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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
March 8, 2000
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Date of Report (Date of earliest event reported)
ASPEON, INC.
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(Exact name of registrant as specified in its charter)
Delaware 000-21477 52-1945748
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation) File Number) Identification No.)
17891 Cartwright Avenue
Irvine, CA 92614
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(Address of principal executive offices) (Zip Code)
(949) 440-8000
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER
On March 8, 2000 Aspeon, Inc. completed the closing of a private
placement of securities with Marshall Capital Management, Inc., an affiliate
of Credit Suisse First Boston, in which the Company sold an aggregate of
10,000 shares of Series A Convertible Exchangeable Preferred Stock (the
"Preferred Stock"), a warrant to acquire 583,334 shares of common stock of
the Company at an initial exercise price of $17.00 per share and a warrant to
acquire 1,250,000 shares of Aspeon Solutions, Inc., a wholly-owned subsidiary
of the Company, at an exercise price of $5.00 per share for an aggregate
purchase price of $10,000,000 pursuant to a Securities Purchase Agreement
dated March 7 by and among the Company, Aspeon Solutions, Inc. and the
Purchaser. The preferred stock and warrants were issued pursuant to Section
4(2) of the Securities Act of 1933, as amended, and Rule 506 promulgated
thereunder.
Dividends on the Preferred Stock accrue at an annual rate of 6%, are
cumulative and shall be payable on the first day of each calendar quarter
commencing on April 1, 2000. The Company is obligated to redeem the Preferred
Stock on the second anniversary of the closing date. The Preferred Stock is
convertible into Common Stock of the Company at any time at a conversion
price of $16.00 per share, subject to certain adjustments. In addition, the
Company and Aspeon Solutions, Inc. have granted the Purchaser certain
registration rights related to the shares of Common Stock issuable upon
conversion of the Preferred Stock and Common Stock issuable upon exercise of
the warrants pursuant to a Registration Rights Agreement dated March 7, by
and among, the Company, Aspeon Solutions, Inc. and the Purchaser. In
addition, under certain circumstances, the Preferred Stock is convertible
into shares of preferred stock of Aspeon Solutions, Inc. having rights,
preferences and privileges substantially equivalent to the Preferred Stock.
The closing price of the Company's common stock on the date of issuance was
$26.25.
The Company's press release announcing the sale of the preferred
stock and warrants as well as the Securities Purchase Agreement, dated March
8, 2000 ,by and among the Company and Marshall Capital Management, Inc., the
Certificate of Designation for the Series A convertible Exchangeable
Preferred Stock, the Registration Rights Agreement and the Warrants are filed
as exhibits to this Current Report on Form 8-K. This summary description of
the transaction is qualified in its entirety by reference to the documents
filed as exhibits hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS.
3.1 Certificate of Designation, Preferences, and Rights
of Series A Convertible Exchangeable Preferred Stock of
Aspeon, Inc.
10.1 Warrant Agreement between Aspeon, Inc. and Marshall
Capital Management, Inc.
10.2 Warrant Agreement between Aspeon Solutions, Inc. and
Marshall Capital Management, Inc.
10.3 Registration Rights Agreement, dated as of
March 7, 2000, by and among the Company, Aspeon
Solutions, Inc. and Marshall Capital Management, Inc.
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10.4 Securities Purchase Agreement dated as of March 7,
2000, by and among the Company, Aspeon Solutions, Inc. and
Marshall Capital Management, Inc.
99.1 Press Release dated March 9, 2000
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ASPEON, INC.
Dated: March 8, 2000 By: /s/ Horace Hertz
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Horace Hertz
Chief Financial Officer
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CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS
OF THE
SERIES A CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
OF
ASPEON, INC.
PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW
ASPEON, INC., a Delaware corporation (the "Corporation"), hereby
certifies that the following resolutions were adopted by the Board of Directors
of the Corporation pursuant to the authority of the Board of Directors as
required by Section 151 of the Delaware General Corporation Law.
RESOLVED, that pursuant to the authority granted to the Board of
Directors in accordance with the provisions of the Corporation's Certificate of
Incorporation, the Board of Directors hereby authorizes a series of the
Corporation's previously authorized Preferred Stock, par value $.01 per share
(the "PREFERRED STOCK"), and hereby states the designation and number of shares
of such series, and fixes the relative rights, preferences, privileges and
restrictions thereof as follows:
1. DESIGNATION AND AMOUNT.
The designation of this series, which consists of ten thousand (10,000)
shares of Preferred Stock, is the "Series A Convertible Exchangeable Preferred
Stock" (the "SERIES A PREFERRED STOCK") and the face amount of each share of
Series A Preferred Stock (each, a "PREFERRED SHARE" and collectively, the
"PREFERRED SHARES") shall be One Thousand Dollars ($1,000) per Preferred Share
(the "STATED VALUE"). The date on which the Preferred Shares are issued and
sold, together with warrants (the "WARRANTS") exercisable into Common Stock (as
defined below), pursuant to the Securities Purchase Agreement, dated as of
March 7, 2000, between the Corporation and the Purchaser named therein (the
"SECURITIES PURCHASE AGREEMENT") is referred to herein as the "ISSUE DATE". The
Corporation has agreed to register shares of the Corporation's Common Stock,
$0.01 par value (the "COMMON STOCK"), pursuant to a Registration Rights
Agreement, dated as of March 7, 2000 (the "REGISTRATION RIGHTS AGREEMENT"). The
holders of Preferred Shares are each referred to as a "HOLDER" and,
collectively, as the "HOLDERS".
2. DIVIDENDS.
Dividends shall accrue on the Preferred Shares at an annual rate of
6.0%, computed on the
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basis of a 360-day year of twelve 30-day months for the actual number of days
elapsed from the Issue Date. Dividends accrued hereunder shall be cumulative
and shall be payable on the first day of each calendar quarter beginning on
April 1, 2000 (each a "DIVIDEND PAYMENT DATE"), or, if such Dividend Payment
Date is not a Business Day (as defined herein), on the next succeeding
Business Day. Dividends are payable in cash or, at the option of the
Corporation, and as long as (i) each Dividend Share Payment Condition (as
defined below) is satisfied (or waived by the Holder entitled to receive such
dividends) and (ii) the Corporation provides written notice (a "DIVIDEND
ELECTION NOTICE") to each Holder at least ten (10) Business Days prior to
such Dividend Payment Date, in shares of Common Stock (the "DIVIDEND
SHARES"). In the event that dividends are to be paid in shares of Common
Stock, the number of Dividend Shares to be delivered by the Corporation to
each Holder with respect to a Dividend Payment Date shall be determined by
dividing (A) the dollar amount of the dividends that have accrued on the
Preferred Shares held by such Holder as of such Dividend Payment Date
(together with any Default Interest (as defined below) that may have accrued
and remain unpaid as of such date) by (B) the Conversion Price (as defined
below) in effect on such Dividend Payment Date. In order for the Corporation
to pay dividends in shares of Common Stock, each of the following conditions
(the "DIVIDEND SHARE PAYMENT CONDITIONS") must be satisfied (or waived by the
Holder entitled to receive such Dividends) on each day beginning on the day
on which the Corporation delivers the Dividend Election Notice relating to
such dividends through and including the related Dividend Payment Date: (i) a
Redemption Event (as defined below), or an event that with the passage of
time or giving of notice, or both, would constitute a Redemption Event, shall
not have occurred and be continuing; (ii) the Registration Statement (as
defined in the Registration Rights Agreement) shall have been declared
effective and shall be available to each Holder at all times since its
effectiveness other than during any Blackout Period (as defined in the
Registration Rights Agreement) and shall cover the number of Registrable
Securities required by the provisions of the Registration Rights Agreement;
and (iii) the Common Stock shall be listed on the Nasdaq National Market or
the New York Stock Exchange. Any dividends (including dividends payable in
shares of Common Stock) that have accrued and are not paid within five (5)
Business Days following the relevant Dividend Payment Date shall bear
interest at an annual rate equal to the lower of (x) twenty four percent
(24%) and (y) the highest rate permitted by applicable law (the "DEFAULT
INTEREST RATE").
3. PRIORITY.
(a) PAYMENT UPON DISSOLUTION.
(i) Upon the occurrence of (x) any insolvency or bankruptcy
proceedings, or any receivership, liquidation, reorganization or other
similar proceedings in connection therewith, commenced by the Corporation or
by its creditors, as such, or relating to its assets or (y) the dissolution
or other winding up of the Corporation whether total or partial, 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"), no distribution shall be made to
the holders of any shares of Junior Securities (as defined below) unless,
following the payment of preferential amounts on all Senior Securities (as
defined below), each Holder shall have received the Liquidation Preference
(as defined below) with respect to each Preferred Share then held by such
Holder. In the event that upon the occurrence of a Liquidation Event, and
following the payment of preferential
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amounts on all Senior Securities (as defined below), the assets available for
distribution to the Holders and the holders of Pari Passu Securities (as
defined below) are insufficient to pay the Liquidation Preference with
respect to all of the outstanding Preferred Shares and the preferential
amounts payable to such holders, the entire assets of the Corporation shall
be distributed ratably among the Preferred Shares and the shares of Pari
Passu Securities in proportion to the ratio that the preferential amount
payable on each such share (which shall be the Liquidation Preference in the
case of a Preferred Share) bears to the aggregate preferential amount payable
on all such shares.
(ii) After the payment of any preferential amounts on all
Senior Securities and payment of the full Liquidation Preference with respect to
each Preferred Share and the preferential amounts payable on any Pari Passu
Securities, the remaining assets of the Corporation legally available for
distribution, if any, shall be distributed ratably to the holders of the Common
Stock of the Corporation.
(iii) The "LIQUIDATION PREFERENCE" with respect to a Preferred
Share shall mean an amount equal to the Stated Value of such Preferred Share
plus all unpaid dividends (and any other unpaid amounts) accrued thereon.
"JUNIOR SECURITIES" shall mean the Common Stock and all other capital stock of
the Corporation that are not Pari Passu Securities or Senior Securities. "PARI
PASSU SECURITIES" shall mean any securities ranking by their terms PARI PASSU
with the Series A Preferred Stock in respect of redemption or distribution upon
liquidation. "SENIOR SECURITIES" shall mean (i) any debt issued or assumed by
the Corporation and (ii) any securities of the Corporation which by their terms
have a preference over the Series A Preferred Stock in respect of redemption or
distribution upon liquidation.
4. CONVERSION.
(a) RIGHT TO CONVERT. Each Holder shall have the right to convert, at
any time and from time to time after the Issue Date, all or any part of the
Preferred Shares held by such Holder into such number of fully paid and
non-assessable shares ("CONVERSION SHARES") of the Common Stock as is determined
in accordance with the terms hereof (a "CONVERSION").
(b) CONVERSION NOTICE. In order to convert Preferred Shares, a Holder
shall send to the Corporation by facsimile transmission, at any time prior to
11:59 p.m., eastern time, on the date on which such Holder wishes to effect such
Conversion (the "CONVERSION DATE"), (i) a notice of conversion in substantially
the form of Exhibit A hereto (a "CONVERSION NOTICE') stating the number of
Preferred Shares to be converted, the applicable Conversion Price (as defined
below) and a calculation of the number of shares of Common Stock issuable upon
such Conversion and (ii) a copy of the certificate or certificates representing
the Preferred Shares being converted. The Holder shall thereafter send the
original of the Conversion Notice and of such certificate or certificates to the
Corporation. The Corporation shall issue a new certificate for Preferred Shares
in the event that less than all of the Preferred Shares represented by a
certificate delivered to the Corporation in connection with a Conversion are
converted. Except as otherwise provided herein, upon delivery of a Conversion
Notice by a Holder in accordance with the terms hereof, such Holder shall, as of
the applicable Conversion Date, be deemed for all purposes to be record owner of
the Common Stock to which such Conversion Notice relates. In the case of a
dispute between the Corporation and a Holder as to the calculation of the
Conversion Price or the number of Conversion Shares issuable
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upon a Conversion (including without limitation the calculation of any
adjustment to the Conversion Price pursuant to Section 6 below), the
Corporation shall issue to such Holder the number of Conversion Shares that
are not disputed within the time periods specified in paragraph 4(e) below
and shall submit the disputed calculations to its independent accountant
within two (2) Business Days of receipt of such Holder's Conversion Notice.
The Corporation shall cause such accountant to calculate the Conversion Price
as provided herein and to notify the Corporation and such Holder of the
results in writing no later than five (5) Business Days following the
Corporation's receipt of such Holder's Conversion Notice (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) NUMBER OF CONVERSION SHARES; CONVERSION PRICE. The number of
Conversion Shares to be delivered by the Corporation pursuant to a Conversion
shall be determined by dividing (A)(x) the aggregate Stated Value of the
Preferred Shares to be converted PLUS (y) any dividends that have accrued on
such Preferred Shares and which remain unpaid on the applicable Conversion Date
PLUS (z) any unpaid Default Interest or other amounts that have accrued thereon
(the sum of (x), (y) and (z) being referred to herein as the "AGGREGATE VALUE"),
by (B) the Conversion Price (as defined below) in effect on the applicable
Conversion Date; PROVIDED, HOWEVER, that, following the Effective Date (as
defined below), the number of Conversion Shares issuable upon the conversion of
all of the Preferred Shares issued hereunder (including any Conversion Shares
issued prior to the Effective Date, but not including any Dividend Shares
whenever issued) shall not exceed a number of shares equal to the greater of (I)
ten million dollars ($10,000,000) DIVIDED BY seventy five percent (75%) of the
Conversion Price in effect on the Effective Date and (II) 1,250,000 (such number
of shares to be subject to adjustment for the events specified in Section 6
below) (the "SHARE LIMITATION"). Notwithstanding the foregoing, the Share
Limitation shall not apply to any conversions effected (i) at any time after the
announcement or other public disclosure by the Corporation of a Change of
Control Transaction or (ii) in connection with a Conversion at Maturity (each as
defined below).
(d) CERTAIN DEFINITIONS.
"BUSINESS DAY" means any day on which the New York Stock
Exchange and commercial banks located in the City of New York are open for
business.
"CLOSING BID PRICE" means, with respect to the Common Stock,
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 Corporation and reasonably
acceptable to Holders of a majority of the then outstanding Preferred Shares
(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. (collectively, the "APPLICABLE REPORTING
ENTITY"). 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 independent investment banking firm
selected by the Holders of a
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majority of the Preferred Shares, and reasonably acceptable to the
Corporation, with the costs of such appraisal to be borne equally by the
Corporation and the Holders.
"CONVERSION PRICE" on any particular day means the lesser of
the Fixed Conversion Price and the Market Conversion Price on such day.
"FIXED CONVERSION PRICE" means $16.00 (subject to adjustment
for the events specified in Section 6 below).
"EFFECTIVE DATE" means the day on which the Registration
Statement (as defined in the Registration Rights Agreement) is declared
effective by the Securities and Exchange Commission.
"MARKET PRICE" means the average of the Closing Bid Prices
for the Common Stock occurring during the period of ten (10) consecutive
Trading Days immediately preceding (but not including) the date of
determination (but in no event greater than the Closing Bid Price on the
Trading Day immediately preceding such date of determination).
"MARKET CONVERSION PRICE" means the average of the three
lowest Closing Bid Prices for the Common Stock occurring during the period of
ten (10) consecutive Trading Days immediately preceding (but not including) the
applicable Conversion Date.
"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.
(e) DELIVERY OF CONVERSION SHARES. Upon receipt of a Conversion Notice
from a Holder, the Corporation shall, on or before the close of business on the
third (3rd) Business Day following the Conversion Date set forth in such
Conversion Notice (a "DELIVERY DATE"), issue and deliver or cause to be
delivered to such Holder the number of Conversion Shares to which such Holder is
entitled to receive as provided herein, 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 and such third Business Day shall be deemed
the Delivery Date with respect to such Conversion Shares. The Corporation shall
effect delivery of Conversion Shares to a Holder by, as long as the transfer
agent for the Corporation (the "TRANSFER AGENT") participates in the Depository
Trust Company ("DTC") Fast Automated Securities Transfer program ("FAST"),
crediting the account of such Holder or its nominee at DTC (as specified in the
applicable Conversion Notice or otherwise in writing) 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 Transfer Agent is not a participant in
FAST, or if Conversion Shares are not otherwise eligible for delivery through
FAST, or if a Holder so specifies in a Conversion Notice or otherwise in writing
on or before the Delivery Date, the Corporation shall effect delivery of
Conversion Shares by delivering, or causing its Transfer Agent to deliver, to
the Holder or its nominee physical certificates representing such shares, no
later than the close of business on such Delivery Date. If any Conversion would
create a fractional Conversion Share, such fractional share shall be disregarded
and the number of Conversion Shares shall be the rounded to the nearest whole
number of shares. Conversion Shares delivered to a Holder shall not contain any
restrictive legend
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as long as (A) the resale, transfer, pledge or other disposition of such shares
is covered by an effective registration statement and such Holder represents in
writing to the Corporation (in the related Conversion Notice or otherwise) that
such shares have been or are being sold pursuant to such registration
statement, (B) such shares have been publicly sold pursuant to Rule 144 ("RULE
144"), or (C) such shares can be sold pursuant to Rule 144(k) under Securities
Act of 1933, as amended (the "SECURITIES ACT"), or any successor rule or
provision.
(f) FAILURE TO DELIVER CONVERSION SHARES.
(i) In the event that a Holder has not received certificates
(without any restrictive legend in the circumstances described in clause (A),
(B) or (C) of paragraph 4(e) above) representing the number of Conversion Shares
specified in the applicable Conversion Notice on or before the Delivery Date
therefor (a "CONVERSION DEFAULT"), and such failure to deliver certificates
continues for ten (10) Business Days following the delivery of written notice
thereof from such Holder (such tenth Business Day being referred to herein as
the "CONVERSION DEFAULT DATE"), the Corporation shall pay to such Holder
payments ("CONVERSION DEFAULT PAYMENTS") in the amount of (i) "N" MULTIPLIED BY
(ii) the Aggregate Value of the Preferred Shares which are the subject of such
Conversion Default MULTIPLIED BY (iii) one percent (1%), where "N" equals the
number of days elapsed between the Conversion Default Date and the earlier to
occur of (i) the date on which all of the certificates (without any restrictive
legend in the circumstances described in clause (A), (B) or (C) of paragraph
4(e) above) representing such Conversion Shares are issued and delivered to such
Holder, (ii) the date on which such Preferred Shares are redeemed pursuant to
the terms hereof and (iii) the date on which a Withdrawal Notice (as defined
below) is delivered to the Corporation. Amounts payable hereunder shall be paid
to the Holder in immediately available funds on or before the fifth (5th)
Business Day of the calendar month immediately following the calendar month in
which such amounts have accrued.
(ii) In the event that a Holder has not received certificates
(without any restrictive legend in the circumstances described in clause (A),
(B) or (C) of paragraph 4(e) above) representing the Conversion Shares by the
tenth (10th) Business Day following a Conversion Default, such Holder may, upon
written notice (a "WITHDRAWAL NOTICE") delivered to the Corporation on such
Business Day or on any Business Day thereafter (unless, prior to the delivery of
such notice, such Conversion Shares are delivered to such Holder), withdraw its
Conversion Notice with respect to such Conversion Shares and regain its rights
as a Holder of the Preferred Shares that are the subject of such Conversion
Default. In such event, the Conversion Price in effect when such Preferred
Shares are thereafter converted shall be equal to the lowest Conversion Price or
(if lower) Market Price occurring on or after the date of such Conversion Notice
reduced by one percent (1%) for each day occurring during the period immediately
following such 10th Business Day until the day on which the such Holder delivers
a Withdrawal Notice to the Corporation; PROVIDED, HOWEVER, that the maximum
percentage by which such Conversion Price or Market Price may be reduced
hereunder shall be fifty percent (50%). (For example, if such Conversion Default
were to continue for five days following such 10th Business Day, such Conversion
Price or Market Price would be reduced by 5%; if for ten days, by 10%; and for
fifty days or more, 50%, so that the number of Conversion Shares deliverable
upon conversion of such Preferred Shares would be increased proportionately).
Upon delivery by a Holder of a Withdrawal Notice, such Holder shall retain all
of such Holder's rights and remedies with respect to the Corporation's failure
to deliver such
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Conversion Shares (including without limitation the right to receive the cash
payments specified in subparagraph 4(f)(i) above).
(iii) In addition to any other remedies provided herein, each
Holder shall have the right to pursue actual damages for the Corporation's
failure to issue and deliver Conversion Shares on the applicable Delivery Date
(including, without limitation, damages relating to any purchase of shares of
Common Stock by such Holder to make delivery on a sale lawfully effected in
anticipation of receiving Conversion Shares upon Conversion, such damages to be
in an amount equal to (A) the aggregate amount paid by such Holder for the
shares of Common Stock so purchased MINUS (B) the aggregate Conversion Price for
such Conversion Shares, and such 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)).
(g) REDEMPTION/CONVERSION AT MATURITY.
(A) On the date which is the second anniversary of the Issue
Date (the "MATURITY DATE"), all Preferred Shares then outstanding (and with
respect to which a Holder has not submitted a Notice of Conversion) (i) shall be
redeemed by the Corporation (a "REDEMPTION AT MATURITY") at a redemption price
(the "REDEMPTION AT MATURITY PRICE") equal to the Aggregate Value of such
Preferred Shares, or (ii) at the option of the Corporation, and as long as each
Mandatory Conversion Condition (as defined below) is satisfied, shall be
converted into a number of Conversion Shares equal to the Aggregate Value of
such Preferred Shares divided by the average Closing Bid Price for the Common
Stock during the period of ten (10) consecutive Trading Days immediately
preceding (but not including) the Maturity Date (a "MANDATORY CONVERSION");
PROVIDED, that in the event of a Mandatory Conversion, the Share Limitation
shall not apply. In the event of a Mandatory Conversion, the Corporation and
each Holder shall follow the procedures for Conversion set forth in this Section
4 (and the Holder shall have the remedies set forth in paragraph 4(f) hereof in
the event that the Conversion Shares are not delivered on or before the Delivery
Date therefor), with the Maturity Date deemed to be the Conversion Date, except
that the Holder shall not be required to send a Conversion Notice as
contemplated by paragraph 4(b).
