EXHIBIT 10.15
PCD INC.
SUBORDINATED DEBENTURE AND WARRANT
PURCHASE AGREEMENT
TABLE OF CONTENTS
1. PURCHASE AND SALE OF SUBORDINATED DEENTURE AND WARRANT . . .1
1.1 Sale and Issuance of Subordinated Debenture . . . . . .1
1.2 Sale and Issuance of Warrant . . . . . . . . . . . . . 1
1.3 Purchase Price . . . . . . . . . . . . . . . . . . . . 1
1.4 Closing . . . . . . . . . . . . . . . . . . . . . . . .2
1.5 Nasdaq Limitation . . . . . . . . . . . . . . . . . . .2
1.6 HSR Limitation . . . . . . . . . . . . . . . . . . . . 2
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY . .2
2.1 Organization; Good Standing, Qualification . . . . . . 2
2.2 Authorization . . . . . . . . . . . . . . . . . . . . .3
2.3 Valid Issuance of Debenture, Warrant and Common Stock .3
2.4 Governmental Consents . . . . . . . . . . . . . . . . .3
2.5 Capitalization and Voting Rights . . . . . . . . . . . 4
2.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . .5
2.7 Contracts and Other Commitments . . . . . . . . . . . .5
2.8 Related-Party Transactions . . . . . . . . . . . . . . 5
2.9 Permits . . . . . . . . . . . . . . . . . . . . . . . .6
2.10 Compliance With Other Instruments . . . . . . . . . . .6
2.11 Litigation . . . . . . . . . . . . . . . . . . . . . . 6
2.12 Offering . . . . . . . . . . . . . . . . . . . . . . . 6
2.13 Title to Property and Assets; Leases . . . . . . . . . 7
2.14 Financial Statements . . . . . . . . . . . . . . . . . 7
2.15 Changes . . . . . . . . . . . . . . . . . . . . . . . .7
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2.16 Proprietary Rights . . . . . . . . . . . . . . . . . . 9
2.17 Employees; Employee Compensation . . . . . . . . . . . 9
2.18 Tax Returns, Payments, and Elections . . . . . . . . .10
2.19 Insurance . . . . . . . . . . . . . . . . . . . . . . 10
2.20 Environmental, Health and Safety Laws . . . . . . . . 10
2.21 SEC Information . . . . . . . . . . . . . . . . . . .10
2.22 Massachusetts Statutes . . . . . . . . . . . . . . . .11
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER . . . . . .11
3.1 Authorization . . . . . . . . . . . . . . . . . . . . 11
3.2 Purchase Entirely for Own Account . . . . . . . . . . 11
3.3 Reliance Upon Purchaser's Representations . . . . . . 11
3.4 Receipt of Information . . . . . . . . . . . . . . . .12
3.5 Investment Experience; Accredited Investor . . . . . .12
3.6 Restricted Securities . . . . . . . . . . . . . . . . 12
3.7 Legends . . . . . . . . . . . . . . . . . . . . . . . 13
3.8 Public Sale . . . . . . . . . . . . . . . . . . . . . 13
4. CONDITIONS OF PURCHASER'S OBLIGATIONS AT CLOSING . . . . . 13
4.1 Representations and Warranties . . . . . . . . . . . .13
4.2 Performance . . . . . . . . . . . . . . . . . . . . . 13
4.3 Compliance Certificate . . . . . . . . . . . . . . . .14
4.4 Qualifications . . . . . . . . . . . . . . . . . . . .14
4.5 Proceedings and Documents . . . . . . . . . . . . . . 14
4.6 Nasdaq Letter . . . . . . . . . . . . . . . . . . . .15
4.7 Voting Agreement and Power of Attorney . . . . . . . .15
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4.8 Opinion of Company Counsel . . . . . . . . . . . . . .15
4.9 Registration Rights Agreement . . . . . . . . . . . . 17
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING . . . . 17
5.1 Representations and Warranties . . . . . . . . . . . .17
5.2 Qualifications . . . . . . . . . . . . . . . . . . . .17
6. REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . .18
7. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . .18
7.1 Survival OF Warranties . . . . . . . . . . . . . . . .18
7.2 Successors and Assigns . . . . . . . . . . . . . . . .18
7.3 Governing Law . . . . . . . . . . . . . . . . . . . . 18
7.4 Counterparts . . . . . . . . . . . . . . . . . . . . .18
7.5 Headings and Subheadings . . . . . . . . . . . . . . .18
7.6 Notices . . . . . . . . . . . . . . . . . . . . . . . 19
7.7 Amendments and Waivers . . . . . . . . . . . . . . . .19
7.8 Severability . . . . . . . . . . . . . . . . . . . . .19
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PCD INC.
SUBORDINATED DEBENTURE AND WARRANT
PURCHASE AGREEMENT
This Subordinated Debenture and Warrant Purchase Agreement
(this "Agreement") is made as of the 26th day of December,
1997, by and between PCD Inc., a Massachusetts corporation (the
"Company"), and ▇▇▇▇▇▇▇ Electric Co., a Missouri corporation
(the "Purchaser").
