EXHIBIT 99.C(1)
INVESTMENT AGREEMENT
This Investment Agreement (the "Agreement") is entered into as of this
26th day of March, 1998, by and among Intelligent Controls, Inc., a Maine
corporation (the "Company"), Ampersand Specialty Materials and Chemicals III
Limited Partnership, a Delaware limited partnership ("ASMC-III Fund"),
Ampersand Specialty Materials and Chemicals III Companion Fund Limited
Partnership, a Delaware limited partnership ("ASMC-III Companion Fund"),
and, for purposes of Article IX only, Xxxxx X. Xxxxxx, an individual
("Xxxxxx"). ASMC-III Fund and ASMC-III Companion Fund are each herein
referred to as an "Investor" and collectively as the "Investors".
Introduction
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A. The Investors propose to purchase from the Company in accordance
with the terms and conditions hereof an aggregate of 1,538,462 newly issued
shares (the "Shares") of the Company's common stock, no par value (the
"Common Stock"), at a price per share of $3.25.
B. The Company proposes to make a tender offer (the "Tender Offer")
to purchase any and all up to a maximum of 615,385 shares (the "Tender Offer
Shares") of the Common Stock at a price per share of Common Stock of $3.25
net to the seller in cash.
C. The Board of Directors of the Company has authorized the issue and
sale of the Shares to the Investors on the terms and conditions contained
herein and recommended that the stockholders of the Company approve such
issue and sale.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings set forth below:
Acquisition Proposal shall mean a bona fide written proposal from any
Person other than an Investor or an Affiliate thereof relating to the
acquisition, sale or merger of the Company, any sale of all or substantially
all of the Company's assets, any offering or distribution of the Company's
capital stock or any reorganization or recapitalization of the Company.
Affiliate shall have the meaning ascribed to it in Rule 405 under the
1933 Act.
Agreement shall have the meaning set forth in the Preamble to this
Agreement.
Benefit Plans shall have the meaning set forth in Section 3.19(a) of
this Agreement.
Xxxxxx shall have the meaning set forth in the Preamble to this
Agreement.
Claims shall have the meaning set forth in Section 9.08 of this
Agreement.
Closing shall have the meaning set forth in Section 2.03 of this
Agreement.
Closing Date shall have the meaning set forth in Section 2.03 of this
Agreement.
Code shall have the meaning set forth in Section 3.19(a) of the
Agreement.
Common Stock shall have the meaning set forth in subparagraph A of the
Introduction to this Agreement.
Company shall have the meaning set forth in the Preamble to this
Agreement.
Company Filings shall have the meaning set forth in Section 3.08(a) of
this Agreement.
Company Offer Documents shall mean the Issuer Tender Offer Statement
on Schedule 13E-4 with respect to the Tender Offer filed by the Company with
the SEC and the form of transmittal letter contained therein and any and all
supplements or amendments thereto.
Company Proxy Statement shall have the meaning set forth in Section
3.08(a) of this Agreement.
Disclosure Documents shall have the meaning set forth in Section 3.07
of this Agreement.
Disclosure Schedule shall have the meaning set forth in the Preamble
to Article III of this Agreement.
Employment Agreement shall have the meaning set forth in Section
7.01(h) of this Agreement.
ERISA shall have the meaning set forth in Section 3.19(a) of this
Agreement.
Hazardous Substance shall have the meaning set forth in Section 3.21
of this Agreement.
Investor and Investors shall have the meanings set forth in the
Preamble to this Agreement.
Intellectual Property shall have the meaning set forth in Section 3.17
of this Agreement.
Knight Amount shall have the meaning set forth in Section 13.12 of
this Agreement.
knowledge shall mean all facts and matters which are known or which
reasonably should be known through reasonable investigation by Xxxx Xxxxx
and the other directors and executive officers of the Company.
Material Adverse Effect shall mean any material and adverse change in
the business, assets, operations or prospects of the Company and its
subsidiaries, taken as a whole.
1934 Act shall have the meaning set forth in Section 3.07 of this
Agreement.
1933 Act shall have the meaning set forth in Section 3.07 of this
Agreement.
Notice of Acceptance shall have the meaning set forth in Section 8.02
of this Agreement.
Offer shall have the meaning set forth in Section 8.01 of this
Agreement.
Offered Securities shall have the meaning set forth in Section 8.01 of
this Agreement.
Person shall mean an individual, partnership, corporation, limited
liability company, association, trust, joint venture, unincorporated
organization or governmental entity (or any department, agency or political
subdivision thereof).
Proportionate Percentage shall mean with respect to an Investor a
fraction of which (a) the numerator is the number of shares of Common Stock
held by such Investor and (b) the denominator is the aggregate number of
shares of Common Stock held by all Investors.
Purchase Price shall have the meaning set forth in Section 2.01 of
this Agreement.
Real Property shall have the meaning set forth in Section 3.13 of this
Agreement.
Redemption Price shall have the meaning set forth in Section 5.11(a)
of this Agreement.
Registrable Securities shall mean all shares of capital stock of the
Company held by the Investors and Xxxxxx, including without limitation any
other shares of capital stock of the Company acquired (or which may be
acquired upon the exercise or conversion of securities for or into shares of
capital stock) by the Investors or Xxxxxx pursuant to any right of first
offer, right of first refusal or otherwise, and any other shares of capital
stock of the Company issued in respect of any of such securities (as a
result of stock splits, stock dividends, reclassifications,
recapitalizations or other events).
Request shall have the meaning set forth in Section 5.11(a) of this
Agreement.
Repurchase Date shall have the meaning set forth in Section 5.11(b) of
this Agreement.
SEC shall mean the United States Securities and Exchange Commission.
Service shall have the meaning set forth in Section 3.19(b) of this
Agreement.
Shares shall have the meaning set forth in subparagraph A of the
Introduction to this Agreement.
Stockholder Meeting shall have the meaning set forth in Section 5.07
of this Agreement.
Stockholders Agreement shall have the meaning set forth in Section
7.01(j) of this Agreement.
Tender Offer shall have the meaning set forth in subparagraph B of the
Introduction to this Agreement.
Tender Offer Shares shall have the meaning set forth in subparagraph B
of the Introduction to this Agreement.
Third Party Claim shall have the meaning set forth in Section 11.04(a)
of this Agreement.
ARTICLE II
THE INVESTMENT
Section 2.01. Sale and Purchase of Shares. Subject to the terms and
conditions hereof, and in reliance on the representations and warranties
contained herein, the Company shall issue and sell to each Investor, and
each Investor shall purchase from the Company, the number of Shares set
forth opposite the name of such Investor on Schedule 1 hereto, at a purchase
price of $3.25 per share (the "Purchase Price").
Section 2.02. Payment. The Investors shall pay the Purchase Price
for the Shares in full at the Closing by wire transfer of immediately
available funds to an account designated in writing by the Company.
Section 2.03. The Closing. The purchase and sale of the Shares shall
take place at a closing (the "Closing") to be held at the offices of Xxxxxx,
Hall & Xxxxxxx, 00 Xxxxx Xxxxxx, Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx at
10:00 a.m. local time on May 1, 1998 (the "Closing Date"), or at such other
place and time or on such other date as the parties may mutually agree.
Section 2.04. Deliveries by the Company. At the Closing, and upon
satisfaction or waiver of the conditions set forth in Section 7.02, the
Company will deliver or cause to be delivered to the Investors the
instruments, consents, opinions, certificates and other documents required
by Section 7.01.
Section 2.05. Deliveries by the Investor. At the Closing, and upon
satisfaction or waiver of the conditions set forth in Section 7.01, the
Investors will deliver or cause to be delivered to the Company the
instruments, opinions, certificates and other documents required by Section
7.02.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors that the
statements contained in this Article III are correct and complete as of the
date hereof and will be correct and complete as of the Closing Date, except
as set forth in the Disclosure Schedule accompanying this Agreement (the
"Disclosure Schedule"). The items contained in the Disclosure Schedule
shall be arranged in sections corresponding to the numbered sections
contained in this Article III.
Section 3.01. Organization and Authority. Each of the Company and
its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is incorporated
and has all necessary corporate and other power and authority to conduct its
business and own its properties as now conducted and as proposed to be
conducted. The Company and each of its subsidiaries is licensed or
qualified to do business as a foreign corporation in each jurisdiction in
which the nature of its business or the ownership of its properties makes
such licensing or qualification necessary and where the failure to so
qualify would have a Material Adverse Effect.
Section 3.02. Authorization and Enforceability. Subject only to the
receipt of stockholder approval, the Company has taken all required
corporate and other action necessary to authorize and permit it to execute
and deliver this Agreement and the other documents, instruments and
agreements contemplated hereby and to issue and sell the Shares as provided
in Article II. This Agreement is, and each of the other documents,
instruments and agreements of the Company contemplated hereby will be, the
valid and binding obligation of the Company, enforceable in accordance with
their respective terms.
