$50,000,000
FLOATING RATE CONVERTIBLE DEBENTURES
Due 2003
DEBENTURE PURCHASE AGREEMENT
dated
May 26, 1999
between
CHS ELECTRONICS, INC.
and
COMPUTER ASSOCIATES INTERNATIONAL, INC.
TABLE OF CONTENTS
Section Page
1. Issuance of Securities and Reservation of Reserved Shares..................1
not defined.
2. Purchase, Sale and Delivery................................................1
3. Representations and Warranties of the
Corporation...........................................................1
(a) Organization...................... ..............................1
(b) Capital Stock; Indebtedness; Liens...............................2
(c) Authorization of Agreement.......................................2
(d) Authorization of Debentures......................................2
(e) Authorization of Shares..........................................3
(f) Non-Contravention; No Required
Consents.........................................................3
(g) Litigation.......................................................4
(h) Compliance; Governmental
Authorizations...................................................4
(i) Financial Statements.............................................4
(j) Absence of Changes...............................................4
(k) Taxes............................................................5
(l) Intellectual Property............................................5
(m) Compliance with ERISA............................................5
(n) No Defaults......................................................6
(o) SEC Reports......................................................6
(p) Offering Exemption...............................................7
(q) Use of Proceeds..................................................7
(r) Investment Company...............................................7
(s) Disclosure.......................................................7
(t) No Finders' Fees.................................................7
(u) Delaware Law; Rights Agreement...................................7
4. Representations and Warranties of the Purchaser............................8
(a) Investment Purpose...............................................8
(b) Restricted Securities............................................8
(c) Accredited Investor..............................................8
5. Conditions of Obligations of the Purchaser.................................9
(a) Debenture........................................................9
(b) Actions Authorized...............................................9
(c) Legal Opinion....................................................9
(d) Representations and Warranties; Compliance; No Default...........9
(e) HSR Act......................................................... 9
6. Transfer of Securities.....................................................9
(a) Restriction on Transfer..........................................9
(b) Restrictive Legend...............................................9
(c) Notice of Transfer..............................................10
7. Registration of Registrable Stock.........................................10
(a) Shelf Registration..............................................10
(b) Registration Procedures ........................................11
(c) Designation of Underwriter......................................12
(d) Cooperation by Prospective Sellers..............................12
(e) Expenses........................................................12
(f) Indemnification.................................................13
8. Covenants.................................................................14
(a) Information.....................................................14
(b) Payment of Obligations..........................................15
(c) Conduct of Business and Maintenance of Existence................16
(d) Compliance with Laws............................................16
(e) Inspection of Property, Books and Records.......................16
(f) Prohibited Transactions.........................................16
(g) Increase in Authorized Capital..................................16
9. Survival of Representations, Warranties and Agreements Etc................17
10. Miscellaneous............................................................17
(a) Entire Agreement................................................17
(b) Headings........................................................17
(c) Notices.........................................................17
(d) Counterparts....................................................18
(e) Amendments......................................................18
(f) Assignment......................................................19
(g) Expenses; Documentary Taxes; Indemnification....................19
(h) CHOICE OF LAW...................................................20
(i) CONSENT TO JURISDICTION.........................................20
(j) WAIVER OF JURY TRIAL............................................20
EXHIBITS
Exhibit A - Form of Floating Rate Convertible Debenture Due 2003
Exhibit B - Form of Warrant
Exhibit C - (Reserved)
Exhibit D - Form of Opinion of Counsel to the Company
DEBENTURE PURCHASE AGREEMENT dated as of May 26, 1999 between
CHS ELECTRONICS, INC., a Florida corporation (the "Company" or
"CHS"), and COMPUTER ASSOCIATES INTERNATIONAL,INC., a Delaware
corporation (the "Purchaser").
The parties hereto agree as follows:
1. Issuance of Securities and Reservation of Reserved Shares. Subject to the
terms and conditions of this Agreement, the Company has authorized the issuance
of its Floating Rate Convertible Debentures due 2003 (the "Debentures") in
substantially the form of Exhibit A hereto in the aggregate principal amount of
$50,000,000, and the Company has authorized the reservation of a sufficient
number of shares of Common Stock, par value $.001 per share (the "Common
Stock"), including the associated Rights (as defined below in Section 3(b)) of
the Company to provide for conversion of the Debentures and exercise of the
Warrants (as defined below in Section 2) (such reserved shares being referred to
herein as the "Reserved Shares").
2. Purchase, Sale and Delivery On the basis of the representations, warranties,
covenants and agreements, but subject to the terms and conditions, set forth in
this Agreement, at the Closings (as defined below), the Company agrees to sell
and deliver to the Purchaser, and the Purchaser agrees to purchase from the
Company, one or more Debentures in the aggregate principal amount of $50,000,000
at 100% of the principal amount (the "Purchase Price"). The Purchaser will
designate to the Company the number and denominations of Debentures at least one
business day prior to the Closing. The closings (the "Closings") for the
consummation of the transactions contemplated by this Agreement shall take place
at the offices of the Purchaser, as follows: (a) at the first closing (the
"First Closing"), which shall occur simultaneously with the execution of this
Agreement, subject to satisfaction of the conditions set forth in Section 5, the
Company shall issue to the Purchaser warrants to purchase an aggregate of
2,000,000 shares of Common Stock (the "Warrants"), (the terms of such Warrants
to be evidenced by a warrant certificate in substantially the form of Exhibit B)
and issue and deliver, and Purchaser shall purchase and pay for, $14,900,000 in
principal amount of Debentures; and (b) at the second closing (the "Second
Closing"), the Company shall issue and deliver, and Purchaser shall purchase and
pay for, $35,100,000 in principal amount of the Debentures. The Second Closing
shall take place within five (5) business days after the date the parties
receive the necessary clearances under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX Xxx"), subject to satisfaction of the
conditions set forth in Section 5. Promptly after the date hereof, the parties
shall make the necessary filings under the HSR Act, and shall use their
commercially reasonable efforts to obtain such clearances as promptly as
possible.(such dates of the Closing being herein referred to as the "Closing
Dates"). The applicable portions of the Purchase Price shall be delivered to the
Company at each Closing by wire transfer of immediately available Federal funds
(instructions for which will be provided by the Company to the Purchaser),
against receipt of the Debentures.