The parties hereby agree as follows:
1. PURCHASE AND SALE OF SUBORDINATED DEBENTURE AND WARRANT.
1.1 Sale and Issuance of Subordinated Debenture.
Subject to the terms and conditions of this Agreement, the
Purchaser agrees to purchase at the Closing and the Company
agrees to sell and issue to the Purchaser at the Closing a
subordinated debenture due December 31, 2000 in the original
principal amount of Twenty-Five Million Dollars ($25,000,000)
(the "Debenture"). The Debenture shall be substantially in the
form set forth in EXHIBIT A hereto.
1.2 Sale and Issuance of Warrant.
Subject to the terms and conditions of this Agreement, the
Purchaser agrees to purchase at the Closing and the Company
agrees to sell and issue to the Purchaser at the Closing a common
stock purchase warrant (the "Warrant") exercisable for 525,000
shares of common stock of the Company, $0.01 par value ("Common
Stock"), only as follows: (i) on and after the date hereof, the
Warrant shall be exercisable to the extent of 150,000 shares of
Common Stock; (ii) if the principal of and accrued interest and
costs and expenses under the Debenture have not been paid in full
at the close of business on December 31, 1998, the Warrant shall
be exercisable to the extent of an additional 225,000 shares of
Common Stock; and (iii) if the principal of and accrued interest
and costs and expenses under the Debenture have not been paid in
full at the close of business on December 31, 1999, the Warrant
shall be exercisable to the extent of an additional 150,000
shares of Common Stock. The Warrant shall be substantially in
the form set forth in EXHIBIT B hereto.
1.3 Purchase Price.
The purchase price for the Debenture shall be $25,000,000.
The purchase price for the Warrant shall be $5,250.
1.4 Closing.
(a) The purchase and sale of the Debenture and the Warrant
shall take place at 10:00 a.m. eastern time on December 26, 1997,
or at such other time as the Company and the Purchaser shall
mutually agree, either orally or in writing (which time is
designated as (the "Closing").
(b) At the Closing, the Company shall deliver to the
Purchaser the Debenture and the Warrant against payment of the
total purchase price therefor by certified check or wire transfer
to the account of the Company.
1.5 Nasdaq Limitation.
Notwithstanding any other provision of this Agreement or
any provision of the Debenture or the Warrant, until the Company
has obtained approval of its stockholders pursuant to the rules
of the Nasdaq Stock Market, Inc. ("Nasdaq"), or has obtained a
waiver in respect of such rules, the Purchaser and any subsequent
holder of either the Debenture or the Warrant shall be permitted
to convert into Common Stock an amount of principal or accrued
unpaid interest and costs and expenses under the Debenture, or
exercise a portion of the Warrant, only to the extent that all
such conversions and exercises together result in the issuance of
up to and no more than 4.99% of the Common Stock outstanding as
of the Closing.
1.6 HSR Limitation.
Notwithstanding any other provision of this Agreement, the
Purchaser and any subsequent holder of either the Debenture or
the Warrant shall be permitted to convert into Common Stock an
amount of principal or accrued unpaid interest or costs and
expenses under the Debenture, or exercise a portion of the
Warrant, only to the extent that the Purchaser and the Company
have obtained any required consent, authorization, order,
approval, exemption or waiver under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended ("HSR").
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
Subject to and except as set forth on a Schedule of
Exceptions furnished to the Purchaser, the Company hereby
represents and warrants to the Purchaser that:
2.1 Organization; Good Standing, Qualification.
The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth
of Massachusetts, has all requisite corporate power and authority
to own and operate its properties and assets and to carry on its
business as now conducted, to execute and deliver this Agreement,
the Debenture and the Warrant, to issue and sell the Debenture,
the Warrant and the Common Stock issuable upon conversion or
exercise thereof, and to carry out the provisions of this
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Agreement. The Company is duly qualified and is authorized to
transact business and is in good standing as a foreign
corporation in each jurisdiction in which the failure so to
qualify would have a material adverse effect on its business,
properties or financial condition.
2.2 Authorization.
Except to the extent that stockholder approval is required
pursuant to paragraph 1.5 above, all corporate action on the part
of the Company, its officers, directors and stockholders
necessary for the authorization, execution and delivery of this
Agreement, the Debenture and the Warrant, the performance of all
obligations of the Company hereunder and thereunder at the
Closing and the authorization, reservation for issuance,
issuance, sale, and delivery of the Debenture and the Warrant
being sold hereunder and the Common Stock issuable upon
conversion or exercise thereof has been taken or will be taken
before the Closing, and this Agreement, the Debenture and the
Warrant, when executed and delivered, will constitute valid and
legally binding obligations of the Company, enforceable in
accordance with their respective terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of
creditors' rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief,
or other equitable remedies. The Company covenants to use its
best efforts to obtain, on or before June 30, 1998, any
stockholder approval of the Debenture and the Warrant required
under Nasdaq rules to permit the full conversion or exercise
thereof.
