Exhibit 21
XXXXXX'X FURNITURE, INC.
SERIES A CONVERTIBLE PREFERRED STOCK
SECURITIES PURCHASE AGREEMENT
Dated as of January 11, 2000
TABLE OF CONTENTS
PAGE
SECTION 1 PURCHASE AND SALE OF THE SERIES A PREFERRED STOCK.................1
1.1 Authorization to Sell the Series A Preferred Stock............1
1.2 Closings......................................................1
1.3 Deliveries at Closings........................................1
1.4 Restructuring of Certain Indebtedness.........................2
1.5 Definitions...................................................3
SECTION 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................3
2.1 Organization and Qualification................................3
2.2 Due Authorization.............................................3
2.3 Subsidiaries..................................................3
2.4 SEC Reports...................................................3
2.5 Financial Statements..........................................4
2.6 Actions Pending; Compliance with Laws.........................4
2.7 Title to Properties, Insurance................................4
2.8 Governmental Consents, etc....................................5
2.9 Holding Company Act and Investment Company Act................5
2.10 Taxes.........................................................5
2.11 Conflicting Agreements and Charter Provisions.................6
2.12 Capitalization................................................6
2.13 Issuance, Sale and Delivery of the Series A Preferred Stock...7
2.14 Registration Under Exchange Act...............................7
2.15 ERISA.........................................................7
2.16 Possession of Franchises, Licenses, Etc.......................8
2.17 Environmental and Other Regulations...........................8
2.18 Patents and Trademarks........................................8
2.19 Material Contracts and Obligations............................8
2.20 Books and Records.............................................9
2.21 Transactions with Related Parties.............................9
2.22 Brokers.......................................................9
2.23 Accuracy of Information.......................................9
2.24 Offering of Series A Preferred Stock.........................10
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS10
3.1 Organization and Qualification...............................10
3.2 Due Authorization............................................10
3.3 Conflicting Agreements and Other Matters.....................11
-
3.4 Acquisition for Investment...................................11
3.5 Brokers or Finders...........................................11
3.6 Accredited Investor..........................................11
SECTION 4 COVENANTS OF THE COMPANY........................................11
4.1 Limitation on Senior Equity Securities.......................11
4.2 Compliance with Laws.........................................11
4.3 Preservation of Franchises and Existence.....................12
4.4 Use of Proceeds..............................................12
4.5 Insurance....................................................12
4.6 Payment of Taxes and Other Charges...........................12
4.7 Effect of Breach.............................................12
4.8 ERISA........................................................13
4.9 Financial Statements and Other Reports.......................13
4.10 Inspection of Property.......................................15
4.11 Lost, Stolen, Damaged and Destroyed Stock Certificates.......15
4.12 Related Party Transactions...................................15
4.13 Operations in Accordance with Business Plan..................15
4.14 Reservation of Shares........................................15
4.15 Notice of Breach.............................................16
4.16 Limitation on Dividends......................................16
4.17 Right of First Refusal.......................................16
SECTION 5. RESTRICTIONS ON TRANSFER........................................17
SECTION 6 EVENT OF DEFAULT AND REMEDIES....................................17
6.1 Event of Default.............................................17
6.2 Remedies.....................................................17
6.3 Conduct no Waiver............................................18
6.4 Remedies Cumulative..........................................18
SECTION 7 CONDITIONS.......................................................18
7.1 Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby...........................18
7.2 Conditions to Purchasers' Obligations to Effect the
Transactions Contemplated Hereby...........................19
SECTION 8 INTERPRETATION...................................................20
8.1 Definitions..................................................20
8.2 Accounting Principles........................................22
SECTION 9 MISCELLANEOUS....................................................23
9.1 Severability.................................................23
9.2 Specific Enforcement.........................................23
9.3 Entire Agreement.............................................23
9.4 Counterparts.................................................23
9.5 Notices and other Communications.............................23
9.6 Amendments...................................................24
9.7 Cooperation..................................................25
9.8 Successors and Assigns.......................................25
9.9 Expenses and Remedies........................................25
9.10 Survival of Representations and Warranties...................27
9.11 Transfer of Series A Preferred Stock.........................27
9.12 Governing Law, Consent to Jurisdiction.......................27
9.13 Publicity....................................................28
9.14 Signatures...................................................28
Exhibit A - Form of Amended and Restated Stockholders' Agreement
Exhibit B - Form of Opinion of Xxxxxxxx & Xxxxxxxx LLP
Exhibit C - Form of Amended and Restated Registration Rights Agreement
Exhibit D - Form of Indebtedness Amendment
This Securities Purchase Agreement, dated as of January 11, 2000 (this
"AGREEMENT"), between Xxxxxx'x Furniture, Inc., a Delaware corporation
(including its predecessors, the "COMPANY") and the purchasers listed on the
signature pages hereto (each a "PURCHASER", and collectively, the "PURCHASERS").
WHEREAS, the Purchasers wish to severally purchase from the Company,
and the Company wishes to sell to the Purchasers, an aggregate of 380,000 shares
of the Company's Series A Convertible Preferred Stock, par value $.001 per share
(the "SERIES A PREFERRED STOCK"), at an aggregate purchase price of $19,000,000.
WHEREAS, in connection with the purchase and sale of the Series A
Preferred Stock, the Purchasers, the Company and the stockholders listed on the
signature pages thereof, will enter into an amended and restated Stockholders
Agreement, substantially in the form attached hereto as EXHIBIT A (the
"STOCKHOLDERS AGREEMENT").
WHEREAS, the Purchasers and the Company desire to provide for such
purchase and sale and to establish various rights and obligations in connection
therewith.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the parties hereto agree as follows:
SECTION 1. PURCHASE AND SALE OF THE SERIES A PREFERRED STOCK.
1.1 AUTHORIZATION TO SELL THE SERIES A PREFERRED STOCK. Subject to the
terms and conditions of this Agreement, the Company has duly authorized the
issuance and sale of the Series A Preferred Stock.
1.2 CLOSINGS. The transactions contemplated hereby will take place in
two closings. The first closing shall be held on or prior to January 18, 2000
(the "First Closing") at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
("SASM&F"), 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx
00000-0000 at 9:00 a.m., or at such place, date and time as shall be mutually
agreed by the Company and the Initial Purchasers (the "FIRST CLOSING DATE"). The
second closing shall be held on or prior to January 18, 2000 (the "SECOND
CLOSING" and together with the First Closing, the "CLOSINGS") at SASM&F, 000
Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000, at 9:00 a.m., or such
place, date and time as shall be mutually agreed by the Company and the
Individual Purchasers (the "SECOND CLOSING DATE" and together with the First
Closing Date, the "CLOSING DATES").
1.3 DELIVERIES AT CLOSINGS.
(a) At the First Closing:
(i) the Company shall execute and deliver an Amended and
Restated Stockholders Agreement in the form of EXHIBIT A hereto;
(ii) Xxxxxxxx & Xxxxxxxx LLP, counsel to the Company, shall
deliver to the Initial Purchasers an opinion dated the First
Closing Date substantially in the form of EXHIBIT B hereto;
(iii) the Company shall execute and deliver an Amended and
Restated Registration Rights Agreement substantially in the form
of EXHIBIT C hereto (the "REGISTRATION RIGHTS AGREEMENT");
(iv) the Company shall deliver to each Initial Purchaser
stock certificates representing the number of shares of Series A
Preferred Stock to be purchased by such Initial Purchaser, as set
forth under its signature on the signature pages hereto,
registered in the name of such Initial Purchaser or its designee
or nominee;
(v) each Initial Purchaser shall pay to the Company, by wire
transfer of immediately available funds, the purchase price for
the Series A Preferred Stock being purchased by such Initial
Purchaser; and
(vi) the Company shall deliver evidence of the restructuring
of certain indebtedness of the Company as described in Section
1.4 below in form and substance satisfactory to the Initial
Purchasers.
(b) At the Second Closing:
(i) Xxxxxxxx & Xxxxxxxx LLP, counsel to the Company, shall
deliver to the Individual Purchasers an opinion dated the Second
Closing Date substantially in the form of EXHIBIT B hereto;
(ii) the Company shall deliver to each Individual Purchaser
stock certificates representing the number of shares of Series A
Preferred Stock to be purchased by such Individual Purchaser, as
set forth under its signature on the signature pages hereto,
registered in the name of such Individual Purchaser or its
designee or nominee; and
(iii) each Individual Purchaser shall pay to the Company, by
wire transfer of immediately available funds, the purchase price
for the Series A Preferred Stock being purchased by such
Individual Purchaser.
1.4 RESTRUCTURING OF CERTAIN INDEBTEDNESS. On or before the First
Closing Date, the Company shall execute and deliver an Amendment to the Note
Agreement substantially in the form of EXHIBIT D hereto (the "INDEBTEDNESS
AMENDMENT").
1.5 DEFINITIONS. Certain capitalized terms used in this Agreement are
defined in Section 8 hereof.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants as follows:
2.1 ORGANIZATION AND QUALIFICATION. Each of the Company and its
Subsidiaries is a corporation duly organized and existing in good standing under
the laws of the jurisdiction in which it is incorporated and has the power to
own its respective property and to carry on its respective business as now being
conducted. Each of the Company and its Subsidiaries is duly qualified as a
foreign corporation to do business and in good standing in every jurisdiction in
which the nature of the respective business conducted or property owned by it
makes such qualification necessary and where the failure so to qualify would be
material to the Company or such Subsidiary, as the case may be.
2.2 DUE AUTHORIZATION. The execution and delivery of this Agreement,
the Stockholders Agreement and the Registration Rights Agreement, and the
issuance and sale of the Series A Preferred Stock by the Company and compliance
by the Company with all the provisions of this Agreement, the Stockholders
Agreement and the Registration Rights Agreement (i) are within the corporate
power and authority of the Company; (ii) do not and will not require any
approval or consent of the stockholders of the Company or any other Person,
other than approvals and consents which have been duly obtained or which will be
obtained pursuant to Section 4.14; and (iii) have been authorized by all
requisite corporate proceedings on the part of the Company. This Agreement, the
Stockholders Agreement and the Registration Rights Agreement have been duly
executed and delivered by the Company and constitute valid and binding
agreements of the Company, enforceable in accordance with their respective
terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. The Company has furnished to the Purchasers
true and correct copies of the Company's Certificate of Incorporation and
By-laws as in effect on the date of this Agreement.
2.3 SUBSIDIARIES. The Subsidiaries of the Company, all of which are
wholly owned by the Company, together with their jurisdiction of incorporation,
are as set forth on Schedule 2.3 hereto.