(B) Each of the following shall constitute a "MANDATORY
CONVERSION CONDITION": (i) the Corporation shall have provided written notice
thereof to each Holder at least ten (10) Business Days prior to the Maturity
Date, (ii) the Common Stock shall be actively traded on the Nasdaq National
Market, (iii) a Redemption Event (as defined herein) ), or an event that with
the passage of time or giving of notice, or both, would constitute a Redemption
Event, shall not have occurred and be continuing, (iv) the conversion of a
Holder's Preferred Shares pursuant to the Conversion at Maturity shall not
violate the provisions of Section 5 below, (v) the Registration Statement (as
defined in the Registration Rights Agreement) shall be effective and shall be
available at all times since its effectiveness other than during any Blackout
Period (as defined in the Registration Rights Agreement) for the resale of the
number of Registrable Securities (as defined in the Registration Rights
Agreement) required by the Registration Rights Agreement and (vi) the
Corporation shall have obtained Stockholder Approval (as defined in the
Securities Purchase Agreement).
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(C) In the event of a Redemption at Maturity, the Corporation
shall deliver the Redemption at Maturity Price to each Holder on or before the
fifth (5th) Business Day following the Maturity Date. Any amount of the
Redemption at Maturity Price that is not paid on or before such fifth Business
Day shall bear interest at the Default Rate. In the event that the Corporation
fails to pay the Maturity at Redemption Price on or before the tenth (10th)
Business Day following the Maturity Date, each Holder shall have the right, upon
written notice to the Corporation, to regain its rights as a Holder of Preferred
Shares, including without limitation its right to convert all or any part of
such Holder's Preferred Shares from time to time, in which case (x) any such
conversion shall be effected at the lowest Conversion Price (or, if lower,
Market Price) occurring between the Maturity Date and the Conversion Date or
Dates specified by such Holder and (y) the Share Limitation shall not apply.
(h) INCREASE OF SHARE LIMITATION. In the event that the
Conversion Price on any Conversion Date is decreased by operation of the terms
hereunder or of the Securities Purchase Agreement or Registration Rights
Agreement, the Share Limitation shall be increased in proportion to such
decrease in the Conversion Price.
5. CONVERSION LIMITATIONS.
In no event shall a Holder be permitted to convert any Preferred Shares
in excess of the number of such shares, upon the Conversion of which:
(a) the number of Conversion Shares to be issued pursuant to such
Conversion, when added to the number of shares of Common Stock issued pursuant
to all prior Conversions of Preferred Shares and all prior exercises of the
Warrants by the Holders thereof, would exceed the maximum number of shares of
Common Stock issuable by the Corporation without stockholder approval in
compliance with the continued listing requirements of the Nasdaq National Market
(the "CAP AMOUNT"), except that such limitation shall not apply in the event
that the Corporation obtains the approval of the holders of a majority of the
Corporation's outstanding Common Stock for the issuance of Common Stock in
excess of the Cap Amount (it being understood that any Holder whose Cap
Allocation Amount (as defined below) represents one hundred and twenty-five
percent (125%) or less of (A) the number of Conversion Shares and Warrant Shares
into which the Preferred Shares and Warrants then held by such Holder are
convertible or exercisable at the Conversion Price or the Exercise Price, as the
case may be, then in effect (without regard to any restrictions or limitations
on such conversion or exercise) PLUS (B) the number of Conversion Shares and
Warrant Shares into which such Holder has previously converted Preferred Shares
and exercised the Warrants, respectively, shall have the right to require the
Corporation, upon written notice to such effect, to seek such approval by means
of a special meeting of stockholders to be held as soon as practicable following
the Corporation's receipt of such notice, but in any case within ninety (90)
days following such receipt, and to recommend such approval to its stockholders
at such special meeting). In the event that Purchaser (as defined in the
Securities Purchase Agreement) shall sell or otherwise transfer any of such
Purchaser's Preferred Shares or Warrants, the transferee shall be allocated a
pro rata portion of the Cap Amount (a "Cap Allocation Amount") and, in such
event, no Holder shall be issued, upon Conversion of the Preferred Shares, any
Conversion Shares in excess of such Holder's Cap Allocation Amount. In the event
that any Holder converts all of such Holder's Preferred Shares and Warrants into
a number of Conversion Shares and Warrant Shares which, in
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the aggregate, is less than such Holder's Cap Allocation Amount, then the
difference between such Holder's Cap Allocation Amount and the number of
Conversion Shares and Warrant Shares actually issued to such Holder shall be
allocated to the respective Cap Allocation Amounts of the remaining Holders
of Preferred Shares on a pro rata basis in proportion to the number of
Preferred Shares then held by each such Holder; or
(b) (x) the number of shares of Common Stock beneficially owned by such
Holder (other than shares of Common Stock issuable upon conversion of such
Preferred Shares or 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 5(b)) PLUS (y) the number of shares of
Common Stock issuable upon the Conversion of such Preferred Shares, would be
equal to or exceed (z) 4.99% of the number of shares of Common Stock then issued
and outstanding, it being the intent of the Corporation and the Holders that no
Holder be deemed at any time to have the power to vote or dispose of greater
than 4.99% of the number of shares of Common Stock issued and outstanding at
such time. 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 applies (and without limiting any rights the Corporation may
otherwise have), the Corporation may rely on the Holder's determination of
whether Preferred Shares are 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 the Preferred Shares
specified therein are convertible pursuant to the terms hereof. This paragraph
may be amended by all of the Holders of Preferred Shares then outstanding only
with the consent of the holders of a majority of the shares of Common Stock then
outstanding. Nothing contained herein shall be deemed to restrict the right of a
Holder to convert Preferred Shares at such time as the Conversion thereof will
not violate the provisions of this paragraph 5(b). The limitation contained in
this paragraph 5(b) shall not apply to a Holder who, after the occurrence of a
Change of Control Transaction (as defined below), submits a written notice to
the Corporation indicating that such Holder will no longer be bound by such
limitation.
6. ADJUSTMENTS TO CONVERSION PRICE.
(a) ADJUSTMENT TO FIXED CONVERSION PRICE DUE TO STOCK SPLIT, STOCK
DIVIDEND, ETC. If, prior to the Conversion of all of the Preferred Shares, (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 Fixed
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 Fixed Conversion Price shall be
proportionately reduced, which reduction shall be effected on the record date
for the determination of holders of Common Stock to receive such dividend;
provided, however, that if such record date is fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed therefor,
the Fixed Conversion Price shall be recomputed accordingly as of the close of
business on such record date and thereafter the Fixed Conversion Price shall be
adjusted pursuant to this Section 6(a) to reflect the actual
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payment of such dividend; or (D) the Corporation issues Common Stock, whether
upon the exercise of rights, warrants, securities convertible or exercisable
into Common Stock or otherwise, at a price that is lower than the Fixed
Conversion Price in effect on any Conversion Date following the date of such
issuance, the Fixed Conversion Price shall be reduced to such lower price. In
no event shall any adjustment pursuant to clause (D) above result in a Fixed
Conversion Price that exceeds the Fixed Conversion Price that would otherwise
apply in the absence of such adjustment.
(b) ADJUSTMENT TO CONVERSION PRICE DURING REFERENCE PERIOD. If, prior
to the Conversion of all of the Preferred Shares, 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 for any Conversion thereof,
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) MERGER, CONSOLIDATION, ETC. If, prior to the Conversion of all of
the Preferred Shares, there shall be any merger, consolidation, business
combination, tender offer, exchange of shares, recapitalization, reorganization,
redemption or other similar event (other than a stock split, reclassification or
other event provided for elsewhere in this Section 6), 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 each Holder
shall (A) upon the consummation of such Exchange Transaction, have the right to
receive, with respect to any shares of Common Stock then held by such Holder, or
which such Holder is then entitled to receive pursuant to a Conversion Notice
previously delivered by such 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, cash, stock, securities and/or
other assets) and on the same terms as a holder of shares of Common Stock would
be entitled to receive in connection with the consummation of such Exchange
Transaction (the "EXCHANGE CONSIDERATION"), and (B) upon the Conversion of
Preferred Shares occurring subsequent to the consummation of such Exchange
Transaction (a "SUBSEQUENT CONVERSION"), have the right to receive the Exchange
Consideration which such Holder would have been entitled to receive in
connection with such Exchange Transaction had such shares been converted
immediately prior to such Exchange Transaction at the Conversion Price
applicable on the Conversion Date relating to such Subsequent Conversion, and in
any such case appropriate provisions shall be made with respect to the rights
and interests of such Holder to the end that the provisions hereof (including,
without limitation, provisions for the adjustment of the Conversion Price and of
the number of shares of Common Stock issuable upon a Conversion) shall
thereafter be applicable as nearly as may be practicable in relation to any
securities thereafter deliverable upon the Conversion of such Preferred Shares.
The Corporation shall not effect any Exchange Transaction unless (i) it first
gives to each Holder twenty (20) days prior written notice of such Exchange
Transaction (an "EXCHANGE NOTICE"), and makes a public announcement of such
event at the same time that it gives such notice (it being understood that the
filing by the Corporation of a Form 8-K for the purpose of disclosing the
anticipated consummation of the Exchange Transaction shall constitute an
Exchange Notice for purposes of this provision) and (ii) 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 6(c), and under the Securities Purchase Agreement and the
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Registration Rights Agreement.
(d) DISTRIBUTION OF ASSETS. If the Corporation or any of its
subsidiaries shall declare or make any distribution of cash, evidences of
indebtedness or other securities or assets (other than cash dividends or
distributions payable out of earned surplus or net profits for the current or
the immediately preceding year), or any rights to acquire any of the foregoing,
to holders of Common Stock (or to a holder, other than the Corporation, of the
common stock of any such subsidiary) as a partial liquidating dividend, by way
of return of capital or otherwise, including any dividend or distribution in
shares of capital stock of a subsidiary of the Corporation (collectively, a
"DISTRIBUTION"), then each Holder shall be entitled to receive, at the same time
as such assets are received by a holder of such stock, an amount and type of
such Distribution as though such Holder were a holder on the record date
therefor of a number of shares of Common Stock determined by dividing the
Aggregate Value of the Preferred Shares held by such Holder on such record date
by the Conversion Price in effect on such record date (such number of shares to
be determined without regard to any limitation on conversion of the Preferred
Shares that may exist pursuant to this Certificate of Designation or otherwise);
provided, however, that if such record date is fixed and such Distribution is
not fully paid or if such Distribution is not fully made on the date fixed
therefor, such Holder shall receive such assets as are actually received by a
holder of such stock pursuant to such Distribution.
(e) ISSUANCE OF CONVERTIBLE SECURITIES. If the Corporation shall issue
any Convertible Securities that are convertible into or exchangeable for shares
of Common Stock on a basis different from that of this Certificate of
Designation, each Holder may elect that the provisions of this Certificate of
Designation be revised to incorporate such different provisions with respect to
conversion or exchange, subject to the limitations of Section 5 hereof.
(f) ADJUSTMENT PURSUANT TO OTHER AGREEMENTS. In addition to and without
limiting in any way the adjustments provided in this Section 6, the Conversion
Price shall be adjusted as may be required by the provisions of the Registration
Rights Agreement and/or by the provisions of the Securities Purchase Agreement.
(g) NO FRACTIONAL SHARES. If any adjustment under this Section 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 rounded to the
nearest whole number of shares.
(h) EXCEPTIONS TO ADJUSTMENT OF CONVERSION PRICE. Notwithstanding
anything to the contrary set forth herein, no adjustment to the Conversion Price
will be made as a result of the issuance of any securities of the Corporation
issued pursuant to (i) an employee benefit plan or program duly adopted by the
Corporation; (ii) any options, warrant, convertible securities or rights or
agreements to purchase securities of the Corporation outstanding on the date
hereof; (iii) any firm-commitment underwritten public offerings of securities;
(iv) any securities issued for consideration other than cash pursuant to a
merger, consolidation, acquisition or similar business combination with a third
party, the primary purpose of which is not the raising of capital (provided
that, in any such event, the provisions of paragraphs 6(c), 6(d) and 6(e) will
remain in effect); (v) shares of Common Stock issued upon conversion of the
Preferred Shares or exercise of the Closing Warrants; (vi) any securities
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issued pursuant to any equipment leasing arrangement or debt financing from a
bank or similar financial institution; or (vii) any securities issued in
connection with strategic transactions involving the Corporation and third
parties, including (A) joint ventures, manufacturing, marketing or
distribution arrangements or (B) technology transfer or development
arrangements; provided, that the primary purpose of such transaction is not
the raising of capital and provided further that, in any such event, the
provisions of paragraphs 6(c), 6(d) and 6(e) will remain in effect.
7. REDEMPTION.
(a) MANDATORY REDEMPTION. In the event that a Redemption Event (as
defined below) occurs, each Holder shall have the right to require the
Corporation to redeem all or any portion of the Preferred Shares held by such
Holder (a "MANDATORY REDEMPTION") at the Mandatory Redemption Price (as defined
herein). In order to exercise its right to effect a Mandatory Redemption, a
Holder must deliver a written notice (a "MANDATORY REDEMPTION NOTICE") to the
Corporation at any time on or before 11:59 p.m. (eastern time) on the third
(3rd) Business Day following the Business Day on which the Mandatory Redemption
Event to which such Mandatory Redemption Notice relates is no longer continuing.
The Mandatory Redemption Notice shall specify the effective date of such
Mandatory Redemption (the "MANDATORY REDEMPTION DATE") and the number of such
shares to be redeemed.
(b) REDEMPTION EVENT. Each of the following events shall be deemed a
"REDEMPTION EVENT":
(i) the Corporation fails to issue shares of Common Stock to a
Holder, including, without limitation, by operation of paragraph 5(a) above, and
deliver certificates representing such shares (without any restrictive legend
under the circumstances described in paragraph 4(e) hereof) to such Holder as
and when required by the provisions of paragraph 4 hereof, and such failure
continues for ten (10) Business Days;
(ii) the Corporation or ASP breaches, in a material respect,
any covenant or other material term or condition of this Certificate of
Designation, the Securities Purchase Agreement, the Registration Rights
Agreement, the Warrants or any other agreement, document, certificate or other
instrument delivered in connection with the transactions contemplated thereby,
and such breach continues for a period of ten (10) Business Days after written
notice thereof to the Corporation or ASP, as the case may be, from a Holder;
(iii) any material representation or warranty made by the
Corporation or ASP in the Securities Purchase Agreement, the Registration Rights
Agreement, the Warrants 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;
(iv) (x) the sale, conveyance or disposition of all or
substantially all of the assets of the Corporation, the effectuation of a
transaction or series of transactions in which more than 50% of the voting power
of the Corporation is disposed of, or 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
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(50%) of the surviving entity or (y) a transaction or series of transactions
in which any person acquires control of the Corporation (each a "Change of
Control Transaction").For purposes hereof, "CONTROL" shall mean, with respect
to the Corporation, the ability to direct the business, operations or
management of the Corporation, whether through an equity interest therein or
otherwise. Notwithstanding the foregoing, a Change of Control Transaction
shall not be considered a Redemption Event if the securities ("Exchange
Securities") of the surviving entity of such Change of Control Transaction
are publicly traded and (a) the average trading volume of the Exchange
Securities during the one hundred eighty (180) day period ending on the date
on which such Change of Control Transaction is publicly disclosed is greater
than two million dollars ($2,000,000), (b) the historical one hundred (100)
day volatility of the Exchange Securities during the period ending on the
date on which such transaction is publicly disclosed is greater than sixty
percent (60%), and (c) the market capitalization of the issuer of the
Exchange Securities on such date is not less than one hundred fifty million
dollars ($150,000,000); and
(v) the Common Stock is not quoted on the Nasdaq National
Market or listed on the New York Stock Exchange or the American Stock Exchange,
or trading in the Common Stock on such market or exchange is suspended and such
suspension is in effect for more than five consecutive (5) Trading Days.
(c) MANDATORY REDEMPTION PRICE. The "MANDATORY REDEMPTION PRICE" shall
be equal to the greater of (i) the Aggregate Value of the Preferred Shares being
redeemed MULTIPLIED BY one hundred and twenty five percent (125%) and (ii) an
amount determined by dividing the Aggregate Value of the Preferred Shares being
redeemed by the Conversion Price in effect on the Mandatory Redemption Date and
multiplying the resulting quotient by the average Closing Trade Price for the
Common Stock on the five (5) Trading Days immediately preceding (but not
including) the Mandatory Redemption Date.
(d) PAYMENT OF MANDATORY REDEMPTION PRICE.
(i) The Corporation shall pay the Mandatory Redemption Price
to the Holder exercising its right to redemption on the later to occur of (i)
the fifth (5th) Business Day following the Mandatory Redemption Date and (ii)
the date on which the Preferred Shares being redeemed are delivered by the
Purchaser to the Corporation for cancellation (the "MANDATORY REDEMPTION PAYMENT
DATE").
(ii) If Corporation fails to pay the Mandatory Redemption
Price to the Holder on or before the Mandatory Redemption Date, the Holder shall
be entitled to interest thereon, from and after the Mandatory Redemption Payment
Date until the Mandatory Redemption Price has been paid in full, at an annual
rate equal to the Default Interest Rate.
(iii) If the Corporation fails to pay the Mandatory Redemption
Price within ten (10) Business Days of the Mandatory Redemption Date, then the
Holder shall have the right to regain its rights as a Holder of the Series A
Preferred Stock and, upon written notice to such effect from the Holder, the
Corporation shall return to such Holder the certificates representing the
Preferred Shares that were delivered to the Corporation in connection with such
Mandatory Redemption; in such event, the Conversion Price otherwise applicable
to future Conversions of the
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Preferred Shares shall be reduced by one percent (1%) for each day beyond
such 10th Business Day in which the failure to pay the Mandatory Redemption
Price continued until the date of such notice; PROVIDED, HOWEVER, that the
maximum percentage by which such Conversion Price may be reduced hereunder
shall be fifty percent (50%).
8. MISCELLANEOUS.
(a) TRANSFER OF PREFERRED SHARES. Upon notice to the Corporation, a
Holder may sell or transfer all or any portion of the Preferred Shares to any
person or entity as long as such sale or transfer is the subject of an effective
registration statement under the Securities Act or is exempt from registration
thereunder. From and after the date of such sale or transfer, the transferee
thereof shall be deemed to be a Holder. Upon any such sale or transfer, the
Corporation shall, promptly following the return of the certificate or
certificates representing the Preferred Shares that are the subject of such sale
or transfer, issue and deliver to such transferee a new certificate in the name
of such transferee.
(b) NOTICES. Except as otherwise provided herein, any notice, demand or
request required or permitted to be given pursuant to the terms hereof, the form
or delivery of which notice, demand or request is not otherwise specified
herein, shall be in writing and shall be deemed delivered (i) when delivered
personally or by verifiable facsimile transmission on or before 5:00 p.m.,
eastern time, on a Business Day or, if such day is not a Business Day, on the
next succeeding Business Day, (ii) on the next Business Day after timely
delivery to an overnight courier and (iii) on the day actually received if
deposited in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed to the parties as follows:
IF TO THE CORPORATION:
Aspeon, Inc.
17891 Cartwright Road
Irvine, California 92614
Tel: (949) 440-8000
Fax: (949) 440-8088
Attention: Chief Financial Officer
WITH A COPY TO:
Cooley Godward LLP
4365 Executive Drive
Suite 1100
San Diego, California 92121-2128
Attention: Jeremy D. Glaser, Esq.
Tel: (858) 550-6000
Fax: (858) 453-3555
and if to any Holder, to such address for such Holder as shall
be designated by such Holder in writing to the Corporation.
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<PAGE>
(c) LOST OR STOLEN CERTIFICATE. Upon receipt by the Corporation of
evidence of the loss, theft, destruction or mutilation of a certificate
representing Preferred Shares, and (in the case of loss, theft or destruction)
of indemnity or security reasonably satisfactory to the Corporation and the
Transfer Agent, and upon surrender and cancellation of such certificate if
mutilated, the Corporation shall execute and deliver to the Holder a new
certificate identical in all respects to the original certificate.
(d) NO VOTING RIGHTS. Except as provided by applicable law and
paragraph 8(g) below, the Holders of the Preferred Shares shall have no voting
rights with respect to the business, management or affairs of the Corporation;
provided that the Corporation shall provide each Holder with prior notification
of each meeting of stockholders (and copies of proxy statements and other
information sent to such stockholders).
(e) REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF. The remedies provided to a Holder in this Certificate of
Designation shall be cumulative and in addition to all other remedies available
to such Holder under this Certificate of Designation or under any other
agreement between such Holder and the Corporation, at law or in equity
(including without limitation a decree of specific performance and/or other
injunctive relief), no remedy contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing contained
herein shall limit such Holder's right to pursue actual damages for any failure
by the Corporation to comply with the terms of this Certificate of Designation.
The Corporation agrees with each Holder that there shall be no characterization
concerning this instrument other than as specifically provided herein. Amounts
set forth or provided for herein with respect to payments, conversion and the
like (and the computation thereof) shall be the amounts to be received by the
Holder hereof and shall not, except as expressly provided herein, be subject to
any other obligation of the Corporation (or the performance thereof). The
Corporation acknowledges that a material breach by it of its obligations
hereunder will cause irreparable harm to the Holders and that the remedy at law
for any such breach may be inadequate. The Corporation agrees, in the event of
any such breach or threatened breach, each Holder shall be entitled, in addition
to all other available remedies, to an injunction restraining any breach,
without the necessity of showing economic loss and without any bond or other
security being required.
(f) FAILURE OR DELAY NOT WAIVER. No failure or delay on the part of a
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 other or further exercise thereof or of any other
right, power or privilege.
(g) PROTECTIVE PROVISIONS.