2.3 Valid Issuance of Debenture, Warrant and Common Stock.
The Debenture and the Warrant being purchased by the
Purchaser hereunder, when issued, sold, and delivered in
accordance with the terms of this Agreement, will be duly and
validly issued. The Common Stock issuable upon conversion of the
Debenture and upon exercise of the Warrant has been duly and
validly reserved for issuance and, upon issuance in accordance
with the terms of the Company's Restated Articles of Organization
(the "Restated Articles") will be duly and validly issued,
fully paid and nonassessable and will be free of restrictions on
transfer other than restrictions on transfer under this Agreement
and under applicable state and federal securities laws.
2.4 Governmental Consents.
No consent, approval, qualification, order or authorization
of, or filing with, any local, state, or federal governmental
authority is required on the part of the Company in connection
with the Company's valid execution, delivery, or performance of
this Agreement, the offer, sale or issuance of the Debenture, the
Warrant or the Common Stock issuable upon conversion or exercise
thereof, except as may be required under applicable state and
federal securities laws and under HSR.
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The Company shall use its best efforts to obtain (and to
cooperate with the Purchaser to obtain) any consent,
authorization, order or approval of, or any exemption by, any
governmental entity and/or any private third party which is
required to be obtained or made by such entity or party in
connection with this Agreement or the transactions contemplated
by this Agreement. The Company specifically agrees to take all
actions necessary for the preparation and filing of Notification
and Report Forms under HSR, if and when such forms are required
under applicable law to be filed with respect to this Agreement
or the transactions contemplated by this Agreement. The Company
will furnish to the Purchaser such information and assistance as
the Purchaser may reasonably request in connection with the
preparation of any HSR filings and will provide the Purchaser
with copies of all correspondence, filings and communications (or
memoranda setting forth the substance thereof) between the
Company and any governmental agency or its staff with respect to
this Agreement and the transactions contemplated by this
Agreement.
2.5 Capitalization and Voting Rights.
The authorized capital of the Company consists of:
(a) Common Stock. 25,000,000 shares of common stock, par
value $0.01 per share ("Common Stock"), of which 6,020,182
shares are issued and outstanding.
(b) Preferred Stock. 1,000,000 shares of preferred stock,
par value $0.10 per share ("Preferred Stock"), of which no
shares are issued and outstanding.
The outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable,
and were issued in accordance with the registration or
qualification provisions of the Securities Act of 1933, as
amended (the "Securities Act") and any relevant state
securities laws or pursuant to valid exemptions therefrom.
Except for currently outstanding options to purchase
674,100 shares of Common Stock granted to employees, directors
and consultants pursuant to the Company's 1992 Stock Option Plan,
1996 Stock Plan and 1996 Eligible Directors Stock Plan
(collectively, the "Stock Plans"), there are not outstanding
any options, warrants, rights (including conversion or preemptive
rights and rights of first refusal), proxy or stockholder
agreements or agreements of any kind for the purchase or
acquisition from the Company of any of its securities. In
addition to the aforementioned options, the Company has reserved
an additional 321,000 shares of its Common Stock for purchase
upon exercise of options to be granted in the future under the
Stock Plans. The Company is not a party or subject to any
agreement or understanding, and, to the best of the Company's
knowledge, there is no agreement or understanding between any
persons that affects or relates to the voting or giving of
written consents with respect to any security or the voting by a
director of the Company. Except as provided in Section 9 of the
Company's Stock Purchase Agreement dated April 2, 1985 and as
contemplated under Section 6 of this Agreement, the Company is
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presently not under any obligation and has not granted any rights
to register under the Securities Act any of its presently
outstanding securities or any of its securities that may
subsequently be issued.
2.6 Subsidiaries.
The Company does not own or control, directly or
indirectly, any interest in any other corporation, partnership,
limited liability company, association, or other business entity,
except for the following majority or wholly-owned subsidiaries:
CTi Technologies, Inc., a Massachusetts corporation; PCD Control
Systems, Inc., a Massachusetts corporation; PCD Securities Corp.,
a Massachusetts corporation; and PCD USVI, Inc., a U.S. Virgin
Islands corporation. On November 17, 1997, the Company entered
into an agreement (the "▇▇▇▇▇ Agreement") to acquire all of the
outstanding capital stock of ▇▇▇▇▇ Electronics, Inc., an Indiana
corporation ("▇▇▇▇▇"). The Company is not a participant in any
joint venture, partnership, or similar arrangement.
2.7 Contracts and Other Commitments.
The Company does not have and is not bound by any contract,
agreement, lease, commitment, or proposed transaction, judgment,
order, writ or decree, written or oral, absolute or contingent,
other than contracts that were entered into in the ordinary
course of business and that are not individually (or, if part of
a series of related contracts, when all such contracts are viewed
as a whole) material to the conduct of the Company's business.
2.8 Related-Party Transactions.
No employee, officer or director of the Company or member
of his or her immediate family is indebted to the Company, nor is
the Company indebted (or committed to make loans or extend or
guarantee credit) to any of them, other than (i) for payment of
salary for services rendered, (ii) reimbursement for reasonable
expenses incurred on behalf of the Company, and (iii) for other
standard employee benefits made generally available to all
employees (including stock option agreements outstanding under
any stock plan approved by the Board of Directors of the
Company). None of such persons has any direct or indirect
ownership interest in any firm or corporation with which the
Company is affiliated or with which the Company has a business
relationship, or any firm or corporation that competes with the
Company, except that employees, officers or directors of the
Company and members of their immediate families may own stock in
publicly traded companies that may compete with the Company. No
officer or director, or any member of their immediate families
is, directly or indirectly, interested in any material contract
with the Company (other than such contracts as relate to any such
person's ownership of capital stock or other securities of the
Company).
