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EXHIBIT 10.5
CONVERTIBLE SUBORDINATED NOTE PURCHASE AGREEMENT, dated as of
July 9, 1999, among ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC., a Delaware corporation having an
office at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Company")
and the individuals and entities whose names are set forth on Schedule 1.01
hereto, as such schedule may be amended from time to time (each, a "Purchaser"
and collectively the "Purchasers").
WHEREAS, the Company desires to sell to the Purchasers, and
the Purchasers desire to purchase from the Company, on the terms and subject to
the conditions set forth herein, 6% Convertible Subordinated Notes of the
Company due June 30, 2007, in a maximum aggregate principal amount of
$10,000,000;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto agree as follows:
I. PURCHASE AND SALE OF THE NOTES
SECTION 1.01. ISSUANCE AND SALE OF THE NOTES. (a) Subject to
the terms and conditions set forth herein, on the Initial Closing Date or on any
Subsequent Closing Date (each as hereinafter defined), as the case may be, the
Company shall execute, sell and deliver to each Purchaser who participates at
such closing, and each such Purchaser shall purchase from the Company, a 6%
Convertible Subordinated Note of the Company in substantially the form attached
hereto as Exhibit A, dated the Initial Closing Date or such Subsequent Closing
Date, as the case may be, and registered in the name of such Purchaser, in the
principal amount set forth opposite the name of such Purchaser on Schedule 1.01
hereof under the caption "Principal Amount of Note" (said notes, together with
any notes issued in exchange or substitution therefor, being hereinafter
collectively called the "Notes").
(b) On the Initial Closing Date or on any Subsequent Closing
Date, as the case may be, as payment in full for the Notes being purchased by it
hereunder, and against delivery thereof as aforesaid, each Purchaser shall
transfer the amount set forth opposite such Purchaser's name on Schedule 1.01
hereof under the caption "Principal Amount of Note" by wire transfer of
immediately available funds to an account designated by the Company two business
days prior to the Initial Closing Date or the Subsequent Closing Date, as the
case may be (unless waived by the respective Purchaser).
SECTION 1.02. CLOSING DATE. The initial closing of the sale
and delivery of Notes (the "Closing") shall take place at the offices of ▇▇▇▇,
Scholer, Fierman, ▇▇▇▇ & Handler, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, at Noon (local time) on July 9, 1999 (such date and time of the Closing
being herein called the "Initial Closing Date"). Subsequent closings, if any,
shall be held at such date, time and place as the Company and the Purchasers who
are acquiring Notes (it being expressly understood that no Purchaser shall be
obligated to acquire Notes at any subsequent closing solely by virtue of such
Purchaser's participation in any other closing) at each such subsequent closing
shall agree (such date and time of any such subsequent closing being herein
called a "Subsequent Closing Date").
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II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers as
follows:
SECTION 2.01. ORGANIZATION AND QUALIFICATION. The Company is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, with power and authority to conduct its
business as it is now being conducted, to own or use its properties and assets
that it purports to own or use and to perform its obligations under this
Agreement and under the Notes.
SECTION 2.02. CAPITALIZATION. (a) As of the Closing Date, the
capitalization of the Company shall be as set forth on Schedule 2.02 hereof. All
of the outstanding capital stock of the Company, has been duly authorized and
validly issued and is fully paid and nonassessable.
(b) Except as set forth on Schedule 2.02 hereof, as of the
date hereof, no subscription, warrant, option, convertible security, stock
appreciation or other right (contingent or other) to purchase or acquire any
shares of any capital stock of the Company is authorized or outstanding and
(except as otherwise expressly contemplated by this Agreement) there is not any
commitment of the Company to issue any shares, warrants, options or other such
rights or to distribute to holders of any class of its capital stock any
evidences of indebtedness or assets.
