Exhibit 10.13
NO SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THIS WARRANT OR THE
SHAPES PURCHASABLE HEREUNDER SHALL BE MADE EXCEPT PURSUANT TO REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT
TO
PURCHASE COMMON STOCK
OF
CENTURY ELECTRONICS MANUFACTURING, INC.
This CERTIFIES that, for value received, GUARANTY BUSINESS CREDIT
CORPORATION d/b/a FIDELITY FUNDING, or its successors and assigns ("Holder") is
entitled, subject to the terms and conditions set forth in this Warrant, to
purchase from CENTURY ELECTRONICS MANUFACTURING, INC., a Delaware corporation
with its principal office at 274 Cedar Hill Road, Marlborough, Massachusetts
01752 (the "Company"), Sixty Thousand (60,000) fully paid and nonassessable
shares (the "Warrant Stock") of the Common Stock, $.01 par value, of the Company
(the "Common Stock"), at any time commencing on July 15, 1999 and continuing
until 5:00 p.m. Boston, Massachusetts time on July 15, 2004 (the "Expiration
Date"), at a price of Six and 00/100 Dollars ($6.00) per share (such price, as
adjusted in accordance with Section 12, the "Purchase Price"), subject to
further adjustment as provided in Section 5 below. This Warrant is issued to
Holder in connection with the increase of a credit facility from Holder to the
Company on the terms and conditions set forth in that certain First Amendment to
Loan and Security Agreement, dated as of July 15, 1999, by and among the
Company, two of its wholly-owned subsidiaries, and Holder.
1. Exercise.
(a) Method of Exercise. This Warrant may be exercised by Holder
hereof, in whole or in part (but not as to a fractional share) and from time to
time, in increments of not less than 500 shares, by the presentation and
surrender of this Warrant with a duly executed Election to Purchase or Convert
(in substantially the form attached to this Warrant as Exhibit A) at the
principal office of the Company as set forth above (or at such other address as
the Company may designate by notice in writing to Holder hereof at the address
of Holder appearing on the books of the Company), upon payment to the Company of
the purchase price by certified or bank cashier's check (unless Holder is
exercising the conversion right set forth in Section 1(b)). The shares of Common
Stock so purchased shall be deemed to be issued to Holder hereof as the record
owner of such shares as of the close of business on the date on which this
Warrant shall have been surrendered, the Election to Purchase or Convert has
been duly executed and delivered to the Company, and payment made for such
shares. Certificates for the shares of Common Stock so purchased shall be
delivered or mailed to Holder promptly after this Warrant shall have been
exercised, and, unless this Warrant has expired or has been exercised in full, a
new Warrant identical in form but representing the number of shares of Common
Stock with respect to which this Warrant shall not then have been exercised
shall also be issued to Holder hereof.
(b) Conversion Right. In lieu of exercising this Warrant as
specified in Section 1(a), Holder may from time to time convert this Warrant, in
whole or in part, into a number of shares of Common Stock determined by dividing
(a) the aggregate fair market value of the shares of Common Stock issuable upon
exercise of this Warrant minus the aggregate Purchase Price of such shares by
(b) the fair market value of one share. The fair market value of the Common
Stock shall be determined pursuant to Section 1(c).
(c) Fair Market Value. If the Common Stock is traded in a public
market, its fair market value shall be its closing price reported for the
business day immediately before Holder delivers its Election to Purchase or
Convert to the Company. If the Common Stock is not traded in a public market,
the Board of Directors of the Company shall determine fair market value in its
reasonable good faith judgment. The foregoing notwithstanding, if Holder advises
the Board of Directors in writing that Holder disagrees with such determination,
then the Company and Holder shall promptly agree upon a reputable investment
banking firm to undertake such valuation. If the valuation of such investment
banking firm is greater than that determined by the Board of Directors, then all
fees and expenses of such investment banking firm shall be paid by the Company.
In all other circumstances, such fees and expenses shall be paid by Holder.
2. No Rights as Stockholder. Nothing contained herein shall be construed
to confer upon Holder of this Warrant, as such, any of the rights of a
stockholder of the Company.
3. No Fractional Shares. The Company shall not issue certificates
representing fractions of shares of Common Stock upon any exercise of this
Warrant, but shall make a cash payment for any fractional share based on the
fair market value of the Common Stock on the date of exercise, determined in
accordance with Section 1(c) above.
4. Replacement Warrants. This Warrant is exchangeable, upon its surrender
by Holder at the office of the Company referred to in Section 1 above, for new
warrants (containing the same terms as this Warrant) each representing the right
to purchase such number of shares of Common Stock as shall be designated by
Holder at the time of such surrender (but not exceeding in the aggregate the
remaining number of shares of Common stock which may be purchased hereunder).
Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and upon delivery of a bond or
indemnity reasonably satisfactory to the Company (or, in the case of mutilation,
upon surrender of this Warrant), the Company will issue to Holder a replacement
warrant (containing the same terms as this Warrant). As used herein, "Warrant"
shall include all new warrants issued in exchange for or replacement of this
Warrant.
5. Stock Dividends and Splits. If the Company shall pay a dividend in
shares of its Common Stock, subdivide (split) its outstanding shares of Common
Stock, combine (reverse split) its outstanding shares of Common Stock, issue by
reclassification of its shares of Common Stock any shares or other securities of
the Company, or distribute to holders of its Common Stock any
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securities of the Company or of another entity, the number of shares of Common
Stock or other securities Holder hereof is entitled to purchase pursuant to this
Warrant immediately prior thereto shall be adjusted so that Holder shall be
entitled to receive upon exercise the number of shares of Common Stock or other
securities of the Company which Holder would have owned or would have been
entitled to receive after the happening of any of the events described above had
this Warrant been exercised immediately prior to the happening of such event,
and the exercise price per share shall be correspondingly adjusted; provided,
however, that no adjustment in the number of shares and/or the exercise price
shall be required unless such adjustment would require an increase or decrease
of at least one percent (1%) in such number and/or price, and provided further,
however, that any adjustments which by reason of this Section 5 are not required
to be made shall be carried forward and taken into account in any subsequent
adjustments. An adjustment made pursuant to this Section 5 shall become
effective immediately after the record date in the case of a stock dividend or
other distribution and shall become effective immediately after the effective
date in the case of a subdivision, combination or reclassification.
6. Consolidation or Merger. If the Company is consolidated or merged with
or into another corporation or if all or substantially all of its assets are
conveyed to another corporation,. this Warrant shall thereafter be exercisable
for the purchase of the kind and number of shares of stock or other securities
or property, if any, receivable upon such consolidation, merger or conveyance by
a holder of the number of shares of Common Stock of the Company which could have
been purchased upon the exercise of this Warrant immediately prior to such
consolidation, merger or conveyance; and, in any such case, appropriate
adjustment (as determined by the Board of Directors in good faith) shall be made
in the application of the provisions herein set forth with respect to the rights
and interest thereafter of Holder of this Warrant to the end that the provisions
set forth herein (including provisions with respect to changes in and other
adjustments of the number of shares of Common Stock that Holder of this Warrant
is entitled to purchase) shall thereafter be applicable, as nearly as reasonably
may be, in relation to any shares of stock or other property thereafter
deliverable upon the exercise of this Warrant.
7. Transfer. This Warrant may not be transferred to any person or entity
other than a successor to the right, title or interest of Holder or a purchaser
of all or substantially all of the assets of Holder, if applicable, without the
prior written consent of the Company, which shall not be unreasonably withheld,
and in compliance with the provisions of Section 8 below. Commencing on the
earlier of the 90th day after the date hereof or the completion by the Company
of a registered, initial public offering of its Common Stock, such consent shall
no longer be necessary.
8. Requirements for Transfer.
(a) This Warrant and the Common Stock so purchased shall not be sold
or transferred unless either (i) they first shall have been registered under the
Securities Act of 1933, as amended (the "Act"), or (ii) tic Company first shall
have been furnished with an opinion of
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legal counsel, reasonably satisfactory to the Company, to the effect that such
sale or transfer is exempt from the registration requirements of the Act.
(b) Notwithstanding the foregoing, no registration or opinion of
counsel shall be required after such time that the Common Stock so purchased
becomes eligible for resale pursuant to Rule 144 under the Act
(c) Each certificate representing Common Stock purchased on exercise
of this Warrant shall bear a legend substantially in the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be offered, sold or otherwise transferred, pledged or
hypothecated unless and until such securities are registered
under such Act or an opinion of counsel satisfactory to the
Company is obtained to the effect that such registration is
not required."
The foregoing legend shall be removed from the certificates at the request
of Holder thereof, at such time as they become eligible for resale
pursuant to Rule 144 under the Act.
9. Representations. The Company represents, warrants and agrees that: the
Company has the corporate power and authority to grant this Warrant; this
Warrant is enforceable and during its life will be enforceable against the
Company in accordance with its terms; the execution and delivery of this Warrant
by the Company has been duly and validly authorized and all requisite corporate
action has been taken to make it valid and binding against the Company in
accordance with its terms; and the Company has and on the date and/or dates of
any exercise or conversion will have the full right and power to transfer the
entire right, title and interest in and to the shares of Common Stock subject to
this Warrant to the Purchaser, free and clear of all liens, encumbrances,
charges and restrictions of any kind, other than those set forth in applicable
securities laws.