Section 3.03. No Conflicts. The execution, delivery and performance
of this Agreement and the other documents, instruments and agreements
contemplated hereby by the Company will not result in any violation of, be
in conflict with or constitute a default under, any law, statute,
regulation, ordinance, contract, agreement, instrument, judgment, decree or
order to which the Company is a party or by which the Company is bound. The
Company is not a party to or bound by any contract, indenture, agreement,
order, law, rule or regulation which restricts in any material respect its
ability to perform its obligations under this Agreement.
Section 3.04. Subsidiaries. Except as set forth in Section 3.04 of
the Disclosure Schedule, the Company has no subsidiaries or, directly or
indirectly, owns or has the right to acquire any equity interest in any
corporation, joint venture, partnership or other entity. All of the
outstanding shares of capital stock of each subsidiary of the Company are
owned beneficially and of record by the Company, free and clear of all
liens, encumbrances, security interests and other restrictions. All of the
outstanding shares of capital stock of each subsidiary of the Company have
been validly issued and are fully paid and nonassessable. Except as
disclosed in the Disclosure Documents (as defined in Section 3.07), the
Company has no investment in, loan to or material advance of cash or other
extension of credit to any entity or individual.
Section 3.05. Capital Stock. The authorized capital stock of the
Company consists of 5,000,000 shares of Common Stock, of which 3,296,375
shares are issued and outstanding. The Company has outstanding options to
acquire 589,208 shares of Common Stock, the holders of which are set forth
on Section 3.05 of the Disclosure Schedule. The Disclosure Documents
contain a correct list of each Person who, to the Company's knowledge, owns
beneficially more than five percent of the issued and outstanding Common
Stock. Except as set forth in Section 3.05 of the Disclosure Schedule,
there are no outstanding options, warrants or agreements for the purchase
from, or sale or issuance by, the Company of any of its capital stock or
securities convertible into or exchangeable for its capital stock. All of
the outstanding shares of Common Stock are, and the Shares to be issued by
the Company will be, validly issued and outstanding, fully paid and
nonassessable, and not subject to preemptive rights on the part of the
holders of any class of securities of the Company. At the Closing, the
Investors will acquire good and marketable title to the Shares, free and
clear of all liens, encumbrances, liens, security interests and other
restrictions.
Section 3.06. Compliance with Law. The Company and each of its
subsidiaries is in compliance in all material respects with all foreign,
federal, state and local statutes, laws, ordinances, judgments, decrees,
orders or governmental rules, regulations, policies and guidelines
applicable to it. The Company has not received any notice from any
governmental or regulatory authority or otherwise of any alleged violation
or noncompliance.
Section 3.07. SEC Filings. The Company has delivered to the
Investors true and correct copies of (a) the Company's annual reports on
Form 10-KSB for the fiscal years ended December 31, 1996 and 1995, (b) the
Company's quarterly reports on Form 10 QSB for the fiscal quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997, (c) its proxy or
information statements relating to meetings of, or actions taken by written
consent of, the stockholders of the Company since June 1, 1995, and (d) any
other documents filed by the Company pursuant to the Securities Exchange Act
of 1934, as amended (the "1934 Act"), since December 31, 1995 (each of the
foregoing collectively referred to as the "Disclosure Documents"). As of
their respective dates, the Disclosure Documents complied in all material
respects with the requirements of the Securities Act of 1933, as amended
(the "1933 Act"), or the 1934 Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Disclosure
Documents, and none of the Disclosure Documents contained any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each registration statement, as
amended or supplemented, filed by the Company pursuant to the 1933 Act, as
of the date such statement or amendment became effective, did not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading.
Section 3.08. Disclosure Documents.
(a) Each document required to be filed by the Company with the SEC in
connection with the transactions contemplated by this Agreement (the
"Company Filings"), including without limitation the Company Offer Documents
and the proxy or information statement of the Company (the "Company Proxy
Statement") to be filed with the SEC in connection with the Stockholder
Meeting (as defined in Section 5.07), when filed, will comply as to form
with the applicable requirements of the 1934 Act.
(b) At the time the Company Proxy Statement, or any amendment or
supplement thereto, is first mailed to stockholders of the Company and at
the time such stockholders vote on the approval of the transactions
contemplated by this Agreement, the Company Proxy Statement, as supplemented
or amended, will not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. At the time of the filing of any Company Filings other than the
Company Proxy Statement, at the time of any distribution thereof and at the
time of consummation of the Tender Offer, such Company Filings will not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made therein, in the light of
the circumstances under which they were made, not misleading. The
representations and warranties contained in this Section 3.08 will not apply
to statements or omissions included in the Company Filings based upon
information furnished to the Company in writing by the Investor specifically
for use therein.
Section 3.09. Financial Statements. The financial statements
contained in the Disclosure Documents have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods covered thereby (except as indicated in the notes
thereto and subject, in the case of the unaudited financial statements, to
year-end and audit adjustments). The balance sheets contained in the
Disclosure Documents fairly present the financial position of the Company as
at the respective dates indicated, and in each case reflect all material
liabilities, contingent or otherwise, at such dates, required by generally
accepted accounting principles to be reflected therein. The statements of
operations, changes in stockholders' equity and cash flows contained in the
Disclosure Documents fairly present the results of operations and the
changes in financial position and cash flows of the Company for the
respective periods indicated. All unaudited financial statements contained
in the Disclosure Documents are subject to year end and audit adjustments
and do not contain all footnotes required by generally accepted accounting
principles. The other financial and statistical data set forth in the
Disclosure Documents is true and correct in all material respects and was
prepared on a basis consistent with the financial statements presented in
the Disclosure Documents and the Company's books and records.
Section 3.10. Material Adverse Change. Since September 30, 1997: (a)
there has been no change in the assets, liabilities or financial condition
of the Company or its subsidiaries from that set forth in the Disclosure
Documents, except for changes expressly contemplated by the Disclosure
Documents and for changes in the ordinary course of business which have not
been, either individually or in the aggregate, materially adverse to the
Company, its business or financial condition; and (b) no event or condition
has occurred which has resulted in, or could reasonably be expected to
result in, a Material Adverse Effect.
Section 3.11. Tax Returns and Payments. Except as set forth in the
Disclosure Documents, the Company has filed all tax returns required by law
to be filed and has paid all taxes, assessments and other governmental
charges levied upon any of its properties, assets, income, franchises or
sales, other than those not yet delinquent and those, not substantial in
aggregate amount, being contested in good faith and by appropriate
proceedings. Except as set forth in the Disclosure Documents, the charges,
accruals and reserves in the financial statements of the Company in respect
of taxes for all fiscal periods are adequate, and there are no unpaid
assessments for additional taxes for any fiscal period nor, except as
described in the Disclosure Documents, any basis therefor.
Section 3.12. Litigation. Except as set forth in Section 3.12 of the
Disclosure Schedule, there are no suits, proceedings or investigations
pending or, to the Company's knowledge, threatened against or affecting the
Company or any of its subsidiaries, or, to the knowledge of the Company, any
of the directors or officers of the Company or any of its subsidiaries,
which could have a Material Adverse Effect or limit the ability of any such
director or officer to participate in the affairs of the Company, or with
respect to the transactions contemplated by this Agreement, and the Company
knows of no basis for any such suit, proceeding or investigation.
Section 3.13. Real Property. The Company has good and marketable
title to or a valid leasehold interest in all real property necessary for
the conduct of its business as now conducted or proposed to be conducted
(the "Real Property"). To the Company's knowledge, all of the Real Property
is in compliance in all material respects with all building, zoning,
subdivision, health, safety and other applicable federal, state and local
laws and regulations. The Company enjoys peaceful and quiet possession of
the Real Property, is not in material default under any leasehold and the
Company has not been informed that the lessor under any of such leases has
taken action or threatened to terminate the lease before the expiration date
specified in the lease.
Section 3.14. Personal Property. The Company has good and marketable
title to or a valid leasehold or license interest in each material item of
personal property necessary for the conduct of its business as now conducted
and as proposed to be conducted (including good and marketable title to all
material assets reflected on the balance sheets in the Disclosure Documents,
other than immaterial assets disposed of since the date of such balance
sheets in the ordinary course of business), free and clear of any security
interests or encumbrances of every kind, nature and description, except as
set forth in Section 3.14 of the Disclosure Schedule. All material
operating assets of the Company are in good operating condition and repair,
normal wear and tear excepted.
Section 3.15. Licenses and Permits. The Company and each of its
subsidiaries has all necessary franchises, permits, licenses and similar
authorizations from all federal, state and local agencies and authorities
with jurisdiction over the business or affairs of the Company or its
subsidiaries and all other rights necessary to conduct its businesses and
own its properties as currently conducted and as proposed to be conducted,
free from unusually burdensome restrictions.
Section 3.16. Government Approvals. Except as set forth in Section
3.16 of the Disclosure Schedule, the Company is not required to obtain any
order, consent, approval or authorization of, or make any declaration or
filing with, any governmental authority in connection with the execution,
delivery and performance of this Agreement, or the offer, issue, sale and
delivery of the Shares pursuant hereto.
