<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 4)*
DENSE-PAC MICROSYSTEMS, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK
- --------------------------------------------------------------------------------
(Title of Class of Securities)
248719-106
- --------------------------------------------------------------------------------
(CUSIP Number)
HELEN W. MELMAN, ESQ.
815 MORAGA DRIVE
LOS ANGELES, CALIFORNIA 90049
(310) 472-4191
-------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
APRIL 8, 1999
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-l(g), check the following
box [ ].
(Continued on following pages)
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SCHEDULE 13D
CUSIP NO. 248719-106
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Euroventures Benelux I B.V.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP.
(a) [X]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS - 00
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION - Belgium
NUMBER OF 7. SOLE VOTING POWER - 0
SHARES
BENEFICIALLY 8. SHARED VOTING POWER - 2,498,879
OWNED BY
EACH REPORTING 9. SOLE DISPOSITIVE POWER - 0
PERSON WITH
10. SHARED DISPOSITIVE POWER - 2,498,879
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,498,879 SHARES OF COMMON STOCK
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.5%
14. TYPE OF REPORTING PERSON - CO
2
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SCHEDULE 13D
CUSIP NO. 248719-106
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Euroventures Benelux II B.V.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP.
(a) [X]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS - PF
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION - Belgium
NUMBER OF 7. SOLE VOTING POWER - 0
SHARES
BENEFICIALLY 8. SHARED VOTING POWER - 3,290,881
OWNED BY
EACH REPORTING 9. SOLE DISPOSITIVE POWER - 0
PERSON WITH
10. SHARED DISPOSITIVE POWER - 3,290,881
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,290,881 SHARES OF COMMON STOCK
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
17.1%
14. TYPE OF REPORTING PERSON - CO
3
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SCHEDULE 13D
CUSIP NO. 248719-106
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Euroventures Benelux Team B.V.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP.
(a) [X]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS - 00
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION - Belgium
NUMBER OF 7. SOLE VOTING POWER - 0
SHARES
BENEFICIALLY 8. SHARED VOTING POWER - 5,789,760
OWNED BY
EACH REPORTING 9. SOLE DISPOSITIVE POWER - 0
PERSON WITH
10. SHARED DISPOSITIVE POWER - 5,789,760
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,789,760 SHARES OF COMMON STOCK
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.1%
14. TYPE OF REPORTING PERSON - CO
4
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SCHEDULE 13D
CUSIP NO. 248719-106
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
EBTB II B.V.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP.
(a) [X]
(b) [ ]
3. SEC USE ONLY
4. SOURCE OF FUNDS - 00
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION - Belgium
NUMBER OF 7. SOLE VOTING POWER - 0
SHARES
BENEFICIALLY 8. SHARED VOTING POWER - 5,789,760
OWNED BY
EACH REPORTING 9. SOLE DISPOSITIVE POWER - 0
PERSON WITH
10. SHARED DISPOSITIVE POWER - 5,789,760
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,789,760 SHARES OF COMMON STOCK
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.1%
14. TYPE OF REPORTING PERSON - CO
5
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ITEM 1. SECURITY AND ISSUER.
This Amendment to Statement on Schedule 13D of EBTB II B.V. ("EBTB"),
Euroventures Benelux Team B.V. ("Team"), Euroventures Benelux I B.V.
("Euroventures I") and Euroventures Benelux II B.V. ("Euroventures II")
(individually or collectively, the "Reporting Persons") is filed to report the
beneficial ownership of shares of Common Stock of Dense-Pac Microsystems, Inc.,
a California corporation (the "Company"). The Company's principal business
address is 7321 Lincoln Way, Garden Grove, California 92641.
ITEM 2. IDENTITY AND BACKGROUND.
Each Reporting Person is a corporation organized under the laws of
Belgium whose address is H. Henneaulaan 366, 1930 Zaventem, Belgium.
Euroventures I and Euroventures II are venture capital funds. As the investment
manager of each of Euroventures I and Euroventures II, Team has both voting and
investment power over their shares of the Company's Common Stock but manages
each fund's portfolio independently of the other. Team is the sole "statutory
director" of each of Euroventures I and Euroventures II.
EBTB has indirect beneficial ownership of the shares of Common Stock of
the Company directly owned by Euroventures I and Euroventures II because it owns
100% of Team. EBTB has a 0.13% and 6.25% voting interest, respectively, in each
of Euroventures I and Euroventures II. As the holder of Class B shares of each
of Euroventures I and Euroventures II, EBTB is entitled to 20% of all
distributions to shareholders of each of Euroventures I and Euroventures II
after the Class A shareholders have received a 125% return on their investment.
The directors and executive officer (Executive Director) of Team and
EBTB are:
<TABLE>
<S> <C>
Name: Martijn Kleijwegt
Business address: Joh. Vermeerplein 9
1071 DV Amsterdam
The Netherlands
Position: Executive Director
Principal occupation: investment manager
Citizenship: Dutch
Name: Roger Claes
Business address: H. Henneaulaan 366
1930 Zaventem
Belgium
Position: Director
Principal occupation: investment manager
Citizenship: Belgian
</TABLE>
6
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<TABLE>
<S> <C>
Name: Paul Verdurme
Business address: H. Henneaulaan 366
1930 Zaventem
Belgium
Position: Director
Principal occupation: investment manager
Citizenship: Belgian
Name: Frits van der Have
Business address: Joh. Vermeerplein 9
1071 DV Amsterdam
The Netherlands
Position: Director
Principal occupation: investment manager
Citizenship: Dutch
</TABLE>
During the last five years, no Reporting Person and no director of any
Reporting Person has been convicted in a criminal proceeding or been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction resulting in a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws, or the finding of any violation with respect to such
laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Euroventures II used its internal funds, and did not borrow funds, to
effect the transactions described in Item 4.
ITEM 4. PURPOSE OF TRANSACTIONS.
Euroventures II loaned the Company $1.8 million in 1994 pursuant to a
Loan Agreement dated October 12, 1994, as amended by an Addendum to Loan
Agreement dated October 23, 1995. Pursuant to an Amended and Restated Loan
Agreement dated April 8, 1999, between the Company and Euroventures II,
Euroventures II converted $1.2 million of the outstanding loan into an aggregate
of 662,069 shares of the Company's Common Stock at the rate of $1.8125 per
share. The remaining $600,000 outstanding principal amount of the loan is
convertible into a number of shares of Common Stock of the Company determined by
dividing the amount of the loan converted by the initial conversion price of
$1.8125 per share. The loan is due and payable in full on December 31, 2000 and
may be converted into Common Stock at any time until it is paid in full. The
conversion price is subject to adjustment to protect against dilution in the
event of certain corporate events such as stock splits, combinations and
reorganizations and in the event the Company issues additional shares of Common
Stock for a consideration per share less than the conversion price then in
effect. On the date hereof, the loan is convertible into an aggregate of 331,034
shares of the Company's Common Stock.
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Pursuant to a Registration Rights Agreement dated April 8, 1998,
Euroventures I and Euroventures II have the right to require the Company to
register their shares of Common Stock for resale under the Securities Act of
1933.
Euroventures II acquired the shares for investment in the ordinary
course of its business and not for the purpose of effecting or changing control
of the Company. Euroventures I and Euroventures II may acquire or dispose of
Common Stock from time to time in the open market, in privately negotiated
transactions, or otherwise. Euroventures I and Euroventures II are each
incorporated for a limited term and must liquidate when their term has expired.
