-six percent (66%) of the
unpaid principal amount of the Debentures, it being understood that,
notwithstanding anything to the contrary contained in any Debenture,
upon the satisfaction of the conditions described in (A) and (B)
above, each Debenture (including any Debenture held by the Holder who
did not execute the agreement specified in (B) above) shall be deemed
to incorporate any amendment, modification, change or waiver effected
thereby as of the effective date thereof.
(d) Transfer of Debenture. The Holder may sell, transfer or otherwise
dispose of all or any part of this Debenture (including without
limitation pursuant to a pledge) to any person or entity as long as
such sale, transfer or disposition is the subject of an effective
registration statement under the Securities Act of 1933, as amended,
or is exempt from registration thereunder. From and after the date
of any such sale, transfer or disposition, the transferee hereof
shall be deemed to be the Holder of a debenture in the principal
amount acquired by such transferee, and the Corporation shall, as
promptly as practicable, issue and deliver to such transferee a new
debenture identical in all respects to this Debenture, in the name
of such transferee. The Corporation shall be entitled to treat the
original Holder as the holder of this entire Debenture unless and
until it receives written notice of the sale, transfer or
disposition hereof.
(e) Lost or Stolen Debenture. Upon receipt by the Corporation of
evidence of the loss, theft, destruction or mutilation of this
Debenture, and (in the case of loss, theft or destruction) of
indemnity or security reasonably satisfactory to the Corporation, and
upon surrender and cancellation of the Debenture, if mutilated, the
Corporation shall execute and deliver to the Holder a new Debenture
identical in all respects to this Debenture.
Page A-21
(f) Governing Law. This Debenture shall be governed by and construed in
accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within the State of New
York.
(g) Successors and Assigns. The terms and conditions of this Debenture
shall inure to the benefit of and be binding upon the respective
successors (whether by merger or otherwise) and permitted assigns of
the Corporation and the Holder. The Corporation may not assign its
rights or obligations under this Debenture except as specifically
required or permitted pursuant to the terms hereof.
(h) Most Favored Nations. The rights of the Purchaser and the obligations
of the Corporation set forth in Section 7.12 of the Purchase Agreement
are hereby incorporated by reference and made a part of this
Agreement.
IN WITNESS WHEREOF, the Corporation has caused this Debenture to be signed in
its name by its duly authorized officer on the date first above written.
RAMTRON INTERNATIONAL CORPORATION
By:
-----------------------------
Name:
Title:
Page A-22
ANNEX I
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal of the 5% Secured
Convertible Debenture (the "Debenture") issued by RAMTRON INTERNATIONAL
CORPORATION (the "Corporation") into shares of common stock, par value $.01 per
share ("Common Stock"), of the Corporation according to the terms and
conditions of the Debenture. Capitalized terms used herein and not otherwise
defined shall have the respective meanings set forth in the Debenture.
Date of Conversion:
------------------------------
Principal Amount of
Debenture to be Converted:
------------------------------
Amount of Interest
to be Converted:
------------------------------
Number of Shares of
Common Stock to be Issued:
------------------------------
Name of Holder:
------------------------------
Address:
------------------------------
------------------------------
------------------------------
Signature:
-------------------------
Name:
------------------------------
Title:
------------------------------
Holder Requests Delivery to be made: (check one)
/ / By Delivery of Physical Certificates to the Above Address
/ / Through Depository Trust Corporation
(Account )
Page A-23
ANNEX II
Schedule of
Decreases
of Principal Amount
Principal Amount of
Balance Decrease Date
$XXXXXXXXXX
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
---------------------- ------------------- --------------------
Page A-24
Exhibit B to Stock Purchase Agreement
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE
OFFERED FOR SALE, SOLD OR TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT
THERETO, OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER,
SALE OR TRANSFER. SUBJECT TO COMPLIANCE WITH THE REQUIREMENTS OF THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, THIS WARRANT AND THE
SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE PLEDGED IN CONNECTION
WITH A BONAFIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THIS WARRANT OR ANY OF
THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARANT.
Warrant to Purchase Issue Date: -------------
XXXXXXX Shares
WARRANT TO PURCHASE COMMON STOCK
of
RAMTRON INTERNATIONAL CORPORATION
THIS CERTIFIES that ------------------ or any subsequent holder hereof
(the "Holder"), has the right to purchase from RAMTRON INTERNATIONAL
CORPORATION, a Delaware corporation (the "Company"), up to XXXXXX fully paid
and nonassessable shares of the Company's common stock, par value $.01 per
share (the "Common Stock"), subject to adjustment as provided herein, at a
price equal to the Exercise Price (as defined below), at any time beginning on
the date on which this Warrant is issued (the "Issue Date") and ending at 5:00
p.m., eastern time, on the date that is the fifth (5th) anniversary of the
Issue Date (the "Expiration Date"). This Warrant is issued pursuant to the
Securities Purchase Agreement, dated as of March 14, 2002, between the Company
and the Holder (the "Securities Purchase Agreement"). Capitalized terms used
herein and not otherwise defined shall have the respective meanings set forth
in the Securities Purchase Agreement.
1. Exercise.
(a) Right to Exercise; Exercise Price. The Holder shall have the right to
exercise this Warrant at any time and from time to time during the
period beginning on the Issue Date and ending on the Expiration Date
as to all or any part of the shares of Common Stock covered hereby
(the "Warrant Shares"). The "Exercise Price" payable by the Holder in
connection with the exercise of this Warrant shall be equal to $XXX.
(b) Exercise Notice. In order to exercise this Warrant, the Holder shall
send by facsimile transmission, at any time prior to 7:00 p.m.,
eastern time, on the Business Day on which the Holder wishes to effect
such exercise (the "Exercise Date"), to the Company and to its
designated transfer agent for the Common Stock (the "Transfer Agent")
Page B-1
a copy of the notice of exercise in the form attached hereto as
Exhibit A (the "Exercise Notice") stating the number of Warrant Shares
as to which such exercise applies and the calculation therefor. The
Holder shall thereafter deliver to the Company the original Exercise
Notice, the original Warrant and, in the case of a Cash Exercise (as
defined below), the Exercise Price. In the case of a dispute as to
the calculation of the Exercise Price or the number of Warrant Shares
issuable hereunder (including, without limitation, the calculation of
any adjustment pursuant to Section 6 below), the Company shall
promptly issue to the Holder the number of Warrant Shares that are not
disputed and shall submit the disputed calculations to the Company's
independent accountant of national recognition within two (2) Business
Days following the date on which the Exercise Notice is delivered to
the Company. The Company shall cause such accountant to calculate the
Exercise Price and/or the number of Warrant Shares issuable hereunder
and to notify the Company and the Holder of the results in writing no
later than two (2) Business Days following the day on which such
accountant received the disputed calculations (the "Dispute
Procedure"). Such accountant's calculation shall be deemed conclusive
absent manifest error. The fees of any such accountant shall be
borne by the party whose calculations were most at variance with
those of such accountant.
(c) Holder of Record. The Holder shall, for all purposes, be deemed to
have become the holder of record of the Warrant Shares specified in an
Exercise Notice on the Exercise Date specified therein, irrespective
of the date of delivery of such Warrant Shares. Except as
specifically provided herein, nothing in this Warrant shall be
construed as conferring upon the Holder hereof any rights as a
stockholder of the Company prior to the Exercise Date.
(d) Cancellation of Warrant. This Warrant shall be canceled upon its
exercise and, if this Warrant is exercised in part, the Company shall,
at the time that it delivers Warrant Shares to the Holder pursuant to
such exercise as provided herein, issue a new warrant, and deliver to
the Holder a certificate representing such new warrant, with terms
identical in all respects to this Warrant (except that such new
warrant shall be exercisable into the number of shares of Common Stock
with respect to which this Warrant shall remain unexercised);
provided, however, that the Holder shall be entitled to exercise all
or any portion of such new warrant at any time following the time at
which this Warrant is exercised, regardless of whether the Company has
actually issued such new warrant or delivered to the Holder a
certificate therefor.
Page B-2
2. Delivery of Warrant Shares Upon Exercise. Upon receipt of an Exercise
Notice pursuant to paragraph 1 above, the Company shall, (A) in the case of a
Cashless Exercise (as defined below), no later than the close of business on
the third (3rd) Business Day following the Exercise Date set forth in such
Exercise Notice, (B) in the case of a Cash Exercise (as defined below) no later
than the close of business on the later to occur of (i) the third (3rd)
Business Day following the Exercise Date set forth in such Exercise Notice and
(ii) such later date on which the Company shall have received payment of the
Exercise Price, and (C) with respect to Warrant Shares which are the subject of
a Dispute Procedure, the close of business on the third (3rd) Business Day
following the determination made pursuant to paragraph 1(b) (the "Delivery
Date"), issue and deliver or caused to be delivered to the Holder the number of
Warrant Shares as shall be determined as provided herein. The Company shall
effect delivery of Warrant Shares to the Holder by, as long as the Transfer
Agent participates in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer program ("FAST"), crediting the account of the Holder or
its nominee at DTC (as specified in the applicable Exercise Notice) with the
number of Warrant Shares required to be delivered, no later than the close of
business on such Delivery Date. In the event that the Transfer Agent is not a
participant in FAST, or if the Warrant Shares are not otherwise eligible for
delivery through FAST, or if the Holder so specifies in an Exercise Notice or
otherwise in writing on or before the Exercise Date, the Company shall effect
delivery of Warrant Shares by delivering to the Holder or its nominee physical
certificates representing such Warrant Shares, no later than the close of
business on such Delivery Date. Warrant Shares delivered to the Holder shall
not contain any restrictive legend as long as (x) the resale, transfer, pledge
or other disposition of such shares is covered by an effective registration
statement, (y) such shares have been publicly sold pursuant to Rule 144, or
(z) such shares can be sold pursuant to Rule 144(k), or any successor rule or
provision.
3. Failure to Deliver Warrant Shares.
In the event that the Holder has not received certificates (without any
restrictive legend in the circumstances described in clause (x), (y) or (z) of
paragraph 2 above) representing the number of Warrant Shares specified in the
applicable Exercise Notice on or before the Delivery Date therefor (an
"Exercise Default"), the Holder shall have the following rights:
(a) the right to receive from the Corporation an amount equal to (i)
(N/365) multiplied by (ii) the aggregate Exercise Price of the Warrant
Shares which are the subject of such Exercise Default (such amount,
the "Exercise Default Amount") multiplied by (iii) twenty four percent
(24%), where "N" equals the number of days elapsed between the
Delivery Date and the date on which such Exercise Default has been
cured; and, at the Holder's option, either of the following
(b) (1) the right to receive from the Corporation an amount equal to
(A) the aggregate amount paid by the Holder for shares of Common
Stock purchased by the Holder in order to make delivery on a
sale effected in anticipation of receiving Warrant Shares upon
such exercise minus (B) the aggregate Exercise Price for such
Warrant Shares; or
Page B-3
(b) (2) the right to require the Corporation to reinstate the Warrant by
an amount equal to the Exercise Default Amount and deem the
exercise resulting in such Exercise Default rescinded, null and
void.
In addition to its right to receive the foregoing amounts, the Holder
shall have the right to pursue all other remedies available to it at law
or in equity (including, without limitation, a decree of specific
performance and/or injunctive relief). Amounts payable under this
paragraph 3 shall be paid to the Holder in immediately available funds on
or before the fifth (5th) Business Day following written notice from the
Holder to the Company specifying the amount owed to it by the Company
pursuant to this paragraph 3.
4. Exercise Limitations.
In no event shall the Holder be permitted to exercise this Warrant, or part
thereof, with respect to Warrant Shares in excess of the number of such shares,
upon the issuance of which, (x) the number of shares of Common Stock
beneficially owned by the Holder (other than shares which would otherwise be
deemed beneficially owned except for being subject to a limitation on
conversion or exercise analogous to the limitation contained in this paragraph
4) plus (y) the number of shares of Common Stock issuable upon such exercise
would be equal to or exceed 9.99% of the number of shares of Common Stock then
issued and outstanding. As used herein, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and the rules thereunder. To the extent that the limitation
contained in this paragraph 4 applies, the submission of an Exercise Notice by
the Holder shall be deemed to be the Holder's representation that this Warrant
is exercisable pursuant to the terms hereof and the Company shall be entitled
to rely on such representation without making any further inquiry as to whether
this Section 4 applies. Nothing contained herein shall be deemed to restrict
the right of a Holder to exercise this Warrant, or part thereof, at such time
as such exercise will not violate the provisions of this Section 4.
5. Payment of the Exercise Price; Cashless Exercise. The Holder may pay the
Exercise Price in either of the following forms or, at the election of Holder,
a combination thereof:
(a) through a cash exercise (a "Cash Exercise") by delivering immediately
available funds, or
(b) if all of the Warrant Shares issuable hereunder are not then eligible
for resale pursuant to an effective Registration Statement, through a
cashless exercise (a "Cashless Exercise") by surrendering this
Warrant to the Company and noting on the Exercise Notice that the
Holder wishes to effect a Cashless Exercise, in which event the
Company shall issue to the Holder the number of Warrant Shares
determined as follows:
Page B-4
X = Y x (A-B)/A
where: X = the number of Warrant Shares to be issued to the Holder;
Y = the number of Warrant Shares with respect to which this
Warrant is being exercised;
A = the Market Price (as defined in the Debenture) on the Exercise
Date; and
B = the Exercise Price.
For purposes of Rule 144, it is intended and acknowledged that the Warrant
Shares issued in a Cashless Exercise transaction shall be deemed to have been
acquired by the Holder, and the holding period for the Warrant Shares required
by Rule 144 shall be deemed to have been commenced, on the Issue Date.
6. Anti-Dilution Adjustments; Distributions; Other Events. The Exercise Price
and the number of Warrant Shares issuable hereunder shall be subject to
adjustment from time to time as provided in this Section 6. In the event that
any adjustment of the Exercise Price or the number of Warrant Shares as
required herein results in a fraction of a cent or fraction of a share, as
applicable, such Exercise Price or number of Warrant Shares shall be rounded
up or down to the nearest cent or share, as applicable.
(a) Adjustment of Exercise Price upon Certain Issuances of Common Stock.
In the event that the Company (A) issues Common Stock, whether upon
the exercise of rights, warrants, securities convertible or
exercisable into Common Stock ("Convertible Securities")or otherwise,
at a price per share that is lower than the Exercise Price then in
effect, or (B) issues Convertible Securities with a conversion price,
exercise price or exchange ratio, that is lower than the Exercise
Price, the Exercise Price shall be reduced to such lower price. In
the event that the Company (A) issues Common Stock, whether upon the
exercise of Convertible Securities or otherwise, or (B) issues
Convertible Securities with a conversion price, exercise price or
exchange ratio, in the case of either (A) or (B), that is lower than
the Market Price (but not lower than the Exercise Price, in which
case the immediately preceding sentence shall apply), the Exercise
Price shall be reduced to a price determined by multiplying the
Exercise Price in effect immediately prior to such issuance by a
fraction, (i) the numerator of which is an amount equal to the sum of
(x) the number of shares of outstanding (not including any shares of
Common Stock held in the treasury of the Company) immediately prior
to the such issuance, plus (y) the quotient of the aggregate
consideration (if any) received by the Company upon such issuance
divided by the Market Price in effect immediately prior to such
issuance, and (ii) the denominator of which is the total number of
shares of Common Stock Deemed Outstanding immediately after such
issuance. "Common Stock Deemed Outstanding" shall mean the number of
Page B-5
shares of Common Stock actually outstanding excluding any shares of
Common Stock held in the treasury of the Company, but which shall
include, in the case where any such issuance comprises the issuance
of Convertible Securities, the maximum total number of shares of
Common Stock issuable upon the exercise of the Convertible Securities
for which the adjustment is required. No further adjustment of the
Exercise Price shall be made pursuant to this paragraph (a) upon the
actual issuance of Common Stock pursuant to such Convertible
Securities, unless the price at which such issuance is effected is
less than the price used to make such adjustment, in which case the
Exercise Price shall be adjusted as though such lesser price had been
in effect as of the date on which such Convertible Securities were
issued.
(b) Subdivision or Combination of Common Stock. If the Company, at any
time after the Issue Date, subdivides (by any stock split, stock
dividend, recapitalization, reorganization, reclassification or
otherwise) its shares of Common Stock into a greater number of
shares, then after the date of record for effecting such subdivision,
the Exercise Price in effect immediately prior to such subdivision
will be proportionately reduced. If the Company, at any time after
the initial issuance of this Warrant, combines (by reverse stock
split, recapitalization, reorganization, reclassification or
otherwise) its shares of Common Stock into a smaller number of
shares, then, after the date of record for effecting such
combination, the Exercise Price in effect immediately prior to such
combination will be proportionally increased.
(c) Distributions. If the Company or any of its Subsidiaries shall at any
time distribute to holders of Common Stock (or to a holder, other than
the Company, of the common stock of any such Subsidiary) cash,
evidences of indebtedness or other securities or assets including any
dividend or distribution in shares of capital stock of a Subsidiary of
the Company (collectively, a "Distribution") then, in any such case,
the Holder of this Warrant shall be entitled to receive, at the same
time as such assets are received by a holder of such stock, at the
option of the Holder, (A) an amount and type of such Distribution as
though the Holder were a holder on the record date therefor of a
number of shares of Common Stock into which this Warrant is
exercisable as of such record date (such number of shares to be
determined at the Exercise Price then in effect and without regard to
any limitation on exercise of this Warrant that may exist pursuant to
the terms hereof or otherwise) and (B) a reduction in the Exercise
Price as of the record date for such Distribution, such reduction to
be effected by reducing the Exercise Price in effect on the Business
Day immediately preceding such record date by an amount equal to the
fair market value of the assets so distributed divided by the number
of shares of Common Stock to which such Distribution is made, such
fair market value to be reasonably determined in good faith by the
Company's Board of Directors.
Page B-6
(d) Major Transactions. In the event of a merger, consolidation, business
combination, tender offer, exchange of shares, recapitalization,
reorganization, redemption or other similar event, as a result of
which shares of Common Stock of the Company shall be changed into the
same or a different number of shares of the same or another class or
classes of stock or securities or other assets of the Company or
another entity or the Company shall sell all or substantially all of
its assets (each of the foregoing being a "Major Transaction"), then
the holder of this Warrant may, at its option, either (a) in the
event that the Common Stock remains outstanding or holders of Common
Stock receive any common stock or substantially similar equity
interest, in each of the foregoing cases which is publicly traded,
retain this Warrant and this Warrant shall continue to apply to such
Common Stock or shall apply, as nearly as practicable, to such other
common stock or equity interest, as the case may be, or (b) receive
consideration, in exchange for this Warrant upon the surrender
thereof (without payment of any exercise price hereunder), equal to
the greater of, as determined in the sole discretion of the Holder,
(i) the number of shares of stock or securities or property of the
Company, or of the entity resulting from such Major Transaction (the
"Major Transaction Consideration"), to which a holder of the number
of shares of Common Stock delivered upon the exercise of this Warrant
(pursuant to the Cashless Exercise feature hereof) would have been
entitled upon such Major Transaction had the Holder so exercised this
Warrant (without regard to any limitations on exercise herein or
elsewhere contained) on the Trading Date immediately preceding the
public announcement of the transaction resulting in such Major
Transaction and had the Holder been the holder of record of such
Common Stock at the time of the consummation of such Major
Transaction, and (ii) cash paid by the Company in immediately
available funds in an amount equal to the product of the (x) Market
Price (as defined in the Debentures) calculated as of the date of the
public announcement of the transaction resulting in such Major
Transaction, and (y) the maximum number of Warrant Shares issuable to
the Holder upon a Cashless Exercise of the Warrant as of such date
(without regard to any limitations on exercise herein contained), and
the Company shall make lawful provision for the foregoing as a part
of such Major Transaction and, in the case of (i) above, shall cause
the issuer of any security in such transaction to assume all of the
Company's obligations under the Securities Purchase Agreement, the
Debentures and the Registration Rights Agreement.
(e) Adjustments; Additional Shares, Securities or Assets. In the event
that at any time, as a result of an adjustment made pursuant to this
paragraph 6, the Holder of this Warrant shall, upon exercise of this
Warrant, become entitled to receive securities or assets (other than
Common Stock) then, wherever appropriate, all references herein to
shares of Common Stock shall be deemed to refer to and include such
shares and/or other securities or assets; and thereafter the number of
Page B-7
such shares and/or other securities or assets shall be subject to
adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this paragraph 6. Any
adjustment made herein that results in a decrease in the Exercise
Price shall also effect a proportional increase in the number of
shares of Common Stock into which this Warrant is exercisable.
(f) Exceptions to Adjustment of Exercise Price. No adjustment to the
Exercise Price will be made pursuant to this Section 6 (i) upon the
exercise of any warrants, options or convertible securities granted,
issued and outstanding on the Closing Date (except in the case where
the price at which such warrant, option or security is exercised has
decreased since the Closing Date as a result of a reset, anti-
dilutive adjustment or similar occurrence); (ii) upon the grant or
exercise of any stock or options which may hereafter be granted or
exercised under any employee benefit plan, stock option plan or
restricted stock plan of the Company now existing or to be
implemented in the future, so long as the issuance of such stock or
options is approved by a majority of the Board of Directors of the
Company; (iii) upon the exercise of the Warrants or the conversion of
the Debentures; and (iv) upon the issuance of securities pursuant to
a firm-commitment, fixed-price underwritten offering. Notwithstanding
the foregoing, no adjustment to the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at
least one percent (1%) in such price; provided, however, that any
adjustments to the Exercise Price by reason of this clause that are
not made shall be carried forward and taken into account in any
subsequent adjustment of the Exercise Price that is required to be
made under this Warrant
7. Fractional Interests.
No fractional shares or scrip representing fractional shares shall be issuable
upon the exercise of this Warrant, but on exercise of this Warrant, the Holder
hereof may purchase only a whole number of shares of Common Stock. If, on
exercise of this Warrant, the Holder hereof would be entitled to a fractional
share of Common Stock or a right to acquire a fractional share of Common Stock,
such fractional share shall be disregarded and the number of shares of Common
Stock issuable upon exercise shall be rounded up or down to the nearest whole
number of shares of Common Stock.
