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EXHIBIT 10.8
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT, dated as of September 7, 1998 among
Special Devices, Incorporated, a Delaware corporation (the "Company"), Paribas
Principal Inc., a New York corporation (the "Purchaser"), J.F. Lehman Equity
Investors I, L.P. (the "Fund") and JFL Co-Invest Partners I, L.P. ("Co-
Invest").
WHEREAS, the Purchaser wishes to subscribe for and purchase,
and the Company desires to issue and sell to the Purchaser, certain shares of
common stock, par value $.01, of the Company (the "Common Stock") on the terms
and subject to the conditions set forth herein;
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as
of June 19, 1998 and amended and restated as of August 18, 1998, between SDI
Acquisition Corp. ("Acquisition") and the Company (the "Merger Agreement") (a
copy of which is attached hereto as Exhibit A), Acquisition shall be merged with
and into the Company, and the Company shall continue as the surviving
corporation of the Merger (as such term is defined in the Merger Agreement);
WHEREAS, pursuant to an Agreement of Limited Partnership,
dated September 4, 1998, among JFL Investors, L.L.C., and those persons listed
therein (the "Partnership Agreement") (a copy of which is attached hereto as
Exhibit B) , the parties thereto have formed Co-Invest for the purpose of
acquiring securities of the Company;
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WHEREAS, the Company, the Purchaser, the Fund and Co-Invest
wish to provide for certain arrangements with respect to the Purchaser's right
to hold and dispose of the shares of Common Stock acquired by the Purchaser
hereunder.
Accordingly, the Purchaser and the Company hereby agree as
follows:
1. Purchase and Sale of Shares. Subject to the terms set forth
in this Agreement, and in reliance upon the representations, warranties and
agreements of the Purchaser and the Company, contained herein, the Company
hereby issues and sells to the Purchaser, and the Purchaser hereby subscribes
for, 297,297 shares of Common Stock of the Company (the "Shares"). Payment will
be made (upon the issuance of an appropriate certificate or certificates
representing the Shares to and in the name of the Purchaser) in cash or by wire
transfer of immediately available funds, at the price of $37.00 per share, for
the aggregate purchase price of $10,999,989 (the "Purchase Price").
2. Closing of the Purchase and Sale; Payment for Shares. The
closing of the transactions contemplated hereby shall take place at the offices
of Paul, Weiss, Rifkind, Wharton & Garrison immediately after the Effective Time
(as such term is defined in the Merger Agreement) (the "Closing"). At the
Closing, the Company shall deliver to the Purchaser a duly executed certificate
or certificates representing the Shares to and in the name of the Purchaser, and
the Purchaser shall pay the Purchase Price to the Company in cash or by wire
transfer of immediately available funds.
3. Representations and Warranties of the Company. The Company
represents and warrants to the Purchaser that:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
the
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requisite corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder.
(b) The execution, delivery and performance of this Agreement,
and the execution, issuance, sale and delivery of the Shares have been duly
authorized by all necessary corporate action on the part of the Company. The
Shares, when issued, shall be validly issued, and, upon payment to the Company
by the Purchaser of the full Purchase Price, shall be fully paid and
nonassessable and the Purchaser shall have record and beneficial ownership of
the Shares, free and clear of any liens.
(c) As of the Closing, the authorized capital stock of the
Company will consist of 20,000,000 shares of Common Stock, par value $.01 per
share, and 2,000,000 shares of preferred stock, of which 2,930,260 shares of
Common Stock are issued and outstanding (excluding 101,575 unexercised options),
and no shares of preferred stock are outstanding . All such shares of Common
Stock will be validly issued and duly authorized. As of the Closing, there will
not be any other equity securities of the Company issued and outstanding. Except
for this Agreement, the Partnership Agreement and the Merger Agreement, the
Company has no obligations to issue any of its Shares.
(d) The execution, delivery and performance by the Company of
this Agreement and the transactions contemplated hereby, including, without
limitation, the sale, issuance and delivery of the Shares (i) do not violate or
contravene the terms of the Company's certificate of incorporation, by-laws, or
any amendment of either thereof, or any organizational or governing documents of
the Company; (ii) assuming the accuracy of the Purchaser's representations and
warranties set forth in
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Article 4 hereto, do not require the approval or consent of, or filing or
registration with, any federal, state or local government authority or any other
person; (iii) do not violate, conflict with or result in any breach or
contravention of, or the creation of any Lien under any material agreement of
the Company; and (iv) do not violate or conflict with any statute, rule
regulation, licensing requirement, judgment, order, writ, decree or injunction
applicable to the Company.
