Exhibit 99.5
February 14, 2000
Peapod, Inc.
0000 Xxxxx Xxxxx
Xxxxxx, XX 00000
Re: Proposal to Purchase Convertible Preferred Stock and Detachable
Warrants of the Company
Ladies and Gentlemen:
This letter agreement concerns the sale by Peapod, Inc. (the "Company") of
Convertible Preferred Stock and Detachable Warrants to one or more affiliates
of; Apollo Management, L.P. ("Apollo"), Ares Management, L.P. ("Ares"), GRP,
Xxxxxxx (or another affiliate of Group Rallye ("Rallye")) Pequot Private Equity
Fund II, L.P. ("Pequot"), and The Yucaipa Companies ("Yucaipa" and together with
Xxxxxx, Xxxx, GRP, Rallye and Pequot, the "Initial Purchasers"), and is intended
to summarize the basis on which the undersigned (the "Initial Purchaser") would
participate in this transaction. The respective rights and obligations of the
Initial Purchasers are several and not joint. In this letter agreement, the
undersigned Initial Purchaser and the Company are sometimes called the
"Parties".
1. Definitive Agreements. The Parties hereby agree to negotiate in good
faith definitive written agreements ("Definitive Agreements") providing for the
sale by the Company to the Initial Purchaser of Convertible Preferred Stock and
Detachable Warrants, and other transactions, all as described on the attached
term sheet (collectively, the "Transactions"). The Definitive Agreements shall
provide the Initial Purchaser with representations, warranties, indemnities and
opinions, and contain other terms and provisions customary for transactions of
this type. The Parties shall use their reasonable best efforts to consummate
the Transactions by March 3, 2000, but in no event shall the parties consummate
the Transactions later than March 31, 2000 (the "Termination Date"). The
Initial Purchaser's obligation to execute and deliver any such Definitive
Agreements and complete the Transactions are subject to (i) the Definitive
Agreements being reasonably satisfactory to the Initial Purchaser, (ii) the
satisfactory completion of the Initial Purchaser's legal, tax and accounting due
diligence investigation of the Company, and (iii) no material adverse change
having occurred in the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Company. The Company's obligation
to execute and deliver any such Definitive Agreements and complete the
Transactions are subject to (i) the Definitive Agreements being reasonably
satisfactory to the Company and (ii) approval of the form of Definitive
Agreements by the Board of Directors of the Company (the "Board").
2. Due Authorization. Each of the Parties represent and warrant that it
is duly authorized to execute this letter agreement, and that this letter
agreement is valid, binding and enforceable against such Party in accordance
with its terms. This letter agreement and the Transactions have been approved
by the Board, and the Board has taken all action (if
any) as may be required in order for the Initial Purchasers and their affiliates
to avoid being, as a result of the execution and delivery of this letter
agreement, (i) one or more "Acquiring Persons" under the Company's Stockholder
Rights Agreement, dated as of June 9, 1997, or (ii) one or more "interested
stockholders" under Section 203 of the Delaware General Corporation Law.
3. Access. During the period from the date this letter agreement is
signed by the Company (the "Signing Date") until the Termination Date, the
Company will afford the Initial Purchaser and its representatives full and free
access to the Company, its personnel, properties, contracts, books and records,
and all other documents and data.
4. Exclusive Dealing. From the Signing Date until the close of business
on March 3, 2000 (or such earlier date, if any, that the Initial Purchasers
shall have advised the Company that the Initial Purchasers are not willing to
proceed with the negotiation of Definitive Agreements on terms and conditions
consistent in all material respects with the terms and conditions described in
this letter agreement), the Company will not, directly or indirectly, through
any representative or otherwise, knowingly solicit or entertain offers from,
negotiate with or in any manner knowingly encourage, discuss, accept, or
consider any proposal of any other person relating to the acquisition of the
Company, shares of its capital stock, securities convertible into or
exchangeable for shares of its capital stock or the Company's assets or
business, in whole or in part, whether directly or indirectly, through purchase,
merger, consolidation, or otherwise (other than sales of inventory in the
ordinary course and shares issued upon the exercise of existing stock options);
provided, however, that nothing contained herein shall limit the ability of the
Company to comply with Rule 14d-9 and Rule 14e-2 promulgated under the
Securities Exchange Act of 1934, as amended. The Company will immediately
notify the Initial Purchasers regarding any contact between the Company or its
representatives and any other person regarding any such offer or proposal or any
related inquiry prior to the Termination Date.
