EXHIBIT 4.6
[Execution Copy]
STOCK SUBSCRIPTION AGREEMENT
AGREEMENT dated as of February 9, 2000, among Condor Systems Inc., a
California corporation (the "Company"), Behrman Capital II L.P. and Strategic
Entrepreneur Fund II, L.P. (collectively, "Behrman"), and DLJ Merchant Banking
Partners II, L.P. and each of its Affiliates listed on Exhibit A hereto
("DLJMB") (Behrman and DLJMB each an "Investor" and collectively, the
"Investors"). Capitalized terms used herein and not otherwise defined herein
shall have the meaning ascribed to such terms in the Investor's Agreement dated
as of April 15, 1999 between the Company, Behrman, DLJMB and the other
signatories thereto.
W I T N E S S E T H :
WHEREAS, the Company desires to obtain funds in the amount of $10
million to repay existing debt, to fund working capital and to fund the
Company's growth;
WHEREAS, the Investors desire to subscribe for, and the Company
desires to issue to the Investors, (i) 100,000 shares of Series A1 15% Senior
Preferred Stock of the Company (the "Series A1 Preferred Stock"), which will in
certain circumstances be converted into Series A2 15% Senior Preferred Stock
(the "Series A2 Preferred Stock" and, together with the Series A1 Preferred
Stock, the "Preferred Stock"), in accordance with the terms of the Amended and
Restated Articles of Incorporation of the Company attached hereto as Exhibit B
(the "Articles") and (ii) Warrants to purchase shares of Class C Common Stock,
par value $0.001 per share, of the Company in the form attached hereto as
Exhibit C (the "Warrants"); and
WHEREAS, the Investors anticipate that an agreement (the "Second
Subscription Agreement") will be entered into prior to March 31, 2000 among the
Company, certain individual shareholders of Global Technology Partners LLC, a
Delaware limited liability company, and certain individual members of the
Company's management (collectively, the "Additional Investors") for the purchase
and sale of additional shares of Senior Preferred Stock and Warrants by the
Additional Investors;
NOW, THEREFORE, IT IS AGREED:
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ARTICLE 1
PURCHASE AND SALE
SECTION 1.01. Purchase and Sale. (a) Upon the terms and subject to
the conditions of this Agreement, the Company agrees to issue and sell to each
Investor and each Investor agrees, severally and not jointly, to purchase from
the Company at the Closing, (x) the number of shares of Series A1 Preferred
Stock set forth opposite such Investor's name on Exhibit A hereto and (y)
Warrants to purchase a number of shares of Class C Common Stock of the Company
(the Investor's "Warrant Amount") equal to the product of 3,100,000 and a
fraction, the numerator of which shall be the number of shares of Preferred
Stock purchased by such Investor pursuant to this agreement and the denominator
of which shall be the total number of shares of Preferred Stock purchased by all
investors pursuant to this Agreement and, prior to the Exchange Date, the Second
Subscription Agreement, if any (collectively, the "Securities"). The purchase
price for the Securities (the "Purchase Price") for each Investor is the amount
in cash specified on Exhibit A hereto. The Purchase Price shall be paid as
provided in Section 1.02.
SECTION 1.02. Closing. The closing (the "Closing") of the purchase
and sale of the Securities hereunder shall take place at the offices of Davis
Polk & Wardwell, New York, New York, as soon as possible, but in no event later
than two Business Days, after satisfaction or waiver of the conditions set forth
in Article 8 or at such other place as DLJMB and the Company may agree. At the
Closing:
(a) Each Investor shall deliver to the Company, in immediately
available funds, the amount of the aggregate Purchase Price set forth opposite
such Investor's name on Exhibit A hereto, by wire transfer (or other means
acceptable to the Company) to an account of the Company with a bank designated
by Company, by notice to such Investor.
(b) The Company shall deliver, or cause to be delivered, to each
Investor certificates, or other appropriate documentation, for the number of
shares of Series A1 Preferred Stock set forth opposite such Investor's name on
Exhibit A and a Warrant to purchase such Investor's Warrant Amount of shares of
Class C Common Stock duly registered in the name of such Investor.
SECTION 1.03. Exchange of Initial Warrants. At any time after the
earlier of (i) the date, if any, on which the closing of the purchase and sale
of shares of Preferred Stock and Warrants by the Additional Investors pursuant
to the Second
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Subscription Agreement shall occur and (ii) March 31, 2000 (the "Exchange
Date"), the Company shall, upon request of any holder of a Warrant, exchange the
Warrant for a Warrant that specifies the actual number of shares of Class C
Common Stock purchaseable upon exercise of such Warrant.