(e) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity relating to enforceability.
(f) This Agreement does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made herein, in light of the circumstances in which they were made, not
misleading.
(g) All information set forth in the SBA Forms (as defined in
Section 5(b)) regarding the Company and its affiliates is accurate and complete.
Copies of such forms have been, on or prior to the date hereof, completed and
executed by the Company and delivered to the Purchaser.
(h) The Company and its subsidiaries do not engage in any
activity which would render the Company ineligible to receive financing
assistance from a Small Business Investment Company as provided in 13 CFR
107.720.
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(i) The Company is aware that the Purchaser is a
Federal licensee under the Small Business Investment Act ("SBIA").
4. Representations and Warranties of the Purchaser. The
Purchaser represents and warrants to the Company that:
(a) it is acquiring the Shares for its own sole benefit and
account for investment and not with a view to distributing or reselling the
Shares in any transaction that would be in violation of any federal or state
securities laws;
(b) it (i) is familiar with the terms of the Merger
Agreement and the business of the Company, (ii) has had an opportunity to
discuss with representatives of the Company the condition of and prospects for
the continued operation of the Company and such other matters as it deemed
appropriate in considering whether to invest in the Shares and (iii) has been
provided access to all available information about the Company and the
transactions contemplated by the Merger Agreement requested by it;
(c) it understands that the Shares have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or
registered or qualified under the securities laws of any state, and that it may
not sell or otherwise transfer the Shares unless the Shares are subsequently
registered under the Securities Act and registered or qualified under applicable
state securities laws, or unless an exemption is available that permits the sale
or transfer without such registration or qualification;
(d) it has made its own investigation whether or not to
invest in the Shares and that it has sufficient business and financial
experience so as to enable it to evaluate the merits and risks associated with
the purchase of the Shares;
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(e) it is able to bear the economic risk of a total loss of
its investment in the Company and it has adequate means of providing for its
current needs and foreseeable contingencies and has no need for its investment
in the Shares to be liquid; and
(f) it understands that the purchase of the Shares involves
various risks, including, among others, that it is unlikely that any market will
exist for any resale of the Shares and that the Shares will be subject to the
terms and conditions of loan or credit agreements and related security documents
entered into by the Company (as such term in defined in the Merger Agreement).
5. Conditions to the Closing.
(a) The obligations of the Company to issue the Shares on
the Closing and the Purchaser to pay the amounts under Section 1 shall be
conditioned upon the consummation of the Merger upon the terms and conditions
set forth in the Merger Agreement, as the same may be amended or waived by the
parties thereto. Neither the Company nor Acquisition shall waive any material
condition set forth in Article 5 of the Merger Agreement without the written
consent of the Purchaser.
(b) At the Closing, the Purchaser shall have received from
the Company fully executed Small Business Administration Forms 480 and 652 and
Small Business Administration Form 1031 with Parts A and B thereof fully
executed (the "SBA Forms").
6. Affiliate Transactions. The Purchaser shall have the right to
enforce all of the affiliate transaction restrictions set forth in Section
2.2(b) of the Partnership Agreement.
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7. Limitations on Transfer.
(a) General Restrictions on Transfer. The Purchaser agrees
that it shall not, either directly or indirectly, offer, sell, transfer, assign,
mortgage, hypothecate, pledge, create a security interest in or Lien upon,
encumber, donate, contribute, place in trust, or otherwise voluntarily or
involuntarily dispose of (any of the foregoing actions, to "Transfer" and, any
offer, sale, transfer, assignment, mortgage, hypothecation, pledge, security
interest or Lien, encumbrance, donation, contribution, placing in trust or other
disposition, a "Transfer") any Shares, or any interest therein, except in a
transaction that is specifically permitted by this Agreement.
(b) Void Transfers. Any attempt to Transfer any Shares, or
any interest therein, which is not in compliance with this Agreement shall be
null and void ab initio, and the Company shall not give any effect in the
Company's stock records to such attempted Transfer.