10. Put Right. The Company hereby irrevocably grants to Holder the right
and option (the "Put") to sell to the Company this Warrant, in whole but not in
part, on and after the first anniversary of the date hereof, and prior to the
Expiration Date, at a purchase price (the "Purchase Price") of $360,000. The
Purchase Price shall be due and payable within five business days after the
Company's receipt of written notice from Holder of its exercise of the Put. Upon
payment in full of such Purchase Price, Holder shall surrender the Warrant to
the Company for cancellation. Should payment of the Purchase Price upon exercise
of the Put result in the computation or earning of interest to Holder in excess
of the maximum amount allowed by law,
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the Purchase Price shall be reduced to the extent necessary to reduce the
computation or earning of interest to the maximum amount allowed by law.
11. Registration.
(a) Piggyback Registrations. Notwithstanding the provisions set
forth above, on and after the 90th day after the completion by the Company of a
registered, initial public offering of its Common Stock, the Company shall
notify Holder in writing at least 30 days prior to filing any registration
statement under the Act for purposes of a public offering of securities of the
Company (including, but not limited to, registration statements relating to
secondary offerings of securities of the Company, but excluding registration
statements relating to employee benefit plans) and will afford Holder an
opportunity to include in such registration statement the Warrant Stock or any
portion thereof. If the registration statement is for an underwritten offering,
the Company shall so advise Holder and the right of Holder to be included in a
registration shall be subject to reduction in the discretion of the underwriter
and shall also be subordinate to the preexisting registration rights of (i) the
Amitek investors as set forth in that certain Registration Rights Agreement
dated as of June 30, 1999 by and among the Company and Myung Ho Park, Yoon Jung
Park and Sung Woo Kwon (collectively the "Amitek investors"); (ii) HarbourVest
as set forth in two certain Series A Convertible Preferred Stock Purchase
Agreements, dated as of February 4, 1998 and December 1, 1998, respectively,
between the Company and HarbourVest Partners V-Direct Fund, L.P.
("HarbourVest"); and (iii) Centennial as set forth in that certain Series B
Convertible Preferred Stock Purchase Agreement, dated as of February 4, 1998,
between the Company and Centennial Technologies, Inc. ("Centennial").
(b) Payment of Expenses. All expenses incurred in connection with
registration (excluding underwriters' discounts and commissions and the fees and
expenses of counsel for Holder), including, without limitation, all
registration, blue sky and qualification fees, printers' and accounting fees,
and fees and disbursements of counsel for the Company shall be borne by the
Company.
(c) Obligations of the Company. Whenever required to effect the
registration of the Warrant Stock, the Company shall, as expeditiously as
reasonably possible:
(i) Prepare and file a registration statement with respect
thereto and use its best efforts to cause such registration
statement to become effective, and keep such registration statement
effective for up to 120 days.
(ii) Prepare and file 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 Act.
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(iii) Furnish to Holder such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as may be
reasonably requested.
(iv) 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 jurisdictions as shall be
reasonably requested by Holder, 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.
(v) In the event of any underwritten public offering, enter
into and peform its obligations under an underwriting agreement in
usual and customary form, with the managing underwriter(s) of such
offering. Holder shall also enter into and perform its obligations
under such an agreement.
(vi) Notify Holder at any time when a prospectus relating
thereto is required to be delivered under the Act of the happening
of any event as a result of which the prospectus included in such
registration statement or any document incorporated therein by
reference, 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 light of the circumstances then existing.
(vii) Furnish, at the request of Holder if and when requesting
registration on the date that such Warrant Stock is delivered to the
underwriters for sale, if such securities are being sold through
underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with
respect to such securities becomes effective, (i) an opinion, dated
as of 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
and reasonably satisfactory to Holder, addressed to the
underwriters, if any, and to Holder and (ii) a "cold comfort" letter
dated as of 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 and reasonably satisfactory to
Holder, addressed to the underwriters, if any, and to Holder.
(viii) Afford to Holder all rights (including the right to
conduct "due diligence" with respect to the Company) customarily
afforded to selling stockholders in an underwritten public offering.