SECTION 2.03. AUTHORIZATION OF AGREEMENTS, ETC. (a) Each of
(i) the execution and delivery by the Company of this Agreement, (ii) the
performance by the Company of its obligations hereunder and (iii) the issuance,
sale and delivery by the Company of the Notes will not violate any provision of
law, any decree or order of any court or other agency of government, the
certificate of incorporation or the by-laws of the Company, or any provision of
any agreement or other instrument to which the Company or any of its properties
or assets is bound, or conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any such agreement or other
instrument, or result in the creation or imposition of any liens, claims,
charges, restrictions, rights of others, security interests, prior assignments
or other encumbrances (collectively, "Claims") in favor of any third person upon
any of the properties or assets of the Company.
(b) The shares of Preferred Stock of the Company to be issued
and delivered upon the conversion of the Notes (the "Conversion Shares") have
been duly authorized, and when issued and delivered upon conversion of the
Notes, will be validly issued, fully paid and nonassessable. Except as set forth
on Schedule 2.03(b), neither the issuance, sale and delivery of the Notes to the
Purchasers hereunder, nor the issuance and delivery of the Conversion Shares, is
subject to any preemptive rights or to any right of first refusal or other
similar right in favor of any person.
SECTION 2.04. VALIDITY. This Agreement has been duly executed
and delivered by the Company and constitutes the legal, valid and binding
obligation of the
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Company, enforceable against the Company in accordance with its terms. The
Notes, when issued and delivered in accordance with this Agreement, will
constitute legal, valid and binding obligations of the Company, enforceable
against it in accordance with their respective terms.
SECTION 2.05. GOVERNMENTAL APPROVALS. Subject to the accuracy
of the representations and warranties of the Purchasers set forth in Article III
hereof, no registration or filing with, or consent or approval of, or other
action by, any Federal, state or other governmental agency or instrumentality is
or will be necessary for the valid execution, delivery and performance of this
Agreement, the issuance, sale and delivery of the Notes or the issuance and
delivery of the Conversion Shares upon the conversion of the Notes, other than
such filings with and approvals of the Securities and Exchange Commission
("SEC") or any state securities commission or similar regulatory body as may be
necessary in connection with the commencement or consummation of the
transactions contemplated herein.
SECTION 2.06. ACTIONS PENDING. There is no action, suit,
investigation or proceeding pending or, to the best knowledge of the Company,
threatened against or affecting the Company, or any of its properties or rights,
before any court or by or before any governmental body or arbitration board or
tribunal and no judgment, decree, injunction or order of any court, governmental
department, commission, agency, instrumentality or arbitrator is outstanding
against the Company.
SECTION 2.07. COMPLIANCE WITH LAW. The Company is not in
default in any respect under any order or decree of any court, governmental
authority, arbitrator or arbitration board or tribunal or under any laws,
ordinances, governmental rules or regulations to which the Company or any of its
respective properties or assets is subject.
SECTION 2.08. OFFERING OF THE SECURITIES. Neither the Company
nor any person authorized or employed by the Company as agent, broker, dealer or
otherwise in connection with the offering or sale of the Notes has offered any
such securities for sale to, or solicited any offers to buy any such securities
from, or otherwise approached or negotiated with respect thereto with, any
person or persons, under circumstances that involved the use of any form of
general advertising or solicitation as contemplated by Rule 502(c) of Regulation
D promulgated under the Securities Act of 1933, as amended (the "Securities
Act"); and, assuming the accuracy of the representations and warranties of the
Purchasers set forth in Article III hereof, neither the Company nor any person
acting on the Company's behalf has taken or will take any action (including,
without limitation, any offer, issuance or sale of any securities of the Company
under circumstances which might require the integration of such transactions
with the sale of the Notes under the Securities Act or the rules and regulations
of the SEC thereunder) which would subject the offering, issuance or sale of the
Notes to the Purchasers, or the issuance and delivery of the Conversion Shares
to the registration provisions of the Securities Act.
SECTION 2.09. BROKERS. All negotiations relative to this
Agreement and the sale of the Notes contemplated hereby have been carried on by
the Company directly with the Purchasers, without the intervention of any other
person on behalf of the Company in such
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manner as to give rise to any valid claim by any other person against the
Purchasers for a finder's fee, brokerage commission or similar payment.