Section 3.17. Intellectual Property. The Company owns or possesses
all patents, trademarks, service marks, trade names, copyrights, franchises,
licenses, and all royalty agreements and other rights with respect to the
foregoing (collectively, with any registrations and applications relating
thereto, the "Intellectual Property") necessary for the conduct of its
business as now conducted and as proposed to be conducted. The Company
holds all interests in the Intellectual Property purported to be owned by
it. Except as set forth in Schedule 3.17 of the Disclosure Schedule, to the
knowledge of the Company, it has not violated or infringed any Intellectual
Property owned by any other person or entity, and no claim has been made
asserting the invalidity, unenforceability or misuse of any of the
Intellectual Property of the Company. To the knowledge of the Company, no
person or entity is violating or infringing any Intellectual Property of the
Company.
Section 3.18. Brokers. Except as set forth in Section 3.18 of the
Disclosure Schedule, the Company has not dealt with any broker, finder,
commission agent or other similar person in connection with the offer or
sale of the Shares and the transactions contemplated by this Agreement, and
the Company is under no obligation to pay any broker's fee, finder's fee, or
commission in connection with such transactions.
Section 3.19. ERISA.
(a) The Company has provided the Investor with a correct and complete
list of all employee compensation and benefit plans, agreements,
commitments, practices or arrangements of any type (including, but not
limited to, plans described in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) offered, maintained or
contributed to by the Company for the benefit of current or former employees
or directors of the Company, or with respect to which the Company has or may
have any liability, whether direct or indirect, actual or contingent
(including, but not limited to, liabilities arising from affiliation under
Section 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as
amended (the "Code"), or Section 4001 of ERISA) (collectively, the "Benefit
Plans"). There are no material compensation or benefit plans, agreements,
commitments, practices or arrangements of any type providing benefits to
employees or directors of the Company, or with respect to which the Company
may have any liability, other than the Benefit Plans.
(b) With respect to each Benefit Plan, the Company has delivered to
the Investor true and complete copies of: (i) any and all plan texts and
agreements (including, but not limited to, trust agreements, insurance
contracts and investment management agreements); (ii) any and all material
employee communications since January 1, 1996 (including all summary plan
descriptions and material modifications thereto); (iii) the two most recent
annual reports, if applicable; (iv) the most recent annual and periodic
accounting of plan assets, if applicable; (v) the most recent determination
letter received from the Internal Revenue Service (the "Service"), if
applicable; and (vi) in the case of any unfunded or self-insured plan or
arrangement, a current estimate of accrued and anticipated liabilities
thereunder.
(c) With respect to each Benefit Plan: (i) if intended to qualify
under Section 401(a) of the Code, such plan so qualifies, and its trust is
exempt from taxation under Section 501(a) of the Code; (ii) such plan has
been administered and enforced in accordance with its terms and all
applicable laws, regulations and rulings in all material respects; (iii) no
breach of fiduciary duty has occurred with respect to which the Company or
any Benefit Plan may be liable or otherwise damaged in any material respect;
(iv) no material disputes nor any audits or investigations by any
governmental authority are pending or threatened; (v) no "prohibited
transaction" (within the meaning of either Section 4975(c) of the Code or
Section 406 of ERISA) has occurred with respect to which the Company or any
Benefit Plan may be liable or otherwise damaged in any material respect;
(vi) all contributions, premiums, and other payment obligations have been
accrued on the financial statements of the Company in accordance with
generally accepted accounting principles, and, to the extent due, have been
made on a timely basis; (vii) all contributions or benefit payments made or
required to be made under such plan meet the requirements for deductibility
under the Code; (viii) the Company has expressly reserved in itself the
right to amend, modify or terminate such plan, or any portion of it, at any
time without liability to itself; (ix) no such plan requires the Company to
continue to employ any employee or director; and (x) no Benefit Plan is, or
has ever been, subject to Title IV of ERISA.
(d) With respect to each Benefit Plan which provides welfare benefits
of the type described in Section 3(1) of ERISA: (i) no such plan provides
medical or death benefits with respect to current or former employees or
directors of the Company beyond their termination of employment, other than
coverage mandated by Sections 601-608 of ERISA and 4980B(f) of the Code,
(ii) no such plan is or is provided through a "multiple employer welfare
arrangement" within the meaning of Section 3(40) of ERISA; and (iii) no such
plan has reserves, assets, surpluses or prepaid premiums.
(e) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any individual to severance pay, (ii)
accelerate the time of payment or vesting under any Benefit Plan, or (iii)
increase the amount of compensation or benefits due to any individual. No
payment made or contemplated under any Benefit Plan constitutes an "excess
parachute payment" within the meaning of Section 280G of the Code.
Section 3.20. Affiliate Transactions. Except as set forth in the
Disclosure Documents or in Section 3.20 of the Disclosure Schedule, (a) the
Company is not a party to any contract or arrangement, or indebted, either
directly or indirectly, to any of its officers, directors or stockholders,
their relatives or Affiliates, and (b) none of such persons or entities is
indebted to the Company or has any direct or indirect ownership interest in,
or any contractual relationship with, any person or entity which is or was
an Affiliate of the Company or with which the Company has a business
relationship, or any person or entity which, directly or indirectly,
competes with the Company.
Section 3.21. Environmental Matters. The occupancy and use of the
Company's properties and the conduct of the Company's operations and
business are in compliance in all material respects with all applicable
federal, state and local laws, ordinances, regulations, standards and
requirements relating to pollution, environmental protection, hazardous
substances and related matters. There is no material liability attaching to
such premises or assets or the ownership or operation thereof as a result of
any hazardous substance that may have been discharged on or released from
such premises, or disposed of on-site or off-site, or any other circumstance
occurring prior to the Closing Date or existing as of the Closing Date. For
purposes of this Section 3.21, "hazardous substance" shall mean oil or any
other substance which is included within the definition of a "hazardous
substance", "pollutant", "toxic substance", "toxic waste", "hazardous
waste", "contaminant" or other words of similar import in any federal, state
or local environmental law, ordinance or regulation.
Section 3.22. Absence of Undisclosed Liabilities. Except (i) as
reflected in the Disclosure Documents, (ii) for obligations of future
performance under the contracts entered into in the ordinary course of
business, and (iii) as set forth in Section 3.22 of the Disclosure Schedule,
as of the Closing Date the Company will have no material liabilities or
obligations, whether absolute, accrued, contingent or otherwise and whether
due or to become due, required by generally accepted accounting principles
to be set forth on the consolidated balance sheet of the Company and its
subsidiaries or in the notes thereto. For purposes of this Section 3.22,
liabilities and obligations will be deemed "material" if they involve
$100,000 or more.
Section 3.23. Voting Provisions. Except as set forth in the
Disclosure Documents, neither the Articles of Incorporation nor the By-Laws
of the Company, nor any agreement to which the Company is a party or which
relates to the Company, contains any provision requiring a higher voting
requirement with respect to action taken by the Company's Board of Directors
or other governing body, or the holders of its capital stock, than that
which would apply in the absence of such provisions.
Section 3.24. Registration Rights. Except as set forth in Section
3.24 of the Disclosure Schedule, the Company has not granted any Person the
right to require the Company to register any securities of the Company under
the 1933 Act, whether on a demand basis or in connection with the
registration of securities of the Company for its own account or for the
account of any other Person.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor, severally and not jointly, represents and warrants to
the Company that the statements contained in this Article IV are correct and
complete as of the date hereof and will be correct and complete as of the
Closing Date.
Section 4.01. Organization and Authority. Such Investor is a limited
partnership duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all necessary corporate and other
power and authority to conduct its business and own its properties as now
conducted and as proposed to be conducted.
Section 4.02. Authorization and Enforceability. Such Investor has
taken all required partnership and other action necessary to authorize and
permit it to execute and deliver this Agreement and the other documents,
instruments and agreements contemplated hereby and to purchase the Shares as
provided in Article II. This Agreement is, and each of the other documents,
instruments and agreements of such Investor contemplated hereby will be, the
valid and binding obligation of such Investor, enforceable in accordance
with their respective terms.
Section 4.03. No Conflicts. The execution, delivery and performance
of this Agreement and the other documents, instruments and agreements
contemplated hereby by such Investor will not result in any violation of, be
in conflict with or constitute a default under, any law, statute,
regulation, ordinance, contract, agreement, instrument, judgment, decree or
order to which such Investor is a party or by which such Investor is bound.
Such Investor is not a party to or bound by any contract, indenture,
agreement, order, law, rule or regulation which restricts in any material
respect its ability to perform its obligations under this Agreement.
Section 4.04. Purchase for Investment. Such Investor is purchasing
the Shares for investment and not with a view to the distribution thereof.
Such Investor understands that (a) the Shares must be held indefinitely
unless registered under the 1933 Act or an exemption from such registration
is available; and (b) routine sales of the Shares made in reliance upon Rule
144 under the 1933 Act can be made only in accordance with the terms and
conditions of such rule.
Section 4.05. Receipt of Information. To the knowledge of such
Investor, it has received all information that it has requested from the
Company and believes that such information is sufficient to make an informed
decision with respect to the purchase of the Shares.