At that time each fund will be required to either sell or distribute in kind to
its shareholders the Common Stock then owned. Roger Claes, a director of Team
and EBTB, serves as a director of the Company. Accordingly, the Reporting
Persons may be in a position to influence the operations and activities of the
Company. Except as stated herein, none of the Reporting Persons has any present
intention to engage in any of the actions contemplated by paragraphs (a) - (j)
of Item 4 to Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) - (b) The beneficial ownership of the Company's Common Stock by each
Reporting Person is as follows:
<TABLE>
<CAPTION>
Euroventures I Euroventures II Team EBTB
-------------- --------------- ------------ --------------
<S> <C> <C> <C> <C>
Sole Power to Vote 0 0 0 0
- --------------------------------------------------------------------------------------------------------
Shared Power to Vote 2,498,879 3,290,881(2) 5,789,760(2) 5,789,760(2)
Sole Power to Dispose 0 0 0 0
Shared Power to Dispose 2,498,879 3,290,881(2) 5,789,760(2) 5,789,760(2)
% Ownership (1) 13.5% 17.1% 30.1% 30.1%
</TABLE>
(1) Based on 17,873,400 shares outstanding on February 28, 1999 as advised
by the Company plus the 662,069 shares issued to Euroventures II upon
conversion of the loan and, as to each Reporting Person, plus the number
of shares such Reporting Person has the right to acquire as disclosed in
note (2).
(2) Includes 375,000 shares which Euroventures II has the right to acquire
upon the exercise of warrants which expire on November 14, 1999 at an
exercise price of $7.00 per share, and 331,034 shares which Euroventures
II has the right to acquire upon conversion of a $600,000 loan due
December 31, 2000 at a conversion price of $1.8125 per share.
(c) See Item 4.
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(d) The shareholders (including EBTB) of each of Euroventures I and
Euroventures II, which are venture capital funds, will have the
right to receive proceeds from the sale of the Common Stock upon
the liquidation of each of such funds. See Item 4.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
See Items 2 and 4.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Amended and Restated Loan Agreement dated April 8, 1999.
2. Registration Rights Agreement dated April 8, 1999.
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SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief, we
certify that the information set forth in this Statement is true, complete and
correct. Pursuant to Rule 13d-1(k)(1), we agree that this statement is filed on
behalf of each of us.
EUROVENTURES BENELUX TEAM, B.V.
Date: April 20, 1999 /S/ Martijn Kleijwegt
----------------------------------------
Martijn Kleijwegt, Executive Director
EUROVENTURES BENELUX I B.V.
Date: April 20, 1999 /S/ Martijn Kleijwegt
----------------------------------------
Martijn Kleijwegt,
Executive Director of
Euroventures Benelux Team
B.V., Managing Director of
Euroventures Benelux I B.V.
EUROVENTURES BENELUX II B.V.
Date: April 20, 1999 /S/ Martijn Kleijwegt
----------------------------------------
Martijn Kleijwegt,
Executive Director of
Euroventures Benelux Team
B.V., Managing Director of
Euroventures Benelux II B.V.
EBTB II B.V.
Date: April 20, 1999 /S/ Martijn Kleijwegt
----------------------------------------
Martijn Kleijwegt, Executive Director
10
<PAGE> 1
EXHIBIT 1
AMENDED AND RESTATED LOAN AGREEMENT
This Amended and Restated Loan Agreement ("Agreement") is entered into
and effective as of April 8, 1999 by and between Dense-Pac Microsystems, Inc., a
California corporation ("Borrower"), Euroventures Benelux II B.V., a Netherlands
corporation ("Euroventures"), and Trude C. Taylor, an individual (individually,
a "Lender" and jointly, the "Lenders").
RECITALS
WHEREAS, Borrower has previously borrowed from Lenders the aggregate sum
of $1,900,000 (the "Original Loan") pursuant to a Loan Agreement dated as of
October 12, 1994 (the "1994 Loan Agreement"); and
WHEREAS, Borrower and Euroventures modified the terms of the 1994 Loan
Agreement pursuant to an Addendum to Loan Agreement dated as of October 23, 1995
(together with the 1994 Loan Agreement, the "Prior Loan Agreements"); and
WHEREAS, the parties have agreed that Euroventures shall convert a
portion of its outstanding loan into Common Stock of the Borrower and that the
terms of the remaining outstanding portion of the loan shall be amended as
stated herein.
AGREEMENT
NOW, THEREFORE, it is agreed as follows:
SECTION 1. PARTIAL CONVERSION OF LOAN.
Euroventures hereby agrees to convert $1.2 million of the
outstanding principal amount of indebtedness due it from Borrower pursuant to
the Prior Loan Agreements into an aggregate of 662,069 shares of the Common
Stock of Borrower (the "Shares") and Borrower agrees to issue and sell the
Shares to Euroventures. Borrower shall promptly issue and deliver to
Euroventures a certificate representing the Shares.
SECTION 2. TERMS OF LOAN.
The $600,000 and $100,000 remaining outstanding principal amount
due Euroventures and Trude Taylor, respectively, pursuant to the Prior Loan
Agreements (individually or in the aggregate, the "Loan") shall have the
following terms:
2.1 INTEREST. Accrued and unpaid interest on the Original Loan
computed in accordance with the Prior Loan Agreements through April 7, 1999
shall be paid within 10 days hereof. The principal balance from time to time
actually outstanding under the Loan shall bear interest, calculated on a daily
basis, including the first day but excluding the last day, based on a 365-day
year, at the rate of eight and three-quarters percent (8.75%) per annum, from
the date hereof
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until the Loan and all interest thereon is repaid in full. Interest shall be
paid quarterly, beginning on June 30, 1999. Any interest not paid on the
Original Loan or the Loan when due shall be added to the principal and
thereafter bear interest as principal.
2.2 REPAYMENT. The outstanding principal balance of the Loan and
all accrued and unpaid interest thereon shall be due and payable in full on
December 31, 2000. Upon 45 days' prior written notice to the Lenders, Borrower
may at any time prepay, without penalty, all or any portion of the Loan plus
accrued and unpaid interest on the amount prepaid to the date of such
prepayment. Upon 45 days' prior written notice to the Lenders, Borrower shall
apply the net proceeds from any sale of debt (other than Equipment Financing as
defined in Section 4.1 and Bank Debt as defined in Section 8 hereof) or equity
securities (except pursuant to employee benefit plans (whether now in effect or
adopted in the future) or warrants which are outstanding on the date hereof) to
prepay the outstanding interest and principal of the Loan. All payments of the
Loan and accrued and unpaid interest shall be in U.S. Dollars.
2.3 APPLICATION OF PAYMENTS. Payments on the Loan shall be
applied first to accrued and unpaid interest and then to principal, and upon
such payment interest shall cease to accrue on the principal so repaid. Payments
of principal shall be made to each Lender, pro rata based the outstanding
principal amount of each Lender's Loan. Payments shall be sent to the Lenders at
their addresses set forth in Section 9.3 hereof or to such other address or bank
account as a Lender may from time to time advise Borrower in writing.
SECTION 3. CONVERSION OF LOAN.
3.1 VOLUNTARY CONVERSION. Each Lender shall have the right, at
its option, at any time prior to payment in full of the outstanding principal
balance of each such Lenders' Loan (or prior to any prepayment date set forth in
the Borrower's notice pursuant to Section 2.2 hereof) to convert the outstanding
principal balance of such Loan, in whole or in part, into fully paid and
non-assessable shares of Common Stock of the Borrower. The number of shares of
Common Stock to be issued upon conversion of the Loan ("Conversion Shares")
shall be determined by dividing the principal amount so converted by the
Conversion Price (as defined below) in effect at the time of such conversion.
The initial Conversion Price shall be equal to $1.8125.