8. Transfer of this Warrant.
The Holder may sell, transfer, assign, pledge or otherwise dispose of this
Warrant, in whole or in part, as long as such sale or other disposition is made
in the pursuant to an effective registration statement or an exemption to the
registration requirements of the Securities Act. Upon such transfer or other
disposition, the Holder shall deliver a written notice to the Company,
substantially in the form of the Transfer Notice attached hereto as Exhibit B
Page B-8
(the "Transfer Notice"), indicating the person or persons to whom this Warrant
shall be transferred and, if less than all of this Warrant is transferred, the
number of Warrant Shares to be covered by the part of this Warrant to be
transferred to each such person. Within three (3) Business Days of receiving a
Transfer Notice and the original of this Warrant, the Company shall deliver to
the each transferee designated by the Holder a Warrant or Warrants of like
tenor and terms for the appropriate number of Warrant Shares and, if less than
all this Warrant is transferred, shall deliver to the Holder a Warrant for the
remaining number of Warrant Shares.
9. Benefits of this Warrant.
This Warrant shall be for the sole and exclusive benefit of the Holder of this
Warrant and nothing in this Warrant shall be construed to confer upon any
person other than the Holder of this Warrant any legal or equitable right,
remedy or claim hereunder.
10. Loss, theft, destruction or mutilation of Warrant.
Upon receipt by the Company of evidence of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
indemnity reasonably satisfactory to the Company, and upon surrender of this
Warrant, if mutilated, the Company shall execute and deliver a new Warrant of
like tenor and date.
11. Notice or Demands.
Any notice, demand or request required or permitted to be given by the Company
or the Holder pursuant to the terms of this Warrant shall be in writing and
shall be deemed delivered (i) when delivered personally or by verifiable
facsimile transmission, unless such delivery is made on a day that is not a
Business Day, in which case such delivery will be deemed to be made on the
next succeeding Business Day, (ii) on the next Business Day after timely
delivery to an overnight courier and (iii) on the Business Day actually
received if deposited in the U.S. mail (certified or registered mail, return
receipt requested, postage prepaid), addressed as follows:
If to the Company:
Ramtron International Corporation
0000 Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attn: XxXxx X. Xxxxxx, Chief Financial Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
Page B-9
with a copy to:
Coudert Brothers LLP
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. St. Clair, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
and if to the Holder, to such address as shall be designated by the Holder in
writing to the Company.
12. Applicable Law.
This Warrant is issued under and shall for all purposes be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within the State of New York.
13. Most Favored Nations.
The rights of the Purchasers and the obligations of the Company set forth in
Section 7.12 of the Securities Purchase Agreement are hereby incorporated by
reference and made a part of this Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the XXth
day of March, 2002.
RAMTRON INTERNATIONAL CORPORATION
By:
-------------------------------
Name:
Title:
Page B-10
EXHIBIT A to WARRANT
EXERCISE NOTICE
The undersigned Holder hereby irrevocably exercises the right to purchase
of the shares of Common Stock ("Warrant Shares") of RAMTRON INTERNATIONAL
CORPORATION evidenced by the attached Warrant (the "Warrant"). Capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the Warrant.
1. Form of Exercise Price. The Holder intends that payment of the Exercise
Price shall be made as:
/ / a Cash Exercise with respect to XXXXXX Warrant Shares; and/or
/ / a Cashless Exercise with respect to XXXXXXX Warrant Shares, as
permitted by Section 5(b) of the attached Warrant.
2. Payment of Exercise Price. In the event that the Holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the Holder shall pay the sum of $XXXXXXXX to the Company in
accordance with the terms of the Warrant.
Date:
------------------------
------------------------------------------
Name of Registered Holder
By:
--------------------------------------
Name:
Title:
Page B-11
EXHIBIT B to WARRANT
TRANSFER NOTICE
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby
sells, assigns and transfers unto the person or persons named below the right
to purchase XXXXXXX shares of the Common Stock of RAMTRON INTERNATIONAL
CORPORATION evidenced by the attached Warrant.
Date:
---------------------------
--------------------------------------
Name of Registered Holder
By:
---------------------------------
Name:
Title:
Transferee Name and Address:
---------------------------------
---------------------------------
---------------------------------
Page B-12
Exhibit C to Stock Purchase Agreement
RAMTRON INTERNATIONAL CORPORATION, as grantor
(Borrower)
to
THE PUBLIC TRUSTEE OF EL PASO COUNTY, COLORADO, as public trustee
(Public Trustee)
for the benefit of
XXXXXXXX CAPITAL CORP.,
a British Virgin Islands international business
company, as beneficiary
(Xxxxxxxx)
and
HALIFAX FUND, L.P.,
a Cayman Islands limited partnership, as beneficiary
(Halifax)
--------------------------
DEED OF TRUST AND
SECURITY AGREEMENT
--------------------------
Dated: March 28, 2002
Location: 0000 Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx
Xxxxxx: El Paso
UPON RECORDATION RETURN TO:
Xxxxx & Stachenfeld LLP
000 Xxxx 00xxXxxxxx, Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Page C-1
THIS DEED OF TRUST AND SECURITY AGREEMENT (this "Security Instrument"), is
made as of the 28th day of March, 2002, by RAMTRON INTERNATIONAL CORPORATION,
a Delaware corporation, having its principal place of business at 0000 Xxxxxxx
Xxxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx, 00000, as grantor ("Borrower"), to THE
PUBLIC TRUSTEE OF EL PASO COUNTY, COLORADO, as grantee ("Public Trustee"), for
the benefit of HALIFAX FUND, L.P., a Cayman Islands limited partnership,
having an address at c/o Huntlaw Corporate Services, The Huntlaw Building, 75
Fort Street, Xxxxxx Town, Grand Cayman Islands ("Halifax"), as beneficiary,
and XXXXXXXX CAPITAL CORP., a British Virgin Islands international business
company, having an address at c/x Xxxxxxx Capital Corp., 000 Xxxxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Xxxxxxxx"), as beneficiary (Halifax and
Xxxxxxxx (and each such parties respective successors and/or assigns) are
hereinafter each sometimes referred to as a "Lender" and collectively as the
"Lenders").
RECITALS:
Borrower by its 5% secured convertible debenture of even date herewith given
to Halifax (together with all extensions, renewals, modifications,
substitutions and amendments thereof, the "Halifax Debenture") is indebted to
the Halifax in the principal sum of Two Million Five Hundred Thousand and
00/100 Dollars ($2,500,000) in lawful money of the United States of America,
with interest from the date thereof at the rates set forth in the Halifax
Debenture, principal and interest to be payable in accordance with the terms
and conditions provided in the Halifax Debenture.
Borrower by its 5% secured convertible debenture of even date herewith given
to Xxxxxxxx (together with all extensions, renewals, modifications,
substitutions and amendments thereof, the "Xxxxxxxx Debenture"; the Halifax
Debenture and Xxxxxxxx Debenture are hereinafter each sometimes referred to as
a "Debenture" and collectively as the "Debentures") is indebted to Xxxxxxxx in
the principal sum of Two Million Five Hundred Thousand and 00/100 Dollars
($2,500,000) in lawful money of the United States of America, with interest
from the date thereof at the rates set forth in the Xxxxxxxx Debenture,
principal and interest to be payable in accordance with the terms and
conditions provided in the Xxxxxxxx Debenture.
Borrower desires to secure the payment and performance of the Obligations (as
defined in Section 2.1 hereof).
1 - GRANTS OF SECURITY
1.1 PROPERTY GRANTED. Borrower, for and in consideration of the sum of Ten
Dollars ($10.00) and other valuable consideration in hand paid, the receipt of
which hereby is acknowledged, and the further consideration, uses, purposes
and trusts herein set forth and declared, has granted, bargained, sold,
conveyed pledged and warranted and by these presents does grant, bargain,
sell, convey pledge and warrant unto Public Trustee, and unto his or its
successors in the trust hereby created and his or its assigns, forever, in
trust, with power of sale, all of the Borrower's right, title and interest in
and to the following (collectively, the "Property"): (a) the real property
Page C-2
described in Exhibit A attached hereto and made a part hereof (the "Land");
(b) all xxxxxxxxxx xxxxx, xxxxxxx and development rights hereafter acquired by
Borrower for use in connection with the Land and the development of the Land
and all additional lands and estates therein which may, from time to time, by
supplemental deed of trust or otherwise be expressly made subject to the lien
of this Security Instrument; (c) the buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs, replacements and
improvements now or hereafter erected or located on the Land (the
"Improvements"); (d) all easements, rights-of-way or use, rights, strips and
gores of land, streets, ways, alleys, passages, sewer rights, water, water
courses, water rights and powers, air rights and development rights, and all
estates, rights, titles, interests, privileges, liberties, servitudes,
tenements, hereditaments and appurtenances of any nature whatsoever, in any
way now or hereafter belonging, relating or pertaining to the Land and the
Improvements and the reversion and reversions, remainder and remainders, and
all land lying in the bed of any street, road or avenue, opened or proposed,
in front of or adjoining the Land, to the center line thereof and all the
estates, rights, titles, interests, dower and rights of dower, curtesy and
rights of curtesy, property, possession, claim and demand whatsoever, both at
law and in equity, of Borrower of, in and to the Land and the Improvements and
every part and parcel thereof, with the appurtenances thereto; (e) all
fixtures (including, but not limited to, any of the following which constitute
fixtures: furnishings, machinery, equipment, heating, air conditioning,
plumbing, lighting, communications and elevator fixtures) and other property
constituting fixtures of every kind and nature whatsoever owned by Borrower,
or in which Borrower has or shall have an interest, now or hereafter located
upon the Land and the Improvements, or appurtenant thereto, and usable in
connection with the present or future operation and occupancy of the Land and
the Improvements and all building equipment, materials and supplies of any
nature constituting fixtures whatsoever owned by Borrower, or in which
Borrower has or shall have an interest, now or hereafter located upon the Land
and the Improvements, or appurtenant thereto, or usable in connection with the
present or future operation and occupancy of the Land and the Improvements
(collectively, the "Personal Property"), and the right, title and interest of
Borrower in and to any of the Personal Property which may be subject to any
security interests, as defined in the Uniform Commercial Code, as adopted and
enacted by the state or states where any of the Property is located (the
"Uniform Commercial Code"), superior in lien to the lien of this Security
Instrument and all proceeds and products of the above; (f) all leases and
other agreements affecting the use, enjoyment or occupancy of the Land and the
Improvements heretofore or hereafter entered into, whether before or after the
filing by or against Borrower of any petition for relief under 00 X.X.X.
Xxxxxx 000 et seq., as the same may be amended from time to time (the
"Bankruptcy Code") (the "Leases") and all right, title and interest of
Borrower, its successors and assigns therein and thereunder, including,
without limitation, cash or securities deposited thereunder to secure the
performance by the lessees of their obligations thereunder and all rents,
additional rents, revenues (including, but not limited to, any payments made
by tenants under the Leases in connection with the termination of any Lease),
issues and profits (including all oil and gas or other mineral royalties and
Page C-3
bonuses) from the Land and the Improvements whether paid or accruing before or
after the filing by or against Borrower of any petition for relief under the
Bankruptcy Code (the "Rents") and all proceeds from the sale or other
disposition of the Leases and the right to receive and apply the Rents to the
payment of the Debts (as hereinafter defined); (g) any and all lease
guaranties, letters of credit and any other credit support (individually, a
"Lease Guaranty" and collectively, the "Lease Guaranties") given by any
guarantor in connection with any of the Leases (individually, a "Lease
Guarantor" and collectively, the "Lease Guarantors"); (h) all rights, powers,
privileges, options and other benefits of Borrower as lessor under the Leases
and beneficiary under all Lease Guaranties; (i) all awards or payments,
including interest thereon, which may heretofore and hereafter be made with
respect to the Property, whether from the exercise of the right of eminent
domain (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of the right), or for a change of grade, or for
any other injury to or decrease in the value of the Property; (j) all proceeds
of and any unearned premiums on any insurance policies covering the Property,
including, without limitation, the right to receive and apply the proceeds of
any insurance, judgments, or settlements made in lieu thereof, for damage to
the Property; (k) all refunds, rebates or credits in connection with a
reduction in real estate taxes and assessments charged against the Property as
a result of tax certiorari or any applications or proceedings for reduction;
(l) all proceeds of the conversion, voluntary or involuntary, of any of the
foregoing including, without limitation, proceeds of insurance and
condemnation awards, into cash or liquidation claims; (m) the right, in the
name and on behalf of Borrower, to appear in and defend any action or
proceeding brought with respect to the Property and to commence any action or
proceeding to protect the interest of each Lender in the Property; (n) all
agreements, contracts, certificates, instruments, franchises, permits,
licenses, plans, specifications and other documents, now or hereafter entered
into, and all rights therein and thereto, respecting or pertaining to the use,
occupation, construction, management or operation of the Land and any part
thereof and any Improvements and all right, title and interest of Borrower
therein and thereunder, including, without limitation, the right, upon the
happening of any default hereunder, to receive and collect any sums payable to
Borrower thereunder; (o) [intentionally omitted]; and (p) any and all other
rights of Borrower in and to the items set forth in Subsections (a) through
(o) above.
CONDITIONS TO GRANT
TO HAVE AND TO HOLD the above granted and described Property unto Public
Trustee, as trustee for the benefit of each Lender, and its respective
successors in the trust created by this Security Instrument and to such
Lender's respective assigns, forever, in trust, upon the terms and conditions
set forth herein;
Page C-4
IN TRUST, WITH THE POWER OF SALE, to secure payment to each Lender of the
portion of the Debt held by such Lender at the time and in the manner provided
for its payment in the respective Debentures and in this Security Instrument;
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Borrower shall well and truly pay each Lender the portion of Debt due to such
Lender at the time and in the manner provided in each of the Debentures and
this Security Instrument, shall well and truly perform the Other Obligations
(as defined in Section 2.1 hereof) as set forth in this Security Instrument
and shall well and truly abide by and comply with each and every covenant and
condition set forth herein and in the Debentures, or if each Lender shall
fully exercise its respective right to convert their Debentures to stock of
Borrower, these presents and the estate hereby granted shall cease, terminate
and be void and each Lender shall execute and deliver to Borrower such
documents as may be required to release this Security Instrument of record.
1.2 ASSIGNMENT OF RENTS. Borrower hereby absolutely and unconditionally
assigns to each Lender all of Borrower's right, title and interest in and to
all current and future Leases and Rents; it being intended by Borrower that
this assignment constitutes a present, absolute assignment and not an
assignment for additional security only. Nevertheless, subject to the terms
of this Section 1.2 and Section 3.6, each Lender grants to Borrower a
revocable license to collect and receive the Rents, which license shall be
automatically revoked upon the occurrence of an Event of Default (as
hereinafter defined). Borrower shall hold the Rents, or a portion thereof
sufficient to discharge all current sums due on the Debts, for use in the
payment of such sums.
1.3 SECURITY AGREEMENT. This Security Instrument is both a deed of trust and
a "security agreement" within the meaning of the Uniform Commercial Code. The
Property includes both real and personal property and all other rights and
interests, whether tangible or intangible in nature, of Borrower in the
Property. By executing and delivering this Security Instrument, Borrower
hereby grants to each Lender, as security for the Obligations, a security
interest in the Property to the full extent that the Property may be subject
to the Uniform Commercial Code.
1.4 PLEDGE OF MONIES HELD. Borrower hereby pledges to each Lender any and
all monies now or hereafter held by such Lender, including, without
limitation, any sums deposited in the Escrow Fund (as defined in Section 3.4),
Net Proceeds (as defined in Section 4.3) held by such Lender and condemnation
awards or payments described in Section 3.5 held by such Lender (collectively,
"Deposits"), as additional security for the Obligations until expended or
applied as provided in this Security Instrument.
Page C-5
2 - DEBT AND OBLIGATIONS SECURED
2.1 DEBT AND OBLIGATIONS SECURED. This Security Instrument and the grants,
assignments and transfers made in Article 1 are given for the purpose of
securing the payment of the Debts and the performance of the Other
Obligations, in such order of priority as each Lender may determine in its
sole discretion. For purposes hereof, the term "Debts" shall mean the
aggregate of the indebtedness evidenced by the Debentures in favor of each
Lender in lawful money of the United States of America, interest, default
interest, late charges, prepayment premiums and other sums, as provided in the
Debentures, this Security Instrument or the other Loan Documents (defined
below), all other moneys agreed or provided to be paid by Borrower in the
Debentures, this Security Instrument or the other Loan Documents and all sums
advanced by a Lender pursuant to this Security Instrument to protect and
preserve the Property and the lien and the security interest created hereby.
For purposes hereof, the term "Other Obligations" shall mean the obligations
of Borrower (other than the obligation to repay the Debt) contained in this
Security Instrument, the Debentures and the other Loan Documents (as
hereinafter defined). For purposes hereof, (a) the term "Xxxxxxxx Loan
Documents" shall mean the Xxxxxxxx Debenture, this Security Instrument and any
other documents or instruments which now or shall hereafter wholly or
partially secure or guarantee payment of the Xxxxxxxx Debenture or which have
otherwise been executed or are hereafter executed by Borrower and/or any other
person or entity in connection with the loan evidenced by the Xxxxxxxx
Debenture and any renewal, extension, amendment, modification, consolidation,
change of, or substitution or replacement for, all or any part thereof, (b)
the term "Halifax Loan Documents" shall mean the Halifax Debenture, this
Security Instrument and any other documents or instruments which now or shall
hereafter wholly or partially secure or guarantee payment of the Halifax
Debenture or which have otherwise been executed or are hereafter executed by
Borrower and/or any other person or entity in connection with the loan
evidenced by the Halifax Debenture and any renewal, extension, amendment,
modification, consolidation, change of, or substitution or replacement for,
all or any part thereof and (c) the term "Loan Documents" shall mean the
Xxxxxxxx Loan Documents and the Halifax Loan Documents. Borrower's
obligations for the payment of the Debts and the performance of the Other
Obligations shall be referred to collectively below as the "Obligations." All
the covenants, conditions and agreements contained in the Debentures and the
other Loan Documents are hereby made a part of this Security Instrument to the
same extent and with the same force as if fully set forth herein.
3 - BORROWER COVENANTS
Borrower covenants and agrees that:
3.1 PAYMENT OF DEBT. Borrower will pay the Debts at the time and in the
manner provided in each of the Debentures, this Security Instrument and the
other Loan Documents that govern such Debts.
Page C-6
3.2 INSURANCE.
(a) Borrower shall obtain and maintain, or cause to be maintained,
insurance for Borrower and the Property providing at least the
coverages set forth herein:
(i) comprehensive all risk insurance on the Improvements and the
Personal Property, in each case (A) in an amount equal to 100%
of the "Full Replacement Cost," which for purposes of this
Security Instrument shall mean actual replacement value
(exclusive of costs of excavations, foundations, underground
utilities and footings) with a waiver of depreciation; (B)
containing either an agreed amount endorsement or a waiver of
all co-insurance provisions; (C) providing for a deductible of
not greater than $10,000; and (D) if any of the Improvements or
the use of the Property shall at any time constitute a legal
non-conforming structure or use, Borrower shall obtain an
"Ordinance or Law Coverage" or "Enforcement" endorsement, which
shall include sufficient coverage for (1) costs to comply with
building and zoning codes and ordinances, (2) demolition costs,
and (3) increased costs of construction. If any portion of the
Improvements is currently or at any time in the future located
in a federally designated "special flood hazard area", Borrower
shall obtain flood hazard insurance in such an amount as each
Lender shall require, but in no event less than the maximum
amount of such insurance available under the National Flood
Insurance Act of 1968, the Flood Disaster Protection Act of 1973
or the National Flood Insurance Reform Act of 1994, as each may
be amended. In addition, in the event the Property is located
in a "seismic zone" 3 or 4 (as defined in the Uniform Building
Code published by the International Conference of Building
Officials), Borrower shall obtain earthquake insurance in
amounts and in form and substance satisfactory to each Lender;
(ii) commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage
occurring upon, in or about the Property, such insurance (A) to
be on the "occurrence" form with a combined single limit
(including "umbrella" coverage in place) of not less than
(1) $3,000,000 and a general aggregate limit of not less than
$4,000,000; or (2) if any of the Improvements contain elevators,
a combined single limit of not less than $5,000,000 and a
general aggregate limit of $6,000,000; (B) to continue at not
less than the aforesaid limit until required to be changed by a
Lender in writing by reason of changed economic conditions
making such protection inadequate; and (C) to cover at least the
following hazards: (1) premises and operations; (2) products and
completed operations on an "if any" basis; (3) independent
contractors; and (4) blanket contractual liability for all
written and oral contracts, to the extent the same is available;
Page C-7
(iii) Intentionally omitted;
(iv) (A) at all times during which structural construction, material
repairs or alterations are being made with respect to the
Improvements, owner's contingent or protective liability
insurance covering claims not covered by or under the terms or
provisions of the above mentioned commercial general liability
insurance policy; and (B) during new construction, the insurance
provided for in Subsection 3.2(a)(i) written in a so-called
builder's risk completed value form on a non-reporting basis;
(v) if Borrower has employees, workers' compensation, subject to the
statutory limits of the state in which the Property is located,
and employer's liability insurance with a limit of at least
$1,000,000 per accident and per disease per employee, and
$1,000,000 aggregate coverage for disease in respect of any work
or operations on or about the Property, or in connection with
the Property or its operation;
(vi) if the Property contains HVAC or other equipment not covered by
the comprehensive all risk insurance, comprehensive boiler and
machinery insurance, in amounts as shall be reasonably required
by each Lender;
(vii) if Borrower owns or operates motor vehicles, motor vehicle
liability coverage for all owned and non-owned vehicles,
including rented and leased vehicles containing minimum limits
reasonably acceptable to each Lender; and
(viii) such other insurance and in such amounts as a Lender from time
to time may reasonably request against such other insurable
hazards which at the time are commonly insured against for
property similar to the Property located in or around the region
in which the Property is located.
(b) All insurance provided for in Subsection 3.2(a) hereof shall be
obtained under valid and enforceable policies (the "Policies" or in
the singular, the "Policy"), and shall be subject to the approval of
each Lender as to insurance companies, amounts, forms, deductibles,
loss payees and insureds. The insurance companies must be approved,
authorized or licensed to provide insurance in the state in which the
Property is located and have a rating of "A" or better for claims
paying ability assigned by Xxxxx'x Investors Service, Inc. and
Standard & Poor's Rating Group or a general policy rating of "A-" or
better and a financial class of VIII or better assigned by A.M. Best
Company, Inc. Each such insurer shall be referred to herein as a
"Qualified Insurer".
Page C-8
(c) Borrower shall not obtain (i) any umbrella or blanket liability or
casualty Policy unless, in each case, such Policy is reasonably
approved in advance in writing by each Lenders and each Lenders'
interests are included therein as provided in this Security
Instrument and such Policy is issued by a Qualified Insurer, or
(ii) separate insurance concurrent in form or contributing in the
event of loss with that required in Subsection 3.2(a) to be furnished
by, or which may be reasonably required to be furnished by, Borrower.