Section 4.06. Financial Resources; Knowledge and Experience. Such
Investor possesses the financial resources to purchase the Shares to be
purchased by it hereunder and to bear the risk of economic loss with respect
to its purchase of the Shares, including the loss of its entire investment.
Such Investor has such knowledge and experience in financial and business
matters that it is able to evaluate the merits and make an informed
investment decision with respect to its purchase of the Shares.
Section 4.07. Brokers. Such Investor is under no obligation to pay
to any person, other than Corporate Finance Dimensions, any broker's fee,
finder's fee, or commission in connection with the transactions contemplated
by this Agreement.
Section 4.08. Legend. A legend substantially in the following form
will be placed on certificates representing the Shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR THE SECURITIES LAWS
OF ANY STATE. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF EFFECTIVE
REGISTRATION STATEMENTS COVERING SUCH SECURITIES UNDER THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED.
Section 4.09. Investor Status. Such Investor is an "accredited
investor" as such term is defined in Regulation D under the 1933 Act and a
"financial and institutional investor" within the meaning of Section
10501(4) of the Revised Maine Securities Act. Neither such Investor nor any
Person who controls such Investor within the meaning of applicable federal
securities laws has been convicted of any felony or misdemeanor or is
subject to any order, judgment, decree, suspension or expulsion described in
Rule 262(b) under the 1933 Act.
Section 4.10. Certain Contracts; SEC Filings. Except for this
Agreement and the Stockholders Agreement, there is no contract, arrangement
or understanding to which such Investor or any Person controlling such
Investor is a party which pertains to the voting or disposition of capital
stock of the Company or which otherwise pertains to the exercise of control
over the affairs of the Company. Each document required to be filed by such
Investor with the SEC in connection with the transactions contemplated by
this Agreement (including without limitation Schedule 13D filings) when
filed, will comply as to form with the applicable requirements of the 1934
Act and will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
ARTICLE V
COVENANTS OF THE COMPANY
The Company covenants and agrees that it shall duly perform and
observe each and all of the covenants and agreements hereinafter set forth
in this Article V:
Section 5.01. Conduct of the Business.
(a) The Company will, prior to the Closing:
(i) maintain its corporate existence;
(ii) preserve its business organization intact, retain its
permits, licenses and franchises, preserve the existing
contracts and goodwill of its customers, suppliers,
personnel and others having business relations with it;
(iii) conduct its business only in the ordinary course; and
(iv) use its best efforts to operate in such a manner as to
assure that the representations and warranties set forth
in Article III in this Agreement will be true and correct
as of the Closing Date.
(b) Except with the Investors' prior written consent, the Company
will not, prior to the Closing:
(i) make any material change in its method of management or
operations;
(ii) dispose of or acquire any material assets or properties;
(iii) incur any indebtedness for borrowed money, make any loans
or advances, assume, guarantee or endorse or otherwise
become responsible for the obligation of any other person
or entity, or subject any of its properties or assets to
any lien, security interest or encumbrance, other than in
the ordinary course of business;
(iv) modify, amend, cancel or terminate any existing agreement
material to its business, including the making of any
prepayment on any existing obligation;
(v) make any direct or indirect redemption, purchase or other
acquisition of any securities of the Company;
(vi) enter into any contract or agreement with respect to
which the Company has any liability or obligation
involving more than $100,000, contingent or otherwise, or
which may otherwise have any continuing effect after the
Closing, other than in the ordinary course of business,
or which may place any material limitation on method of
conducting or scope of its business; or
(vii) take any action that would have a Material Adverse Effect
on the value of the Company or its business.
Section 5.02. Exclusivity. Prior to the Closing, the Company will
not, and its officers, directors, representatives and affiliates and Xxxx X.
Xxxxx will not, directly or indirectly, solicit or respond to any offers for
the acquisition of all or any material portion of the assets or stock of the
Company, including by merger or otherwise, or negotiate with respect to any
unsolicited offer or indication of interest with respect to any such
acquisition, except that the Company and its Board of Directors may
negotiate with a third party in connection with an unsolicited Acquisition
Proposal to the extent that the Board of Directors of the Company determines
in good faith upon the advice of its counsel that such action is necessary
to comply with its fiduciary duties to the Company under applicable law.
Section 5.03. Access. Until the Closing Date, the Company will grant
the Investor, their representatives, and the legal, accounting and other
advisors to the Investors, during normal business hours, access to any
properties, corporate records, books of account, contracts and other
documents of the Company, and to any employees, advisors, consultants and
other personnel of the Company, requested by any of them. No investigation
or findings of the Investors shall affect the representations and warranties
of the Company hereunder.
Section 5.04. Efforts. The Company will use all commercially
reasonable efforts to cause the conditions specified in Section 7.01 to be
satisfied as soon as practicable.
Section 5.05. Public Disclosure. The Company will not disclose any
information regarding this Agreement or the transactions contemplated hereby
prior to the Closing except (a) through a joint press release in a form
mutually acceptable to the Company and the Investors following the execution
of this Agreement, (b) as required by applicable law or court order (after
notice to and discussion with the Investors), and (c) with the written
consent of the Investors.
Section 5.06. Cooperation with Filings. The Company and the Investor
shall cooperate with one another (a) in connection with the preparation of
the Company Filings, (b) in determining whether any action by or in respect
of, or filing with, any governmental body, agency or official, or authority
is required, or any actions, consents, approvals or waivers are required to
be obtained from parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Agreement, and (c) in
seeking any such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith or with the
Company Filings and seeking timely to obtain any such actions, consents,
approvals or waivers.
Section 5.07. Meeting of Stockholders. The Company shall cause a
meeting of its stockholders (the "Stockholder Meeting") to be duly called
and held as soon as reasonably practicable following the date hereof, but in
no event later than May 15, 1998, for the purpose of voting on, among other
things, (a) an amendment to the Company's Articles of Incorporation to
exempt the Company from the provisions of Section 910 of the Maine Statute,
(b) an increase in the number of authorized shares of Common Stock, (c) an
increase in the number of shares of Common Stock authorized for issuance
under the Company's stock option plan and (d) the grant of restricted stock
or stock options to Xxxxxx under the Employment Agreement (as defined in
Section 7.01). In connection with the Stockholder Meeting, the Company will
(x) promptly prepare and file with the SEC, will use its best efforts to
have cleared by the SEC and will thereafter mail to its stockholders as
promptly as practicable the Company Proxy Statement and all other proxy
materials for such meeting, and (y) otherwise comply with all legal
requirements applicable to such meeting.
Section 5.08. Reports. The Company will furnish to the Investors
prior to Closing, and for as long as the Investors hold in the aggregate at
least 150,000 Shares (such number to be appropriately adjusted for stock
splits, stock dividends, reverse splits and similar events affecting the
Common Stock), the following reports:
(a) Annual Reports. Within 90 days after the end of each fiscal
year, a consolidated balance sheet of the Company and its subsidiaries as at
the end of such fiscal year and the related consolidated statements of
earnings, stockholders' equity and cash flows for such year, in each case
setting forth in comparative form the corresponding figures for the next
preceding fiscal year, all in reasonable detail and accompanied by the
report on such consolidated financial statements by Coopers & Xxxxxxx LLP,
or such other independent certified public accountants of recognized
national standing selected by the Company and reasonably satisfactory to the
Investors;
(b) Monthly Reports. Within 15 days after the end of each month, an
unaudited consolidated balance sheet of the Company and its subsidiaries as
at the end of such month and the related consolidated statements of
earnings, stockholders' equity and cash flows for such month;
(c) Annual Budgets. At least 60 days prior to the beginning of each
fiscal year, a comprehensive consolidated budget of the Company and its
subsidiaries setting forth projected revenues, expenses and cash flows of
the Company and its subsidiaries for each month during such upcoming fiscal
year;
(d) Quarterly Budgets. At least 30 days prior to the beginning of
each fiscal quarter, a comprehensive budget of the Company and its
subsidiaries setting forth projected revenues, expenses and cash flows of
the Company and its subsidiaries for each month during such upcoming fiscal
quarter;
(e) Audit Reports. Within five days after receipt thereof, copies of
all reports (including, without limitation, audit reports and so called
management letters) or written comments submitted to the Company or its
subsidiaries by independent certified public accountants or other management
consultants in connection with each annual, interim or special audit in
respect of the financial statements or the accounts or the financial or
accounting systems or controls of the Company and its subsidiaries made by
any such accountants or other management consultants;
(f) Securities Filings, Etc. Within five days after they become
available, copies of (i) all press releases issued by the Company, and all
notices, proxy statements, financial statements, reports and documents as
the Company shall send or make available generally to its stockholders or to
financial analysts, and (ii) all periodic and special reports, documents and
registration statements (other than on Form S 8) which the Company furnishes
or files with the SEC or with the American Stock Exchange; and
(g) Other Information. Such other information relating to the
Company as from time to time may reasonably be requested by the Investors.