3.2 CONVERSION PROCEDURE. Before a Lender shall be entitled to
convert its Loan into Conversion Shares, it shall give written notice of the
election to convert to the Borrower, which notice shall state the principal
amount of the Loan to be converted and the name or names in which the
certificate or certificates for the Conversion Shares are to be issued. The
Borrower shall, as soon as practicable thereafter, issue and deliver to such
Lender a certificate or certificates for the full number of Conversion Shares to
which the Lender shall be entitled. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of the notice of
conversion and the person or persons entitled to receive the Conversion Shares
shall be treated for all purposes as the record holder of holders of such shares
as of such date. No fractional shares of Common Stock shall be issued upon
conversion of the Loan. In lieu thereof, the Borrower shall pay to the
converting Lender the amount of outstanding principal that is not so converted
by check, payable concurrently with delivery of the certificates for the
Conversion Shares. Upon conversion of any portion of the
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Loan, the Borrower shall be released from its obligations and liabilities under
this Agreement with respect to that principal amount which is converted
hereunder, except that the Borrower shall be obligated to pay to the converting
Lender, within ten (10) days of the date of such conversion, any interest
accrued and unpaid with respect to the principal amount converted, through the
date of such conversion.
3.3 ADJUSTMENT TO CONVERSION PRICE FOR DILUTING ISSUES.
(a) Special Definitions. For purposes of this Section
3.3, the following definitions shall apply:
(1) "Convertible Securities" shall mean any
evidences of indebtedness (other than the Loan), shares of capital stock (other
than Common Stock) or other securities convertible into or exchangeable for
Common Stock.
(2) "Options" shall mean rights, options or
warrants to subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities.
(3) "Additional Shares of Common Stock" shall
mean all shares of Common Stock issued or, pursuant to Section 3.3(c), deemed to
be issued by the Borrower after the date hereof; other than shares of Common
Stock issued or deemed to be issued (A) to officers or employees of, or
consultants to, the Borrower pursuant to stock option plans or incentive
agreements approved by Borrower's Board of Directors; (B) in connection with
Equipment Financings or Bank Debt; (C) to the sellers of a corporation pursuant
to the acquisition of such corporation by the Borrower by merger, purchase of
substantially all of the assets, or other reorganization whereby the Borrower
owns not less than fifty-one percent (51%) of the voting power of such
corporation; (D) upon exercise or conversion of options, warrants and other
convertible securities outstanding on the date hereof; (E) upon conversion of
the Loan; (F) in connection with any transaction for which adjustment is made
pursuant to Section 3.4 hereof; and (G) by way of dividend or distribution on
securities described in the foregoing clauses.
(b) No Adjustment of Conversion Price. No adjustment in
the Conversion Price shall be made in respect of the issuance of Additional
Shares of Common Stock unless the consideration per share (determined in
accordance with Section 3.3(e) hereof) for an Additional Share of Common Stock
issued or deemed to be issued is less than the Conversion Price in effect on the
date of, and immediately prior to, such issuance.
(c) Deemed Issue of Additional Shares of Common Stock.
In the event the Borrower at any time or from time to time after the date hereof
shall issue any Options or Convertible Securities or shall fix a record date for
the determination of holders of any class of securities entitled to receive any
such Options or Convertible Securities, then the maximum number of shares (as
set forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock
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issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date; provided, however,
that Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Section 3.3(e)
hereof) of such Additional Shares of Common Stock would be less than the
Conversion Price in effect on the date of and immediately prior to such issue,
or such record date, as the case may be; and, provided, further, that in any
such case in which Additional Shares of Common Stock are deemed to be issued:
(1) no further adjustment in the Conversion
Price shall be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or conversion or
exchange of such Convertible Securities;
(2) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any increase or
decrease in the consideration payable to the Borrower or increase or decrease in
the number of shares of Common Stock issuable, upon the exercise, conversion or
exchange thereof, the Conversion Price computed upon the original issue thereof
(or upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such increase or decrease
becoming effective, be recomputed to reflect such increase or decrease, insofar
as it affects such Conversion Price, but no further change in the Conversion
Price shall be made upon the exercise, conversion or exchange of such Options or
Convertible Securities;
(3) if any such Options or Convertible
Securities shall expire or be canceled without having been exercised or
converted, the Conversion Price as adjusted upon the original issuance thereof
(or upon the occurrence of a record date with respect thereto) shall be
readjusted as if
(A) in the case of Convertible
Securities or Options for Common Stock, the only Additional Shares of Common
Stock so issued were shares of Common Stock, if any, actually issued or sold on
the exercise of such Options or the conversion or exchange of such Convertible
Securities, and such Additional Shares of Common Stock, if any, were issued or
sold for the consideration actually received by the Borrower upon such exercise,
plus the consideration, if any, actually received by the Borrower for the
granting of all such Options, whether or not exercised, plus the consideration
received for issuing or selling the Convertible Securities actually converted
plus the consideration, if any, actually received by the Borrower (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) on the conversion or exchange of such Convertible Securities; and
(B) in the case of Options for
Convertible Securities, only the Convertible Securities, if any, actually issued
upon the exercise thereof were issued at the time of issue of such Options, and
the consideration received by the Borrower for the Additional Shares of Common
Stock deemed to have been then issued was the consideration actually received by
the Borrower for the issue of all such Options, whether or not exercised, plus
the consideration deemed to have been received by the Borrower upon the issue of
the Convertible Securities with respect to which such Options were actually
exercised;
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(4) no readjustment pursuant to clauses (2) or (3) above
shall have the effect of increasing the Conversion Price to an amount which
exceeds the lower of (i) the Conversion Price on the original adjustment date
(immediately prior to the adjustment), or (ii) the Conversion Price that would
have resulted from any actual issuance of Additional Shares of Common Stock
between the original adjustment date and such readjustment date.
(d) Adjustment of Conversion Price Upon Issuance of Additional
Shares of Common Stock. In the event the Borrower shall at any time after the
date hereof issue Additional Shares of Common Stock, without consideration or
for a consideration per share less than the Conversion Price in effect on the
date of and immediately prior to such issue, then and in such event, such
Conversion Price shall be reduced, concurrently with such issue, to the price
(calculated to the nearest cent) determined by multiplying such Conversion Price
by a fraction (x) the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such issue plus the number of shares of
Common Stock which the aggregate consideration received by the Borrower for the
total number of Additional Shares of Common Stock so issued or deemed issued
would purchase at such Conversion Price, and (y) the denominator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
issue or deemed issued plus the number of such Additional Shares of Common Stock
so issued or deemed issued; provided, however, that all shares of Common Stock
issuable upon conversion of the Loan and any Additional Shares of Common Stock
deemed issued pursuant to Section 3.3(c) shall be deemed to be outstanding for
purposes hereof.
(e) Determination of Consideration. For purposes of this Section
3.3 the consideration received by the Borrower for the issuance of any
Additional Shares of Common Stock shall be computed, before deducting reasonable
selling discounts, commissions, expenses and fees, as follows:
(1) Cash and Property. Such consideration shall:
(A) insofar as it consists of cash, be computed
at the aggregate amount of cash received by the Borrower excluding amounts paid
or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other
than cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Borrower's Board of Directors; and
(C) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other assets of the
Borrower for consideration which covers both, by the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Borrower's Board of Directors.
(2) Options and Convertible Securities. The
consideration per share received by the Borrower for Additional Shares of Common
Stock deemed to have been issued pursuant to Section 3.3(c) shall be determined
by dividing:
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(A) the total amount, if any, received or
receivable by the Borrower as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provisions contained therein for a subsequent adjustment of such
consideration) payable to the Borrower upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, or in the case of Options
for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities, by
(B) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without regard to any
provisions contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
3.4 ADJUSTMENTS FOR STOCK DIVIDENDS, DISTRIBUTIONS,
SUBDIVISIONS, COMBINATIONS OR CONSOLIDATIONS OF COMMON STOCK.