So long as shares of Series A Preferred Stock are outstanding, the
Corporation shall not, without first obtaining the approval of the Holders of at
least two-thirds (2/3) of outstanding shares of Series A Preferred Stock:
(i) alter, change, modify or amend (x) the terms of
the Series A Preferred Stock in any way or (y) the terms of any other capital
stock of the Corporation so as to affect adversely the Series A Preferred Stock;
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(ii) create any new class or series of capital stock
having a preference over or ranking pari passu with the Series A Preferred Stock
as to redemption or distribution of assets upon a Liquidation Event or any other
liquidation, dissolution or winding up of the Corporation;
(iii) increase the authorized number of shares of
Series A Preferred Stock;
(iv) re-issue any shares of Series A Preferred Stock
which have been converted or redeemed in accordance with the terms hereof;
(v) issue any Pari Passu Securities or Senior
Securities (provided that this clause (v) will apply only as long as there are
at least 2,000 shares of Series A Preferred Stock outstanding);
(vi) redeem, or declare, pay or make any provision
for any dividend or distribution with respect to, the Common Stock or any other
capital stock of the Corporation ranking junior to the Series A Preferred Stock
as to the distribution of assets upon liquidation, dissolution or winding up of
the Corporation; or
(vii) issue any Series A Preferred Stock except
pursuant to the terms of the Securities Purchase Agreement.
In the event that the Holders of at least two-thirds of the outstanding
shares of Series A Preferred Stock agrees to allow the Corporation to alter or
change the rights, preferences or privileges of the shares of Series A Preferred
Stock pursuant to the terms hereof, then the Corporation will deliver notice of
such approved change to the holders of the Series A Preferred Stock that did not
agree to such alteration or change (the "DISSENTING HOLDERS") and the Dissenting
Holders shall have the right for a period of thirty (30) days following such
delivery to convert their Preferred Shares pursuant to the terms hereof as they
existed prior to such alteration or change, or to continue to hold such
Preferred Shares. No such change shall be effective to the extent that, by its
terms, it applies to less than all of the Holders of Preferred Shares then
outstanding.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Corporation has duly executed this Certificate
of Designation as of the 7th day of March, 2000.
ASPEON, INC.
By: ____________________________
Name: Richard P. Stack
Title: Chief Executive Officer
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EXHIBIT A
NOTICE OF CONVERSION
The undersigned hereby elects to convert shares of Series A Convertible
Preferred Stock (the "Preferred Stock"), represented by stock certificate
No(s) ______________ (the "Preferred Stock Certificates"), into shares of common
stock ("Common Stock") of ASPEON, INC. according to the terms and conditions of
the Certificate of Designation relating to the Preferred Stock (the
"Certificate of Designation"), as of the date written below. Capitalized terms
used herein and not otherwise defined shall have the respective meanings set
forth in the Certificate of Designation. Unless otherwise specified in writing
to the Corporation, the undersigned represents to the Corporation that the
shares of Common Stock covered by this notice have been or will be sold
pursuant to an effective registration statement.
Date of Conversion: _____________________________
Number of Shares of
Preferred Stock to be Converted: ________________
Amount of Accrued Dividends: ____________________
Applicable Conversion Price: ____________________
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 _________________________________)
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EXHIBIT A TO
SECURITIES
PURCHASE AGREEMENT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, 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.
WARRANT TO PURCHASE ISSUE DATE: MARCH [ ], 2000
583,334 SHARES
WARRANT TO PURCHASE COMMON STOCK
OF
ASPEON, INC.
THIS CERTIFIES that Marshall Capital Management, Inc. or any subsequent
holder hereof (the "HOLDER"), has the right to purchase from ASPEON, INC.,a
Delaware corporation (the "COMPANY"), up to 583,334 fully paid and nonassessable
shares of the Company's Common Stock, $.01 par value (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, and all rights hereunder shall be, subject to all of the
conditions, limitations and provisions set forth herein and in the related
Securities Purchase Agreement by and among the Company and the Purchasers named
therein (the "SECURITIES PURCHASE AGREEMENT"). Capitalized terms used herein
and not otherwise defined shall have the respective meanings set forth in the
Securities Purchase Agreement or the Certificate of Designation relating to the
Series A Convertible Exchangeable Preferred Stock ("CERTIFICATE OF
DESIGNATION").
<PAGE>
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 determined, subject to adjustment for the events specified
in Section 6 below, as follows: (A) beginning on the Issue Date, the Exercise
Price shall be $17.00 per share (subject to adjustment from time to time as
provided in Section 6 below), and thereafter shall be subject to adjustment as
specified in clause (B); and (B) if, on the one year anniversary of the Issue
Date, the Market Price (as defined in the Certificate of Designation) is lower
than the Exercise Price then in effect, the Exercise Price shall be equal to
such Market Price for all exercises of this Warrant occurring thereafter.
Notwithstanding the foregoing, in no event shall the Exercise Price be lower
than $8.00 per share (subject to adjustment from time to time for the events
specified in Section 6 below).
(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 (as defined below) on which the Holder wishes to
effect such exercise (the "EXERCISE DATE"), to the Company 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. As used herein, "BUSINESS DAY" shall mean any day on which
the New York Stock Exchange (the "NYSE") and commercial banks in the city of New
York are open for business. The Holder shall promptly thereafter deliver to the
Company the original Exercise Notice, the original Warrant and (unless a
cashless exercise is intended) 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 to the Exercise Price 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 within two (2) Business Days following the Exercise Date. 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 three Business Days following the day on
which such accountant received the disputed calculations. 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) 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
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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.
2. DELIVERY OF WARRANT SHARES UPON EXERCISE. Upon receipt of a
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 disputed as
described in paragraph 1(b) above, and required to be delivered by the Company
pursuant to the accountant's calculations described therein, 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 Company's designated transfer agent for the Common
Stock (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 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 the resale of
such Warrant Shares is covered by an effective Registration Statement (as
defined in the Registration Rights Agreement) and such Holder represents in
writing to the Company that such Warrant Shares (i) have been or are being sold
pursuant to such registration statement or pursuant to Rule 144 under the
Securities Act of 1933, as amended, or (ii) may be made pursuant to Rule 144(k)
under the Securities Act of 1933, as amended, or any successor rule or
provision.
3. FAILURE TO DELIVER WARRANT SHARES.
(a) Exercise Default. In the event that, as a result of any
action or failure to act on the part of the Company (including without
limitation a failure by the Company to have a sufficient number of shares of
Common Stock authorized and reserved for issuance pursuant to exercise of the
Warrants), the Company does not deliver to a Holder certificates representing
the number of Warrant Shares specified in the applicable Exercise Notice on or
before the Delivery Date therefor and such failure continues for ten (10)
Business Days (an "EXERCISE DEFAULT"), the Company shall pay to the
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Holder payments ("EXERCISE DEFAULT PAYMENTS") in the amount of (i) (N/365)
MULTIPLIED BY (ii) the aggregate Exercise Price for the Warrant Shares which
are the subject of such Exercise Default MULTIPLIED BY (iii) the lower of
twenty four percent (24%) and the maximum rate permitted by applicable law,
where "N" equals the number of days elapsed between the original Delivery
Date for such Warrant Shares and the date on which all of such Warrant Shares
are issued and delivered to the Holder. Amounts payable under this
subparagraph 3(a) shall be paid to the Holder in immediately available funds
on or before the fifth (5th) Business Day of the calendar month immediately
following the calendar month in which such amount has accrued.
(b) Buy-in. Nothing herein shall limit a Holder's right to
pursue actual damages for the Company's failure to issue and deliver Warrant
Shares in connection with an exercise on the applicable Delivery Date
(including, without limitation, damages relating to any purchase of shares of
Common Stock by the Holder to make delivery on a sale effected in
anticipation of receiving Warrant Shares upon exercise, such damages to be in
an amount equal to (A) the aggregate amount paid by the Holder for the shares
of Common Stock so purchased MINUS (B) the aggregate amount of net proceeds,
if any, received by the Holder from the sale of the Warrant
Shares issued by the Company pursuant to such exercise), and the Holder shall
have the right to pursue all remedies available to it at law or in equity
(including, without limitation, a decree of specific performance and/or
injunctive relief).
(c) Reduction of Exercise Price. In the event that, as a
result of any action or failure to act on the part of the Company (including
without limitation a failure by the Company to have a sufficient number of
shares of Common Stock authorized and reserved for issuance pursuant to
exercise of the Warrants), a Holder has not received certificates
representing the Warrant Shares by the tenth (10th) Business Day following an
Exercise Default, the Holder may, upon written notice to the Company, regain
on such Business Day the rights of a Holder of this Warrant, or part thereof,
with respect to the Warrant Shares that are the subject of such Exercise
Default, and the Exercise Price for such Warrant Shares shall be reduced by
one percent (1%) for each day beyond such 10th Business Day in which the
Exercise Default continues. In such event, the Holder shall retain all of
the Holder's rights and remedies with respect to the Company's failure to
deliver such Warrant Shares (including without limitation the right to
receive the cash payments specified in subparagraph 3(a) above).
(d) Holder of Record. Each Holder shall, for all purposes, be
deemed to have become the holder of record of Warrant Shares on the Exercise
Date of this Warrant, irrespective of the date of delivery of such Warrant
Shares. 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.
4. EXERCISE LIMITATIONS.
In no event shall a 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 PLUS (y) the number of shares of Common
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Stock issuable upon such exercise, would be equal to or exceed (z) 4.99% of
the number of shares of Common Stock then issued and outstanding. 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. The provisions of this Section
4 may not be amended without the approval of the holders of a majority of the
Common Stock then outstanding.
5. PAYMENT OF THE EXERCISE PRICE. The Holder may pay the Exercise
Price in either of the following forms or, at the election of Holder, a
combination thereof:
(a) Cash Exercise: by delivery of immediately available funds.
(b) Cashless Exercise: by surrender of this Warrant to the Company
together with a notice of cashless exercise, in which event the Company shall
issue to the Holder the number of Warrant Shares determined as follows:
X = Y x (A-B)/A
where: X = the number of Warrant Shares to be issued to the
Holder.
Y = the number of Warrant Shares with respect to which this
Warrant is being exercised.
A = the average of the Closing Bid Prices of the Common
Stock for the five (5) Trading Days immediately prior to
(but not including) the Exercise Date.
B = the Exercise Price;
PROVIDED, HOWEVER, that the Holder may exercise this Warrant pursuant to a
Cashless Exercise only if, on the Exercise Date, the resale of Warrant Shares is
not covered by an effective Registration Statement (as defined in the
Registration Rights Agreement) that is available to the Holder on such date.
For purposes of Rule 144 under the Securities Act of 1933, as amended, it is
intended, understood 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 shall be deemed to have
been commenced, on the Issue Date.
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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 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 AND NUMBER OF SHARES UPON
ISSUANCE OF COMMON STOCK. Except as otherwise provided in Sections 6(b)(vi),
6(c) and 6(e) hereof, if and whenever after the initial issuance of this
Warrant, the Company issues or sells, or in accordance with Section 6(b) hereof
is deemed to have issued or sold, any shares of Common Stock for no
consideration (other than a stock split or stock dividend) or for a
consideration per share less than Exercise Price (as then in effect) (a
"Dilutive Issuance"), then effective immediately upon the Dilutive Issuance, the
Exercise Price will be adjusted in accordance with the following formula:
E' = (E)(O+P/E)
----------
(CSDO)
where:
E' = the adjusted Exercise Price
E = the then current Exercise Price;
O = the number of shares of Common Stock outstanding
immediately prior to
the Dilutive Issuance;
P = the aggregate consideration, calculated as set forth in
Section 6(b) hereof, received by the Company upon such
Dilutive Issuance; and
CSDO = the total number of shares of Common Stock Deemed
Outstanding (as herein defined) immediately after the
Dilutive Issuance.
(b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes
of determining the adjusted Exercise Price under Section 6(a) hereof, the
following will apply:
(i) Issuance of Rights, Options or Convertible
Securities. Subject to Section 6(b)(ii) below, if, after the date hereof, the
Company in any manner issues or grants any warrants, rights or options, whether
or not immediately exercisable, to subscribe for or to purchase Common Stock or
other securities exercisable, convertible into or exchangeable for Common Stock
("Convertible Securities")(such warrants, rights and options to purchase Common
Stock or Convertible Securities are hereinafter referred to as "Options"), and
the price per share for which Common Stock is purchasable or issuable upon the
exercise of such Options is less than the Exercise Price (as then in effect) on
the date of issuance of such Option or direct stock grant ("Below Market
Options"), then the maximum total number of shares of Common Stock issuable upon
the exercise of all such Below Market Options (assuming full exercise,
conversion or exchange of Convertible Securities, if
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applicable) will, as of the date of the issuance or grant of such Below
Market Options, be deemed to be outstanding and to have been issued and sold
by the Company for such price per share. For purposes of the preceding
sentence, the price per share for which Common Stock is issuable upon the
exercise of such Below Market Options is determined by dividing (i) the total
amount, if any, received or receivable by the Company as consideration for
the issuance or sale of all such Below Market Options, plus the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the exercise of all such below Market Options, plus, in the case of
Convertible Securities issuable upon the exercise of such Below Market
Options, the minimum aggregate amount of additional consideration payable
upon the exercise, conversion or exchange thereof at the time such
Convertible Securities first become exercisable, convertible or exchangeable,
by (ii) the maximum total number of shares of Common Stock issuable upon the
exercise of all such Below Market Options (assuming fll conversion of
Convertible Securities, if applicable). No further adjustment to the
Exercise Price will be made upon the exercise of such Below Market Options or
upon the exercise, conversion or exchange of Convertible Securities issuable
upon exercise of such Below Market Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES.
(A) If the Company in any manner issues or sells
any Convertible Securities, whether or not immediately convertible (other than
where the same are issuable upon the exercise of Options) and the price per
share for which Common Stock is issuable upon such exercise, conversion or
exchange (as determined pursuant to Section 6(b)(ii)(B) if applicable) is less
than the Exercise Price (as then in effect) on the date of issuance of such
Convertible Security, then the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such Convertible
Securities will, as of the date of the issuance of such Convertible Securities,
be deemed to be outstanding and to have been issued and sold by the Company for
such price per share. For the purposes of the preceding sentence, the price per
share for which Common Stock is issuable upon such exercise, conversion or
exchange is determined by dividing (i) the total amount, if any, received or
receivable by the Company as consideration for the issuance or sale of all such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise, conversion or
exchange thereof at the time such Convertible Securities first become
exercisable, convertible or exchangeable, by (ii) the maximum total number of
shares of Common Stock issuable upon the exercise, conversion or exchange of all
such Convertible Securities. No further adjustment to the Exercise Price will
be made upon the actual issuances of such Common Stock upon exercise, conversion
or exchange of such Convertible Securities.
(B) If the Company in any manner issues or sells
any Convertible Securities with a fluctuating or re-setting conversion or
exercise price or exchange ratio (a "Variable Rate Convertible Security"), then
the price per share for which Common Stock is issuable upon such exercise,
conversion or exchange for purposes of the calculation contemplated by Section
6(b)(ii)(A) shall be deemed to be the lowest price per share which would be
applicable assuming that all holding
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period and other conditions to any discounts contained in such Convertible
Security have been satisfied.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If there
is a change at any time in (i) the amount of additional consideration payable to
the Company upon the exercise of any Options; (ii) the amount of additional
consideration, if any, payable to the Company upon the exercise, conversion or
exchange of any Convertible Securities; or (iii) the rate at which any
Convertible Securities are convertible into or exchangeable for Common Stock
(other than under or by reason of provisions designed to protect against
dilution), the Exercise Price in effect at such time shall be adjusted to the
Exercise Price which would have been in effect had such Options or Convertible
Securities still outstanding provided for such changed additional consideration
or changed conversion rate, as the case may be, at the time initially granted,
issued or sold.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED
CONVERTIBLE SECURITIES. If, in any case, the total number of shares of
Company Stock issuable upon exercise of any Options or upon exercise,
conversion or exchange of any Convertible Securities is not, in fact, issued
and the rights to exercise such Option or to exercise, convert or exchange
such Convertible Securities shall have expired or terminated, the Exercise
Price then in effect will be readjusted to the Exercise Price which would
have been in effect at the time of such expiration or termination had such
Options or Convertible Securities, to the extent outstanding immediately
prior to such expiration or termination (other than in respect of the actual
number of shares of Common Stock issued upon exercise or conversion thereof),
never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any
Common Stock, Options or Convertible Securities are issued, granted or sold for
cash, the consideration received therefor for purposes of this Warrant will be
the amount received by the Company therefor, before deduction of reasonable
commissions, underwriting discounts or allowances or other reasonable expenses
paid or incurred by the Company in connection with such issuance, grant or sale.
In case any Common Stock, Options or Convertible Securities are issued or sold
for a consideration part or all of which shall be other than cash, the amount of
the consideration other than cash received by the Company will be the fair
market value of such consideration except where such consideration consists of
freely-tradable securities, in which case the amount of consideration received
by the Company will be the Market Price thereof as of the date of receipt. The
fair market value of any consideration other than cash or securities will be
determined in the good faith reasonable business judgment of the Board of
Directors.
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(vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE. No
adjustment to the Exercise Price will be made as a result of the issuance of any
securities of the Company issued pursuant to (i) an employee benefit plan or
program duly adopted by the Company; (ii) any options, warrant, convertible
securities or rights or agreements to purchase securities of the Company
outstanding on the date hereof; (iii) any public offerings of Equity Securities
(as defined in the Securities Purchase Agreement); (iv) any Equity Securities
issued for consideration other than cash pursuant to a merger, consolidation,
acquisition or similar business combination; (v) shares of Common Stock issued
in connection with any stock split, stock dividend or recapitalization by the
Company; (vi) shares of Common Stock issued upon conversion of the Preferred
Shares or exercise of the Closing Warrants; (vii) any Equity Securities issued
pursuant to any equipment leasing arrangement or debt financing from a bank or
similar financial institution; or (viii) any Equity Securities issued in
connection with strategic transactions involving the Company and other entities,
including (A) joint ventures, manufacturing, marketing or distribution
arrangements or (B) technology transfer or development arrangements; provided,
that the primary purpose of such transaction is not the raising of capital.
(c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company, at
any time after the initial issuance of this Warrant, 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. In
the event of any adjustment to the Exercise Price arising from an event
specified in the subparagraph (c), the number of shares of Common Stock into
which this Warrant is exercisable will be proportionately increased or
reduced, as the case may be.
(d) 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 (other than cash dividends or
distributions payable out of earned surplus or net profits for the current or
the immediately preceding year) 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, an
amount and type of such Distribution as though such 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).
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(e) MAJOR TRANSACTIONS. If the Company shall consolidate or merge
with any other corporation or entity (other than a consolidation or merger in
which the Company is the surviving or continuing entity and its capital stock is
unchanged and unissued in such transaction (except for issuances which do not
exceed fifty percent (50%) of the Common Stock)) or there shall occur any share
exchange pursuant to which all of the outstanding shares of Common Stock are
converted into other securities or property or any such other reclassification
or change of the outstanding shares of Common Stock 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) regardless of whether (a) applies, receive consideration, in exchange
for this Warrant (without payment of any exercise price hereunder), equal to the
greater of, as determined in the sole discretion of such 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 such 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 such
Common Stock been issued and outstanding and had such 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 Black-Scholes Amount (as defined herein) times the number
of shares of Common Stock for which this Warrant was exercisable (without regard
to any limitations on exercise herein contained and assuming payment of the
exercise payment in cash hereunder), and the Company shall make lawful provision
for the foregoing as a part of such Major Transaction and shall cause the issuer
of any security in such transaction to assume all of the Company's obligations
under the Registration Rights Agreement. Notwithstanding the foregoing, this
Section 6(e) shall not apply to a Major Transaction if the securities ("Exchange
Securities") of the surviving entity of such Major Transaction are publicly
traded and (a) the average trading volume of the Exchange Securities during the
one hundred eighty (180) day period ending on the date which such Major
Transaction is publicly disclosed is greater than two million dollars
($2,000,000), (b) the historical one hundred (100) day volatility of the
Exchange Securities during the period ending on the date on which such
transaction is publicly disclosed is greater than sixty percent (60%), and (c)
the market capitalization of the issuer of the Exchange Securities on such date
is not less than one hundred fifty million dollars ($150,000,000).
The "BLACK-SCHOLES AMOUNT" shall be the amount determined by
calculating the "Black-Scholes" value of an option to purchase one share of
Common Stock on the applicable page on the Bloomberg online page, using the
following variable values: (i) the current market price of the
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Common Stock equal to the closing trade price on the last trading day before
the date of the Notice of the Major Transaction; (ii) volatility of the
Common Stock equal to the volatility of the Common Stock during the 100
trading day period preceding the date of the Major Transaction; (iii) a risk
free rate equal to the interest rate on the United States treasury bill or
treasury note with a maturity corresponding to the remaining term of this
Warrant on the date of the Notice of the Major Transaction; and (iv) an
exercise price equal to the Exercise Price on the date of the Notice of the
Major Transaction. In the event such calculation function is no longer
available utilizing the Bloomberg online page, the Holder shall calculate
such amount in its sole discretion using the closest available alternative
mechanism and variable values to those available utilizing the Bloomberg
online page for such calculation function.
(f) ADJUSTMENTS; ADDITIONAL SHARES, SECURITIES OR ASSETS. In the
event that at any time, as a result of an adjustment made pursuant to this
paragraph 6, the Holder of this Warrant shall, upon exercise of this Warrant,
become entitled to receive securities or assets (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common Stock shall be
deemed to refer to and include such shares and/or other securities or assets;
and thereafter the number of such shares and/or other securities or assets shall
be subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this paragraph 6.
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 pursuant to an effective registration
statement or an exemption to the registration requirements of the Securities Act
of 1933, as amended, and applicable state laws. Upon such transfer or other
disposition, the Holder shall deliver a written notice to Company, substantially
in the form of the Transfer Notice attached hereto as Exhibit B (the "TRANSFER
NOTICE"), indicating the person or persons to whom this Warrant shall be
transferred and, if less than all of this Warrant is transferred or this Warrant
is transferred in parts, 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. Notwithstanding the foregoing, no Holder may knowingly and voluntarily
sell this Warrant (or any portion thereof) to an entity that is a competitor of
the Company.
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9. BENEFITS OF THIS WARRANT. 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 under this Warrant and this Warrant
shall be for the sole and exclusive benefit of the Holder of this Warrant.