Section 5.09. Venture Capital Exception. If either Investor or any
investor of an Investor is subject to the plan asset regulations under ERISA
(Department of Labor Regulation 2510.3 101), until six months following such
time as the Investors no longer hold shares of Common Stock, the Company
shall use its best efforts so that the Investors shall be permitted to
routinely consult from time to time with the Company's management with
respect to the business and affairs of the Company and, if requested by the
Investors, exercise other "management rights" as may be necessary to qualify
the securities of the Company owned by the Investors as a "venture capital
investment" within such regulations, it being agreed that all the rights of
the Investor under this Agreement and all rights which the Investors may
then have with respect to the management of any other companies in which the
Investors hold investments shall be considered in determining whether the
Investors are permitted to exercise "management rights" to the extent
required under such regulations for venture capital investments.
Section 5.10. Operating Company. The Company will not take any
action that would cause it to cease to be an "operating company" within the
meaning of Department of Labor Regulation 2510.3 101.
Section 5.11. Repurchase Obligation.
(a) In the event the Company refuses to accept a bona fide
Acquisition Proposal which would imply a valuation for the Common Stock in
excess of $10.00 per share (such amount to be appropriately adjusted for
stock splits, stock dividends, reverse splits and similar events affecting
the Common Stock), the Company shall, upon the written request (the
"Request") of the holders of a majority of the Common Stock held by the
Investors and Xxxxxx as a group, repurchase all shares of capital stock of
the Company held by the Investors and Xxxxxx at the price per share (the
"Redemption Price") which the Investors and Xxxxxx would have received had
such Acquisition Proposal been accepted and consummated.
(b) The closing of a repurchase of shares pursuant to Section 5.11(a)
shall take place at the Company's principal offices on such date (the
"Repurchase Date") and at such time as the Investors shall specify;
provided, however, that such date shall not be less than sixty (60) days
after the date the Request is received by the Company.
(c) If the funds of the Company legally available for repurchase of
shares pursuant to Section 5.11(a) are insufficient to repurchase all shares
requested to be repurchased on the Repurchase Date, those funds which are
legally available will be used to repurchase the maximum possible number of
such shares, ratably based on the number of shares held by each holder of
shares to be so repurchased. At any time thereafter when additional funds
of the Company become legally available for the repurchase of shares, such
funds will be used to repurchase the balance of the shares which the Company
was theretofore obligated to repurchase, ratably on the basis set forth in
the immediately preceding sentence. Interest shall accrue on the Redemption
Price for any shares not repurchased on the Repurchase Date at 12% per
annum, commencing on the Repurchase Date.
(d) In the event the Company for whatever reason (including
insufficient legally available funds) fails to repurchase any shares
required hereunder to be repurchased on the Repurchase Date, the Investors
shall, in accordance with the Stockholders Agreement, have the right to
designate a majority of the members of the Company's Board of Directors.
ARTICLE VI
COVENANTS OF THE INVESTORS
Section 6.01. Efforts. The Investors will use all commercially
reasonable efforts to cause the conditions specified in Section 7.02 to be
satisfied as soon as practicable.
Section 6.02. Public Disclosure. The Investors will not disclose any
information regarding this Agreement or the transactions contemplated hereby
prior to the Closing except (a) through a joint press release in a form
mutually acceptable to the Company and the Investors following the execution
of this Agreement, (b) as required by applicable law or court order (after
notice to and discussion with the Company), and (c) with the written consent
of the Company.
Section 6.03. Cooperation with Filings. The Company and the
Investors shall cooperate with one another (a) in connection with the
preparation of the Company Filings, (b) in determining whether any action by
or in respect of, or filing with, any governmental body, agency or official,
or authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated by this
Agreement, and (c) in seeking any such actions, consents, approvals or
waivers or making any such filings, furnishing information required in
connection therewith or with the Company Filings and seeking timely to
obtain any such actions, consents, approvals or waivers.
ARTICLE VII
CONDITIONS TO THE CLOSING
Section 7.01. Conditions to Obligations of the Investors. Unless
waived in writing by the Investors, the obligation of the Investors
hereunder to purchase the Shares is subject to the satisfaction at or prior
to the Closing of the following conditions:
(a) Representations and Warranties True. The representations and
warranties contained in Article III shall be true and accurate in all
material respects on and as of the Closing Date with the same effect as
though made on and as of such date.
(b) Performance of Covenants. The Company shall have performed and
complied in all material respects with each and every covenant, agreement
and condition required to be performed or complied with by it hereunder on
or prior to the Closing Date.
(c) Certificate. The Investors shall have received a certificate
signed by the Company confirming the satisfaction by the Company of the
conditions set forth in the preceding subsections of this Section 7.01.
(d) Licenses, Consents, etc. Received. The Company shall have
obtained and delivered to the Investors copies of all consents, licenses,
approvals and permits of other parties required to be obtained to permit it
to consummate the transactions contemplated hereby.
(e) No Injunctions. The consummation of the transactions
contemplated hereby shall not violate any order, decree or judgment of any
court or governmental body having competent jurisdiction.
(f) Issuance of the Shares. The Company shall have issued and
delivered the Shares to the Investors.
(g) Certificates; Documents. The Investors shall have received
copies of each of the following, certified to their satisfaction by an
authorized officer of the Company: (i) the Company's Articles of
Incorporation, certified by the Secretary of State of Maine, (ii) a
certificate of the Secretary of State of Maine as to the legal existence and
good standing of the Company, (iii) the Company's Bylaws, (iv) resolutions
of the Company's Board of Directors approving the transactions contemplated
by this Agreement, and (v) the incumbency of officers and the genuineness of
the signatures thereof. The Investors shall also have received such other
certificates, documents and materials as they shall reasonably request.
(h) Employment Agreement. The Company shall have entered into an
employment agreement with Xxxxxx in substantially the form of Exhibit
7.01(h) hereto (the "Employment Agreement").
(i) Stockholder Approval. The stockholders of the Company shall have
voted (i) to amend the Company's Articles of Incorporation to increase the
authorized Common Stock to 8,000,000 shares, (ii) to provide that Section
910 of the Maine Statute shall not be applicable to the Company, (iii) to
approve the 1998 Employee Stock Option Plan, and (iv) to approve the
restricted stock arrangement with Xxxxxx.
(j) Stockholders Agreement. The Company, Xxxx Xxxxx, Xxxx X. Xxxxx,
Xxxxx X. Xxxxx, Xxxx Xxxxx, as custodian for Xxxxxx X. Xxxxx, Xxxxx X. Xxxxx
XX, Trustee, the Xxxxxx X. Xxxxx Trust dated December 4, 1994, Lukas
Brothers and Xxxxxx shall have entered into a stockholders agreement in
substantially the form of Exhibit 7.01(j) hereto (the "Stockholders
Agreement").
(k) Listing of Shares. The Shares shall have been approved for
listing (if necessary) on the American Stock Exchange.
(l) Opinion of Counsel to Company. The Investors shall have received
an opinion of Xxxxxxx & Xxxx, LLP, counsel for the Company, dated as of the
Closing Date, in form and substance satisfactory to the Investors.
(m) Actions and Proceedings. All actions, proceedings, instruments
and documents required to carry out the transactions contemplated hereby or
incident hereto and all other legal matters required for such transactions
shall be reasonably satisfactory to the Investors and their counsel.
(n) Section 910 of the Maine Statute. The Company's Articles of
Incorporation shall have been validly amended to provide that Section 910 of
the Maine Statute shall not be applicable to the Company.
(o) Amendment of Bylaws. The Company's Bylaws shall have been
amended and restated so as to be in the form of 7.01(o) hereto.
Section 7.02. Conditions to Obligations of the Company. Unless
waived in writing by the Company, the obligation of the Company to issue and
sell the Shares is subject to the satisfaction at or prior to the Closing of
the following conditions:
(a) Representations and Warranties True. The representations and
warranties contained in Article IV shall be true and accurate in all
material respects on and as of the Closing Date with the same effect as
though made on and as of such date.
(b) Covenants Performed. The Investors shall have performed and
complied in all material respects with each and every covenant, agreement
and condition required to be performed or complied with by them under this
Agreement on or prior to the Closing Date.
(c) Officer's Certificate. The Investors shall have delivered to the
Company a certificate confirming the satisfaction by the Investors of the
conditions set forth in the preceding subsections of this Section 7.02.
(d) Licenses, Consents, Etc. Received. The Investors shall have
delivered to the Company copies of all consents, licenses, approvals and
permits of other parties required to be obtained to permit it to consummate
the transactions contemplated hereby.
(e) No Injunction. The consummation of the transactions contemplated
hereby shall not violate any order, decree or judgment of any court or
governmental body having competent jurisdiction.
(f) Purchase Price. The Investors shall have paid the Purchase
Price for the Purchased Shares.
(g) Employment Agreement. Xxxxxx shall have entered into the
Employment Agreement.
(h) Stockholders Agreement. The Investors shall have entered into
the Stockholders Agreement.
(i) Actions and Proceedings. All actions, proceedings, instruments
and documents required to carry out the transactions contemplated hereby or
incident hereto and all other legal matters required for such transactions
shall be reasonably satisfactory to the Company and its counsel.