In the event Borrower obtains separate insurance or an umbrella or a
blanket Policy, Borrower shall concurrently notify each Lender of the
same and shall cause certified copies of each Policy to be delivered
as required in Subsection 3.2(e). Any blanket insurance Policy shall
specifically allocate to the Property the amount of coverage from
time to time required hereunder and shall otherwise provide the same
protection as would a separate Policy insuring only the Property in
compliance with the provisions of Subsection 3.2(a).
(d) All Policies of insurance provided for or contemplated by Subsection
3.2(a), except for the Policy referenced in Subsection 3.2(a)(v),
shall name each Lender and Borrower as the insured or additional
insureds, as their respective interests may appear, and in the case
of property damage, boiler and machinery, flood and earthquake
insurance, shall contain a so-called New York standard
non-contributing mortgagee clause in favor of each Lender providing,
among other things, that each Lender shall receive notification of
any termination or cancellation of insurance and that the loss
thereunder shall be payable to the Lenders.
(e) If not previously delivered to each Lenders, Borrower shall deliver
to each Lender no later than fifteen (15) days after the date hereof
certificates of insurance, or at Lender's request, certified copies
of the existing Policies providing the insurance coverage required
under Section 3.2(a) marked "premium paid" or accompanied by evidence
satisfactory to each Lender of payment of the premiums due thereunder
(the "Insurance Premiums") annually in advance. In addition, no
later than five (5) Business Days prior to the expiration dates of
the Policies which Borrower is now or hereafter required to maintain
hereunder, Borrower shall deliver to each Lender certified copies of
new or renewal Policies (also marked "premium paid" or accompanied by
evidence satisfactory to each Lender of payment of the Insurance
Premiums due thereunder annually in advance), together with
certificates of insurance therefor, setting forth, among other
things, the amounts of insurance maintained, the risks covered by
such insurance and the insurance company or companies which carry
such insurance. If requested by a Lender, Borrower shall furnish
verification of the adequacy of such insurance by an independent
insurance broker or appraiser acceptable to such requesting Lender.
Under no circumstances shall Borrower be permitted to finance the
payment of any portion of the Insurance Premiums. In any event,
Borrower shall have delivered to each Lender certified copies of the
existing Policies or certificates evidencing same and payment of the
Insurance Premiums on or before the date hereof.
Page C-9
(f) If at any time a Lender is not in receipt of written evidence that
all insurance required hereunder is in full force and effect, such
Lender shall have the right, without notice to Borrower to take such
action as such Lender deems necessary to protect its interest in the
Property, including, without limitation, the obtaining of such
insurance coverage as such Lender in its sole discretion deems
appropriate, and all expenses incurred by such Lender in connection
with such action or in obtaining such insurance and keeping it in
effect shall be paid by Borrower to such Lender upon demand and until
paid shall be secured by this Security Instrument and shall bear
interest in accordance with Section 10.3 hereof.
(g) If the Property shall be damaged or destroyed, in whole or in part,
by fire or other casualty, Borrower shall give prompt notice of such
damage to each Lender and shall promptly commence and diligently
prosecute the completion of the repair and restoration of the
Property as nearly as possible to the condition the Property was in
immediately prior to such fire or other casualty, with such
alterations as may be approved by each Lender (the "Restoration") and
otherwise in accordance with Section 4.3 of this Security Instrument,
except in instances where the Lenders have failed or elected not to
disburse Net Proceeds to Borrower under such Section 4.3 (provided
that such exception shall not apply if the failure to disburse is
attributable to Borrower's failure to comply with the conditions set
forth in Clauses (A), (D) or (I) of Subsection 4.3(b)(i) or in
Subsection 4.3(b)(ii) or any other conditions set forth in Section
4.3 which Borrower has the practical ability to satisfy). A Lender
may, but shall not be obligated to make proof of loss if not made
promptly by Borrower.
(h) In the event of foreclosure of this Security Instrument, or other
transfer of title to the Property in extinguishment in whole or in
part of the Debts, all right, title and interest of Borrower in and
to such policies then in force concerning the Property and all
proceeds payable thereunder shall thereupon vest in the purchaser at
such foreclosure or the Lenders or other transferee in the event of
such other transfer of title.
3.3 PAYMENT OF TAXES, ETC. Borrower shall promptly pay all taxes,
assessments, water rates, sewer rents, governmental impositions, and other
charges, including without limitation vault charges and license fees for the
use of vaults, chutes and similar areas adjoining the Land, now or hereafter
levied or assessed or imposed against the Property or any part thereof (the
"Taxes"), all ground rents, maintenance charges, property association charges
and similar charges, now or hereafter levied or assessed or imposed against
the Property or any part thereof (the "Other Charges"), and all charges for
utility services provided to the Property prior to the time same become
delinquent. Borrower will deliver to each Lender, promptly upon a Lender's
request, evidence satisfactory to each Lenders that the Taxes, Other Charges
and utility service charges have been so paid or are not then delinquent.
Borrower shall not suffer and shall promptly cause to be paid and discharged
Page C-10
any lien or charge whatsoever which may be or become a lien or charge against
the Property. Except to the extent sums sufficient to pay all Taxes and Other
Charges have been deposited with a Lender in accordance with the terms of this
Security Instrument, Borrower shall furnish to each Lender paid receipts for
the payment of the Taxes and Other Charges prior to the date the same shall
become delinquent.
3.4 RESERVES. If a Lender so requests in writing, Borrower shall pay to the
Lender or each Lender's designee on the first day of each calendar month (a)
one-twelfth of an amount which would be sufficient to pay the Taxes payable,
or estimated by such Lender to be payable, during the next ensuing twelve (12)
months and (b) one-twelfth of an amount which would be sufficient to pay the
Insurance Premiums due for the renewal of the coverage afforded by the
Policies upon the expiration thereof (the amounts in (a) and (b) above shall
be called the "Escrow Fund"). Borrower agrees to notify each Lender
immediately of any changes to the amounts, schedules and instructions for
payment of any Taxes and Insurance Premiums of which it has obtained knowledge
and authorizes each Lender or such Lender's respective agent to obtain the
bills for Taxes and Other Charges directly from the appropriate taxing
authority. The Escrow Fund and the payments of interest or principal or both,
payable pursuant to the Debentures shall be added together and shall be paid
as an aggregate sum by Borrower to the Lenders. The Lenders will apply the
Escrow Fund to payments of Taxes and Insurance Premiums required to be made by
Borrower pursuant to Sections 3.2 and 3.3 hereof. If the amount of the Escrow
Fund shall exceed the amounts due for Taxes and Insurance Premiums pursuant to
Sections 3.2 and 3.3 hereof, then, if agreed to by each Lender, in their
respective discretion, any excess shall be returned to Borrower or credited
against future payments to be made to the Escrow Fund; provided, however, each
Lender shall comply with all laws applicable to the handling of any portion of
the Escrow Fund held by such Lender. In allocating such excess, a Lender may
deal with the person shown on the records of such Lender to be the owner of
the Property. If the Escrow Fund is not sufficient to pay the items set forth
in clauses (a) and (b) above, then upon demand from a Lender, Borrower shall
promptly pay to the Lender or each Lender's designee, an amount which such
Lender shall estimate as sufficient to make up the deficiency. The Escrow
Fund shall not constitute a trust fund and may be commingled with other monies
held by the Lenders. No earnings or interest on the Escrow Fund shall be
payable to Borrower.
3.5 CONDEMNATION. Borrower shall promptly give each Lender notice of the
actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to each Lender copies of any and all papers
served in connection with such proceedings. A Lender may participate in any
such proceedings, and Borrower shall from time to time deliver to such Lender
all instruments requested by such Lender to permit such participation.
Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with each Lender, its respective attorneys and experts, and
cooperate with each of them in the carrying on or defense of any such
proceedings. Notwithstanding any taking by any public or quasi-public
authority through eminent domain or otherwise (including but not limited to
Page C-11
any transfer made in lieu of or in anticipation of the exercise of such
taking), Borrower shall continue to pay the Debts at the time and in the
manner provided for its payment in the Debentures and in this Security
Instrument and the Debts shall not be reduced until any award or payment
therefor shall have been actually received and applied by the Lenders, after
the deduction of expenses of collection, to the reduction or discharge of the
Debts. A Lender shall not be limited to the interest paid on the award by the
condemning authority but each shall be entitled to receive out of the award
interest at the rate or rates provided herein or in the Debentures. If the
Property or any portion thereof is taken by a condemning authority, Borrower
shall promptly commence and diligently prosecute the Restoration of the
Property and otherwise comply with the provisions of Section 4.3 of this
Security Instrument, except in instances where the Lenders have failed or
elected not to disburse Net Proceeds to Borrower under such Section 4.3
(provided that such exception shall not apply if the failure to disburse is
attributable to Borrower's failure to comply with the conditions set forth in
clauses (A), (D) or (I) of Subsection 4.3(b)(i) or in Subsection 4.3(b)(ii) or
any other conditions set forth in Section 4.3 which Borrower has the practical
ability to satisfy). If the Property is sold, through foreclosure or
otherwise, prior to the receipt by the Lenders of the award or payment, a
Lender shall have the right, whether or not a deficiency judgment on the
Debentures shall have been sought, recovered or denied, to receive the award
or payment, or a portion thereof sufficient to pay the Debts.
3.6 LEASES. Borrower shall not enter into any Leases in respect of the
Property without the prior written consent of each Lender, which consent may
be withheld by a Lender for any reason or no reason in such Lender's sole and
absolute discretion. Borrower represents and warrants that there are no
Leases affecting the Property.
3.7 MAINTENANCE OF PROPERTY. Borrower shall cause the Property to be
maintained in a good and safe condition and repair and in accordance with
requirements of all restrictive covenants affecting the Land. The
Improvements and the Personal Property shall not be removed, demolished or
materially altered (except for normal replacement of the Personal Property)
without the consent of each Lender. Subject to the provisions of Subsection
3.2(g) and Section 3.5, Borrower shall promptly repair, replace or rebuild any
part of the Property which may be destroyed by any casualty, or become
damaged, worn or dilapidated or which may be affected by any proceeding of the
character referred to in Section 3.5 hereof and shall complete and pay for any
structure at any time in the process of construction or repair on the Land.
Borrower shall not initiate, join in, acquiesce in, or consent to any change
in any private restrictive covenant, zoning law or other public or private
restriction, limiting or defining the uses which may be made of the Property
or any part thereof. If under applicable zoning provisions the use of all or
any portion of the Property is or shall become a nonconforming use, Borrower
will not cause or permit the nonconforming use to be discontinued or abandoned
without the express written consent of each Lender.
Page C-12
3.8 WASTE. Borrower shall not commit or suffer any waste of the Property or
make any change in the use of the Property which will in any way materially
increase the risk of fire or other hazard arising out of the operation of the
Property, or take any action that might invalidate or give cause for
cancellation of any Policy, or do or permit to be done thereon anything that
may in any way materially impair the value of the Property or the security of
this Security Instrument.
3.9 COMPLIANCE WITH LAWS. Borrower shall (i) promptly comply with all
existing and future federal, state and local laws, orders, ordinances,
governmental rules and regulations or court orders affecting the Property, or
the use thereof including, but not limited to, the Americans with Disabilities
Act ("ADA") (collectively, the "Applicable Laws"), (ii) from time to time,
upon a Lender's request, provide such Lender with evidence satisfactory to
such Lender that the Property complies with all Applicable Laws or is exempt
from compliance with Applicable Laws, (iii) give prompt notice to each Lender
of the receipt by Borrower of any notice related to a violation of any
Applicable Laws and of the commencement of any proceedings or investigations
which relate to compliance with Applicable Laws, and (iv) take appropriate
measures to prevent and will not engage in or knowingly permit any illegal
activities at the Property.
3.10 BOOKS AND RECORDS.
(a) Borrower shall furnish a Lender with such financial or management
information as may, from time to time, be reasonably required by such
Lender in form and substance reasonably satisfactory to such
Lender.
(b) A Lender may commission new or updated appraisals, phase I and/or
phase II environmental reports, property condition surveys and (if
the Property is located in an area with a high degree of seismic
activity) seismic risk assessments of the Property to be prepared by
third parties (each a "Third Party") designated by such Lender after
the date hereof (each, a "Third Party Report"). Any additional
updates of any Third Party Report or any new Third Party Reports may
be obtained at Borrower's expense any time a Lender reasonably
believes there has been a change in the condition of the Property (it
being understood that each Lender shall have the right but not the
obligation to obtain such updated or new Third Party Report at its
own expense at any time). Borrower shall cooperate with each Third
Party and the Lenders in the preparation of the Third Party Reports
and shall reimburse each Lender within ten (10) days after a Lender's
demand for all costs incurred by each Lender in connection with such
Third Party Reports, provided that Borrower shall not be obligated to
reimburse the Lenders for more than the cost of one appraisal, one
phase I environmental report, one phase II environmental report, one
property condition survey and one seismic risk assessment in any
consecutive twelve month period following the date hereof.
Page C-13
3.11 PAYMENT FOR LABOR AND MATERIALS. Borrower will promptly pay when due
all bills and costs for labor, materials, and specifically fabricated
materials incurred in connection with the Property and never permit to be
created or exist in respect of the Property or any part thereof any other or
additional lien or security interest other than the liens or security
interests hereof, except for the Permitted Exceptions (defined below).
3.12 Intentionally omitted.
3.13 PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe and perform
each and every term to be observed or performed by Borrower pursuant to the
terms of any agreement or recorded instrument affecting or pertaining to the
Property, or given by Borrower to a Lender for the purpose of further securing
an obligation secured hereby and any amendments, modifications or changes
thereto.
3.14 CHANGE OF NAME, IDENTITY OR STRUCTURE. Borrower will not change
Borrower's name, identity (including its trade name or names) or, if not an
individual, Borrower's corporate, limited liability company, partnership or
other structure without notifying each Lender of such change in writing at
least thirty (30) days prior to the effective date of such change and, in the
case of a change in Borrower's structure, without first obtaining the prior
written consent of each Lender. Borrower will execute and deliver to each
Lender, prior to or contemporaneously with the effective date of any such
change, any financing statement or financing statement change required by a
Lender to establish or maintain the validity, perfection and priority of the
security interest granted herein. At the request of a Lender, Borrower shall
execute a certificate in form satisfactory to such Lender listing the trade
names under which Borrower intends to operate the Property, and representing
and warranting that Borrower does business under no other trade name with
respect to the Property.
3.15 EXISTENCE. Borrower will continuously maintain its existence and its
rights to do business in the state where the Property is located together with
its franchises and trade names.
4 - SPECIAL COVENANTS
Borrower covenants and agrees that:
4.1 PROPERTY USE. The Property shall be used only for Borrower's office use,
and for no other use without the prior written consent of each Lender, which
consent may be withheld in each Lender's sole and absolute discretion.
4.2 Intentionally omitted.
4.3 RESTORATION. The following provisions shall apply in connection with the
Restoration of the Property:
Page C-14
(a) If the Net Proceeds shall be less than $100,000 and the costs of
completing the Restoration shall be less than $100,000, the Net
Proceeds will be disbursed by the Lenders to Borrower upon receipt,
provided that all of the conditions set forth in Subsection 4.3(b)(i)
are met and Borrower delivers to each Lender a written undertaking to
expeditiously commence and to satisfactorily complete with due
diligence the Restoration in accordance with the terms of this
Security Instrument.
(b) If the Net Proceeds are equal to or greater than $100,000 or the
costs of completing the Restoration is equal to or greater than
$100,000 the Lenders shall make the Net Proceeds available for the
Restoration in accordance with the provisions of this Subsection
4.3(b). The term "Net Proceeds" for purposes of this Section 4.3
shall mean: (i) the net amount of all insurance proceeds received by
the Lenders pursuant to Subsections 3.2(a)(i), (iv), (vi) and (ix) of
this Security Instrument as a result of such damage or destruction
(or any proceeds of self-insurance maintained in lieu of such
insurance policies), after deduction of each Lender's reasonable
costs and expenses (including, but not limited to, reasonable counsel
fees), if any, in collecting same ("Insurance Proceeds"), or (ii) the
net amount of all awards and payments received by the Lenders with
respect to a taking referenced in Section 3.5 of this Security
Instrument, after deduction of each Lender's reasonable costs and
expenses (including, but not limited to, reasonable counsel fees), if
any, in collecting same ("Condemnation Proceeds"), whichever the case
may be.
(i) The Net Proceeds shall be made available to Borrower for the
Restoration provided that each of the following conditions are
met: (A) no Event of Default shall have occurred and be
continuing under either Debenture, this Security Instrument or
any of the other Loan Documents; (B) (1) in the event the Net
Proceeds are Insurance Proceeds, less than fifty percent (50%)
of the total floor area of the Improvements has been damaged,
destroyed, or rendered unusable as a result of such fire or
other casualty or (2) in the event the Net Proceeds are
Condemnation Proceeds, less than ten percent (10%) of the land
constituting the Property is taken, and such land is located
along the perimeter or periphery of the Property; (C)
Intentionally omitted; (D) Borrower shall have commenced the
Restoration as soon as reasonably practicable (but in no event
later than ninety (90) days after such damage or destruction or
taking, whichever the case may be, occurs) and shall diligently
pursue the same to satisfactory completion; (E) Intentionally
omitted; (F) Intentionally omitted; (G) each Lender shall be
reasonably satisfied that the Restoration will be completed on
or before the earliest to occur of (1) twelve (12) months prior
to the Maturity Date (as defined in the Debentures), (2) twelve
(12) months after the occurrence of such fire or other casualty
Page C-15
or taking, whichever the case may be, or (3) such time as may be
required under any applicable zoning laws, ordinances, rules or
regulations in order to repair and restore the Property to the
condition it was in immediately prior to such fire or other
casualty or to as nearly as possible the condition it was in
immediately prior to such taking, as applicable; (H) the
Property and the use thereof after the Restoration will be in
compliance with and permitted under all applicable zoning laws,
ordinances, rules and regulations; (I) the Restoration shall be
done and completed by Borrower in an expeditious and diligent
fashion and in compliance with all applicable laws, rules and
regulations; and (J) such fire or other casualty or taking, as
applicable, does not result in the loss of access to the
Property or the Improvements.
(ii) The Net Proceeds shall be held by the Lenders or their joint
designee and, until disbursed in accordance with the provisions
of this Subsection 4.3(b), shall constitute additional security
for the Obligations. The Net Proceeds shall be disbursed by the
Lenders to, or as directed by, Borrower from time to time during
the course of the Restoration, upon receipt of evidence
satisfactory to each Lender that (A) all materials installed and
work and labor performed (except to the extent that they are to
be paid for out of the requested disbursement) in connection
with the Restoration have been paid for in full, and (B) there
exist no notices of pendency, stop orders, mechanic's or
materialman's liens or notices of intention to file same, or any
other liens or encumbrances of any nature whatsoever on the
Property arising out of the Restoration which have not either
been fully bonded to the satisfaction of each Lender and
discharged of record or in the alternative fully insured to the
satisfaction of each Lender by the title company insuring the
lien of this Security Instrument.
(iii) All plans and specifications required in connection with the
Restoration shall be subject to prior review and approval in all
respects by each Lender and by an independent consulting
engineer selected by such Lender (each, a "Casualty
Consultant"), which approval shall not be unreasonably withheld
or delayed. Each Lender shall have the use of the plans and
specifications and all permits, licenses and approvals required
or obtained in connection with the Restoration. The identity of
the contractors, subcontractors and materialmen engaged in the
Restoration, as well as the contracts under which they have been
engaged, shall be subject to prior review and acceptance by each
Lender and the Casualty Consultant, which approval shall not be
unreasonably withheld or delayed. All costs and expenses
incurred by each Lender in connection with making the Net
Proceeds available for the Restoration including, without
limitation, reasonable counsel fees and disbursements and the
Casualty Consultant's fees, shall be paid by Borrower.
Page C-16
(iv) In no event shall the Lenders or their designee be obligated to
make disbursements of the Net Proceeds in excess of an amount
equal to the costs actually incurred from time to time for work
in place as part of the Restoration, as certified by the
Casualty Consultant, minus the Casualty Retainage. The term
"Casualty Retainage" as used in this Subsection 4.3(b) shall
mean an amount equal to 10% of the costs actually incurred for
work in place as part of the Restoration, as certified by the
Casualty Consultant, until the Restoration has been completed.
The Casualty Retainage shall in no event, and notwithstanding
anything to the contrary set forth above in this Subsection
4.3(b), be less than the amount actually held back by Borrower
from contractors, subcontractors and materialmen engaged in the
Restoration. The Casualty Retainage shall not be released until
the Casualty Consultant certifies to each Lender that the
Restoration has been completed in accordance with the provisions
of this Subsection 4.3(b) and that all approvals necessary for
the re-occupancy and use of the Property have been obtained from
all appropriate governmental and quasi-governmental authorities,
and the Lenders receive evidence reasonably satisfactory to each
Lender that the costs of the Restoration have been paid in full
or will be paid in full out of the Casualty Retainage, provided,
however, that the Lenders will release the portion of the
Casualty Retainage being held with respect to any contractor,
subcontractor or materialman engaged in the Restoration as of
the date upon which the Casualty Consultant certifies to each
Lender that the contractor, subcontractor or materialman has
satisfactorily completed all work and has supplied all materials
in accordance with the provisions of the contractor's,
subcontractor's or materialman's contract, and the contractor,
subcontractor or materialman delivers the lien waivers and
evidence of payment in full of all sums due to the contractor,
subcontractor or materialman as may be reasonably requested by a
Lender or by the title company insuring the lien of this
Security Instrument. If required by a Lender, the release of
any such portion of the Casualty Retainage shall be approved by
the surety company, if any, which has issued a payment or
performance bond with respect to the contractor, subcontractor
or materialman.
(v) The Lenders shall not be obligated to make disbursements of the
Net Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the reasonable opinion of a Lender, be
sufficient to pay in full the balance of the costs which are
estimated by the Casualty Consultant to be incurred in
connection with the completion of the Restoration, Borrower
shall deposit the deficiency (the "Net Proceeds Deficiency")
with the Lenders or their joint designee before any further
Page C-17
disbursement of the Net Proceeds shall be made. The Net
Proceeds Deficiency deposited with the Lenders or their designee
shall be held by the Lenders or their designee and shall be
disbursed for costs actually incurred in connection with the
Restoration on the same conditions applicable to the
disbursement of the Net Proceeds, and until so disbursed
pursuant to this Subsection 4.3(b) shall constitute additional
security for the Obligations. With respect to Restorations
following a casualty in which the Improvements are restored to
substantially the same condition as they existed prior to the
casualty, the excess, if any, of the Net Proceeds and the
remaining balance, if any, of the Net Proceeds Deficiency
deposited with the Lenders or their designee after the Casualty
Consultant certifies to each Lender that the Restoration has
been completed in accordance with the provisions of this
Subsection 4.3(b), and the receipt by the Lenders of evidence
reasonably satisfactory to each Lender that all costs incurred
in connection with the Restoration have been paid in full, shall
be remitted by the Lenders to Borrower, provided no Event of
Default shall have occurred and shall be continuing under either
Debenture, this Security Instrument or any of the other Loan
Documents.