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 or
security 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. Except as otherwise provided herein, any
notice, demand or request required or permitted to be given pursuant to the
terms of this Warrant shall be in writing and shall be deemed given (i) when
delivered personally or by verifiable facsimile transmission (with an original
to follow) on or before 5:00 p.m., eastern time, on a Business Day or, if such
day is not a Business Day, on the next succeeding Business Day, (ii) on the next
Business Day after timely delivery to a nationally-recognized 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:
Aspeon, Inc.
17891 Cartwright Road
Irvine, California 92614
Tel: (949) 440-8000
Fax: (949) 440-8088
Attention: Chief Financial Officer
with a copy to:
Cooley Godward LLP
4365 Executive Drive
Suite 1100
San Diego, California 92121-2128
Attention: Jeremy D. Glaser, Esq.
Tel: (858) 550-6000
Fax: (858) 453-3555
and if to the Holder, to such address as shall be designated by the Holder in
writing to the Company.
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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 Delaware, without giving effect to conflict of law provisions thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
[ ] day of March, 2000.
ASPEON, INC.
By:___________________________
Name: Richard P. Stack
Title: Chief Executive Officer
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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 ASPEON,
INC. 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. Unless otherwise specified in writing to the Company, the
undersigned represents to the Company that the shares of Common Stock covered by
this notice have been or will be sold pursuant to the terms of an effective
registration statement.
1. Form of Exercise Price. The Holder intends that payment of the
Exercise Price shall be made as:
______ a CASH EXERCISE with respect to _________________ Warrant
Shares; and/or
______ a CASHLESS EXERCISE with respect to _________________
Warrant Shares.
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 $________________ to the
Company in accordance with the terms of the Warrant.
3. Delivery of Warrant Shares. The Company shall deliver to the
Holder _____________ Warrant Shares in accordance with the terms of the Warrant.
Date: ______________________
___________________________________
Name of Registered Holder
By: _______________________________
Name:
Title:
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EXHIBIT B TO WARRANT
TRANSFER NOTICE
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells,
assigns and transfers unto the person or persons named below the right to
purchase______shares of the Common Stock of ASPEON, INC. evidenced by the
attached Warrant.
Date: ______________________
___________________________________
Name of Registered Holder
By: _______________________________
Name:
Title:
Transferee Name and Address:
_____________________________
_____________________________
_____________________________
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EXHIBIT B TO
SECURITIES
PURCHASE AGREEMENT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, 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.
WARRANT TO PURCHASE ISSUE DATE: MARCH [ ], 2000
1,250,000 SHARES
WARRANT TO PURCHASE COMMON STOCK
OF
ASPEON SOLUTIONS, INC.
THIS CERTIFIES that Marshall Capital Management, Inc. or any subsequent
holder hereof (the "HOLDER"), has the right to purchase from ASPEON SOLUTIONS,
INC., a Delaware corporation (the "COMPANY"), up to 1,250,000 fully paid and
nonassessable shares of the Company's Common Stock, $.01 par value (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 (the
"INITIAL EXERCISE DATE") that is the earlier to occur of (i) the date on which
an initial public offering of the Common Stock (the "INITIAL PUBLIC OFFERING")
is commenced (it being understood that the Initial Public Offering shall be
deemed to commence on the date on which the registration statement pursuant to
which the offering will be conducted is declared effective by the Securities and
Exchange Commission) and (ii) the one-year anniversary of the Issue Date (as
defined below) and ending at 5:00 p.m., eastern time, on the date that is the
fifth (5th) anniversary of the Initial Exercise Date (as defined below) (the
"EXPIRATION DATE"). This Warrant is issued, and all rights hereunder shall be,
subject to all of the conditions, limitations and provisions set forth herein
and in the related Securities Purchase Agreement by and among the Company and
the Purchaser named
<PAGE>
therein (the "SECURITIES PURCHASE AGREEMENT"). The date on
which this Warrant is issued is referred to herein as the "ISSUE DATE".
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 Initial Exercise 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 $5.00 per share, subject to
adjustment for the events specified in Section 6 below.
(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 (as defined below) on which the Holder wishes to
effect such exercise (the "EXERCISE DATE"), to the Company 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. As used herein, "BUSINESS DAY" shall mean any day on which
the New York Stock Exchange (the "NYSE") and commercial banks in the city of New
York are open for business. The Holder shall promptly thereafter deliver to the
Company the original Exercise Notice, the original Warrant and (unless a
cashless exercise is intended) 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 to the Exercise Price 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 within two (2) Business Days following the Exercise Date. 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 three Business Days following the day on
which such accountant received the disputed calculations. 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) 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.
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<PAGE>
2. DELIVERY OF WARRANT SHARES UPON EXERCISE. Upon receipt of a
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 disputed as
described in paragraph 1(b) above, and required to be delivered by the Company
pursuant to the accountant's calculations described therein, 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 Company's designated transfer agent for the Common
Stock (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 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 the resale of
such Warrant Shares is covered by an effective Registration Statement (as
defined in the Registration Rights Agreement) and such Holder represents in
writing to the Company that such Warrant Shares (i) have been or are being sold
pursuant to such registration statement or pursuant to Rule 144 under the
Securities Act of 1933, as amended, or (ii) may be made pursuant to Rule 144(k)
under the Securities Act of 1933, as amended, or any successor rule or
provision.
3. FAILURE TO DELIVER WARRANT SHARES.
(a) Exercise Default. In the event that, as a result of any
action or failure to act on the part of the Company (including without
limitation a failure by the Company to have a sufficient number of shares of
Common Stock authorized and reserved for issuance pursuant to exercise of the
Warrants), the Company does not deliver to a Holder certificates representing
the number of Warrant Shares specified in the applicable Exercise Notice on or
before the Delivery Date therefor and such failure continues for ten (10)
Business Days (an "EXERCISE DEFAULT"), the Company shall pay to the Holder
payments ("EXERCISE DEFAULT PAYMENTS") in the amount of (i) (N/365) MULTIPLIED
BY (ii) the aggregate Exercise Price for the Warrant Shares which are the
subject of such Exercise Default MULTIPLIED BY (iii) the lower of twenty four
percent (24%) and the maximum rate permitted by applicable law, where "N" equals
the number of days elapsed between the original Delivery Date for
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<PAGE>
such Warrant Shares and the date on which all of such Warrant Shares are issued
and delivered to the Holder. Amounts payable under this subparagraph 3(a)
shall be paid to the Holder in immediately available funds on or before the
fifth (5th) Business Day of the calendar month immediately following the
calendar month in which such amount has accrued.
(b) Buy-in. Nothing herein shall limit a Holder's right to
pursue actual damages for the Company's failure to issue and deliver Warrant
Shares in connection with an exercise on the applicable Delivery Date
(including, without limitation, damages relating to any purchase of shares of
Common Stock by the Holder to make delivery on a sale effected in anticipation
of receiving Warrant Shares upon exercise, such damages to be in an amount equal
to (A) the aggregate amount paid by the Holder for the shares of Common Stock so
purchased MINUS (B) the aggregate amount of net proceeds, if any, received by
the Holder from the sale of the Warrant Shares issued by the Company pursuant to
such exercise), and the Holder shall have the right to pursue all remedies
available to it at law or in equity (including, without limitation, a decree of
specific performance and/or injunctive relief).
(c) Reduction of Exercise Price. In the event that, as a
result of any action or failure to act on the part of the Company (including
without limitation a failure by the Company to have a sufficient number of
shares of Common Stock authorized and reserved for issuance pursuant to exercise
of the Warrants), a Holder has not received certificates representing the
Warrant Shares by the tenth (10th) Business Day following an Exercise Default,
the Holder may, upon written notice to the Company, regain on such Business Day
the rights of a Holder of this Warrant, or part thereof, with respect to the
Warrant Shares that are the subject of such Exercise Default, and the Exercise
Price for such Warrant Shares shall be reduced by one percent (1%) for each day
beyond such 10th Business Day in which the Exercise Default continues. In such
event, the Holder shall retain all of the Holder's rights and remedies with
respect to the Company's failure to deliver such Warrant Shares (including
without limitation the right to receive the cash payments specified in
subparagraph 3(a) above).
(d) Holder of Record. Each Holder shall, for all purposes, be
deemed to have become the holder of record of Warrant Shares on the Exercise
Date of this Warrant, irrespective of the date of delivery of such Warrant
Shares. 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.
4. EXERCISE LIMITATIONS.
In no event shall a 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 PLUS (y) the number of shares of Common Stock
issuable upon such exercise, would be equal to or exceed (z) 4.99% of the number
of shares of Common Stock then issued and outstanding. 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
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<PAGE>
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. The provisions of this Section 4 may not be amended without
the approval of the holders of a majority of the Common Stock then
outstanding.
5. PAYMENT OF THE EXERCISE PRICE. The Holder may pay the Exercise
Price in either of the following forms or, at the election of Holder, a
combination thereof:
(a) Cash Exercise: by delivery of immediately available funds.
(b) Cashless Exercise: by surrender of this Warrant to the Company
together with a notice of cashless exercise, in which event the Company shall
issue to the Holder the number of Warrant Shares determined as follows:
X = Y x (A-B)/A
where: X = the number of Warrant Shares to be issued to the
Holder.
Y = the number of Warrant Shares with respect to which this
Warrant is being exercised.
A = the average of the Closing Bid Prices of the Common
Stock for the five (5) Trading Days immediately prior to
(but not including) the Exercise Date.
B = the Exercise Price;
PROVIDED, HOWEVER, that the Holder may exercise this Warrant pursuant to a
Cashless Exercise only if, on the Exercise Date, the resale of Warrant Shares
is not covered by an effective Registration Statement (as defined in the
Registration Rights Agreement) that is available to the Holder on such date.
For purposes of Rule 144 under the Securities Act of 1933, as amended, it is
intended, understood 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 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 number of Warrant Shares as
required herein results in a fraction of a cent or fraction of a share, as
applicable, such
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<PAGE>
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 AND NUMBER OF SHARES UPON
ISSUANCE OF COMMON STOCK. Except as otherwise provided in Sections 6(b)(vi),
6(c) and 6(e) hereof, if and whenever after the initial issuance of this
Warrant, the Company issues or sells, or in accordance with Section 6(b) hereof
is deemed to have issued or sold, any shares of Common Stock for no
consideration (other than a stock split or stock dividend) or for a
consideration per share less than Exercise Price (as then in effect) (a
"Dilutive Issuance"), then effective immediately upon the Dilutive Issuance, the
Exercise Price will be adjusted in accordance with the following formula:
E' = (E)(O+P/E)
------------
(CSDO)
where:
E' = the adjusted Exercise Price
E = the then current Exercise Price;
O = the number of shares of Common Stock outstanding
immediately prior to
the Dilutive Issuance;
P = the aggregate consideration, calculated as set forth in
Section 6(b) hereof,
received by the Company upon such Dilutive Issuance; and
CSDO = the total number of shares of Common Stock Deemed
Outstanding (as
herein defined) immediately after the Dilutive Issuance.
(b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes
of determining the adjusted Exercise Price under Section 6(a) hereof, the
following will apply:
(i) Issuance of Rights, Options or Convertible
Securities. Subject to Section 6(b)(ii) below, if, after the date hereof, the
Company in any manner issues or grants any warrants, rights or options, whether
or not immediately exercisable, to subscribe for or to purchase Common Stock or
other securities exercisable, convertible into or exchangeable for Common Stock
("Convertible Securities")(such warrants, rights and options to purchase Common
Stock or Convertible Securities are hereinafter referred to as "Options"), and
the price per share for which Common Stock is purchasable or issuable upon the
exercise of such Options is less than the Exercise Price (as then in effect) on
the date of issuance of such Option or direct stock grant ("Below Market
Options"), then the maximum total number of shares of Common Stock issuable upon
the exercise of all such Below Market Options (assuming full exercise,
conversion or exchange of Convertible Securities, if applicable) will, as of the
date of the issuance or grant of such Below Market Options, be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. For purposes of the preceding sentence, the price per share for which
Common Stock is issuable upon the exercise of such Below Market Options is
determined by dividing (i) the total amount, if any, received or
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<PAGE>
receivable by the Company as consideration for the issuance or sale of all
such Below Market Options, plus the minimum aggregate amount of additional
consideration, if any,payable to the Company upon the exercise of all such
below Market Options, plus, in the case of Convertible Securities issuable
upon the exercise of such Below Market Options, the minimum aggregate amount
of additional consideration payable upon the exercise, conversion or exchange
thereof at the time such Convertible Securities first become exercisable,
convertible or exchangeable, by (ii) the maximum total number of shares of
Common Stock issuable upon the exercise of all such Below Market Options
(assuming fll conversion of Convertible Securities, if applicable). No
further adjustment to the Exercise Price will be made upon the exercise of
such Below Market Options or upon the exercise, conversion or exchange of
Convertible Securities issuable upon exercise of such Below Market Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES.
(A) If the Company in any manner issues or sells
any Convertible Securities, whether or not immediately convertible (other than
where the same are issuable upon the exercise of Options) and the price per
share for which Common Stock is issuable upon such exercise, conversion or
exchange (as determined pursuant to Section 6(b)(ii)(B) if applicable) is less
than the Exercise Price (as then in effect) on the date of issuance of such
Convertible Security, then the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such Convertible
Securities will, as of the date of the issuance of such Convertible Securities,
be deemed to be outstanding and to have been issued and sold by the Company for
such price per share. For the purposes of the preceding sentence, the price per
share for which Common Stock is issuable upon such exercise, conversion or
exchange is determined by dividing (i) the total amount, if any, received or
receivable by the Company as consideration for the issuance or sale of all such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise, conversion or
exchange thereof at the time such Convertible Securities first become
exercisable, convertible or exchangeable, by (ii) the maximum total number of
shares of Common Stock issuable upon the exercise, conversion or exchange of all
such Convertible Securities. No further adjustment to the Exercise Price will
be made upon the actual issuances of such Common Stock upon exercise, conversion
or exchange of such Convertible Securities.
(B) If the Company in any manner issues or sells
any Convertible Securities with a fluctuating or re-setting conversion or
exercise price or exchange ratio (a "Variable Rate Convertible Security"), then
the price per share for which Common Stock is issuable upon such exercise,
conversion or exchange for purposes of the calculation contemplated by Section
6(b)(ii)(A) shall be deemed to be the lowest price per share which would be
applicable assuming that all holding period and other conditions to any
discounts contained in such Convertible Security have been satisfied.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If there
is a change at any
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time in (i) the amount of additional consideration payable to
the Company upon the exercise of any Options; (ii) the amount of additional
consideration, if any, payable to the Company upon the exercise, conversion or
exchange of any Convertible Securities; or (iii) the rate at which any
Convertible Securities are convertible into or exchangeable for Common Stock
(other than under or by reason of provisions designed to protect against
dilution), the Exercise Price in effect at such time shall be adjusted to the
Exercise Price which would have been in effect had such Options or Convertible
Securities still outstanding provided for such changed additional consideration
or changed conversion rate, as the case may be, at the time initially granted,
issued or sold.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED
CONVERTIBLE SECURITIES. If, in any case, the total number of shares of Common
Stock issuable upon exercise of any Options or upon exercise, conversion or
exchange of any Convertible Securities is not, in fact, issued and the rights to
exercise such Option or to exercise, convert or exchange such Convertible
Securities shall have expired or terminated, the Exercise Price then in effect
will be readjusted to the Exercise Price which would have been in effect at the
time of such expiration or termination had such Options or Convertible
Securities, to the extent outstanding immediately prior to such expiration or
termination (other than in respect of the actual number of shares of Common
Stock issued upon exercise or conversion thereof), never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any
Common Stock, Options or Convertible Securities are issued, granted or sold for
cash, the consideration received therefor for purposes of this Warrant will be
the amount received by the Company therefor, before deduction of reasonable
commissions, underwriting discounts or allowances or other reasonable expenses
paid or incurred by the Company in connection with such issuance, grant or sale.
In case any Common Stock, Options or Convertible Securities are issued or sold
for a consideration part or all of which shall be other than cash, the amount of
the consideration other than cash received by the Company will be the fair
market value of such consideration except where such consideration consists of
freely-tradable securities, in which case the amount of consideration received
by the Company will be the Market Price thereof as of the date of receipt. The
fair market value of any consideration other than cash or securities will be
determined in the good faith reasonable business judgment of the Board of
Directors.
(vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE. No
adjustment to the Exercise Price will be made AS A RESULT OF THE ISSUANCE OF
ANY SECURITIES OF THE COMPANY ISSUED PURSUANT TO (i) AN EMPLOYEE BENEFIT PLAN OR
PROGRAM DULY ADOPTED BY THE COMPANY; (ii) ANY OPTIONS, WARRANT, CONVERTIBLE
SECURITIES OR RIGHTS OR AGREEMENTS TO PURCHASE SECURITIES OF THE COMPANY
outstanding on the date hereof; (iii) ANY PUBLIC OFFERINGS OF EQUITY SECURITIES
(as defined in the Securities Purchase Agreement); (iv) ANY EQUITY SECURITIES
ISSUED FOR CONSIDERATION OTHER THAN CASH PURSUANT TO A MERGER, CONSOLIDATION,
ACQUISITION OR SIMILAR BUSINESS COMBINATION; (v) SHARES OF COMMON STOCK ISSUED
IN CONNECTION WITH ANY STOCK SPLIT, STOCK DIVIDEND OR RECAPITALIZATION BY THE
COMPANY; (vi) SHARES OF COMMON STOCK ISSUED UPON CONVERSION OF THE PREFERRED
SHARES OR EXERCISE OF THE WARRANTS; (vii) ANY EQUITY SECURITIES ISSUED PURSUANT
TO ANY EQUIPMENT LEASING ARRANGEMENT OR
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DEBT FINANCING FROM A BANK OR SIMILAR FINANCIAL INSTITUTION; OR (viii) ANY
EQUITY SECURITIES ISSUED IN CONNECTION WITH STRATEGIC TRANSACTIONS INVOLVING
THE COMPANY AND OTHER ENTITIES, INCLUDING (A) JOINT VENTURES, MANUFACTURING,
MARKETING OR DISTRIBUTION ARRANGEMENTS OR (B) TECHNOLOGY TRANSFER OR
DEVELOPMENT ARRANGEMENTS; PROVIDED, THAT THE PRIMARY PURPOSE OF SUCH
TRANSACTION IS NOT THE RAISING OF CAPITAL.
(c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company, at
any time after the initial issuance of this Warrant, 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.
In the event of any adjustment to the Exercise Price arising from an event
specified in the subparagraph (c), the number of shares of Common Stock into
which this Warrant is exercisable will be proportionately increased or reduced,
as the case may be.
(d) 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 (other than cash dividends or
distributions payable out of earned surplus or net profits for the current or
the immediately preceding year) 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, an
amount and type of such Distribution as though such 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). The Company shall not distribute or transfer any of its
businesses or assets to Aspeon, Inc. or to any subsidiary or affiliate of
Aspeon, Inc., during the period beginning on the Issue Date and ending on the
Expiration Date, without the prior consent of the Holder.
(e) MAJOR TRANSACTIONS. If the Company shall consolidate or merge
with any other corporation or entity (other than a consolidation or merger in
which the Company is the surviving or continuing entity and its capital stock is
unchanged and unissued in such transaction (except for issuances which do not
exceed fifty percent (50%) of the Common Stock)) or there shall occur any share
exchange pursuant to which all of the outstanding shares of Common Stock are
converted into other securities or property or any such other reclassification
or change of the outstanding shares of Common Stock or the Company shall sell
all or substantially all of its assets (each of the foregoing
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<PAGE>
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) regardless of whether (a)
applies, receive consideration, in exchange for this Warrant (without payment
of any exercise price hereunder), equal to the greater of, as determined in
the sole discretion of such 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 such 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 such Common
Stock been issued and outstanding and had such 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 Black-Scholes Amount (as defined herein) times the
number of shares of Common Stock for which this Warrant was exercisable
(without regard to any limitations on exercise herein contained and assuming
payment of the exercise payment in cash hereunder), and the Company shall
make lawful provision for the foregoing as a part of such Major Transaction
and shall cause the issuer of any security in such transaction to assume all
of the Company's obligations under the Registration Rights Agreement.
Notwithstanding the foregoing, this Section 6(e) shall not apply to a Major
Transaction if the securities ("Exchange Securities") of the surviving entity
of such Major Transaction are publicly traded and (a) the average trading
volume of the Exchange Securities during the one hundred eighty (180) day
period ending on the date which such Major Transaction is publicly disclosed
is greater than two million dollars ($2,000,000), (b) the historical one
hundred (100) day volatility of the Exchange Securities during the period
ending on the date on which such transaction is publicly disclosed is greater
than sixty percent (60%), and (c) the market capitalization of the issuer of
the Exchange Securities on such date is not less than one hundred fifty
million dollars ($150,000,000).
The "BLACK-SCHOLES AMOUNT" shall be the amount determined by calculating
the "Black-Scholes" value of an option to purchase one share of Common Stock on
the applicable page on the Bloomberg online page, using the following variable
values: (i) the current market price of the Common Stock equal to the closing
trade price on the last trading day before the date of the Notice of the Major
Transaction; (ii) volatility of the Common Stock equal to the volatility of the
Common Stock during the 100 trading day period preceding the date of the Major
Transaction; (iii) a risk free rate equal to the interest rate on the United
States treasury bill or treasury note with a maturity corresponding to the
remaining term of this Warrant on the date of the Notice of the Major
Transaction; and (iv) an exercise price equal to the Exercise Price on the date
of the Notice of the Major Transaction. In the event such calculation function
is no longer available utilizing the
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Bloomberg online page, the Holder shall calculate such amount in its sole
discretion using the closest available alternative mechanism and variable
values to those available utilizing the Bloomberg online page for such
calculation function.
(f) ADJUSTMENTS; ADDITIONAL SHARES, SECURITIES OR ASSETS. In the
event that at any time, as a result of an adjustment made pursuant to this
paragraph 6, the Holder of this Warrant shall, upon exercise of this Warrant,
become entitled to receive securities or assets (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common Stock shall be
deemed to refer to and include such shares and/or other securities or assets;
and thereafter the number of such shares and/or other securities or assets shall
be subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this paragraph 6.