3. Representations and Warranties of the Company. Except in the case of any
representation and warranty below, to the extent described under the caption
identifying such representation and warranty in the Company Disclosure Letter
dated the date of this Agreement and furnished by the Company to the Purchaser
on the date of this Agreement (the "Company Disclosure Letter"), the Company
represents and warrants, and agrees, as follows:
(a) Organization The Company and each of the subsidiaries of the Company, a
list of which are set forth on Schedule 3(a) of the Company Disclosure Letter
(each a "Subsidiary" and, collectively, the "Subsidiaries"), are corporations
duly organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation, and are duly qualified and in good
standing to do business in each jurisdiction in which such qualification is
necessary because of the property owned or leased or because of the nature of
business conducted by it, except for those jurisdictions where the failure to be
so qualified would not, individually or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), assets, liabilities,
operations, earnings or business of the Company and its Subsidiaries, taken as a
whole (a "Material Adverse Effect"). The Company does not own, directly or
indirectly, any equity interest in any corporation, partnership, joint venture
or other entity other than the Subsidiaries.
(b) Capital Stock; Indebtedness; Liens.
(i) The authorized capital stock of the Company as of the date hereof consists
of 100,000,000 shares of Common Stock, par value $.001 per share, and 5,000,000
shares of Preferred Stock, of which 58,049,580 shares of Common Stock, including
associated Rights (the "Rights") issued pursuant to the Rights Agreement, as
amended, dated as of March 18, 1998, between the Company and American Stock
Transfer and Trust Company, as Rights Agent (the "Rights Agreement"), are
validly issued and outstanding, fully paid and non-assessable, with no personal
liability attaching to the ownership thereof, and no shares of Preferred Stock
are issued or outstanding. All outstanding shares of capital stock of the
Company are duly authorized and not subject to any pre-emptive rights. Except
for such 58,049,580 shares of Common Stock and the Rights, there are no other
shares of capital stock or other equity securities of the Company issued or
outstanding.
(ii) Except as set forth in the Reports (as defined below) and in Schedule
3(b)(ii): (A) there are no options, warrants, contracts, commitments or
agreements to which the Company is a party or is bound relating to any shares of
capital stock or other securities of the Company, whether or not outstanding,
and (B) other than the Purchaser pursuant to this Agreement, no person has any
right to cause the Company to effect the registration under the Securities Act
of 1933, as amended (the "Securities Act"), of Common Stock or any other
securities of the Company, and (C) there are no voting trusts, voting
agreements, proxies or other agreements or instruments with respect to the
voting of the Company's capital stock to which the Company is a party or, to the
best of the Company's knowledge, among or between any persons other than the
Company.
(c) Authorization of Agreement. The execution, delivery and performance by the
Company of this Agreement are within the Company's corporate powers and
have been duly authorized by all requisite corporate action by the Company; and
this Agreement has been duly executed and delivered by the Company and
constitutes the valid and binding obligation of the Company.
(d) Authorization of Debentures and Warrants. The issuance, sale and delivery of
the Debentures and the Warrants are within the Company's corporate powers and
have been duly authorized by all requisite corporate action of the Company, and
when issued, sold and delivered in accordance with the provisions of this
Agreement, the Debentures and the Warrants will constitute the valid and binding
obligations of the Company, enforceable in accordance with their respective
terms.
(e) Authorization of Shares. The Debentures are convertible into Common Stock in
accordance with the terms of this Agreement and of the Debentures. The Warrants
are exercisable for shares of Common Stock in accordance with the terms set
forth in this Agreement and the Warrant Certificate. The reservation, issuance
and delivery of the Reserved Shares are within the Company's corporate powers
and have been duly authorized by all requisite corporate action of the Company,
and when issued and delivered in accordance with the terms of this Agreement and
the terms of the Debentures and the Warrants, as the case may be, and accepted
for listing on The New York Stock Exchange ("NYSE"), the Reserved Shares will be
validly issued and outstanding, fully paid and non-assessable with no personal
liability attaching to the ownership thereof, and not subject to preemptive or
any other similar rights of the shareholders of the Company or others. The
stockholders of the Company have no preemptive rights with respect to the
Debentures, the Warrants, the Reserved Shares or the Common Stock.
(f) Non-Contravention; No Required Consents. The execution, delivery and
performance of this Agreement, the issuance, sale and delivery of the Debentures
and the Warrants and the reservation, issuance and delivery of the Reserved
Shares, and compliance with the provisions hereof and thereof by the Company
will not (i) violate any provision of law, statute, rule or regulation, or any
ruling, writ, injunction, order, judgment, or decree of any court,
administrative agency or other governmental body applicable to the Company, any
of the Subsidiaries or any of their properties or assets or (ii) conflict with
or result in any breach of any of the terms, conditions or provisions of, or
constitute (with due notice or lapse of time, or both) a default (or give rise
to any right of termination, cancellation or acceleration) under, or result in
the creation of any lien, security interest, charge or encumbrance upon any of
the properties or assets of the Company under, (A) the Company's or any
Subsidiary's articles of incorporation or bylaws, or (B) any note, indenture,
mortgage, lease, contract, agreement or instrument (1) to which the Company is a
party or by which it or any of its properties or assets are bound or affected
and (2) relating to any debt owed by, or any capital stock issued by, the
Company, (C) any other material lease, contract, agreement or other instrument
to which the Company is a party or by which any of its properties or assets are
bound or affected or (D) any material note, indenture, mortgage, lease,
agreement or other contract, agreement or instrument to which any Subsidiary is
a party or by which it or any of its properties or assets are bound or affected.