(c) Permitted Transfers. Notwithstanding Sections 7(a) and
7(b), Transfers (including, without limitation, pledges of Shares as collateral
for loans) may be made pursuant to this Agreement if:
(i) such Transfer complies in all respects with Section
7(c) of this Agreement and any shareholders' agreement executed by the
parties hereto and applicable federal and state securities laws;
(ii) the transferee agrees in writing with the Company
to be bound by the terms and conditions of this Agreement and any
shareholder's agreement executed by the parties hereto with respect to
the Shares transferred to such transferee to the same extent as the
Purchaser; and
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(iii) if requested by the Company, in its sole
discretion, an opinion of counsel to the Purchaser shall be supplied to
the Company, at the Purchaser's expense, to the effect that such
Transfer complies with applicable United States federal and state
securities laws.
8. Tag-Along Rights.
(a) In the event that the Fund and/or Co-Invest (each a
"Selling Stockholder") shall desire to sell shares of Common Stock (the "Offered
Shares") to any person other than the Fund or Co-Invest or any wholly-owned
subsidiary of the Fund or Co-Invest (a "Third Party Purchaser"), such Selling
Stockholder shall send a written offer (a "Tag-Along Offer") (which shall state
(i) the number of Offered Shares, (ii) the proposed purchase price per share
(the "Offer Price") and all other material conditions of such sale and (iii) if
applicable, be accompanied by any written offer from the Third Party Purchaser)
to the Purchaser to enable the Purchaser to participate on a pro rata basis in
such sale by including a portion of the Purchaser's shares of Common Stock (the
exact number of which shall be determined based on multiplying the number of
Offered Shares by a fraction, (i) the numerator of which is the total number of
shares of Common Stock then owned directly by the Purchaser and (ii) the
denominator of which is the sum of the total number of shares of Common Stock
then owned by the Fund, Co-Invest and directly by the Purchaser), at the Offer
Price and otherwise upon the same terms and conditions of such sale. Upon
delivery of the Tag-Along Offer pursuant to this Section 8, the offer made
therein to the Purchaser shall be irrevocable unless the Third Party Purchaser
withdraws its offer, or unless and until the rights provided for therein shall
have been waived or shall have expired in accordance with this Agreement. The
failure of the
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Purchaser to respond within 15 days after receiving the Tag-Along Offer shall be
regarded as a rejection of the offer to participate in such sale as contemplated
by the Tag-Along Offer and shall be deemed to be a waiver of its rights under
this Section 8. To the extent that the Purchaser exercises its right to sell
shares of Common Stock pursuant to this Section 8, the number of shares of
Common Stock proposed to be sold to the Third Party Purchaser by the Fund and/or
Co-Invest shall be reduced proportionately.
(b) Upon acceptance of a Tag-Along, the Purchaser shall be
obligated:
(i) to sell the pro rata portion of its shares of
Common Stock in the transaction contemplated by the Tag-Along Offer on the same
terms and conditions as the Selling Stockholders;
(ii) to provide for the payment by the Purchaser of
its pro rata portion of all costs associated with such transaction, in the
proportion that the number of shares of Common Stock owned directly by the
Purchaser bears to the number of outstanding shares of Common Stock; and
(iii) to agree to participate on a pro rata basis in
any indemnification provided to the Third Party Purchaser on the same terms and
conditions as the Selling Stockholders up to the Purchaser's cash proceeds from
such sale; provided that the Purchaser shall only provide representations and
warranties to the Third Party Purchaser relating to the Purchaser's ownership of
the Shares to be sold in such transaction.
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(c) None of the parties to this Agreement nor any of the
affiliates hereto shall receive any benefit or remuneration from any Third Party
Purchaser beyond customary investment banking fees.
9. Bring-Along Rights.
(a) In the event that one or more Selling Stockholders
holding at least 50% of the outstanding shares of Common Stock receives a bona
fide offer from a Third Party Purchaser (excluding offers from affiliates of any
of the holders of Common Stock (each a "Stockholder") to purchase (including a
purchase by merger) at least a majority of the outstanding shares of Common
Stock, the Selling Stockholders may send written notice (a "Buyout Notice") to
the Purchaser notifying the Purchaser that it will be required to sell the same
percentage of its shares of Common Stock in such sale as the Selling
Stockholders propose to sell (which percentage shall be specified in such Buyout
Notice) (the "Designated Percentage").