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 pursuant to an effective registration
statement or an exemption to the registration requirements of the Securities Act
of 1933, as amended, and applicable state laws. Upon such transfer or other
disposition, the Holder shall deliver a written notice to Company, substantially
in the form of the Transfer Notice attached hereto as Exhibit B (the "TRANSFER
NOTICE"), indicating the person or persons to whom this Warrant shall be
transferred and, if less than all of this Warrant is transferred or this Warrant
is transferred in parts, 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. Notwithstanding the foregoing, no Holder may knowingly and voluntarily
sell this Warrant (or any portion thereof) to an entity that is a competitor of
the Company.
9. BENEFITS OF THIS WARRANT. 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 under this Warrant and this Warrant
shall be for the sole and exclusive benefit of the Holder of this Warrant.
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
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<PAGE>
destruction) of indemnity or security 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. Except as otherwise provided herein, any
notice, demand or request required or permitted to be given pursuant to the
terms of this Warrant shall be in writing and shall be deemed given (i) when
delivered personally or by verifiable facsimile transmission (with an original
to follow) on or before 5:00 p.m., eastern time, on a Business Day or, if such
day is not a Business Day, on the next succeeding Business Day, (ii) on the next
Business Day after timely delivery to a nationally-recognized 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:
Aspeon Solutions, Inc.
17891 Cartwright Road
Irvine, California 92614
Tel: (949) 440-8000
Fax: (949) 440-8088
Attention: Chief Financial Officer
with a copy to:
Cooley Godward LLP
4365 Executive Drive
Suite 1100
San Diego, California 92121-2128
Attention: Jeremy D. Glaser, Esq.
Tel: (858) 550-6000
Fax: (858) 453-3555
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 Delaware, without giving effect to conflict of law provisions thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
[]day of March, 2000.
ASPEON SOLUTIONS, INC.
By:___________________________
Name: Richard P. Stack
Title: Chief Executive Officer
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<PAGE>
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 ASPEON
SOLUTIONS, INC. 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. Unless otherwise specified in writing to the Company,
the undersigned represents to the Company that the shares of Common Stock
covered by this notice have been or will be sold pursuant to the terms of an
effective registration statement.
1. Form of Exercise Price. The Holder intends that payment of the
Exercise Price shall be made as:
______ a CASH EXERCISE with respect to _________________ Warrant
Shares; and/or
______ a CASHLESS EXERCISE with respect to _________________
Warrant Shares.
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 $________________ to the
Company in accordance with the terms of the Warrant.
3. Delivery of Warrant Shares. The Company shall deliver to the
Holder _____________ Warrant Shares in accordance with the terms of the Warrant.
Date: ______________________
___________________________________
Name of Registered Holder
By: _______________________________
Name:
Title:
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<PAGE>
EXHIBIT B TO WARRANT
TRANSFER NOTICE
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells,
assigns and transfers unto the person or persons named below the right to
purchase__________shares of the Common Stock of ASPEON SOLUTIONS, INC.
evidenced by the attached Warrant.
Date: ______________________
___________________________________
Name of Registered Holder
By: _______________________________
Name:
Title:
Transferee Name and Address:
____________________________
____________________________
____________________________
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<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of March 7,
2000, by and among ASPEON, INC., a Delaware corporation (the "COMPANY"), ASPEON
SOLUTIONS, INC., a Delaware corporation ("ASP"), and MARSHALL CAPITAL
MANAGEMENT, INC. ("Purchaser").
The Company has agreed, on the terms and subject to the conditions set
forth in the Securities Purchase Agreement of even date herewith (the
"SECURITIES PURCHASE AGREEMENT"), to issue and sell to Purchaser (i) shares (the
"COMPANY PREFERRED SHARES") of the Company's Series A Convertible Exchangeable
Preferred Stock, $.01 par value (the "COMPANY PREFERRED STOCK") and (ii)
warrants (the "COMPANY WARRANTS") entitling the holder thereof to purchase
shares (the "COMPANY WARRANT SHARES") of the Company's common stock, $.01 par
value (the "COMPANY COMMON STOCK")ASP has agreed to issue and sell, on the terms
and subject to the conditions set forth in the Securities Purchase Agreement,
warrants (the "ASP WARRANTS") entitling the holder thereof to purchase shares
(the "ASP WARRANT SHARES") of the common stock, $.01 par value (the "ASP COMMON
STOCK"), of ASP. The Company Preferred Shares are convertible pursuant to a
certificate of designation (the "COMPANY CERTIFICATE OF DESIGNATION") into
shares (the "COMPANY CONVERSION SHARES") of the Company Common Stock and, in
certain circumstances, exchangeable for shares of the preferred stock of ASP
(the "ASP PREFERRED SHARES"), which are convertible, pursuant to a certificate
of designation (the "ASP CERTIFICATE OF DESIGNATION"), into shares of ASP Common
Stock (the "ASP CONVERSION SHARES"). Dividends accruing on the Company
Preferred Shares may be paid, in certain circumstances, in shares of Common
Stock (the "DIVIDEND SHARES"). Dividends accruing on the ASP Preferred Shares
may be paid, in certain circumstances, in shares of ASP Common Stock (the "ASP
DIVIDEND SHARES"). The Company Preferred Shares and the ASP Preferred Shares
are collectively referred to herein as the "PREFERRED SHARES." The Company
Warrants and the ASP Warrants are collectively referred to herein as the
"Warrants."
In order to induce 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 or the Certificate of Designation, as applicable.
In consideration of 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:
<PAGE>
(a) "ASP REGISTRABLE SECURITIES" means the ASP Conversion
Shares, the ASP Warrant Shares, the ASP Dividend Shares and any
other shares of ASP Common Stock issuable pursuant to the terms of
the ASP Certificate of Designation or the ASP Warrants,
respectively, 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 ASP Conversion Shares,
the ASP Warrant Shares or the ASP Dividend Shares, or pursuant to
the conversion of any security issued in exchange for the ASP
Preferred Shares.
(b) "BUSINESS DAY" and "CLOSING DATE" shall have the respective
meanings specified in the Securities Purchase Agreement;
(c) "EFFECTIVE DATE" means the date on which the Registration
Statement is declared effective by the Securities and Exchange
Commission (the "COMMISSION");
(d) "FILING DEADLINE" means the thirtieth (30th) day following
the Closing Date; PROVIDED, HOWEVER, that if such thirtieth day is
not a Business Day, the Filing Deadline shall be the Business Day
immediately following such thirtieth day;
(e) "HOLDER" means any person owning or having the right to
acquire, through conversion of the Preferred Shares or exercise of
the Warrants, Registrable Securities, including initially
Purchaser and thereafter any permitted assignee thereof;
(f) "INITIAL PUBLIC OFFERING" means the initial public offering
of the ASP Common Stock. The Initial Public Offering will be
deemed to commence upon the effectiveness of the registration
statement pursuant to which the Initial Public Offering will be
conducted;
(g) "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 ("REGISTRATION STATEMENT"), and the
declaration or ordering of effectiveness of the Registration
Statement by the Commission;
(h) "REGISTRATION DEADLINE" means the ninetieth (90th) day
following the earlier to occur of (i) the Filing Deadline and (ii)
the date on which the Registration Statement is filed;
(i) "COMPANY REGISTRABLE SECURITIES" means the Company
Conversion Shares, the Company Warrant Shares, the Company
Dividend Shares and any other shares of Common Stock issuable
pursuant to the terms of the Company Certificate of Designation or
the Company Warrants, respectively, and any shares of common stock
issued or issuable from time to time (with any adjustments) in
replacement of, in
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<PAGE>
exchange for or otherwise in respect of the Company Conversion
Shares, the Company Warrant Shares or the Company Dividend
Shares, or pursuant to the conversion of any security issued in
exchange for the Company Preferred Shares; and
(j) "REGISTRABLE SECURITIES" means the Company Registrable
Securities and/or the ASP Registrable Securities, as the context
requires; and
(l) "REGISTRANT" means, with respect to a Registration
Statement or Registrable Securities, the Company and/or ASP, as
the context requires.
2. MANDATORY REGISTRATION.
(A) COMPANY REGISTRATION.
(a) 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 the number of
shares of Company Registrable Securities equal to the Reserved Amount (as
defined in the Securities Purchase Agreement). 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 Preferred Shares and Warrants in order to
prevent dilution resulting from stock splits, stock dividends or similar events.
(b) The Company shall use its best efforts to cause the
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 fifteen
(15) Business Days following the Company's receipt thereof), and shall submit to
the Commission, within two (2) Business Days after the Company learns 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 shall maintain the
effectiveness of the Registration Statement until the earlier to occur of (i)
the date on which all of the Company Registrable Securities have been sold
pursuant to the Registration Statement and (ii) the date on which all of the
remaining Company Registrable Securities (in the reasonable opinion of counsel
to the Holders) may be immediately sold to the public without registration and
without regard to the amount of Company Registrable Securities which may be sold
by a Holder thereof at a given time (the period beginning on the Registration
Deadline and ending on the earlier of such dates being referred to herein as
the "REGISTRATION PERIOD").
(c) If (A) the Registration Statement is not filed on or before
the Filing Deadline or declared effective by the Commission on or before the one
hundred and twentieth (120th) day following the earlier to occur of (i) the
Filing Deadline and (ii) the date on which the Registration Statement is filed
(such 120th day being referred to herein as the "REGISTRATION DEFAULT DATE"),
(B) after the Registration Statement has been declared effective by the
Commission, sales of Company Registrable Securities cannot be made by a Holder
under the Registration Statement (except during a Blackout
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<PAGE>
Period (as defined below)) for any reason not within the exclusive control of
such Holder (other than with respect to such Company Registrable Securities
as are then freely saleable pursuant to Rule 144(k) under the Securities
Act), or (C) the Common Stock is not listed and freely tradeable on the
Nasdaq National Market or the New York Stock Exchange (each of (A), (B) or
(C) being referred to herein as a "DEFAULT EVENT"), the Company shall pay to
each Holder an amount equal to the lesser of (x) one and one half percent
(1.5%) per thirty calendar day period (prorated for any period of less than
thirty calendar days) and (y) the highest rate permitted by applicable law,
TIMES the Stated Value of the Preferred Shares then held by such Holder,
accruing daily and compounded monthly, from the date on which a Default Event
occurs until the date on which such Default Event and any and all other
Default Events have been cured and are no longer continuing. The amounts paid
or payable by the Company hereunder 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, or otherwise. Payments of
such amounts pursuant hereto shall be made in immediately available funds
within five (5) Business Days after the end of each period that gives rise to
such obligation, provided that, if any such period extends for more than
thirty (30) days, payments shall be made within five (5) days after the end
of each thirty-day period.
(d) In the event that (A) the Registration Statement is not
declared effective by the Registration Default Date, (B) after the
Registration Statement has been declared effective by the Commission, sales
of Company Registrable Securities cannot be made by a Holder under the
Registration Statement (except during a Blackout Period (as defined below)
for any reason not within the exclusive control of such Holder (other than
such Company Registrable Securities as are then freely saleable pursuant to
Rule 144(k) under the Securities Act), (C) the Common Stock is not listed and
freely tradeable on the Nasdaq National Market or the New York Stock
Exchange, or (D) the Company breaches, in any material respect, any material
covenant or other material term or condition of the applicable Certificate of
Designation, the Securities Purchase Agreement, Registration Rights Agreement
or the applicable Warrants or any other agreement, document, certificate or
other instrument delivered in connection with the transactions contemplated
hereby or thereby, and such breach continues for a period of ten (10)
Business Days after written notice thereof to the Company from a Holder (each
event described in clause (A), (B), (C) or (D) being hereinafter referred to
as a "REPRICING EVENT"), in addition to the amounts which may be payable
pursuant to paragraph 2(c) above (and any other remedies available to the
Holders), the Conversion Price for any conversion of Preferred Shares
occurring on a Conversion Date following the occurrence of such Repricing
Event shall be deemed to be equal to the lesser of (i) the lowest Conversion
Price (or if lower, Market Price) occurring during the period between the
date on which a Repricing Event occurs and the date on which such Repricing
Event and any and all other Repricing Events have been cured and are no
longer continuing and (ii) the Conversion Price that would otherwise be in
effect on such Conversion Date. If a Repricing Event occurs, the Share
Limitation (as defined in the Certificate of Designation) shall be increased
in proportion to the reduction in the Conversion Price effected thereby. The
Company may suspend the use of the Registration Statement and refuse to
permit the Holders to resell any Company Registrable Securities pursuant to
the Registration Statement for a period not to exceed twenty (20) days in any
twelve (12) month period (each, a "BLACKOUT PERIOD"); provided, however, that
in order to exercise this right, the Company must notify each Holder in
writing that there exists material, non-public information relating to the
Company, which, in the reasonable opinion of the board of directors of the
Company would not be appropriate for disclosure during that time. In such
event, the Company shall
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<PAGE>
(i) use its best efforts to amend the Registration Statement and/or
supplement the related prospectus as necessary and to take all other actions
necessary to allow such sales and (ii) notify the Holders promptly after it
has determined that such sales are permissible.
(B) ASP REGISTRATION.
(a) FROM AND AFTER THE COMMENCEMENT OF THE INITIAL PUBLIC
OFFERING, EACH HOLDER OF ASP REGISTRABLE SECURITIES SHALL HAVE THE RIGHT, UPON
WRITTEN NOTICE DELIVERED TO ASP, TO REQUIRE ASP TO prepare and file with the
Commission a registration statement (the "ASP REGISTRATION STATEMENT") as a
"shelf" registration statement under Rule 415 covering the resale of the number
of shares of ASP Registrable Securities equal to the ASP Reserved Amount (as
defined in the Securities Purchase Agreement). The ASP 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 ASP Common Stock as may be
required to effect exercise of the ASP Warrants in order to prevent dilution
resulting from stock splits, stock dividends or similar events. ASP will file
the ASP Registration Statement on Form S-3 if ASP is eligible to use such form
for sales of ASP Registrable Securities by the Holders or, if Form S-3 is not
available, on such form as may be available to ASP; PROVIDED, that if the ASP
Registration Statement is filed on a form other than Form S-3, ASP will use its
best efforts to convert the ASP Registration Statement to Form S-3 as soon as
practicable following its eligibility to us Form S-3.
(e) ASP shall use its best efforts to cause the ASP
Registration Statement to become effective as soon as practicable following the
filing thereof. ASP 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 fifteen (15) Business Days following ASP's receipt thereof), and shall
submit to the Commission, within two (2) Business Days after ASP learns that no
review of the ASP Registration Statement will be made by the staff of the
Commission or that the staff of the Commission has no further comments on the
ASP Registration Statement, as the case may be, a request for acceleration of
the effectiveness of the ASP Registration Statement to a time and date not later
than forty eight (48) hours after the submission of such request. ASP shall
maintain the effectiveness of the ASP Registration Statement until the earlier
to occur of (i) the date on which all of the ASP Registrable Securities have
been sold pursuant to the ASP Registration Statement and (ii) the date on which
all of the remaining ASP Registrable Securities (in the reasonable opinion of
counsel to the Holders) may be immediately sold to the public without
registration and without regard to the amount of ASP Registrable Securities
which may be sold by a Holder thereof at a given time (the period beginning on
the commencement of the Initial Public Offering and ending on the earlier of
such dates being referred to herein as the "ASP REGISTRATION PERIOD").
3. PIGGYBACK REGISTRATION.
(A) COMPANY 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 (other than a
registration relating solely to the sale of securities to participants in a
Company stock plan or employee stock award or a registration on Form S-4 under
the
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<PAGE>
Securities Act or any successor or similar form registering stock issuable
upon a reclassification, a business combination involving an exchange of
securities or an exchange offer for securities of the issuer or another
entity, or a registration statement covering the resale of securities issued
in connection with a corporate acquisition) (a "PROPOSED REGISTRATION") and
(ii) a registration statement covering the sale of all of the Company
Registrable Securities is not then effective and available for sales thereof
by the Holders, the Company shall, at such time, promptly give each Holder
written notice of such Proposed Registration. Each Holder shall have twenty
(20) days from its receipt of such notice to deliver to the Company a written
request specifying the amount of Company 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 Company 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 to which this Section 3 applies without obligation to the
Holder. If, in connection with any underwritten public offering for the
account of the Company or for shareholders 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 the 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 such Registration Statement only
such limited portion of the Company Registrable Securities with respect to
which each Holder has requested inclusion hereunder as such underwriter(s)
shall permit. Any such exclusion of Company Registrable Securities shall be
made pro rata among the Holders seeking to include Company Registrable
Securities in the Registration Statement, in proportion to the number of
Company Registrable Securities sought to be included by such Holders;
provided, however, that the Company shall not exclude any Company Registrable
Securities unless the Company has first excluded all outstanding securities,
the holders of which are not entitled to inclusion of such securities in such
Registration Statement or are not entitled to pro rata inclusion with the
Company Registrable Securities; and provided, further, that, after giving
effect to the immediately preceding proviso, any exclusion of Company
Registrable Securities shall be made pro rata with holders of other
securities having the right to include such securities in the Registration
Statement. Notwithstanding the foregoing, and in connection with any
underwritten public offering, in the event that the managing underwriter(s)
thereof impose any limitation on the number of shares of Common Stock which
may be included on the Registration Statement, Finova Capital Corporation
shall have a priority over the Holders for inclusion in such Registration
Statement with respect to 100,000 shares of Common Stock.
(B) ASP PIGGYBACK REGISTRATION
If at any time prior to the expiration of the ASP Registration
Period, (i) ASP proposes to register shares of Common Stock under the Securities
Act in connection with the public offering of such shares for cash (other than a
registration relating solely to the sale of securities to participants in a
Company stock plan or employee stock award or a registration on Form S-4 under
the Securities Act or any successor or similar form registering stock issuable
upon a reclassification, a business combination involving an exchange of
securities or an exchange offer for securities of the issuer or another entity,
or a registration statement covering the resale of securities issued in
connection with a corporate
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<PAGE>
acquisition) (a "PROPOSED ASP REGISTRATION") and (ii) a registration
statement covering the sale of all of the ASP Registrable Securities is not
then effective and available for sales thereof by the Holders, ASP shall, at
such time, promptly give each Holder written notice of such ASP Proposed
Registration. Each Holder shall have twenty (20) days from its receipt of
such notice to deliver to ASP a written request specifying the amount of ASP
Registrable Securities that such Holder intends to sell and such Holder's
intended method of distribution. Upon receipt of such request, ASP shall use
its best efforts to cause all ASP Registrable Securities which ASP 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 ASP shall have the right to postpone or withdraw any
registration to which this Section 3 applies without obligation to the
Holder. If, in connection with any underwritten public offering for the
account of ASP or for shareholders of ASP that have contractual rights to
require ASP to register shares of Common Stock, the managing underwriter(s)
thereof shall impose a limitation on the number of shares of ASP Common Stock
which may be included in the ASP Registration Statement because, in the
judgment of such underwriter(s), marketing or other factors dictate such
limitation is necessary to facilitate such offering, then ASP shall be
obligated to include in such ASP Registration Statement only such limited
portion of the ASP Registrable Securities with respect to which each Holder
has requested inclusion hereunder as such underwriter(s) shall permit. Any
such exclusion of ASP Registrable Securities shall be made pro rata among the
Holders seeking to include ASP Registrable Securities in the ASP Registration
Statement, in proportion to the number of ASP Registrable Securities sought
to be included by such Holders; provided, however, that ASP shall not exclude
any ASP Registrable Securities unless ASP has first excluded all outstanding
securities, the holders of which are not entitled to inclusion of such
securities in such ASP Registration Statement or are not entitled to pro rata
inclusion with the ASP Registrable Securities; and provided, further, that,
after giving effect to the immediately preceding proviso, any exclusion of
ASP Registrable Securities shall be made pro rata with holders of other
securities having the right to include such securities in the ASP
Registration Statement.
4. OBLIGATIONS OF THE COMPANY.
In addition to performing its obligations hereunder, including
without limitation those pursuant to paragraphs 2(A) above, the Company shall:
(a) promptly prepare and file with the Commission such
amendments and supplements to the Registration Statement and the prospectus used
in connection with the Registration Statement, or file such new Registration
Statement or Statements, as may be necessary (i) to comply with the provisions
of the Securities Act, (ii) in the event that the Company is unable to include
in the Registration Statement filed pursuant to paragraph 2(A) above all of the
Company Registrable Securities required to be included therein pursuant to
paragraph 2(A), to cover any such Company Registrable Securities not so
included, or (iii) to maintain the effectiveness of the Registration Statement
during the Registration Period, or as may be reasonably requested within a
reasonable time prior to any proposed sale by a Holder in order to incorporate
information concerning such Holder or such Holder's intended method of
distribution;
(b) secure the listing of all Company Registrable Securities on
the Nasdaq National
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Market prior to the date on which the Registration Statement relating to such
Company Registrable Securities becomes effective;
(c) furnish to each Holder such number of copies of the
prospectus included in such Registration Statement, including a preliminary
prospectus, if any, 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 Company Registrable Securities;
(d) use all commercially reasonable efforts to register or
qualify the Company 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 Company 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
Company Registrable Securities, enter into (together with all Holders proposing
to distribute Company 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 upon the occurrence of any
event as a result of which the prospectus included in such 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;
(g) use all commercially reasonable efforts to prevent the
issuance of any stop order or other order suspending the effectiveness of such
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 such 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) an opinion addressed to the underwriters, dated
such date, of such outside counsel, in such form and substance as is required to
be given to such underwriters, and (B) a letter addressed to such underwriters,
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;
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<PAGE>
(i) provide each Holder and its representatives the 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 retained for such purpose by each Holder to
review and comment on the Registration Statement and all amendments and
supplements thereto, and any comments made by the staff of the Commission and
the Company's responses thereto, within a reasonable period of time 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);
(k) refrain during the period of one hundred and eighty
(180) days following the Effective Date from allowing any registration
statement covering the Common Stock (other than the Registration Statement(s)
required to be filed hereunder) to be declared effective by the Commission,
other than a registration statement relating to the issuance or resale of
securities pursuant to (i) an employee benefit plan or program duly adopted
by the Company; (ii) any options, warrant, convertible securities or rights
or agreements to purchase securities of the Company outstanding on the date
hereof; (iii) any firm-commitment underwritten public offerings of
securities; (iv) any security issued for consideration other than cash
pursuant to a merger, consolidation, acquisition or similar business
combination; (v) shares of Common Stock issued in connection with any stock
split, stock dividend or recapitalization by the Company; (vi) shares of
Common Stock issued upon conversion of the Preferred Shares or exercise of
the Closing Warrant; (vii) any securities issued pursuant to any equipment
leasing arrangement or debt financing from a bank or similar financial
institution; or (viii) any securities issued in connection with strategic
transactions involving the Company and other entities, including (A) joint
ventures, manufacturing, marketing or distribution arrangements or (B)
technology transfer or development arrangements; provided, that the primary
purpose of such transaction is not the raising of capital. and
(l) in the event that the number of shares available under the
Registration Statement filed by the Company hereunder is insufficient during any
period of three (3) consecutive trading days to cover 125% of the Company
Registrable Securities then issued or issuable (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 to a Holder to convert Preferred Shares
or exercise the Warrants as of such dates) 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) Business Day following
notice from such Holder of the occurrence of such event, so that the
Registration Statement or such new registration statement covers no less than
150% of the Company Registrable Securities then issued or issuable. 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 Preferred Shares 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 above.