Except for the filing of any notice subsequent to the Closings that may be
required under applicable Federal or state securities laws (which, if required,
shall be filed on a timely basis as may be so required), obtaining the necessary
clearances under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, and
listing the Reserved Shares on the NYSE, no consent, approval or authorization
of, or declaration to, or filing with, any Person is required for the valid
authorization, execution, delivery, and performance by the Company of this
Agreement or for the valid authorization, issuance, sale and delivery of the
Debentures or for the valid authorization, reservation, issuance and delivery of
the Reserved Shares. The term "Person", as used herein, means an individual, a
corporation, a partnership, a limited liability company, a trust, an
unincorporated association or any other entity or organization, including,
without limitation, a government or political subdivision or an agency,
instrumentality or official thereof.
(g) Litigation. Except as disclosed in Schedule 3(g) or in the Reports (i) there
are no actions, suits, claims, investigations or legal or administrative or
arbitration proceedings pending or, to the knowledge of the Company or any
Subsidiary, threatened against or affecting the Company or any Subsidiary,
whether at law or in equity, or before or by any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality which individually or in the aggregate would, if adversely
determined, have a Material Adverse Effect, or which in any manner draws into
question the validity of this Agreement, the Debentures or the Reserved Shares
or the transactions contemplated hereby or thereby; and (ii) there are no
judgments, decrees, injunctions or orders of any court, governmental department,
commission, agency, instrumentality or arbitrator against or affecting the
Company or any Subsidiary, which individually or in the aggregate, would have a
Material Adverse Effect.
(h) Compliance; Governmental Authorizations. Each of the Company and each
Subsidiary has complied, and is in compliance with, in all respects with the
Federal, state, local or foreign laws, ordinances, regulations and orders
(including environmental laws, ordinances, regulations and orders) necessary for
the conduct of its business, except where the failure to comply with any of the
foregoing would not have a Material Adverse Effect. Each of the Company and each
Subsidiary has all Federal, state and foreign governmental licenses and permits
necessary for the conduct of its business as presently being conducted
(including all those required by the United States Environmental Protection
Agency and similar state agencies), such licenses and permits are in full force
and effect, no violations are or have been recorded in respect of any thereof
and no proceeding is pending or, to the knowledge of the Company or any
Subsidiary, threatened to revoke or limit any thereof, except where the failure
to comply with any of the foregoing would not have a Material Adverse Effect.
(i) Financial Statements. The consolidated financial statements of the Company
and the Subsidiaries set forth in the (i) Company's Annual Report on Form 10-K
for the year ended December 31, 1998, reported on by Xxxxx Xxxxxxxx LLP, and
(ii) Company's Quarterly Report on Form 10-Q for the three months ended March
31, 1999, in each case fairly present the consolidated financial position of the
Company and the Subsidiaries as of such date and the consolidated results of
operation and cash flows for such period then ended in conformity with generally
accepted accounting principles. Xxxxx Xxxxxxxx is the Company's independent
accountant as defined under the Securities Act and the rules and regulations
promulgated thereunder.
(j) Absence of Changes. Since March 31, 1999, and except as disclosed in
Schedule 3(j), the Company and each Subsidiary has been operated in the ordinary
course of business consistent with past practice and there has not been (i) any
material adverse change in the condition (financial or otherwise), assets,
liabilities, operations, earnings or business of the Company and its
Subsidiaries, taken as a whole; or (ii) any declaration, setting aside or
payment of any dividend or other distribution with respect to any shares of
Common Stock, or any direct or indirect redemption, purchase or other
acquisition of any such shares of Common Stock.
(k) Taxes. Except as disclosed in Schedule 3.2(k), the federal income tax
returns of the Company or its predecessors have never been examined by the
Internal Revenue Service. Neither the Company nor its predecessors has taken any
reporting positions for which they do not have a reasonable basis and the
Company does not anticipate any further material tax liability with respect to
the years for which returns have been filed prior to the date of this Agreement.
For purposes of this paragraph, the term "Company" shall include each other
corporation with which the Company files consolidated or combined income tax
returns or reports. The Company and each Subsidiary have timely filed (or
received extensions for filing) all United States federal income tax returns and
all other material tax returns (federal, state, local and foreign) required to
be filed by it, which returns are true and correct in all material respects, and
all taxes, assessments, fees and othergovernmental charges thereupon and upon
its properties, assets, income and franchises which are due and payable prior to
the date of this Agreement, the failure of which to pay when due and payable has
or is likely to have a Material Adverse Effect, have been paid when due and
payable, or reserves have been provided for payment thereof to the extent
required under generally accepted accounting standards. The Company does not
know of any actual or proposed additional tax assessments for any fiscal period
against it or any of the Subsidiaries which, singly or in the aggregate, would
have a Material Adverse Effect and the Company has established adequate reserves
for such additional tax assessments, if any.