2.4 SEC REPORTS. The Company and its predecessor have filed all proxy
statements, reports and other documents required to be filed by it under the
Exchange Act, since December 31, 1996; and the Company has furnished the
Purchasers copies of its Annual Report on Form 10-K for the fiscal year ended
January 31, 1999, and all proxy statements and reports under the Exchange Act
filed by the Company after such date, each as filed with the Securities and
Exchange Commission (the "COMMISSION") (collectively, the "SEC REPORTS"). Each
SEC Report was in compliance in all material respects with the requirements of
its respective report form and did not on the date of filing contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. As of the date hereof
there is no fact not disclosed in the SEC Reports which is material to the
Company.
2.5 FINANCIAL STATEMENTS. The financial statements (including any
related schedules and/or notes) included in the SEC Reports have been prepared
in accordance with generally accepted accounting principles consistently
followed (except as indicated in the notes thereto) throughout the periods
involved and fairly present the consolidated financial condition, results of
operations, changes in stockholders' equity and cash flows of the Company and
its Subsidiaries as of the dates thereof and for the periods ended on such dates
(in each case subject, as to interim statements, to changes resulting from
year-end adjustments, which in the aggregate will not be material in amount or
effect). The Company and its Subsidiaries have no material liabilities,
contingent or otherwise, not reflected in the Company's balance sheet as of
January 31, 1999 that is included in the SEC Reports or otherwise referred to in
the SEC Reports or otherwise disclosed to the Purchasers in writing prior to the
date of this Agreement, other than any such liabilities incurred in the ordinary
course of business, consistent with past practice, since January 31, 1999. Since
January 31, 1999, the Company and its Subsidiaries have operated their
respective businesses only in the ordinary course, consistent with past
practice, and no event has occurred that has or is reasonably likely to have a
material adverse effect on the business, financial condition, operations,
results of operations, assets, liabilities or prospects of the Company or any of
its Subsidiaries (a "MATERIAL ADVERSE EFFECT"), other than changes disclosed or
referred to in the SEC Reports or otherwise disclosed to the Purchasers in
writing prior to the date of this Agreement.
2.6 ACTIONS PENDING; COMPLIANCE WITH LAWS. There is no action, suit,
investigation or proceeding pending or, to the knowledge of the Company,
threatened by any public official or governmental authority, against the Company
or any of its Subsidiaries or any of their respective properties or assets by or
before any court, arbitrator or governmental body, department, commission,
board, bureau, agency or instrumentality, which questions the validity or
enforceability of, or seeks to enjoin or in validate this Agreement, the
Stockholders Agreement, the Registration Rights Agreement or the Series A
Preferred Stock or any action taken or to be taken pursuant hereto or thereto,
or, except as set forth in the SEC Reports or as otherwise disclosed to the
Purchasers in writing, which is reasonably likely to be material to the Company
or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries
is in default in any material respect with respect to any judgment, order, writ,
injunction, decree or award.
2.7 TITLE TO PROPERTIES; INSURANCE. The Company and each of its
Subsidiaries have good and valid title to, or, in the case of property leased by
any of them as lessee, a valid and subsisting leasehold interest in, their
respective properties and assets, free of all liens and encumbrances other than
those referred to in the financial statements of the Company (or the notes
thereto) for the fiscal year ended January 31, 1999, included in the SEC
Reports, except in each case for such defects in title and such other liens and
encumbrances which are disclosed in the SEC Reports or which do not in the
aggregate materially detract from the value to the Company and its Subsidiaries
of their respective properties and assets. The Company and its Subsidiaries
maintain insurance in such amounts (to the extent available in the public
market), including self-insurance, retainage and deductible arrangements, and of
such a character as is reasonable for companies engaged in the same or similar
business. All insurance policies of the Company and its Subsidiaries are
disclosed on SCHEDULE 2.7.
2.8 GOVERNMENTAL CONSENTS, ETC. The Company is not required to obtain
any consent, approval or authorization of, or to make any declaration or filing
with, any governmental authority or other Person as a condition to or in
connection with the valid execution, delivery and performance of this Agreement,
the Stockholders Agreement and the Registration Rights Agreement and the valid
offer, issue, sale or delivery of the Series A Preferred Stock, or the
performance by the Company of its obligations in respect thereof, except for any
filings required to effect any registration pursuant to the Registration Rights
Agreement and any filings required pursuant to state and federal securities laws
which will be timely made after the applicable Closing hereunder.
2.9 HOLDING COMPANY ACT AND INVESTMENT COMPANY ACT. Neither the
Company nor any Subsidiary is: (i) a "public utility company" or a "holding
company," or an "affiliate" or a "subsidiary company" of a "holding company," or
an "affiliate" of such a "subsidiary company," as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended, or (ii) a "public
utility," as defined in the Federal Power Act, as amended, or (iii) an
"investment company" or an "affiliated person" thereof or an "affiliated person"
of any such "affiliated person," as such terms are defined in the Investment
Company Act of 1940, as amended.
2.10 TAXES. (a) The Company and each of its Subsidiaries have filed or
caused to be filed all tax returns which are required to be filed by them, and
all such tax returns are true, complete and correct in all material respects.
The Company and each of its Subsidiaries have paid or caused to be paid all
taxes that have become due, except taxes the validity or amount of which is
being contested in good faith by appropriate proceedings and with respect to
which adequate reserves have been set aside in accordance with generally
accepted accounting principles. The federal income tax returns of the Company
and its Subsidiaries have been examined and reported on by the Internal Revenue
Service (or closed by applicable statutes) and all tax liabilities including
additional assessments have been satisfied for all fiscal years prior to and
including the fiscal year ended December 31, 1993 for the Company and its
Subsidiaries. The Company and its Subsidiaries have paid or caused to be paid,
or have established reserves in accordance with generally accepted accounting
principles that the Company reasonably believes are adequate, for all federal
income tax liabilities and state income tax liabilities applicable to the
Company or any of its Subsidiaries for all fiscal years which have not been
examined and reported on by the taxing authorities (or closed by applicable
statutes).
(b) As of January 31, 1999, the Company did not have any accumulated
"earnings and profits" as determined under section 312 of the Internal Revenue
Code of 1986, as amended (the "CODE"). To the best knowledge and belief of the
Company, the Company does not anticipate having any material current earnings
and profits, as determined under section 312 of the Code, for its current
taxable year. As of the date hereof, the Company is not a "United States real
property holding corporation" within the meaning of section 897(c)(2) of the
Code. The Company shall not become a United States real property holding
corporation.
2.11 CONFLICTING AGREEMENTS AND CHARTER PROVISIONS. Neither the
Company nor any of its Subsidiaries is a party to any contract or agreement or
subject to any charter or bylaw provision or judgment or decree which has or is
reasonably likely to have a Material Adverse Effect. None of (i) the execution
and delivery of this Agreement, the Shareholders Agreement and the Registration
Rights Agreement and the issuance of the Series A Preferred Stock and (ii) the
fulfillment of and compliance with the terms and provisions hereof and thereof
and of the Series A Preferred Stock will conflict with or result in a breach of
the terms, conditions or provisions of, or give rise to a fight of termination
under, or constitute a default under, or result in any violation of, the
Certificate of Incorporation or By-laws of the Company or any Subsidiary or any
mortgage, agreement, instrument, order, judgment, decree, statute, law, rule or
regulation to which the Company or any Subsidiary or any of their respective
properties is subject. Neither the Company nor any of its Subsidiaries (i) is in
default under any outstanding indenture or other debt instrument or with respect
to the payment of principal of or interest on any outstanding obligation for
borrowed money, or (ii) is in default under any of their respective contracts or
agreements, or under any instrument by which the Company or any of its
Subsidiaries is bound which default, in the case of this clause (ii),
individually or in the aggregate with all other such defaults, would be material
to the Company or any of its Subsidiaries.
2.12 CAPITALIZATION. As of the date hereof, the authorized capital
stock of the Company consists of: (a) 35,000,000 shares of Common Stock, par
value $0.001 per share (the "COMMON STOCK" and, together with the Series A
Preferred Stock, the "STOCK"), of which 22,050,328 shares are validly issued and
outstanding, fully paid and nonassessable; (b) warrants to purchase 2,712,045
shares of Common Stock which are validly issued and outstanding, fully paid and
nonassessable; (c) options to purchase 2,823,458 shares of Common Stock and
deferred stock units representing the right to receive 85,225 shares of Common
Stock, all of which are validly issued and outstanding, fully paid and
nonassessable; and (d) 666,667 shares of Preferred Stock, par value $.001 per
share, of which no shares are outstanding, as of the date hereof, and 380,000
shares designated as Series A Convertible Preferred Stock will preemptive
rights. Except for the options and warrants listed above, there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, securities or rights
convertible into, shares of any class of capital stock of the Company, or
contracts, commitments, understandings, or arrangements by which the Company is
or may become bound to issue additional shares of its capital stock or options,
warrants or rights to purchase or acquire any shares of its capital stock. Since
August 1, 1996, the Company has not changed the amount of its authorized capital
stock or subdivided or otherwise changed any shares of any class of its capital
stock, whether by way of reclassification, recapitalization, stock split or
otherwise, or issued or reissued, or agreed to issue or reissue, any of its
capital stock.
2.13 ISSUANCE, SALE AND DELIVERY OF THE SERIES A PREFERRED STOCK. The
shares of Series A Preferred Stock being issued to the Initial Purchasers at the
First Closing and the shares of Series A Preferred Stock being issued to the
Individual Purchasers at the Second Closing are duly authorized and when issued
and delivered in accordance herewith will be, validly issued, fully paid and
nonassessable. The 17,272,727 shares of Common Stock to be issued upon
conversion of the Series A Preferred Stock, when issued and delivered upon such
conversion in accordance with the terms of the Certificate of Designation, will
be validly issued, fully paid and nonassessable. The Company will take all
action necessary to increase its authorized but unissued shares of Common Stock
to such number of shares as shall be sufficient to reserve shares of Common
Stock for issuance upon conversion of the Series A Preferred Stock, including,
without limitation, obtaining the requisite stockholder approval of any
necessary amendment to the Company's Certificate of Incorporation.
2.14 REGISTRATION UNDER EXCHANGE ACT. The Company has not registered
the Series A Preferred Stock as a class pursuant to Section 12 of the Exchange
Act.