(a) Stock Dividends, Distributions or Subdivisions. In
the event the Borrower shall issue Additional Shares of Common Stock pursuant to
a stock dividend, stock distribution or subdivision, the Conversion Price in
effect immediately prior to such stock dividend, stock distribution or
subdivision shall concurrently with such stock dividend, stock distribution or
subdivision, be proportionately decreased.
(b) Combinations or Consolidations. In the event the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Conversion Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
(c) Adjustments for Other Distributions. In the event
the Borrower at any time or from time to time makes or fixes a record date for
the determination of holders of Common Stock entitled to receive any
distribution payable in securities of the Borrower other than shares of Common
Stock and other than as otherwise adjusted in Sections 3.3 or 3.4, then, and in
each such event, provision shall be made so that the Lenders shall receive upon
conversion of the Loan, in addition to the number of shares of Common Stock
receivable thereupon, the amount of securities of the Borrower which they would
have received had the Loan been converted into Common Stock on the date of such
event and had they thereafter, during the period from the date of such event to
and including the date of conversion, retained such securities receivable by
them as aforesaid during such period, subject to all other adjustments called
for during such period under Sections 3.3 or 3.4 hereof.
(d) Adjustments for Reclassification, Exchange, and
Substitution. If the Common Stock issuable upon conversion of the Loan shall be
changed into the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization, reclas sification or
otherwise (other than a subdivision or combination of shares provided for
above), the applicable Conversion Price then in effect shall, concurrently with
the effectiveness of such
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<PAGE> 7
reorganization or reclassification, be proportionately adjusted such that the
Loan shall be convertible into, in lieu of the number of shares of Common Stock
which the Lenders would otherwise have been entitled to receive, a number of
shares of such other class or classes of stock equivalent to the number of
shares of Common Stock that would have been subject to receipt by the Lenders
upon conversion of the Loan immediately before that change.
3.5 NO IMPAIRMENT. The Borrower will not, by amendment of its
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
other terms to be observed or performed hereunder by the Borrower but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 3 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the Lenders against
impairment.
3.6 RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Borrower
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
Loan such number of shares of its Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding principal of the Loan;
and if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of the entire Loan, in addition
to such other remedies as shall be available to the Lenders, the Borrower will
take such corporate actions as shall, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes.
3.7 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 3,
the Borrower at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each Lender a
certificate executed by its chief financial officer setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Borrower shall, upon the written
request at any time of any Lender, furnish or cause to be furnished to such
Lender a like certificate setting forth (i) all such adjustments and
readjustments, (ii) the Conversion Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of the Loan.
3.8 NOTICES OF RECORD DATE. In the event that the Borrower shall
propose at any time:
(a) to declare any dividend or distribution upon the
Common Stock, whether in cash, property, stock or other securities, whether or
not a regular cash dividend and whether or not out of earnings or earned
surplus; or
(b) to offer for subscription to the holders of any
class or series of its capital stock any additional shares of stock of any class
or series or any other rights; or
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<PAGE> 8
(c) to effect any reclassification or recapitalization;
or
(d) to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up;
then, in connection with each such event, the Borrower shall send to the
Lenders:
(1) at least 20 days' prior written notice of
the date on which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of Common
Stock shall be entitled thereto) or for determining the rights to vote in
respect of the matters referred to in (c) and (d) above; and
(2) in the case of the matters referred to in
(c) and (d) above, at least 20 days' prior written notice of the date of a
shareholders meeting at which a vote on such matters shall take place or the
effective date of any written consent (and specifying the material terms and
conditions of the proposed transaction or event and the date on which the
holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon the occurrence of such event and
the amount of securities or other property deliverable upon such event).
The failure to provide such notice shall not affect the validity of such
actions.
SECTION 4. COVENANTS OF BORROWER.
4.1 ADDITIONAL DEBT. Until the Loan and all amounts due
hereunder have been paid in full, without the prior written consent of a Lender
or Lenders who have outstanding more than 50% of the principal amount of the
Loan then outstanding, Borrower will not incur, issue, assume or guarantee any
indebtedness except for Bank Debt or purchase money indebtedness incurred for
the purchase or lease of equipment and machinery in the ordinary course of
business ("Equipment Financing") and which indebtedness is secured solely by the
equipment or machinery so purchased or leased.
4.2 LIENS AND ENCUMBRANCES. Until the Loan and all amounts due
hereunder have been paid in full, without the prior written consent of a Lender
or Lenders who have outstanding more than 50% of the principal amount of the
Loan then outstanding, Borrower will not cause or permit or agree or consent to
cause or permit in the future (upon the happening of a contingency or
otherwise), any of its personal property whether now owned or hereafter
acquired, to be subject to a lien except:
(a) liens securing non-delinquent personal property
taxes or assessments;
(b) attachment, judgment and other similar liens arising
in connection with court proceedings, provided (and only for so long as) the
execution or other enforcement of such liens is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings;
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(c) the liens described in Exhibit A hereto; and
(d) liens securing Bank Debt or Equipment Financing.
4.3 REGISTRATION RIGHTS AGREEMENT. Concurrently with the
execution hereof, Borrower shall execute and deliver to Lenders a Registration
Rights Agreement in form and substance satisfactory to Lenders.
4.4 LEGAL EXPENSES. Borrower shall reimburse Lenders for all
reasonable legal fees and costs incurred by Lenders in connection with this
Agreement and filings under Sections 13 and 16 of the Securities Exchange Act of
1934 required as a result of the transactions contemplated hereby, in an amount
not to exceed $5,000.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower hereby
represents and warrants to Lenders that:
5.1 Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the State of California and has the
requisite corporate power and authority to carry on its business as presently
conducted and to carry out the transactions contemplated hereunder.
5.2 All corporate action on the part of Borrower necessary for
the authorization, execution and delivery of this Agreement and the Registration
Rights Agreement and the performance of all obligations of Borrower under such
agreements has been taken.
5.3 No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of Borrower is
required in connection with the valid execution and delivery of this Agreement
and the Registration Rights Agreement or the performance of Borrower's
obligations hereunder or thereunder, except as has already been obtained or
filed.
5.4 The execution, delivery and performance of this Agreement
and the Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby will not result in any violation of, or default
under, any provision of the Articles of Incorporation or Bylaws of Borrower or,
any contract, agreement or instrument to which Borrower is a party or by which
it is bound.
5.5 Borrower has sufficient authorized and unissued shares of
Common Stock under its Articles of Incorporation to fulfill Borrower's
obligations under Section 3 of this Agreement and any other outstanding rights
to acquire Common Stock. Except as provided in the Registration Rights Agreement
and the Amended and Restated Warrant Agreement between Borrower and Euroventures
dated April 1, 1996, Borrower has not granted any contractual right in respect
to registration of its securities.
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<PAGE> 10
5.6 The Shares are, and the Conversion Shares, when issued in
accordance with Section 3, shall be, validly issued, fully paid and
nonassessable and listed on the Nasdaq Stock Market or such exchange or
reporting system as the Borrower's Common Stock is then traded.
5.7 Each of this Agreement and the Registration Agreement has
been duly executed and delivered by, and constitutes the valid and binding
obligation of, the Borrower, enforceable against the Borrower in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or the principles governing the availability of equitable
remedies.
5.8 The Borrower is in material compliance with the provisions
of its Articles of Incorporation, as amended, and its Bylaws, as amended, and is
not in default under or in breach of any material agreement to which it is a
party. The Borrower's business is being conducted in material compliance with
all applicable laws, ordinances, codes, rules and regulations of any
governmental or administrative body, provided, however, that the Borrower's
representation and warranty regarding compliance with any such legal
requirements as they relate to environmental matters is subject to the
Borrower's actual knowledge.