(l) Intellectual Property. The Company or a Subsidiary
exclusively or jointly owns, or is licensed to use, all patents, licenses,
copyrights, trademarks or trade names or other intellectual property rights
("Intellectual Property") which the Company believes are necessary, required or
desirable for the conduct of the business of the Company and the Subsidiaries as
presently conducted or as presently proposed to be conducted. There are no
pending or threatened claims against the Company or any Subsidiary alleging that
the conduct of the Company's or such Subsidiary's business (as now conducted or
presently proposed to be conducted) infringes or conflicts with or will infringe
or will conflict with the rights of others in any Intellectual Property. To the
knowledge of the Company, no third party is infringing any of the Intellectual
Property of the Company or any Subsidiary. To the Company's knowledge, neither
the Company nor any Subsidiary is making unauthorized use of any confidential
information or trade secrets of any person, including without limitation, any
former or present employees of the Company or any Subsidiary.
(m) Compliance with ERISA. Each member of the ERISA Group has fulfilled its
obligations under the minimum funding standards of ERISA and the Internal
Revenue Code with respect to each Plan and is in compliance in all material
respects with the
presently applicable provisions of ERISA and the Internal Revenue Code with
respect to each Plan. No member of the ERISA Group has (i) sought a waiver of
the minimum funding standard under Section 412 of the Internal Revenue Code in
respect of any Plan, (ii) failed to make any contribution or payment to any Plan
or Multiemployer Plan or in respect of any Benefit Arrangement, or made any
amendment to any Plan or Benefit Arrangement, which has resulted or could result
in the imposition of a lien or the posting of a bond or other security under
ERISA or the Internal Revenue Code or (iii) incurred any liability under Title
IV of ERISA other than a liability to the PBGC for premiums under Section 4007
of ERISA. "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute. "ERISA Group" means the Company and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Company, are treated as a single employer under Section 414 of the Internal
Revenue Code. "PBGC" means the Pension Benefit Guaranty Company or any entity
succeeding to any or all of its functions under ERISA. "Benefit Arrangement"
means at any time an employee benefit plan within the meaning of Section 3(3) of
ERISA which is not a Plan or a Multiemployer Plan and which is maintained or
otherwise contributed to by any member of the ERISA Group. "Multiemployer Plan"
means at any time an employee pension benefit plan within the meaning of Section
4001(a) (3) of ERISA to which any member of the ERISA Group is then making or
accruing an obligation to make contributions or has within the preceding five
Plan years made contributions, including for these purposes any Person which
ceased to be a member of the ERISA Group during such five year period. "Plan"
means at any time an employee pension benefit plan (other than a Multiemployer
Plan) which is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Internal Revenue Code and either (i) is
maintained, or contributed to, by any member of the ERISA Group for employees of
any member of the ERISA Group or (ii) has at any time within the preceding five
years been maintained, or contributed to, by any Person which was at such time a
member of the ERISA Group for employees of any Person which was at such time a
member of the ERISA Group.
(n) No Defaults. Except as disclosed in Schedule 3(n), (A) neither the Company
nor any Subsidiary is in default (i) under its articles of incorporation or
bylaws, or any indenture, mortgage, lease, purchase or sales order, or any other
contract, agreement or instrument to which the Company or any Subsidiary is a
party or by which they or any of their properties are bound or affected or (ii)
with respect to any order, writ, injunction or decree of any court or any
Federal, state, municipal or other domestic or foreign governmental department,
commission, board, bureau, agency or instrumentality, which defaults
individually or in the aggregate would have a Material Adverse Effect; and (B)
there exists no condition, event or act which constitutes, or which after
notice, lapse of time, or both, would constitute, a default under any of the
foregoing, which defaults individually or in the aggregate would have a Material
Adverse Effect.
(o) SEC Reports. The Company has delivered to the Purchaser its (i) AnnualReport
on Form 10-K for the year ended December 31, 1998 and (ii) Quarterly Report on
Form 10-Q for the three months ended March 31, 1999 (together, the "Reports").
The description of the business, operations, properties and assets of the
Company contained in the Reports, as well as all other factual statements
concerning the Company contained therein,are true,
correct and complete in all material respects and do not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(p) Offering Exemption. Neither the Company nor any
of its agents has offered or sold any Debentures, Warrants or Common Stock, or
any similar security or securities to, or solicited any offers to buy any of the
foregoing from, or otherwise approached or negotiated in respect thereof with,
any person or persons so as to require registration of the Debentures, the
Warrants or the Reserved Shares under the Securities Act or qualification under
the Trust Indenture Act of 1939. The offering and sale of the Debentures and the
Warrants and the issuance of the Reserved Shares upon conversion of the
Debentures and the Warrants, as the case may be, are each exempt from
registration under the Securities Act pursuant to Section 4(2) of such Act.
(q) Use of Proceeds. The proceeds received by the Company from the sale of the
Debentures and the Warrants shall be used by the Company for general corporate
purposes. None of such proceeds will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of buying or carrying any
"margin stock" within the meaning of Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
(r) Investment Company. The Company is
not an "investment company" or an entity "controlled" by an "investment company"
as such terms are defined in the Investment Company Act of 1940, as amended.
(s) Disclosure. No document, certificate, instrument or written statement or
information furnished or made available to the Purchaser by or on behalf of the
Company in connection with the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained therein not misleading. There is no
fact peculiar to the Company which materially adversely affects (without regard
to general market and economic conditions), or in the future may (so far as the
Company can now foresee), to the best knowledge of the Company, materially
adversely affect the business, operations, condition, properties or assets of
the Company which has not been set forth in this Agreement or in the other
documents, certificates, instruments or written statements furnished to the
Purchaser by or on behalf of the Company pursuant hereto.