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5A. OBLIGATIONS OF ASP.
In addition to performing its obligations hereunder, including
without limitation those pursuant to paragraphs 2(B) above, ASP shall:
(b) promptly prepare and file with the Commission such
amendments and supplements to the ASP Registration Statement and the prospectus
used in connection with the ASP Registration Statement, or file such new ASP
Registration Statement or Statements, as may be necessary (i) to comply with the
provisions of the Securities Act, (ii) in the event that ASP is unable to
include in the ASP Registration Statement filed pursuant to paragraph 2(B) above
all of the ASP Registrable Securities required to be included therein pursuant
to paragraph 2(B), to cover any such ASP Registrable Securities not so included,
or (iii) to maintain the effectiveness of the ASP Registration Statement during
the ASP Registration Period, or as may be reasonably requested within a
reasonable time prior to any proposed sale by a Holder in order to incorporate
information concerning such Holder or such Holder's intended method of
distribution;
(b) secure the listing of all ASP Registrable Securities on the
Nasdaq National Market prior to the date on which the ASP Registration Statement
relating to such ASP Registrable Securities becomes effective;
(c) furnish to each Holder such number of copies of the
prospectus included in such ASP Registration Statement, including a preliminary
prospectus, if any, 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 ASP Registrable Securities;
(d) use all commercially reasonable efforts to register or
qualify the ASP 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 ASP Registrable Securities in such jurisdictions;
provided that ASP 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 ASP
Registrable Securities, enter into (together with all Holders proposing to
distribute ASP Registrable Securities through such underwriting) and perform its
obligations under an underwriting agreement, in usual and customary form
reasonably acceptable to ASP, with the managing underwriter of such offering;
(f) notify each Holder immediately upon the occurrence of any
event as a result of which the prospectus included in such ASP 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
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<PAGE>
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;
(g) use all commercially reasonable efforts to prevent the
issuance of any stop order or other order suspending the effectiveness of such
ASP 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 such ASP
Registration Statement becomes effective, (x) a letter, dated such date, of
outside counsel representing ASP (and reasonably acceptable to such Holder)
addressed to such Holder, confirming the effectiveness of the ASP Registration
Statement and, to the knowledge of such counsel, the absence of any stop order,
and (y) in the case of an underwriting, (A) an opinion addressed to the
underwriters, dated such date, of such outside counsel, in such form and
substance as is required to be given to such underwriters, and (B) a letter
addressed to such underwriters, dated such date, from ASP's independent
certified public accountants, in such form and substance as is required to be
given by ASP's independent certified public accountants to such underwriters;
(i) provide each Holder and its representatives the opportunity
to conduct a reasonable inquiry of ASP'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 retained for such purpose by each Holder to
review and comment on the ASP Registration Statement and all amendments and
supplements thereto, and any comments made by the staff of the Commission and
ASP's responses thereto, within a reasonable period of time 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 ASP);
(k) refrain during the period of one hundred and eighty (180)
days following the date on which the ASP Registration Statement is declared
effective by the Commission from allowing any registration statement covering
the ASP Common Stock (other than the ASP Registration Statement(s) required to
be filed hereunder) to be declared effective by the Commission, other than a
registration statement relating to the issuance or resale of securities pursuant
to (i) an employee benefit plan or program duly adopted by ASP; (ii) any
options, warrant, convertible securities or rights or agreements to purchase
securities of ASP outstanding on the date hereof; (iii) any public offerings of
securities; (iv) any security issued for consideration other than cash pursuant
to a merger, consolidation, acquisition or similar business combination; (v)
shares of Common Stock issued in connection with any stock split, stock dividend
or recapitalization by ASP; (vi) shares of Common Stock issued upon exercise of
the ASP Warrant; (vii) any securities issued pursuant to any equipment leasing
arrangement or debt financing from a bank or similar financial institution; or
(viii) any securities issued in connection with strategic transactions involving
ASP and other entities, including (A) joint ventures, manufacturing, marketing
or distribution arrangements or (B) technology transfer or development
arrangements; provided, that the primary purpose of such transaction is not the
raising of capital; and
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(m) in the event that the number of shares available under the
ASP Registration Statement filed by ASP hereunder is insufficient during any
period of three (3) consecutive trading days to cover 125% of the ASP
Registrable Securities then issued or issuable (such number to be determined
using the exercise price in effect on such dates and without regard to any
restriction on the ability to a Holder to exercise the ASP Warrant as of such
dates), ASP shall promptly amend the ASP Registration Statement or file a new
registration statement, in any event as soon as practicable, but not later than
the tenth (10th) Business Day following notice from such Holder of the
occurrence of such event, so that the Registration Statement or such new
registration statement covers no less than 150% of the Registrable Securities
then issued or issuable. Any ASP Registration Statement filed pursuant to this
paragraph 4A shall state that, to the extent permitted by Rule 416 under the
Securities Act, such ASP Registration Statement also covers such indeterminate
number of additional shares of ASP Common Stock as may become issuable upon
exercise of the ASP Warrants in full.
6. OBLIGATIONS OF EACH HOLDER.
In connection with the registration of the Registrable Securities
pursuant to the Registration Statement or the ASP Registration Statement, as the
case may be, each Holder shall:
(a) furnish to the Registrant in writing such information
regarding itself and the intended method of disposition of Registrable
Securities as the Registrant shall reasonably request in order to effect the
registration thereof;
(b) upon receipt of any notice from the Registrant of the
happening of any event of the kind described in paragraphs 4(f) or 4(g) (or
4A(f) or 4A(g) or of the imposition of a Blackout Period pursuant to paragraph
2(d), immediately discontinue any sale or other disposition of Registrable
Securities pursuant to the applicable Registration Statement until the filing of
an amendment or supplement as described in paragraph 4(f) (or 4A(f)) or
withdrawal of the stop order referred to in paragraph 4(g) (or 4A(g));
(c) in the event of an underwritten offering of the Registrable
Securities, enter into a customary and reasonable underwriting agreement and
execute such other documents as the managing underwriter for such offering may
reasonably request;
(d) to the extent required by applicable law, deliver a
prospectus to the purchaser of Registrable Securities;
(e) notify the Registrant when it has sold all of the
Registrant's Registrable Securities theretofore held by it; and
(f) promptly notify the Registrant in the event that any
information supplied by such Holder in writing for inclusion in the applicable
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.
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<PAGE>
7. 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 Registrant shall
indemnify and hold harmless each Holder, the officers, directors, employees and
agents 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 "1934 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, if any, 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
Registrant will reimburse such Holder, and each such officer, director,
employee, agent or controlling 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 Registrant (which consent
shall not be unreasonably withheld), nor shall the Registrant be obligated to
indemnify any person for any Loss to the extent that such Loss arises out of or
is based upon and in conformity with written information furnished by such
person expressly for use in such Registration Statement; and provided, further,
that the Registrant shall not be required to indemnify any person to the extent
that any Loss results from such person selling Registrable Securities (i) to a
person to whom there was not sent or given, at or prior to the written
confirmation of the sale of such shares, a copy of the prospectus, as most
recently amended or supplemented, if the Registrant has previously furnished or
made available copies thereof or (ii) during any period following written notice
by the Registrant to such Holder of an event described in paragraph 4(f) or 4(g)
(or paragraph 4A(f) or 4A(g)) or pursuant to paragraph 2(d).
(b) To the extent permitted by law, each Holder, acting
severally and not jointly, shall indemnify and hold harmless the Registrant, the
officers, directors, employees, agents and representatives of the Registrant,
and each person, if any, who controls the Registrant within the meaning of the
Securities Act or the 1934 Act, against any Losses to the extent (and only to
the extent) that any such Losses arise out of or are based upon and in
conformity with written information furnished by such Holder expressly for use
in such Registration Statement; and such Holder will reimburse any legal or
other expenses as reasonably incurred by the Registrant 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; provided, that, in no event shall
any indemnity under this paragraph 6(b) exceed the net proceeds resulting from
the sale of the Registrable Securities sold by such Holder under the
Registration Statement.
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<PAGE>
(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 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 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 6(a)
or 6(b) is unavailable or insufficient to hold harmless an indemnified party for
any reason, the Registrant and each Holder agree, severally and not jointly, to
contribute to the aggregate Losses to which the Registrant or such Holder may be
subject in such proportion as is appropriate to reflect the relative fault of
the Registrant 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
Registrant or by such Holder. The Registrant 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 6(d), no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
indemnification or contribution from any person who is not guilty of 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 or agent of such Holder shall have the same
rights to contribution as such Holder, and each person who controls the
Registrant within the meaning of either the Securities Act or the Exchange Act
and each officer, director, employee or agent of the Registrant shall have the
same rights to contribution as the Registrant, subject in each case to the
applicable terms and conditions of this paragraph 6(d).
(e) The obligations of the Registrant and each Holder under
this Section 6 shall survive the conversion of the Preferred Shares and exercise
of the Warrants in full, the completion of any offering of Registrable
Securities pursuant to a Registration Statement under this Agreement, or
otherwise.
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<PAGE>
8. 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 or ASP, as the case may be, to the public without
registration, the applicable Registrant agrees to:
(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 to be filed by the Company under the Securities Act and
the 1934 Act; and
(c) furnish to such Holder, so long as such Holder owns any of
such Registrant's Registrable Securities, forthwith upon written request (i) a
written statement by the Registrant, if true, that it has complied with the
reporting requirements of Rule 144, and the 1934 Act, (ii) to the extent not
publicly available through the Commission's EDGAR database, a copy of the most
recent annual or quarterly report of the Registrant and such other reports and
documents so filed by the Registrant, and (iii) such other information as may be
reasonably requested in availing such Holder of any rule or regulation of the
Commission which permits the selling of any such securities without
registration.
9. MISCELLANEOUS.
(a) EXPENSES OF REGISTRATION. All expenses, other than
underwriting discounts and commissions and fees and expenses of counsel to the
Holders, 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 applicable Registrant, and the fees
and disbursements incurred in connection with the opinion and letter described
in paragraph 4(h) and in paragraph 4A(h) hereof, shall be borne by the
applicable Registrant.
(b) AMENDMENT; WAIVER. Any provision of this Agreement may be
amended only pursuant to a written instrument executed by the Company, ASP and
the Holders of a majority of the Registrable Securities (assuming conversion of
all of the Preferred Shares and exercise in full of the Warrants in each case
without regard to any limitation on such conversion or exercise). Any waiver of
the provisions of this Agreement may be made only pursuant to a written
instrument executed by the party against whom enforcement is sought. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each Holder, each future Holder, the Company and ASP. 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 any party to any other party pursuant to the terms of
this Agreement shall be in writing and shall be deemed given (i) when delivered
personally or by verifiable facsimile transmission (with an original to follow)
on or before 5:00 p.m., eastern time, on a Business Day or, if such day is not a
Business Day, on the next succeeding Business Day, (ii) on the next Business Day
after timely delivery to a
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<PAGE>
nationally-recognized overnight courier and (iii) on the day actually
received after deposit in the U.S. mail (certified or registered mail, return
receipt requested, postage prepaid), addressed to the parties as follows:
If to the Company or ASP:
Aspeon, Inc.
17891 Cartwright Road
Irvine, California 92614
Tel: (949) 440-8000
Fax: (949) 440-8088
Attention: Chief Financial Officer
WITH A COPY TO:
Cooley Godward LLP
4365 Executive Drive
Suite 1100
San Diego, California 92121-2128
Attention: Jeremy D. Glaser, Esq.
Tel: (858) 550-6000
Fax: (858) 453-3555
and if to any Holder, to such address as shall be designated by such Holder in
writing to the Company.
(d) TERMINATION. This Agreement shall terminate on the earlier
to occur of (a) the end of the Registration Period and (b) the date on which all
of the Registrable Securities have been publicly distributed; but any such
termination shall be without prejudice to (i) the parties' rights and
obligations arising from breaches of this Agreement occurring prior to such
termination and (ii) the indemnification and contribution obligations under this
Agreement.
(e) ASSIGNMENT. Upon the transfer of Preferred Shares,
Warrants or Registrable Securities by a Holder, the rights of such Holder
hereunder, solely with respect to the securities so transferred, shall be
assigned automatically to the transferee thereof as long as: (i) the Company and
ASP are , 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 and ASP to be bound by all of the
provisions hereof and (iii) such transfer is made in accordance with the
applicable securities laws, the applicable requirements of the Securities
Purchase Agreement, the applicable Certificate of Designation or the applicable
Warrant, as the case may be; PROVIDED, HOWEVER, that the registration rights
granted in this Agreement shall not be transferred to any person or entity that
receives any such security pursuant to an effective registration statement under
the Securities Act or pursuant to a transaction under Rule 144 or any successor
provision thereto.
(f) COUNTERPARTS. This Agreement may be executed in two or
more 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
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facsimile transmission.
(g) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
the conflict of laws provisions thereof.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first-above written.
ASPEON, INC.
By: __________________________
Name: Richard P. Stack
Title: Chief Executive Officer
ASPEON SOLUTIONS, INC.
By: __________________________
Name: Richard P. Stack
Title: Chief Executive Officer
MARSHALL CAPITAL MANAGEMENT, INC.
By: __________________________
Allan Weine, President
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<PAGE>
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of March 7,
2000, by and among ASPEON, INC., a Delaware corporation (the "COMPANY"), ASPEON
SOLUTIONS, INC., a Delaware corporation ("ASP"), and Marshall Capital
Management, Inc. ("PURCHASER").
The Company wishes to sell to Purchaser, and Purchaser wishes to buy, on
the terms and subject to the conditions set forth in this Agreement, shares (the
"PREFERRED SHARES") of the Company's Series A Convertible Exchangeable Preferred
Stock, par value $.01 per share (the "PREFERRED STOCK"), and a warrant in the
form attached hereto as EXHIBIT A (the "CLOSING WARRANT"). ASP, the Company's
majority-owned subsidiary, wishes to sell to Purchaser, and Purchaser wishes to
buy, on the terms and subject to the conditions set forth in this Agreement, a
warrant in the form attached hereto as EXHIBIT B (the "ASP WARRANT") (the
Closing Warrant and the ASP Warrant are collectively referred to herein as the
"WARRANTS"). The Preferred Shares are convertible pursuant to the terms of the
Certificate of Designation relating to the Preferred Stock, the form of which is
attached hereto as EXHIBIT C (the "CERTIFICATE OF DESIGNATION") into shares (the
"CONVERSION SHARES") of the Company's common stock, par value $.01 per share
(the "COMMON STOCK") and dividends payable thereon may be paid, under certain
conditions, in shares of Common Stock (the "DIVIDEND SHARES"). The Closing
Warrant is exercisable into shares of Common Stock (the "CLOSING WARRANT
SHARES") in accordance with its terms. The ASP Warrant is exercisable into
shares (the "ASP Warrant Shares") of the common stock (the "ASP COMMON STOCK")
of ASP(the Closing Warrant Shares and the ASP Warrant Shares are collectively
referred to herein as the "WARRANT SHARES"). The Preferred Shares, the
Conversion Shares, the Dividend Shares, the Warrants, and the Warrant Shares are
collectively referred to herein as the "SECURITIES". Any capitalized term used
herein that is not otherwise defined shall have the meaning specified therefor
in the Certificate of Designation.
The sale and issuance of the Preferred Shares and the Closing Warrant by
the Company hereunder, and the sale and issuance of the ASP Warrant by ASP
hereunder, 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 of 1933, as amended (the "SECURITIES ACT"). The Company has
agreed to effect the registration of the Conversion Shares and the Warrant
Shares under the Securities Act pursuant to a Registration Rights Agreement of
even date herewith by and between the Company and Purchaser (the "REGISTRATION
RIGHTS AGREEMENT").
The Company and Purchaser hereby agree as follows:
1. PURCHASE AND SALE OF THE PREFERRED SHARES AND WARRANTS.
1.1 AGREEMENT TO PURCHASE AND SELL. Upon the terms and subject to the
satisfaction or waiver of the conditions set forth herein, the Company agrees to
sell and Purchaser agrees to purchase (A) ten thousand (10,000) Preferred Shares
and (B) a Closing Warrant exercisable from
<PAGE>
time to time following the issue date thereof for five (5) years from the
Closing Date (as defined below) into 583,334 Closing Warrant Shares (subject
to adjustment as specified in the Closing Warrant). Upon the terms and
subject to the satisfaction or waiver of the conditions set forth herein, ASP
agrees to sell and Purchaser agrees to purchase an ASP Warrant exercisable
from the date (the "INITIAL EXERCISE DATE") that is the earlier to occur of
(i) the date on which ASP or any successor entity commences an initial public
offering (the "INITIAL PUBLIC OFFERING") of its equity securities and (ii)
one year from the Closing Date, for five (5) years from the Initial Exercise
Date into 1,250,000 ASP Warrant Shares (subject to adjustment as specified
in the ASP Warrant). The Closing Warrant will have an initial exercise price
of $17.00 per Closing Warrant Share, subject to adjustment from time to time
as set forth in the Closing Warrant. The ASP Warrant will have an initial
exercise price equal to $5.00 per ASP Warrant Share, (assuming that the ASP
Warrant is exercisable into one million two hundred fifty thousand
(1,250,000) ASP Warrant Shares and that the number of shares of ASP Common
Stock outstanding is twenty million (20,000,000) as of the Closing Date). The
date on which the closing (the "CLOSING") of the purchase and sale of the
Preferred Shares and Warrants occurs is hereinafter referred to as the
"CLOSING DATE". The purchase price for the Preferred Shares and Warrants
being purchased by Purchaser (the "PURCHASE PRICE") shall be equal to the
Stated Value of the Preferred Shares being purchased by Purchaser. The
Company and ASP shall allocate the Purchase Price paid by the Purchasers
among the Preferred Shares and the Warrants as set forth on SCHEDULE 1.1.
Subject to the satisfaction or waiver of the conditions set forth herein, the
Closing will be deemed to occur when the Company and Purchaser execute and
deliver this Agreement and the other Transaction Documents (as defined
below), which delivery may be effected by facsimile transmission, and full
payment of Purchaser's Purchase Price has been made by wire transfer of
immediately available funds against physical delivery by the Company of duly
executed certificates representing the Preferred Shares and Warrants being
purchased by Purchaser (it being understood that the Company will be deemed
to be acting as agent for ASP for purposes of delivering the certificates
representing the ASP Warrant and receiving the portion of the Purchase Price
allocated to the ASP Warrant as set forth on Schedule 1.1).
1.2 CERTAIN DEFINITIONS. When used herein, the following terms shall
have the respective meanings indicated:
"BUSINESS DAY" shall mean any day on which the New York Stock
Exchange (the "NYSE") and commercial banks in the city of New York are open for
business.
"CLOSING BID PRICE" shall mean, with respect to the Common Stock,
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 Company and reasonably acceptable
to Purchaser (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 independent investment banking firm selected by Purchaser, and
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reasonably acceptable to the Company, with the costs of such appraisal to be
borne equally by the Company and Purchaser.
"CLOSING TRADE PRICE" shall mean, with respect to the Common
Stock, the last sale price reported for the Common Stock on a given Trading Day
on the principal securities exchange or trading market where such security is
listed or traded as reported by the Bloomberg or, if no sale price was reported
on such Trading Day by Bloomberg, the last sale price reported by Bloomberg on
the Trading Day on which such prices were last reported.
"TRADING DAY" shall mean 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.
"TRANSACTION DOCUMENTS" shall have the meaning set forth in
Section 3.2.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER.
Purchaser hereby represents and warrants to the Company and agrees with
the Company that, as of the date of this Agreement and as of the Closing Date:
2.1 AUTHORIZATION; ENFORCEABILITY. Purchaser is duly and validly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization with full power and authority
to purchase the Securities and to execute and deliver this Agreement, the
Registration Rights Agreement and the other Transaction Documents to which
Purchaser is a party. This Agreement and the Registration Rights Agreement each
constitutes Purchaser's valid and legally binding obligation, enforceable in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency or other laws affecting creditors' rights
generally and to general principles of equity (regardless of whether enforcement
is sought in a proceeding at law or in equity) or public policy.
2.2 ACCREDITED INVESTOR; PURCHASE AS PRINCIPAL. Purchaser has
substantial experience in evaluating and investing in private placement
transactions of securities similar to the Securities so that it is capable of
evaluating the merits and risks of its investment in the Securities and has the
capacity to protect its own interests. Purchaser must bear the economic risk of
this investment indefinitely unless the Securities are registered pursuant to
the Securities Act or an exemption from registration is available. Purchaser
understands that, except as set forth in this Agreement or the Registration
Rights Agreement, the Company has no present intention of registering the
Securities. Purchaser also understands that there is no assurance that any
exemption from registration under the Securities Act will be available.
Purchaser is an accredited investor as that term is defined in Rule 501 of
Regulation D, and is acquiring the Securities 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,
Purchaser does not agree to hold any 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.