ARTICLE VIII
RIGHT OF FIRST REFUSAL
Section 8.01. Offer. The Company will give the Investors at least 20
days prior written notice of any proposed sale or issuance by the Company of
any shares of its capital stock or any other securities exercisable for or
convertible into shares of its capital stock (the "Offered Securities"),
except for (a) the grant of options to purchase shares of Common Stock, and
the issuance of shares of Common Stock upon the exercise of such options, to
employees of or consultants to the Company pursuant to stock option plans
approved by the Company's Board of Directors, (b) the sale by the Company of
shares of Common Stock in a public offering, and (c) the issuance of shares
of capital stock upon conversion or exercise of any Offered Securities as to
which the Investors were offered the opportunity to purchase their
Proportionate Percentages under this Article VIII or as to which the
Investors were not required to be offered such opportunity hereunder. Such
notice will identify the number of shares or amount of Offered Securities to
be issued, the approximate date of issuance, and the price and other terms
and conditions of the issuance. Such notice will also include an offer (the
"Offer") to sell to each Investor its Proportionate Percentage of such
Offered Securities at the price and on the other terms as are proposed for
such sale or issuance, which Offer by its terms shall remain open for a
period of 15 days from the date of receipt of such notice and which offer
may be accepted by the Investors in their sole discretion.
Section 8.02. Acceptance and Closing. Each Investor shall give
written notice to the Company of its intention to accept an Offer prior to
the end of the 15-day period of such Offer, setting forth the portion of the
Offered Securities which such Investor elects to purchase (the "Notice of
Acceptance"). Upon the closing of the sale or issuance of such Offered
Securities, such Investor shall purchase from the Company, and the Company
shall sell to such Investor, the Offered Securities subscribed for by such
Investor at the terms specified in the Offer, which shall be the same terms
at which all other persons or entities acquire such securities in connection
with such sale or issuance.
Section 8.03. Sale to Others. To the extent the Investors do not
subscribe for all of the Offered Securities, the Company shall have 120 days
from the end of the foregoing 15-day period to sell all those Offered
Securities not subscribed for the Investors to any other Persons, at a price
and on terms and conditions which are no more favorable to such other
Persons or less favorable to the Company than those set forth in the Offer.
Any Offered Securities not purchased by the Investors or such other Persons
in accordance with this Article VIII may not be sold or otherwise disposed
of until they are again offered to the Investor under the procedures
specified in this Article VIII.
ARTICLE IX
REGISTRATION RIGHTS
Section 9.01. Demand Registration Rights.
(a) If the holders of a majority of the Registrable Securities
request the Company to file a registration statement under the 1933 Act for
a firm commitment underwritten public offering of not less than 20% of the
Registrable Securities (or any lesser percentage if the anticipated
aggregate offering price of such offering, net of underwriting discounts and
commissions, exceeds $2,000,000), the Company shall (i) within 10 days
notify all holders of Registrable Securities of such request and (ii) use
its best efforts to so register under the 1933 Act the Registrable
Securities initially requested to be registered and the Registrable
Securities of all other holders who request within 20 days after receiving
the Company's notice that their Registrable Securities be included therein.
The Company is obligated to effect a maximum of two such demand
registrations requested by holders of Registrable Securities, none of which
shall be within the same six-month period.
(b) If the underwriter managing the offering determines that, because
of marketing considerations, all of the Registrable Securities requested to
be registered may not be included in the offering, the underwriter may
reduce the number of Registrable Securities included therein. Such
reduction shall be applied first to shares other than Registrable
Securities. Any remaining reduction shall be applied pro rata among the
holders of the Registrable Securities based upon the number of shares
requested by each such holder to be included in the registration. If any
such reduction results in the inclusion of less than 85% of the Registrable
Securities requested to be included therein by the holders that initiated
such registration, such registration shall not reduce the number of
registrations available to such holders under this Section 9.01.
(c) If the Company includes in any registration required under this
Section 9.01 a number of shares other than Registrable Securities that
exceeds the number of Registrable Securities to be included, then such
registration shall be deemed to be a registration under Section 9.02 instead
of this Section 9.01. In all other cases where the Company includes in such
registration any shares other than Registrable Securities, such registration
shall remain subject to this Section 9.01, provided, however, that in no
event shall other shares be included in such registration if such inclusion
would (i) prevent holders of Registrable Securities from registering all
Registrable Securities requested by them or (ii) adversely affect the
offering price of the Registrable Securities in such registration.
(d) Notwithstanding anything to the contrary contained herein, the
Company shall have the right to delay a registration requested pursuant to
this Section 9.01 for up to sixty (60) days following the receipt of such
request by the Company if the Board of Directors of the Company determines,
after consultation with legal counsel, that such registration would require
disclosure of a confidential event or condition and that such disclosure
would not be in the best interests of the Company's stockholders; provided,
however, that the Company shall have the right to delay registrations under
this Section 9.01(d) for no more than an aggregate of ninety (90) days in
any twelve-month period.
Section 9.02. Piggyback Registration Rights.
(a) Whenever the Company proposes to register any Common Stock for
its own or others' account under the 1933 Act, other than a registration
relating to employee benefit plans or a registration solely relating to
shares to be sold under Rule 145 under the Act, the Company shall give each
holder of Registrable Securities prompt written notice of its intent to do
so. Upon the written request of any such holder given within 20 days after
receipt of such notice, the Company will use its best efforts to cause to be
included in such registration all of the Registrable Securities which such
holder requests.
(b) If the Company is advised in writing in good faith by any
managing underwriter of the securities being offered pursuant to any
registration statement under this Section 9.02 that, because of marketing
considerations, the number of shares to be sold by persons other than the
Company is greater than the number of such shares which can be offered
without adversely affecting the offering, the Company may reduce the number
of shares offered for the accounts of such persons to a number deemed
satisfactory by such managing underwriter. Such reduction shall be applied
first to shares other than Registrable Securities. Any remaining reduction
shall be applied pro rata among the holders of the Registrable Securities
based upon the number of shares requested by each such holder to be included
in the registration.
Section 9.03. Selection of Underwriter. The underwriter of any
offering under Section 9.01 shall be selected by holders of a majority of
the Registrable Securities initiating such registration; provided, however,
that such underwriter shall be reasonably acceptable to the Company. The
underwriter of any offering requested under Section 9.02 and 9.03 shall be
selected by the Company.
Section 9.04. Registration Procedures. If and when the Company is
required by the provisions of this Agreement to use its best efforts to
effect the registration of any of the Registrable Securities under the Act,
the Company shall:
(a) as expeditiously as possible (and, in the case of a registration
under Section 9.01, within 60 days of any request thereunder) file with the
SEC a registration statement, in form and substance required by the Act,
with respect to such Registrable Securities and use its best efforts to
cause that registration statement to become effective;
(b) as expeditiously as possible, prepare and file with the SEC any
amendments and supplements to the registration statement and the prospectus
included in the registration statement as may be necessary to keep the
registration statement effective, in the case of a firm commitment
underwritten public offering, until completion of the distribution of all
securities described therein and, in the case of any other offering, until
the earlier of the sale of all Registrable Securities covered thereby or 120
days after the effective date thereof;
(c) as expeditiously as possible, furnish to each holder that
requested that Registrable Securities be included in such registration, such
reasonable numbers of copies of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the 1933 Act, and such
other documents as such holder may reasonably request in order to facilitate
the public sale or other disposition of the Registrable Securities owned by
such holder;
(d) as expeditiously as possible, use its best efforts to register or
qualify the Registrable Securities covered by the registration statement
under the securities or Blue Sky laws of such states as the holders thereof
shall reasonably request, and do any and all other acts and things that may
be necessary or desirable to enable the holders thereof to consummate the
public sale or other disposition in such states of the Registrable
Securities owned by the holders; provided, however, that the Company shall
not be required in connection with this paragraph (d) to qualify as a
foreign corporation or execute a general consent to service of process in
any jurisdiction;
(e) in connection with each registration covering an underwritten
public offering, the Company and each participating holder agrees to enter
into a written agreement with the managing underwriter in such form and
containing such provisions (including, if the underwriter so requests,
customary contribution provisions on the part of the Company) as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature,
provided that the holders shall not be obligated to enter into any such
underwriting agreement if the indemnification provisions thereof are more
burdensome on such holder than those contained herein or if any standback
requirement therein is for a period that exceeds the period required by this
Agreement;
(f) at the request of any participating holder, the Company will
furnish to each underwriter, if any, and the participating holders, a legal
opinion of its counsel and a letter from its independent certified public
accountants, each in customary form and substance, at such time or times as
such documents are customarily provided in the type of offering involved;
(g) whenever the Company is registering any Common Stock under the
1933 Act and a holder of Registrable Securities is selling securities under
such registration or determines that it may be a controlling person under
the 1933 Act, the Company will keep such holder advised in writing of the
initiation, progress and completion of such registration, will allow such
holder and such holders's counsel to participate in the preparation of the
registration statement and to have access to all relevant corporate records,
documents and information, will include in the registration statement such
information as such holder may reasonably request and will take all such
other action as such holder may reasonably request;
(h) each holder of Registrable Securities included in a registration
shall furnish to the Company such information regarding such holder and the
distribution proposed by such holder as the Company may reasonably request
in writing and as shall be required in connection with the registration,
qualification or compliance referred to in this Agreement;
(i) as of the effective date of any registration statement relating
thereto, cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are
then listed, and, if not so listed, to be listed on the New York Stock
Exchange or the NASDAQ Stock Market National Market System; and
(j) as of the effective date of any registration statement relating
thereto, provide a transfer agent and registrar for all such Registrable
Securities.