(t) No Finders' Fees. There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of the
Company or any Subsidiary who might be entitled to any fee or commission from
the Company, any Subsidiary, the Purchaser or any of Purchaser's affiliates upon
consummation of the transactions contemplated by this Agreement or thereafter.
(u) Florida Law; Rights Agreement. The Company has delivered to the Purchaser a
complete and correct copy of the Rights Agreement, including all amendments and
exhibits thereto. The Company has taken, and as soon as possible after the date
hereof (but in no event later than five business days after the date hereof),
the Rights Agent will take, all actions necessary or appropriate to amend the
Rights Agreement to ensure that the execution of this Agreement and the issuance
and delivery of the Reserved Shares in accordance with the terms of thiS
Agreement and the terms of the Debentures and the other transactions
contemplated by this Agreement and the Debentures and the Warrants will not
cause (i) the Purchaser or any of its affiliates to be considered an Acquiring
Person (as such term isdefined in the Rights Agreement), (ii) the occurrence of
a Distribution Date or Stock Acquisition Date (as such terms are defined in the
Rights Agreement) or (iii) the separation of the Rights from the underlying
Shares, and will not give the holders thereof the right to acquire securities of
any party hereto;provided that: (A) the amendments described in subsections (i)
through (iii) above shall be effective only so long as Purchaser does not
acquire, upon conversion of the Debenture, exercise of the Warrants, or
otherwise, 20% or more of the outstanding Common Stock; and (B) if Purchaser
acquires Common Stock ("Excess Shares") in excess of the amounts set forth in
subsection (A), such acquisition will be considered a "Triggering Event," and
Purchaser will be deemed an "Acquiring Person," all as defined in the Rights
Agreement. If the shareholders of the Company approve the Holder's purchase of
Excess Shares upon conversion of the Debentures and exercise of the Warrants (in
accordance with Section 3(g) of the Debentures), then the Company and its Board
of Directors shall take such further actions as may be necessary to exempt such
Excess Shares (and the Holder's acquisition thereof) from the provisions of
Florida Statutes ss.607.0902 and the Rights Agreement. If due to the Company's
issuance(s) of Common Stock after the date hereof, the total number of shares of
Common Stock which may be acquired by Purchaser pursuant to the Debentures and
the Warrants is less than 19.95% of the total shares of Common Stock then
outstanding, Purchaser may, at its option, elect to purchase additional shares
of Common Stock other than pursuant to the Debenture or the Warrants (the
"Outside Purchases"). Such Outside Purchases shall be exempt from the Rights
Agreement, so long as the total shares acquired through Outside Purchases, plus
the maximum amount of shares of Common Stock which have been or may be acquired
by Purchaser pursuant to the Debentures and the Warrants, does not exceed 19.95%
of the total shares of Common Stock then outstanding.
4. Representations and Warranties of
the Purchaser. The Purchaser represents and warrants to the Company as follows:
(a) Investment Purpose. The Purchaser is acquiring the Debentures and the
Warrants for the Purchaser's own account, not as a nominee or agent, and the
Purchaser is acquiring the Debentures and the Warrants for investment and not
with a view to the distribution thereof within the meaning of the Securities
Act.
(b) Restricted Securities.
(i) The Purchaser understands that the Debentures and the Warrants have
not been registered under the Securities Act; and that the Debentures and the
Warrants are restricted securities within the meaning of Rule 144 under the
Securities Act.
(ii) The Purchaser understands that the Reserved Shares issuable upon
conversion and the shares issuable upon exercise of the Warrants will not b
registered under the Securities Act (except as otherwise provided in Sectio 6)
and may only be sold or transferred in compliance with the Securities Act.
(c) Accredited Investor. Purchaser is an Accredited Investor (as that
term is defined in Rule 501 of Regulation D promulgated under the Securities
Act of 1933, as amended).
5. Conditions of Obligations of the Purchaser. The obligations of the
Purchaser to perform under this Agreement are subject to the satisfaction
of the following conditions at each closing unless waived by the Purchaser:
(a) Debenture and Warrant Certificate. The Purchaser shall have received
a duly executed Debenture or Debentures evidencing the principal amount of
Debentures purchased and a duly executed Warrant Certificate.
(b) Actions Authorized. All action necessary to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly and validly taken by the
Company, and the Company shall have full power and right to consummate the
transactions contemplated hereby. The Company shall have furnished to the
Purchaser such documents relating to its corporate existence and authority
(including, without limitation, certified copies of the Company's Articles of
Incorporation, Bylaws, resolutions and minutes of meetings of the Board of
Directors authorizing the Agreement and good standing certificates from the
Secretary of State of the states of Florida and such other matters as the
Purchaser or its counsel may reasonably request.
(c) Legal Opinion. The Purchaser shall have received an opinion dated the
Closing Date of Xxxxxx and Xxxxx LLP, and/or Xxxxxxxxx Traurig LLP, counsel to
the Company in the form of Exhibit D.
(d) Representations and Warranties; Compliance; No Default The
representations and warranties of the Company in Section 3 shall be true and
correct in all respects on and as of each Closing Date; the Company shall have
complied in all material respects with all obligations, covenants and conditions
required to be complied with by it pursuant to this Agreement on or prior to
each Closing; and the Purchaser shall have received a certificate at each
Closing signed by the Company's President and Chief Executive Officer to the
foregoing effect. No Event of Default under the Debentures and no event or
condition which, with the giving of notice or the lapse of time or both, would,
unless cured or waived, become such an Event of Default, shall have occurred and
be continuing.
(e) HSR Act. Prior to the Second Closing, the parties shall have received
clearance under the HSR Act to proceed with the Second Closing.