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2.3 INFORMATION. Purchaser has received and read the Disclosure
Documents (as defined in Section 3.4) and the Company has provided Purchaser
with such other information regarding the business, operations and financial
condition of the Company, and has granted to 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 Securities.
Neither such information nor any other investigation conducted by Purchaser or
any of its representatives shall modify, amend or otherwise affect Purchaser's
right to rely on the Company's representations and warranties contained in this
Agreement.
2.4 LIMITATIONS ON DISPOSITION. 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. 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, sold, pledged or hypothecated 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 such 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 such Securities is
registered pursuant to an effective registration statement and Purchaser
represents in writing to the Company that such Securities have been or are being
sold pursuant to such registration statement, (B) such Securities have been
publicly sold pursuant to Rule 144 ("RULE 144") and Purchaser has delivered to
the Company customary Rule 144 broker's and seller's representation letters, or
(C) such Securities can be publicly sold pursuant to Rule 144(k) under the
Securities Act, 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 promptly upon request.
2.6 NO CONFLICT. The execution, delivery and performance by Purchaser
of this Agreement and the other Transaction Documents to which it is a party (A)
have been approved by all necessary action (corporate or other) on the part of
Purchaser and (B) will not result in (i) any material violation of any
provisions of its charter, bylaws or any other governing document in effect on
the date hereof, (ii) any material violation of any instrument or contract to
which it is a party or by which it is bound, or (iii) the creation of any
material lien, charge or encumbrance upon any of its assets.
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3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY AND ASP.
The Company and, to the extent applicable, ASP each hereby represents and
warrants to Purchaser and agrees with Purchaser that, as of the date of this
Agreement:
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 corporate 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 the failure so to qualify would have a material adverse
effect on the consolidated business or financial condition of the Company and
its subsidiaries taken as a whole, except that ASP has filed an application
to qualify to do business in the State of California, which application is
currently pending. For purposes of this Agreement, the term "subsidiary" or
"subsidiaries" shall mean any entity or entities in which the Company
beneficially owns 20% or more of the voting equity thereof.
3.2 AUTHORIZATION; CONSENTS. The Company has the requisite corporate
power and authority to enter into and perform its obligations under (i) this
Agreement, (ii) the Registration Rights Agreement, (iii) the Closing Warrant and
(iv) all other agreements, documents or other instruments executed and delivered
by or on behalf of the Company at the Closing (the instruments described in (i),
(ii), (iii) and (iv) being collectively referred to herein as the "TRANSACTION
DOCUMENTS"), to execute and file, and perform its obligations under the
Certificate of Designation, to issue and sell Preferred Shares and Closing
Warrant to Purchaser in accordance with the terms hereof and to issue and
deliver Conversion Shares in accordance with the terms of the Certificate of
Designation and Warrant Shares in accordance with the terms of the Warrants. ASP
has the requisite corporate power and authority to enter into and perform its
obligations under (i) this Agreement, (ii) the Registration Rights Agreement,
(iii) the ASP Warrant and (iv) all other agreements, documents or other
instruments executed and delivered by or on behalf of ASP at the Closing (the
instruments described in (i), (ii), (iii) and (iv) being collectively referred
to herein as the "ASP TRANSACTION DOCUMENTS"), to issue and sell the ASP Warrant
to Purchaser in accordance with the terms hereof and to issue and deliver ASP
Warrant Shares in accordance with the terms of the ASP Warrant. All corporate
action on the part of (i) each of the Company and ASP by its officers, directors
and stockholders necessary for the authorization, execution and delivery of, and
the performance by it of its obligations under, the Transaction Documents or the
ASP Transaction Documents, as the case may be, and (ii) the Company by its
officers, directors and stockholders necessary for the authorization, execution
and filing of, and the performance by the Company of its obligations under, the
Certificate of Designation has been taken, and no further consent or
authorization of the Company, ASP, their respective Board of Directors and
stockholders, any governmental agency 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 (except as may be required by National Association of Securities
Dealers, Inc. Rule 4460(i)).
3.3 ENFORCEMENT. Each of the Transaction Documents constitutes a
valid and legally binding obligation of the Company, enforceable in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency or other laws affecting
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creditors' rights generally and to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity) or
public policy and except to the extent that the enforceability of the
indemnification provisions of Section 6 of the Registration Rights Agreement
may be limited by applicable law. Each of the ASP Transaction Documents
constitutes a valid and legally binding obligation of ASP, enforceable in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency or other laws affecting creditors' rights
generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity) or public policy
and except to the extent that the enforceability of the indemnification
provisions of Section 6 of the Registration Rights Agreement may be limited
by applicable law.
3.4 DISCLOSURE DOCUMENTS; AGREEMENTS; FINANCIAL STATEMENTS; OTHER
INFORMATION. The Company has filed with the Commission: (i) the Company's
Annual Report on Form 10-K for the year ended June 30, 1999 (ii) Quarterly
Reports on Form 10-Q for the quarters ended September 30, 1999 and December 31,
1999, (iii) all Current Reports on Form 8-K, if any, and any other reports,
required to be filed with the Commission since December 31, 1998 and prior to
the date hereof and (iv) the Company's definitive Proxy Statement for its 1999
Annual Meeting of Stockholders (collectively, the "DISCLOSURE DOCUMENTS"). The
Company is not aware of any event occurring on or prior to the Closing Date
(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 such date
other than as previously filed by the Company. Each Disclosure Document, as of
the date of the filing thereof with the Commission, conformed in all material
respects to the requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder (the "EXCHANGE ACT") and, as of the
date of such filing, such Disclosure Document 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 material
agreements required to be filed as exhibits to the Disclosure Documents have
been filed or incorporated by reference as required by the applicable provisions
of the Exchange Act. Neither the Company nor any of its subsidiaries is in
breach of any agreement to which it is a party or by which it is bound where
such breach could have, or with the passage of time could reasonably be expected
to have, a material adverse effect on (i) the consolidated business, operations,
properties, financial condition or results of operations of the Company and its
subsidiaries taken as a whole, (ii) the transactions contemplated hereby, by the
other Transaction Documents, by the other ASP Transaction Documents or by the
Certificate of Designation, (iii) the Securities or (iv) the ability of the
Company or ASP to perform its obligations under this Agreement, the other
Transaction Documents, the other ASP Transaction Documents or the Certificate of
Designation (collectively, a "MATERIAL ADVERSE EFFECT"), in each such case as
applicable. Except as set forth in the Disclosure Documents, the Company has no
liabilities, contingent or otherwise, other than liabilities incurred in the
ordinary course of business which, under generally accepted accounting
principles, are not required to be reflected in such financial statements
(including the footnotes to 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 have been prepared in accordance with generally accepted
accounting principles 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
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may exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company as of
the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end adjustments). The written information described in paragraph 2.3
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, in light of the circumstances under which they were made,
not misleading.
3.5 CAPITALIZATION. The capitalization of the Company and of ASP as
of the Closing Date, 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 or ASP's stock option plans, the number of
shares issuable and reserved for issuance pursuant to securities (other than the
Preferred Stock and Warrants) exercisable for, or convertible into or
exchangeable for any shares of Common Stock or ASP Common Stock and the number
of shares initially to be reserved for issuance upon conversion and exercise of
the Preferred Stock and 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 set forth on SCHEDULE
3.5, no shares of the capital stock of the Company or ASP are subject to
preemptive rights or any other similar rights of the stockholders of the Company
or ASP or any liens or encumbrances created by or through the Company or ASP.
Except as disclosed on SCHEDULE 3.5, or as contemplated herein, 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. The number of shares
of ASP common stock issued and outstanding as of the Closing Date is 20,000,000.
3.6 VALID ISSUANCE. The Preferred Shares 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 taxes,
liens, claims, preemptive or similar rights or encumbrances imposed by or
through the Company (collectively, "ENCUMBRANCES"), (ii) based in part upon the
representations of Purchaser in this Agreement, will be issued, sold and
delivered in compliance with all applicable Federal and state securities laws
and (iii) will be entitled to all of the rights, preferences and privileges set
forth in the Certificate of Designation. 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
Encumbrances and (ii) based in part upon the representations of Purchaser 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 upon conversion of the
Preferred Shares in accordance with the terms of the Certificate of Designation,
will be duly and validly issued, fully paid and nonassessable, free and clear of
any Encumbrances. The Dividend Shares are duly authorized and reserved for
issuance and, if and when issued in accordance with the terms of the Certificate
of Designation, will be duly and validly issued, fully paid and nonassessable,
free and clear of any Encumbrances. The Warrant Shares are duly authorized and,
upon the issuance thereof in accordance with the terms of a Warrant, will be
duly and validly issued, fully paid and nonassessable, free and clear of any
Encumbrances. The Company's Board of Directors (i) has
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determined that the issuance and sale of the Preferred Shares and Warrants
hereunder, and the consummation of the transactions contemplated hereby, by
the other Transaction Documents and by the Certificate of Designation
(including without limitation the issuance of the Conversion Shares upon
exercise of the Preferred Shares and the Warrant Shares upon exercise of the
Warrants), are in the best interests of the Company and (ii) has unanimously
approved the issuance of the Preferred Shares and Warrants hereunder, and the
consummation of such transactions. ASP's Board of Directors (i) has
determined that the issuance and sale of the ASP Warrant hereunder, and the
consummation of the transactions contemplated hereby and by the other ASP
Transaction Documents (including without limitation the issuance of the ASP
Warrant Shares upon exercise of the ASP Warrant) are in the best interests of
ASP and (ii) has unanimously approved the issuance of the ASP Warrant
hereunder, and the consummation of such transactions.
3.7 NO CONFLICT WITH OTHER INSTRUMENTS. Neither the Company nor any
of its subsidiaries is in violation of any provisions of its charter, bylaws or
any other governing document as amended and in effect on and as of the date
hereof or in default (and no event has occurred which, with notice or lapse of
time or both, would constitute a default) under any provision of any instrument
or contract to which it is a party or by which it is bound, or of any provision
of any Federal, state or foreign judgment, writ, decree, order, statute, rule or
governmental regulation applicable to the Company or any such subsidiary, which
violation or default could reasonably be expected to have a Material Adverse
Effect. The (i) execution, delivery and performance of this Agreement and the
other Transaction Documents, (ii) execution and filing of the Certificate of
Designation and (iii) consummation of the transactions contemplated hereby and
thereby (including without limitation, the issuance of the Preferred Shares and
the Warrants and the reservation for issuance and issuance of the Conversion
Shares and the Warrant Shares) will not, in any such case, result in any such
violation 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, charge or
encumbrance upon any assets of the Company or of any of its subsidiaries or the
triggering of any preemptive or anti-dilution rights or rights of first refusal
or first offer, or any similar rights (whether pursuant to a "poison pill"
provision or otherwise), on the part of holders of the Company's or any such
subsidiary's securities.
3.8 FINANCIAL CONDITION; TAXES; LITIGATION.
3.8.1 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. There has not
been a material adverse change, or any event or circumstance that with the
passage of time could reasonably be expected to result in a material adverse
change, to the Company's business, operations, properties, financial condition
or results of operations since the date of the Company's most recent audited
financial statements contained in the Disclosure Documents.
3.8.2 The Company has filed all tax returns required to be filed
by it and paid all taxes which are due, except for taxes which it reasonably
disputes or which could not have a Material Adverse Effect.
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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 which could have a Material Adverse Effect.
3.8.4 Except as described in the Disclosure Documents, there is
no 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 that,
individually or in the aggregate, could have a Material Adverse Effect. 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 could 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 for resale shares of its Common
Stock 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 would prohibit or delay
the preparation and filing of a registration statement on Form S-3 with respect
to the Registrable Securities (as defined in the Registration Rights Agreement).
3.10 ACKNOWLEDGEMENT OF DILUTION. Each of the Company and ASP
acknowledges that the issuance of Conversion Shares or Warrant Shares, as
applicable, may result in dilution of the outstanding shares of Common Stock or
ASP Common Stock (as the case may be), which dilution may be substantial under
certain market conditions. Each of the Company and ASP further acknowledges
that its obligation (in the case of the Company) to issue Conversion Shares in
accordance with the terms of the Certificate of Designation and Closing Warrant
Shares in accordance with the terms of the Closing Warrant, and (in the case of
ASP) to issue ASP Warrant Shares in accordance with the terms of the ASP
Warrant) is unaffected by any such dilution.
3.11 INTELLECTUAL PROPERTY. The Company and its subsidiaries each has
the right to use adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and other
intellectual property rights necessary to conduct the business now operated by
it, and is not aware of any infringement by a third party with respect to such
rights or of any infringement by it or conflict with asserted rights of others
that, in any such case, if determined adversely to the Company or any of its
subsidiaries, could individually or in the aggregate have a Material Adverse
Effect.
3.12 REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION. Except as
described on SCHEDULE 3.12 hereto, (A) neither the Company nor any of its
subsidiaries has 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 and (B) no person or
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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 any of its subsidiaries or other consideration as a result of, the
transactions contemplated by this Agreement or the other Transaction
Documents which has not been waived or will not be waived or otherwise
satisfied as of the Closing Date.
3.13 LISTING ON NASDAQ. The Common Stock is listed on the Nasdaq
National Market, and trading in the Common Stock on such market has not been
suspended. The Company is, to its knowledge, in full compliance with the
continued listing criteria of the Nasdaq National Market, and does not
reasonably anticipate that the Common Stock will lose its listing on the Nasdaq
National Market, whether by reason of the transactions contemplated by this
Agreement or the other Transaction Documents, or otherwise and is not aware of
any inquiry by or received any notice from the Nasdaq National Market regarding
any failure or alleged failure by the Company to comply with such criteria.
3.14 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 Preferred Shares or
Warrants to Purchaser for purposes of the Securities Act or of any applicable
stockholder approval provisions, including, without limitation, under the rules
and regulations of any exchange or automated quotation system on which any of
the securities of the Company are listed or designated. In order to prevent the
possible integration of the offer and sale of the Securities with any offering
effected subsequent to the Closing Date, neither the Company nor any of its
subsidiaries or affiliates will offer or sell any securities during the six (6)
month period following the Closing Date; PROVIDED, HOWEVER, that such limitation
shall not apply to any securities that are offered or sold pursuant to (i) an
employee benefit plan or program duly adopted by the Company; (ii) any options,
warrant, convertible securities or rights or agreements to purchase securities
of the Company outstanding on the date hereof; (iii) any underwritten public
offerings of securities ; (iv) any security issued for consideration other than
cash pursuant to a merger, consolidation, acquisition or similar business
combination; (v) shares of Common Stock issued in connection with any stock
split, stock dividend or recapitalization by the Company; (vi) shares of Common
Stock issued upon conversion of the Preferred Shares or exercise of the Closing
Warrant; (vii) any securities issued pursuant to any equipment leasing
arrangement or debt financing from a bank or similar financial institution; or
(viii) any securities issued in connection with strategic transactions involving
the Company and third parties, including (A) joint ventures, manufacturing,
marketing or distribution arrangements or (B) technology transfer or development
arrangements; provided, that the primary purpose of such transaction is not the
raising of capital.
3.15 FEES. Except as described on SCHEDULE 3.15 hereto, neither the
Company nor any of
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its subsidiaries is obligated to pay any compensation or other fee, cost or
related expenditure to any underwriter, broker, agent or other representative
or entity in connection with the transactions contemplated hereby. The
Company will indemnify and hold harmless Purchaser from and against any claim
by any person or entity alleging that Purchaser is obligated to pay any such
compensation, fee, cost or related expenditure in connection with the
transactions contemplated hereby.
3.16 REGULATORY PERMITS. Each of the Company and its subsidiaries
possesses all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct its
business, except where the failure to so possess such certificates,
authorizations or permits could not have a Material Adverse Effect, 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 which revocation or modification could have a Material
Adverse Effect.
3.17 KEY EMPLOYEES. Each person whose name is set forth on SCHEDULE
3.17 (each, a "KEY EMPLOYEE") is currently serving in the capacity indicated on
such schedule on a full-time basis (except as otherwise noted in such Schedule).
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. Except as described on SCHEDULE 3.17, 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.
3.18 YEAR 2000. To the Company's knowledge: (i) all hardware and
software products used by the Company and its subsidiaries in the administration
and the business operations of the Company and such subsidiaries will be able to
process date data (including, but not limited to, calculating, comparing and
sequencing) in a consistent manner from, into and between the twentieth century
(through 1999), the year 2000 and the twenty-first century, including leap year
calculations, when used in accordance with the product documentation
accompanying such hardware and software products; (ii) all software developed
and currently sold by the Company and any of its subsidiaries (other than third
party software) will be able to process date data (including, but not limited
to, calculating, comparing and sequencing) in a consistent manner from, into and
between the twentieth century (through 1999), the year 2000 and the twenty-first
century, including leap year calculations, when used in accordance with the
product documentation accompanying such software; and (iii) there were no
returns of merchandise or software, or any claims or complaints received from
any third party or customer, relating to any year 2000 problems.
3.19 ENVIRONMENT. Except as disclosed in the Disclosure Documents (i)
there is no environmental liability, nor, to the Company's knowledge, factors
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, would have a Material Adverse Effect and
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(ii) neither the Company nor any of the subsidiaries has violated any
environmental laws applicable to it now or previously in effect
("ENVIRONMENTAL LAWS"), other than such violations or infringements that,
individually or in the aggregate, have not had and will not have a Material
Adverse Effect.
3.20 EMPLOYEE RELATIONS. Neither the Company nor any of its
subsidiaries is involved in any union labor dispute nor, to the knowledge of the
Company or any of its subsidiaries, is any such dispute threatened. Neither the
Company nor any of its subsidiaries is a party to a collective bargaining
agreement. No executive officer of the Company or any of its subsidiaries has
given notice that such officer intends to terminate such officer's employment
with the Company or such subsidiary. To the Company's knowledge, no executive
officer of the Company or any of its subsidiaries is in violation of any
material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant with the Company.
3.21 TRANSACTIONS WITH AFFILIATES. Except for the grant of stock
options disclosed on SCHEDULE 3.5 HERETO, none of the officers, directors, or
employees of the Company is presently a party to any transaction with the
Company or any of its subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
such officer, director or employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.
3.22 ANTI-TAKEOVER PROVISIONS. Neither the Company nor any of its
subsidiaries has adopted a shareholder rights plan or similar arrangement
relating to accumulations of beneficial ownership of Common Stock or a change in
control of the Company or any such subsidiary, or any business combination,
poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Certificate of Incorporation or the
laws of the state of Delaware which is or could become applicable as a result of
the transactions contemplated by this Agreement, including, without limitation,
the issuance of the Securities to Purchaser.
4. COVENANTS OF THE COMPANY.
4.1 CORPORATE EXISTENCE. The Company shall, or if there has been a
Change of Control Transaction (as defined in the Certificate of Designation)
following which the Company is not the surviving entity, the surviving entity
shall, so long as Purchaser or any affiliate of Purchaser beneficially owns any
Securities, maintain its corporate existence in good standing under the
jurisdiction of its incorporation and shall pay all taxes owed by it when due
except for taxes which the Company (or such surviving entity) reasonably
disputes.
4.2 PROVISION OF INFORMATION. The Company shall, so long as Purchaser
or any affiliate
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of Purchaser beneficially owns any Securities, provide any Purchaser with
copies of all materials sent to stockholders, in each such case at the same
time that it mails such materials to its stockholders.
4.3 FORM D; BLUE-SKY QUALIFICATION. To the extent that the Company
is relying on Regulation D under the Securities Act in selling the Securities
to Purchaser hereunder, the Company agrees to file a Form D with respect to
the Securities as required under Regulation D and to provide a copy thereof,
if requested, to Purchaser promptly after such filing. The Company shall
take such action as is necessary to qualify the Preferred Shares and Warrants
for sale to Purchaser under applicable state or "blue-sky" laws or obtain an
exemption therefrom, and shall provide evidence of any such action to
Purchaser at Purchaser's request.
4.4 REPORTING STATUS. As long as Purchaser or any affiliate of
Purchaser beneficially owns any Securities and until the date on which any of
the foregoing may be sold to the public pursuant to Rule 144(k) (or any
successor rule or regulation), the Company shall, or if there has been a Change
of Control Transaction following which the Company is not the surviving entity,
the surviving entity shall, (i) timely file with the Commission all reports
required to be so filed pursuant to the Exchange Act and (ii) not terminate 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. The Company agrees to issue a press release describing the
transactions contemplated by this Agreement and the other Transaction Documents
and, at the same time, to file with the Commission a Form 8-K in the form
required by the Exchange Act describing the terms of the transactions
contemplated by this Agreement and the other Transaction Documents, with this
Agreement and all schedules and exhibits attached to such Form 8-K as an exhibit
thereto, on or before the fifth (5th) Business Day following the date of this
Agreement.
4.5 RESERVATION OF COMMON STOCK. The Company shall at all times
following the Closing Date have authorized and reserved for issuance to
Purchaser pursuant to the Preferred Shares and the Closing Warrant, free from
any preemptive rights, at least 2,750,000 shares of Common Stock, subject to
adjustment for the events specified in Section 6 of the Certificate of
Designation (the "RESERVED AMOUNT") (assuming (i) application of the minimum
Conversion Price that may occur under the Certificate of Designation and the
minimum Exercise Price that may occur under the Closing Warrant and (ii) that
none of the limitations set forth herein, in the Certificate of Designation
(other than the "Share Limitation" as defined in the Certificate of Designation)
or in the Closing Warrant on such conversion or exercise exist). If on any date
the Reserved Amount is less than 125% of the number of shares of Common Stock
then issuable upon conversion of all of the Preferred Shares and exercise of the
Closing Warrant in full (assuming for such purpose that such conversion or
exercise were to occur as of such date), the Company shall take action
(including without limitation seeking stockholder approval for the authorization
or reservation of additional shares of Common Stock) as soon as practicable (but
in no event later than the fifth (5th) business day or, in the event that
stockholder approval is required, the sixtieth (60th) day following such date)
to increase the Reserved Amount to no less than 150% of the number of shares of
Common Stock into which such outstanding Preferred Shares are then convertible
and the Closing Warrant is exercisable.