5. Conduct of Business. During the period from the Signing Date until the
Termination Date, the Company shall operate its business in the ordinary course
and shall refrain from any extraordinary transactions.
6. Disclosure. From the Signing Date until the Termination Date, the
Company may disclose the terms of this letter agreement, but only if such
disclosure has been previously approved by the Initial Purchaser. The Parties
agree that the Company may file this letter agreement in its entirety as an
exhibit to a Current Report on Form 8-K, provided that a mutually agreeable
press release has been publicly disseminated at or before the time of filing of
such Current Report on Form 8-K. From the Signing Date until the Termination
Date, without the prior approval of the Initial Purchaser, except as, and only
to the extent, required by law, the Company will not, and will not permit its
representatives to, make, directly or indirectly, any public comment, statement,
or communication inconsistent with the provisions of this letter agreement.
7. Costs. The Company will be responsible for and bear all of its own
costs and expenses (including any broker's or finder's fees and the expenses of
its representatives) incurred at any time in connection with pursuing or
consummating the Transactions. In addition, whether or not the Transactions are
consummated, the Company shall reimburse all of the Initial Purchaser's
reasonable out-of-pocket expenses, including, without limitation (i) fees
associated with any governmental filings, and (ii) fees and expenses of legal
counsel for such Purchaser, which shall not exceed $500,000 in the aggregate for
all Purchasers (excluding Apollo).
8. Entire Agreement. This letter agreement constitutes the entire
agreement between the Parties, and supersedes all prior oral or written
agreements, understandings, representations and warranties, and courses of
conduct and dealing between the parties on the subject matter hereof. Except as
otherwise provided herein, this letter agreement may be amended or modified only
by a writing executed by all of the Parties.
9. Governing Law. This letter agreement will be governed by and
construed under the laws of the State of New York.
10. Counterparts. This letter agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this letter
agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
If you are in agreement with the foregoing, please sign and return one copy
of this letter agreement, which thereupon will constitute our agreement with
respect to its subject matter.
Very truly yours,
INITIAL PURCHASER:
PEQUOT PRIVATE EQUITY FUND II, L.P.
By: /s/ Xxxxxxxx X. Xxxxxxx, Xx.
-----------------------------
Name: Xxxxxxxx X. Xxxxxxx, Xx.
Title: Managing Member of the
General Partner
Xxxx executed and agreed on February 14, 2000
PEAPOD, INC.
By: /s/ Xxxx Xxxxxx
-------------------------
Xxxx Xxxxxx
President
Term Sheet
Issuer: Peapod, Inc.
Security: Convertible Preferred Stock (the "Preferred Stock"), which will
be structured such that it will be considered common stock for
U.S. Federal income tax purposes.
Amount: $120,000,000 liquidation preference in the aggregate, issued as
1,200,000 convertible preferred shares, each with a liquidation
preference of $100 (together with any paid in kind shares, the
"Shares") of which the Initial Purchasers will initially own at
least $75,000,000 and buy or place the remainder with
purchaser(s) mutually acceptable to the Company and the Initial
Purchasers (such purchasers, together with the Initial
Purchasers, the "Purchasers").
Each Purchaser will acquire the shares of Preferred Stock, and
any share of stock purchased upon exercise of the Warrants
(unless such purchase has been registered under the Securities
Act of 1933 (the "Securities Act")), for its own account for
investment purposes and not with a view to reselling or
distributing such securities in any transaction that would
constitute a "distribution" within the meaning of the Securities
Act. Each Purchaser will acquire the shares of Preferred Stock as
an individual entity and not as part of a "group" (as defined
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), except for its affiliates.
Each Purchaser shall be required to purchase the "Minimum
Commitment" set forth below opposite such Purchaser's name.
Purchaser Minimum Commitment
--------- ------------------
Apollo $ 30,000,000
Yucaipa 30,000,000
Pequot 25,000,000
GRP 20,000,000
Ares 10,000,000
Rallye 5,000,000
------------
Total $120,000,000
Dividends: The holders of the Preferred Stock shall be entitled to receive
cumulative dividends, payable quarterly in arrears at an annual
rate of 7.5%, subject to reduction to 5.0% after the Company
completes a Qualified Equity Offering (as defined below).