SECTION 1.04. Qualification and Substitution of Series A2 Preferred
Stock. (a) Promptly after the date hereof, the Company shall file an application
with the California Department of Corporations for qualification under Section
25113(b)(1) of the California Corporations Code of 300,000 shares of Series A2
15% Senior Preferred Stock of the Company to be issued pursuant to the terms of
Article Three, Section B(9) of the Articles. The Company shall use its best
efforts to obtain qualification of the Series A2 Senior Preferred Stock under
the foregoing provisions.
SECTION 1.05. Transferability of Warrants. The Warrants shall
initially be issued as part of an issuance of units, each of which shall consist
of the number of shares of Preferred Stock purchased by each Investor pursuant
to this Agreement and such Investor's Warrant Amount. Prior to 90 days after the
Closing, the Warrants shall not be transferred or exchanged separately from, but
may be transferred or exchanged only together with, the Preferred Stock. The
certificates to be issued representing the Warrants shall bear legends
substantially in the form set forth on the first page of the Warrant Certificate
attached hereto as Exhibit C.
SECTION 1.06. Designation of Registrable Securities. The parties
hereto acknowledge that the Preferred Stock to be purchased by the Investors
pursuant to this Agreement shall be deemed to be Registrable Securities under
the Investors' Agreement dated as of April 15, 1999 among the Company and the
Shareholders (as defined therein) (the "Investors' Agreement") and agree to take
any and all actions necessary to carry out this intent, including without
limitation, to approve and effect an amendment to the Investors' Agreement.
ARTICLE 2
REPRESENTATIONS OF THE COMPANY
The Company represents and warrants to each Investor as of the date
hereof that:
SECTION 2.01. Corporate Existence and Power. The Company is a
corporation duly incorporated or organized, validly existing and in good
standing under the laws of the State of California and has all corporate powers
and all
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material governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted and as proposed to be
conducted.
SECTION 2.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the documents attached hereto
and the consummation of the transactions contemplated thereby (including the
issuance and sale of the Securities by the Company) are within its powers, and
have been duly authorized by all necessary action. This Agreement constitutes a
valid and binding agreement of the Company, enforceable in accordance with its
terms. On or prior to the Closing Date, the amended and restated Articles of
Incorporation of the Company (in the form attached hereto as Exhibit D) and the
certificate of determination will have been duly filed with the Secretary of
State of California and will be valid and in effect.
SECTION 2.03. Capitalization. (a) As of the Closing Date, the
authorized capital stock of the Corporation consisted of 60,000,000 shares of
Class A Common Stock, 10,000,000 shares of Class B Common Stock, 60,000,000
shares of Class C Common Stock and 10,000,000 shares of Preferred Stock.
(b) Immediately following the Closing Date, there will be
outstanding 21,407,891 shares of Class A Common Stock, 2,551,053 shares of Class
B Common Stock, 26,948,947 shares of Class C Common Stock, 600,000 shares of
Senior Preferred Stock, employee stock options to purchase 1,854,540 shares of
Class A Common Stock, and Warrants to purchase 3,100,000 shares of Class C
Common Stock. The rights, privileges and preferences of the Senior Preferred
Stock shall be as set forth in the Amended and Restated Articles of
Incorporation of the Company attached hereto as Exhibit B and the Warrants shall
be in the form attached hereto as Exhibit C.
(c) Except as set forth in this Section 2.03, there are, and
immediately after the Closing there will be, no outstanding (i) shares of
capital stock or voting securities of the Corporation, (ii) securities of the
Company convertible into or exchangeable or exercisable for shares of capital
stock or voting securities of the Company, (iii) options or other rights to
acquire from the Company, or other obligation of the Company to issue, any
capital stock, voting securities or securities convertible into or exchangeable
or exercisable for capital stock or voting securities of the Company and (iv) no
obligation of the Company to repurchase or otherwise acquire or retire any
shares of capital stock or other securities, rights or obligations referred to
in (i), (ii), or (iii).
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ARTICLE 3
REPRESENTATIONS OF THE INVESTORS
Each Investor represents and warrants to the Company, severally as to
itself only and not jointly as to any other Investor, as of the date hereof
that:
SECTION 3.01. Corporate Existence and Power. Such Investor is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization.
SECTION 3.02. Corporate Authorization. The execution, delivery and
performance by such Investor of this Agreement and the consummation of the
transactions contemplated hereby are within the powers (corporate, partnership
or otherwise) of such Investor and have been duly authorized by all necessary
action on the part of such Investor. This Agreement constitutes a valid and
binding agreement of such Investor.
SECTION 3.03. Purchase for Investment. Such Investor is purchasing the
relevant Securities for investment for its own account and not with a view to,
or for sale in connection with, any distribution thereof other than in
compliance with the Securities Act of 1933 as amended (the "1933 Act") and other
applicable regulations.
SECTION 3.04. Private Placement. (a) Such Investor understands that
(i) the offering and sale of the Securities hereby is intended to be exempt from
registration under the 1933 Act and (ii) there is only a limited market for the
Securities, and there can be no assurance that any Investor will be able to sell
or dispose of any Securities to be purchased by such Investor.