2.15 ERISA. No accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, exists with
respect to any Pension Plan (as defined in Section 11) (other than a
Multiemployer Plan (as defined below)). No liability to the PBGC has been, or is
reasonably likely to be, incurred with respect to any Pension Plan (other than a
Multiemployer Plan) by the Company, any of its Subsidiaries or any ERISA
Affiliate (as defined below) which is or would be materially adverse to the
Company, its Subsidiaries and any ERISA Affiliate. Neither the Company nor any
of its Subsidiaries and any ERISA Affiliate has incurred, or is reasonably
likely to incur, any withdrawal liability under Title IV of ERISA with respect
to any Multiemployer Plan which is or would be materially adverse to the
Company, its Subsidiaries and its ERISA Affiliates and if the Company, its
Subsidiaries and ERISA Affiliates, were to completely withdraw as of the date
hereof from each Multiemployer Plan in which they participate, the Company, its
Subsidiaries and its ERISA Affiliates would not incur any material withdrawal
liability under Title IV of ERISA. Neither the Company nor any of its
Subsidiaries has any obligation to provide post-retirement health benefits to
any employee or former employee. No fiduciary of any employee benefit plan (as
defined in Section 3(3) of ERISA) maintained or contributed to by the Company or
any of its subsidiaries, for the benefit of their respective employees (each an
"EMPLOYEE PLAN") has engaged or caused any Employee Plan to engage in any
transaction prohibited by Section 4975 of the Code or Section 406 of ERISA which
is reasonably likely to subject the Company or any Subsidiary or any entity the
Company or any Subsidiary has an obligation to indemnify to any tax or penalty
imposed under Section 4975 of the Code or Section 502 of ERISA. Each Employee
Plan has been maintained and administered in compliance with all applicable law
including ERISA and the Code in all material respects. An "ERISA AFFILIATE" for
purposes of this Section is any trade or business, whether or not incorporated,
which, together with the Company, is under common control, as described in
Section 414(b) or (c) of the Code, and the term "MULTIEMPLOYER PLAN" shall mean
any Pension Plan which is a "multiemployer plan" (as such term is defined in
Section 4001(a)(3) of ERISA).
2.16 POSSESSION OF FRANCHISES, LICENSES, ETC. The Company and its
Subsidiaries possess all franchises, certificates, licenses, permits and other
authorizations from governmental or political subdivisions or regulatory
authorities and all patents, trademarks, service marks, trade names, copyrights,
licenses and other rights, free from burdensome restrictions, that are necessary
in any material respect to the Company or any of its Subsidiaries for the
ownership, maintenance and operation of their respective properties and assets,
and neither the Company nor any of its Subsidiaries is in violation of any
thereof in any material respect.
2.17 ENVIRONMENTAL AND OTHER REGULATIONS. The Company and its
Subsidiaries are in compliance with all applicable laws and regulations relating
to protection of the environment and human health, and are in compliance in all
material respects with all other applicable laws and regulations, including,
without limitation, those relating to equal employment opportunity and
employment safety. There are no claims, notices, civil, criminal or
administrative actions, suits, hearings, investigations, inquiries or
proceedings pending or, to the best knowledge of the Company, threatened against
the Company or any Subsidiary that are based on or related to any environmental
matters, including any disposal of hazardous substances at any place, or the
failure to have any required environmental permits, and there are no past or
present conditions that are likely to give rise to any liability or other
obligations of the Company or any Subsidiary under any environmental laws.
2.18 PATENTS AND TRADEMARKS. Set forth on SCHEDULE 2.18 is a true and
complete list of all patents, patent applications, trademarks, service marks,
trademark and service xxxx applications, trade names, copyrights and licenses
presently used by the Company or any Subsidiary or necessary for the conduct of
the business of the Company and its Subsidiaries as conducted and as proposed to
be conducted (the "INTELLECTUAL PROPERTY RIGHTS"). The Company owns, or has the
right to use under the agreements or upon the terms described on SCHEDULE 2.18,
all of the Intellectual Property Rights. To the best of the Company's knowledge,
the business conducted or proposed to be conducted by the Company and its
Subsidiaries does not infringe or violate any of the patents, trademarks,
service marks, trade names, copyrights, licenses, trade secrets or other
proprietary rights of any other Person. Except as set forth on SCHEDULE 2.18, to
the Company's knowledge, no other Person has any right to or interest in any
inventions, improvements, discoveries or other confidential in formation
utilized by the Company or any Subsidiary in its business.
2.19 MATERIAL CONTRACTS AND OBLIGATIONS. SCHEDULE 2.19 sets forth a
list of the following agreements or commitments of any nature to which the
Company or any Subsidiary is a party or by which it is bound: (a) any agreement
relating to material Intellectual Property Rights, (b) all employment and
consulting agreements, and all employee benefit, bonus, pension, profit-sharing,
stock option, stock purchase and similar plans and arrangements (other than
plans or arrangements providing for less than $10,000 per employee), (c) all
manufacturing, distributor and sales representative agreements and all
agreements with suppliers or vendors if the value of the payments thereunder is
in excess of $100,000, (d) all agreements or commitments that materially
restrict the ability of the Company or any Subsidiary or Affiliate to engage in
any business or line of business in any location, (e) all agreements or
commitments relating to indebtedness or guarantees of the Company or any
Subsidiary if the value of the payments thereunder is in excess of $100,000 and
(f) any other agreement or commitment which requires future payments by or to
the Company or any Subsidiary in excess of $100,000 or which is otherwise
material to the Company or any of its Subsidiaries. The Company has delivered or
made available to the Purchasers copies of all of the foregoing agreements and
commitments. To the best knowledge of the Company, all of such agreements and
commitments are valid, binding and in full force and effect.
2.20 BOOKS AND RECORDS. All the books, records and accounts of the
Company and its Subsidiaries are in all material respects true and complete, are
maintained in accordance with good business practice and all laws applicable to
its business, and accurately present and reflect in all material respects all of
the transactions therein described. The Company has previously delivered to the
Purchasers true and complete texts of all of the minutes relating to meetings of
the stockholders, boards of directors and committees of the Company and each
Subsidiary for the past five years.
2.21 TRANSACTIONS WITH RELATED PARTIES. SCHEDULE 2.21 sets forth a
true and complete list of the amounts and other essential terms of any contract,
arrangement or transaction currently in effect or effected during the past five
years between the Company or any Subsidiary and any Related Party, other than
(i) arrangements for the payment of salary, including bonuses, for services
rendered to the Company, which arrangements have previously been disclosed to
the Purchasers, (ii) other arrangements with any such Person which in the
aggregate do not involve more than $10,000 or (iii) as previously disclosed in
the SEC Reports.
2.22 BROKERS. Neither the Company nor any Subsidiary has engaged any
finder, broker or investment adviser, and has no obligation to pay any fees, in
connection with the transactions contemplated hereby.
2.23 ACCURACY OF INFORMATION. None of the representations and
warranties of the Company contained herein or the information, documents or
other materials (other than projections) which have been furnished in writing by
the Company or any of its representatives to the Purchasers in connection with
the transactions contemplated by this Agreement contains any material
misstatement of fact, or omits any material fact necessary to make the
statements herein and therein, in light of the circumstances under which they
were made, not misleading. All projections furnished in writing by the Company
(i) have been prepared by management of the Company after a careful analysis of
all material data, (ii) are based on reasonable assumptions by management of the
Company and (iii) represent the best estimate by management of the Company,
based upon current reasonable assumptions, as to the financial performance of
the Company and its Subsidiaries for the periods indicated, but do not represent
any guarantee or assurance of the future financial results of the Company and
its Subsidiaries.
2.24 OFFERING OF SERIES A PREFERRED STOCK. Neither the Company nor any
Person acting on its behalf has offered any of the Series A Preferred Stock or
any similar securities of the Company for sale to, solicited any offers to buy
any of the Series A Preferred Stock or any similar securities of the Company
from or otherwise approached or negotiated with respect to the Company with any
Person other than the Purchasers and other "ACCREDITED INVESTORS" (as defined in
Rule 501(a) under the Securities Act). Neither the Company nor any Person acting
on its behalf has taken or will take any action (including, without limitation,
any offering of any securities of the Company under circumstances which would
require the integration of such offering with the offering of any of the Series
A Preferred Stock under the Securities Act and the rules and regulations of the
Commission thereunder) which could reasonably be expected to subject the
offering, issuance or sale of any of the Series A Preferred Stock to the
registration requirements of Section 5 of the Securities Act.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser represents and warrants as follows:
3.1 ORGANIZATION AND QUALIFICATION. Such Purchaser is either (a) (i)
duly organized and existing in good standing under the laws of the jurisdiction
of its formation and has the power to own its respective property and to carry
on its respective business as now being conducted and (ii) duly qualified to do
business and in good standing in every jurisdiction in which the nature of the
respective business conducted or property owned by it makes such qualification
necessary, except where the failure to so qualify would not prevent consummation
of the transactions contemplated hereby or have a material adverse effect on
such Purchaser's ability to perform its obligations hereunder or (b) a natural
person with the capacity to enter into this Agreement and to consummate the
transactions contemplated hereby.
3.2 DUE AUTHORIZATION. Such Purchaser has all right, power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Purchaser and the consummation by such Purchaser of the transactions
contemplated hereby have been duly authorized by all necessary action on behalf
of such Purchaser. This Agreement has been duly executed and delivered by the
Purchaser and constitutes a valid and binding agreement of the Purchaser
enforceable in accordance with its terms, except that (i) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors, rights, and (ii)
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
3.3 CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the execution
and delivery of this Agreement nor the performance by the Purchaser of its
obligations hereunder will conflict with, result in a breach of the terms,
conditions or provisions of, constitute a default under, or require any consent,
approval or other action by or any notice to or filing with any court or
administrative or governmental body pursuant to, the organizational documents or
agreements of the Purchaser or any mortgage, agreement, instrument, order,
judgment, decree, statute, law, rule or regulation to which the Purchaser or any
of its respective properties are subject.
3.4 ACQUISITION FOR INVESTMENT. The Purchaser is acquiring the Series
A Preferred Stock being purchased by it for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof, and the Purchaser has no present intention or plan to
effect any distribution thereof. The Purchaser acknowledges that the Series A
Preferred Stock has not been registered under the Securities Act and may be sold
or disposed of in the absence of such registration only pursuant to an exemption
from such registration.
3.5 BROKERS OR FINDERS. No agent, broker, investment banker or other
firm or Person, including any of the foregoing that is an Affiliate of the
Purchasers, is or will be entitled to any broker's fee or any other commission
or similar fee from the Purchaser in connection with any of the transactions
contemplated by this Agreement that the Company will be responsible for pursuant
to Section 9.9.
3.6 ACCREDITED INVESTOR. The Purchaser is an "Accredited Investor"
within the meaning of Rule 501 promulgated under the Securities Act.
SECTION 4. COVENANTS OF THE COMPANY.