(d) Indemnification. The Company will indemnify and hold harmless
Holder, the partners, officers and directors of Holder, any underwriter (as
defined in the Act) for Holder
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and each person, if any, who controls Holder or any such underwriter within the
meaning of the Act or the Securities Exchange Act of 1934, as amended (the "1934
Act"), against any losses, claims, damages, or liabilities (joint and several)
to which they may become subject under the Act, the 1934 Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, or any documents
incorporated therein by reference, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, and the Company, at its option,
shall either assume the defense thereof or will reimburse Holder, partner,
officer, or director, underwriter or controlling person for any legal or other
expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this subsection
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if Holder fails to promptly notify the Company of such claim
or such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any
such, case for any such toss, claim, damage, liability or action (i) to the
extent that it arises out of or is based upon a violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by Holder, or such partner, officer,
director, underwriter or controlling person of Holder, or, (ii) in the case of a
sale directly by Holder or such partner, officer, director, underwriter or
controlling person of Holder, such untrue statement or alleged untrue statement
or omission or alleged omission was contained in a preliminary prospectus and
corrected in a final or amended prospectus, and such seller failed to deliver a
copy of the final or amended prospectus at or prior to the confirmation of the
sale to the person asserting any such loss, claim, damage, liability or action
in any case in which such delivery is required by applicable securities laws.
The obligations of the Company under this paragraph shall survive the completion
of any offering of Warrant Stock.
(e) Survival. The Company's obligations under this Section 11 shall
survive until the fifth anniversary of the date hereof.
12. Adjustment of Purchase Price. If and whenever the Company subsequent
to the date hereof shall issue or sell any shares of Common Stock (or
convertible securities, options, warrants or other stock purchase rights which
provide for an exercise or conversion price to receive Common Stock) for a
consideration or having an exercise or conversion price less than the then
applicable Purchase Price, then the Purchase Price upon each such reissuance,
conversion, exercise or sale shall forthwith be reduced to such lower price.
There is excluded from this Section 12 all Common Stock issued or sold, or to be
issued or sold, as consideration for the acquisition by merger of Amitek
Corporation, including non-statutory stock options issued in connection with
that acquisition. As promptly as practicable (but in any event not later than
five days) after the occurrence of any event requiring any adjustment under this
Section 12 (or
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under Section 5 above) to the Purchase Price, the Company shall, at its expense,
deliver to the Holder of this Warrant an officers certificate setting forth in
reasonable detail the events requiring the adjustment and the method by which
such adjustment was calculated and specifying the adjusted Purchase Price and
the number of shares of Common Stock purchasable upon exercise of this Warrant
after giving effect to such adjustment
13. No Impairment or Amendment. The Company shall not by any action
including, without limitation, amending its charter, any reorganization,
recapitalization, 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 of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate to protect the
rights of the holder hereof against impairment. Without limiting the generality
of the foregoing, the Company (a) will not permit the par value of any shares of
Warrant Stock issuable upon exercise of this Warrant to be greater than the
amount payable therefor upon such exercise, (b) will take all such action as may
be necessary or appropriate in order that the Company may validly issue fully
paid and nonassessable shares of Warrant Stock, (c) will obtain and maintain all
such authorizations, exemptions or consents from any public regulatory body
having jurisdiction as may be necessary to enable the Company to perform its
obligations under this Warrant, and (d) will not issue any capital stock or
enter into any agreement the terms of which would have the effect, directly or
indirectly, of preventing the Company from honoring its obligations hereunder.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer as of this 30th day of July, 1999.
ATTEST: CENTURY ELECTRONICS MANUFACTURING, INC.
/s/ James M. Roller By: /s/ Leslie J. Sainsbury
- -------------------------- ----------------------------------
James M. Roller Leslie J. Sainsbury
Secretary President and CEO
EXHIBIT A
ELECTION TO PURCHASE OR CONVERT
Century Electronics Manufacturing, Inc.:
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to purchase Warrant Stock and (check one):
[ ] herewith tenders payment for ___________ shares of Warrant Stock
to the order of Century Electronics Manufacturing, Inc. in the
amount of $ ________ in accordance with the terms of this Warrant or
[ ] herewith tenders this Warrant for ___________ shares of Warrant
Stock pursuant to the conversion right provisions of Section 1(b) of
this Warrant.
Please issue a certificate or certificates for such Warrant Stock in the
name of, and pay any cash for any fractional share to:
Name____________________________________________
________________________________________________
________________________________________________
________________________________________________
Signature_______________________________________
Note: The above signature should correspond
exactly with the name on the first page of
this Warrant or with the name of any
assignee pursuant to Section 7 of this
Warrant
If said number of shares shall not be all the shares purchasable under the
within Warrant, a new Warrant is to be issued in the name of said undersigned
for the balance remaining of the shares purchasable thereunder.
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