(c) All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds
pursuant to Subsection 4.3(b)(vi) may be retained and applied by a
Lender towards the payment of the Debts of the Lenders whether or not
then due and payable in such order, priority and proportions as such
Lender in its discretion shall deem proper or, at the election of all
Lenders, the same may be paid, either in whole or in part, to
Borrower for such purposes as the Lenders shall jointly designate, in
their discretion. Any such prepayment shall be applied to the
principal last due under the Debentures and shall not release
Borrower from the obligation to pay the payments required to be paid
by Borrower under the Debentures and such payments shall not be
adjusted or recalculated as a result of such partial prepayment. If
the Lenders shall receive and retain Net Proceeds, the lien of this
Security Instrument shall be reduced only by the amount thereof
received and retained by each Lender and actually applied by each
Lender in reduction of the respective Debts.
5 - REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to each Lender that:
5.1 WARRANTY OF TITLE. Borrower has paid for and has good title to the
Property and has the right to mortgage, grant, bargain, sell, pledge, assign,
warrant, set over, transfer and convey the same and that Borrower possesses an
unencumbered fee simple absolute estate in the Land and the Improvements and
that it owns the Property free and clear of all liens, encumbrances and
Page C-18
charges whatsoever except for those exceptions shown in the title insurance
policy insuring this Security Instrument (the "Permitted Exceptions").
Borrower shall forever warrant, defend and preserve the title and the validity
and priority of the lien of this Security Instrument and shall forever warrant
and defend the same to each Lender against the claims of all persons
whomsoever.
5.2 AUTHORITY. Borrower (and the undersigned representative of Borrower, if
any) has full power, authority and legal right to execute this Security
Instrument, and to mortgage, grant, bargain, sell, pledge, assign, warrant,
set-over, transfer and convey the Property pursuant to the terms hereof and to
keep and observe all of the terms of this Security Instrument on Borrower's
part to be performed.
5.3 LEGAL STATUS AND AUTHORITY. Borrower (a) is duly organized, validly
existing and in good standing under the laws of its state of organization or
incorporation; (b) is duly qualified to transact business and is in good
standing in the State where the Property is located; and (c) has all necessary
approvals, governmental and otherwise, and full power and authority to own the
Property and carry on its business as now conducted and proposed to be
conducted, except where any failure to do so would not have a Material Adverse
Effect (as hereinafter defined). Borrower now has and shall continue to have
the full right, power and authority to operate the Property, to encumber the
Property as provided herein and to perform all of the other obligations to be
performed by Borrower under the Debentures, this Security Instrument and the
other Loan Documents.
5.4 VALIDITY OF DOCUMENTS. (a) The execution, delivery and performance of
the Debentures, this Security Instrument and the other Loan Documents and the
borrowing evidenced by the Debentures (i) are within the corporate,
partnership, trust or limited liability company (as the case may be) power of
Borrower; (ii) have been authorized by all requisite corporate, partnership,
trust or limited liability company (as the case may be) action; (iii) have
received all necessary approvals and consents, corporate, governmental or
otherwise; (iv) will not violate, conflict with, result in a breach of or
constitute (with notice or lapse of time, or both) a default under any
provision of law, any order or judgment of any court or governmental
authority, the articles of incorporation, by-laws, partnership, trust,
operating agreement or other governing instrument of Borrower, or any
indenture, agreement or other instrument to which Borrower is a party or by
which it or any of its assets or the Property is or may be bound or affected;
(v) will not result in the creation or imposition of any lien, charge or
encumbrance whatsoever upon any of its assets, except the lien and security
interest created hereby; and (vi) will not require any authorization or
license from, or any filing with, any governmental or other body (except for
the recordation of this instrument in appropriate land records in the State
where the Property is located and except for Uniform Commercial Code filings
relating to the security interest created hereby); and (b) the Debentures,
this Security Instrument and the other Loan Documents constitute the legal,
valid and binding obligations of Borrower.
Page C-19
5.5 LITIGATION. There is no action, suit or proceeding, judicial,
administrative or otherwise (including any condemnation or similar
proceeding), pending or, to the best of Borrower's knowledge, threatened or
contemplated against, or affecting Borrower or the Property that has not been
disclosed to each Lender or is not adequately covered by insurance, as
determined by each Lender in its sole and absolute discretion.
5.6 STATUS OF PROPERTY. (a) No portion of the Improvements is located in an
area identified by the Secretary of Housing and Urban Development or any
successor thereto as an area having special flood hazards pursuant to the
National Flood Insurance Act of 1968 or the Flood Disaster Protection Act of
1973, as amended, or any successor law, or, if located within any such area,
Borrower has obtained and will maintain the insurance prescribed in Section
3.2 hereof; (b) except where such failure to do so would not reasonably be
expected to have a Material Adverse Effect, Borrower has obtained all
necessary certificates, licenses and other approvals, governmental and
otherwise, necessary for the operation of the Property and the conduct of its
business and all required zoning, building code, land use, environmental and
other similar permits or approvals, all of which are in full force and effect
as of the date hereof and not subject to revocation, suspension, forfeiture or
modification; (c) except where such failure to do so would not reasonably be
expected to have a Material Adverse Effect, the Property and the present and
contemplated use and occupancy thereof are in full compliance with all
Applicable Laws, including, without limitation, zoning ordinances, building
codes, land use and environmental laws, laws relating to the disabled
(including, but not limited to, the ADA) and other similar laws; (d) the
Property is served by all utilities (including, but not limited to, public
water and sewer systems) required for the current or contemplated use thereof;
(e) all utility service is provided by public utilities and the Property has
accepted or is equipped to accept such utility service; (f) all public roads
and streets necessary for service of and access to the Property for the
current or contemplated use thereof have been completed, are serviceable and
all-weather and are physically and legally open for use by the public; (g) the
Property is, to the best of Borrower's knowledge, free from damage caused by
fire or other casualty; (h) all costs and expenses of any and all labor,
materials, supplies and equipment used in the construction of the Improvements
have been paid in full; (i) all liquid and solid waste disposal, septic and
sewer systems located on the Property are in a good and safe condition and
repair and in compliance with all Applicable Laws; and (j) all Improvements
lie within the boundary of the Land.
5.7 NO FOREIGN PERSON. Borrower is not a "foreign person" within the meaning
of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended and the
related Treasury Department regulations, including temporary regulations.
5.8 SEPARATE TAX LOT. The Property is assessed for real estate tax purposes
as one or more wholly independent tax lot or lots, separate from any adjoining
land or improvements not constituting a part of such lot or lots, and no other
land or improvements are assessed and taxed together with the Property or any
portion thereof.
Page C-20
5.9 Intentionally omitted.
5.10 LEASES. There are no Leases currently affecting the Property.
5.11 FINANCIAL CONDITION. Borrower (a) is solvent, and no bankruptcy,
reorganization, insolvency or similar proceeding under any state or federal
law with respect to Borrower has been initiated, and (b) has received
reasonably equivalent value for the granting of this Security Instrument.
5.12 BUSINESS PURPOSES. The loan evidenced by the Debentures is solely for
the business purpose of Borrower, and is not for personal, family, household,
or agricultural purposes.
5.13 TAXES. Borrower has filed all federal, state, county, municipal, and
city income and other tax returns required to have been filed by them and have
paid all taxes and related liabilities which have become due pursuant to such
returns or pursuant to any assessments received by them. Borrower knows of no
basis for any additional assessment in respect of any such taxes and related
liabilities for prior years.
5.14 MAILING ADDRESS. Borrower's mailing address, as set forth in the
opening paragraph hereof or as changed in accordance with the provisions
hereof, is true and correct.
5.15 NO CHANGE IN FACTS OR CIRCUMSTANCES. All information submitted in
connection with each Lender's due diligence investigation of Borrower,
including, but not limited to, all financial statements, reports, certificates
and other documents, are accurate, complete and correct in all respects.
There has been no adverse change in any condition, fact, circumstance or event
that would make any such information inaccurate, incomplete or otherwise
misleading.
5.16 DISCLOSURE. To Borrower's best knowledge, Borrower has disclosed to
each Lender all material facts and has not failed to disclose any material
fact that could cause any representation or warranty made herein to be
materially misleading.
5.17 SERVICE AGREEMENTS. There are no contracts or agreements of any kind or
nature pertaining to the operation, maintenance, management, leasing, repair
or development of the Property that are not terminable without penalty on not
more than thirty (30) days' notice.
5.18 ILLEGAL ACTIVITY. No portion of the Property has been or will be
purchased with proceeds of any illegal activity.
5.19 USE OF PROPERTY. The Property is currently being used only for
Borrower's office use, and for no other use.
Page C-21
Borrower acknowledges that in accepting the Debentures, this Security
Instrument and the other Loan Documents, each Lender is expressly and
primarily relying on the truth and accuracy of the warranties and
representations set forth above notwithstanding any investigation of the
Property by such Lender; that such reliance existed on the part of each Lender
prior to the date hereof; that the warranties and representations are a
material inducement to each Lender in making the loan evidenced by the
Debentures and that each Lender would not make such loan in the absence of
such warranties. For purposes of this Security Instrument, the term "Material
Adverse Effect" means an effect that has material and adverse consequences on
(i) the consolidated business, operations, properties, financial condition, or
results of operations of Borrower and its subsidiaries taken as a whole or
(ii) the ability of Borrower to perform its obligations under (a) this
Security Instrument, (b) the Debentures, that certain Securities Purchase
Agreement, dated as of March 28, 2002 (the "Securities Purchase Agreement"),
between Borrower and the Lenders, and all other agreements, documents and
other instruments executed and delivered by or on behalf of Borrower or any of
its officers in connection therewith, including, without limitation, the
"Infineon Documents", as such term is defined in the Securities Purchase
Agreement.
6 - OBLIGATIONS AND RELIANCES
6.1 RELATIONSHIP OF BORROWER AND THE LENDERS. The relationship between
Borrower and the Lenders is solely that of debtor and creditors, and no Lender
has any fiduciary or other special relationship with Borrower and no term or
condition of any of the Debentures, this Security Instrument and the other
Loan Documents shall be construed so as to deem the relationship between
Borrower and the Lenders to be other than that of debtor and creditors.
Borrower is not relying on a Lender's expertise business acumen or advice in
connection with the Property.
6.2 NO LENDER OBLIGATIONS. (a) Notwithstanding the provisions of
Subsections 1.1(f) and (l) or Section 1.2, no Lender is undertaking the
performance of (i) any obligations under the Leases; or (ii) any obligations
with respect to such agreements, contracts, certificates, instruments,
franchises, permits, trademarks, licenses and other documents.
(b) By accepting or approving anything required to be observed, performed
or fulfilled or to be given to a Lender pursuant to this Security
Instrument, the Debentures or the other Loan Documents, a Lender
shall not be deemed to have warranted, consented to, or affirmed the
sufficiency, the legality or effectiveness of same, and such
acceptance or approval thereof shall not constitute any warranty or
affirmation with respect thereto by a Lender.
Page C-22
7 - FURTHER ASSURANCES
7.1 RECORDING OF SECURITY INSTRUMENT, ETC. Each Lender forthwith upon the
execution and delivery of this Security Instrument and thereafter, from time
to time, will have the right to cause this Security Instrument and any of the
other Loan Documents creating a lien or security interest or evidencing the
lien hereof upon the Property to be filed, registered or recorded in such
manner and in such places as may be required by any present or future law in
order to publish notice of and fully to protect and perfect the lien or
security interest hereof upon, and the interest of each Lender in, the
Property. Except where prohibited by law, Borrower will pay all taxes,
duties, imposts, assessments, filing, registration and recording fees, and any
and all expenses incident to the preparation, execution, acknowledgment and/or
recording of the Loan Documents and any amendment or supplement thereto,
including, without limitation, any title insurance premium payable in
connection with the Lenders' title insurance policy insuring this Security
Instrument and the cost of any affirmative insurance or endorsements thereto
required by a Lender.
7.2 FURTHER ACTS, ETC. Borrower will, at the cost of Borrower, and without
expense to any Lender, do, execute, acknowledge and deliver all and every such
further acts, deeds, conveyances, mortgages, deeds of trust, assignments,
notices of assignments, transfers, deeds to secure debt and assurances as a
Lender shall, from time to time, reasonably require, for the better assuring,
conveying, assigning, transferring, and confirming unto such Lender the
property and rights hereby mortgaged, granted, bargained, sold, conveyed,
confirmed, pledged, assigned, warranted and transferred or intended now or
hereafter so to be, or which Borrower may be or may hereafter become bound to
convey or assign to such Lender, or for carrying out the intention or
facilitating the performance of the terms of this Security Instrument or for
filing, registering or recording this Security Instrument, or for complying
with all Applicable Laws. Borrower, on demand, will execute and deliver and
hereby authorizes each Lender to execute in the name of Borrower or without
the signature of Borrower to the extent such Lender may lawfully do so, one or
more financing statements, chattel mortgages or other instruments, to evidence
more effectively the security interest of the Lenders in the Property.
Borrower grants to each Lender an irrevocable power of attorney coupled with
an interest for the purpose of exercising and perfecting any and all rights
and remedies available to the Lenders at law and in equity, including without
limitation such rights and remedies available to the Lenders pursuant to this
Section 7.2.
7.3 CHANGES IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS. (a) If any law
is enacted or adopted or amended after the date of this Security Instrument
which deducts the Debts from the value of the Property for the purpose of
taxation or which imposes a tax, either directly or indirectly, on the Debts
or the Lenders' interest in the Property, Borrower will pay the tax, with
interest and penalties thereon, if any. If a Lender is advised by counsel
chosen by it that the payment of tax by Borrower would be unlawful or taxable
to a Lender or unenforceable or provide the basis for a defense of usury, then
each Lender shall have the option by written notice of not less than ninety
(90) days to declare the Debts immediately due and payable.
Page C-23
(b) Borrower will not claim or demand or be entitled to any credit or
credits against the Debts for any part of the Taxes or Other Charges
assessed against the Property, or any part thereof, and no deduction
shall otherwise be made or claimed from the assessed value of the
Property, or any part thereof, for real estate tax purposes by reason
of this Security Instrument or either Debt. If such claim, credit or
deduction shall be required by law, each Lender shall have the
option, by written notice of not less than ninety (90) days, to
declare the Debts immediately due and payable.
(c) If at any time the United States of America, any State thereof or any
subdivision of any such State shall require revenue or other stamps
to be affixed to the Debentures, this Security Instrument, or any of
the other Loan Documents or impose any other tax or charge on the
same, Borrower will pay for the same, with interest and penalties
thereon, if any.
7.4 ESTOPPEL CERTIFICATES. (a) After request by a Lender, Borrower, within
ten (10) days, shall furnish such Lender or any proposed assignee an
estoppel certificate in form and content as may be requested by such
Lender with respect to the status of the Debt and/or the Loan Documents.
(b) Borrower shall use its best efforts to deliver to a Lender, promptly
upon request, duly executed estoppel certificates from any one or
more lessees as required by such Lender attesting to such facts
regarding the Lease as such Lender may reasonably require.
7.5 REPLACEMENT DOCUMENTS. Upon receipt of an affidavit of an officer of a
Lender as to the loss, theft, destruction or mutilation of the Debentures or
any other Loan Document which is not of public record, and, in the case of any
such mutilation, upon surrender and cancellation of such Debentures or other
Loan Document, Borrower will issue, in lieu thereof, replacement Debentures or
other Loan Document, dated the date of such lost, stolen, destroyed or
mutilated Debenture or other Loan Document in the same principal amount
thereof and otherwise of like tenor.
8 - DUE ON SALE/ENCUMBRANCE
8.1 LENDERS' RELIANCE. Borrower acknowledges that each Lender has examined
and relied on the experience of Borrower in owning and operating properties
such as the Property in agreeing to make the loans evidenced by the
Debentures, and will continue to rely on Borrower's ownership of the Property
as a means of maintaining the value of the Property as security for payment
and performance of the Obligations. Borrower acknowledges that each Lender
has a valid interest in maintaining the value of the Property so as to ensure
that, should Borrower default in the payment or the performance of the
Obligations, each Lender can recover its respective Debt by a sale of the
Property.
Page C-24
8.2 NO SALE/ENCUMBRANCE. Borrower agrees that except as expressly provided
in the Debentures, the sale, conveyance, mortgage, grant, bargain,
encumbrance, pledge, assignment, or other transfer of the Property, or any
part thereof, without the prior written consent of each Lender, shall
constitute an event allowing a Lender to declare the entire unpaid Debts to be
immediately due and payable without notice of intention to accelerate, notice
of acceleration, demand or any other notice.
8.3 SALE/ENCUMBRANCE DEFINED. A sale, conveyance, mortgage, grant, bargain,
encumbrance, pledge, assignment, or transfer within the meaning of this
Article 8 shall be deemed to mean the occurrence of a "Change of Control
Transaction", as such term is defined in the Debentures.
8.4 LENDERS' RIGHTS. A Lender shall not be required to demonstrate any
actual impairment of its security or any increased risk of default hereunder
in order to declare the Debts immediately due and payable upon Borrower's
sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment,
or transfer of the Property without each Lender's consent. This provision
shall apply to every sale, conveyance, mortgage, grant, bargain, encumbrance,
pledge, assignment, or transfer of the Property regardless of whether
voluntary or not, or whether or not a Lender has consented to any previous
sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment,
or transfer of the Property.
9 - DEFAULT
9.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an "Event of Default": (a) if any portion of Debt is
not paid prior to the date same is due or if the entire amount of the Debt is
not paid on or before the Maturity Date (subject to the grace period (if any)
provided for the payment thereof in the Debentures); (b) if any of the Taxes
or Other Charges is not paid prior to the date the same becomes delinquent
except to the extent sums sufficient to pay such Taxes and Other Charges have
been deposited with the Lenders or their joint designee in accordance with the
terms of this Security Instrument; (c) if the Policies are not kept in full
force and effect, or if the Policies are not delivered to a Lender upon
request or Borrower has not delivered evidence of the renewal of the Policies
five (5) Business Days prior to their expiration as provided in Section
3.2(e); (d) if Borrower violates or does not comply with any of the provisions
of Section 3.6 or Articles 8, 11 or 20; (e) if any representation or warranty
of Borrower made herein or in any certificate, report, financial statement or
other instrument or document furnished to a Lender shall have been false or
misleading in any material respect when made; (f) if (i) Borrower shall
commence any case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, adjustment, liquidation, dissolution or other relief
with respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or any
Page C-25
substantial part of its assets, or Borrower shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced against
Borrower any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed or undischarged
for a period of sixty (60) days; or (iii) there shall be commenced against
Borrower any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of any order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within sixty (60) days from the entry thereof; or (iv) Borrower
shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) Borrower shall generally not, or shall be unable
to, or shall admit in writing its inability to, pay its debts as they become
due; (g) if Borrower shall be in default beyond any applicable notice or cure
period under any other mortgage, deed of trust, deed to secure debt or other
security agreement covering any part of the Property whether it be superior or
junior in lien to this Security Instrument; (h) if the Property becomes
subject to any mechanic's, materialman's or other lien other than a lien for
local real estate taxes and assessments not then delinquent and the lien shall
remain undischarged of record (by payment, bonding or otherwise) for a period
of thirty (30) days after Borrower has first received notice thereof; (i) if
any federal tax lien is filed against the Property and same is not discharged
of record within thirty (30) days after Borrower has first received notice
thereof; (j) if within ten (10) days after a Lender's demand therefor Borrower
fails to provide such Lender with the written certification and evidence
referred to in Section 5.9 hereof, (k) if for more than ten (10) days after
notice from a Lender, Borrower shall continue to be in default under any other
term, covenant or condition of this Security Instrument or the other Loan
Documents in the case of any default which can be cured by the payment of a
sum of money or for thirty (30) days after notice from such Lender in the case
of any other default, provided that if such default cannot reasonably be cured
within such thirty (30) day period and Borrower shall have commenced to cure
such default within such thirty (30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30) day period shall be
extended for so long as it shall require Borrower in the exercise of due
diligence to cure such default, it being agreed that no such extension shall
be for a period in excess of sixty (60) days or (l) if an "Event of Default"
occurs under either Debenture.