Dividends shall be payable as follows:
(i) through the fifth anniversary of the Closing Date, only in
additional shares of Preferred Stock with an aggregate
liquidation preference equal to the dividend then due; and
(ii) thereafter in cash.
The holders of shares of Preferred Stock shall share in any
dividends declared on the Company's common stock (the "Common
Stock") on an as-converted basis.
"Qualified Equity Offering" means a sale by the Company, in a
single underwritten public offering, of Common Stock for net
proceeds of at least $75 million at a price per share in excess
of (i) if the sale occurs within one year after the Closing Date,
two times the Conversion Price (as defined below) of the
Preferred Stock, and (ii) if the sale occurs more than one year
after the Closing Date, three times the Conversion Price.
Liquidation
Preference: Upon any liquidation, dissolution or other winding up of the
affairs of the Company, before any distribution or payment is
made to any equity security of the Company ranking junior to the
Preferred Stock, the holders of the Preferred Stock shall be paid
a liquidation preference equal to the greater of (i) $100 per
share, plus the value of accumulated and unpaid dividends through
and including the date of determination, whether or not earned or
declared, or (ii) the amount that such holders would receive if
they had converted their shares of Preferred Stock into Common
Stock.
Use of
Proceeds: The proceeds of this offering shall be used to provide capital
for the development of distribution facilities, advertising and
marketing expenses and general corporate purposes.
Conversion: Each holder of Preferred Stock shall have the right to convert
its shares at any time into shares of Common Stock. The number of
shares of Common Stock into which shares of Preferred Stock may
be converted shall be determined by dividing the liquidation
preference of such shares, plus all accumulated and unpaid
dividends thereon, by the Conversion Price. The conversion price
shall initially be $8.00 (the "Initial Conversion Price"), and
shall be subject to adjustment pursuant to the antidilution
provisions below (as so adjusted, the "Conversion Price").
Antidilution
Provisions: Full ratchet antidilution protection shall be provided for
reorganizations, stock splits, stock dividends, combinations,
consolidations, stock distributions, recapitalizations,
reclassifications or other similar events. Full ratchet
antidilution protection shall also be provided for (i) future
issuances of Common Stock (or securities convertible or
exercisable into Common Stock) below the Conversion Price or
below the then current market price of the Common Stock, except
for (x) issuances of Excluded Securities or (y) underwritten
public offerings at a price per share not below the Conversion
Price and with an underwriting discount that does not exceed 7%;
and (ii) redemptions above the then current market price of the
Common Stock. "Excluded Securities" shall mean (a) shares of
Common Stock issued pursuant to the exercise of options and
warrants which are currently outstanding, (b) options and
warrants to purchase, in the aggregate, up to 500,000 shares of
Common Stock (and the shares issued upon exercise
thereof) approved by the Board and (c) in addition to options and
warrants referred to in clause (b), options and warrants to
purchase shares of Common Stock (and the shares issued upon
exercise thereof) issued pursuant to stock option plans for the
benefit of employees which plans have been approved by the Board
and the Company's stockholders.
Mandatory
Redemption: The Preferred Stock shall be mandatorily redeemable on the
twelfth anniversary of the original issuance date.
Optional
Redemption: Upon a Change of Control, (i) the liquidation preference of the
Preferred Stock shall be increased by the amount of dividends
that would have been paid on the shares then outstanding from the
date of the Change of Control through the fifth anniversary of
the Closing Date; and (ii) the Company shall offer to purchase
the shares of Preferred Stock at 100% of their minimum stated
liquidation preference plus all accumulated and unpaid dividends
and dividends accelerated pursuant to (i) above.
"Change of Control" means (i) the sale or other disposition of
all or substantially all assets of the Company, (ii) the adoption
of a plan relating to the liquidation or dissolution of the
Company, (iii) any person or group (other than a group including
any of the Initial Purchasers) becoming the beneficial owner of a
majority of the outstanding Common Stock, (iv) the first day on
which the continuing directors (i.e., directors who were
directors on the closing date or were subsequently elected with
the approval of a majority of the then continuing directors)
cease to represent at least a majority of the directors then
serving, or (v) delisting of the Common Stock (after a reasonable
cure period).
Call: At any time after the fifth anniversary of the Closing Date, the
Company may, upon 60 days notice, redeem all, but not less than
all, of the outstanding shares of Preferred Stock for an amount
per share equal to 103% of the liquidation preference thereof,
plus any accumulated and unpaid dividends thereon.