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2.9 Permits.
The Company has all franchises, permits, licenses, and any
similar authority necessary for the conduct of its business as
now being conducted by it, the lack of which could materially and
adversely affect the business, properties or financial condition
of the Company, and believes it can obtain, without undue burden
or expense, any similar authority for the conduct of its business
as presently planned to be conducted. The Company is not in
default in any material respect under any of such franchises,
permits, licenses or other similar authority.
2.10 Compliance With Other Instruments.
The Company is not in violation or default of any provision
of its Restated Articles or Bylaws or any provision of any
mortgage, indenture, agreement, instrument, or contract to which
it is a party or by which it is bound or of any federal or state
judgment, order, writ, decree, statute, rule, regulation or
restriction applicable to the Company. The execution, delivery,
and performance by the Company of this Agreement, the Debenture
and the Warrant, and the consummation of the transactions
contemplated hereby and thereby, will not result in any such
violation or be in conflict with or constitute, with or without
the passage of time or giving of notice, either a default under
any such provision or an event that results in the creation of
any lien, charge, or encumbrance upon any assets of the Company
or the suspension, revocation, impairment, forfeiture, or
nonrenewal of any permit, license, authorization, or approval
applicable to the Company, its business or operations, or any of
its assets or properties.
2.11 Litigation.
There is no action, suit, proceeding, or investigation
pending or, to the best of the Company's knowledge, currently
threatened against the Company, nor, to the best of the Company's
knowledge, are there any grounds therefor, that (i) questions the
validity of this Agreement, the Debenture, the Warrant, or the
right of the Company to enter into such agreements, or to
consummate the transactions contemplated hereby or thereby, or
(ii) could reasonably be expected to have, either individually or
in the aggregate, an adverse effect on the assets, business,
properties, or financial condition of the Company, or to cause
any change in the current equity ownership of the Company. The
Company is not a party to or named in or subject to any order,
writ, injunction, judgment, or decree of any court, government
agency or instrumentality.
2.12 Offering.
Subject in part to the accuracy and completeness of the
Purchaser's representations set forth in this Agreement, the
offer, sale and issuance of the Debenture and the Warrant as
contemplated by this Agreement are exempt from the registration
requirements of the Securities Act, and neither the Company nor
any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption.
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2.13 Title to Property and Assets; Leases.
Except (i) as reflected in the Financial Statements
(defined in paragraph 2.14), (ii) for the security interests
granted or to be granted to Fleet National Bank under the
Company's loan agreement dated December 26, 1997 (the "Fleet
Agreement"), (iii) for liens for current taxes not yet
delinquent, (iv) for liens imposed by law and incurred in the
ordinary course of business for obligations not past due to
carriers, warehousemen, laborers, materialmen and the like, (v)
for liens in respect of pledges or deposits under workers'
compensation laws or similar legislation or (vi) for minor
defects in title, none of which, individually or in the
aggregate, materially interferes with the use of such property,
the Company has good and marketable title to its property and
assets free and clear of all mortgages, liens, claims, and
encumbrances. With respect to the property and assets it leases,
the Company is in compliance with such leases and holds a valid
leasehold interest free of any liens, claims, or encumbrances,
subject to clauses (i)-(vi) above.
2.14 Financial Statements.
The Company has delivered to the Purchaser its audited
consolidated financial statements (balance sheets, statements of
income and statements of cash flows, including notes thereto) at
December 31, 1996 and for the fiscal year then ended and its
unaudited financial statements (balance sheets, statements of
income and statements of cash flows, including notes thereto) as
at, and for the three and nine-month periods ended September 27,
1997 (the "Financial Statements"). The Financial Statements
have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout
the periods indicated and with each other, except that unaudited
Financial Statements may not contain all footnotes required by
generally accepted accounting principles. The Financial
Statements fairly present the financial condition and operating
results of the Company as of the dates, and for the periods,
indicated therein, subject in the case of the unaudited Financial
Statements to normal year-end audit adjustments. Except as set
forth in the Financial Statements, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business after September 27,
1997 and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required
under generally accepted accounting principles to be reflected in
the Financial Statements, which, in both cases, individually or
in the aggregate, are not material to the financial condition or
operating results of the Company. Except as disclosed in the
Financial Statements, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm, or
corporation.