(b) Upon receipt of a Buyout Notice, the Purchaser shall
be obligated:
(i) to sell the Designated Percentage of its
shares of Common Stock in the transaction (including a sale or merger)
contemplated by the Buyout Notice on the same terms and conditions as
the Selling Stockholders;
(ii) to provide for the payment by the
Purchaser of its pro rata portion of all costs associated with such
transaction, in the proportion that the number of shares of Common
Stock owned by the Purchaser bears to the number of outstanding shares
of Common Stock;
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(iii) to agree to participate on a pro rata
basis in any indemnification provided to the Third Party Purchaser on
the same terms and conditions as the Selling Stockholders up to the
Purchaser's cash proceeds from such sale; provided that the Purchaser
shall only provide representations and warranties to the Third Party
Purchaser relating to the Purchaser's ownership of the Shares to be
sold in such transaction; and
(iv) otherwise to take all necessary action
to cause the consummation of such transaction, including voting its
shares of Common Stock in favor of such transaction and not exercising
any appraisal rights in connection therewith.
(c) The Purchaser further agrees to take all actions
(including executing documents) in connection with the consummation of the
proposed transaction as may reasonably be requested of it by the Selling
Stockholders.
(d) In the event a contract with respect to the
transaction contemplated by the Buyout Notice has not been entered into within
the 90 days after the date of delivery of the Buyout Notice, the obligations of
the Purchaser under this Section 9 with respect to such Buyout Notice shall
terminate, subject, however, to the right of the Selling Stockholders to deliver
a further Buyout Notice.
(e) None of the parties to this Agreement nor any of
the affiliates of the parties hereto shall receive any benefit or remuneration
from any Third Party Purchaser beyond customary investment banking fees.
10. Right to Purchase. The Company shall give the Purchaser 30
days' prior written notice of the proposed issuance by the Company of any
capital stock or any
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security convertible for or exchangeable into capital stock (each a "New
Issuance") (other than capital stock to be issued in connection with an employee
stock option plan that is approved by the Company's Board of Directors, an
issuance of capital stock as a stock split or stock dividend, an issuance of
capital stock pursuant to the exercise of any option, warrant or convertible
security outstanding on the date of this Agreement, an issuance of capital stock
pursuant to the exercise of any option, warrant or convertible security issued
after the date hereof whose original issuance entitled the Purchaser to purchase
the Purchaser Percentage of such securities pursuant to this Section 10, or the
issuance of capital stock upon the conversion of any share of convertible
capital stock outstanding on the date hereof or upon conversion of any share of
convertible capital stock subsequently issued in respect of shares of
convertible capital stock outstanding on the date hereof). Such notice shall
specify the number and class of securities to be issued, the rights, terms and
privileges thereof and the price at which such securities will be issued. By
written notice to the Company given within fifteen (15) business days of being
notified of such New Issuance, the Purchaser shall be entitled to purchase the
Purchaser's Percentage (as defined below) of the New Issuance. The Purchaser
Percentage shall mean the percentage of the outstanding Common Stock of the
Company prior to the New Issuance represented by a fraction, (A) the numerator
of which is equal to the sum of (a) the total number of shares of Common Stock
owned directly by the Purchaser and (b) the product of (i) the total number of
shares owned by Co-Invest multiplied by (ii) a fraction, the numerator of which
is the Original Available Capital (as such term is defined in the Partnership
Agreement) of the Purchaser in Co-Invest and the denominator of which is the
Original Available Capital of all parties in Co-Invest taken together;
provided, that if
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Co-Invest purchases a portion of the New Issuance, the numerator set forth in
(A) shall be reduced by the product of (x) the total number of shares acquired
in such New Issuance by Co-Invest multiplied by (y) a fraction, the numerator of
which is the Original Available Capital (as such term is defined in the
Partnership Agreement) of the Purchaser in Co-Invest and the denominator of
which is the Original Available Capital of all parties in Co-Invest taken
together and (B) the denominator of which is the total number of shares of
Common Stock then outstanding; provided, however, that the Purchaser shall not
have any right to purchase securities pursuant to this Section 10 if, prior to a
sale of securities to the Purchaser pursuant to this Section 10, such securities
would be required to be registered under the Securities Act.
11. Registration Rights. The Purchaser and its Affiliates (as
such term is defined in the Partnership Agreement) shall be granted demand
registration rights for an aggregate of two such registrations of any Common
Stock directly owned by the Purchaser or its Affiliates. The Purchaser, its
Affiliates and certain other Stockholders shall also be granted piggy-back
rights on other registrations by the Company, subject to customary exceptions.
The foregoing shall be provided to the Purchaser and its Affiliates pursuant to
a Registration Rights Agreement in form and substance reasonably acceptable to
the Purchaser, the Fund and Co-Invest. This Section 11 shall not limit
registration rights granted to other Stockholders pursuant to any registration
rights agreement as may be executed after the Effective Time.