Warrants: Upon any purchase of Preferred Stock hereunder, each Purchaser
shall receive detachable warrants (the "Warrants") to purchase
one share of Common Stock for each share of Common Stock into
which such Purchaser's Preferred Stock is then convertible. The
strike price per share for each Warrant shall be equal to the
lowest of (i) $8.00; (ii) 105% of the average closing price of
the Common Stock over the 10 trading days prior to first
announcement by the Company of the investment in the Preferred
Stock contemplated by this term sheet; and (iii) either (x) if
the initial purchase of Preferred Stock by the Purchasers occurs
on or before March 3, 2000, 105% of the average closing price of
the Common Stock over the 10 trading days prior to such purchase,
or (y) if such purchase occurs after March 3, 2000, 105% of the
average closing price of the Common Stock over the 15 trading
days prior to such purchase (the "Warrant Strike Price"). The
Warrants shall
have a term of ten years from their date of issuance and may be
exercised on a cashless basis. The Warrant Strike Price shall be
subject to the same antidilution provisions described above in
connection with the Initial Conversion Price. If necessary to
comply with applicable antitrust laws, the Warrants will be
exercisable for shares of common stock that are non-voting, but
only for so long and only to the extent necessary to comply with
such laws. If the shareholder approval necessary for the
Company's Common Stock to continue to be listed on the Nasdaq
National Market is not obtained by the date 150 days after the
Closing Date, (i) the Warrant Strike Price will be reduced by
50%, and (ii) until such shareholder approval is obtained, the
Warrants will be exercisable for shares of non-voting common
stock.
Standstill: Each Purchaser will execute a standstill agreement with the
Company pursuant to which the Purchaser and its affiliates will
agree, for a period of 5 years, not to increase their aggregate
Common Stock interest (on an as-converted basis) above their
aggregate Common Stock interest represented by the Shares
purchased by them, as described in this term sheet, except for
(i) pay-in-kind dividends on the Preferred Stock, (ii) conversion
of Preferred Stock, (iii) the exercise of Warrants, and (iv) the
exercise of preemptive rights described herein. Each Purchaser
will agree under the standstill agreement that neither it nor its
affiliates will (w) solicit proxies or consents to vote or
otherwise encourage a proxy contest in opposition to management's
approved slate; (x) solicit or otherwise encourage any
shareholder proposal not supported by the Board; (y) form, join
or in any way participate in a "group" (as defined under the
Exchange Act), except with its affiliates; or (z) enter into any
arrangements with any third party with respect to the foregoing.
The foregoing restrictions in the standstill agreement shall
immediately and automatically be suspended upon the occurrence
and during the continuation of any of the following events: (a)
the filing with the SEC of a Schedule 13D (or any successor
filing) by any person, entity or group, other than the Initial
Purchasers, indicating that such person, entity or group has
acquired 15% or more of the outstanding shares of Common Stock
and intends to effect a change of control of the Company, whether
by tender offer, merger, proxy contest or otherwise; (b) the
commencement of a tender offer by any person, entity or group,
other than the Initial Purchasers, to acquire 30% or more of the
outstanding shares of Common Stock; (c) the solicitation of
proxies by any party, other than a Purchaser, that is intended to
effect a change in the majority of members of the Board; or (d)
failure of the Company to comply with any of its material
agreements with such Purchaser to the extent that it has a
material adverse impact on the Purchaser's rights or their
investment in the Company.
In addition, each Purchaser will agree not to exercise its
Warrants for a period of one year following the initial closing
date unless the Company is involved in a significant transaction,
including, without limitation, a merger, tender offer,
recapitalization, reorganization, liquidation, sale of
substantially all of its assets or similar transaction.
Voting Rights: The holders of Preferred Stock shall vote together with the
holders of shares of Common Stock on all matters, except as
specifically provided herein or as otherwise required by law.
Each share of Preferred Stock shall have a number of votes equal
to the total number of shares of Common Stock then issuable upon
conversion of such shares.
In addition, holders of shares of Preferred Stock, voting
separately as a class, will have the right to approve (i)
amendments to the charter or bylaws that adversely affect the
holders of Preferred Stock and (ii) as long as at least 33% of
the shares of Preferred Stock originally issued to the Initial
Purchasers is outstanding, any issuance of senior or parity stock
or any junior stock other than Common Stock, any subdivision of
Preferred Stock and any reclassification or change in the
outstanding capital stock.
