EXHIBIT 4.6
REDEMPTION AND EXCHANGE AGREEMENT
This REDEMPTION AND EXCHANGE AGREEMENT, dated as of July 16, 1998 (this
"Agreement") is entered into by and among Genus, Inc. (the "Company"),
Southbrook International Investments, Ltd. ("Southbrook"), Westover Investments
L.P. ("Westover"), Montrose Investments, Ltd. ("Montrose"), Brown Simpson
Strategic Growth Fund, L.P. ("Brown Simpson, L.P.") and Brown Simpson Strategic
Growth Fund, Ltd. ("Brown Simpson Ltd."; and collectively, with Southbrook,
Westover, Montrose and Brown Simpson, L.P., the "Purchasers").
A. The Company and the Purchasers entered into the Convertible Preferred
Stock Purchase Agreement, dated as of February 2, 1998 (the "Stock Purchase
Agreement"), pursuant to which the Company sold 100,000 shares of its 6% Series
A Convertible Preferred Stock (the "Series A Shares") which have the rights,
preferences and privileges set forth in the Certificate of Determination of the
Company filed with the California Secretary of State as of February 3, 1998 (the
"Series A Certificate of Determination").
B. The Company has entered into a Asset Purchase Agreement, dated as of
April 15, 1998, with Varian Associates, Inc. ("Varian") pursuant to which the
Company is selling certain assets to Varian (the "Varian Sale").
NOW, THEREFORE, in consideration of the mutual promises, representations,
warrants and conditions set forth herein, and intending to be legally bound, the
Company and the Purchasers agree as follows:
1. REDEMPTION. The Company and Purchasers, severally and not jointly,
hereby agree that the Company will redeem and the Purchasers will tender for
redemption (the "Redemption") on the business day following the closing of and
the Company's receipt of proceeds from the Varian Sale that number of Series A
Shares as is set forth opposite such Purchaser's name below (collectively, the
"Redeemed Series A Shares") for the redemption price set forth opposite such
Purchaser's name below:
Purchaser Shares Redemption Price
-------------------------- ------ ----------------
Southbrook 35,000 $ 2,362,500.00
Westover 11,200 $ 756,000.00
Montrose 16,800 $ 1,134,000.00
Brown Simpson, L.P. 1,400 $ 94,500.00
Brown Simpson, Ltd. 5,600 $ 378,000.00
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Total: 70,000 $ 4,725,000.00
2. EXCHANGE. As soon as is practicable after the redemption price
described in paragraph 1 has been paid to such Purchaser, each Purchaser agrees
severally and not jointly that it will exchange (the "Exchange") each remaining
Series A Share held by it (collectively, the "Non-Redeemed Series A Shares") for
a newly issued share of Series B Convertible Preferred Stock ("Series B Shares")
having the rights, preferences and privileges set forth in the Certificate of
Determination attached hereto as Exhibit A (the "Series B Certificate of
Determination"). The Series B Shares will be issuable as follows:
Purchaser Remaining Series A Shares Series B Shares Issuable
------------------- ------------------------- ------------------------
Southbrook 13,000 (*) 13,000
Westover 4,800 4,800
Montrose 7,200 7,200
Brown Simpson, L.P. 600 600
Brown Simpson, Ltd. 2,400 2,400
------ ------
Total: 28,000 28,000
An original copy of the Series B Certificate of Determination has been filed
with the California Secretary of State. For purposes of the Series A
Certificate of Determination, the Series B Shares shall be considered a "series
of Preferred Stock issued and sold in accordance with the Purchase Agreement"
and the signatures of all of the Purchasers below shall be deemed to be an
affirmative vote of the holders of the Series A Shares permitting the issuance
of the Series B Shares. The parties agree that the Stock Purchase Agreement
shall be deemed amended to the extent necessary to reflect the agreements set
forth herein and Section 1.3(b) of the Stock Purchase Agreement shall be of no
further force and effect.
3. ESCROW. Immediately upon receipt of the proceeds of the Varian Sale,
the Company will wire into the client trust account of Wilson Sonsini Goodrich &
Rosati, P.C. ("WSGR"), the sum of $4,725,000 (the "Redemption Amount"). Each
Purchaser agrees to deliver all certificates representing the Series A Shares
(the "Series A Certificates") held by it, duly endorsed for transfer, to WSGR,
which will act as escrow agent (in such capacity, "Escrow Agent"), not later
than the business day after receipt by such Purchaser of notice from Escrow
Agent that Escrow Agent has received the Redemption Amount in its client trust
account. Upon tender of all of the Series A Certificates for redemption and
receipt of written direction from each Purchaser (or such Purchaser's
representative), Escrow Agent will cause the applicable Redemption Price to be
wired to each Purchaser according to wire instructions provided by each such
Purchaser to Escrow Agent and the
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(*)Southbrook previously converted 2,000 shares.