5.9 Borrower has filed all reports (including, without
limitation, proxy statements) required to be filed with the Securities and
Exchange Commission ("SEC") since March 1, 1998 (collectively, the "SEC
Reports"), and has previously furnished or made available to the Lenders true
and complete copies of all SEC Reports. None of the SEC Reports, as of their
respective dates (as amended through the date hereof), contained any untrue
statement of material fact or omitted 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. Each of the balance
sheets (including the related notes) included in the SEC Reports presents
fairly, in all material respects, the consolidated financial position of
Borrower and its subsidiaries as of the respective dates thereof, and the other
related statements (including the related notes) included therein present
fairly, in all material respects, the results of operations and the changes in
financial position of Borrower and its subsidiaries for the respective periods
set forth therein, all in conformity with generally accepted accounting
principles consistently applied during the periods involved, except as otherwise
noted therein and subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments and any other adjustments described
therein. All of the SEC Reports, as of their respective dates (as amended
through the date hereof), complied in all material respects with the
requirements of the Securities Exchange Act of 1934 and the applicable rules and
regulations thereunder.
5.10 Except as described in the SEC Reports, there is no pending
or, to the best knowledge of the Borrower, threatened action, suit, litigation
or investigation against the Borrower which would have a material adverse effect
on the Borrower, its business or its financial condition. The Borrower's
personal property is not the subject of any attachment, judgment or other
similar lien arising in connection with court proceedings.
5.11 Since the date of the last SEC Report and except as
described in the SEC Reports, to the best knowledge of the Borrower no fact,
event, condition or contingency exists or
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has occurred which has, or in the future can reasonably be expected to have, a
material adverse effect on the business or financial condition of the Borrower.
For purposes hereof, any information regarding the Borrower known by or supplied
to Roger Claes shall be deemed to be known by Euroventures.
SECTION 6. REPRESENTATIONS OF LENDERS. Each Lender severally hereby
represents and warrants to Borrower with respect to himself or itself that:
6.1 Euroventures is a corporation duly organized, validly
existing and in good standing under the laws of the Netherlands and has the
requisite power and authority to execute and deliver this Agreement and the
Registration Rights Agreement and to carry out the transactions contemplated
hereby and thereby.
6.2 Trude C. Taylor has full legal capacity and the requisite
power and authority and is competent to execute and deliver this Agreement and
the Registration Rights Agreement and to carry out the transactions contemplated
hereby and thereby.
6.3 Each Lender has the business experience to analyze, and net
worth sufficient to assume, the risks associated with the Loan and the
acquisition of the Shares and the Conversion Shares. The Loan is being made, and
the Shares and Conversion Shares will be acquired, solely for such Lender's own
account for investment and not for the account of any other person and not for
distribution or assignment.
6.4 The Lenders understand and acknowledge that the Shares are
not, and the Conversion Shares will not be, registered under the Securities Act
of 1933 (the "Securities Act") on the grounds that the offering and sale of
securities contemplated by this Agreement are exempt from registration under the
Securities Act. The Lenders acknowledge and understand that the shares and the
Conversion Shares must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration and
such qualification is available. The Lenders acknowledge and agree that the
certificates representing the Shares and the Conversion Shares may be endorsed
with a legend restricting the transfer thereof except in accordance with the
Securities Act.
SECTION 7. EVENTS OF DEFAULT. Upon the occurrence of an Event of Default
(as defined herein), the entire unpaid balance of the Loan, including any
interest accrued thereon, shall, at the option of one or more Lenders holding,
individually or in the aggregate, fifty percent (50%) or more of the Loan then
outstanding (the "Majority Lender"), and without notice or demand of any kind to
the Borrower or any other person, immediately become due and payable. The
occurrence of any of the following events shall constitute an "Event of
Default":
(a) If Borrower fails to pay the principal of, or
interest on, the Loan within fifteen (15) days of the date such payment is due;
or
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(b) If Borrower fails to perform or observe any material
covenant contained herein or in the Registration Rights Agreement or breaches
any material representation or warranty contained herein and such failure or
breach continues for more than twenty (20) days after written notice from the
Majority Lender specifying such failure or breach; or
(c) The institution by the Borrower of proceedings to be
adjudicated as bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it or the filing by it of a
petition or answer or consent seeking reorganization or release under the
federal Bankruptcy Act, or any other applicable federal or state law, or the
consent by it to the filing of any such petition or the appointment of a
receiver, liquidator, assignee, trustee or other similar official of the
Borrower, or of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the taking of corporate action by
the Borrower in furtherance of any such action; or
(d) If, within sixty (60) days after the commencement of
an action against the Borrower (and service of process in connection therewith
on the Borrower) seeking any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, such action shall not have been resolved in favor of the
Borrower or all orders or proceedings thereunder affecting the operations or the
business of the Borrower stayed, or if the stay or any such order or proceeding
shall thereafter be set aside, or if, within sixty (60) days after the
appointment without the consent or acquiescence of the Borrower of any trustee,
receiver or liquidator of the Borrower or of all or any substantial part of the
properties of the Borrower, such appointment shall not have been vacated; or
(e) Any declared default of the Borrower under any
indebtedness of Borrower to banks, commercial finance lenders, insurance
companies or other financial institutions regularly engaged in the business of
lending money (whether secured or unsecured) that gives the holder of such
indebtedness the right to accelerate such indebtedness, and such indebtedness is
in fact accelerated by the holder.
SECTION 8. BANK DEBT. To facilitate Borrower's obtaining a bank line of
credit or accounts receivable factoring line for working capital purposes ("Bank
Debt"), the Lenders agree, upon receipt by Borrower of a commitment letter from
a lender to provide Bank Debt and approval of the terms thereof by Borrower's
Board of Directors, to terminate the Security Agreement between Borrower and the
Lenders dated as of October 12, 1994 and to execute UCC termination statements
and such other documents as Borrower and such lender shall reasonably request to
terminate the Lenders' security interest in Borrower's assets. Subject to the
foregoing, the parties hereby reaffirm the Security Agreement and acknowledge
that the security interest created thereby and evidenced by the financing
statements and other documents filed with public agencies with respect thereto
continue in full force and effect. Provided that Kredietbank N.V. agrees to
subordinate on the same terms and conditions, Lenders agree to execute and
deliver a subordination agreement or such other agreements or documents as shall
be necessary to cause the Loan to become subordinated in right of payment,
subject to Lenders' right of subrogation, to any Bank Debt.
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SECTION 9. MISCELLANEOUS.
9.1 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof. This
Agreement supersedes and replaces the Prior Loan Agreements in their entirety.
None of the parties has relied upon any agreement or representation except as
set forth in this Agreement.
9.2 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California as applied to
contracts entirely executed and performed within said state and without regard
to choice of law or conflicts of law principles. Each party hereto expressly
consents to the jurisdiction of the California courts and agrees that any action
relating to or arising or of this Agreement shall be instituted and prosecuted
only in the Municipal or Superior Court of California sitting in the County of
Orange. Each party waives any right to a change in venue and any and all
objections to the jurisdiction of the California courts.
9.3 NOTICES. All notices and other communications pursuant to
this Agreement shall be in writing and delivered as set forth below. Notice
given to one Lender shall not be deemed to constitute notice to the other.
Notices shall be delivered personally, either by messenger, air courier or by
telecopy. Notices shall be deemed to have been given, if delivered personally or
by telecopy, on the date of delivery; or if transmitted by air courier, two (2)
business days after the date of delivery to the courier. The addresses for
notices set forth below may be changed by giving written notice of such change
in the manner provided herein for giving notice.
If to Lenders to: Euroventures Benelux II B.V.