10 - RIGHTS AND REMEDIES
10.1 REMEDIES. Upon the occurrence of any Event of Default, Borrower agrees
that Public Trustee or a Lender may take such action, to the extent permitted
by law, without notice or demand, except as required by applicable law, as it
deems advisable to protect and enforce its rights against Borrower and in and
to the Property, including, but not limited to, the following actions, each of
which may be pursued concurrently or otherwise, at such time and in such order
as Public Trustee or a Lender may determine, in its sole discretion, without
Page C-26
impairing or otherwise affecting the other rights and remedies of Public
Trustee, such Lender or the Lenders collectively: (a) declare either of the
entire unpaid Debts to be immediately due and payable; (b) with or without
entry, institute proceedings, judicial or otherwise, for the complete or
partial foreclosure of this Security Instrument under any applicable provision
of law in which case the Property or any interest therein may be sold for cash
or upon credit in one or more parcels or in several interests or portions and
in any order or manner, any partial foreclosure to be subject to the
continuing lien and security interest of this Security Instrument for the
balance of the Debts not then due, unimpaired and without loss of priority;
(c) sell for cash or upon credit the Property or any part thereof and all
estate, claim, demand, right, title and interest of Borrower therein and
rights of redemption thereof, pursuant to power of sale, judicial decree or
otherwise, at one or more sales, as an entirety or in one or more parcels; (d)
institute an action, suit or proceeding in equity for the specific performance
of any covenant, condition or agreement contained herein, in the Debentures or
in the other Loan Documents insofar as the Debts have not been satisfied; (e)
recover judgment on any Debenture either before, during or after any
proceedings for the enforcement of this Security Instrument or the other Loan
Documents; (f) apply for the appointment of a receiver, trustee, liquidator or
conservator of the Property, without notice and without regard for the
adequacy of the security for the Debts and without regard for the solvency of
Borrower or of any person, firm or other entity liable for the payment of the
Debts; (g) enter into or upon the Property, either personally or by its
agents, nominees or attorneys and dispossess Borrower and its agents and
servants therefrom, without liability for trespass, damages or otherwise and
exclude Borrower and its agents or servants wholly therefrom, and take
possession of all books, records and accounts relating thereto and Borrower
agrees to surrender possession of the Property and of such books, records and
accounts to a Lender upon demand, and thereupon a Lender may exercise all
rights and powers of Borrower with respect to the Property including, without
limitation, (1) the right to use, operate, manage, control, insure, maintain,
repair, restore and otherwise deal with all and every part of the Property and
conduct the business thereat; (2) the right to make or complete any
construction, alterations, additions, renewals, replacements and improvements
to or on the Property as such Lender deems advisable; (3) the right to make,
cancel, enforce or modify Leases, obtain and evict tenants, and demand, xxx
for, collect and receive all Rents of the Property and every part thereof;
(h) require Borrower to pay monthly in advance to the Lenders, or any receiver
appointed to collect the Rents, the fair and reasonable rental value for the
use and occupation of such part of the Property as may be occupied by
Borrower; (i) require Borrower to vacate and surrender possession of the
Property to the Lenders or to such receiver and, in default thereof, Borrower
may be evicted by summary proceedings or otherwise; (j) apply the receipts
from the Property, any Deposits and interest thereon and/or any unearned
Insurance Premiums paid to a Lender upon the surrender of any Policies
maintained pursuant to Article 3 hereof (it being agreed that each Lender
shall have the right to surrender such Policies upon the occurrence of an
Event of Default), to the payment of the Obligations, in such order, priority
and proportions as the Lenders shall deem appropriate in their sole
discretion; (k) exercise any and all rights and remedies granted to a secured
party upon default under the Uniform Commercial Code, including, without
Page C-27
limiting the generality of the foregoing: (1) the right to take possession of
the Personal Property or any part thereof, and to take such other measures as
a Lender may deem necessary for the care, protection and preservation of the
Personal Property, and (2) request Borrower at its expense to assemble the
Personal Property and make it available to a Lender at a convenient place
acceptable to such Lenders or (l) exercise any remedies of a Lender under
their respective Debentures. Any notice of sale, disposition or other
intended action by a Lender with respect to the Personal Property sent to
Borrower in accordance with the provisions hereof at least ten (10) days prior
to such action, shall constitute commercially reasonable notice to Borrower.
Upon any foreclosure or other sale of the Property pursuant to the terms
hereof, a Lender or any combination of Lenders may bid for and purchase the
Property and shall be entitled to apply all or any part of the secured
indebtedness as a credit against the purchase price.
In the event of a sale, by foreclosure, power of sale, or otherwise, of less
than all of the Property, this Security Instrument shall continue as a lien
and security interest on the remaining portion of the Property unimpaired and
without loss of priority. Notwithstanding the provisions of this Section 10.1
to the contrary, if any Event of Default as described in clause (i) or (ii) of
Subsection 9.1(f) shall occur, the entire unpaid Debts shall be automatically
due and payable, without any further notice, demand or other action by a
Lender
10.2 APPLICATION OF PROCEEDS. The purchase money, proceeds and avails of any
disposition of the Property, or any part thereof, or any other sums collected
by a Lender pursuant to the Debentures, this Security Instrument or the other
Loan Documents, may be applied by such Lender to the payment of the Debts in
such priority and proportions as such Lender in its discretion shall deem
proper.
10.3 RIGHT TO CURE DEFAULTS. Upon the occurrence of any Event of Default, a
Lender may, but without any obligation to do so and without notice to or
demand on Borrower and without releasing Borrower from any obligation
hereunder or curing or being deemed to have cured any default hereunder, make
or do the same in such manner and to such extent as such Lender may deem
necessary to protect the security hereof. Each Lender is authorized to enter
upon the Property for such purposes, or appear in, defend, or bring any action
or proceeding to protect its respective interest in the Property or to
foreclose this Security Instrument or collect the Debts, and the cost and
expense thereof (including reasonable attorneys' fees to the extent permitted
by law), with interest as provided in this Section 10.3, shall constitute a
portion of the Debts and shall be due and payable to the applicable Lender
upon demand. All such costs and expenses incurred by a Lender in remedying
such Event of Default or such failed payment or act or in appearing in,
defending, or bringing any such action or proceeding shall bear interest at
the Default Interest Rate (as defined in the Debentures), for the period after
notice from such Lender that such cost or expense was incurred to the date of
payment to such Lender. All such costs and expenses incurred by a Lender
together with interest thereon calculated at the Default Interest Rate shall
be deemed to constitute a portion of the Debts and be secured by this Security
Instrument and the other Loan Documents and shall be immediately due and
payable upon demand by such Lender therefor.
Page C-28
10.4 ACTIONS AND PROCEEDINGS. Each Lender has the right to appear in and
defend any action or proceeding brought with respect to the Property and to
bring any action or proceeding, in the name and on behalf of Borrower, which
such Lender, in its discretion, decides should be brought to protect its
interest in the Property.
10.5 RECOVERY OF SUMS REQUIRED TO BE PAID. Each Lender shall have the right
from time to time to take action to recover any sum or sums which constitute a
part of the Debts as the same become due, without regard to whether or not the
balance of the Debts shall be due, and without prejudice to the rights of such
Lender or the other Lender thereafter to bring an action of foreclosure, or
any other action, for a default or defaults by Borrower existing at the time
such earlier action was commenced.
10.6 EXAMINATION OF BOOKS AND RECORDS. Each Lender, its agents, accountants
and attorneys shall have the right to examine the records, books, management
and other papers of Borrower and its affiliates which reflect upon their
financial condition, at the Property or at any office regularly maintained by
Borrower, its affiliates where the books and records are located. Each Lender
and its agents shall have the right to make copies and extracts from the
foregoing records and other papers. In addition, each Lender, its agents,
accountants and attorneys shall have the right to examine and audit the books
and records of Borrower and its affiliates pertaining to the income, expenses
and operation of the Property during reasonable business hours at any office
of Borrower, its affiliates where the books and records are located. This
Section 10.6 shall apply throughout the term of the Debentures and without
regard to whether an Event of Default has occurred or is continuing.
10.7 OTHER RIGHTS, ETC. (a) The failure of any or all of the Lenders to
insist upon strict performance of any term hereof shall not be deemed to be a
waiver of any term of this Security Instrument. Borrower shall not be
relieved of Borrower's obligations hereunder by reason of (i) the failure of
any or all of the Lenders to comply with any request of Borrower to take any
action to foreclose this Security Instrument or otherwise enforce any of the
provisions hereof or of any Debenture or the other Loan Documents, (ii) the
release, regardless of consideration, of the whole or any part of the
Property, or of any person liable for the Debts or any portion thereof, or
(iii) any agreement or stipulation by any or all of the Lenders extending the
time of payment or otherwise modifying or supplementing the terms of any
Debenture, this Security Instrument or the other Loan Documents.
(b) It is agreed that the risk of loss or damage to the Property is on
Borrower, and no Lender shall have any liability whatsoever for
decline in value of the Property, for failure to maintain the
Policies, or for failure to determine whether insurance in force is
adequate as to the amount of risks insured. Possession by any or all
of the Lenders shall not be deemed an election of judicial relief, if
any such possession is requested or obtained, with respect to any
Property or collateral not in a Lenders' possession.
Page C-29
(c) Public Trustee or a Lender may resort for the payment of the Debts to
any other security held by Public Trustee or such Lender in such
order and manner as Public Trustee or such Lender, in its discretion,
may elect. Public Trustee or a Lender may take action to recover the
Debts, or any portion thereof, or to enforce any covenant hereof
without prejudice to the right of Public Trustee or a Lender
thereafter to foreclose this Security Instrument. The rights of each
Lender and Public Trustee under this Security Instrument shall be
separate, distinct and cumulative and none shall be given effect to
the exclusion of the others. No act of Public Trustee or a Lender
shall be construed as an election to proceed under any one provision
herein to the exclusion of any other provision. The Lenders and
Public Trustee shall not be limited exclusively to the rights and
remedies herein stated but shall be entitled to every right and
remedy now or hereafter afforded at law or in equity.
10.8 RIGHT TO RELEASE ANY PORTION OF THE PROPERTY. The Lenders may release
any portion of the Property for such consideration as is approved and
required by each Lender without, as to the remainder of the Property, in
any way impairing or affecting the lien or priority of this Security
Instrument, or improving the position of any subordinate lienholder with
respect thereto, except to the extent that the obligations hereunder
shall have been reduced by the actual monetary consideration, if any,
received by a Lender for such release, and may accept by assignment,
pledge or otherwise any other property in place thereof as each Lenders
may require without being accountable for so doing to any other
lienholder. This Security Instrument shall continue as a lien and
security interest in the remaining portion of the Property.
10.9 VIOLATION OF LAWS. If the Property is not in compliance with Applicable
Laws, a Lender may impose additional requirements upon Borrower in connection
therewith including, without limitation, monetary reserves or financial
equivalents.
10.10 RECOURSE AND CHOICE OF REMEDIES. Notwithstanding any other provision
of this Security Instrument, including but not limited to Article 13 hereof,
each Lender and other Indemnified Parties (defined in Section 11.1 below) are
entitled to enforce the obligations of Borrower contained in the Debentures
and this Security Instrument without first resorting to or exhausting any
security or collateral and without first having recourse to the Debentures or
any of the Property, through foreclosure or acceptance of a deed in lieu of
foreclosure or otherwise, and in the event a Lender commences a foreclosure
action against the Property, each Lender is entitled to pursue a deficiency
judgment with respect to such obligations against Borrower. The liability of
Borrower is not limited to the original principal amount of the Debentures.
Notwithstanding the foregoing, nothing herein shall inhibit or prevent a
Lender from foreclosing pursuant to this Security Instrument or exercising any
other rights and remedies pursuant to the Debentures, this Security Instrument
and the other Loan Documents, whether simultaneously with foreclosure
proceedings or in any other sequence. A separate action or actions may be
brought and prosecuted against Borrower, whether or not action is brought
against any other person or entity or whether or not any other person or
entity is joined in the action or actions.
Page C-30
10.11 RIGHT OF ENTRY. Each Lender and its respective agents shall have the
right to enter and inspect the Property at all reasonable times.
10.12 DEFAULT INTEREST AND LATE CHARGES. Borrower acknowledges that, without
limitation to any of the Lenders' rights or remedies set forth in this
Security Instrument, each Lender has the right following an Event of Default
to demand interest on the principal amount of the Debentures at the Default
Interest Rate and late payment charges in accordance with the terms of the
Debentures.
11 - INDEMNIFICATION
11.1 GENERAL INDEMNIFICATION. Borrower shall, at its sole cost and expense,
protect, defend, indemnify, release and hold harmless the Indemnified Parties
for, from and against any and all claims, suits, liabilities (including,
without limitation, strict liabilities), actions, proceedings, obligations,
debts, damages, losses, costs, expenses, diminutions in value, fines,
penalties, charges, fees, expenses, judgments, awards, amounts paid in
settlement, punitive damages, foreseeable and unforeseeable consequential
damages, of whatever kind or nature (including but not limited to attorneys'
fees and other costs of defense) (the "Losses") imposed upon or incurred by or
asserted against any Indemnified Parties and directly or indirectly arising
out of or in any way relating to any one or more of the following, except to
the extent the following relate solely to an Indemnified Party's gross
negligence or willful misconduct: (a) any Event of Default; (b) any and all
lawful action that may be taken by a Lender in connection with the enforcement
of the provisions of this Security Instrument or any Debenture or any of the
other Loan Documents, whether or not suit is filed in connection with same, or
in connection with Borrower and/or any partner, joint venturer or shareholder
thereof becoming a party to a voluntary or involuntary federal or state
bankruptcy, insolvency or similar proceeding; (c) any accident, injury to or
death of persons or loss of or damage to property occurring in, on or about
the Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (d) any use,
nonuse or condition in, on or about the Property or any part thereof; (e) any
failure on the part of Borrower to perform or be in compliance with any of the
terms of this Security Instrument; (f) the failure of any person to file
timely with the Internal Revenue Service an accurate Form 0000-X, Xxxxxxxxx
for Recipients of Proceeds from Real Estate, Broker and Barter Exchange
Transactions, which may be required in connection with this Security
Instrument, or to supply a copy thereof in a timely fashion to the recipient
of the proceeds of the transaction in connection with which this Security
Instrument is made; (g) any failure of the Property to be in compliance with
any Applicable Laws; (h) the enforcement by any Indemnified Party of the
provisions of this Article 11; (i) the payment of any commission, charge or
brokerage fee to anyone which may be payable in connection with the funding
under the Debentures; (j) any misrepresentation made by Borrower in this
Security Instrument or any other Loan Document; or (k) any other transaction
arising out of or in any way connected with the Property or the Debt. Any
amounts payable to a Lender by reason of the application of this Section 11.1
Page C-31
shall become immediately due and payable and shall bear interest at the
Default Interest Rate from the date loss or damages are sustained by such
Lender until paid. For purposes of this Article 11, the term "Indemnified
Parties" means each Lender, the Public Trustee and any person or entity who is
or will have been involved in the origination of any portion of the Debt, any
person or entity who is or will have been involved in the servicing of any
portion of the Debt, any person or entity in whose name the encumbrance
created by this Security Instrument is or will have been recorded and persons
and entities who may hold or acquire or will have held a full or partial
interest in any portion of the Debt, including, but not limited to,
custodians, trustees and other fiduciaries who hold or have held a full or
partial interest in any portion of the Debt.
11.2 MORTGAGE AND/OR INTANGIBLE TAX. Borrower shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless the Indemnified
Parties from and against any and all Losses imposed upon or incurred by or
asserted against any Indemnified Parties and directly or indirectly arising
out of or in any way relating to any tax on the making and/or recording of
this Security Instrument, the Debentures or any of the other Loan Documents.
11.3 Intentionally omitted.
11.4 DUTY TO DEFEND; ATTORNEYS' FEES AND OTHER FEES AND EXPENSES. Upon
written request by any Indemnified Party, Borrower shall defend such
Indemnified Party (if requested by any Indemnified Party, in the name of the
Indemnified Party) by attorneys and other professionals approved by the
Indemnified Parties. Notwithstanding the foregoing, any Indemnified Parties
may, in their sole and absolute discretion, engage their own attorneys and
other professionals to defend or assist them, and, at the option of
Indemnified Parties, their attorneys shall control the resolution of claim or
proceeding. Upon demand, Borrower shall pay or, in the sole and absolute
discretion of the Indemnified Parties, reimburse, the Indemnified Parties for
the payment of reasonable fees and disbursements of attorneys, engineers,
environmental consultants, laboratories and other professionals in connection
therewith.
12 - WAIVERS
12.1 WAIVER OF COUNTERCLAIM. Borrower hereby waives the right to assert a
counterclaim, other than a mandatory or compulsory counterclaim, in any action
or proceeding brought against it by any or all of the Lenders arising out of
or in any way connected with this Security Instrument, the Debentures, any of
the other Loan Documents, or the Obligations. Any assignee of a Lender's
interest in this Security Instrument and the other Loan Documents shall take
the same free and clear of all offsets, counterclaims or defenses which are
unrelated to such documents which Borrower may otherwise have against any
assignor of such documents, and no such unrelated counterclaim or defense
shall be interposed or asserted by Borrower in any action or proceeding
brought by any such assignee upon such documents, and any such rights to
interpose or assert any such unrelated offset, counterclaim or defense in any
such action or proceeding is hereby expressly waived by Borrower.
Page C-32
12.2 MARSHALLING AND OTHER MATTERS. Borrower hereby waives, to the extent
permitted by law, the benefit of all appraisement, valuation, stay, extension,
reinstatement and redemption laws now or hereafter in force and all rights of
marshalling in the event of any sale hereunder of the Property or any part
thereof or any interest therein. Further, Borrower hereby expressly waives
any and all rights of redemption from sale under any order or decree of
foreclosure of this Security Instrument on behalf of Borrower, and on behalf
of each and every person acquiring any interest in or title to the Property
subsequent to the date of this Security Instrument and on behalf of all
persons to the extent permitted by applicable law.
12.3 WAIVER OF NOTICE. Borrower shall not be entitled to any notices of any
nature whatsoever from Public Trustee or a Lender except with respect to
matters for which this Security Instrument specifically and expressly provides
for the giving of notice by a Lender to Borrower and except with respect to
matters for which Public Trustee or the Lenders are required by applicable law
to give notice, and Borrower hereby expressly waives the right to receive any
notice from Public Trustee or a Lender with respect to any matter for which
this Security Instrument does not specifically and expressly provide for the
giving of notice by Public Trustee or a Lender to Borrower.
12.4 SOLE DISCRETION OF THE LENDERS. Wherever pursuant to this Security
Instrument (a) a Lender or any combination of Lenders exercises any right
given to it (or them) to approve or disapprove, (b) any arrangement or term is
to be satisfactory to a Lender (or all Lenders), or (c) any other decision or
determination is to be made by a Lender (or all Lenders), the decision of a
Lender to approve or disapprove, all decisions that arrangements or terms are
satisfactory or not satisfactory and all other decisions and determinations
made by a Lender, shall be in the sole and absolute discretion of such Lender
and shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein.
12.5 Intentionally omitted.
12.6 WAIVER OF TRIAL BY JURY. BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR
INDIRECTLY TO ANY PORTION OF THE DEBT, ANY APPLICATION FOR THE DEBT, THE
DEBENTURES, THIS SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS OR ANY ACTS
OR OMISSIONS OF A LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN
CONNECTION THEREWITH.
13 - INTENTIONALLY OMITTED.
14 - NOTICES
14.1 NOTICES. Any notice, demand or request required or permitted to be
given by the Borrower or a Lender pursuant to the terms of this Security
Instrument shall be in writing and shall be deemed delivered (i) when
delivered personally or by verifiable facsimile transmission, unless such
Page C-33
delivery is made on a day that is not a Business Day, in which case such
delivery will be deemed to be made on the next succeeding Business Day,
(ii) on the next Business Day after timely delivery to an overnight courier
and (iii) on the Business Day actually received if deposited in the U.S. mail
(certified or registered mail, return receipt requested, postage prepaid),
addressed as follows:
If to Borrower: Ramtron International Corporation
0000 Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: XxXxx X. Xxxxxx, Chief Financial Officer
With a copy to: Coudert Brothers LLP
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. St. Clair, Esq.
If to Lenders: Halifax Fund, L.P.
c/o Huntlaw Corporate Services
The Huntlaw Building
75 Fort Street
Xxxxxx Town
Grand Cayman Islands
With a copy to: Xxxxxxxx Capital Corp.
c/x Xxxxxxx Capital Corp.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Mor Sagi
With a copy to: Xxxxx & Stachenfeld LLP
000 Xxxx 00xx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
or addressed as such party may from time to time designate by written notice
to the other parties. Any party by notice to the other may designate
additional or different addresses for subsequent notices or communications.
For purposes of this Security Instrument, the term "Business Day" shall mean
any day on which the New York Stock Exchange and commercial banks in the City
of New York are open for business.
15 - APPLICABLE LAW
15.1 CHOICE OF LAW. This Security Instrument shall be governed, construed,
applied and enforced in accordance with the laws of the state in which the
Property is located and the applicable laws of the United States of America.
Page C-34
15.2 USURY LAWS. This Security Instrument and the Debentures are subject to
the express condition that at no time shall Borrower be obligated or required
to pay interest on the Debts at a rate which could subject the holder of
either Debenture to either civil or criminal liability as a result of being in
excess of the maximum interest rate which Borrower is permitted by applicable
law to contract or agree to pay. If by the terms of this Security Instrument
or either Debentures, Borrower is at any time required or obligated to pay
interest on the Debts at a rate in excess of such maximum rate, the rate of
interest under this Security Instrument and such Debenture shall be deemed to
be immediately reduced to such maximum rate and the interest payable shall be
computed at such maximum rate and all prior interest payments in excess of
such maximum rate shall be applied and shall be deemed to have been payments
in reduction of the principal balance of such Debenture. All sums paid or
agreed to be paid to a Lender for the use, forbearance, or detention of the
Debts shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full stated term of the
applicable Debenture until payment in full so that the rate or amount of
interest on account of the Debts does not exceed the maximum lawful rate of
interest from time to time in effect and applicable to the Debts for so long
as any portion of the Debts are outstanding.
15.3 PROVISIONS SUBJECT TO APPLICABLE LAW. All rights, powers and remedies
provided in this Security Instrument may be exercised only to the extent that
the exercise thereof does not violate any applicable provisions of law and are
intended to be limited to the extent necessary so that they will not render
this Security Instrument invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any applicable law. If
any term of this Security Instrument or any application thereof shall be
invalid or unenforceable, the remainder of this Security Instrument and any
other application of the term shall not be affected thereby.
16 - SECONDARY MARKET
16.1 TRANSFER OF LOAN. Each Lender may, at any time, sell, transfer or
assign its Debenture, its interest in this Security Instrument and any other
Loan Documents, and any or all servicing rights with respect thereto, or grant
participations therein or issue mortgage pass-through certificates or other
securities evidencing a beneficial interest in a rated or unrated public
offering or private placement (the "Securities"). Each Lender may forward to
each purchaser, transferee, assignee, servicer, participant, investor in such
Securities or any rating agency (a "Rating Agency") rating such Securities
(all of the foregoing entities collectively referred to as the "Investor") and
each prospective Investor, all documents and information which such Lender now
has or may hereafter acquire relating to the Debts, Borrower and the Property,
as such Lender determines necessary or desirable. Borrower agrees to
cooperate with each Lender in connection with any transfer made or any
Securities created pursuant to this Section, provided such cooperation does
not require Borrower to incur any material cost or expense. Borrower shall
also furnish and Borrower consents to each Lender furnishing to such Investors
or such prospective Investors or Rating Agency any and all available
Page C-35
information concerning the Property, the Leases and/or the financial condition
of Borrower as may be requested by such Lender, any Investor or any
prospective Investor or Rating Agency in connection with any sale, transfer or
participation interest. In addition to any other obligations Borrower may
have under this Section 16.1, Borrower shall execute such amendments to the
Loan Documents and Borrower's organizational documents as may be requested by
any holder of a Debenture or any Investor to effect the assignment of a
Debenture and the other Loan Documents and/or issuance of Securities including
(i) bifurcating a Debenture into two or more debentures and/or splitting this
Security Instrument into two or more mortgages, deeds of trust or deeds to
secure debt (as the case may be) of the same or different priorities or
otherwise as determined by and acceptable to each Lender or (ii) dividing
either Debenture into multiple components corresponding to tranches of
certificates to be issued in a securitization each having a notional balance
and an interest rate determined by the applicable Lender; provided, however,
that Borrower shall not be required to modify or amend any Loan Document if
the overall effect of such modification or amendment would (y) change the
interest rate, the maturity or the amortization of principal set forth in
either Debenture, or (z) modify or amend any other material economic term of
either Debenture or the other Loan Documents.