4.1 LIMITATION ON SENIOR EQUITY SECURITIES. Without the consent of the
holders of a majority of the then outstanding shares of Series A Preferred
Stock, the Company will not issue any equity securities or any rights, options,
warrants or other securities which are exercisable for, exchangeable for or
convertible into shares of any class of capital stock ranking PARI PASSU or
senior as to dividends or upon liquidation to the Series A Preferred Stock.
4.2 COMPLIANCE WITH LAWS. The Company will, and will cause each
Subsidiary to, comply with all applicable statutes, rules, regulations and
orders of all governmental authorities, with respect to the conduct of its
business and the ownership of its properties, including without limitation,
those relating to protection of the environment and human health, equal
employment opportunity, employee safety, ERISA and international trade laws and
regulations, and apply for, obtain and maintain all permits necessary for the
conduct of its business and the ownership of its properties.
4.3 PRESERVATION OF FRANCHISES AND EXISTENCE. The Company will (i)
maintain its corporate existence, rights and franchises in full force and
effect, and (ii) cause the Subsidiaries to maintain their respective corporate
existences, rights and franchises in full force and effect; PROVIDED that
nothing in this Section 4.3 shall prevent the Company or any Subsidiary from
discontinuing its operations in any particular state or at any particular
location or locations within the state, or prevent the corporate existence,
rights and franchises of any Subsidiary from being terminated if, in the opinion
of the Board of Directors, the preservation thereof is no longer desirable in
the conduct of the business of the Company and its Subsidiaries and the loss
thereof is not disadvantageous in any material respect to the holders of Series
A Preferred Stock.
4.4 USE OF PROCEEDS. The Company will only use the Proceeds for
Permitted Proceeds Uses; PROVIDED that, in the case of Retail Proceeds, the
Company may, pending any Retail Proceeds Uses, use Retail Proceeds to pay down
long-term indebtedness so long as the Company has the right to immediately
reborrow such amounts.
4.5 INSURANCE. The Company will, and will cause each of the
Subsidiaries to, maintain with insurers believed by the Company to be
responsible such insurance, in such amounts and of such types as are customarily
carried under similar circumstances by companies engaged in the same or a
similar business or having similar properties similarly situated.
4.6 PAYMENT OF TAXES AND OTHER CHARGES. The Company will pay or
discharge, and will cause each of the Subsidiaries to pay or discharge, before
the same shall become delinquent, (i) all taxes, assessments and other
governmental charges or levies imposed upon it or any of its properties or
income (including, without limitation, such as may arise under Sections 4062,
4063, or 4064 of ERISA or any similar provision of law), and (ii) all claims or
demands of materialmen, mechanics, carriers, warehousemen, landlords and other
like Persons which, in the case of either clause (i) or clause (ii), if unpaid,
might result in the creation of a material lien upon any of its properties,
PROVIDED, HOWEVER, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith pursuant to
appropriate proceedings.
4.7 EFFECT OF BREACH. In addition to the rights of THLi under the
Stockholders Agreement, upon the occurrence of an Event of Default and
notification by THLi prior to the two-year anniversary of the First Closing Date
of its desire to add directors in accordance with Section 6.2, then the Board of
Directors shall take all necessary action to increase or decrease the size of
the Board of Directors and to appoint to the Board of Directors a number of
additional members (the "ADDITIONAL MEMBERS") designated by THLi that, when
added to any directors then in office designated solely by THLi, will result in
directors designated by THLi constituting a majority of the entire Board of
Directors. THLi shall be entitled to designate the Additional Members and, for
so long as such Event of Default continues, at each subsequent annual meeting,
THLi shall be entitled to propose (and the Board of Directors shall nominate and
recommend) Persons reasonably acceptable to the Board of Directors as the
Additional Members of the Board of Directors. In the event of any vacancy
arising by reason of the resignation, death, removal or inability to serve of
any Additional Member, THLi shall be entitled to designate a successor to fill
such vacancy for the remaining term of such director. At such times as such
Event of Default shall have been cured or waived, the rights of THLi under this
Section 4.7 shall terminate (and THLi shall cause such Additional Directors to
resign from the Board of Directors), subject to revesting in the event of each
and every subsequent Event of Default.
4.8 ERISA. Neither the Company nor any Subsidiary shall incur any
material liability with respect to retiree medical or death benefits or unfunded
benefits payable after termination of employment. All employee benefit plans and
arrangements maintained or contributed to by the Company, any Subsidiary or any
ERISA Affiliate shall be maintained in compliance in all material respects with
all applicable law, including any reporting requirements. With respect to any
plan maintained by or contributed to by the Company or any Subsidiary, neither
the Company nor any Subsidiary will fail to make any contribution due from it
under the terms of such plan or as required by law. Neither the Company nor any
ERISA Affiliate will permit a Pension Plan to incur an accumulated funding
deficiency (as such term is defined in Section 302 of ERISA or Section 412 of
the Code), whether or not waived, cause a lien or a security interest to attach
to any asset of the Company or any Subsidiary for the benefit of any Plan, or
incur any liability which would be material to the Company or any of its
Subsidiaries under Title IV of ERISA, including withdrawal liability (other than
the payment of premiums, none of which are overdue). Neither the Company nor any
Subsidiary, nor any other Person including any fiduciary, will engage in any
transaction prohibited by Section 406 of ERISA or Section 4975 of the Code which
is reasonably likely to subject the Company, any Subsidiary or any entity that
the Company or any Subsidiary has an obligation to indemnify to any tax or
penalty imposed under Section 4975 of the Code or Section 502 of ERISA.
4.9 FINANCIAL STATEMENTS AND OTHER REPORTS.
(a) The Company will, as soon as practicable and in any
event within 60 days after the end of each quarterly period
(other than the last quarterly period) in each fiscal year,
furnish to THLi statements of consolidated net income and cash
flows and a statement of changes in consolidated stockholders'
equity of the Company and its Subsidiaries for the period from
the beginning of the then current fiscal year to the end of such
quarterly period, and a consolidated balance sheet of the Company
and its Subsidiaries as of the end of such quarterly period,
setting forth in each case in comparative form figures for the
corresponding period or date in the preceding fiscal year, all in
reasonable detail and certified by an authorized financial
officer of the Company, subject to changes resulting from
year-end adjustments; PROVIDED, HOWEVER, that delivery pursuant
to clause (iii) below of a copy of the Quarterly Report on Form
10-Q of the Company for such quarterly period filed with the
Commission shall be deemed to satisfy the requirements of this
clause (i);
(b) The Company will, as soon as practicable and in any
event within 100 days after the end of each fiscal year, furnish
to THLi statements of consolidated net income and cash flows and
a statement of changes in consolidated stockholders' equity of
the Company and its Subsidiaries for such year, and a
consolidated balance sheet of the Company and its Subsidiaries as
of the end of such year, setting forth in each case in
comparative form the corresponding figures from the preceding
fiscal year, all in reasonable detail and examined and reported
on by independent public accountants of recognized national
standing selected by the Company; PROVIDED, HOWEVER, that
delivery pursuant to clause (iii) below of a copy of the Annual
Report on Form 10-K of the Company for such fiscal year filed
with the Commission shall be deemed to satisfy the requirements
of this clause (ii);
(c) The Company will, promptly upon transmission thereof,
furnish to each Purchaser copies of all such financial
statements, proxy statements, notices and reports as it shall
send to its stockholders and copies of all such registration
statements (without exhibits), other than registration statements
relating to employee benefit or dividend reinvestment plans, and
all such regular and periodic reports as it shall file with the
Commission;
(d) The Company will, promptly after such package becomes
available, furnish to THLi copies of all financial reporting
packages prepared for management of the Company; and
(e) Until the two-year anniversary of the First Closing
Date, the Company will, as soon as practicable, and in any event
within 5 days after the end of each month, furnish to THLi and
GECC detailed reports, and any other information THLi and GECC
may reasonably request, relating to (i) the use of Proceeds by
the Company and its Subsidiaries and (ii) the Company's
compliance with the Retail Plan and the E-Commerce Plan;
(f) The Company will promptly furnish to THLi copies of any
reports furnished to GECC pursuant to the Note Agreement; and
(g) The Company will promptly furnish to THLi copies of any
compliance certificates furnished to lenders in respect of
indebtedness of the Company and its Subsidiaries and, with
reasonable promptness, furnish to each Purchaser such other
financial and other data of the Company and its Subsidiaries as
such Purchaser may reasonably request, including, but not limited
to, operating financial information for each retail store owned
or operated by the Company or any of its Subsidiaries.
4.10 INSPECTION OF PROPERTY. The Company will permit representatives
of THLi to visit and inspect, at THLi's expense, any of the properties of the
Company and its Subsidiaries, to examine the corporate books and make copies or
extracts therefrom and to discuss the affairs, finances and accounts of the
Company and its Subsidiaries with the principal officers of the Company, all at
such reasonable times, upon reasonable notice and as often as such Purchaser may
reasonably request.
4.11 LOST, STOLEN, DAMAGED AND DESTROYED STOCK CERTIFICATES. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of any certificate for shares of Series A Preferred Stock (or any
certificate for the shares of Common Stock into which the Series A Preferred
Stock is convertible) and in the case of loss, theft or destruction, upon
delivery of an indemnity satisfactory to the Company (which, in the case of any
Purchaser, may be an undertaking by such Purchaser so to indemnify the Company),
or, in the case of mutilation, upon surrender and cancellation thereof, the
Company will issue a new certificate of like tenor for a number of shares of
Series A Preferred Stock (or, if applicable, shares of Common Stock into which
the Series A Preferred Stock is convertible) equal to the number of shares of
such stock represented by the certificate lost, stolen, destroyed or mutilated.
4.12 RELATED PARTY TRANSACTIONS. The Company shall not, directly or
indirectly, and shall not permit any of its Subsidiaries to, directly or
indirectly, enter into, amend or terminate any contract, arrangement or
transaction with a Related Party, other than (i) any action to terminate the
Consumer Credit Card Agreement by and among Xxxxxx'x Sofa Factory, Xxxxxx
Convertible Corporation and Monogram Credit Bank of Georgia, dated as of April
27, 1997 and (ii) the payment of salary and benefits pursuant to employment
agreements entered into in the ordinary course of business.
4.13 OPERATIONS IN ACCORDANCE WITH BUSINESS PLAN. The business and
operations of the Company and its Subsidiaries shall be conducted in all
material respects in accordance with the Company's annual business plan as
approved by a majority of the Board of Directors, which majority must include
the GECC Designee and the THLi Designees (each as defined in the Stockholders
Agreement), except for such changes which shall have been approved in accordance
with Section 2.2(u) of the Stockholders Agreement. The Company shall submit the
E-Commerce Plan to the Board of Directors for approval no later than 90 days
from the First Closing Date.