2.15 Changes.
To the best of the Company's knowledge, since September 27,
1997, except for the execution of the ▇▇▇▇▇ Agreement and the
Fleet Agreement and the consummation of the transactions
contemplated thereby, there has not been:
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(a) any change in the assets, liabilities, financial
condition, or operating results of the Company from that
reflected in the Financial Statements, except changes in the
ordinary course of business that have not been, in the aggregate,
materially adverse;
(b) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the
business, properties, prospects or financial condition of the
Company (as such business is presently conducted and as it is
presently proposed to be conducted);
(c) any waiver or compromise by the Company of a valuable
right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company, except
in the ordinary course of business and that is not material to
the business, properties, prospects or financial condition of the
Company (as such business is presently conducted and as it is
presently proposed to be conducted);
(e) any material change to a material contract or
arrangement by which the Company or any of its assets is bound or
subject;
(f) any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
(g) any sale, assignment, or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;
(h) any resignation or termination of employment of any
key officer of the Company; and the Company, to the best of its
knowledge, does not know of the impending resignation or
termination of employment of any such officer;
(i) any mortgage, pledge, transfer of a security interest
in, or lien, created by the Company, with respect to any of its
material properties or assets, except liens for taxes not yet due
or payable;
(j) any loans or guarantees made by the Company to or for
the benefit of its employees, stockholders, officers, or
directors, or any members of their immediate families, other than
travel advances and other advances made in the ordinary course of
its business;
(k) any declaration, setting aside, or payment of any
dividend or other distribution of the Company's assets in respect
of any of the Company's capital stock, or any direct or indirect
redemption, purchase or other acquisition of any of such stock by
the Company;
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(l) any other event or condition of any character that
might materially and adversely affect the business, properties or
financial condition of the Company; or
(m) any agreement or commitment by the Company to do any
of the things described in this paragraph 2.15.
2.16 Proprietary Rights.
The Company owns or possesses all legal rights to all
patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, and proprietary rights and
processes (collectively, "Intellectual Property") necessary for
its business as now conducted and as proposed to be conducted
without any conflict with, or infringement of the rights of,
others. Except for agreements with its own employees or
consultants and license agreements with customers or
distributors, there are no outstanding options, licenses, or
agreements of any kind relating to the foregoing, nor is the
Company bound by or a party to any options, licenses, or
agreements of any kind with respect to the Intellectual Property
of any other person or entity. Except with respect to the ▇▇▇▇▇
litigation described in the Financial Statements, the Company has
not received any communications alleging that the Company has
violated or, by conducting its business as proposed, would
violate any of the Intellectual Property of any other person or
entity. The Company does not believe it is or will be necessary
to use any inventions of any of its employees (or persons it
currently intends to hire) made before their employment by the
Company.
2.17 Employees; Employee Compensation.
There is no strike, labor dispute or union organization
activities pending or threatened between it and its employees.
None of the Company's employees (excluding employees of ▇▇▇▇▇)
belongs to any union or collective bargaining unit. The Company
has complied in all material respects with all applicable state
and federal equal opportunity and other laws related to
employment.
The Company is not aware that any of its employees is
obligated under any contract (including licenses, covenants, or
commitments of any nature) or other agreement, or subject to any
judgment, decree, or order of any court or administrative agency,
that would interfere with the use of such employee's best efforts
to promote the interests of the Company or that would conflict
with the Company's business as proposed to be conducted. Neither
the execution nor delivery of this Agreement, the Debenture or
the Warrant, nor the carrying on of the Company's business by the
employees of the Company, will, conflict with or result in a
breach of the terms, conditions, or provisions of, or constitute
a default under, any contract, covenant, or instrument under
which any of such employees is now obligated.
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2.18 Tax Returns, Payments, and Elections.
The Company has timely filed all tax returns and reports
(federal, state and local) as required by law. These returns and
reports are true and correct in all material respects. The
Company has paid all taxes and other assessments due, except
those contested by it in good faith. The provision for taxes of
the Company as shown in the Financial Statements is adequate for
taxes due or accrued as of the date thereof. The Company has
never had any tax deficiency proposed or assessed against it and
has not executed any waiver of any statute of limitations on the
assessment or collection of any tax or governmental charge. Since
the date of the Financial Statements, the Company has made
adequate provisions on its books of account for all taxes,
assessments, and governmental charges with respect to its
business, properties, and operations for such period. The
Company has withheld or collected from each payment made to each
of its employees, the amount of all taxes, including, but not
limited to, federal income taxes, Federal Insurance Contribution
Act taxes and Federal Unemployment Tax Act taxes required to be
withheld or collected therefrom and has paid the same to the
proper tax receiving officers or authorized depositaries.
2.19 Insurance.
The Company has in full force and effect fire and casualty
insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of
its properties that might be damaged or destroyed. The Company
has in full force and effect products liability and errors and
omissions insurance in amounts customary for companies similarly
situated.
2.20 Environmental, Health and Safety Laws.
The Company is not in violation of any applicable statute,
law, or regulation relating to the environment or occupational
health and safety, and to the best of its knowledge, no material
expenditures are or will be required in order to comply with any
such existing statute, law or regulation.
2.21 SEC Information.
The Company has made available to the Purchaser its Annual
Report on Form 10-K and Proxy Statement for the year ended
December 31, 1996 and its Quarterly Reports on Form 10-Q for the
quarters ended March 29, June 28 and September 27, 1997, in each
case as filed with the Securities and Exchange Commission (the
"SEC"). Such filings, taken together with information
previously furnished by the Company to the Purchaser, did not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances
in which they were made, not misleading. As used in this
paragraph 2.21, "material" means material to the financial
condition, business, properties, prospects, rights or operations
of the Company together with its subsidiaries, taken as a whole.