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, severally and not jointly, represents and
warrants to the Company as follows:
SECTION 3.01. AUTHORIZATION. The execution, delivery and
performance by such Purchaser of this Agreement and the purchase and receipt by
such Purchaser of the Notes being acquired by it hereunder, have been duly
authorized by all requisite action on the part of such Purchaser, and will not
violate any provision of law, any order of any court or other agency of
government, the charter or other governing documents of such Purchaser, or any
provision of any indenture, agreement or other instrument by which such
Purchaser or any of such Purchaser's properties or assets are bound, or conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument, or
result in any claims upon any of the properties or assets of such Purchaser.
SECTION 3.02. VALIDITY. This Agreement has been duly executed
and delivered by such Purchaser and constitutes the legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in accordance
with its terms.
SECTION 3.03. INVESTMENT REPRESENTATIONS. (a) Such Purchaser
is acquiring the Notes being purchased by such Purchaser hereunder for such
Purchaser's own account, for investment, and not with a view toward the resale
or distribution thereof.
(b) Such Purchaser understands that he, she or it, as the case
may be, must bear the economic risk of such Purchaser's investment for an
indefinite period of time because the Notes are not registered under the
Securities Act or any applicable state securities laws, and may not be resold
unless subsequently registered under the Securities Act and such other laws or
unless an exemption from such registration is available.
(c) Such Purchaser is able to fend for itself in the
transactions contemplated by this Agreement and such Purchaser has the ability
to bear the economic risks of the investment in the Notes being purchased by it
hereunder for an indefinite period of time. Such Purchaser further acknowledges
that he, she or it, as the case may be, has received copies of the financial
statements of the Company and has had the opportunity to ask questions of, and
receive answers from, officers of the Company with respect to the business and
financial condition of the Company and the terms and conditions of the offering
of the Notes and to obtain additional information necessary to verify such
information or can acquire it without unreasonable effort or expense.
(d) Such Purchaser has such knowledge and experience in
financial and business matters that such Purchaser is capable of evaluating the
merits and risks of its
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investment in the Notes. Such Purchaser further represents that he, she or it,
as the case may be, is an "accredited investor" as such term is defined in Rule
501 of Regulation D of the SEC under the Securities Act with respect to its
purchase of the Notes, and that any such Purchaser that is a limited partnership
or a limited liability company has not been formed solely for the purpose of
purchasing the Notes.
(e) If such Purchaser is a limited partnership, such Purchaser
represents that it has been organized and is currently existing as a limited
partnership in good standing under the laws of the state of its formation.
(f) If such Purchaser is a limited liability company, such
Purchaser represents that it has been organized and is currently existing as a
limited liability company in good standing under the laws of the state of its
formation.
(g) If such Purchaser is a corporation, such Purchaser
represents that it has been organized and is currently existing as a corporation
in good standing under the laws of the state of its incorporation.
SECTION 3.04. GOVERNMENTAL APPROVALS. No registration or
filing with, or consent or approval of, or other action by, any Federal, state
or other governmental agency or instrumentality is or will be necessary by such
Purchaser for the valid execution, delivery and performance of this Agreement.
IV. CERTAIN TRANSFER RESTRICTIONS
SECTION 4.01. RESTRICTION ON TRANSFER. No Purchaser or any
other holder of any Note (such Purchaser or holder being referred to herein as a
"Holder") may assign, participate, transfer or otherwise convey such Note or any
of its rights or obligations thereunder or interest therein without the prior
written consent of the Company. Any purported transfer in contravention of the
foregoing sentence shall be void ab initio and of no effect. Notwithstanding the
foregoing, a holder of a Note may transfer such Note or any of its rights or
obligations thereunder to a trust for the benefit of such holder or any
immediate family member of such holder.