4.14 RESERVATION OF SHARES. From and after the 15th day following the
first meeting of stockholders of the Company occurring on or after the First
Closing Date, the Company 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 shares of the Series A Preferred Stock, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Series A Preferred Stock.
4.15 NOTICE OF BREACH. As promptly as practicable, and in any event
not later than ten Business Days after senior management of the Company becomes
aware of any breach by the Company of any provision of this Agreement,
including, without limitation, this Article 4, the Company shall provide the
Purchasers with written notice specifying the nature of such breach and any
actions proposed to be taken by the Company to cure such breach.
4.16 LIMITATION ON DIVIDENDS. The Company shall not pay any dividends
on Common Stock so long as any shares of Series A Preferred Stock remain
outstanding.
4.17 RIGHT OF FIRST REFUSAL. Subject to the terms and conditions
specified in this Section 4.17, the Company hereby grants to THLi or any of its
designees (collectively, the "FIRST REFUSAL STOCKHOLDERS") a right of first
offer with respect to future sales by the Company of its Offered Shares (as
hereinafter defined).
Each time the Company proposes to offer any shares of, or securities
convertible into or exercisable or exchangeable for any shares of, any class of
its capital stock ("OFFERED SHARES"), the Company shall first make an offering
of such Offered Shares to the First Refusal Stockholders in accordance with the
following provisions:
(a) The Company shall deliver a notice in accordance with
Section 9.5 of this Agreement ("NOTICE") to THLi stating (i) its
BONA FIDE intention to offer such Offered Shares, (ii) the number
of such Offered Shares to be offered, and (iii) the price and
terms, if any, upon which it proposes to offer such Offered
Shares.
(b) Within 15 days after delivery of the Notice, the First
Refusal Stockholders may elect to purchase or obtain, at the
price and on the terms specified in the Notice, up to that
portion of such Offered Shares that equals the proportion that
the number of shares of Common Stock issued and held (or issuable
upon conversion and exercise of all convertible or exercisable
securities then held by THLi and its Affiliates) bears to the
total number of shares of Common Stock then outstanding (assuming
full conversion and exercise of all outstanding convertible or
exercisable securities).
(c) The right of first offer in this Section 4 shall not be
applicable to any issuance or sale of any of the following
securities:
(i) Common Stock issued pursuant to any stock split,
dividend or distribution payable in additional shares of
Common Stock or other securities or rights convertible into,
or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock without
payment of any consideration by such holder, PROVIDED that
all holders of capital stock of the Company and options or
warrants or other securities exercisable or exchangeable for
or convertible into, capital stock of the Company receive
their PRO RATA share (on a common equivalent basis) of such
Common Stock,
(ii) Common Stock issuable or issued to employees,
consultants or directors of the Company directly or pursuant
to a stock option plan or restricted stock plan, or other
similar arrangements related to compensation for services in
effect on the date of this Agreement, or thereafter approved
by a
(iii) Common Stock issued in a bona fide firm
commitment underwritten offering to the public.
SECTION 5. RESTRICTIONS ON TRANSFER.
Neither the Purchasers or any of their respective Affiliates shall,
directly or indirectly, sell, transfer, pledge, encumber or otherwise dispose of
(collectively, a "TRANSFER") any of the Series A Preferred Stock or Common Stock
received upon conversion of the Series A Preferred Stock, except for: (a)
Transfers to or between Affiliates who agree to be bound by the provisions of
this Agreement; (b) Transfers of Series A Preferred Stock or Common Stock
received upon conversion of the Series A Preferred Stock pursuant to the
exercise of the registration rights set forth in the Registration Rights
Agreement; or (c) other Transfers that comply with the provisions of the
Securities Act. The Company may require, in connection with any Transfer
pursuant to the preceding clause (c), an opinion of counsel to the Purchaser
that such Transfer complies with the provisions of the Securities Act.
SECTION 6. EVENT OF DEFAULT AND REMEDIES.
6.1 EVENT OF DEFAULT. The occurrence of any of the events set forth on
Schedule prior to the two-year anniversary of the First Closing Date shall
constitute an Event of Default under this Agreement.
6.2 REMEDIES. The Company shall notify the Purchasers immediately upon
becoming aware of any Event of Default. If an Event of Default occurs and is
continuing, then in every such case:
(a) THLi at its option, shall have the right to either:
(i) demand immediate redemption of up to its Maximum Number
(as such term is defined in the Certificate of Designation) of
shares of Series A Preferred Stock pursuant to paragraph 5(c) of
the Certificate of Designation, or
(ii) nominate and designate additional members of the Board
of Directors pursuant to Section 4.7 hereof; and
(b) without limiting the foregoing, any Purchaser may enforce its
rights by suit in equity, by action at law, or by any other appropriate
proceedings, whether for the specific performance (to the extent permitted by
law) of any covenant or agreement contained in this Agreement or the Certificate
of Incorporation or in aid of the exercise of any power granted in this
Agreement or the Certificate of Incorporation.
If THLi elects to demand redemption pursuant to clause (a)(i) above,
each other holder of Series A Preferred Stock shall also be entitled to demand
immediate redemption of such shares of Series A Preferred Stock permitted under
paragraph 5(c) of the Certificate of Designation.
6.3 CONDUCT NO WAIVER. No course of dealing on the part of any holder,
nor any delay or failure on the part of any holder to exercise any of its
rights, shall operate as a waiver of such right or otherwise prejudice such
holder's rights, powers and remedies.
6.4 REMEDIES CUMULATIVE. No right or remedy conferred upon or reserved
to the holders of Series A Preferred Stock under this Agreement is intended to
be exclusive of any other right or remedy, and every right and remedy shall be
cumulative and in addition to every other right and remedy given hereunder or
now and hereafter existing under applicable law. Every right and remedy given by
this Agreement or by applicable law to the holders of Series A Preferred Stock
may be exercised from time to time and as often as may be deemed expedient by
the holders.
SECTION 7. CONDITIONS.
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE TRANSACTIONS
CONTEMPLATED HEREBY. The respective obligations of each party to effect the
transactions contemplated by this Agreement shall be subject to the fulfillment
at or prior to the applicable Closing Date of the following conditions:
(a) No temporary restraining order, preliminary or permanent
injunction or other order or decree by any court of competent
jurisdiction which prevents the consummation of the transactions
contemplated hereby or imposes material conditions with respect
thereto shall have been issued and remain in effect (each party
agreeing to use its reasonable efforts to have any such injunction,
order or decree lifted).
(b) No Action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any State or Federal government
or governmental agency which would prevent the consummation of the
transactions contemplated by this Agreement or imposes material
conditions with respect thereto.
(c) All consents and approvals of governmental entities legally
required for the consummation of the transactions contemplated by this
Agreement shall have been obtained and be in effect at the applicable
Closing Date, except those for which failure to obtain such consents
and approvals would not, individually or in the aggregate, have a
Material Adverse Effect or materially impair the ability of any party
to this Agreement to consummate the transactions contemplated by this
Agreement.
7.2 CONDITIONS TO PURCHASERS' OBLIGATIONS TO EFFECT THE TRANSACTIONS
CONTEMPLATED HEREBY. The obligations of the Purchasers to effect the
transactions contemplated by this Agreement shall be subject to the fulfillment
at or prior to the applicable Closing Date of the following additional
conditions:
(a) The Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or
prior to the applicable Closing Date, and the representations and
warranties of the Company contained in this Agreement shall be true
and correct in all material respects (if not qualified by materiality)
and true and correct (if so qualified) on and as of the date of this
Agreement and at and as of the applicable Closing Date as if made at
and as of the applicable Closing Date, except to the extent that any
such representation or warranty expressly relates to another date (in
which case, as of such date).
(b) The consent or approval of each third party whose consent or
approval shall be required in connection with the transactions
contemplated hereby shall have been obtained.
(c) The Company and the stockholders listed on the signature
pages thereto shall have executed and delivered the Stockholders
Agreement substantially in the form attached hereto as EXHIBIT A.
(d) Purchasers shall have received an opinion of Xxxxxxxx &
Xxxxxxxx LLP, counsel to the Company, substantially in the form
attached hereto as EXHIBIT B.
(e) The Company and the stockholders listed on the signature
pages thereto shall have executed and delivered the Registration
Rights Agreement substantially in the form attached hereto as EXHIBIT
C.
(f) Since the date of this Agreement, there shall not have been
any change or events which have resulted or would in REASONABLE
probability result in a Material Adverse Effect.
(g) The Company, GECC and JOL shall have executed and delivered
the Indebtedness Amendment substantially in the form attached hereto
as EXHIBIT D.
(h) The Company shall have filed the Certificate of Designation
substantially in the form attached hereto as EXHIBIT E with the
Delaware Secretary of State.
(i) Purchasers shall have completed their business, legal and
financial due diligence review and the results of such review shall be
satisfactory to Purchasers in their sole judgment.
SECTION 8. INTERPRETATION.
8.1 DEFINITIONS
"AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
"BENEFICIALLY OWN" with respect to any Series A Preferred Stock shall
mean having "beneficial ownership" of such Series A Preferred Stock (as
determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to
any agreement, arrangement or understanding, whether or not in writing.
"BOARD OF DIRECTORS" shall mean the board of directors of the Company.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"CERTIFICATE OF DESIGNATION" shall mean the Certificate of Designation
of Series A Convertible Preferred Stock of the Company substantially in the form
attached hereto as EXHIBIT E.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONSOLIDATED" or "CONSOLIDATED," when used with reference to any
financial term in this Agreement (but not when used with respect to any tax
return or tax liability), shall mean the aggregate for two or more Persons of
the amounts 2.16 signified by such term for all such Persons, with inter-company
items eliminated and, with respect to earnings, after eliminating the portion of
earnings properly attributable to minority interests, if any, in the capital
stock of any such Person or attributable to shares of preferred stock of any
such Person not owned by any other such Person.
"E-COMMERCE PLAN" shall mean a business plan setting forth the
Company's planned business to business and E-commerce activities, including
detailed information with respect to E- Commerce Proceed Uses, strategy,
implementation of strategy, milestone targets and a timeline with respect
thereto, as such business plan may be amended from time to time in accordance
with Section 2.2(u) of the Stockholders Agreement.
"E-COMMERCE PROCEED USES" shall mean the use of Proceeds to build
infrastructure and sales and marketing capabilities for (including the
recruitment of appropriate talent associated with) business-to-business
activities and e-commerce activities, including commerce related to transactions
on the Internet and such further uses described in the E-Commerce Plan.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any successor Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Securities Exchange Act of 1934, as amended,
shall include reference to the comparable section, if any, of any such successor
Federal statute.