6. Transfer of Debentures.
(a) Restriction on Transfer. The Debentures shall not be transferable
except upon the conditions specified in this Section 6, which conditions are
intended to ensure compliance with the provisions of the Securities Act in
respect of the transfer of the Debentures. In addition, in no event shall the
Debentures be transferred to any person listed on Schedule 6(a).
(b) Restrictive Legend. Each Debenture shall (unless otherwise permitted
by the provisions of Section 6(d)) be stamped or otherwise imprinted with
legends in substantially the following form:
THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR QUALIFIED UNDER THE TRUST
INDENTURE ACT OF 1939. THIS DEBENTURE MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN EXEMPTION THEREFROM UNDER SAID ACT. ADDITIONALLY,
THE TRANSFER OF THIS DEBENTURE IS SUBJECT TO THE
CONDITIONS SPECIFIED IN SECTION 6 OF THE DEBENTURE
PURCHASE AGREEMENT PURSUANT TO WHICH THIS DEBENTURE WAS
PURCHASED, AND NO TRANSFER OF THIS DEBENTURE SHALL BE
VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED.
(c) Notice of Transfer. Each holder of a Debenture (a "Holder"), by acceptance
thereof agrees, prior to any transfer of any Debentures, to give written notice
to the Company of such Holder's intention to effect such transfer and to comply
in all other respects with the provisions of this Section 6(c). Each such notice
shall describe the manner and circumstances of the proposed transfer and shall
be accompanied by the written opinion of counsel for such Holder, as to whether
in the opinion of such counsel such proposed transfer involves a transaction
requiring registration of such Debentures under the Securities Act. If in the
opinion of such counsel the proposed transfer of the Debentures may be effected
without registration under the Securities Act, the Holder shall thereupon be
entitled to transfer the Debentures in accordance with the terms of the notice
delivered by it to the Company. Each certificate or other instrument evidencing
the securities issued upon the transfer of any Debentures (and each certificate
or other instrument evidencing any untransferred balance of such Debentures)
shall bear the legend set forth in Section 6(b) unless in the opinion of such
counsel registration of future transfer is not required by the applicable
provisions of the Securities Act.
7. Registration of Registrable Stock.
(a) Shelf Registration.
(i) The Company shall within the earlier of 30 business days of (A) the
Second Closing and from time to time thereafter; and (B) delivery of a written
request to register Registrable Stock (as defined below) by any holder or
holders owning beneficially, in the aggregate, Debentures and/or Warrants
convertible or exchangeable into at least 51% of the Registrable Stock, file
with the Securities and Exchange ommission (the "SEC") a Shelf Registration
Statement (as defined below) relating to the offer and sale of the shares of
Common Stock or other securities issued or issuable upon conversion of the
Debentures or exercise of the Warrants (the "Registrable Stock") by the holders
of Registrable Stock from time to time in accordance with the methods of
distribution elected by such holders
and set forth in such Shelf Registration Statement, and (y) use its best efforts
to cause such Shelf Registration Statement to be declared effective under the
Securities Act as promptly as practicable. "Register," "registered" and
"registration" each refer to a registration of Registrable Stock effected by
filing with the SEC a registration statement in compliance with the Securities
Act and the declaration or ordering by the SEC of effectiveness of such
registration statement. "Shelf Registration" means a registration effected
pursuant to this Section 7. "Shelf Registration Statement" means a shelf
registration statement of the Company filed with the SEC pursuant to the
provisions of this Section 7 which covers some or all of the Registrable Stock,
as applicable, on an appropriate form under Rule 415 under the Securities Act,
or any similar rule that may be adopted by the SEC, amendments and supplements
to such registration statement, includingpost-effective amendments, in each case
including the prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
(ii) The Company shall use its best efforts (x) to keep the Shelf
Registration Statement continuously effective in order to permit the prospectus
forming part thereof to be usable by the holders of Registrable Stock for a
period ending at such time as any holder could sell under Rule 144 under the
Securities Act, in any three month period, all of the Registrable Stock then
held by it, without any such Shelf Registration Statement being effective, and
(y) after the effectiveness of the Shelf Registration Statement, promptly upon
the request of any holder of Registrable Stock, to take any action necessary
including filing an amendment to the Shelf Registration Statement to register
the sale of any Registrable Stock of such holder and to identify such holder as
a selling securityholder.
( b) Registration Procedures. In connection with any Shelf
Registration Statement, the Company shall:
(i) prepare and file with the SEC a Shelf Registration Statement with respect to
the Registrable Stock and use its best efforts to cause such Shelf Registration
Statement to become and remain effective as provided in this Agreement;
(ii) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such Shelf Registration Statement effective and current and to
comply with the provisions of the Securities Act with respect to the disposition
of all shares covered by such Shelf Registration Statement, including such
amendments and supplements as may be necessary to reflect the intended method of
disposition from time to time of the prospective seller or sellers of such
Registrable Stock;
(iii) furnish to each selling holder of Registrable Stock
such number of copies of a prospectus in conformity with the requirements of the
Securities Act, and such other documents, as such holder may reasonably request
in order to facilitate the public sale or other disposition of the Registrable
Stock owned by such holder;
(iv) use its best efforts to register or qualify the
shares of Registrable Stock covered by such Shelf Registration Statement under
such other securities or blue sky or other applicable laws of such jurisdiction
within the United States as each
prospective seller shall reasonably request, to enable such seller to consummate
the public sale or other disposition in such jurisdictions of the shares of
Registrable Stock owned by such seller; and
(v) furnish to each prospective seller a signed counterpart, addressed to the
prospective sellers, of (i) an opinion of counsel for the Company, dated the
effective date of the Shelf Registration Statement, and (ii) a "comfort" letter
(or, in the case of any such Person which does not satisfy the conditions for
receipt of a "comfort" letter specified in Statement on Auditing Standards No.