17 - COSTS
17.1 PERFORMANCE AT BORROWER'S EXPENSE. Borrower acknowledges and confirms
that each Lender shall be entitled to impose certain administrative processing
and/or commitment fees in connection with: (a) extensions, renewals,
modifications, amendments and terminations of the Loan Documents requested by
Borrower and (b) the release or substitution of collateral for the Debt
requested by Borrower, and that each Lender shall be entitled to reimbursement
for its reasonable out-of-pocket costs and expenses associated with its
provision of consents, waivers and approvals under the Loan Documents (the
occurrence of any of the above shall be called an "Event"). Borrower further
acknowledges and confirms that it shall be responsible for the payment of all
costs of reappraisal of the Property or any part thereof, which are required
by law, regulation or any governmental or quasi-governmental authority.
Borrower hereby acknowledges and agrees to pay, immediately, upon demand, all
such fees, costs and expenses.
17.2 ATTORNEY'S FEES FOR ENFORCEMENT. Borrower shall pay to each Lender on
demand any and all expenses, including legal expenses and attorneys' fees,
incurred or paid by such Lender in protecting its interest in the Property or
in collecting any amount payable hereunder or in enforcing its rights
hereunder with respect to the Property, whether or not any legal proceeding is
commenced hereunder or thereunder and whether or not any default or Event of
Default shall have occurred and is continuing, together with interest thereon
at the Default Interest Rate from the date paid or incurred by such Lender
until such expenses are paid by Borrower.
Page C-36
18 - DEFINITIONS
18.1 GENERAL DEFINITIONS. Unless the context clearly indicates a contrary
intent or unless otherwise specifically provided herein, words used in this
Security Instrument may be used interchangeably in singular or plural form and
the word "Borrower" shall mean "each Borrower and any subsequent owner or
owners of the Property or any part thereof or any interest therein," the word
"Lender" shall mean "any Lender and any subsequent holder of such Lender's
Debenture," and the words "the Lenders" shall mean "the Lenders and any
subsequent holders of the Debentures," the word "Debentures" shall mean "the
Halifax Debenture and the Xxxxxxxx Debenture and any other evidence of
indebtedness secured by this Security Instrument," the word "person" shall
include an individual, corporation, partnership, limited liability company,
trust, unincorporated association, government, governmental authority, and any
other entity, the word "Property" shall include any portion of the Property
and any interest therein, and the phrases "attorneys' fees", "legal fees" and
"counsel fees" shall include any and all reasonable attorneys', paralegal and
law clerk fees and disbursements, including, but not limited to, fees and
disbursements at the pre-trial, trial and appellate levels incurred or paid by
the Lenders in protecting each of their interests in the Property, the Leases
and the Rents and enforcing their rights hereunder. The terms "include(s)"
and "including" shall mean "include(s), without limitation" and "including,
without limitation", respectively.
19 - MISCELLANEOUS PROVISIONS
19.1 NO ORAL CHANGE. This Security Instrument, and any provisions hereof,
may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Borrower or a
Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change,
discharge or termination is sought (it being acknowledged that any
modification, amendment, waiver, extension, change, discharge or termination
affecting a Lender shall be deemed to affect all Lenders).
19.2 LIABILITY. If Borrower consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several. This Security Instrument shall be binding upon and inure to the
benefit of Borrower and each Lender and their respective successors and
assigns forever.
19.3 INAPPLICABLE PROVISIONS. If any term, covenant or condition of any
Debenture or this Security Instrument is held to be invalid, illegal or
unenforceable in any respect, such Debenture and this Security Instrument
shall be construed without such provision.
19.4 HEADINGS, ETC. The headings and captions of various Sections of this
Security Instrument are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
Page C-37
19.5 DUPLICATE ORIGINALS; COUNTERPARTS. This Security Instrument may be
executed in any number of duplicate originals and each duplicate original
shall be deemed to be an original. This Security Instrument may be executed
in several counterparts, each of which counterparts shall be deemed an
original instrument and all of which together shall constitute a single
Security Instrument. The failure of any party hereto to execute this Security
Instrument, or any counterpart hereof, shall not relieve the other signatories
from their obligations hereunder.
19.6 NUMBER AND GENDER. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns shall include the plural and vice
versa.
19.7 SUBROGATION. If any or all of the proceeds of either Debenture have
been used to extinguish, extend or renew any indebtedness heretofore existing
against the Property, then, to the extent of the funds so used, the applicable
Lender(s) shall be subrogated to all of the rights, claims, liens, titles, and
interests existing against the Property heretofore held by, or in favor of,
the holder of such indebtedness and such former rights, claims, liens, titles,
and interests, if any, are not waived but rather are continued in full force
and effect in favor of such Lender(s) and are merged with the lien and
security interest created herein as cumulative security for the payment and
performance of the Obligations.
19.8 ENTIRE AGREEMENT. The Debentures, this Security Instrument and the
other Loan Documents constitute the entire understanding and agreement between
Borrower and the Lenders with respect to the transactions arising in
connection with the Debts and supersede all prior written or oral
understandings and agreements between Borrower and the Lenders with respect
thereto. Borrower hereby acknowledges that, except as incorporated in writing
in the Debentures, this Security Instrument and the other Loan Documents,
there are not, and were not, and no persons are or were authorized by a Lender
to make, any representations, understandings, stipulations, agreements or
promises, oral or written, with respect to the transaction which is the
subject of the Debentures, this Security Instrument and the other Loan
Documents.
19.9 THE PUBLIC TRUSTEE'S FEES. Borrower shall pay all reasonable costs, fees
and expenses incurred by the Public Trustee and the Public Trustee's agents and
counsel in connection with the performance by the Public Trustee of the Public
Trustee's duties hereunder and all costs, fees and expenses shall be secured by
this Security Instrument.
19.10 CERTAIN RIGHTS. With the approval of a Lender, the Public Trustee shall
have the right to take any and all of the following actions: i) to select,
employ, and advise with counsel (who may be, but need not be, counsel for a
Lender) upon any matters arising hereunder, including the interpretation of the
Debentures, this Security Instrument or the other Loan Documents, and shall be
fully protected in relying as to legal matters on the advice of counsel, ii) to
execute any of the trusts and powers hereof and to perform any duty hereunder
Page C-38
either directly or through his agents or attorneys, iii) to select and employ,
in and about the execution of his duties hereunder, suitable accountants,
engineers and other experts, agents and attorneys-in-fact, either corporate or
individual, not regularly in the employ of the Public Trustee, and the Public
Trustee shall not be answerable for any act, default, negligence, or misconduct
of any such accountant, engineer or other expert, agent or attorney-in-fact, if
selected with reasonable care, or for any error of judgment or act done by the
Public Trustee in good faith, or be otherwise responsible or accountable under
any circumstances whatsoever, except for the Public Trustee's gross negligence
or bad faith, and iv) any and all other lawful action as a Lender may instruct
the Public Trustee to take to protect or enforce each the Lender's rights
hereunder. The Public Trustee shall not be personally liable in case of entry
by the Public Trustee, or anyone entering by virtue of the powers herein
granted to the Public Trustee, upon the Property for debts contracted for or
liability or damages incurred in the management or operation of the Property.
The Public Trustee shall have the right to rely on any instrument, document, or
signature authorizing or supporting an action taken or proposed to be taken by
the Public Trustee hereunder, believed by the Public Trustee in good faith to
be genuine. The Public Trustee shall be entitled to reimbursement for actual
expenses incurred by the Public Trustee in the performance of the Public
Trustee's duties hereunder and to reasonable compensation for such of the
Public Trustee's services hereunder as shall be rendered.
19.11 RETENTION OF MONEY. All moneys received by the Public Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated in any manner from any
other moneys (except to the extent required by applicable law) and the Public
Trustee shall be under no liability for interest on any moneys received by the
Public Trustee hereunder.
19.12 PERFECTION OF APPOINTMENT. Should any deed, conveyance, or instrument
of any nature be required from Borrower by any Public Trustee or substitute
trustee to more fully and certainly vest in and confirm to the Public Trustee
or substitute trustee such estates rights, powers, and duties, then, upon
request by the Public Trustee or substitute trustee, any and all such deeds,
conveyances and instruments shall be made, executed, acknowledged, and
delivered and shall be caused to be recorded and/or filed by Borrower.
19.13 SUCCESSION INSTRUMENTS. Any substitute trustee appointed pursuant to
any of the provisions hereof shall, without any further act, deed, or
conveyance, become vested with all the estates, properties, rights, powers, and
trusts of its or his predecessor in the rights hereunder with like effect as if
originally named as the Public Trustee herein; but nevertheless, upon the
written request of a Lender or of the substitute trustee, the Public Trustee
ceasing to act shall execute and deliver any instrument transferring to such
substitute trustee, upon the trusts herein expressed, all the estates,
properties, rights, powers, and trusts of the Public Trustee so ceasing to act,
and shall duly assign, transfer and deliver any of the property and moneys held
by such Public Trustee to the substitute trustee so appointed in the Public
Trustee's place.
Page C-39
19.14 RELIANCE OF PUBLIC TRUSTEE. As to all matters concerning the existence
of defaults hereunder and the amount of indebtedness subject to the Debentures
and secured hereby, as well as similar or related matters, the Public Trustee
is hereby authorized by Borrower to rely conclusively upon, without further
inquiry, the affidavit of any officer of a Lender.
19.15 CONTEST OF CERTAIN CLAIMS. Notwithstanding anything to the contrary
herein, Borrower shall not be in default for failure to pay or discharge Taxes,
Other Charges or mechanic's or materialman's lien asserted against the Property
if, and so long as, (a) Borrower shall have notified each Lender of same within
ten (10) days of obtaining knowledge thereof; (b) Borrower shall diligently and
in good faith contest the same by appropriate legal proceedings which shall
operate to prevent the enforcement or collection of the same and the sale of
the Property or any party thereof, to satisfy the same; (c) Borrower shall have
furnished to the Lenders or their joint designee a cash deposit, or an
indemnity bond or other security or assurances satisfactory to each Lender with
a surety satisfactory to each Lender, in the amount of the Taxes, Other Charges
or mechanic's or materialman's lien claim, plus a reasonable additional sum to
pay all costs, interest and penalties that may be imposed or incurred in
connection therewith, to assure payment of the matters under contest and to
prevent any sale or forfeiture of the Property or any part hereof; (d) Borrower
shall promptly upon final determination thereof pay the amount of any such
Taxes, Other Charges or claim so determined, together with all costs, interest
and penalties which may be payable in connection therewith; (e) the failure to
pay the Taxes, Other Charges or mechanic's or materialman's lien claim does not
constitute a default under any other deed of trust, mortgage or security
interest covering or affecting any part of the Property; and (f)
notwithstanding the foregoing, Borrower shall immediately upon request of a
Lender pay (and if Borrower shall fail so to do, a Lender may, but shall not be
required to, pay or cause to be discharged or bonded against) any such Taxes,
Other Charges or claim notwithstanding such contest, if in the opinion of such
Lender, the Property or any part thereof or interest therein may be in danger
of being sold, forfeited, foreclosed, terminated, canceled or lost. A Lender
may pay over any such cash deposit or part hereof to the claimant entitled
thereto at any time when, in the judgment of such Lender, the entitlement of
such claimant is established.
20 - HAZARDOUS SUBSTANCES
20.1 HAZARDOUS SUBSTANCES. Borrower covenants and agrees that: (a) all uses
and operations on or of the Property, whether by Borrower or any other person
or entity, shall be in compliance with all Environmental Laws and permits
issued pursuant thereto; (b) there shall be no Releases of Hazardous Substances
in, on, under or from the Property by Borrower or anyone controlled by,
controlling or under common control with Borrower; (c) Borrower shall keep the
Property free and clear of all liens and other encumbrances imposed pursuant to
any Environmental Law, whether due to any act or omission of Borrower or any
other person or entity (the "Environmental Liens"); (d) Borrower shall, at its
sole cost and expense, perform any environmental site assessment or other
investigation of environmental conditions in connection with the Property,
pursuant to any written request of a Lender, and share with each Lender the
Page C-40
reports and other results thereof, and each Lender and all Indemnified Parties
shall be entitled to rely on such reports and other results thereof; (e)
Borrower shall, at its sole cost and expense, comply with all reasonable
written requests of a Lender to (i) reasonably effectuate Remediation of any
condition (including but not limited to a Release of a Hazardous Substance) in,
on, under or from the Property; (ii) comply or cause compliance by any other
tenant or user of the Property with any Environmental Law; (iii) comply or
cause compliance by any other tenant or user of the Property with any directive
from any governmental authority; and (iv) take any other reasonable action
necessary or appropriate for protection of human health or the environment; (f)
Borrower shall not do or allow any tenant or other user of the Property to do
any act that materially increases the dangers to human health or the
environment, poses an unreasonable risk of harm to any person or entity
(whether on or off the Property), impairs or may impair the value of the
Property, is contrary to any requirement of any insurer, constitutes a public
or private nuisance, constitutes waste, or violates any covenant, condition,
agreement or easement applicable to the Property; and (g) Borrower shall
immediately notify each Lender in writing of (i) any presence or Releases or
threatened Releases of Hazardous Substances in, on, under, from or migrating
towards the Property; (ii) any non-compliance with any Environmental Laws
related in any way to the Property; (iii) any actual or potential Environmental
Lien; (iv) any required or proposed Remediation of environmental conditions
elating to the Property; and (v) any written or oral notice or other
communication of which Borrower becomes aware from any source whatsoever
(including but not limited to a governmental entity) relating in any way to
Hazardous Substances or Remediation thereof, possible liability of any person
or entity pursuant to any Environmental Law, other environmental conditions in
connection with the Property, or any actual or potential administrative or
Judicial proceedings in connection with anything referred to in this Security
Instrument.
20.2 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES. To the best of Borrower's
knowledge, (a) there are no Hazardous Substances (defined below) or underground
storage tanks in, on, or under the Property, except those that are both (i) in
compliance with all Environmental Laws (defined below) and with permits issued
pursuant thereto and (ii) fully disclosed to each Lender in writing pursuant to
the written report(s) resulting from the environmental assessment(s) of the
Property delivered to each Lender; (b) there are no past, present or threatened
Releases (defined below) of Hazardous Substances in, on, under or from the
Property except as disclosed to each Lender in writing and Borrower has
delivered to each Lender true and correct copies of any and all environmental
reports and assessments pertaining to the Property that are in Borrower's
possession or reasonable control; (c) there is no threat of any Release of
Hazardous Substances migrating to the Property; (d) there is no past or present
non-compliance with Environmental Laws, or with permits issued pursuant
thereto, in connection with the Property; (e) Borrower does not know of, and
has not received, any written notice or other communication from any person or
entity (including but not limited to a governmental entity) relating to
Hazardous Substances or Remediation (defined below) thereof, of possible
liability of any person or entity pursuant to any Environmental Law, other
environmental conditions in connection with the Property, or any actual or
Page C-41
potential administrative or judicial proceedings in connection with any of the
foregoing; and (f) Borrower has truthfully and fully provided to each Lender,
in writing, any and all information relating to conditions in, on, under or
from the Property that is known to Borrower and that is contained in files and
records of Borrower, including but not limited to any reports relating to
Hazardous Substances in, on, under or from the Property and/or to the
environmental condition of the Property.
20.3 INDEMNIFIED PARTIES' RIGHTS/COOPERATION AND ACCESS. Indemnified Parties
and any other person or entity designated by Indemnified Parties (including but
not limited to any receiver, any representative of a governmental entity and
any environmental consultant), shall have the right but not the obligation to
enter upon the Property at all reasonable times to assess any and all aspects
of the environmental condition of the Property and its use, including but not
limited to, conducting any environmental assessment or audit (the scope of
which shall be determined in each Lender's sole and absolute discretion) and
taking samples of soil, groundwater or other water, air or building materials,
and conducting other invasive testing. Borrower shall cooperate with and
provide access to Indemnified Parties and any such person or entity designated
by Indemnified Parties. All such investigations shall be performed at each
Lender's sole cost and expenses except following an Event of Default, in which
case all such investigations shall be performed at Borrower's sole cost and
expense.
20.4 INDEMNIFICATION. Borrower covenants and agrees at its sole cost and
expense, to protect, defend, indemnify, release and hold Indemnified Parties
harmless from and against any and all Environmental Losses (defined below)
imposed upon or incurred by or asserted against any Indemnified Parties and
directly or indirectly arising out of or in any way relating to any one or more
of the following (except to the extent the same relate solely to Hazardous
Substances first introduced to the Property by anyone other than Borrower or
its agents or employees following the foreclosure of this Security Instrument
(or the delivery and acceptance of a deed in lieu of such foreclosure), the
expiration of any applicable right of redemption and the obtaining by the
purchaser at such foreclosure sale or grantee under such deed of possession of
the Property): (a) the past, present or future presence, Release or threatened
Release of any Hazardous Substances in, on, above, or under the Property;
b) any past, present or threatened non-compliance or violations of any
Environmental Laws (or permits issued pursuant to any Environmental Law) in
connection with the Property or operations thereon; (c) any legal or
administrative processes or proceedings or judicial proceedings in any way
connected with any matter addressed in this Article 20; (d) any personal
injury, wrongful death, or property or other damage arising under any statutory
or common law or tort law theory concerning Hazardous Substances; and (e) any
misrepresentation or inaccuracy in any representation or warranty or material
breach or failure to perform any covenants or other obligations pursuant to
this Article 20.
Page C-42
20.5 DUTY TO DEFEND AND ATTORNEYS AND OTHER FEES AND EXPENSES. Upon written
request by any Indemnified Party, Borrower shall defend same (if requested by
any Indemnified Party, in the name of the Indemnified Party) by attorneys and
other professionals approved by the Indemnified Parties. Notwithstanding the
foregoing, any Indemnified Parties may, in their sole and absolute discretion,
engage their own attorneys and other professionals to defend or assist them,
and, at the option of Indemnified Parties, their attorneys shall control the
resolution of any claim or proceeding. Upon demand, Borrower shall pay or, in
the sole and absolute discretion of the Indemnified Parties, reimburse, the
Indemnified Parties for the payment of reasonable fees and disbursements of
attorneys, engineers, environmental consultants, laboratories and other
professionals in connection therewith.
20.6 DEFINITIONS. As used in this Article 20, the following terms shall have
the following meanings:
"Environmental Law" means any present and future federal, state and local laws,
statutes, ordinances, rules, regulations and the like, as well as common law,
relating to protection of human health or the environment, relating to
Hazardous Substances, relating to liability for or costs of Remediation or
prevention of Releases of Hazardous Substances or relating to liability for or
costs of other actual or threatened danger to human health or the environment.
The term "Environmental Law" includes, but is not limited to, the following
statutes, as amended, any successor thereto, and any regulations promulgated
pursuant thereto, and any state or local statutes, ordinances, rules,
regulations and the like addressing similar issues: the Comprehensive
Environmental Response, Compensation and Liability Act; the Emergency Planning
and Community Right-to-Know Act; the Hazardous Substances Transportation Act;
the Resource Conservation and Recovery Act (including but not limited to
Subtitle I relating to underground storage tanks); the Solid Waste Disposal
Act; the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act;
the Safe Drinking Water Act; the Occupational Safety and Health Act; the
Federal Water Pollution Control Act; the Federal Insecticide, Fungicide and
Rodenticide Act; the Endangered Species Act; the National Environmental Policy
Act; and the River and Harbors Appropriation Act. The term "Environmental Law"
also includes, but is not limited to, any present and future federal, state
and local laws, statutes, ordinances, rules, regulations and the like, as well
as common law: conditioning transfer of property upon a negative declaration or
other approval of a governmental authority of the environmental condition of
the property; requiring notification or disclosure of Releases of Hazardous
Substances or other environmental condition of the Property to any governmental
authority or other person or entity, whether or not in connection with transfer
of title to or interest in property; imposing conditions or requirements in
connection with permits or other authorization for lawful activity; relating to
nuisance, trespass or other causes of action related to the Property; and
relating to wrongful death, personal injury, or property or other damage in
connection with any physical condition or use of the Property.
Page C-43
"Environmental Losses" includes any losses, damages, costs, fees, expenses,
claims, suits, judgments, awards, liabilities (including but not limited to
strict liabilities), obligations, debts, diminutions in value, fines,
penalties, charges, costs of Remediation (whether or not performed
voluntarily), amounts paid in settlement, foreseeable and unforeseeable
consequential damages, litigation costs, attorneys' fees, engineers' fees,
environmental consultants' fees, and investigation costs (including but not
limited to costs for sampling, testing and analysis of soil, water, air,
building materials, and other materials and substances whether solid, liquid or
gas), of whatever kind or nature, and whether or not incurred in connection
with any judicial or administrative proceedings, actions, claims, suits,
judgments or awards.
"Hazardous Substances" includes but is not limited to any and all substances
(whether solid, liquid or gas) defined, listed, or otherwise classified as
pollutants, hazardous wastes, hazardous substances, hazardous materials,
extremely hazardous wastes, or words of similar meaning or regulatory effect
under any present or future Environmental Laws or that may have a negative
impact on human health or the environment, including but not limited to
petroleum and petroleum products, asbestos and asbestos-containing materials,
polychlorinated biphenyls, lead, radon, radioactive materials, flammables and
explosives.
"Legal Action" means any claim, suit or proceeding, whether administrative or
judicial in nature.
"Release" with respect to any Hazardous Substance includes but is not limited
to any release, deposit, discharge, emission, leaking, leaching, spilling,
seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping,
disposing or other movement of Hazardous Substances.
"Remediation" includes but is not limited to any response, remedial, removal,
or corrective action; any activity to clean up, detoxify, decontaminate,
contain or otherwise remediate any Hazardous Substance; any actions to prevent,
cure or mitigate any Release of any Hazardous Substance; any action to comply
with any Environmental Laws or with any permits issued pursuant thereto; any
inspection, investigation, study, monitoring, assessment, audit, sampling and
testing, laboratory or other analysis, or evaluation relating to any Hazardous
Substances or to anything referred to herein.