Protective
Provisions: So long as the Initial Purchasers hold shares of Preferred Stock
and such shares (taken together with any shares of Common Stock
held by such Purchasers which were issued upon conversion of
Preferred Stock) equal at least 51% of the shares of Common Stock
issuable upon conversion of shares of Preferred Stock outstanding
on the Closing Date, the Company shall not, and shall not permit
any of its subsidiaries to, (A) without the consent of the
holders of a majority of the shares of Preferred Stock then
outstanding, (i) merge or consolidate with any person or entity
unless the per share consideration received by the holders of
shares of Preferred Stock in such transaction exceeds three times
the Conversion Price, (ii) effect, approve or authorize any
liquidation or any recapitalization or reorganization of the
Company or any subsidiary unless the per share consideration
received by the holders of shares of Preferred Stock in such
transaction exceeds three times the Conversion Price, (iii)
directly or indirectly pay or declare any dividend, make any
distribution upon, redeem or repurchase any shares of capital
stock (except a dividend on, distribution upon or redemption of
Preferred Stock), (iv) agree to, or permit any subsidiary to
agree to, any provision in any agreement that would impose any
restriction on the Company's ability to honor the exercise of any
rights of the holders of the Shares, or (v) enter into any
transaction with any affiliate of the Company, except upon terms
which are not less favorable and reasonable than those obtainable
in an arm's-length transaction with a party that is not an
affiliate, or (B) without the approval of the Board, including a
majority of directors (if any) nominated by holders of the
Preferred Stock, (i) materially alter or change the business of
the Company as it is currently conducted (including related
Internet ventures), (ii) hire or fire, or amend the employment
terms of, the CEO, COO or CFO of the Company, (iii) make or
commit to capital expenditures or acquire or dispose of any
business or assets for consideration with a value in excess of
$2.5 million (including all assumed debt, all cash payments, and
the fair market value of all securities or other property issued
as consideration) or incur, assume or otherwise become obligated
for indebtedness in excess of $10 million, or (iv) alter any
equity incentive plan or materially alter any cash bonus plan for
executive officers.
Preemptive
Rights: Holders of Preferred Stock will have the opportunity to
purchase their pro rata portions of any future private placements
or public offerings by the Company of equity or equity-linked
securities, other than (i) Excluded Securities, and (ii)
securities issued as consideration in bona fide acquisitions
which have been approved by the Board.
Restrictions
on Transfer: None of the Preferred Stock, the Warrants or the Common Stock
issuable upon conversion of the Preferred Stock (collectively,
the "Securities") has been registered under the Securities Act
and the Securities may not be sold or transferred without
registration under the Securities Act or an exemption therefrom.
In connection with a transfer by a Purchaser pursuant to an
exemption from registration, the Company will have the right to
require such Purchaser to deliver an opinion of counsel stating
that such transfer is being made in compliance with the
Securities Act.
Information
Rights: The Company shall provide the Initial Purchasers access to
all books and records of the Company and shall deliver to each
Purchaser (i) monthly, quarterly and annual financial statements,
(ii) copies of all filings made with the Securities and Exchange
Commission, (iii) notification of any material defaults or
litigation, and (iv) any other information reasonably requested.
The Company shall provide each holder of Shares with copies of
SEC required filings or, if the Company no longer is required by
the SEC to make such filings, the equivalent thereof.
Board of
Directors: The Board of Directors shall consist of not more than eleven
members and shall not include more than three members of
management. The holders of the Preferred Stock, voting separately
as a class, shall have the right to elect five directors, at
least one of whom will not be an employee or officer of any of
the Initial Purchasers and will be a person reasonably acceptable
to the Company. The directors elected by the holders of the
Preferred Stock shall be represented on each committee of the
Board of Directors in at least the same proportion as they are
represented on the Board.
At such time as the Initial Purchasers (i) hold no shares of
Preferred Stock or (ii) hold shares of Preferred Stock which,
taken together with any shares of Common Stock held by such
Purchasers which were issued upon conversion of Preferred Stock,
equal less than 51% of the shares of Common Stock issuable upon
conversion of shares of Preferred Stock owned by the Initial
Purchasers on the Closing Date, the paragraph immediately above
shall no longer be operable, though the Initial Purchasers shall
be entitled to representation on the Board proportional to the
Initial Purchasers' ownership of the Company, rounded up to the
nearest whole person.