H. Henneaulaan 366
1930 Zaventem
Belgium
Attn: Mr. Roger Claes
Ms. Sabine Vermassen
Facsimile: 011-322-721-4435
With a Copy to:
Helen W. Melman, Esq.
815 Moraga Drive
Los Angeles, California 90049
Facsimile: (310) 472-4091
Trude C. Taylor
505 E. Colorado Boulevard
Suite 209
Pasadena, California 91011
Facsimile: (626) 577-8994
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If to Borrower to: Dense-Pac Microsystems, Inc.
7321 Lincoln Way
Garden Grove, California 92641
Attn: Mr. William M. Stowell
Facsimile: (714) 896-0748
With a Copy to:
Nicholas J. Yocca
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660-6441
Fax: (949) 725-4100
9.4 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provisions shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provisions were so excluded and shall be enforceable in
accordance with the remaining terms.
9.5 AMENDMENT. This Agreement and any provision hereof may not
be amended or terminated except by a statement in writing signed by the party
against whom enforcement of the amendment or termination is sought.
9.6 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall inure to the benefit of, and be binding upon, the successors and assigns
of the parties. No party shall be permitted to assign its rights or obligations
under this Agreement without the prior written consent of the other parties
hereto.
9.7 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, and all of which,
when taken together, shall constitute one and the same instrument.
9.8 ATTORNEYS' FEES. In the event of any dispute concerning the
terms or conditions of this Agreement, or in the event a Lender is required to
enforce said terms and conditions, the prevailing party in such dispute or
enforcement shall be entitled to recover all of its reasonable attorneys' fees
and costs incurred in connection with said dispute or enforcement, whether or
not litigation is commenced.
9.9 REMEDIES CUMULATIVE. No failure or delay on the part of
either Lender in exercising any right, power or privilege under this Agreement,
and no course of dealing between the Borrower and either Lender shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege under this Agreement preclude any other or further exercise thereof
or the exercise of any other right, power or privilege hereunder. The rights,
powers and remedies in
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the this Agreement expressly provided are cumulative and not exclusive of any
rights, powers or remedies which either Lender would otherwise have. No notice
to or demand on the Borrower in any case shall entitle the Borrower to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of Lender to any other or further action in any
circumstances without notice or demand, unless such demand or notice is
specifically required by this Agreement.
9.10 SURVIVAL. All representations and warranties made in this
Agreement shall survive the execution and delivery hereof until the Loan has
been paid in full.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the dates set forth below to be effective as of the date first set forth above.
DENSE-PAC MICROSYSTEMS, INC.,
A CALIFORNIA CORPORATION
BY:
-------------------------------------
WILLIAM M. STOWELL
VICE PRESIDENT, FINANCE
EUROVENTURES BENELUX II B.V.
BY:
-------------------------------------
----------------------------------------
TRUDE C. TAYLOR
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EXHIBIT 2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made and entered into as of April
8, 1999 by and among Dense-Pac Microsystems, Inc. a California corporation (the
"Company"), Euroventures Benelux I B.V., Euroventures Benelux II B.V. and Trude
C. Taylor (each an "Investor").
RECITALS:
A. The Investors are the owners of Common Stock of the Company or
have the right to acquire shares of Common Stock pursuant to the terms of that
certain Amended and Restated Loan Agreement of even date herewith (the "Loan
Agreement").
B. The parties to the Loan Agreement have required that certain
registration rights be granted to them with respect to the Common Stock of the
Company now owned or which may be acquired by them or their affiliates.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained herein, the parties agree as follows:
1. Definitions. As used herein:
(a) The terms "register", "registered" and "registration" refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "Securities Act"),
and the declaration or ordering of the effectiveness of such registration
statement.
(b) For the purposes hereof, the term "Registrable Securities"
means (i) in the case of Trude C. Taylor, shares of Common Stock issuable to him
pursuant to the Loan Agreement and in the case of Euroventures Benelux I B.V.,
and Euroventures Benelux II B.V., all shares of Common Stock of the Company now
owned or which may hereafter be acquired by either of them or their respective
affiliates (ii) stock issued with respect to or in any exchange for or in
replacement of stock included in subparagraph (i) above, and (iii) stock issued
in respect of the stock referred to in subparagraphs (i) and (ii) above as a
result of a stock split, stock dividend or the like, provided, however, that
Registrable Securities shall not include any shares of Common Stock which have
been previously resold to the public in a registered public offering or pursuant
to Rule 144, or which have been sold in a private transaction in which the
transferor's rights under this Agreement are not assigned pursuant to Section 13
hereof.
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(c) The terms "Holder" or "Holders" mean any person or persons
to whom Registrable Securities were originally issued and who execute this
Agreement or qualifying transferees under Section 13 hereof who hold Registrable
Securities.
(d) The term "Initiating Holders" means any Holder or Holders of
in the aggregate at least 20% of the Registrable Securities.
(e) The term "Majority Participating Holders" means Holders of a
majority of Registrable Securities proposed to be included in any particular
registration.
(f) The term "SEC" means the Securities and Exchange Commission.
2. Requested Registration.
(a) Request for Registration. In case the Company shall receive
from the Initiating Holders a written request that the Company effect a
registration with respect to all or a part of the Registrable Securities, the
Company will:
(i) within ten (10) days after its receipt thereof give
written notice of the proposed registration to all other Holders; and
(ii) as soon as practicable, use its best efforts to
effect such registration (including, without limitation, preparation of a
registration statement and prospectus complying as to form with the requirements
of the Securities Act, the execution of an undertaking to file post-effective
amendments, appropriate qualifications under the applicable blue sky or other
state securities laws and appropriate compliance with any other governmental
requirements or regulations) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holders'
Registrable Securities as is specified in such request, together with all or
such portion of the Registrable Securities of any Holder or Holders joining in
such request as are specified in a written request given within 20 days after
receipt of such written notice from the Company; provided that the Company shall
not be obligated to take any action to effect a registration pursuant to this
Section 2:
(A) In any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration; or
(B) After the Company has effected two such
registrations pursuant to this subsection 2(a) and such registration has been
declared or ordered effective for the period set forth in Section 6(a); or
(C) If the Registrable Securities to be
registered have an anticipated offering price to the public of less than
$1,000,000; or
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(D) During the period starting with the date
sixty (60) days prior to the Company's good faith estimate of the date of filing
of, and ending on a date one hundred eighty (180) days after the effective date
of, a Company-initiated registration; provided that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to be filed and to become effective.
Subject to the foregoing clauses (A) through (D), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practical, but in any event within ninety (90) days after
receipt of the request or requests of the Initiating Holders; provided, however,
that if the Company shall furnish to such Holders a certificate signed by the
President or Chief Executive Officer of the Company stating that in the good
faith judgment of the Board of Directors it would materially interfere with the
Company and its business for such registration statement to be filed at the date
filing would be required and it is therefore essential to defer the filing of
such registration statement, the Company shall be entitled to delay the filing
of such registration statement not more than once for an additional period of up
to one hundred and fifty (150) days.