4.6 USE OF PROCEEDS. The Company shall use the proceeds from the sale
of the Preferred
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Shares and Closing Warrant for general corporate purposes only, in the
ordinary course of its business, consistent with past practice, and for the
development of the ASP business and, without limiting the generality of the
foregoing, shall not use such proceeds to make a loan to any employee,
officer, director or stockholder of the Company, to repay any loan or other
obligation of the Company to any such person or to repurchase or pay a
dividend on shares of Common Stock or other securities of the Company, other
than any such payment explicitly required or permitted by the terms of this
Agreement, the Certificate of Designation or the other Transaction Documents.
4.7 QUOTATION ON NASDAQ. The Company shall, or if there has been a
Change of Control Transaction following which the Company is not the surviving
entity, the surviving entity shall, (i) promptly following the Closing, take
such action as may be necessary to include all of the Conversion Shares and
Closing Warrant Shares that may be issued by the Company (or such surviving
entity) under the Preferred Shares and Closing Warrant 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 or the New York Stock Exchange for a minimum of five (5) years
following the Closing Date.
4.8 USE OF PURCHASER NAME. Except as may be required by applicable
law, neither the Company nor any of its subsidiaries shall use, directly or
indirectly, 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 Purchaser for the specific use
contemplated (which consent will not be unreasonably withheld) or as otherwise
required by applicable law or regulation.
4.9 RIGHT OF FIRST OFFER. Prior to any offer or sale by the Company of
any Equity Securities (as defined below) during the period beginning on the
Closing Date and ending on the twelve (12) month anniversary of the Closing
Date, the Company must first deliver to Purchaser written notice describing the
proposed issuance, including the terms and conditions thereof, and provide
Purchaser with an option during the ten (10) Trading Day period following
delivery of such notice to purchase all or any part of Purchaser's Allocable
Portion (as defined below) of the Equity Securities being offered on the same
terms as contemplated by such issuance (the "RIGHT OF FIRST OFFER"). In the
event that Purchaser either does not give notice within such ten Trading Day
period that it intends to exercise the foregoing option or informs the Company
in writing that it does not intend to participate in all or any part of such
issuance, the Company may offer to a third party the option to purchase up to,
in the aggregate, the amount of Equity Securities which were declined by
Purchaser, on the same terms as were offered to Purchaser. Any sale to Purchaser
must comply with the registration requirements of the Securities Act or be
exempt from such registration requirements. For purposes hereof, (A) "EQUITY
SECURITY" shall mean Common Stock or any other equity security of the Company or
any of its subsidiaries, or any security convertible into, or exercisable or
exchangeable for, Common Stock or any such equity security and (B) Purchaser's
"ALLOCABLE PORTION" of Equity Securities as of a particular date shall be
determined by dividing the number of Preferred Shares purchased by Purchaser
hereunder by the aggregate number of Preferred Shares purchased by Purchaser
hereunder, and multiplying the resulting quotient by the aggregate amount of
Equity Securities being issued. "Equity Securities" shall not include and this
Right of First Offer will not apply to the issuance of securities of the Company
or any of its subsidiaries pursuant to (i) an employee benefit plan or program
duly adopted by the Company; (ii) any options,
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warrant, convertible securities or rights or agreements to purchase
securities of the Company outstanding on the date hereof; (iii) any public
offerings of Equity Securities; (iv) any Equity Security issued for
consideration other than cash pursuant to a merger, consolidation,
acquisition or similar business combination; (v) shares of Common Stock
issued in connection with any stock split, stock dividend or recapitalization
by the Company; (vi) shares of Common Stock issued upon conversion of the
Preferred Shares or exercise of the Closing Warrant; (vii) any Equity
Securities issued pursuant to any equipment leasing arrangement or debt
financing from a bank or similar financial institution; or (viii) any Equity
Securities issued in connection with strategic transactions involving the
Company and other entities, including (A) joint ventures, manufacturing,
marketing or distribution arrangements or (B) technology transfer or
development arrangements; provided, that the primary purpose of such
transaction is not the raising of capital.
4.10 EXCHANGE OPTION. In the event that the Company issues any Equity
Securities during the period of eighteen (18) months following the Closing Date
(the "EXCHANGE OPTION PERIOD"), Purchaser shall have the right to exchange all
or any part of the Preferred Shares held by it for such Equity Securities (the
"EXCHANGE OPTION") and, upon exercise of its Exchange Option, shall receive, on
the closing date for such issuance, an amount of such Equity Securities that a
purchaser of such securities would receive upon payment of an amount of cash (or
other applicable consideration) equal to the outstanding stated value of and
accrued but unpaid dividends on such Preferred Shares being exchanged by
Purchaser. The Company agrees that it will not issue Equity Securities during
the Exchange Option Period unless it first gives Purchaser at least twenty (20)
days' prior written notice thereof (a "NOTICE OF ISSUANCE"). In order for
Purchaser to exercise its Exchange Option, Purchaser must deliver written notice
thereof to the Company on or before the fifth (5th) Business Day following its
receipt of a Notice of Issuance.
4.11 MANAGEMENT RESTRICTIONS. During the period beginning on the
Closing Date and ending on the later to occur of (i) the one hundred and
eightieth (180th) day following the Closing Date and (ii) the date on which
the Registration Statement (as defined in the Registration Rights Agreement)
is declared effective by the Commission (the "MANAGEMENT RESTRICTION
PERIOD"), 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.
Notwithstanding the foregoing, a Key Employee may sell shares of Common Stock
during the Management Restriction Period (A) in order to meet the applicable
margin requirements of any broker-dealer from which such Key Employee has
obtained margin credit and (B) in a number that, in the aggregate during the
Management Restriction Period, does not exceed ten percent (10%) of the
number of shares of Common Stock beneficially owned by such Key Employee on
the Closing Date.
4.12 STOCKHOLDER APPROVAL. The Company agrees that, at its next annual
meeting of stockholders, it will recommend to the holders of its Common Stock
approval of the issuance of Conversion Shares and Warrant Shares in excess of
the Cap Amount (as defined in the Certificate of Designation) ("STOCKHOLDER
APPROVAL"), and will hold such meeting on or before December 31, 2000. In the
event that the Company does not obtain Stockholder Approval on or before such
date, Purchaser shall have the right to demand at any time thereafter that the
Company hold a meeting of its stockholders for the purpose of seeking
Stockholder Approval, such meeting to be held no later
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than the sixtieth (60th) day following receipt by the Company of such demand
in writing.
4.13 ENVIRONMENTAL LAWS. The Company will take all action necessary in
order to comply with applicable Environmental Laws and agrees to indemnify
Purchaser from and against any loss, claim, damage or expense arising from or in
connection with any failure or alleged failure of the Company, or any of its
subsidiaries or affiliates, to comply with such laws.
4A. COVENANTS OF ASP.
4A.1 CORPORATE EXISTENCE. ASP shall, so long as Purchaser or any
affiliate of Purchaser beneficially owns the ASP Warrant or any ASP Warrant
Shares, maintain its corporate existence in good standing under the jurisdiction
of its incorporation and shall pay all taxes owed by it when due except for
taxes which ASP reasonably disputes.
4A.2 PROVISION OF INFORMATION. ASP shall, so long as Purchaser or any
affiliate of Purchaser beneficially owns the ASP Warrant or any ASP Warrant
Shares, provide Purchaser with copies of all materials sent to its stockholders,
in each such case at the same time that it mails such materials to its
stockholders.
4A.3 FORM D; BLUE-SKY QUALIFICATION. To the extent that ASP is relying
on Regulation D under the Securities Act in selling the ASP Warrant to Purchaser
hereunder, ASP agrees to file a Form D with respect to the ASP Warrant as
required under Regulation D and to provide a copy thereof to Purchaser promptly
after such filing. Promptly following the Initial Public Offering, ASP shall
take such action as is necessary to qualify ASP Warrant for sale under
applicable state or "blue-sky" laws or obtain an exemption therefrom, and shall
provide evidence of any such action to Purchaser at Purchaser's request.
4A.4 REPORTING STATUS. Following the Initial Public Offering, and as
long as Purchaser or any affiliate of Purchaser beneficially owns the ASP
Warrant or any ASP Warrant Shares and until the date on which any of the
foregoing may be sold to the public pursuant to Rule 144(k) (or any successor
rule or regulation), (i) ASP shall timely file with the Commission all reports
required to be so filed pursuant to the Exchange Act and (ii) ASP shall not
terminate 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.
4A.5 RESERVATION OF ASP COMMON STOCK. ASP shall at all times following
the Closing Date have authorized and reserved for issuance to Purchaser pursuant
to the ASP Warrant, free from any preemptive rights, a number of shares of
Common Stock equal to the number of ASP Warrant Shares issuable upon exercise in
full of the ASP Warrant (assuming that none of the limitations set forth in the
ASP Warrant on such exercise exist) (the "SUBSIDIARY RESERVED AMOUNT"). ASP
shall not reduce the ASP Reserved Amount without Purchaser's prior written
consent.
4A.6 QUOTATION ON NASDAQ NATIONAL MARKET. ASP shall (i) promptly
following the Initial Public Offering , take such action as may be necessary
to include all of ASP Warrant Shares that may be issued under the ASP Warrant
for designation and quotation on the Nasdaq National Market and (ii) use its
commercially reasonable
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efforts to maintain the designation and quotation, OR listing, of the ASP
Common Stock on the Nasdaq National Market or the New York Stock Exchange for
a minimum of five (5) years following the Closing Date.
4A.7 USE OF PURCHASER NAME. Except as may be required by applicable
law, ASP shall not use, directly or indirectly, 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
Purchaser for the specific use contemplated (which consent will not be
unreasonably withheld) or as otherwise required by applicable law or regulation.
4A.8 NO ADVERSE ACTION. ASP shall refrain, while the ASP Warrant is
outstanding, from taking any action or entering into any arrangement which in
any way adversely affects the rights, privileges or benefits available to the
holder of the ASP Warrant.
4A.9 EXCHANGE OPTION. If on any day following the Initial Public
Offering, the average dollar daily trading volume (as reported by Bloomberg)
for the Common Stock of the Company during the period of ninety (90) days
immediately preceding such day is less than $1,250,000, Purchaser shall have
the option, upon written notice to the Company and to ASP (an "EXCHANGE
NOTICE"), to exchange all or any portion of the Preferred Shares then held by
purchaser for shares of the preferred stock of ASP (the "ASP Preferred
Shares"). Upon delivery of an Exchange Notice by Purchaser, Purchaser shall
be entitled to receive one ASP Preferred Share for each Preferred Share to be
exchanged therefor. The certificate of designation relating to the ASP
Preferred Shares (the "ASP CERTIFICATE") shall have terms identical to those
set forth in the Certificate of Designation, MUTATIS MUTANDIS, including
without limitation terms relating to the conversion of the ASP Preferred
Shares into ASP Common Stock, except that (i) the Fixed Conversion Price
shall be equal to 120% of the Market Price for the ASP Common Stock on the
Exchange Date (as defined below); (ii) the maturity date of the ASP Preferred
Shares shall be two (2) years from the Exchange Date (as defined below); and
(iii) dividends payable thereunder shall include any dividends that have
accrued but have not been paid under the Preferred Shares as of the Exchange
Date. Within two (2) Business Days after Purchaser delivers an Exchange
Notice to the Company (an "EXCHANGE NOTICE DATE"), and assuming the ASP
Certificate has not previously been prepared and filed, ASP shall prepare the
ASP Certificate and file it with the State of Delaware. ASP will issue and
deliver the ASP Preferred Shares to Purchaser on the Business Day following
the filing of the ASP Certificate, against delivery of the Preferred Shares
being exchanged therefor (such Business Day being referred to as the
"EXCHANGE DATE"). Immediately following ASP's receipt of the Preferred Shares
being exchanged hereby and delivery of the ASP Preferred Shares, the Company
will retire such Preferred Shares so that they will not be issued and
outstanding.
5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO PURCHASER'S OBLIGATIONS AT CLOSING. Purchaser's
obligations at the Closing, including without limitation its obligation to
purchase the Preferred Shares and Warrants being purchased by such Purchaser,
are conditioned upon the satisfaction by the Company (or
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waiver by Purchaser) of each of the following events as of the Closing Date:
5.1.1 the respective representations and warranties of the
Company and ASP set forth in this Agreement shall be true
and correct in all material respects as of such date as if
made on such date;
5.1.2 the Company and ASP each 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 the Closing;
5.1.3 the Closing Date shall occur, and all closing conditions
set forth in this paragraph 5.1 shall have been satisfied
or waived, on a date that is not later than March 8, 2000;
5.1.4 the Company shall have delivered to Purchaser a
certificate, signed by an 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 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 Purchaser an opinion of
counsel for the Company, dated as of such date, in
substantially the form set forth on Exhibit 5.1.5 hereto;
5.1.6 the Company shall have delivered to Purchaser duly executed
certificates representing the Preferred Shares and Warrants
being purchased by Purchaser;
5.1.7 the Company and ASP shall each have executed and delivered
the Registration Rights Agreement;
5.1.8 the Common Stock shall be listed for trading on the Nasdaq
National Market and no suspension of trading in the Common
Stock on such market shall have occurred and be continuing
as of the Closing Date;
5.1.9 each of the Company and ASP shall have authorized and
reserved for issuance the number of shares of Common Stock
and ASP Common Stock, as applicable, required to be
reserved under paragraphs 4.5 and 4A.5 hereof, and shall
have provided Purchaser with reasonable evidence thereof;
5.1.10 since the date of this Agreement and until the Closing Date
there shall not have occurred, in the reasonable judgment
of Purchaser, a material adverse change, or any event or
circumstance that with the
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passage of time could reasonably be expected to result
in a material adverse change, in the business,
operations, financial condition, properties or results
of operation of the Company; and
5.1.11 the Company shall have delivered to Purchaser proposed
"final" drafts of each Schedule to this Agreement, together
with a proposed "final draft" of the opinion required by
5.1.5, no later than the close of business on the third
(3rd) Business Day immediately prior to the Closing Date.
5.2 CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING. The Company's
obligations at the Closing are conditioned upon the satisfaction (or waiver by
the Company) of each of the following events as of the Closing Date:
5.2.1 the representations and warranties of Purchaser shall be
true and correct in all material respects as of such date
as if made on such date; and
5.2.2 Purchaser 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 Purchaser on or before the
Closing.
5.2.3 Purchaser shall have tendered payment for the Purchase
Price of the Preferred Shares.
6. MISCELLANEOUS.
6.1 SURVIVAL. The representations and warranties 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.
6.2 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. Purchaser may assign its rights
and obligations hereunder, in connection with any private sale or transfer of
Securities pursuant to Section 2.4, 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
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transferee as though such transferee were an original signatory hereto;
PROVIDED, HOWEVER, that such transferee shall not be deemed a "Purchaser" for
purposes of paragraph 4.9 or 4.10 hereof. Neither the Company nor ASP may
assign it rights or obligations under this Agreement except as may be
specifically provided by this Agreement or the other Transaction Documents.
6.3 NO RELIANCE. Each party acknowledges that (i) it has such
knowledge in business and financial matters as to be fully capable of evaluating
this Agreement, the other Transaction Documents and the transactions
contemplated hereby and thereby, (ii) it is not relying on any advice or
representation of the other party in connection with entering into this
Agreement, the other Transaction Documents or such transactions (other than the
representations made in this Agreement or the other Transaction Documents),
(iii) it has not received from such party any assurance or guarantee as to the
merits (whether legal, regulatory, tax, financial or otherwise) of entering into
this Agreement or the other Transaction Documents or the performance of its
obligations hereunder and thereunder, and (iv) it has consulted with its own
legal, regulatory, tax, business, investment, financial and accounting advisors
to the extent that it has deemed necessary, and has entered into this Agreement
and the other Transaction Documents based on its own independent judgment and on
the advice of its advisors as it has deemed necessary, and not on any view
(whether written or oral) expressed by such party.
6.4 INJUNCTIVE RELIEF. Each of the Company and ASP acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to
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, to an injunction restraining any breach and requiring
immediate and specific performance of such obligations without the necessity of
showing economic loss. In connection with any proceedings brought by Purchaser
for the purpose of enforcing its rights hereunder (including any proceedings
brought at law or in equity), Purchaser shall, if it prevails in such
proceeding, be entitled to reimbursement of its reasonable legal fees and
expenses incurred by it.
6.5 GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and construed under the laws of the State of Delaware without regard to the
conflict of laws provisions thereof. Each party hereby irrevocably submits to
the non-exclusive jurisdiction of the state and federal courts sitting in the
county of New Castle, Delaware, for the adjudication of any dispute hereunder or
under any Transaction Document or the Certificate of Designation or in
connection herewith or therewith or with any transaction contemplated hereby or
thereby or discussed herein or therein, 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 (certified or registered
mail, return receipt requested) 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.
6.6 COUNTERPARTS. This Agreement may be executed in any number of
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counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
6.7 HEADINGS; DRAFTING. The headings used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement. The parties shall be deemed to have participated
jointly in the drafting of this Agreement and the other Transaction Documents,
and no provision hereof or thereof shall be construed against any party as the
drafter thereof.
6.8 NOTICES. Any notice, demand or request required or permitted to
be given by any party to any other party pursuant to the terms of this Agreement
shall be in writing and shall be deemed given (i) when delivered personally or
by verifiable facsimile transmission (with an original to follow) on or before
5:00 p.m., eastern time, on a Business Day or, if such day is not a Business
Day, on the next succeeding Business Day, (ii) on the next Business Day after
timely delivery to a nationally-recognized 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 to the
parties as follows:
IF TO THE COMPANY OR ASP:
Aspeon, Inc.
17891 Cartwright Road
Irvine, California 92614
Tel: (949) 440-8000
Fax: (949) 440-8088
Attention: Chief Financial Officer
WITH A COPY TO:
Cooley Godward, LLP
4365 Executive Drive
Suite 1100
San Diego, California 92121-2128
Attention: Jeremy D. Glaser, Esq.
Tel: (858) 550-6000
Fax: (858) 453-3555
IF TO PURCHASER:
Marshall Capital Management, Inc.
c/o Credit Suisse First Boston
11 Madison Avenue, 7th Floor
New York, New York 10010
Attention: Allan Weine, Charles Gassenheimer
Tel: (212) 325-0038
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<PAGE>
(312) 750-3239
Fax: (212) 325-6519
(312) 750-1031
WITH A COPY TO:
Solomon, Zauderer, Ellenhorn, Frischer & Sharp
45 Rockefeller Plaza
New York, New York 10111
Attention: Robert L. Mazzeo, Esq.
Tel: (212) 956-3700
Fax: (212) 956-4068
or to such other address or addresses as shall be designated by either party in
writing to the other party.
6.9 EXPENSES. The Company, ASP and Purchaser each shall pay
all costs and expenses that it incurs in connection with the negotiation,
execution, delivery and performance of this Agreement and the transactions
contemplated hereby; PROVIDED, HOWEVER, that the Company shall reimburse
Purchaser at the Closing (which reimbursement may be deducted by Purchaser
from the purchase price payable by it at the Closing) for all reasonable
out-of-pocket expenses (including without limitation reasonable legal fees
and expenses) incurred by it in connection with its due diligence
investigation of the Company and the negotiation, preparation, execution,
delivery and performance of the Transaction Documents, the ASP Transaction
Documents and the Certificate of Designation in an amount not to exceed forty
thousand dollars ($40,000).
6.10 ENTIRE AGREEMENT; AMENDMENTS; WAIVER. This Agreement, the
other Transaction Documents (including the other ASP Transaction Documents) and
the Certificate of Designation 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, ASP and Purchaser.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first-above written.
ASPEON, INC.
By: __________________________
Name: Richard P. Stack
Title: Chief Executive Officer
ASPEON SOLUTIONS, INC.
By: __________________________
Name: Richard P. Stack
Title: Chief Executive Officer
MARSHALL CAPITAL MANAGEMENT, INC.
By: __________________________
Allan Weine, President
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<PAGE>
NEWS RELEASE
Contact: Horace Hertz
Aspeon, Inc.
949.440.8000 or [email protected]
E.E. Wang
Pondel /Wilkinson Group
310.207.9300 or [email protected]
FOR IMMEDIATE RELEASE
ASPEON COMPLETES PRIVATE PLACEMENT WITH AFFILIATE
CREDIT SUISSE FIRST BOSTON
IRVINE, CA - March 9, 2000 -- ASPEON, INC. (NasdaqNM: ASPE) today
announced it has completed a private placement of its convertible preferred
stock totaling $10 million with Marshall Capital Management, Inc., an affiliate
of Credit Suisse First Boston. The Company intends to use the funds to expand
the operations of Aspeon Solutions, Inc. Aspeon Solutions a wholly owned
subsidiary of the Company, is the first "Next Generation" Application Service
Provider (ASP) focused on delivering mission-critical business applications
customized to meet industry-specific needs.
"We intend to invest the majority of the proceeds to fund the
growth of our ASP business" said Richard Stack, chief executive officer of
Aspeon. "This funding allows us to extend our leadership position in the
foodservice vertical as well as enter new target verticals. We will now also
begin to explore strategic alternatives for the ASP business in order to
maximize shareholder value".
<PAGE>
Marshall Capital is a proprietary investment vehicle that invests Credit
Suisse First Boston capital into small capitalization emerging growth
companies after careful fundamental due diligence.
ABOUT ASPEON, INC.
Aspeon, Inc. operates in two lines of business. Aspeon Solutions, Inc.,
a wholly-owned subsidiary, is the first "Next Generation" Application Service
Provider (ASP) focused on delivering pre-integrated mission-critical business
applications customized to meet industry-specific needs. Javelin Systems is the
leading provider of integrated touchscreen computers and system integration
services to the global foodservice industry. Visit Aspeon at www.aspeon.com
The statements in this press release that relate to future financial results,
future plans by the Company, including development of the ASP business,
customer contracts or financial performance by the Company are
forward-looking statements that involve risks and uncertainties pertaining to
customer orders, demand for products and services, development of markets for
the Company's products and services and other risks identified in the
Company's SEC filings. The Company's actual results and performance may
differ materially; therefore, readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. The Company undertakes no obligation to release publicly the result
of any revisions to these forward-looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