21 - STATE SPECIFIC PROVISIONS
21.1 POWER OF SALE. Upon the occurrence and continuance of an Event of
Default, a Lender may file notice with the Public Trustee declaring such Event
of Default and such Lender's election and demand for sale, in writing, as
provided by law, and requesting that the Property be advertised for sale and
sold in accordance with the laws of the State of Colorado. Upon receipt of
such notice of election and demand for sale, the Public Trustee shall cause a
copy of the same to be recorded in the Recorder's office of the county in
which the Property is situated, and thereupon the Public Trustee shall sell
Page C-44
and dispose of the Property and all the right, title and interest of Borrower
at public auction at the front door of the Courthouse or City and County
Building in the County of El Paso and State of Colorado, or on the Land,
public notice having been previously given of the time and place of such sale,
in accordance with the laws of the State of Colorado, in some newspaper of
general circulation at the time published in said County, together with such
other notice, if any, as may then be required by law, and shall issue, execute
and deliver a certificate of purchase, public trustee's deed or certificate of
redemption in the manner provided by law to the party entitled thereto. The
Public Trustee's deed may be in the ordinary form of conveyance. The Public
Trustee shall, out of the proceeds or avails of such sale, after first paying
and retaining all fees, charges and costs of making said sale, including
reasonable sums for attorney's fees, pay to each Lender the amount of its
respective Debt, rendering the overplus, if any, unto Borrower or unto its
legal representatives, successors or assigns or unto such other persons as may
be entitled thereto by law, provided that it shall not be the obligation of
any Lender to see to the application of such funds. Each Lender or any
combination of Lenders may purchase the Property or any part thereof at such
sale. If a release deed be required, it is agreed that Borrower will pay the
expense thereof.
21.2 CONFLICTING PROVISIONS. The provisions of this Article are intended to
supplement, and not limit, the other provisions of this Security Instrument;
provided, however, that in the event the provisions of this Article contradict
any other provision of this Security Instrument, the provisions of this
Article shall govern.
22 - MULTIPLE LENDER PROVISION
22.1 MULTIPLE LENDER PROVISION. Notwithstanding anything to the contrary
contained herein, Borrower and each Lender, by its acceptance hereof, hereby
acknowledge and agree as follows:
(a) Wherever in this Security Instrument the consent or approval of "each
Lender" is required for any matter or thing or a matter or thing is
required to be satisfactory to "each Lender", then such matter or
thing must be consented to, approved by or satisfactory to all
Lenders and if any Lender shall disapprove same or find same to be
unsatisfactory, then Borrower shall be prohibited from taking any
action with respect to such matter or thing.
(b) Subject to Section 22.2(e) below, wherever in this Security
Instrument "a Lender" is granted the right to take an action
(including, without limitation, the exercise of remedies under
Article 10), make an election or request, approve a request or
otherwise act, then any Lender may take such action, make such
election or request, approve such request or otherwise act, without
the participation by or consent of any other Lender.
Page C-45
(c) Wherever in this Security Instrument funds are required to be
deposited with or held by "the Lenders" (including, without
limitation, funds deposited in the Escrow Fund and/or the Net
Proceeds), each Lender shall receive a portion of such funds equal to
(x) such Lender's Proportionate Loan Share (as hereinafter defined)
of (y) the funds to be deposited with or held by the Lenders. Each
Lender shall hold and apply its proportionate share of such deposited
funds in accordance with this Security Instrument.
(d) Any funds received by a Lender pursuant to this Security Instrument
shall be allocated between and paid to the Lenders in accordance with
each Lender's Proportionate Loan Share. To the extent that a Lender
receives greater than its Proportionate Loan Share, such Lender shall
promptly remit such overpayment to each other Lender as required to
comply with this Security Instrument and the Debentures. Each Lender
may determine the order in which to apply funds received by it
regardless of the order which any other Lender applies funds (e.g., a
Lender may determine to apply funds first to expenses, second to
interest and third to principal and a second Lender may determine to
apply funds first to interest, second to expenses and third to
principal).
(e) If an event occurs which with the given of notice or the passage of
time would constitute an Event of Default, then a Lender shall have
the right to deliver any notice required to be given to the Borrower
in connection with such event (and such notice shall be deemed to be
given on behalf of all Lenders).
(f) If an Event of Default occurs and a Lender takes action to exercise
remedies under this Security Instrument, then (i) if the exercise of
a remedy would preclude any other Lender from exercising the same
remedy or would make it impractical or impossible for any other
Lender to exercise such remedy, then any action by such Lender in
exercising such remedy shall automatically be deemed to have been
taken (and shall be taken) on behalf of each other Lender (e.g., if
such Lender elects to institute a foreclosure proceeding and/or enter
the Property and collect Rents, then such Lender shall automatically
cause such foreclosure proceeding to be instituted with respect to
the entire amount of the Debt due to all Lenders and shall collect
such Rents on behalf of all Lenders and any funds received by such
Lender shall be allocated between the Lenders in proportion to their
Proportionate Loan Share), (ii) if the exercise of a remedy would not
preclude any other Lender from exercising the same remedy or would
not make it impractical or impossible for any other Lender to
exercise such remedy or any other remedy afforded to a Lender, any
action by such Lender may be taken by such Lender on its own behalf
with respect to its Proportionate Loan Share of the Debts (e.g., a
Lender may seek to recover a judgment on any Debenture either before,
during or after any proceeding for enforcement of this Security
Instrument or other Loan Document if such recovery would not preclude
Page C-46
any other Lender from exercising the same remedy or exercising any
other remedy afforded to a Lender) and (iii) no Lender shall (x)
except as provided in subclause (f)(i) above, take or have the right
to take any action which would be prejudicial to the exercise of any
other Lender's remedies or take an action which would be deemed an
election of remedies by all of the Lenders under this Security
Instrument (and if any such action is taken without the consent of
the affected Lender, same shall be deemed to be void and of nor force
and effect) or (y) waive, relinquish, reduce or otherwise abrogate or
limit any right, claim, remedy, interest, lien or other matter to
which any other Lender is entitled without the consent of such Lender
(and if any such action is taken, same shall be deemed to be void and
of nor force and effect). In no event shall the foregoing preclude
any Lender from exercising any remedy granted to a Lender under any
other Loan Document (including, without limitation, the conversion by
a Lender of its Debenture to common stock of Borrower).
(g) Each Lender (each, an "Indemnifying Lender") hereby indemnifies and
holds harmless each other Lender (each, an "Indemnified Lender") from
and against any and all losses, claims, liabilities, judgments, costs
and expenses (including, without limitation, reasonable legal fees,
costs and disbursements) sustained by an Indemnified Lender as a
result of the actions or omissions of the Indemnifying Lender which
are determined by a final, non-appealable order of a court of
competent jurisdiction or arbitration proceeding to be in violation of
the terms of this Security Instrument (including, without limitation,
a claim by Borrower against the Lenders arising from the actions or
failure to act of any one Lender and/or a claim by an Indemnified
Lender against an Indemnifying Lender arising from a breach of the
provisions of this Section 22.1). In no event shall the Borrower be
deemed to be a third party beneficiary of the foregoing indemnity.
(h) As used herein "Proportionate Loan Share" shall mean, as to each
Lender, a percentage equal to (x) the amount due to such Lender under
the Loan Documents divided by (y) the total amount due to all of the
Lenders under the Loan Documents.
Page C-47
IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by Borrower as
of the day and year first above written.
BORROWER:
RAMTRON INTERNATIONAL CORPORATION, a Delaware corporation
By: /S/ XxXxx X. Xxxxxx
------------------------
Name: XxXxx X. Xxxxxx
Title: Chief Financial Officer
STATE OF Colorado )
) ss.:
COUNTY OF El Paso )
The foregoing instrument was acknowledged before me this 28th day of March,
2002, by XxXxx X. Xxxxxx as Chief Financial Officer of Ramtron International
Corporation, a Delaware corporation, on behalf of the corporation.
/S/ Xxxxxx X. Xxxxx
--------------------
Xxxxxx X Xxxxx
Notary Public
My Commission Expires: 1-8-05
Page C-48
EXHIBIT A
Description of Land
ALL of that certain lot, piece or parcel of land, with the buildings and
improvements thereon, situate, lying and being in El Paso County, Colorado and
being more particularly described as follows:
Xxx 0, Xxxxxxx Xxxxxx Xx. 0, Xxxxxx xx Xx Xxxx, Xxxxx of Colorado.
Page C-49
Exhibit D to Stock Purchase Agreement
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of March XX, 0000,
by and between RAMTRON INTERNATIONAL CORPORATION, a Delaware corporation (the
"Company"), and each of the entities whose names appear on the signature pages
hereof. Such entities are each referred to herein as a "Purchaser" and,
collectively, as the "Purchasers".
The Company has agreed, on the terms and subject to the conditions set forth
in the Securities Purchase Agreement, dated as of March 14, 2002 (the
"Securities Purchase Agreement"), to issue and sell to each Purchaser named
therein a 5% Secured Convertible Debenture (a "Debenture" and, collectively,
the "Debentures") and a Warrant (a "Warrant" and, collectively, the
"Warrants").
The Debentures are convertible into shares (the "Conversion Shares") of the
Company's common stock, par value $.01 per share (the "Common Stock"). The
Warrants are exercisable into shares of Common Stock (the "Warrant Shares") in
accordance with their terms.
In order to induce each Purchaser to enter into the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended (the "Securities Act"), and under
applicable state securities laws. Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the
Securities Purchase Agreement.
In consideration of each Purchaser entering into the Securities Purchase
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the meanings
specified:
(a) "Holder" means any person owning or having the right to acquire,
through conversion of the Debentures or exercise of the Warrants or
otherwise, Registrable Securities, including initially each Purchaser
and thereafter any permitted assignee thereof;
(b) "Effective Date" means the date on which a Registration Statement is
declared effective by the Securities and Exchange Commission (the
"Commission");
(c) "Filing Deadline" means the thirty-first (31st) day following the
Closing Date;
Page D-1
(e) "Registration Deadline" means the one hundred and twentieth (120th)
day following the Closing Date;
(f) "Registration Statement" means the Registration Statement relating to
resales of the Registrable Securities issued or issuable upon the
conversion or exercise of the Debentures and Warrants, respectively;
(j) "Register", "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement or
statements in compliance with the Securities Act and pursuant to Rule
415 under the Securities Act ("Rule 415") or any successor rule
providing for the offering of securities on a continuous or delayed
basis (a "Registration Statement"), and the declaration or ordering
of effectiveness of such registration statement by the Commission;
(k) "Registration Period" has the meaning set forth in paragraph 2(c)
below; and
(l) "Registrable Securities" means the Conversion Shares and the Warrant
Shares and any other shares of Common Stock issuable pursuant to the
terms of the Debentures or the Warrants, and any shares of capital
stock issued or issuable from time to time (with any adjustments) in
replacement of, in exchange for or otherwise in respect of the
Conversion Shares or the Warrant Shares.
2. REGISTRATION.
(a) Registration Statement. On or before the Filing Deadline, the
Company shall prepare and file with the Commission a Registration
Statement on Form S-3 as a "shelf" registration statement under Rule
415 covering the resale of a number of shares of Registrable
Securities equal to the one hundred and fifty percent (150%) of the
number of shares of Common Stock issuable on the Closing Date
pursuant to the Debentures and the Warrants at the conversion or
exercise prices then in effect (without giving effect to any
limitation on such conversion or exercise). The Registration
Statement shall state, to the extent permitted by Rule 416 under the
Securities Act, that it also covers such indeterminate number of
shares of Common Stock as may be required to effect conversion of the
Debentures and exercise of the Warrants in order to prevent dilution
resulting from stock splits, stock dividends or similar events.
(b) Effectiveness. The Company shall use its reasonable best efforts to
cause each Registration Statement to become effective as soon as
practicable following the filing thereof, but in no event later than
the Registration Deadline. The Company shall respond promptly to any
and all comments made by the staff of the Commission on the
Registration Statement (but in no event later than seven (7) Business
Days following the Company's receipt thereof), and shall submit to
the Commission, within one (1) Business Day after the Company learns
Page D-2
that no review of the Registration Statement will be made by the
staff of the Commission or that the staff of the Commission has no
further comments on the Registration Statement, as the case may be, a
request for acceleration of the effectiveness of the Registration
Statement to a time and date not later than forty-eight (48) hours
after the submission of such request. The Company will maintain the
effectiveness of the Registration Statement until the earlier to
occur of (i) the date on which all of the Registrable Securities
eligible for resale thereunder have been publicly sold pursuant to
either the Registration Statement or Rule 144 and (ii) the date on
which all of the Registrable Securities remaining to be sold under
the Registration Statement (in the reasonable opinion of counsel to
the Holder) may be immediately sold to the public without
registration and without regard to the amount of Registrable
Securities which may be sold by a Holder thereof at a given time (the
period beginning on the Closing Date and ending on the earlier to
occur of (i) or (ii) above being referred to herein as the
"Registration Period").
(d) Registration Default. If (A) the Registration Statement is not filed
on or before the Filing Deadline or declared effective by the
Commission on or before the Registration Deadline, (B) after the
Registration Statement has been declared effective by the Commission
and during a period in which an Allowed Delay (as hereinafter
defined) is not in effect, sales of Registrable Securities cannot be
made by a Holder under the Registration Statement for any reason not
within the exclusive control of such Holder (other than such
Registrable Securities as are then freely saleable pursuant to Rule
144(k)), or (C) an amendment to the Registration Statement, or a new
registration statement, required to be filed pursuant to the terms of
paragraph 4(k) below is not filed on or before the date required by
such paragraph, (each of (A), (B) and C) being referred to herein as
a "Registration Default"), the Company shall make payments to each
Holder equal to (i) for the first thirty (30) day period in which a
Registration Default occurs (prorated for any period of less than
thirty days), one and one-half percent (1.5%) of the principal amount
of the Debentures then held by such Holder and (ii) for each thirty
day period in which a Registration Default exists thereafter
(prorated for any period of less than thirty days), two percent (2%)
of such principal amount. Such payment shall be in addition to any
other remedies available to each Holder at law or in equity or
pursuant to the terms hereof or the Securities Purchase Agreement,
the Debentures, or otherwise.
3. PIGGYBACK REGISTRATION.
If at any time prior to the expiration of the Registration Period, (i) the
Company proposes to register shares of Common Stock under the Securities Act
in connection with the public offering of such shares for cash (a "Proposed
Registration") and (ii) a Registration Statement covering the sale of all of
the Registrable Securities is not then effective and available for sales
Page D-3
thereof by the Holders, the Company shall, at such time, promptly give each
Holder written notice of such Proposed Registration. Each Holder shall have
ten (10) Business Days from its receipt of such notice to deliver to the
Company a written request specifying the amount of Registrable Securities that
such Holder intends to sell and such Holder's intended method of distribution.
Upon receipt of such request, the Company shall use its best efforts to cause
all Registrable Securities which the Company has been requested to register to
be registered under the Securities Act to the extent necessary to permit their
sale or other disposition in accordance with the intended methods of
distribution specified in the request of such Holder; provided, however, that
the Company shall have the right to postpone or withdraw any registration
effected pursuant to this Section 3 without obligation to the Holder. If, in
connection with any underwritten public offering for the account of the
Company or for stockholders of the Company that have contractual rights to
require the Company to register shares of Common Stock, the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock which may be included in a Registration Statement because, in the
judgment of such underwriter(s), marketing or other factors dictate such
limitation is necessary to facilitate such offering, then the Company shall be
obligated to include in the Registration Statement only such limited portion
of the Registrable Securities with respect to which each Holder has requested
inclusion hereunder as such underwriter(s) shall permit. Any exclusion of
Registrable Securities shall be made pro rata among the Holders seeking to
include Registrable Securities in a Registration Statement, in proportion to
the number of Registrable Securities sought to be included by such Holders;
provided, however, that the Company shall not exclude any Registrable
Securities unless the Company has first excluded all outstanding securities,
the holders of which are not entitled to inclusion of such securities in the
Registration Statement or are not entitled to pro rata inclusion with the
Registrable Securities; and provided, further, that, after giving effect to
the immediately preceding proviso, any exclusion of Registrable Securities
shall be made pro rata with holders of other securities having the right to
include such securities in the Registration Statement.
4. OBLIGATIONS OF THE COMPANY.
In addition to performing its obligations hereunder, including without
limitation those pursuant to paragraphs 2(a), (b) and (c) above, the Company
shall:
(a) prepare and file with the Commission such amendments and supplements
to the Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to comply with
the provisions of the Securities Act or to maintain the effectiveness
of the Registration Statement during the Registration Period, or as
may be reasonably requested by a Holder in order to incorporate
information concerning such Holder or such Holder's intended method
of distribution;
Page D-4
(b) immediately following the Closing, secure the listing of all
Registrable Securities on the Nasdaq National Market System, and
provide each Holder with reasonable evidence thereof;
(c) furnish to each Holder such number of copies of the prospectus
included in the Registration Statement, including a preliminary
prospectus, in conformity with the requirements of the Securities
Act, and such other documents as such Holder may reasonably request
in order to facilitate the disposition of such Holder's Registrable
Securities;
(d) use all commercially reasonable efforts to register or qualify the
Registrable Securities under the securities or "blue sky" laws of
such jurisdictions within the United States as shall be reasonably
requested from time to time by a Holder, and do any and all other
acts or things which may be necessary or advisable to enable such
Holder to consummate the public sale or other disposition of the
Registrable Securities in such jurisdictions; provided that the
Company shall 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 jurisdiction;
(e) in the event of an underwritten public offering of the Registrable
Securities, enter into (together with all Holders proposing to
distribute Registrable Securities through such underwriting) and
perform its obligations under an underwriting agreement, in usual and
customary form reasonably acceptable to the Company, with the
managing underwriter of such offering;
(f) notify each Holder immediately after becoming aware of the occurrence
of any event as a result of which the prospectus included in the
Registration Statement, as then in effect, contains an untrue
statement of material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and as
promptly as practicable, prepare, file and furnish to each Holder a
reasonable number of copies of a supplement or an amendment to such
prospectus as may be necessary so that such prospectus does not
contain an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing, provided that, for not more than five (5) consecutive
Business Days (or a total of not more than thirty (30) calendar days
in any twelve (12) month period), in the event of a proposed merger
or similar transaction, during a period of time when the Company is
in possession of material information that its board of directors (A)
has determined, after advice of securities counsel, would be required
to be disclosed in an offering registered under the Securities Act
and (B) reasonably deems is in the Company's best interests not to
disclose publicly, and during any period of time necessary to
Page D-5
prepare file and furnish to each Holder a reasonable number of copies
of a supplement or an amendment to such prospectus included in any
Registration Statement as may be necessary in response to any notice
received by the Company pursuant to Section 5(f) of this Agreement in
order that such prospectus does not contain an untrue statement of
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, the Company may delay the
disclosure of such material non-public information (an "Allowed
Delay"); provided, further, that the Company shall promptly (i)
notify each Holder in writing of the existence of material non-public
information giving rise to an Allowed Delay (but in no event, without
the prior written consent of such Holder, shall the Company disclose
to such Holder any of the facts or circumstances regarding any
material non-public information) and (ii) advise each Holder in
writing to cease all sales under the Registration Statement until the
termination of the Allowed Delay;
(g) use all commercially reasonable efforts to prevent the issuance of
any stop order or other order suspending the effectiveness of the
Registration Statement and, if such an order is issued, to obtain the
withdrawal thereof at the earliest possible time and to notify each
Holder of the issuance of such order and the resolution thereof;
(h) furnish to each Holder, on the date that the Registration Statement
becomes effective, (x) a letter, dated such date, of outside counsel
representing the Company (and reasonably acceptable to such Holder)
addressed to such Holder, confirming the effectiveness of the
Registration Statement and, to the knowledge of such counsel, the
absence of any stop order, and (y) in the case of an underwriting,
(A) a copy of an opinion, dated such date, of such outside counsel,
in such form and substance as is required to be given to the
underwriters, and (B) a letter addressed to such Holder, dated such
date, from the Company's independent certified public accountants, in
such form and substance as is required to be given by the Company's
independent certified public accountants to such underwriters;
(i) provide to each Holder and its representatives the reasonable
opportunity to conduct a reasonable inquiry of the Company's
financial and other records during normal business hours and make
available its officers, directors and employees for questions
regarding information which such Holder may reasonably request in
order to fulfill any due diligence obligation on its part;
(j) permit counsel for each Holder to review the Registration Statement
and all amendments and supplements thereto, and any comments made by
the staff of the Commission concerning such Holder and/or the
transactions contemplated by the Transaction Documents and the
Company's responses thereto, within a reasonable period of time (but
in no event less than three (3) Business Days after such Holder has
Page D-6
received such documents) prior to the filing thereof with the
Commission (or, in the case of comments made by the staff of the
Commission, within a reasonable period of time following the receipt
thereof by the Company); and
(k) in the event that, at any time, the number of shares available under
the Registration Statement is insufficient to cover one hundred and
twenty five percent 125% of the Registrable Securities eligible for
resale thereunder and issuable under the related Debentures and
Warrants (such number to be determined using the Conversion Price or
Exercise Price in effect on such dates and without regard to any
restriction on the ability of a Holder to convert such Holder's
Debentures or exercise such Holder's Warrant as of such date) the
Company shall promptly amend the Registration Statement or file a new
registration statement, in any event as soon as practicable, but not
later than the tenth (10th) day following notice from a Holder of the
occurrence of such event, so that the Registration Statement or such
new registration statement, or both, covers no less than one hundred
and fifty percent (150%) of the Registrable Securities eligible for
resale thereunder and issuable under the related Debentures and
Warrants (such number to be determined using the Conversion Price or
Exercise Price in effect on such dates and without regard to any
restriction on the ability of a Holder to convert such Debentures or
exercise such Warrants as of such date). Any Registration Statement
filed pursuant to this paragraph 4 shall state that, to the extent
permitted by Rule 416 under the Securities Act, such Registration
Statement also covers such indeterminate number of additional shares
of Common Stock as may become issuable upon conversion of the
Debentures or exercise of the Warrants in full. Unless and until such
amendment or new Registration Statement becomes effective, each
Holder shall have the rights described in Section 2(d) above.
5. OBLIGATIONS OF EACH HOLDER.
In connection with the registration of Registrable Securities pursuant to a
Registration Statement, each Holder shall:
(a) timely furnish to the Company in writing such information regarding
itself and the intended method of disposition of such Registrable
Securities as the Company shall reasonably request in order to effect
the registration thereof;
(b) upon receipt of any notice from the Company of the happening of any
event of the kind described in paragraphs 4(f) or 4(g), immediately
discontinue any sale or other disposition of such Registrable
Securities pursuant to such Registration Statement until the filing
of an amendment or supplement as described in paragraph 4(f) or
withdrawal of the stop order referred to in paragraph 4(g), and use
commercially reasonable efforts to maintain the confidentiality of
such notice and its contents;
Page D-7
(c) in the event of an underwritten offering of such Registrable
Securities in which such Holder participates, enter into a customary
and reasonable underwriting agreement and execute such other
documents as the Company and the managing underwriter for such
offering may reasonably request;
(d) to the extent required by applicable law, deliver a prospectus to the
purchaser of such Registrable Securities;
(e) notify the Company when it has sold all of the Registrable Securities
held by it; and
(f) notify the Company in the event that any information supplied by such
Holder in writing for inclusion in such Registration Statement or
related prospectus is untrue or omits to state a material fact
required to be stated therein or necessary to make such information
not misleading in light of the circumstances then existing;
immediately discontinue any sale or other disposition of such
Registrable Securities pursuant to such Registration Statement until
the filing of an amendment or supplement to such prospectus as may be
necessary so that such prospectus does not contain an untrue
statement of material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing; and use
commercially reasonable efforts to assist the Company as may be
appropriate to make such amendment or supplement effective for such
purpose.