72, an "agreed upon procedures" letter) signed by the independent auditors who
have certified the Company's financial statements included in the Shelf
Registration Statement, covering substantially the same matters with respect to
the Shelf Registration Statement (and the prospectus included therein) and (in
the case of the "comfort" or "agreed upon procedures" letter) with respect to
events subsequent to the date of the financial statements, as are customarily
covered (at the time of such registration) in opinions of issuer's counsel and
in "comfort" letters delivered to the underwriters in underwritten public
offerings of securities (with, in the case of an "agreed upon procedures"
letter, such modifications or deletions as may be required under Statement on
Auditing Standards No. 35).
(c) Designation of Underwriter. In the case of any
registration effected pursuant to this Section 7, a majority in interest of the
holders of Registrable Stock shall have the right to designate the managing
underwriter in any underwritten offering. The Company agrees to enter into a
customary underwriting agreement with the managing underwritten in connection
with any such underwriter offering.
(d) Cooperation by Prospective Sellers.
(i) Each prospective seller of Registrable Stock, and each underwriter
designated by each such seller, will furnish to the Company such information as
the Company may reasonably require from such seller or underwriter in connection
with the Shelf Registration Statement (and the prospectus included therein). No
holder of Registrable Stock may participate in any offering unless such Holder
completes and executes all questionnaires, indemnities, underwriting agreements
and other documents reasonably required in connection with the offering.
(ii) Failure of a prospective seller of Registrable Stock to furnish the
information and agreements described in this Agreement shall not affect the
obligations of the Company under this Agreement to remaining sellers to furnish
such information and agreements unless, in the reasonable opinion of counsel to
the Company or the underwriters, such failure impairs or may impair the
viability of the offering or the legality of the registration or the underlying
offering.
(iii) The holders of shares of Registrable Stock included in the registration
will not (until further notice by the Company) effect sales thereof (or deliver
a prospectus to any purchaser) after receipt of telegraphic or written notice
from the Company to suspend sales to permit the Company to correct or update a
registration statement or prospectus. In connection with any offering each
Holder who is a prospective seller, will not
use any offering document, offering circular or other offering materials with
respect to the offer or sale of Registrable Stock, other than the prospectuses
provided by the Company and any documents incorporated by reference therein.
(e) Expenses. All expenses incurred in complying with this Section 7, including,
without limitation, all registration and filing fees (including all expenses
incident to filing with the National Association of Securities Dealers, Inc.),
fees and expenses of complying with securities and "blue sky" laws, printing
expenses and fees and disbursements of counsel for the Company, and one counsel
for the holders of Registrable Stock, and of the independent certified public
accountants shall be paid by the Company; provided, however, that all
underwriting discounts and selling commissions applicable to the Registrable
Stock, covered by registrations effected pursuant to this Section 7 shall not be
borne by the Company but shall be borne by the seller or sellers.
(f) Indemnification.
(i) In the event of any registration of any Registrable Stock under the
Securities Act pursuant to this Section 7 or registration or qualification of
any Registrable Stock pursuant to this Section 7, the Company shall indemnify
and hold harmless the seller of such shares, each underwriter of such shares, if
any, each broker or any other person acting on behalf of such seller and each
other person, if any, who controls any of the foregoing persons, within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which any of the foregoing persons may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any registration statement under which such Registrable Stock as
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or any
document prepared or furnished by the Company incident to the registration or
qualification of any Registrable Stock pursuant to this Section 7, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or, with respect to any prospectus, necessary to make the
statements therein in light of the circumstances under which they were made, not
misleading, or any violation by the Company of the Securities Act or state
securities or "blue sky" laws applicable to the Company and relating to action
or inaction required of the Company in connection with such registration or
qualification under such state securities or blue sky laws; and shall reimburse
such seller, such underwriter, broker or other person acting on behalf of such
seller and each such controlling person for any legal or any other expenses
reasonably incurred by any of them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable (i) in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the registration statement, the preliminary prospectus or prospectus or in any
amendment or supplement thereof pursuant to this Section 7 in reliance upon and
in conformity with written information furnished to the Company through an
instrument duly executed by such seller or such underwriter specifically for use
in the preparation thereof and (ii) to any
broker or other person acting on behalf of such seller to the extent that any
such loss, claim, damage or liability arises out of or is based upon any
representation or other statement of such broker or other person that is not in
conformity with the preliminary prospectus or prospectus.
(ii) Before Registrable Stock held by a prospective seller shall be included in
any registration pursuant to this Section 7, such prospective seller and any
underwriter acting on its behalf shall have agreed to indemnify and hold
harmless (in the same manner and to the same extent as set forth in (i) above)
the Company, each director of the Company, each officer of the Company who shall
sign such registration statement and any person who controls the Company within
the meaning of the Securities Act, with respect to any untrue statement or
omission from such registration statement, any preliminary prospectus or
prospectus contained therein, or any amendment or supplement thereof, if such
untrue statement or omission was made in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by such seller or such underwriter, as the case may be, specifically for use in
the preparation of such registration statement, preliminary prospectus,
prospectus or amendment or supplement; provided that the maximum amount of
liability in respect of such indemnification shall be limited, in the case of
each prospective seller of Registrable Stock, to an amount equal to the net
proceeds actually received by such prospective seller from the sale of
Registrable Stock effected pursuant to such registration.