(b) Underwriting. If the Majority Participating Holders intend
to distrib ute the Registrable Securities covered by their request by means of
an underwriting, they shall so advise the Company as a part of their request
made pursuant to Section 2(a) and the Company shall include such information in
the written notice referred to in subsection 2(a)(i). The right of any Holder to
registration pursuant to Section 2 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. The Company shall (together with all Holders proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by a majority in interest of the Holders
participating in such registration, provided, however, that the managing
underwriter shall be approved by the Company, which approval shall not be
unreasonably withheld. Notwithstanding any other provision of this Section 2, if
the underwriter advises the Majority Participating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, the Majority Participating Holders shall so advise all Holders of
Registrable Securities who have elected to participate in such offering, and the
number of shares of Registrable Securi ties that may be included in the
registration and underwriting shall be allocated among all such Holders thereof
in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by such Holders. If any Holder of Registrable
Securities disapproves of the terms of the underwriting, he may elect to
withdraw therefrom by written notice to the Company, the underwriter and the
Majority Participating Holders. Any Registrable Securities which are excluded
from the underwriting by reason of the underwriter's marketing limitation or
withdrawn from such underwriting shall be withdrawn from such registration. If
the underwriter has not limited the number of Registrable Securities to be
underwritten, the Company may include securities for its own account (or for the
account of employees and other holders, at the Company's sole discretion) in
such registration if the underwriter so agrees and if the number of Registrable
Securities which
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<PAGE> 4
would otherwise have been included in such registration and underwriting will
not thereby be limited by the underwriter.
3. Company Registration.
(a) Right to Include. If at any time or from time to time, the
Company proposes to register any of its securities for its own account or the
account of any of its shareholders other than the Holders (other than a
registration relating solely to employee stock option or purchase plans, or a
registration relating solely to a transaction pursuant to Rule 145 promulgated
under the Securities Act, or a registration on any other form (other than Form
S-1, S-2, S-3, SB-2 or any successor to such form) which does not permit
secondary sales), the Company will:
(i) promptly give to each Holder written notice thereof;
and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance with applicable laws), and
in any underwriting involved therein, all the Registrable Securities specified
in a written request or requests, made within 20 days after receipt of such
written notice from the Company, by any Holder or Holders to be included in any
such registration, except as set forth in Section 3(b) below.
(b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to subsection 3(a)(i). In such event the right of any Holder to
registration pursuant to Section 3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and the other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by the
Company. Notwithstanding any other provision of this Section 3, if the
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the underwriter may limit the number of
Registrable Securities to be included in the registration and underwriting to
not less than 10% of the shares to be included in any registration that is
solely for the account of the Company. In the event of a cutback by the
underwriters of the number of Registrable Securities to be included in the
registration and underwriting, the Company shall advise all Holders of
Registrable Securities which would otherwise be registered and underwritten
pursuant hereto, and the number of shares of Regis trable Securities that may be
included in the registration and underwriting shall be allocated among all of
such Holders in proportion, as nearly as practicable, to the respective amounts
of Registrable Securities held by such Holders. If any Holder disapproves of the
terms of any such underwriting, he may elect to withdraw therefrom by written
notice to the Company and the underwriter. Any Registrable Securities excluded
or withdrawn from such underwriting shall be withdrawn from such registration.
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<PAGE> 5
4. Form S-3. The Company shall use its best efforts to qualify for use
of Form S-3 or any comparable or successor form. Whenever the Company is
qualified to use Form S-3, Holders of the outstanding Registrable Securities
shall have the right to request unlimited registrations on Form S-3 (such
requests shall be in writing and shall state the number of shares of Registrable
Securities to be disposed of and the intended method of disposition of the
Registrable Securities by such Holders), subject only to the following:
(a) The Company shall not be required to effect a registration
pursuant to this Section 4 during the period beginning 60 days prior to the
Company's good faith estimate of the date of filing of, and ending 180 days
after the effective date of, any registration referred to in Sections 2 or 3
above, provided that the Company is using its best efforts to cause such
registration statement to be filed and to become effective.
(b) The Company shall not be required to effect a registration
pursuant to this Section 4 unless the Holder or Holders requesting registration
propose to dispose of shares of Registrable Securities having an aggregate
disposition price (before deduction of underwriting discounts and expenses of
sale) of at least $500,000.
(c) The Company shall not be required to effect more than one
registra tion pursuant to this Section 4 in any consecutive 12 month period.
The Company shall promptly give written notice to all Holders of
Registrable Securities of the receipt of a request for registration pursuant to
this Section 4 and shall provide a reasonable opportunity for other Holders to
participate in the registration, provided that if the registration is for an
underwritten offering, the terms of Section 2(b) shall apply to all participants
in such offering. Subject to the foregoing, the Company will use its best
efforts to effect as promptly as practicable the registration of all Registrable
Securities on Form S-3 to the extent requested by the Holder or Holders thereof
for purposes of disposition; provided, however, that if the Company shall
furnish to such Holders a certificate signed by the President or Chief Executive
Officer of the Company stating that in the good faith judgement of the Board of
Directors it would materially interfere with the Company and its business for
such registration statement to be filed at the date filing would be required and
it is therefore essential to defer the filing of such registration statement,
the Company shall be entitled to delay the filing of such registration statement
for such a period that the Board determines in good faith to be necessary, which
in no event shall exceed one hundred and twenty (120) days. Any registration
pursuant to this Section 4 shall not be counted as a registration pursuant to
Section 2.
5. Expenses of Registration. All expenses incurred in connection
with any registration, qualification or compliance pursuant to Sections 2, 3 and
4, including without limitation, all registration, filing and qualification
fees, printing expenses, exchange or NASDAQ listing fees, fees and disbursements
of counsel for the Company and fees and expenses of any special audits
incidental to or required by such registration, shall be borne by the Company
except as follows:
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<PAGE> 6
(a) The Company shall not be required to pay for expenses of any
registration initiated pursuant to Section 2 or 4, the request for which has
been subsequently withdrawn by the Majority Participating Holders (other than as
a result of the Company's deferral), in which such case, such expenses shall be
borne by the Holders requesting such withdrawal; provided, however, that if the
Holders have learned of a material adverse change in the business, condition or
prospects of the Company from that known to the Holders at the time of their
request and have withdrawn the request with reasonable promptness following
disclosure by the Company of such change, then the Holders shall not be required
to pay any such expenses and shall retain their rights to such registration
pursuant to Section 2.
(b) The Company shall not be required to pay fees of legal
counsel of a Holder except for a single counsel acting on behalf of all selling
Holders.
(c) The Company shall not be required to pay underwriters' fees,
discounts or commissions relating to the Registrable Securities.
6. Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep each Holder participating therein advised in writing as to
the initiation of each registration, qualification and compliance and as to the
completion thereof. At its expense the Company will:
(a) Keep such registration, qualification or compliance pursuant
to Sections 2, 3 or 4 effective for a period of 180 days or until the Holder or
Holders have completed the distribution described in the registration statement
relating thereto, whichever first occurs;
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by them;
(d) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act or the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
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<PAGE> 7
(e) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such United States jurisdictions as shall be reasonably requested by the
Holders; 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 states or jurisdictions, unless the Company is
already subject to service in such jurisdiction;
(f) Cause all such registered Registrable Securities to be
listed on each securities exchange or reporting system on which similar
securities issued by the Company are then listed; and
(g) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Agreement, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with such registration, if such securities are being sold through
underwriters on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities, and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters
and to the Holders requesting registration of Registrable Securities.
7. Indemnification.
(a) The Company will indemnify and hold harmless each Holder of
Registrable Securities, each of its officers, directors and partners, and each
person controlling such Holder, with respect to which such registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls any underwriter of the
Registrable Securities held by or issuable to such Holder, against all claims,
losses, expenses, damages and liabilities (or actions in respect thereto)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any preliminary or final prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation or alleged violation by the Company
relating to action or inaction required of the Company in connection with the
Securities Act, any rule or regulation promulgated under the Securities Act or
any state securities law applicable to the Company and will reimburse (on an as
incurred basis) each such Holder, each of its officers, directors and partners,
and each person controlling such Holder, each such underwriter and each person
who controls any such underwriter, for any reasonable legal and any other
expenses incurred in connection with investigating, defending or settling any
such claim, loss, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage or liability arises out of or is based
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<PAGE> 8
on any untrue statement or omission based upon written information furnished to
the Company in an instrument duly executed by such Holder or underwriter
specifically for use therein, and provided further that the agreement of the
Company to indemnify any person contained herein with respect to any preliminary
prospectus shall not inure to the benefit of any such person if at or prior to
the written confirmation of the sale of such stock, a copy of the prospectus (or
the prospectus as amended or supplemented) was not sent or delivered to such
person, excluding the documents incorporated therein by reference, and the
untrue statement or omission of a material fact contained in such preliminary
prospectus was corrected in the prospectus (or the prospectus as amended or
supplemented).