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Redemption will be deemed completed. If Escrow Agent does not receive the
Redemption Amount by July 31, 1998, a majority in interest of the Purchasers
shall have the right to terminate this Agreement by notice to the Company and to
Escrow Agent and in such case Escrow Agent will return the Redemption Amount to
the Company and the Series A Certificates to the Purchasers. If Escrow Agent
has received the Redemption Amount, but one or more of the Purchasers has not
tendered its Series A Certificate to the Company by July 31, 1998, the Company
shall have the right to either except the tendered Series A Shares for
redemption or terminate this Agreement by notice to the Escrow Agent and the
Purchasers.
4. COMPLETION OF EXCHANGE. Unless otherwise directed by the Company or a
Purchaser, Escrow Agent will continue to hold the Series A Certificates pending
exchange of the remaining Series A Shares for Series B Shares. Within one
business day of the closing of the Varian Sale, the Company shall deliver to
Escrow Agent certificates representing the Series B Shares to be held in escrow
pending the completion of the Exchange. The exchange of the Non-Redeemed
Series A Shares for the newly issued Series B Shares shall be deemed completed
concurrently with the declaration of effectiveness of the Post-Effective
Amendment (as defined below) with the Securities and Exchange Commission (the
"SEC") without further action on the part of any party and Escrow Agent is
authorized to deliver the applicable certificates representing the Series B
Shares to each Purchaser and to cancel each Series A Certificate immediately
after the Post-Effective Amendment is declared effective; PROVIDED, HOWEVER,
that if the SEC objects to the conditioning of the Exchange upon the
effectiveness of the Post-Effective Amendment, then the Company shall amend the
Post-Effective Amendment filing to provide that the Exchange shall take place
upon the filing of such amended Post-Effective Amendment and the Exchange shall
be deemed completed immediately prior to the filing of such Amended
Post-Effective Amendment and Escrow Agent will be authorized to deliver the
applicable certificates representing the Series B Shares to each Purchaser and
to cancel each Series A Certificate immediately after such filing.
5. SEC FILING. The Company agrees that, not later than the third
business day after the later to occur of (i) the closing of the Varian Sale and
(ii) the date on which the Company is notified that the Secretary of State of
the State of California has accepted for filing the Series B Certificate of
Determination (the "Filing Date"), it will file a post-effective amendment (the
"Post-Effective Amendment") to the Company's existing effective Registration
Statement (as defined in the Registration Rights Agreement as defined below)
with the SEC which would provide that the Registration Statement covers resales
of the Common Stock issuable upon conversion of the Series B Shares. The
Purchasers will be provided with drafts and given a reasonable opportunity to
comment upon the Post-Effective Amendment. The provisions of the Registration
Rights Agreement, dated as of February 2, 1998 (the "Registration Rights
Agreement"), among the Company and the Purchasers shall remain in effect, except
that (i) the references therein to the Registration Statement with respect to
the Series A Shares shall be deemed to refer to such Registration Statement as
amended by the Post-Effective Amendment and which is applicable to the resale of
the Common Stock issuable upon conversion of the Series B Shares, (ii) all
references to the "Series B Shares" therein shall not be applicable and all
references to the "Series B Warrants"
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therein shall be deemed deleted and (iii) for purposes of the Post-Effective
Amendment, the requirement to register 200% of the maximum number of shares of
Common Stock into which the Series B Shares are convertible as set forth in
Clause (1) of the definition of "Registrable Securities" in the Registration
Rights Agreement shall be waived and the Company shall instead be required,
pursuant to such Clause (1) of such definition, to register 100% of the maximum
number of shares of Common Stock into which the Series B Shares are convertible.
The Purchasers acknowledge and agree that use of the prospectus under the
Registration Statement for the resale of Common Stock shall be suspended from
the date hereof until the Post-Effective Amendment is declared effective by the
SEC and that no penalty in respect thereof shall be applicable, notwithstanding
any term of the Purchaser Agreement or the Registration Rights Agreement. The
Company will use its reasonable best efforts to have the Post-Effective
Amendment declared effective as soon as possible after filing. If the Company
has not taken action to cause the Post-Effective Amendment to become effective
within 5 days of receiving notice from the SEC that the Post Effective Amendment
will not be reviewed or that any such review is complete, or if the Company
fails to respond to comments from the SEC within 10 days of receiving such
comments, then a majority in interest of the Purchasers shall have the right to
terminate this Agreement with respect to the Exchange and the Non-Redeemed
Series A Shares shall remain outstanding, and the Purchasers shall again be
permitted to utilize the prospectus existing with respect to the Series A Shares
as in effect prior to the filing of the Post-Effective Amendment.
6. TRANSFER AGENT INSTRUCTIONS. Contemporaneously with the issuance of
the Series B Shares, the Company shall deliver transfer agent instructions to
the transfer agent of the Company's Common Stock comparable to those delivered
in connection with the Series A Shares. The Series B shares and the Common
Stock issuable upon conversion thereof shall have restrictions on transfer and
shall bear legends which are the same as those applicable to the Series A
Shares.
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants as follows:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the state of California and has the power and
authority to own, lease and operate its properties and carry on its business as
now conducted.
(b) The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby (i) are
within the power of Company and (ii) have been duly authorized by all necessary
actions on the part of Company. Upon issuance, the Series B Shares and the
Common Stock issuable upon conversion thereof will be validly issued, fully paid
and non-assessable.