12. Governance. The Purchaser shall be entitled to designate
one of the members of the Company's Board of Directors (the "Purchaser
Director"); provided that if the Purchaser directly owns less than 25% of the
Shares, as adjusted for any stock-
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splits, stock dividends or other similar changes in the capital structure of the
Company, the Purchaser Director shall resign from the Company's Board of
Directors and the Purchaser shall no longer have the right to designate a
director. Each year, the Purchaser Director shall have the right to bring to one
meeting of the Company's Board of Directors one observer designated by the
Purchaser. The Company shall pay all reasonable costs incurred by the Purchaser
Director in attending meetings of the Company's Board of Directors upon
presentation to the Company of expense statements or vouchers or such other
supporting information as the Company shall require from its directors.
13. Information Rights; Access. Until such time as the Company
shall have become subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended, the Company shall provide the Purchaser with
(a) such information, statements and reports required under any credit agreement
to which the Company is a party, (b) such information, statements and reports
required under the credit agreement (the "Credit Agreement") by and among the
Company, each of the financial institutions from time to time a party thereto
and Bankers Trust Company, as agent, whether or not the Credit Agreement remains
in effect or any amounts are outstanding thereunder, and (c) such other
information as the Purchaser may reasonably request.
As long as the Purchaser has the right to appoint the
Purchaser Director, the Company and its subsidiaries shall afford the Purchaser
and the Purchaser's accountants, counsel and other representatives full and
reasonable access during normal business hours to its properties, books,
contracts, commitments, records and personnel.
14. Regulatory Problem. Notwithstanding any other provision of
this Agreement to the contrary, in the event that the Purchaser or any of its
affiliates shall
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determine that, if the Purchaser or such affiliate shall continue to hold some
or all of the shares of Common Stock or any other securities of the Company held
by it, there is a material risk that such ownership will result in a Regulatory
Problem or the cost of continuing to hold such securities has, in the reasonable
judgment of the Purchaser or such affiliate, significantly increased, the
Purchaser or such affiliate, may sell, exchange, convert to an investment in
Co-Invest or otherwise dispose of such securities, in a prompt and orderly
manner. In connection with the foregoing sentence, if requested by the
Purchaser, (a) the Company shall cooperate with the Purchaser or such affiliate
in (i) disposing of such securities to a third party or (ii) exchanging all or
any portion of such voting securities on a share-for-share basis for shares of a
non-voting security of the Company (such non-voting security to be identical in
all respects to such voting securities or other securities, except that they
shall be non-voting and shall be convertible or exercisable into voting
securities on such conditions as are requested by the Purchaser in light of the
regulatory considerations prevailing) and (b) Co-Invest shall cooperate with the
Purchaser or such affiliate in order to permit the Purchaser to convert the
Shares or any portion thereof into a Capital Contribution in Co-Invest with
appropriate modifications to the Partnership Agreement, including but not
limited to a modification of the allocation of income/loss provisions of the
Partnership Agreement to give effect to the fact that the Purchaser's direct
investment in the Company has been reduced, provided that such conversion and
modifications are in compliance with federal and state law. Without limiting the
foregoing, at the request of the Purchaser or such affiliate, the Company shall
provide (and authorize the Purchaser or such affiliate, to provide) financial
and other information concerning the Company to any prospective purchaser of
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such securities owned by the Purchaser or such affiliate, and shall amend this
Agreement, the articles or organization of the Company, the operating agreement
of the Company, and any related agreements and instruments and shall take such
additional actions in order to effectuate and reflect the foregoing. The Company
shall not be required to provide any such information unless the recipient
thereof signs a confidentiality agreement reasonably satisfactory to the
Company.
For purposes of this Section 14 "Regulatory Problem" shall
mean, with respect to the Purchaser or any of its affiliates any set of facts,
events or circumstances the existence of which would cause Purchaser or any of
its affiliates to believe that there is a substantial risk of assertion by a
governmental entity (which belief shall be reasonable in light of the prevailing
regulatory environment) that the Purchaser or any of its affiliates is or would
be in violation of any law, regulation, rule or other requirement of any
governmental authority (including without limitation, the SBIA).
15. Merger. The Company shall not enter into any merger or
consolidation unless the terms of such merger or consolidation provide that all
shares of Common Stock held by Purchaser shall be treated no less favorably than
any other shares of Common Stock.