Section 9.05. Payment of Expenses. The Company shall bear all
expenses (excluding underwriting commissions) applicable to registrations,
qualifications, underwriting and other matters pursuant to this Article IX,
including the reasonable fees and expenses of counsel to the holders of the
Registrable Securities; provided, however, that the Company shall not be
required to pay for any expenses of any registration proceedings pursuant to
Section 9.01 if the registration request is subsequently withdrawn at any
time at the request of the holders of a majority of the Registrable
Securities, unless the holders of the majority of the Registrable Securities
agree to forfeit their right to the demand registration pursuant to Section
9.01.
Section 9.06. 1934 Act Registration Requirements. The Company shall
at all times remain subject to the reporting requirements of either Section
13 or Section 15(d) of the 1934 Act. The Company shall file with the SEC in
a timely manner such information as the Commission may require under either
of said Sections, and shall take all action as may be required to be taken
under the 1934 Act to permit sales of the Registrable Securities pursuant to
Rule 144 (or any similar or successor exemptive rule hereafter in effect)
and the use of Form S 3 for registration of the Registrable Securities.
Section 9.07. Action Under State Laws. The Company shall register or
qualify the securities covered by a registration statement which includes
Registrable Securities under the securities or Blue Sky laws of such
jurisdictions as each selling holder or managing underwriter of Registrable
Securities shall reasonably request, and do any and all other acts and
things which may be necessary or advisable to enable such holder to
consummate the disposition of the securities in such jurisdiction, but in no
event shall the provisions of this Article IX be deemed to require the
Company to register or qualify as a foreign corporation or as a broker or
dealer in any jurisdiction.
Section 9.08. Indemnification Relating to Registration. The Company
hereby agrees to indemnify each holder of the Registrable Securities, each
partner of such holder, each officer and director of such holder, and each
person, if any, who controls any such holder within the meaning of
applicable federal or state securities laws against all claims, losses,
damages, liabilities and expenses (collectively, "Claims") under the
applicable federal or state securities laws, or common law or otherwise
arising out of or relating to (a) any untrue statement or alleged untrue
statement of a material fact contained in any registration statement,
prospectus, offering circular or other document relating thereto (each as
amended or supplemented) or any preliminary prospectus, except insofar as
such Claims are caused solely by any untrue statement or omission contained
in information furnished in writing to the Company by such holder expressly
for use therein, (b) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein complete or not misleading, or (c) any violation by the
Company of the 1933 Act or any other securities law, or any rule or
regulation promulgated thereunder. If the offering pursuant to any
registration statement provided for under this Article IX is made through
underwriters, the Company agrees to indemnify such underwriters and each
person who controls such underwriters within the meaning of the applicable
federal or state securities laws to the same extent as hereinabove provided
with respect to the indemnification of the holders of the Registrable
Securities.
In connection with any registration statement in which a holder of the
Registrable Securities is participating, and as a condition to the
obligation of the Company to cause any Registrable Securities of such holder
to be included in a registration statement pursuant to this Article IX, such
holder will furnish to the Company in writing such information as shall
reasonably be requested by the Company for use in any such registration
statement or prospectus and will indemnify the Company, its directors and
officers, each person, if any, who controls the Company within the meaning
of the applicable federal and state securities laws, the underwriters
engaged in any offering covered by this Article IX and each person who
controls such underwriters within the meaning of the applicable federal and
state securities laws, against any Claims resulting from any untrue
statement or alleged untrue statement of a material fact or any omission or
alleged omission of a material fact required to be stated in the
registration statement or prospectus and necessary to make the statements
therein complete or not misleading, but only to the extent that such untrue
statement or omission is contained in information so furnished in writing by
such holder expressly for use therein.
If the indemnification provided for above from an indemnifying party
is unavailable to an indemnified party in respect of any Claims, then the
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such Claims in such proportion as is
appropriate to reflect the relative faults of the indemnifying party and the
indemnified party in connection with the actions or failure to act which
resulted in such Claims, plus any other relevant equitable considerations.
The relative faults of the indemnifying party and the indemnified party
shall be determined by reference to, among other things, whether any action
or failure to act, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has
been made, or relates to information furnished by, the indemnifying party or
the indemnified party, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such action. The
amount paid or payable by a party as a result of the Claims shall be deemed
to include any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation or proceeding. The parties
hereto agree that it would not be just and equitable if contributions
pursuant to this paragraph were determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to in this paragraph.
Section 9.09. Other Registration Rights. The Company will not grant
any holder or prospective holder of any of shares of its capital stock or
any other securities exercisable for or convertible into shares of its
capital stock the right to require the Company to register, or include in
any registration by the Company, any of its securities under the 1933 Act if
such rights would (a) conflict or interfere in any way with the rights of
the holders of Registrable Securities under this Article IX (including
without limitation, allowing such holder or prospective holder to include
any securities in any registration filed under Section 9.01 hereof unless
such holder or prospective holder is entitled to include securities in any
such registration only to the extent that the inclusion of its securities
will not reduce the amount of the Registrable Securities which would
otherwise be included), or (b) allow such holder or prospective holder to
include such securities in any registration covered by Section 9.02, unless
such holder is permitted to include such securities only after the holders
of shares of Registrable Securities have included all shares of Registrable
Securities requested by them to be included therein.
ARTICLE X
TERMINATION
Section 10.01. This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the Closing:
(a) by mutual written consent of the Company and the Investors;
(b) by the Company or the Investors, if the Closing shall not have
occurred by May 15, 1998;
(c) by the Company or the Investors, if there has been a breach of
any representation, warranty, covenant or agreement on the part of the other
party set forth in this Agreement, which breach shall not have been cured
within 10 days following receipt by the breaching party of written notice of
such breach from the other party;
(d) by the Company or the Investors, if, at the Stockholder Meeting
(including any adjournment or postponement), the requisite vote of the
Company's stockholders in favor of the matters set forth in Section 5.07
shall not have been obtained; or
(e) by the Investors, if the Board of Directors of the Company shall
have withdrawn or modified in a manner adverse to the Investors its
favorable recommendation for the approval by stockholders of the matters set
forth in Section 5.07.
Notwithstanding the foregoing, no party may terminate this Agreement
at any time when such party is in breach or violation of this Agreement.
Any party terminating this Agreement shall give immediate written notice
thereof to the other parties.
Section 10.02. Effect of Termination.
(a) Except as provided in Section 10.02(b), in the event of a
termination of this Agreement pursuant to Section 10.01, this Agreement
shall thereupon become void and there shall be no liability on the part of
any party to any other party under this Agreement, except that the
provisions of Sections 5.05, 5.06, 6.02, 6.03 and Articles XI and XII hereof
shall continue in full force and effect, and except that nothing herein
shall relieve any party from liability for any breach of this Agreement
prior to such termination or to relieve the Company of its obligations under
Section 13.04 with regard to costs and expenses incurred prior to
termination.
(b) If this Agreement is terminated by the Investors pursuant to
Section 10.01(c) or (e), the Company shall pay the Investors a termination
fee of $300,000, such amount to be payable within three (3) business days
after termination of this Agreement and to be allocated between the
Investors in proportion to the number of Shares to be purchased by each as
set forth on Schedule 1 hereto.
ARTICLE XI
INDEMNIFICATION
Section 11.01. Survival. The representations, warranties and
covenants contained herein shall survive the Closing and any investigation
made by the Investors or the Company for two years following the Closing
Date. No claim for a breach of the representations, warranties and
covenants contained herein shall be brought after the second anniversary of
the Closing Date, except for (i) claims arising from the representations and
warranties contained in Section 3.05, which shall survive indefinitely,
(ii) claims arising from the representations and warranties contained in
Sections 3.11 which shall survive until the expiration of the applicable
statute(s) of limitation (including any extensions thereof) and (iii) claims
of which the indemnifying party under this Article XI has been notified with
reasonable specificity by the indemnified party under this Article XI or
before the second anniversary of the Closing Date.
Section 11.02. Indemnification by the Company. Subject to Sections
11.01, the Company hereby indemnifies and holds the Investors harmless from
and against (a) any and all claims, liabilities, obligations, costs,
damages, losses and expenses of any nature, arising out of, resulting from
or relating to any breach of the representations, warranties or covenants of
the Company under this Agreement, and (b) all costs and expenses (including
reasonable attorneys fees) incurred in connection therewith; provided,
however, that the Company shall only be liable under this Section 11.02 if
and to the extent that the amounts specified in clauses (a) and (b) in the
aggregate exceed $50,000.