"GECC" shall mean, collectively, General Electric Capital Corporation,
a New York corporation and GE Capital Equity Investments, Inc., a Delaware
corporation.
"INDIVIDUAL PURCHASERS" shall mean the Purchasers other than THLi,
GECC and Permal.
"INITIAL PURCHASERS" shall mean TBLi, GECC and Permal.
"JOL" shall mean Japan Omnibus Ltd., an international business
corporation incorporated --- in the British Virgin Islands.
"NOTE AGREEMENT" shall mean, collectively, the Securities Purchase
Agreement dated as of August 26, 1996 between the Company and GECC and the
Supplemental Securities Purchase Agreement, dated as of August 14, 1997, among
the Company GECC and JOL, in each case, as amended.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PENSION PLAN" shall mean any multiemployer plan or single employer
plan, as defined in Section 4001 of ERISA, that is subject to Title IV of ERISA,
that the Company, any Subsidiary or any ERISA Affiliate maintains or is or ever
has been obligated to contribute to for the benefit of employees or former
employees of the Company, any Subsidiary or any ERISA Affiliate.
"PERMAL" shall mean those entities and individuals constituting the
Permal Group as set forth on Schedule C to the Stockholders Agreement.
"PERMITTED PROCEEDS USES" shall mean Retail Proceed Uses or E-Commerce
Proceed Uses.
"PERSON" shall mean any individual, firm, corporation, partnership or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
"PROCEEDS" shall mean the proceeds from the sale of the Series A
Preferred Stock pursuant to this Agreement.
"RELATED PARTY" shall mean any officer, director or beneficial holder
of 3% or more of the outstanding shares of capital stock of the Company or any
Subsidiary, any spouse, former spouse, child, parent, parent of a spouse,
sibling or grandchild of any such officer, director or beneficial holder of the
Company or any Subsidiary, and any Affiliate or Associate of any of the
foregoing Persons; PROVIDED, HOWEVER, that neither THLi nor GECC shall be deemed
to be a Related Party.
"RETAIL PLAN" shall mean a business plan setting forth the Company's
planned retail activities, including detailed information with respect to Retail
Proceed Uses, Strategy, implementation of Strategy, milestone targets and a time
line with respect thereto, as such business plan may be amended from time to
time in accordance with section 2.2(a) of the Stockholders Agreement.
"RETAIL PROCEED USES" shall mean the use of Proceeds to (i) repay the
Loan and Security Agreement, dated as of January 20, 1995, as amended, by and
between Congress Financial Corporation (Western), Xxxxxx'x Sofa Factory and
Xxxxxx Convertible Corporation (the "CREDIT AGREEMENT"), (ii) make capital
expenditures related to the opening of new stores, (iii) for working capital
purposes in connection with the Company's retail business and (iv) for such
further uses described in the Retail Plan.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SUBSIDIARY" of any Person means any corporation or other entity of
which a majority of the voting power or the Voting Securities or equity interest
is owned, directly or indirectly, by such Person.
"THLI shall mean, collectively, TH Xxx.Xxxxxx Internet Partners, L.P.
and TH Xxx.Xxxxxx. Internet Parallel Partners, L.P., together with their
affiliates.
"VOTING SECURITIES" of any Person shall mean at any time shares of any
class of capital stock of such Person which are then entitled to vote generally
in the election of directors.
8.2 ACCOUNTING PRINCIPLES. The character or amount of any asset,
liability, capital account or reserve and of any item of income or expense
required to be determined pursuant to this Agreement, and any consolidation or
other accounting computation required to be made pursuant to this Agreement, and
the construction of any definition in this Agreement containing a financial
term, shall be determined or made, as the case may be, in accordance with
generally accepted accounting principles, to the extent applicable, unless such
principles are inconsistent with the express requirements of this Agreement.
References in this Agreement to a fiscal year refer to the period ending on the
last Sunday of January of the following calendar year as determined by the 52/53
retail fiscal year. (For example, 1998 fiscal year refers to the fiscal year
ending January 31, 1999.)
SECTION 9. MISCELLANEOUS.
9.1 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement or any exhibit hereto is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement and such exhibits shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such which may be hereafter declared
invalid, void or unenforceable.
9.2 SPECIFIC ENFORCEMENT. Each Purchaser, on the one hand, and the
Company, on the other, acknowledge and agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction to
prevent breaches of the provisions of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
thereof having jurisdiction, this being in addition to any other remedy to which
they may be entitled at law or equity.
9.3 ENTIRE AGREEMENT. This Agreement (including the documents set
forth in the exhibits hereto) contains the entire understanding of the parties
with respect to the transactions contemplated hereby.
9.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
9.5 NOTICES AND OTHER COMMUNICATIONS. All notices, consents, requests,
instructions, approvals, financial statements, proxy statements, reports and
other communications provided for herein shall be in writing and shall be
delivered personally, by facsimile or sent by prepaid overnight courier service,
to:
The Company
Xxxxxx'x Furniture, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxx, XX 00000-0000
Facsimile #: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
With a copy to:
Xxxxxx'x Furniture, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxx, XX 00000-0000
Facsimile #: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
and
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxx 0xx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000-0000
Facsimile #: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx, Esq.
Each Purchaser:
At the address or facsimile number set forth on the
signature pages hereto.
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner.
9.6 AMENDMENTS. This Agreement may be amended as to the Purchasers and
their successors and assigns, and the Company may take any action herein
prohibited, or omit to perform any act required to be performed by it, if the
Company shall obtain (i) the written consent of the Purchasers and/or such
successors and assigns who are the registered holders of not less than a
majority of the outstanding shares of Series A Preferred Stock then held by the
Purchasers and their successors or assigns and (ii) the written consent of THLi;
PROVIDED, HOWEVER, that without the consent of each holder affected, however, no
amendment or waiver may (with respect to any shares of Series A Preferred Stock
held by a non consenting holder of shares of Series A Preferred Stock):
(a) reduce the aggregate number of shares of Series A Preferred
Stock whose holders must consent to an amendment or waiver of any
provision of this Agreement; or
(b) make any change in the foregoing amendment and waiver
provisions.
This Agreement may not be waived, changed, modified, or discharged
orally, but only by an agreement in writing signed by the party or parties
against whom enforcement of any waiver, change, modification or discharge is
sought or by parties with the right to consent to such waiver, change,
modification or discharge on behalf of such party.
9.7 COOPERATION. Each Purchaser and the Company agree to take, or
cause to be taken, all such further or other actions as shall reasonably be
necessary to make effective and consummate the transactions contemplated by this
Agreement.
9.8 SUCCESSORS AND ASSIGNS. All covenants and agreements contained
herein shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns. Any Purchaser may (but shall not be required
to) assign any or all of its rights under this Agreement to any transferee of
any Series A Preferred Stock; PROVIDED that THLi may only assign its rights
under Section 4 to a transferee of at least 30% of the Stock held by THLi as of
the date of this Agreement (calculated as if all shares of Series A Preferred
Stock had been converted into shares of Common Stock as of the date of such
calculation). If THLi assigns any or all of its rights under Section 4, such
rights shall only be exercised by holders of more than 50% of the Stock held by
TBLi as of the date of this Agreement (calculated as if all shares of Series A
Preferred Stock had been converted into shares of Common Stock as of the date of
such calculation). This Agreement may not be assigned by the Company.
9.9 EXPENSES AND REMEDIES.
(a) The Company agrees to pay THLi for all reasonable outside
legal and consulting fees of THLi in connection with this Agreement
and the consummation of all transactions contemplated hereby, which
costs shall not exceed $50,000, and all costs and expenses relating to
any future amendment or supplement to this Agreement or the Series A
Preferred Stock (or any proposal by the Company for such amendment or
supplement) whether or not consummated or any waiver or consent with
respect thereto (or any proposal for such waiver or consent) whether
or not consummated, and all costs and expenses of THLi relating to the
enforcement of this Agreement, the Registration Rights Agreement or
the Series A Preferred Stock.
(b) The Company further agrees to indemnify and save harmless
each Purchaser and each Purchaser's officers, directors, partners,
employees, trustees and agents, each Person who controls such
Purchaser within the meaning of the Securities Act or the Exchange
Act, from and against any and all costs, expenses, damages or other
liabilities resulting from any breach of this Agreement by the Company
or any legal, administrative or other proceedings arising out of the
transactions contemplated hereby (other than such costs, expenses,
damages or other liabilities resulting, directly or indirectly, (i)
from the breach by such Purchaser of any of its representations,
warranties or other agreements contained herein, (ii) from the gross
negligence or willful misconduct of such Purchaser or any of its
officers, directors, partners, employees or agents, or any Person who
controls such Purchaser within the meaning of the Securities Act or
the Exchange Act or (iii) from an ERISA violation resulting from any
action or inaction by such Purchaser, other than an ERISA violation
resulting from a breach by the Company of this Agreement); PROVIDED,
HOWEVER, that, if and to the extent that such indemnification is
unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of such indemnified
liability which shall be permissible under applicable laws.
(c) The indemnified party under this Section 9.9 will, promptly
after the receipt of notice of the commencement of any action against
such indemnified party in respect of which indemnity may be sought
from the Company on account of an indemnity agreement contained in
this Section 9.9 notify the Company in writing of the commencement
thereof. The omission of any indemnified party so to notify the
Company of any such action shall not relieve the Company from any
liability which it may have to such indemnified party except to the
extent the Company shall have been prejudiced by the omission of such
indemnified party so to notify the Company, pursuant to this Section
9.9. In case any such action shall be brought against any indemnified
party and it shall notify the Company of the commencement thereof, the
Company shall be entitled to participate therein and, to the extent
that it may wish, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party, and after notice
from the Company to such indemnified party of its election so to
assume the defense thereof, the Company will not be liable to such
indemnified party under this Section 9.9 for any legal or other
expense subsequently incurred by such indemnified party in connection
with the defense thereof nor for any settlement thereof entered into
without the consent of the Company; PROVIDED, HOWEVER, that (i) if the
Company shall elect not to assume the defense of such claim or action
or (ii) if the indemnified party reasonably determines (x) that there
may be a conflict between the positions of the Company and of the
indemnified party in defending such claim or action or (y) that there
may be legal defenses available to such indemnified party different
from or in addition to those available to the Company, then separate
counsel for the indemnified party shall be entitled to participate in
and conduct the defense, in the case of (i) and (ii) (x), or such
different defenses, in the case of (ii)(y), and the Company shall be
liable for any reasonable legal or other expenses incurred by the
indemnified party in connection with the defense. The obligations of
the Company to each indemnified party hereunder shall be separate
obligations, and the Company's liability to any such indemnified party
hereunder shall not be extinguished solely because any other
indemnified party is not entitled to indemnity hereunder. The
obligations of the Company under this Section 9.9 shall survive the
redemption or purchase by the Company of the shares of Series A
Preferred Stock purchased by any Purchaser, any transfer of the Series
A Preferred Stock by any Purchaser and the termination of this
Agreement, the Series A Preferred Stock, the Stockholders Agreement
and any of the other documents executed in connection herewith.