(c) This Agreement has been duly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of Company, enforceable
against Company in accordance with its terms, except as limited by bankruptcy,
insolvency or other laws of general
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application relating to or affecting the enforcement of creditors' rights
generally and general principles of equity.
(d) The execution and delivery by Company of this Agreement and the
performance and consummation of the transactions contemplated thereby do not and
will not (i) violate the Articles of Incorporation or Bylaws of the Company or
any material judgment, order, writ, decree, statute, rule or regulation
applicable to Company; (ii) violate any provision of, or result in the breach or
the acceleration of, or entitle any other person to accelerate (whether after
the giving of notice or lapse of time or both), any material mortgage,
indenture, agreement, instrument or contract to which the Company is a party or
by which it is bound; or (iii) result in the creation or imposition of any Lien
upon any property, asset or revenue of Company or the suspension, revocation,
impairment, forfeiture, or nonrenewal of any material permit, license,
authorization or approval applicable to Company, its business or operations, or
any of its assets or properties.
(e) No consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental authority or other person is
required in connection with the execution and delivery of this Agreement and the
performance and consummation of the transactions contemplated thereby, other
than the acceptance of the Series B Certificate of Determination with the
California Secretary of State, the filing of the Post-Effective Amendment with
and the declaration of effectiveness thereof by the SEC and any filings that may
be required with the Nasdaq Stock Market.
(f) The Company has paid no commission or other remuneration directly or
indirectly to any person for soliciting the Exchange.
(g) Neither the Company, nor any of its affiliates, nor any person acting
on its or their behalf has, directly or indirectly, made any offers or sales of
any security or solicited any offers to buy any security, under circumstances
that would require registration of the Series B Shares under the Securities Act
of 1933, as amended.
8. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
severally represents and warrants as follows:
(a) Such Purchaser is a corporation duly incorporated or a limited
partnership duly formed, validly existing and in good standing under the laws of
its jurisdiction of incorporation or formation with the requisite power and
authority to enter into and perform the transactions contemplated hereby.
(b) The execution, delivery and performance by such Purchaser of this
Agreement and the consummation of the transactions contemplated hereby (i) are
within the power of such Purchaser and (ii) have been duly authorized by all
necessary actions on the part of such Purchaser.
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(c) This Agreement has been duly executed and delivered by such Purchaser
and constitutes a legal, valid and binding obligation of such Purchaser,
enforceable against such Purchaser in accordance with its terms, except as
limited by bankruptcy, insolvency or other laws of general application relating
to or affecting the enforcement of creditors' rights generally and general
principles of equity.
(d) Each Purchaser acknowledges that it has reviewed or had the
opportunity to review all of the Company's filings with the SEC required under
the Securities Exchange Act of 1934, as amended, including without limitation
the Proxy Statement for Annual Meeting of Shareholders, dated as of June 29,
1998, which relates to, among other things, the Varian Sale.
9. ESCROW AGENT. In its capacity as Escrow Agent, WSGR shall act only
upon the written direction of the Company and/or each of the Purchasers (or
their representative), as described herein, and shall be fully protected in
relying on the correctness of all written instructions, notices, certificates
and documents which the Escrow Agent believes to be genuine and in complying
with the instructions therein. Escrow Agent shall in no event be liable for any
act taken or omitted hereunder for any reason, except as a result of its gross
negligence or willful misconduct. The Escrow Agent's duties and
responsibilities shall be limited to those expressly set forth in this
Agreement. In the event that Escrow Agent becomes involved in any dispute by
reason hereof, it is hereby authorized to deposit with the clerk of a court of
competent jurisdiction any funds or certificates held by it and its shall be
fully relieved and discharged of any further duties hereunder. The Escrow Agent
shall be a third party beneficiary of this Agreement.
10. APPOINTMENT OF REPRESENTATIVE. Each of the Purchasers appoints Robert
L. Miller as its representative for purposes of directing Escrow Agent to take
actions contemplated under this Agreement.
11. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York without
regard to the principles of conflicts of laws thereof.
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IN WITNESS WHEREOF, the undersigned executed this Agreement as of the date
first written above.
GENUS, INC.
By: /s/ William W. R. Elder
------------------------------------------
Name: William W.R. Elder
Title: Chairman and Chief Executive Officer
SOUTHBROOK INTERNATIONAL INVESTMENTS, LTD.
By: /s/ Robert L. Miller
------------------------------------------
Name:
Title:
WESTOVER INVESTMENTS L.P.
By: /s/ Lawrence H. Lebowitz
------------------------------------------
Name: Lawrence H. Lebowitz
Title: Authorized Signatory
MONTROSE INVESTMENTS, LTD.
By: /s/ Lawrence H. Lebowitz
------------------------------------------
Name: Lawrence H. Lebowitz
Title: Authorized Signatory
BROWN SIMPSON STRATEGIC GROWTH FUND, L.P.
By: /s/ Mitchell Kaye
------------------------------------------
Name:
Title:
BROWN SIMPSON STRATEGIC GROWTH FUND, LTD.
By: /s/ Mitchell Kaye
------------------------------------------
Name:
Title:
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