Section 11.03. Indemnification by the Investors. Subject to Section
11.01, each Investor, severally and not jointly, hereby indemnifies and
holds the Company harmless from and against (a) any and all claims,
liabilities, obligations, costs, damages, losses and expenses of any nature,
arising out of, resulting from or relating to any breach of the
representations, warranties or covenants of such Investor under this
Agreement, and (b) all costs and expenses (including reasonable attorneys
fees) incurred in connection therewith; provided, however, that an Investor
shall only be liable under this Section 11.03 if and to the extent that the
amounts specified in clauses (a) and (b) for which one or both Investors are
liable exceed $50,000 in the aggregate.
Section 11.04. Procedures for Indemnification of Third Party Claims.
(a) A party or parties entitled to indemnification hereunder with
respect to a third party claim will give the indemnifying party prompt
written notice of any legal proceeding, claim or demand instituted by any
third party (in each case, a "Third Party Claim") in respect of which the
indemnified party is entitled to indemnification hereunder.
(b) The indemnifying party shall have the right, by giving written
notice to the indemnified party within 15 days after receipt of notice from
the indemnified party and stating that it is responsible for such Third
Party Claim, at its option and expense, to defend against, negotiate, settle
or otherwise deal with any Third Party Claim with respect to which it is the
indemnifying party and to have the indemnified party represented by counsel,
reasonably satisfactory to the indemnified party, selected by the
indemnifying party; provided, that the indemnified party may participate in
any proceeding with counsel of its choice and at its expense; provided,
further, that the indemnified party, at any time when it believes in good
faith that any Third Party Claim with respect to which the indemnifying
party is defending is having a Material Adverse Effect on the business of
the Company, may assume the defense and settlement of such Third Party Claim
in good faith and be fully indemnified therefor; and provided, further, that
the indemnifying party may not enter into a settlement of any such Third
Party Claim without the consent of the indemnified party unless such
settlement requires no more than a monetary payment for which the
indemnified party is fully indemnified or involves other matters not binding
upon or affecting the indemnified party.
ARTICLE XII
DISPUTE RESOLUTION
In the event of any controversy or claim arising out of or relating to
this Agreement (including its validity) or any act or omission of a party
hereunder (a "dispute"), either party (by written notice to the others) may
invoke the procedures of this Article. Promptly after such notice is given,
senior management of the parties will meet to attempt to negotiate a
settlement of all pending disputes. If for any reason the parties have not
entered into a written settlement of the dispute(s) within thirty (30) days
after the original notice, any party may within one year of the original
notice give notice demanding arbitration. Thereafter all pending disputes
shall be settled by arbitration before a panel of three arbitrators, in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association (or such other rules and procedures as the parties may hereafter
consent to in writing). The arbitration shall occur in Boston,
Massachusetts, or such other location as is mutually acceptable to the
parties. Except as the parties may hereafter consent in writing, at least
one of the arbitrators shall be licensed to practice law in Maine and
experienced in Maine corporate law, at least one of the arbitrators shall be
licensed to practice law in Massachusetts and experienced in Massachusetts
contracts law, and the arbitrators shall be required to decide each claim in
accordance with applicable law and to set forth briefly in writing the
award, the rationale of the decision, and those facts considered by the
arbitrators to be material to such decision. The arbitral award shall be
deemed binding upon each party, and judgment on the award may be entered in
any court having jurisdiction thereof. This Agreement to arbitrate shall be
enforceable under the Uniform Arbitration Act. In any arbitration
proceeding under this Article and in any action to compel arbitration under
this Article or to enforce an arbitral award, the prevailing party shall be
entitled to an award of its reasonable expenses, including attorneys' fees.
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Notices. All notices to a party hereunder shall be in
writing and shall be deemed to have been adequately given if delivered in
person, by facsimile transmission with receipt acknowledged or by delivery
by a recognized courier for overnight delivery, or mailed, certified mail,
return receipt requested, to such party at its address set forth on below
(or such other address as it may from time to time designate in writing to
the other parties hereto).
If to the Company, to: Intelligent Controls, Inc.
00 Xxxxxxxxxx Xxxx Xxxx
P. O. Xxx 000
Xxxx, XX 00000
Attn: President
Fax: (000) 000-0000
With a copy to: Verrill & Xxxx, LLP
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxx, Esquire
Fax: (000) 000-0000
If to the Investors, to: c/o Ampersand Ventures
00 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxx
Fax: (000) 000-0000
With a copy to: Xxxxxx, Xxxx & Xxxxxxx
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esquire
Fax: (000) 000-0000
If to Xxxxxx, to: Xxxxx X. Xxxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Section 13.02. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties and their
respective successors and assigns, provided that neither this Agreement nor
any right hereunder may be assigned by any party without the written consent
of the Investor and the Company.
Section 13.03. Amendments and Waivers. This Agreement may be
modified or amended only by a writing signed by the Company and the
Investor. No waiver of any term or provision hereof shall be effective
unless in writing signed by the party waiving such term or provision.
Section 13.04. Expenses. All costs and expenses incurred by any
party (including Xxxxxx) in connection with this Agreement and the
transactions contemplated hereby, including without limitation all legal
fees, shall be borne by the Company, regardless of whether the transactions
contemplated hereby are actually consummated; provided, however, that if
this Agreement is terminated by the Company pursuant to Section 10.01(c),
then the Company shall not be responsible for the costs and expenses
incurred by the Investors in connection with this Agreement or the
transactions contemplated hereby.
Section 13.05. Counterparts. This Agreement may be executed in two
or more counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this
Agreement by signing any such counterpart.
Section 13.06. Headings. The headings of Articles and Sections
herein are inserted for convenience of reference only and shall be ignored
in the construction or interpretation hereof.
Section 13.07. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of The Commonwealth of
Massachusetts, without regard to the choice of law provisions thereof.
Section 13.08. No Waiver. No failure to exercise and no delay in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The rights provided are
cumulative and not exclusive of any rights provided by law.
Section 13.09. Integration. This writing, together with Exhibits and
Disclosure Schedule hereto, embodies the entire agreement and understanding
between the parties with respect to this transaction and supersedes all
prior discussions, understandings and agreements concerning the matters
covered hereby.
Section 13.10. Limitation on Scope of Agreement. If any provision of
this Agreement is unenforceable or illegal, such provision shall be enforced
to the fullest extent permitted by law and the remainder of the Agreement
shall remain in full force and effect.
Section 13.11. Third-Party Beneficiaries. Nothing in this Agreement
shall be construed as giving any person, firm, corporation or other entity,
other than the parties hereto and their permitted successors and assigns,
any right, remedy or claim under or in respect of this Agreement or any
provision thereof.
Section 13.12. Resolution of Knight Litigation. If in connection
with the dispute which is currently the subject of litigation between the
Company and Xxxx Xxxxxx the Company pays or becomes obligated to pay,
pursuant to a final judgment or settlement, an amount (the "Knight Amount")
in cash or other consideration in excess of $40,000, the Company shall
immediately issue to the Investors an aggregate number of shares of Common
Stock determined by dividing (i) the Knight Amount minus $40,000 by (ii)
3.25 (subject to appropriate adjustment for any stock splits, stock
dividends, reverse splits and similar events affecting the Common Stock.
Such shares of Common Stock shall be allocated between the Investors in
proportion to the number of Shares purchased by each as set forth on
Schedule 1 hereto. The Knight Amount shall not include any amount paid by
the Company to repurchase shares of Common Stock held by Xxxx Xxxxxx to the
extent the purchase price does not exceed $3.25 per share (or, if greater,
the then prevailing market price for the Common Stock).
[The remainder of this page is intentionally blank]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first above written.
INTELLIGENT CONTROLS, INC.
By: ____________________________
Title: _________________________
AMPERSAND SPECIALTY MATERIALS AND
CHEMICALS III LIMITED PARTNERSHIP
By: ASMC-III Management Company
Limited Partnership
By: ASMC-III MCLP LLP, its general
partner
By: ____________________________
Xxxxxxx X. Xxx, General Partner
AMPERSAND SPECIALTY MATERIALS
AND CHEMICALS III COMPANION FUND
LIMITED PARTNERSHIP
By: ASMC-III Management Company
Limited Partnership
By: ASMC-III MCLP LLP, its general
partner
By: ____________________________
Xxxxxxx X. Xxx, General Partner
For purposes of Article IX only:
________________________________
Xxxxx X. Xxxxxx
Schedule 1
----------
Name of Investor Number of Shares Purchase Price
---------------- ---------------- --------------
Ampersand Specialty Materials and 1,513,847 $4,920,002.75
Chemicals III Limited Partnership
Ampersand Specialty Materials and 24,615 $ 79,998.75
Chemicals III Companion Limited
Partnership
_________ _____________
Total 1,538,462 $5,000,001.50
========= =============
[Disclosure Schedule Omitted]