9.10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
issuance and de livery of the Series A Preferred Stock, regardless of any
investigation made by or on behalf of any party.
9.11 TRANSFER OF SERIES A PREFERRED STOCK. (a) Each Purchaser
understands and agrees that the Series A Preferred Stock has not been registered
under the Securities Act or the securities laws of any state and that they may
be sold or otherwise disposed of only in one or more transactions registered
under the Securities Act and, where applicable, such laws or transactions as to
which an exemption from the registration requirements of the Securities Act and,
where applicable, such laws are available. Each Purchaser acknowledges that,
except as provided in the Registration Rights Agreement, such Purchaser has no
right to require the Company to register the Series A Preferred Stock. Each
Purchaser understands and agrees that each certificate representing the Series A
Preferred Stock shall bear legends substantially in the form as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
IS RESTRICTED BY A STOCKHOLDERS AGREEMENT BY AND AMONG XXXXXX'X
FURNITURE, INC. (THE "COMPANY") AND THE STOCKHOLDERS PARTIES THERETO
(THE "STOCKHOLDERS AGREEMENT"), A COPY OF WHICH IS ON FILE AT THE
OFFICES OF THE COMPANY."
"IN ADDITION TO THE RESTRICTIONS SET FORTH IN THE STOCKHOLDERS
AGREEMENT, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE RESTRICTIONS SET FORTH IN A SECURITIES PURCHASE AGREEMENT BY
AND AMONG THE COMPANY AND THE PURCHASERS LISTED ON THE SIGNATURE PAGES
THERETO, A COPY OF EACH OF WHICH IS ON FILE AT THE OFFICES OF THE
COMPANY."
9.12 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
including, without limitation, Sections 5-1401 and 5-1402 of the New York
General Obligations Law and New York Civil Practice Laws and Rules 327(b). Each
of the parties hereto hereby irrevocably and unconditionally consents to submit
to the exclusive jurisdiction of the courts of the State of New York and of the
United States of America, in each case located in the County of New York, for
any action, proceeding or investigation in any court or before any governmental
authority ("LITIGATION") arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any litigation
relating thereto except in such courts), and further agrees that service of any
process, summons, notice or document by U.S. Registered Mail to its respective
address set forth in this Agreement shall be effective service of process for
any litigation brought against it in any such court. Each of the parties hereto
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any litigation arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of New York or the United States
of America, in each case located in the County of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such litigation brought in any such court has been brought
in an inconvenient forum. Each of the parties irrevocably and unconditionally
waives, to the fullest extent permitted by applicable law, any and all rights to
trial by jury in connection with any litigation arising out of or relating to
this Agreement or the transactions contemplated hereby.
9.13 PUBLICITY. Each of the parties hereto agrees that it will make no
statement regarding the transactions contemplated hereby which is inconsistent
with the press release agreed to by the parties hereto. Notwithstanding the
foregoing, each of the parties hereto may, in document required to be filed by
it with the Commission or other regulatory bodies, make such statements with
respect to the transactions contemplated hereby as each may be advised is
legally necessary upon advice of its counsel.
9.14 SIGNATURES. This Agreement shall be effective upon delivery of
original signature pages or facsimile copies thereof executed by each of the
parties hereto.
IN WITNESS WHEREOF, the Company and the Purchasers have caused this
agreement to be executed and delivered by their respective officers thereunto
duly authorized.
XXXXXX'X FURNITURE, INC.
By: ----------------------
Name:
Title:
TH XXX.XXXXXX INTERNET PARTNERS, L.P.
By: TH XXX.XXXXXX INTERNET FUND
ADVISORS, L.P., its GENERAL PARTNER
By: TH XXX.XXXXXX INTERNET FUND
ADVISORS, LLC, its GENERAL PARTNER
By: -------------------------------------
Name: Xxxxxxxxx Xxx
Title: Vice President
ADDRESS: 000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile #: (000) 000-0000
Attention: Xxxxxxxxx Xxx
NUMBER OF SHARES: 134,000
PURCHASE PRICE: $6,700,000
TH XXX.XXXXXX INTERNET PARTNERS, L.P.
By: TH XXX.XXXXXX INTERNET FUND
ADVISORS, L.P., its GENERAL PARTNER
By: TH XXX.XXXXXX PARALLEL
INTERNET FUND ADVISORS, LLC,
its GENERAL PARTNER
By: --------------------------------------
Name: Xxxxxxxxx Xxx
Title: Vice President
ADDRESS: 000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile #: (000) 000-0000
Attention: Xxxxxxxxx Xxx
NUMBER OF SHARES: 126,000
PURCHASE PRICE: $6,300,000
GE CAPITAL EQUITY INVESTMENTS, INC.
By:
------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx, Xx.
Title: Senior Vice President
ADDRESS: 000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Facsimile #: (203)
Attention:
NUMBER OF SHARES: 20,000
PURCHASE PRICE: $1,000,000
ASCEND PARTNERS, L.P.
By:
--------------------------------------
Name:
Title:
ADDRESS: Xxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxxxx Xxxxxxxxx,
c/o Xxxxx Xxxx
NUMBER OF SHARES: 6,500
PURCHASE PRICE: $325,000
ATCO DEVELOPMENT, INC.
By:
-------------------------------------
Name:
Title:
ADDRESS: 00000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile #:
Attention: Xxxxx Xxxxxxxxx
NUMBER OF SHARES: 5,000
PURCHASE PRICE: $250,000
XXXXX XXXXX
By:
-------------------------------------
ADDRESS: c/o Black and Company
Xxx XX Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Facsimile #:
NUMBER OF SHARES: 1,000
PURCHASE PRICE: $50,000
XXXXXXX REVOCABLE TRUST
By:
--------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Trustee
By:
--------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Trustee
ADDRESS: Apex Capital, LLC
Pine Grove
0 Xxxxxx Xxx, Xxxxx 000-X
Xxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxxxx X. Xxxxx
NUMBER OF SHARES: 300
PURCHASE PRICE: $15,000
XXXXXX XXXXXXX XXXXXX - XXX
By:
-------------------------------------
Name:
Title:
ADDRESS: Apex Capital, LLC
Pine Grove
0 Xxxxxx Xxx, Xxxxx 000-X
Xxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxxxx X. Xxxxx
NUMBER OF SHARES: 2,000
PURCHASE PRICE: $100,000
XXXXXXX X. XXXXX
By:
-------------------------------------
ADDRESS: Apex Capital, LLC
Pine Grove
0 Xxxxxx Xxx, Xxxxx 000-X
Xxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxxxx X. Xxxxx
NUMBER OF SHARES: 900
PURCHASE PRICE: $45,000
XXXXX X. XXXXX, UTMA, CA
By:
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Custodian
ADDRESS: Apex Capital, LLC
Pine Grove
0 Xxxxxx Xxx, Xxxxx 000-X
Xxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxxxx X. Xxxxx
NUMBER OF SHARES: 250
PURCHASE PRICE: $12,500
XXXXX X. XXXXX, UTMA, CA
By:
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Custodian
ADDRESS: Apex Capital, LLC
Pine Grove
0 Xxxxxx Xxx, Xxxxx 000-X
Xxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxxxx X. Xxxxx
NUMBER OF SHARES: 250
PURCHASE PRICE: $12,500
XXXX X. XXX
By:
-------------------------------------
ADDRESS: 000 Xxxxx Xxx Xxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
NUMBER OF SHARES: 500
PURCHASE PRICE: $25,000
XXXX XXXXXX
By:
-------------------------------------
Name:
Title:
ADDRESS: c/o Xxxxx Xxxxxxx
1999 Avenue of the Stars,
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
NUMBER OF SHARES: 1,250
PURCHASE PRICE: $62,500
DIAMOND A. PARTNERS, L.P.
By:
-------------------------------------
Name:
Title:
ADDRESS: Lawndale Capital Management, L.L.C.
Xxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxxx X. Xxxxxxx
NUMBER OF SHARES: 2,625
PURCHASE PRICE: $131,250
J. XXXXXX XXXXXXX
By: -------------------------------------
Name:
Title:
ADDRESS: Xxxxxxx Investment Group
00000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: J. Xxxxxx Xxxxxxx
NUMBER OF SHARES: 6,250
PURCHASE PRICE: $312,500
XXXXX XXXXXXXXX - XXX
By:
-------------------------------------
Name:
Title:
Address: Xxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxx Xxxx
NUMBER OF SHARES: 4,500
PURCHASE PRICE: $225,000
XXXXXXX XXXXXXXXX - XXX
By:
-------------------------------------
Name:
Title:
ADDRESS: Xxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile:
Attention: Xxxxx Xxxx
NUMBER OF SHARES: 1,500
PURCHASE PRICE: $75,000
XXXXXXX X. AND XXXXXXXX X. XXXXXX
By:
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
By:
-------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Address: 000 Xx Xxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
NUMBER OF SHARES: 500
PURCHASE PRICE: $25,000
XXXXXXXX & XXXXX XXXXXX
FAMILY TRUST
By:
-------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Trustee
By:
-------------------------------------
Name: Xxxxx Xxxxx Xxxxxx
Title: Trustee
ADDRESS: 1999 Avenue of the Stars,
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile:
Attention:
NUMBER OF SHARES: 2,000
PURCHASE PRICE: $100,000
Suite
By:
-------------------------------------
Name:
Title:
ADDRESS: 000 Xxxxx Xxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
NUMBER OF SHARES: 200
PURCHASE PRICE: $10,000
XXXXXX X. XXXXXX
By:
-------------------------------------
ADDRESS: 000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
NUMBER OF SHARES: 200
PURCHASE PRICE: $10,000
XXXXXXX XXXXX XXXXXX TRUST I
By:
-------------------------------------
Name: Xxxx X. Xxxxxx
Title: Trustee
ADDRESS: 000 Xxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxx X. Xxxxxx
NUMBER OF SHARES: 2,500
PURCHASE PRICE: $125,000
XXXXXXX XXXX XXXXXX TRUST I
By:
-------------------------------------
Name: Xxxx X. Xxxxxx
Title: Trustee
ADDRESS: 000 Xxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxx X. Xxxxxx
NUMBER OF SHARES: 2,500
PURCHASE PRICE: $125,000
XXXXXX FAMILY TRUST
By:
-------------------------------------
Name: Xxxx X. Xxxxxx
Title: Trustee
ADDRESS: 000 Xxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxx X. Xxxxxx
NUMBER OF SHARES: 2,500
PURCHASE PRICE: $125,000
XXXXXXX XXXX XXXXXX TRUST I
By:
-------------------------------------
Name: Xxxx X. Xxxxxx
Title: Trustee
ADDRESS: 000 Xxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxx X. Xxxxxx
NUMBER OF SHARES: 2,500
PURCHASE PRICE: $125,000
XXXXXXX XXXXXX XXXXXX TRUST I
By:
-------------------------------------
Name: Xxxx X. Xxxxxx
Title: Trustee
ADDRESS: 000 Xxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxx X. Xxxxxx
NUMBER OF SHARES: 2,500
PURCHASE PRICE: $125,000
XX. XXXXXX XXXXXX, XX.
By:
-------------------------------------
ADDRESS: 000 Xxxxx Xxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile #:
NUMBER OF SHARES: 1,250
PURCHASE PRICE: $62,500
XXXXXX X. XXXXXX
By:
-------------------------------------
Name:
Title:
ADDRESS: 000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
NUMBER OF SHARES: 200
PURCHASE PRICE: $10,000
XXXXXXX XXXXX
By:
-------------------------------------
ADDRESS: 00 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
NUMBER OF SHARES: 6,000
PURCHASE PRICE: $300,000
XXXXXXX XXXXXXX TRUST
By:
-------------------------------------
Name:
Title:
ADDRESS: 1999 Avenue of the Stars,
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxxxx Xxxxxxx
NUMBER OF SHARES: 250
PURCHASE PRICE: $12,500
XXXXX XXXXXXX
By:
-------------------------------------
Name:
Title:
ADDRESS: 0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Facsimile #:
NUMBER OF SHARES: 200
PURCHASE PRICE: $10,000
XXXXXXX X. XXXXXX
By:
-------------------------------------
ADDRESS: 000 Xxxxx Xxx Xxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
NUMBER OF SHARES: 500
PURCHASE PRICE: $25,000
XXXXXXX X. XXXXXX
By:
-------------------------------------
ADDRESS: 00 Xxxx 00xx Xxxxxx, Xxx. 0X
Xxx Xxxx, Xxx Xxxx 00000
Facsimile #:
Attention: Xxxxxxxxx Xxxxxx
NUMBER OF SHARES: 500
PURCHASE PRICE: $25,000
XXXXXXX X. XXXXXX PROFESSIONAL
CORPORATION DEFINED BENEFIT PLAN
By:
-------------------------------------
Name:
Title:
ADDRESS: 000 X. Xxx Xxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxxxx X. Xxxxxx
NUMBER OF SHARES: 1,500
PURCHASE PRICE: $75,000
XXXX XXXXXXX
By:
-------------------------------------
ADDRESS: 11777 Xxx Xxxxxxxx Xxxxxxxxx,
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxxxxxx Xxxxxx
NUMBER OF SHARES: 3,750
PURCHASE PRICE: $187,500
XXXXXX XXXXXX
By:
-------------------------------------
Name:
Title:
ADDRESS: Apex Capital, LLC
Pine Grove
0 Xxxxxx Xxx, Xxxxx 000-X
Xxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxxxx X. Xxxxx
NUMBER OF SHARES: 125
PURCHASE PRICE: $6,250
XXXXXXXX X. XXXXXXXXX
By:
-------------------------------------
Name:
Title:
ADDRESS: 00000 Xxxxxx Xxxxxxxxx,
Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxxxxxx Xxxxxx
NUMBER OF SHARES: 1,250
PURCHASE PRICE: $62,500
XXXXX XXXX
By:
-------------------------------------
ADDRESS: 0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Facsimile #:
NUMBER OF SHARES: 2,000
PURCHASE PRICE: $100,000
XXXXXX LONDON
By:
-------------------------------------
ADDRESS: Cruttenden Xxxx
000 Xxxxxxxx Xxxxxx, Xxxxx X
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxxx London
NUMBER of SHARES: 6,000
PURCHASE PRICE: $300,000
XXXXXXX X. XXXXXX
By:
-------------------------------------
Address: Coldwell Banker
000 Xxxx 000xx Xxxxxx,
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxxxx X. Xxxxxx
NUMBER OF SHARES: 625
PURCHASE PRICE: $31,250
THE MUHL FAMILY TRUST
By:
-------------------------------------
Name: Xxxxxx X. Xxxx
Title: Trustee
By:
-------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Trustee
ADDRESS: 000 Xxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile #:
Attention: Xxxxxxx X. Xxxx
or Xxxxxxx X. Xxxx
NUMBER OF SHARES: 625
PURCHASE PRICE: $31,250
PACIFIC SECURITY GROUP, INC.
By:
-------------------------------------
Name:
Title:
ADDRESS: 0000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile #:
Attention: Xxxxxxx Xxxxxxxxx,
c/o Xxxxx Xxxx
NUMBER OF SHARES: 500
PURCHASE PRICE: $25,000
PERMAL U.S. OPPORTUNITIES LTD.
By:
-------------------------------------
Name:
Title:
ADDRESS: Apex Capital, LLC
Pine Grove
0 Xxxxxx Xxx, Xxxxx 000-X
Xxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxxxx X. Xxxxx
NUMBER OF SHARES: 1,000
PURCHASE PRICE: $50,000
PILOT HOLDINGS, L.P.
By: SHED INVESTMENTS, LLC,
ITS GENERAL PARTNER
By: -------------------------------------
Name: Xxxxxx X. XxXxxxx
Title: Managing Member
ADDRESS: 000 Xxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Facsimile #: (000) 000-0000
Attention: Xxxxxx X. XxXxxxx
NUMBER OF SHARES: 5,000
PURCHASE PRICE: $250,000
POINTE INVESTMENTS CAPITAL, LTD.
By:
-------------------------------------
Name:
Title:
ADDRESS: 000 X. Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxxxx Xxxxx
NUMBER OF SHARES: 2,000
PURCHASE PRICE: $100,000
POLLAT, XXXXX & CO., INC.
By:
-------------------------------------
Name:
Title:
ADDRESS: Apex Capital, LLC
Pine Grove
0 Xxxxxx Xxx, Xxxxx 000-X
Xxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxxxx X. Xxxxx
NUMBER OF SHARES: 175
PURCHASE PRICE: $8,750
XXXXX AND XXXX XXXXXXXXX
By:
-------------------------------------
Name: Xxxxx Xxxxxxxxx
By:
-------------------------------------
Name: Xxxx Xxxxxxxxx
ADDRESS: 000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
NUMBER OF SHARES: 200
PURCHASE PRICE: $10,000
XXXXXXX X. XXXXXXX, XX.
By:
-------------------------------------
ADDRESS: 2029 Avenue of the Stars,
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxx Xxxxxxx
NUMBER OF SHARES: 625
PURCHASE PRICE: $31,250
XXXXXXX X. XXXXXXX, III
By:
-------------------------------------
ADDRESS: 00000 Xxxx Xxxxxxx Xxx
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile #:
NUMBER OF SHARES: 625
PURCHASE PRICE: $31,250
G. XXXXX XXXXXXX
By:
-------------------------------------
ADDRESS: 1999 Avenue of the Stars,
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
NUMBER OF SHARES: 8,000
PURCHASE PRICE: $400,000
LORD XXXXX XXXXXXX
By:
-------------------------------------
ADDRESS: Xxxx Xxxxx
Xxxxxx Xxxx
Xxxxxx
Xxxxxx Xxxxxx
XX00 0XX Xxxxxxx
Facsimile #:
NUMBER OF SHARES: 250
PURCHASE PRICE: $12,500
XXXXXXX XXXXXXX XXXXXXX
By:
-------------------------------------
ADDRESS: 000 X. XxXxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxx Xxxxxxx
NUMBER OF SHARES: 2,500
PURCHASE PRICE: $125,000
WAVE ENTERPRISES, INC.
By:
-------------------------------------
Name:
Title:
ADDRESS: 00000 Xxxxxxx Xxxxx Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Facsimile #:
Attention: Xxxx X. X'Xxxx
NUMBER OF SHARES: 250
PURCHASE PRICE: $12,500
XXX XXXXXXXXXX
By:
-------------------------------------
ADDRESS: Equity Communications
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxx Xxxxxxxxxx
NUMBER OF SHARES: 625
PURCHASE PRICE: $31,250
X.X. XXXXX
By:
-------------------------------------
Name:
Title:
ADDRESS: 0000 Xxxx 00 0/0
Xxxxxx, Xxxxxxxx 00000
Facsimile #:
NUMBER OF SHARES: 250
PURCHASE PRICE: $12,500
ZAXIS PARTNERS, L.P.
By:
-------------------------------------
Name:
Title:
ADDRESS: Apex Capital, LLC
Pine Grove
0 Xxxxxx Xxx, Xxxxx 000-X
Xxxxxx, Xxxxxxxxxx 00000
Facsimile #:
Attention: Xxxxxxx X. Xxxxx
NUMBER OF SHARES: 5,000
PURCHASE PRICE: $250,000
SCHEDULE 6.1
EVENTS OF DEFAULT
(a) the Company's breach of the covenant contained in the last
sentence of Section 4.13 of the Agreement;
(b) the failure of the Company to receive approval of the
E-Commerce Plan in accordance with Section 2.2(u) of the Stockholders
Agreement within 120 days from the First Closing Date;
(c) failure to use at least $10,000,000 of the Proceeds for
E-Commerce Proceed Uses during the term of the E-Commerce Plan; and
(d) the Company's material variance (positive or negative) from
the aggregate projected expenditures contained in the E-Commerce Plan
for any calendar month and the continuance of a material variance for
the period beginning on the first day of such month and ending 60 days
after written notice is given to the Company by THLi.
THLi shall be deemed to waive any Event of Default pursuant to clause
(c) or (d) above unless THLi has notified the Company in writing of such Event
of Default within 15 days of the later of (i) THLi's becoming aware of such
Event of Default and (ii) THLi's receipt of the monthly report required by
Section 4.9(e) of the Agreement. In addition, THLi may approve deviations from
the E-Commerce Plan (and such deviations will not be deemed to be Events of
Default) or waive any of the defaults listed above, in each case by executing a
written instrument specifying such waiver.