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2.22 Massachusetts Statutes.
Chapter 110D of the General Laws of the Commonwealth of
Massachusetts does not apply to the Company and the Company will
not hereafter take any action which would make such Chapter
applicable to the Company. Chapter 110F of the General Laws of
the Commonwealth of Massachusetts does not apply to either the
acquisition of the Debenture or the Warrant or the acquisition by
the Purchaser of the Common Stock issuable upon conversion of the
Debenture or the exercise of the Warrant.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants to the Company
that:
3.1 Authorization.
The Purchaser has full power and authority to enter into
this Agreement, and that this Agreement, when executed and
delivered, will constitute a valid and legally binding obligation
of the Purchaser.
3.2 Purchase Entirely for Own Account.
This Agreement is made with the Purchaser in reliance upon
the Purchaser's representation to the Company, which by the
Purchaser's execution of this Agreement the Purchaser hereby
confirms, that the Debenture and the Warrant and the Common Stock
issuable upon conversion or exercise thereof (collectively, the
"Securities") will be acquired for investment for the
Purchaser's own account, not as a nominee or agent, and not with
a view to the resale or distribution of any part thereof, and
that the Purchaser has no present intention of selling, granting
any participation in, or otherwise distributing the same. By
executing this Agreement, the Purchaser further represents that
such Purchaser does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with
respect to any of the Securities.
3.3 Reliance Upon Purchaser's Representations.
The Purchaser understands that the Debenture is not, and
any Common Stock acquired on conversion thereof at the time of
issuance will not be, registered under the Securities Act on the
ground that the sale provided for in this Agreement and the
issuance of securities hereunder is exempt from registration
under the Securities Act pursuant to Section 4(2) thereof, and
that the Company's reliance on such exemption is predicated on
the Purchaser's representations set forth herein. The Purchaser
realizes that the basis for the exemption may not be present if,
notwithstanding such representations, the Purchaser contemplates
acquiring shares of the Debenture for a fixed or determinable
period in the future, or for a market rise, or for sale if the
market does not rise. The Purchaser has no such intention.
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3.4 Receipt of Information.
The Purchaser believes the Purchaser has received all the
information the Purchaser considers necessary or appropriate for
deciding whether to purchase the Debenture and the Warrant. The
Purchaser further represents that the Purchaser has had an
opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the
Debenture and the Warrant and the business, properties and
financial condition of the Company and to obtain additional
information (to the extent the Company possessed such information
or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to
the Purchaser or to which the Purchaser had access. The
foregoing, however, does not limit or modify the representations
and warranties of the Company in Section 2 of this Agreement or
the right of the Purchaser to rely thereon.
3.5 Investment Experience; Accredited Investor.
The Purchaser represents that such Purchaser is experienced
in evaluating and investing in private placement transactions of
securities of companies in a similar stage of development and
acknowledges that the Purchaser is able to fend for itself, can
bear the economic risk of the Purchaser's investment, and has
such knowledge and experience in financial and business matters
that the Purchaser is capable of evaluating the merits and risks
of the investment in the Debenture.
The Purchaser further represents that such Purchaser is a
corporation not formed for the specific purpose of acquiring the
Debenture and has total assets in excess of Five Million Dollars
($5,000,000).
3.6 Restricted Securities.
The Purchaser understands that the Debenture and the
Warrant (and any Common Stock issued on conversion or exercise
thereof) may not be sold, transferred, or otherwise disposed of
without registration under the Securities Act or an exemption
therefrom, and that in the absence of an effective registration
statement covering the Debenture or the Warrant (or the Common
Stock issued on conversion or exercise thereof) or an available
exemption from registration under the Securities Act, the
Debenture and the Warrant (and any Common Stock issued on
conversion or exercise thereof) must be held indefinitely. In
particular, the Purchaser is aware that the Debenture and the
Warrant (and any Common Stock issued on conversion or exercise
thereof) may not be sold pursuant to Rule 144 promulgated under
the Securities Act unless all of the conditions of that Rule are
met. Among the conditions for use of Rule 144 is the
availability of current information to the public about the
Company.
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3.7 Legends.
To the extent applicable, each document evidencing the
Debenture or the Warrant, or any Common Stock issued upon
conversion or exercise thereof, shall be endorsed with the
legends substantially in the form set forth below:
(a) The following legend under the Securities Act:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS. IT MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SUCH ACT AND APPLICABLE LAWS, OR UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER
EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
THAT SUCH REGISTRATION IS NOT REQUIRED."
(b) Any legend imposed or required by applicable state
securities laws.
3.8 Public Sale.
The Purchaser agrees not to make any public offering or
sale of the Debenture or the Warrant. The Purchaser agrees not to
make any public offering or sale of any Common Stock issued upon
the conversion or exercise of the Debenture or the Warrant,
except in compliance with the Securities Act and the Rules and
Regulations promulgated by the Securities and Exchange Commission
thereunder.