(b) Such Investor's financial situation is such that such Investor
can afford to bear the economic risk of holding the Securities acquired by such
Investor hereunder for an indefinite period of time, and such Investor can
afford to suffer the complete loss of the investment in such Securities.
(c) Such Investor's knowledge and experience in financial and
business matters are such that it is capable of evaluating the merits and risks
of the investment in the Securities, or such Investor has been advised by a
representative possessing such knowledge and experience.
(d) Such Investor understands that the Securities acquired
hereunder are a speculative investment which involves a high degree of risk of
loss of the entire investment therein, that there are substantial restrictions
on the
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transferability of the Securities as set forth in the Investors' Agreement, and
that for an indefinite period there will be no public market for the Securities.
(e) Such Investor and its representatives have been given the
opportunity to examine all documents and to ask questions of, and to receive
answers from, Seller and its representatives concerning the terms and conditions
of the acquisition of the Securities and related matters and to obtain all
additional information which such Investor or its representatives deem
necessary.
(f) Such Investor is an "accredited investor" as such term is
defined in Regulation D under the 1933 Act.
ARTICLE 4
SURVIVAL; INDEMNIFICATION
SECTION 4.01. Survival. The representations and warranties of the
parties hereto contained in this Agreement shall remain in full force and effect
following the Closing. A breach of any representation or warranty made in this
Agreement shall not affect in any manner whatsoever the relative rights and
obligations of the parties to and under the Investors' Agreement.
SECTION 4.02. Indemnification. (a) The Company hereby indemnifies each
Investor and its Affiliates, limited partners, general partners, directors,
officers and employees against and agrees to hold each of them harmless from any
and all damage, loss, liability and expense (including, without limitation,
reasonable expenses of investigation and reasonable attorneys' fees and expenses
in connection with any action, suit or proceeding) ("Damages") incurred or
suffered by any such party arising out of any misrepresentation or breach of
warranty, covenant or agreement made or to be performed by the Company pursuant
to this Agreement.
(b) Each Investor hereby indemnifies, severally and not jointly, the
Company and its Affiliates, directors, officers and employees against and agrees
to hold each of them harmless from any and all Damages incurred or suffered by
any such party arising out of any misrepresentation or breach of warranty,
covenant or agreement made or to be performed by such Investor pursuant to this
Agreement; provided that such Investor's maximum liability under this Section
4.02(b) shall not exceed the amount of the consideration paid by such Investor
to the Company.
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SECTION 4.03. Exclusivity. After the Closing, Section 4.02 will
provide the exclusive remedy for any misrepresentation, breach of warranty,
covenant or other agreement or other claim arising out of this Agreement or the
transactions contemplated hereby except to the extent any such claim is in
respect of fraud.
ARTICLE 5
MISCELLANEOUS
SECTION 5.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission to
the recipient's then current facsimile number) and shall be given,
if to the Company, to:
Condor Systems, Inc.
2133 Samaritan Drive
San Jose, CA 95124
Attention: John Taft
Fax: (408) 377-4421
with a copy to:
Orrick, Herrington & Sutcliffe LLP
400 Sansome Street
San Francisco, CA 94111
Attention: Lawrence T. Kane
Fax: (415) 773-5759
if to DLJMB or any of its Affiliates listed on Exhibit A hereto, to:
DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: David L. Jaffe
Fax: (212) 892-7552
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
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Attention: Christopher Mayer
Fax: (212) 450-4800
if to Behrman, to:
Behrman Capital II L.P.
4 Embarcadero Center
Suite 3640
San Francisco, CA 94111
Attention: William Matthes
Fax: (415) 434-7312
with a copy to:
Latham & Watkins
135 Commonwealth Drive
Menlo Park, CA 94025
Attention: Peter Kerman
Fax: (650) 463-2600
SECTION 5.02. Amendments and Waivers. Any provision of this Agreement
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed, in the case of an amendment, by each party to this Agreement, or
in the case of a waiver, by the party against whom the waiver is to be
effective.
SECTION 5.03. Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense;
provided that the Company shall pay all reasonable out-of-pocket costs, expenses
and other payments, including without limitation legal fees and disbursements,
incurred by DLJMB in connection with the transactions contemplated by this
Agreement.
SECTION 5.04. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other party hereto.
SECTION 5.05. Counterparts; Third Party Beneficiaries. This Agreement
may be executed in any number of counterparts, each of which shall be an
original and all of which together shall be deemed to be one and the same
instrument. This Agreement shall become effective when each party hereto shall
have
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received a counterpart hereof signed by the other party hereto. No provision of
this Agreement is intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
SECTION 5.06. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may only be brought
in the United States District Court for the Southern District of New York or any
New York State court sitting in New York City, and each of the parties hereby
consents to the jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding which is brought
in any such court has been brought in an inconvenient forum. Process in any such
suit, action or proceeding may be served on any party anywhere in the world,
whether within or without the jurisdiction of any such court. Without limiting
the foregoing, each party agrees that service of process on such party as
provided in Section 5.01 shall be deemed effective service of process on such
party.