16. Miscellaneous.
(a) Rules of Construction. In this Agreement, unless the
context otherwise requires, words in the singular number or in the plural number
shall each include the singular number and the plural number, words of the
masculine gender shall include the feminine and the neuter, and, when the sense
so indicates, words of the neuter shall refer to any gender.
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(b) Further Assurances. Each party hereto shall do and perform
or cause to be done and performed all further acts and shall execute and deliver
all other agreements, including, without limitation, such stockholders'
agreements as may be executed into pursuant to the Merger, certificates,
instruments and documents as any other party hereto reasonably may request in
order to carry out the intent and accomplish the purposes of this Agreement and
the consummation of the transactions contemplated hereby.
(c) Governing Law. This Agreement and the rights and
obligations of the parties hereto shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware, without giving
effect to the conflicts of laws principles thereof.
(d) Specific Performance. The parties hereto
acknowledge that there will be no adequate remedy at law for a violation of any
of the provisions of this Agreement and that, in addition to any other remedies
that may be available, all of the provisions of this Agreement shall be
specifically enforceable in accordance with their respective terms.
(e) Invalidity of Provision. The invalidity or
unenforceability of any provision of this Agreement in any jurisdiction shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of this Agreement, including
that provision, in any other jurisdiction.
(f) Notice. All notices and other communications
hereunder shall be in writing and, unless otherwise provided herein, shall be
deemed to have been given when received by the party to whom such notice is to
be given at its address set
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forth below, or such other address for the party as shall be specified by notice
given pursuant hereto:
If to the Company, to:
Special Devices, Incorporated
16830 West Placerita Canyon Road
Newhall, California 91321
Attention: The President
Telephone: (805) 259-0753
Facsimile: (805) 254-4721
with a copy to:
Gibson, Dunn & Crutcher LLP
333 S. Grand Avenue
Los Angeles, California 90071
Attention: Richard A. Strong, Esq.
Telephone:
Facsimile:
If to the Fund or Co-Invest, to:
c/o J.F. Lehman & Company
450 Park Avenue
New York, New York 10022
Attention: Donald Glickman
Telephone: (212) 634-1160
Facsimile: (212) 634-1155
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Robert M. Hirsh, Esq.
Telephone: (212) 373-3000
Facsimile: (212) 757-3990
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If to the Purchaser, to:
Paribas Principal Inc.
787 7th Avenue
New York, New York 10019
Attention: Steven Eisenstein
Telephone: (212) 841-2127
Facsimile: (212) 841-2502
with a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036-2787
Attention: John Reiss, Esq.
Telephone: (212) 819-8247
Facsimile: (212) 819-2582
(g) Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon the parties hereto and their respective
heirs, legal representatives, successors and assigns.
(h) Amendment and Modification. This Agreement may be
amended, modified or supplemented only by written agreement of the party against
whom enforcement of such amendment, modification or supplement is sought.
(i) Headings; Execution in Counterparts. The headings
and captions contained herein are for convenience only and shall not control or
affect the meaning or construction of any provision hereof. This Agreement may
be executed in any number of counterparts, each of which shall be deemed to be
an original and all of which together shall constitute one and the same
instrument.
(j) Entire Agreement. This Agreement constitutes the
entire agreement, and supersedes all prior agreements and understandings, oral
and written, between the parties hereto with respect to the subject matter
hereof.
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(k) Termination Upon the termination of the Merger
Agreement pursuant to Section 6.1 of the Merger Agreement, this Agreement shall
terminate and there shall be no liability or obligation on the part of any party
or its affiliates, directors, officers or stockholders with respect to this
Agreement.
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IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
SPECIAL DEVICES, INCORPORATED
By: /s/ Thomas F. Treinen
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Name: Thomas F. Treinen
Title: President and
Chief Executive Officer
PARIBAS PRINCIPAL INC.
By: /s/ Stephen Eisenstein
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Name: Stephen Eisenstein
Title: Director
J.F. LEHMAN EQUITY INVESTORS I, L.P.
By: JFL Investors, L.L.C., Its General
Partner
By: /s/ Donald Glickman
------------------------
Name: Donald Glickman
Title: Managing Member
JFL CO-INVEST PARTNERS I, L.P.
By: JFL Investors, L.L.C., Its General
Partner
By: /s/ Donald Glickman
-----------------------
Name: Donald Glickman
Title: Managing Member