4. CONDITIONS OF PURCHASER'S OBLIGATIONS AT CLOSING.
The obligations of the Purchaser under Section 1 of this
Agreement are subject to the fulfillment on or before the Closing
of each of the following conditions:
4.1 Representations and Warranties.
The representations and warranties of the Company contained
in Section 2 shall be true on and as of the Closing with the same
effect as though such representations and warranties had been
made on and as of the date of the Closing.
4.2 Performance.
The Company shall have performed and complied with all
agreements, obligations, and conditions contained in this
Agreement that are required to be performed or complied with by
it on or before the Closing.
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4.3 Compliance Certificate.
The Chairman of the Board of the Company shall deliver to
the Purchaser at the Closing a certificate certifying that the
conditions specified in paragraphs 4.1, 4.2, 4.4, and 4.5 have
been fulfilled.
4.4 Qualifications.
All authorizations, approvals, or permits, if any, of any
governmental authority or regulatory body of the United States or
of any state that are required in advance of the lawful issuance
and sale of the Debenture and the Warrant pursuant to this
Agreement shall be duly obtained and effective as of the Closing.
4.5 Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and
substance to the Purchaser, which shall have received all such
counterpart original and certified or other copies of such
documents as it may reasonably request.
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4.6 Nasdaq Letter.
In response to the Company's letter to Nasdaq dated
December 18, 1997, a copy of which has been furnished to the
Purchaser, the Company shall have obtained from Nasdaq a letter
confirming that, if the transactions are structured as described
in the Company's letter, (i) neither the National Association of
Securities Dealers, Inc. (the "NASD") nor Nasdaq would impose
any requirement that such transactions be approved by the
Company's stockholders before the closing of such transactions,
and (ii) if stockholder approval of the transactions is required
at any time, none of the Company's stockholders (including
without limitation the Purchaser) would be disqualified by the
NASD or Nasdaq from voting to approve the transactions as a whole
or any portion thereof, except that in any such vote neither the
Purchaser nor any of the Purchaser's affiliates would be
permitted to vote any shares of Common Stock acquired upon
conversion of principal or interest under the Debenture or upon
exercise of the Warrant.
4.7 Voting Agreement and Power of Attorney.
The Purchaser shall have received from shareholders owning
1,042,860 or more shares of the Common Stock of the Company
issued and outstanding as of the Closing a Voting Agreement and
Power of Attorney in the form set forth in EXHIBIT C hereto, and
any other related documentation reasonably required by Purchaser,
giving the Purchaser the right to vote all of such shareholders'
shares in any shareholder vote relating to approval of this
Agreement or the transactions contemplated in this Agreement as
referred to in Sections 1.5 and 2.2 hereof.
4.8 Opinion of Company Counsel.
The Purchaser shall have received from Hill & ▇▇▇▇▇▇,
counsel for the Company, an opinion, dated the date of the
Closing, in form and substance satisfactory to the Purchaser, to
the effect that:
(a) The Company is a corporation duly organized, legally
existing and in corporate good standing under the laws of the
Commonwealth of Massachusetts and has the requisite corporate
power to own its property and assets and to conduct its business
as it is currently being conducted.
(b) (i) Except to the extent that stockholder approval is
required pursuant to paragraph 2.2 above, each of this Agreement,
the Debenture set forth in EXHIBIT A, the Warrant set forth in
EXHIBIT B and the Registration Rights Agreement set forth in
EXHIBIT D has been duly and validly authorized, executed and
delivered by the Company, each constitutes a valid and binding
agreement of the Company and each is enforceable against the
Company in accordance with its terms. (ii) The Voting Agreement
and Power of Attorney set forth in EXHIBIT C has been duly and
validly executed and delivered by each of the shareholders who
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are parties thereto and constitutes a valid and binding agreement
of each of such shareholders enforceable against each of such
shareholders in accordance with its terms.
(c) The capital stock of the Company is as follows:
(i) Preferred Stock. 1,000,000 shares of Preferred
Stock authorized, of which no shares are issued and outstanding.
(ii) Common Stock. 25,000,000 shares of Common Stock
authorized, of which 6,020,362 shares have been validly issued
and are outstanding, fully paid and nonassessable.
(d) The Common Stock issuable upon the conversion of the
Debenture and upon exercise of the Warrant purchased under this
Agreement has been duly and validly reserved for issuance and,
when issued in accordance with the Company's Restated Articles,
will be validly issued, fully paid and nonassessable.
Except for currently outstanding options to purchase
shares of the Common Stock granted to employees, consultants and
directors pursuant to the Company's Stock Plans, to the best of
counsel's knowledge, there are no preemptive rights or options,
warrants, conversion privileges, or other rights (or agreements
for any such rights) outstanding to purchase or otherwise obtain
any of the Company's securities.