SECTION 5.07. Specific Enforcement. Each party hereto acknowledges
that the remedies at law of the other parties for a breach or threatened breach
of this Agreement would be inadequate and, in recognition of this fact, any
party to this Agreement, without posting any bond, and in addition to all other
remedies which may be available, shall be entitled to obtain equitable relief in
the form of specific performance, a temporary restraining order, a temporary or
permanent injunction or any other equitable remedy which may then be available.
SECTION 5.08. Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto and supersedes all prior agreements and
understandings, oral and written, among the parties with respect to the subject
matter hereof.
SECTION 5.09. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 5.10. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICTS OF LAW RULES OF SUCH STATE.
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IN WITNESS WHEREOF, the Investor has executed this Agreement and the
Company has caused its corporate name to be hereunto subscribed by its officers
thereunto duly authorized, all as of the day and year first above written.
CONDOR SYSTEMS, INC.
By:______________________________
Name:
Title:
DLJ MERCHANT BANKING PARTNERS
II, L.P., a Delaware Limited Partnership
By: DLJ Merchant Banking II, Inc., as
managing general partner
By:_______________________________
Name:
Title:
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJ MERCHANT BANKING PARTNERS
II-A, L.P., a Delaware Limited Partnership
By: DLJ Merchant Banking II, Inc., as
managing general partner
By:_________________________________
Name:
Title:
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
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DLJ OFFSHORE PARTNERS II, C.V., a
Netherlands Antilles Limited Partnership
By: DLJ Merchant Banking II, Inc., as
advisory general partner
By:_________________________________
Name:
Title:
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJ DIVERSIFIED PARTNERS, L.P., a
Delaware Limited Partnership
By: DLJ Diversified Partners, Inc., as
managing general partner
By:_________________________________
Name:
Title:
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
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DLJ DIVERSIFIED PARTNERS-A, L.P., a
Delaware Limited Partnership
By: DLJ Diversified Partners, Inc., as
managing general partner
By:_________________________________
Name:
Title:
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJ MILLENNIUM PARTNERS, L.P., a
Delaware Limited Partnership
By: DLJ Merchant Banking II, Inc., as
managing general partner
By:_________________________________
Name:
Title:
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
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DLJ MILLENNIUM PARTNERS-A, L.P.
By: DLJ Merchant Banking II, Inc., as
managing general partner
By:_________________________________
Name:
Title:
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJMB FUNDING II, INC., a Delaware
corporation
By:_____________________________
Name:
Title:
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJ FIRST ESC, L.P.,
By: DLJ LBO Plans Management
Corporation, as manager
By:_______________________________
Name:
Title:
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
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DLJ EAB PARTNERS, L.P.
By: DLJ LBO Plans Management
Corporation, as managing general partner
By:_______________________________
Name:
Title:
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJ ESC II, L.P.
By: DLJ LBO Plans Management
Corporation, as manager
By:_______________________________
Name:
Title:
Address: c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
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BEHRMAN CAPITAL II L.P.
By:_______________________________
Name:
Title:
Address: 4 Embarcadero Center
Suite 3640
San Francisco, CA 94111
STRATEGIC ENTREPRENEUR
FUND II, L.P.
By: _______________________________
Name:
Title:
Address: 4 Embarcadero Center
Suite 3640
San Francisco, CA 94111
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EXHIBIT A
No. of Shares
of Senior
Preferred Aggregate
INVESTOR Stock Purchase Price
-------- ---------------- -----------------
DLJMB
DLJ Merchant Banking Partners II, L.P. 40,467 $ 4,046,700
DLJ Merchant Banking Partners II-A, L.P. 1,612 161,200
DLJ Offshore Partners II, C.V. 1,990 199,000
DLJ Diversified Partners, L.P. 2,366 236,600
DLJ Diversified Partners-A, L.P. 879 87,900
DLJMB Funding II, Inc. 8,255 825,500
DLJ Millennium Partners, L.P. 654 65,400
DLJ Millennium Partners-A, L.P. 128 12,800
DLJ EAB Partners, L.P. 182 18,200
DLJ ESC II, L.P. 7,631 763,100
DLJ First ESC, L.P. 78 7,800
------ -----------
Total for DLJMB: 64,242 $ 6,424,200
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Behrman
Behrman Capital II L.P. 35,280 $ 3,528,000
Strategic Entrepreneur Fund II, L.P. 478 47,800
------ -----------
Total for Behrman: 35,758 $ 3,575,800
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