(b) Each Holder will, if Registrable Securities held by or
issuable to such Holder are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify and hold
harmless the Company, each of its directors and officers, each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company within the meaning of the Securities Act, and
each other such Holder, each of its officers, directors and partners and each
person controlling such Holder, against all claims, losses, expenses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any preliminary or final prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse (on an as incurred basis) the Company, such Holders, such
directors, officers, partners, persons or underwriters for any reasonable legal
or any other expenses incurred in connection with investigating, defending or
settling any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company in an instrument
duly executed by such Holder specifically for use therein, and provided further
that the agreement of the Holder to indemnify any person contained herein with
respect to any preliminary prospectus shall not inure to the benefit of any
person if at or prior to the written confirmation of the sale of such stock, a
copy of the prospectus (or the prospectus as amended or supplemented) was not
sent or delivered to such person, excluding the documents incorporated therein
by reference, and the untrue statement or omission of a material fact contained
in such preliminary prospectus was corrected in the prospectus (or the
prospectus as amended or supplemented). Notwithstanding the foregoing, in no
event shall the indemnification provided by any Holder hereunder exceed the
gross proceeds received by such Holder for the sale of such Holder's securities
pursuant to such registration.
(c) Each party entitled to indemnification under this Section 7
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought. The
Indemnified Party shall promptly permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense
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<PAGE> 9
of such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not be unreasonably be withheld). The Indemnified Party may
participate in such defense and hire counsel at such party's own expense (or at
the Indemnifying Party's expense, in the event that a conflict of interest
exists between Indemnifying Party's counsel and the Indemnified Party's
counsel). The failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations hereunder, unless,
and only to the extent that, such failure is materially prejudicial to an
Indemnifying Party's ability to defend such action. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the consent of
the Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Any Indemnified Party shall
reasonably cooperate with the Indemnifying Party in the defense of any claim or
litigation brought against such Indemnified Party.
If the indemnification provided for in this Section 7 is for any reason
not available to an Indemnified Party with respect to any loss, liability,
claim, damage, or expense referred to therein, then the Indemnifying Party, in
lieu of indemnifying such Indemnified Party hereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
liability, claim, damage, or expense in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on the one hand and of the
Indemnified Party on the other in connection with the statements or omissions
that resulted in such loss, liability, claim, damage, or expense as will as any
other relevant equitable considerations. The relative fault of the Indemnifying
Party and of the Indemnified Party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Indemnifying Party or by the Indemnified Party and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.
8. Lock-Up Provision. Upon receipt of a written request by the
Company or by its underwriters, the Holders shall not sell, sell short, grant an
option to buy, or otherwise dispose of shares of the Company's Common Stock or
other securities (except for any such shares included in the registration) for a
period of one hundred and eighty (180) days following the effective date of a
registration of the Company's securities for its own account (other than any
transfer of shares as a bona fide gift or gifts, or by will or intestacy or, if
the Holder is a partnership or corporation, any distribution by such partnership
or corporation to its partners or shareholders subject to such partners or
shareholders agreeing to be bound by this Section 8); provided, however, that
such Holder shall have no obligation to enter into the agreement described in
this Section 8 unless all executive officers and directors of the Company and
all other Holders and holders of other registration rights from the Company
enter into similar agreements. The Company may impose stop-transfer instructions
with respect to the shares (or securities) subject to the foregoing restriction
until the end of said 180-day period.
9. Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall promptly furnish to the Company
such information regarding
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<PAGE> 10
such Holder or Holders and the distribution proposed by such Holder or Holders
as the Company may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to herein.
10. Rule 144 Reporting.
(a) With a view to making available to Holders of Registrable
Securities the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its best efforts to:
(i) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act;
(ii) File with the SEC in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); and
(iii) So long as a Holder owns any Registrable
Securities, to furnish to such Holder forthwith upon such Holder's request a
written statement by the Company as to its compliance with the reporting
requirements of said Rule 144 and with the Securities Act and the Exchange Act,
a copy of the most recent annual or quarterly report of the Company, and such
other reports and documents so filed by the Company as such Holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing such Holder to sell any such securities without registration.
11. Limitations on Subsequent Registration Rights. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of the Holders of 66 2/3% of the Registrable Securities, enter into any
agreement with any holder or prospective holder of any securities of the Company
which would allow such holder or prospective holder (a) to include such
securities in any registration filed pursuant to this Agreement unless under the
terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of its
securities will not reduce the amount of the Registrable Securities of the
Holders which may be included in such registration or (b) to make a demand
registration which would result in the registration of such parties' securities
to the exclusion of any securities requested to be included in such registration
under Section 3 hereof.
12. Termination. The rights of a Holder pursuant to Sections 2 and 3
of this Agreement shall terminate on the date on which a Holder can sell all of
its Registrable Securities without registration pursuant to Rule 144 within a
three (3) month period, unless at the time the Holder's Registrable Securities
represent more than five percent (5%) of the outstanding capital stock of the
Company, and the rights of a Holder pursuant to Section 4 hereof shall terminate
five years after the date hereof.
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<PAGE> 11
13. Assignment of Rights.
The rights granted pursuant to this Agreement may be assigned by
an Investor or its transferee upon sale or transfer (other than a sale to the
public) of at least a number of shares of Registrable Securities held by an
Investor or transferee equal to at least 5% of the outstanding shares of the
Company's Common Stock, provided that such rights may not be assigned to a
transferee which the Company reasonably believes is a competitor or intends to
become a competitor of the Company and provided further that the Company is
given prompt notice of such transfer and any such transferee shall agree to
become subject to the obliga tions of the Investor under this Agreement.
14. Miscellaneous.
(a) Amendment or Waiver. Any term of this Agreement may be
amended and the observance of any such term may be waived (either generally or
in a particular instance and either retroactively or prospectively) with the
written consent of the Company and Holders holding at least 66 2/3% of the
Registrable Securities. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon the parties hereto and their successors and
assigns, provided that no amendment, waiver or modification may discriminate
against a Holder without such Holder's consent.
(b) Governing Law. This Agreement shall be governed in all
respects by the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California.
(c) Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with respect to the
subject hereof and it supersedes, merges, and renders void any and all prior
understandings and/or agreements, written or oral, with respect to such subject
matter.
(d) Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be personally delivered,
mailed by certified or registered mail, postage prepaid, or delivered by
overnight delivery or express courier, addressed to the Holders at their
addresses shown on the records of the Company or, to the Company, at its
principal executive office, or at such other address as the Company or any
Holder shall hereafter furnish in writing. All notices that are mailed shall be
deemed delivered seven (7) days after deposit in the United States mail,
immediately upon personal delivery or delivery by facsimile, and two (2) days
after deposit with overnight delivery or express courier.
(e) Severability. In case any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
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<PAGE> 12
(f) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
(g) Attorney's Fees. If any legal action is necessary to enforce
or interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorney's fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
DENSE-PAC MICROSYSTEMS, INC.
By:
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Title:
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EUROVENTURES BENELUX I B.V.
By:
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Title:
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EUROVENTURES BENELUX II B.V.
By:
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Title:
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----------------------------------------
TRUDE C. TAYLOR
12