Upon (i) a payment default under, or an acceleration of,
indebtedness of the Company exceeding $10 million (which default
shall go uncured for more than 30 days) or (ii) a material breach
by the Company of the certificate of designation governing the
Preferred Stock, the holders of the Preferred
Stock, voting separately as a class, shall have to right to
elect a majority of the Board of Directors. The Board of
Directors shall use reasonably commercial efforts to cure
promptly the event that triggered such special right and,
upon such cure, such special right shall terminate and the
Board of Directors shall be restored in accordance with the
two paragraphs above.
The Company shall indemnify its directors to the fullest
extent permitted by law and maintain customary directors and
officers insurance.
Registration
Rights: Pursuant to a registration rights agreement between the
Company and the Initial Purchasers, the Company will grant
customary registration rights to the Initial Purchasers with
respect to the Shares, Warrants and the underlying shares of
Common Stock into which the Shares are convertible and the
Warrants are exercisable. The registration rights agreement
will include unlimited piggyback rights and two demand
registrations, which demand registrations may be made by
Purchasers holding at least 50% of the shares of Common
Stock then held by the Initial Purchasers (assuming the
conversion of all shares of Preferred Stock and the exercise
of all Warrants), provided that the registration is for a
minimum of $10 million. With respect to shelf registrations,
the Company shall have the right to suspend the use of shelf
registrations from time to time, but not for more than 45
days in any consecutive 12 month period, if the Company
would otherwise be required to disclose material non-public
information and the Company has a bona fide business purpose
for not disclosing such information. The Initial Purchasers
may assign their rights under the registration rights
agreement to any transferee of Shares, Warrants or shares of
Common Stock into which the Shares are converted or for
which the Warrants are exercised.
Indemnification: The Company shall indemnify each Purchaser and its
affiliates, partners, officers, directors, employees, agents
and representatives against any demand, claim, or action by
any third party (including derivative actions brought
through or in the name of the Company) in connection with
(i) the status or conduct of the Company, (ii) the
execution, delivery and performance of the documents entered
into in connection with the purchase of the Shares and the
transactions contemplated thereby, or (iii) the indemnified
party's role with the Company or such transactions, in each
case, except to the extent of (A) any willful misconduct or
gross negligence of the indemnified party or (B) any breach
by an indemnified party of its obligations under any
agreement between such party and the Company, including,
without limitation, the standstill agreement and the
purchase agreement for the Preferred Stock.
Shareholder and
Board Approval: The Preferred Stock will be divided into $28,000,000 of
Series B Preferred Stock and $92,000,000 of Series C
Preferred Stock. Upon payment therefore, the Series B
Preferred Stock will be issued on the Closing Date, prior to
the expiration or termination of the Xxxx-Xxxxx-Xxxxxx
waiting period, and shall initially be non-voting securities
that will convert into voting securities at such time as the
Xxxx-Xxxxx-Xxxxxx waiting period has expired or is
terminated. If Xxxx-Xxxxx-Xxxxxx approval has not been
obtained within 120 days, until such approval has been
obtained, the dividend rate on the Preferred Stock will
increase to 12.5% per year, the Conversion Price will be
reduced by 50%, and the Preferred Stock will be convertible
into common stock which is non-voting only to the extent
necessary to comply with antitrust laws. The Series C
Preferred Stock (and related Warrants) shall be issued upon
the date (the "Subsequent Closing Date") which is 10 days
after written notice from the Company of (i) the expiration
or termination of the Xxxx-Xxxxx-Xxxxxx waiting period, and
(ii) the Company has obtained any shareholder approval
necessary for the Company to continue to be listed on the
NASDAQ National Market following the conversion of all
outstanding Series B and Series C Preferred Stock. If such
shareholder approval is not obtained by the date 120 days
after the Closing Date (the "Outside Date"), the dividend
rate on the Preferred Stock shall increase to 12.5% per
annum until such approval is obtained. The Company will
commit to use its best efforts to obtain such shareholder
approval. The Board shall take appropriate action to approve
the documents and transactions contemplated hereby,
including, without limitation, such action as may be
required in order for the Initial Purchasers and their
affiliates to avoid being (i) one or more "Acquiring
Persons" under the Company's Stockholder Rights Agreement,
dated as of June 9, 1997, or (ii) one or more "interested
stockholders" under Section 203 of the Delaware General
Corporation Law.