SECTION 4.02. TRANSFEREES BOUND; CERTAIN CONDITIONS TO
TRANSFER. Any transferee of a Holder and any direct or indirect transferee of
such a transferee (other than the Company) shall be subject to all the terms and
conditions, including the restrictions on transfer, set forth in Article IV of
this Agreement, and shall, prior to the transfer of all or any portion of the
Notes thereto, and as a condition to such transfer, (i) consent to be bound by
the terms of Article IV of this Agreement by executing and delivering to the
Company an instrument reasonably satisfactory to the Company accepting and
agreeing to the terms and conditions of Article IV of this Agreement, including
a counterpart signature page to this Agreement and (ii) pay to the Company a fee
sufficient to cover all reasonable expenses directly incurred by the Company
(including reasonable fees and expenses of counsel) in connection with such
transfer.
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No transfer of Notes may be made, and the Company may refuse to register any
transfer thereof, if such transfer would violate this Agreement or the
applicable securities laws of any applicable jurisdiction. The Company may, as a
condition to the registration of any transfer of Notes, require the transferor
to furnish to the Company an opinion of counsel reasonably acceptable to the
Company as to compliance with the foregoing.
V. MISCELLANEOUS
SECTION 5.01. SURVIVAL OF AGREEMENTS. All covenants,
agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement and the issuance, sale and delivery of
the Notes pursuant hereto, notwithstanding any investigation made at any time by
or on behalf of any party hereto. All statements contained in any certificate or
other instrument delivered by the Company hereunder shall be deemed to
constitute representations and warranties made by the Company.
SECTION 5.02. PARTIES IN INTEREST. All covenants and
agreements contained in this Agreement by or on behalf of any party hereto shall
bind and inure to the benefit of the respective successors and assigns of such
party hereto whether so expressed or not.
SECTION 5.03. NOTICES. Notices, consents and other
communications provided for herein shall be in writing and shall be delivered or
mailed (or in the case of telex or facsimile communication, delivered by graphic
scanning, telecopier or other telecommunications equipment, with receipt
confirmed) addressed to (i) the Company at its address set forth above and (ii)
each Purchaser at its address set forth on Schedule 1.01 hereof. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt if
hand delivered or three days after being sent by registered or certified mail,
postage prepaid, return receipt requested, if by mail, or upon receipt if by any
facsimile or other telecommunications equipment, in each case addressed to such
party as provided in this Section 5.03 or in accordance with the latest
unrevoked direction from such party.
SECTION 5.04. HEADINGS. The headings of the sections and
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
SECTION 5.05. SUBORDINATION. The Company's obligations under
the Notes shall be subordinate and junior to all indebtedness constituting
Senior Indebtedness (as defined in Section 1.07 of Annex A to each Note) on the
terms and conditions set forth in each Note.
SECTION 5.06. ASSIGNMENT. This Agreement shall not be assigned
by operation of law or otherwise without the consent of each of the parties
hereto.
SECTION 5.07. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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SECTION 5.08. GOVERNING LAW. THIS AGREEMENT SHALL, IN
ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK, BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
ANY CONFLICTS OF LAWS PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF
THE LAWS OF ANY OTHER JURISDICTION.
[Remainder of Page Intentionally Blank]
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IN WITNESS WHEREOF, the Company and the Purchasers have
executed this Agreement as of the day and year first above written.
COMPANY:
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
PURCHASERS:
FDG-CHASE CAPITAL PARTNERS LLC
By: FDG Capital Associates LLC.,
its Managing Member
By: /s/ M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Manager
FDG CAPITAL PARTNERS, LLC
By: FDG Capital Associates LLC.,
its Managing Member
By: /s/ M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Manager
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ JULY, 1999 GRAT
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Trustee
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ JULY, 1999 GRAT
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Trustee
CB CAPITAL INVESTORS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: General Partner
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Schedule 1.01
Name and Address of Purchaser Principal Amount of Note
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FdG-Chase Capital Partners LLC $292,683
c/o FdG Associates
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
FdG Capital Partners, LLC $3,707,317
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ July, 1999 GRAT $1,000,000
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ July, 1999 GRAT $1,000,000
c/o ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
CB Capital Investors, Inc. $4,000,000
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