6. INDEMNIFICATION.
In the event that any Registrable Securities are included in a Registration
Statement under this Agreement:
(a) To the extent permitted by law, the Company shall indemnify and hold
harmless each Holder, the officers, directors, employees, agents and
representatives of such Holder, and each person, if any, who controls
such Holder within the meaning of the Securities Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
against any losses, claims, damages, liabilities or reasonable
out-of-pocket expenses (whether joint or several) (collectively,
including legal or other expenses reasonably incurred in connection
with investigating or defending same, "Losses"), insofar as any such
Losses arise out of or are based upon (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, or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading. Subject to the provisions of paragraph
6(c) below, the Company will reimburse such Holder, and each such
officer, director, employee, agent, representative or controlling
Page D-8
person for any legal or other expenses as reasonably incurred by any
such entity or person in connection with investigating or defending
any Loss; provided, however, that the foregoing indemnity shall not
apply to amounts paid in settlement of any Loss if such settlement is
effected without the consent of the Company (which consent shall not
be unreasonably withheld), nor shall the Company be obligated to
indemnify any person for any Loss to the extent that such Loss is
based upon and is in conformity with written information furnished by
such person expressly for use in such Registration Statement.
(b) To the extent permitted by law, each Holder who is named in such
Registration Statement as a selling stockholder, acting severally and
not jointly, shall indemnify and hold harmless the Company, the
officers, directors, employees, agents and representatives of the
Company, and each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act, against any Losses
to the extent (and only to the extent) that any such Losses are based
upon and in conformity with written information furnished by such
Holder expressly for use in such Registration Statement. Subject to
the provisions of paragraph 6(c) below, such Holder will reimburse
any legal or other expenses as reasonably incurred by the Company and
any such officer, director, employee, agent, representative, or
controlling person, in connection with investigating or defending any
such Loss; provided, however, that the foregoing indemnity shall not
apply to amounts paid in settlement of any such Loss if such
settlement is effected without the consent of such Holder (which
consent shall not be unreasonably withheld); and provided, further,
that, in no event shall any indemnity under this subsection 6(b)
exceed the net proceeds resulting from the sale of the Registrable
Securities sold by such Holder under such Registration Statement.
(c) Promptly after receipt by an indemnified party under this Section 6
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 6, deliver to the indemnifying party a written notice of
the commencement thereof and the indemnifying party shall have the
right to participate in and to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that
an indemnified party shall have the right to retain its own counsel,
with the reasonably incurred fees and expenses of one such counsel
for all indemnified parties to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate under applicable
standards of professional conduct due to actual or potential
conflicting 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, to the extent
Page D-9
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under
this Section 6 with respect to such action, 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 6 or with respect to any other action unless
the indemnifying party is materially prejudiced as a result of not
receiving such notice.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 6 is unavailable or insufficient to hold harmless an
indemnified party for any reason, the Company and each Holder agree,
severally and not jointly, to contribute to the aggregate Losses to
which the Company or such Holder may be subject in such proportion as
is appropriate to reflect the relative fault of the Company and such
Holder in connection with the statements or omissions which resulted
in such Losses; provided, however, that in no case shall such Holder
be responsible for any amount in excess of the proceeds resulting
from the sale of the Registrable Securities sold by it under the
Registration Statement. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission relates
to information provided by the Company or by such Holder. The
Company and each Holder agree that it would not be just and equitable
if contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. For purposes of this Section 6, each
person who controls a Holder within the meaning of either the
Securities Act or the Exchange Act and each officer, director,
employee, agent or representative of such Holder shall have the same
rights to contribution as such Holder, and each person who controls
the Company within the meaning of either the Securities Act or the
Exchange Act and each officer, director, employee, agent or
representative of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable
terms and conditions of this paragraph (d).
(e) The obligations of the Company and each Holder under this Section 6
shall survive the conversion of the Debentures and exercise of the
Warrants in full, the completion of any offering or sale of
Registrable Securities pursuant to a Registration Statement under
this Agreement, or otherwise.
7. REPORTS.
With a view to making available to each Holder the benefits of Rule 144 under
the Securities Act ("Rule 144") and any other similar rule or regulation of
the Commission that may at any time permit such Holder to sell securities of
the Company to the public without registration, the Company agrees to:
Page D-10
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the
Exchange Act; and
(c) furnish to such Holder, so long as such Holder owns any Registrable
Securities, forthwith upon written request (i) a written statement by
the Company, if true, that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act,
(ii) to the extent not publicly available through the Commission's
XXXXX database, a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably
requested by such Holder in connection with such Holder's compliance
with any rule or regulation of the Commission which permits the
selling of any such securities without registration.
8. MISCELLANEOUS.
(a) Expenses of Registration. All reasonable expenses, other than
underwriting discounts and commissions and fees and expenses of
counsel to each Holder, incurred in connection with the
registrations, filings or qualifications described herein, including
(without limitation) all registration, filing and qualification fees,
printers' and accounting fees, the fees and disbursements of counsel
for the Company, and the fees and disbursements incurred in
connection with the opinion and letter described in paragraph 4(h)
hereof, shall be borne by the Company.
(b) Amendment; Waiver. Any provision of this Agreement may be amended or
waived only pursuant to a written instrument executed by the Company
and each Holder. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each Holder, each future Holder,
and the Company. The failure of any party to exercise any right or
remedy under this Agreement or otherwise, or the delay by any party
in exercising such right or remedy, shall not operate as a waiver
thereof.
(c) Notices. Any notice, demand or request required or permitted to be
given by the Company or a Holder pursuant to the terms of this
Agreement shall be in writing and shall be deemed delivered (i) when
delivered personally or by verifiable facsimile transmission, unless
such delivery is made on a day that is not a Business Day, in which
case such delivery will be deemed to be made on the next succeeding
Business Day, (ii) on the next Business Day after timely delivery to
an overnight courier and (iii) on the Business Day actually received
if deposited in the U.S. mail (certified or registered mail, return
receipt requested, postage prepaid), addressed as follows:
Page D-11
If to the Company:
Ramtron International Corporation
0000 Xxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attn: XxXxx X. Xxxxxx, Chief Financial Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Coudert Brothers LLP
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. St. Clair, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
and if to a Holder, to such address as shall be designated by such
Holder in writing to the Company.
(d) Assignment. Upon the transfer of a Debenture or Warrant (or a part
thereof constituting 10% or more of the Registrable Securities
issuable upon conversion or exercise of such Debenture or Warrant) or
Registrable Securities by a Holder, the rights of such Holder
hereunder with respect to such Debenture or Warrant (or part thereof)
or securities so transferred shall be assigned automatically to the
transferee thereof, and such transferee shall thereupon be deemed to
be a "Holder" for purposes of this Agreement, as long as: (i) the
Company is, within a reasonable period of time following such
transfer, furnished with written notice of the name and address of
such transferee, (ii) the transferee agrees in writing with the
Company to be bound by all of the provisions hereof, and (iii) such
transfer is made in accordance with the applicable requirements of
the Securities Purchase Agreement; provided, however, that the
registration rights granted in this Agreement shall not be
transferred to any person or entity that receives a Debenture,
Warrant or Registrable Securities pursuant to an effective
registration statement under the Securities Act or pursuant to a
public transaction under Rule 144 or any successor provision thereto.
(e) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which together shall
be deemed one and the same instrument. This Agreement, once executed
by a party, may be delivered to any other party hereto by facsimile
transmission.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within the State of New
York.
Page D-12
(g) Most Favored Nations. The rights of the Purchasers and the
obligations of the Company set forth in Section 7.12 of the
Securities Purchase Agreement are hereby incorporated by reference
and made a part of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first-above written.
RAMTRON INTERNATIONAL CORPORATION
By:
---------------------------------
Name:
Title:
HALIFAX FUND, L.P.
By:
-----------------------
Name:
Title:
Page D-13
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first-above written.
RAMTRON INTERNATIONAL CORPORATION
By:
---------------------------------
Name:
Title:
XXXXXXXX CAPITAL CORP.
By:
-----------------------------
Name:
Title:
Page D-14
Ramtron International Corporation
Schedule 1.2 - Debt (subject to Schedule 4.5)
March 14, 2002
Indebtedness, liabilities and obligations to pay deferred purchase price of
property or services, other than trade accounts payable arising in the normal
course of business.
-----------------------------------------------------------------------------
None
Capital lease obligations
-------------------------
None
Debt of other guaranteed by Ramtron International Corp.
-------------------------------------------------------
Ramtron, the parent company, has guaranteed a 36-month equipment operating
lease its subsidiary, Enhanced Memory Systems, entered into with Cypress
Semiconductor on October 22, 2001. Payments on the lease are $75,733.32 per
month plus sales tax.
Liens, liabilities, and obligations secured by a lien existing on Ramtron's
property
---------------------------------------------------------------------------
None, other than exceptions 8-15 listed on Schedule B-2 of that certain title
insurance commitment dated February 28, 2002, and any liability in respect of
property taxes for the Real Property for the year 2002 and thereafter not yet
due or payable.
Reimbursement obligations of Ramtron in respect of letters of credit, banker's
acceptance, surety or other bonds and similar instruments
------------------------------------------------------------------------------
Outstanding letter of credit at US Bank for $150,000 for the benefit of
Comdisco should the Company fail to make operating lease payments. Monthly
lease payment is approximately $25,000 per month and expires in September
2002.
Indebtedness, liabilities and obligations of Ramtron to redeem or retire
shares of capital stock
------------------------------------------------------------------------
1,092 redeemable convertible preferred shares outstanding as of December 31,
2001, plus accrued dividends through July 31, 2002, must be redeemed July 31,
2002 if not converted to common stock by holders of these securities. Total
obligation approximates $1,174,453.
Page S-1
Ramtron International Corporation
Schedule 3.11 - Intellectual Property
March 14, 2002
A patent interference proceeding, which was declared in 1991 in the United
States Patent and Trademark Office (the "Patent Office") between the Company,
National Semiconductor Corporation ("National") and the Department of the Navy
in regard to one of the Company's issued United States patents, is continuing.
The patent involved covers a basic ferroelectric memory cell design invention
the Company believes is of fundamental importance to its FRAM business in the
United States. An interference is declared in the Patent Office when two or
more parties each claim to have made the same invention. The interference
proceeding is therefore conducted to determine which party is entitled to the
patent rights covering the invention. In the present interference contest,
the Company is the "senior" party, which means that it is in possession of the
issued United States Patent and retains all rights associated with such
patent. The other two parties involved in the interference are the "junior"
parties, and each has the burden of proof of convincing the Patent Office by a
preponderance of the evidence that it was the first to invent the subject
matter of the invention and thus is entitled to the corresponding patent
rights. Only the Company and National filed briefs in this matter. Oral
arguments were presented before the Patent Office on March 1, 1996.
The Patent Office decided the interference on May 6, 1997, holding that all of
the claims were patentable to National, one of the "junior" parties. The
other "junior" party, the Department of the Navy, was not granted any patent
claims pursuant to the interference proceedings. On June 20, 1997, the
Company filed a Request for Reconsideration with the Patent Office concerning
the interference decision. Pursuant to the Request for Reconsideration, the
Company requested that five separate issues be reconsidered because, from the
Company's perspective, they were either ignored or misconstrued in the
original decision. A decision on the Request for Reconsideration was issued
on November 19, 1998, again holding that all of the claims were patentable to
National. On January 9, 1999, the Company appealed the decision of the Patent
Office on one of the interference counts directly to the Court of Appeals for
the Federal Circuit. On February 2, 2000, the Court of Appeals vacated and
remanded the decision of the Patent Office for further proceedings. The
Company also filed complaints in Federal District Court seeking a review of
the decision of the Patent Office on the remaining interference counts. The
Company remains in possession of the issued United States Patent and retains
all rights associated with such patent while it pursues its appeal options.
The "junior" party has received no rights associated with this patent decision
and will not receive any such rights as long as the appeal process continues.
Under a Patent Office decision on August 13, 2001, the Company was found to be
the first to invent, however, the Patent Office concluded that the enablement
and best-mode requirements for patent issuance had not been met by the
Company. In October 2001, both the Company and National filed a Request for
Reconsideration with the Patent Office. The Patent Office response is still
pending. If the Company's Request for Reconsideration is denied, the Company
will appeal the decision of the Patent Office.
Page S-2
If the Company's patent rights that are the subject of the interference
proceeding are ultimately lost or significantly compromised, the Company would
be precluded from producing FRAM products in the United States using the
Company's existing design architecture, absent being able to obtain a suitable
license to exploit such rights. If such patent rights are ultimately awarded
to National, and if a license to such rights is not subsequently entered into
by the Company with National, National could use the patent to prevent the
manufacture, use or sale by the Company, and/or its licensees, within the
United States of any products that come within the scope of such patent
rights, which would include all FRAM products as currently designed, and which
would materially adversely affect the Company. The Company has vigorously
defended its patent rights in this interference contest and will continue such
efforts. The Company is uncertain as to the ultimate outcome of the
interference proceeding, as well as to the resulting effects upon the
Company's financial position or results of operations.
Page S-3
Ramtron International Corporation
Schedule 3.12 - Registration Rights; Rights of Participation
March 14, 2002
Entities or Individuals with Registration Rights
------------------------------------------------
Infineon Technologies, AG
National Electrical Benefit Fund
L. Xxxxx Xxxxx
Xxxxxxx Xxxxxxx
Xxxxxxxxx Xxxxx
Entities or Individuals with right of first refusal, preemptive right, right
of participation, or anti-dilutive right
----------------------------------------------------------------------------
Infineon Technologies AG, 20% shareholder of Ramtron, has a right of
participation to maintain a pro rata ownership position in Ramtron, pursuant
to a Securities Purchase Agreement dated December 14, 2000.
Page S-4
Ramtron International Corporation
Schedule 3.14 - Fees
March 14, 2002
Compensation and Fees Related to the Stock Purchase Transaction
---------------------------------------------------------------
Fees Payable To: Amount
--------------- ------
Cardinal Capital $225,000
TN Capital Equities, Ltd. $ 75,000
Cardinal Capital and TN Capital Equities, Ltd. are entitled to receive 5%
warrant coverage (73,099 warrants) on their respective portions of the funding
arrangement.
Page S-5
Ramtron International Corporation
Schedule 3.16 - Key Employees
March 14, 2002
Ramtron Key Employees
---------------------
L. Xxxxx Xxxxx
Xxxxxxx X. Xxxxxxxx
Xxxx X. Xxxxx
XxXxx X. Xxxxxx
Xxxxx X. Xxxxxxx
Page S-6
Ramtron International Corporation
Schedule 3.17 - Environment
March 14, 2002
None
Page S-7
Ramtron International Corporation
Schedule 3.18 - Pension Plan
March 14, 2002
Ramtron maintains a 401(K) plan for its employees, the Ramtron International
Corporation 401(K) Retirement Plan.
Ramtron maintains a standard employee benefit package that includes, health,
dental, life and disability insurance.
Page S-8
Ramtron International Corporation
Schedule 3.21 - Real Property Listing
March 14, 2002
Real Property Owned by Ramtron International Corporation
--------------------------------------------------------
All of that certain lot, piece or parcel of land, with buildings and
improvements thereon, situate, laying and being in El Paso County, Colorado
and being more particularly described as follows:
Xxx 0, Xxxxxxx Xxxxxx Xx. 0, Xxxxxx xx Xx Xxxx, Xxxxx of Colorado
Page S-9
Ramtron International Corporation
Schedule 3.5 - Capitalization
March 14, 2002
Authorized Capital: Shares
------------------ ------
Common stock 50,000,000
Preferred stock 10,000,000
Total Shares Outstanding:
------------------------
Common stock 22,081,443
Preferred stock 1,092,000
Expiration Exercise Currently
Holder Instrument Issue Date Date Price Shares Exercisable
------ ---------- ---------- ---------- -------- -------- -----------
Warrants:
--------
NEBF* Warrant 12/22/1999 09/30/2008 $2.25 805,697 805,697
NEBF* Warrant 12/22/1999 08/06/2009 $2.25 100,000 100,000
XXX Partners Warrant 02/11/2000 08/31/2002 $5.00 124,000 124,000
XXX Investments Warrant 02/12/2000 08/31/2002 $5.00 96,000 96,000
X. Xxxxxxxxxx Warrant 12/23/1997 12/23/2002 $5.00 8,059 8,059
Xxx Enterprises Warrant 12/23/1997 12/23/2002 $5.00 12,088 12,088
L. Xxxxx Xxxxx Warrant 01/18/2000 12/31/2007 $6.88 667,000 0
Xxx Xxxxxxx-Fine Warrant 03/09/2000 03/09/2003 $17.00 25,000 25,000
----------------------
Total Warrants 1,837,844 1,170,844
======================
*National Electrical Benefit Fund
Stock Options:
-------------
Key Employees:
L. Xxxxx Xxxxx Option 06/24/1992 06/24/2002 $20.75 10,000 10,000
Option 07/29/1994 07/29/2004 $20.75 1,750 1,750
Option 03/21/1995 03/21/2005 $20.75 40,000 40,000
Option 04/19/1996 04/19/2006 $32.50 10,000 10,000
Option 02/18/1997 02/18/2007 $34.70 10,000 10,000
Option 04/27/1998 02/18/2007 $22.50 20,000 15,000
Option 09/28/1999 02/18/2007 $2.25 200,000 200,000
Option 10/16/2001 02/18/2007 $1.88 25,000 25,000
Page S-10
Xxxxxxx X. Xxxxxxxx Option 12/14/2000 12/14/2010 $5.50 200,000 100,000
Option 10/16/2001 10/16/2011 $1.88 75,000 0
Xxxx X. Xxxxx Option 04/05/1995 04/05/2005 $20.75 8,000 8,000
Option 01/16/1996 01/16/2006 $32.50 9,000 9,000
Option 09/11/1996 09/11/2006 $34.45 20,000 20,000
Option 01/02/1998 01/02/2008 $28.44 9,000 9,000
Option 09/28/1999 09/28/2009 $2.25 100,000 100,000
Option 01/28/2000 01/28/2010 $7.44 125,000 62,500
Option 12/02/2000 12/02/2010 $5.47 75,000 18,750
Option 10/16/2001 10/16/2011 $1.88 50,000 0
XxXxx X. Xxxxxx Option 09/29/1993 09/29/2003 $20.75 550 550
Option 01/16/1996 01/16/2006 $32.50 3,449 3,449
Option 09/11/1996 09/11/2006 $34.45 4,000 4,000
Option 01/22/1998 01/22/2008 $25.08 3,000 3,000
Option 08/17/1999 08/17/2009 $2.19 13,199 13,199
Option 01/28/2000 01/28/2010 $7.44 50,000 25,000
Option 12/02/2000 12/02/2010 $5.47 75,000 18,750
Option 10/16/2001 10/16/2011 $1.88 50,000 0
Xxxxx X. Xxxxxxx Option 10/09/1995 10/09/2005 $40.10 2,000 2,000
Option 01/16/1996 01/16/2006 $32.50 6,485 6,485
Option 09/11/1996 09/11/2006 $34.45 20,000 20,000
Option 09/28/1999 09/28/2009 $2.25 75,000 75,000
Option 01/28/2000 01/28/2010 $7.44 75,000 37,500
Option 12/02/2000 12/02/2010 $5.47 75,000 18,750
Option 10/16/2001 10/16/2011 $1.88 50,000 0
Other employees Option Various Various $1.47-$1.90 743,425 127,600
Other employees Option Various Various $2.19-$2.99 341,393 271,093
Other employees Option Various Various $3.31-$5.59 339,307 67,730
Other employees Option Various Various $6.94-$7.63 440,173 259,309
Other employees Option Various Various $8.19-$17.81 63,930 31,309
Other employees Option Various Various $20.75-$28.45 87,165 87,165
Other employees Option Various Various $30.00-$40.95 232,495 232,495
----------------------
Total Options 3,738,321 1,943,384
======================
Remaining Shares Issuable Under
Existing Stock Option Programs:
------------------------------
1986 Stock Option Plan 0
1989 Stock Option Plan 0
1995 Stock Option Plan 1,827,402
1999 Stock Option Plan 7,361
Page S-11
Key Employee Stock Holdings:
---------------------------
L. Xxxxx Xxxxx 2,100 Shares
Xxxx X. Xxxxx 2,600 Shares
XxXxx X. Xxxxxx 100 Shares
Xxxxx X. Xxxxxxx 1,200 Shares
Redeemable Convertible Series A Preferred:
-----------------------------------------
Shares
Holder Held Par Value & Accrued Dividends
------ ------ -----------------------------
Xxxxxxxxxx X. Xxxxxx Trust 232 $237,867 Conversion price
$5.00, redeemable July 31, 2002
JMG Capital Partners, LP 430 $440,874 Conversion price
$5.00, redeemable July 31, 2002
Triton Capital Holdings, Inc. 430 $440,874 Conversion price
$5.00, redeemable July 31, 2002
Page S-12
Ramtron International Corporation
Schedule 3.7 - Third Party Rights
March 14, 2002
Infineon Technologies AG has contractual pre-emptive rights and other rights
as provided in the Share Purchase Agreement dated December 14, 2000, by and
between Infineon Technologies AG and Ramtron, a copy of which has been
provided to Purchasers and the Infineon Documents (as defined in the Security
Purchase Agreements) contain anti-dilution and other such rights.
Page S-13
Ramtron International Corporation
Schedule 3.8 - Changes in Financial Condition
March 14, 2002
The Company's liquidity has deteriorated from the most recent Disclosure
Document. Cash, cash equivalents and marketable equity securities have
decreased as a result of loan repayments to the National Electrical Benefit
Fund and the funding of operating losses.
Page S-14
Ramtron International Corporation
Schedule 4.5 - Debt
March 14, 2002
Ramtron retains the right to obtain debt secured by:
---------------------------------------------------
Accounts receivable of Ramtron and its subsidiaries
Inventory of Ramtron and its subsidiaries
Capital equipment under operating or capital lease obligations
Marketable securities Ramtron or its subsidiaries may acquire
Page S-15
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