(e) The execution, delivery and performance of this
Agreement by the Company on or before the Closing and the
issuance of the Debenture and the Warrant pursuant thereto do not
violate any provision of the Company's Restated Articles or
Bylaws, and do not constitute a default under the provisions of
any material agreement known to such counsel to which the Company
is a party or by which it is bound, and do not violate or
contravene (i) any governmental statute, rule or regulation
applicable to the Company or (ii) any order, writ, judgment,
injunction, decree, determination or award which has been entered
against the Company and of which such counsel is aware, the
violation or contravention of which would materially and
adversely affect the Company, its assets, financial condition or
operations.
(f) To the best of such counsel's knowledge, after due
inquiry, there is no action, proceeding or investigation pending
or threatened against the Company before any court or
administrative agency that questions the validity of this
Agreement, the Debenture or the Warrant or might result, either
individually or in the aggregate, in any material adverse change
in the assets, financial condition or operations of the Company.
(g) All consents, approvals, authorizations, or orders of,
and filings, registrations and qualifications with any federal,
Massachusetts state or Massachusetts local regulatory authority
or governmental body required for the consummation by the Company
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of the transactions contemplated by the Agreement, have been made
or obtained.
(h) The offer and sale of the Debenture and the Warrant
are, and the issuance of the Common Stock upon conversion or
exercise thereof would be, exempt from the registration
requirements of the Securities Act.
(i) The Voting Agreement and Power of Attorney delivered to
the Purchaser pursuant to paragraph 4.7 of this Agreement is
legal, valid, binding and sufficient under Massachusetts law to
confer upon the Purchaser the right to vote the number of shares
of the Common Stock of the Company covered thereby in any
shareholder vote relating to approval of this Agreement or the
transactions contemplated in this Agreement and complies with all
applicable federal and Massachusetts securities laws.
(j) Chapter 110D of the General Laws of the Commonwealth of
Massachusetts does not apply to the Company. Chapter 110F of the
General Laws of the Commonwealth of Massachusetts does not apply
to either the acquisition of the Debenture or the Warrant or the
acquisition by the Purchaser of Common Stock issuable upon
conversion of the Debenture or exercise of the Warrant.
4.9 Registration Rights Agreement.
The Company and the Purchaser shall have entered into at or
prior to the Closing a Registration Rights Agreement in
substantially the form set forth in Exhibit D.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING
The obligations of the Company to the Purchaser under this
Agreement are subject to the fulfillment on or before the Closing
of each of the following conditions by the Purchaser.
5.1 Representations and Warranties.
The representations and warranties of the Purchaser
contained in Section 3 hereof shall be true on and as of the
Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Closing.
5.2 Qualifications.
All authorizations, approvals, or permits, if any, of any
governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful
issuance and sale of the Debenture pursuant to this Agreement
shall be duly obtained and effective as of the Closing.
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6. REGISTRATION RIGHTS.
The Purchaser shall have the registration rights set forth
in EXHIBIT D.
7. MISCELLANEOUS.
7.1 Survival of Warranties.
The warranties, representations, and covenants of the
Company and the Purchaser contained in or made pursuant to this
Agreement shall survive the execution and delivery of this
Agreement and the Closing for a period of thirty-six (36) months
after the Closing.
7.2 Successors and Assigns.
The Purchaser's rights pursuant to this Agreement may be
transferred or assigned by the Purchaser to any of the
Purchaser's affiliates to whom the Debenture or the Warrant is
transferred as permitted by the terms thereof. Except as
otherwise provided herein, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties (including
permitted transferees of the Debenture and the Warrant sold
hereunder or any Common Stock issued upon conversion or exercise
thereof). Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
7.3 Governing Law.
This Agreement shall be governed by and construed under the
laws of The Commonwealth of Massachusetts as applied to
agreements among Massachusetts residents entered into and to be
performed entirely within Massachusetts.
7.4 Counterparts.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 Headings and Subheadings
The headings and subheadings used in this Agreement are
used for convenience only and are not to be considered in
construing or interpreting this Agreement.
- 18 -
7.6 Notices.
Unless otherwise provided, all notices and other
communications required or permitted under this Agreement shall
be in writing and shall be mailed by United States first-class
mail, postage prepaid, sent by facsimile or delivered personally
by hand or by a nationally recognized courier addressed to the
party to be notified at the address or facsimile number indicated
for such person on the signature page hereof, or at such other
address or facsimile number as such party may designate by ten
(10) days' advance written notice to the other parties hereto.
All such notices and other written communications shall be
effective on the date of mailing, confirmed facsimile transfer or
delivery.
7.7 Amendments and Waivers.
Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and
the Purchaser. Any amendment or waiver effected in accordance
with this paragraph shall be binding upon the holder of any
securities purchased under this Agreement at the time outstanding
(including securities into which such securities have been
converted), each future holder of all such securities, and the
Company.
7.8 Severability.
If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement
shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms.
{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK}
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IN WITNESS WHEREOF, the parties have executed this
Agreement under seal as of the date first above written.
COMPANY:
PCD INC.
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
Chairman of the Board
Address: ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
PURCHASER:
▇▇▇▇▇▇▇ ELECTRIC CO.
By: /S/ ▇.▇. ▇▇▇▇▇▇▇
-----------------------------
▇.▇. ▇▇▇▇▇▇▇
Senior Vice President - Development
Address: 8000 West Florissant
▇.▇. ▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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