(iii) Notwithstanding the foregoing provisions of this Section 7(f), if
pursuant to an underwritten public offering of Common Stock, the Company,
the selling shareholders and the underwriters enter into an underwriting or
purchase agreement relating to such offering which contains provisions
covering indemnification among the parties thereto in connection with such
offering, the indemnification provisions of Section 7(f) shall be deemed
inoperative for purposes of such offering.
(iv) Each party entitled to indemnification under this Section 7(f) (the
"indemnified party") shall give notice to the party required to provide
indemnification (the "indemnifying party") promptly after such indemnified party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the indemnifying party (at its expense) to assume the defense of any
claim or any litigation resulting therefrom, provided that counsel for the
indemnifying party, who shall conduct the defense of such claim or litigation,
shall be reasonably satisfactory to the indemnified party, and the indemnified
party may participate in such defense, but only at such indemnified party's
expense, and provided, further, that the omission by any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under this Section 7(f) except to the extent that the omission
results in a failure of actual notice to the indemnifying party and such
indemnifying party is damaged solely as a result of the failure to give notice.
No indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
8. Covenants. The Company agrees that:
(a) Information. The Company shall deliver to each Holder:
(i) (A) as soon as available and in any event within 5 days after filing of each
of the Company's Quarterly Reports on Form 10-Q and Current Reports on Form 8-K
with the Commission, copies of each of such reports; and (B) as soon as
available and in any event within 10 days after filing of each of the Company's
Annual Reports on Form 10-K including copies of the Company's Annual Report to
Shareholders and Schedule 14A with the Commission, copies of each of such
reports;
(ii) promptly upon the mailing thereof to the shareholders of the Company
generally, copies of all information (other than as described in clause (i)) so
mailed;
(iii) simultaneously with the delivery of each set of financial statements
referred to above, a certificate of the chief financial officer or the chief
accounting officer of the Company stating whether any Event of Default, as
defined in the Debentures, or any condition or event which, with the giving of
notice or lapse of time or both would, unless cured or waived, become an Event
of Default, exists on the date of such certificate and, if any Event of Default
or any such condition or event then exists, setting forth the details thereof
and the action which the Company is taking or proposes to take with respect
thereto;
(iv) if and when any member of the ERISA Group (i) gives or is required to give
notice to the PBGC of any "reportable event" (as defined in Section 4043 of
ERISA) with respect to any Plan which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knows that the plan administrator of
any Plan has given or is required to give notice of any such reportable event, a
copy of the notice of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability under
Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such notice; (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate, impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies
for a waiver of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gives notice of withdrawal from any
Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to
make any payment or contribution to any Plan or Multiemployer Plan or in respect
of any Benefit Arrangement or makes any amendment to any Plan or Benefit
Arrangement which has resulted or could result in the imposition of a lien or
the posting of a bond or other security, a certificate of the chief financial
officer or the chief accounting officer of the Company setting forth details as
to such occurrence and action, if any, which the Company or applicable member of
the ERISA Group is required or proposes to take; and
(v) from time to time such additional information
regarding the financial position or business of the Company and its Subsidiaries
as any Holder may reasonably request (it being understood and agreed that no
Holder shall be entitled to request
any confidential or proprietary information of the Company and its Subsidiaries
pursuant to this clause (v)).
(b) Payment of Obligations. The Company will pay and discharge, and will cause
each Subsidiary to pay and discharge, at or before maturity, all their
respective material obligations and liabilities, including, without limitation,
tax liabilities, except where the same may be contested in good faith by
appropriate proceedings, and will maintain, and will cause each Subsidiary to
maintain, in accordance with generally accepted accounting principles,
appropriate reserves for the accrual of any of the same.
(c) Conduct of Business and Maintenance of Existence. The Company will continue,
and will cause each Subsidiary to continue, to engage in business of the same
general type as now conducted by the Company and its Subsidiaries, and will
preserve, renew and keep in full force and effect, and will cause each
Subsidiary to preserve, renew and keep in full force and effect their respective
corporate existence and their respective rights, privileges and franchises
necessary or desirable in the normal conduct of business, provided that nothing
in this Section 8(c) shall prohibit (i) the merger of a Subsidiary into the
Company or the merger or consolidation of the Company or a Subsidiary with or
into another Person as permitted by Section 6(d) of the Debenture, or (ii) the
termination of the corporate existence of any Subsidiary if the Company in good
faith determines that such termination is in the best interest of the Company
and is not materially disadvantageous to the Holders of the Debentures.
(d)
Compliance with Laws. The Company will comply, and cause each Subsidiary to
comply, in all material respects with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities (including, without
limitation, environmental laws and ERISA and the rules and regulations
thereunder) except where the necessity of compliance therewith is contested in
good faith by appropriate proceedings.
(e) Inspection of Property, Books and
Records. The Company will keep, and will use its best efforts to cause each
Subsidiary to keep, proper books of record and account in which full, true and
correct entries shall be made of all dealings and transactions in relation to
its business and activities; and will permit, and will cause each Subsidiary to
permit, representatives of any Holder at such Holder's expense to visit and
inspect any of their respective properties, to examine and make abstracts from
any of their respective books and records and to discuss their respective
affairs, finances and accounts with their respective officers, employees and
independent public accountants, all at such reasonable times, upon reasonable
notice and as often as may reasonably be desired (it being understood and agreed
that no Holder shall be entitled to request any confidential or proprietary
information of the Company and its Subsidiaries pursuant to this subsection
(e)).
(f) Prohibited Transactions. Neither the Company nor any agent acting on its
behalf will, directly or indirectly, sell or offer for sale or dispose of, or
attempt or offer to dispose of, any of the Debentures, Common Stock or any
similar security of the Company to, or solicit any offers to buy any thereof
from, or otherwise approach or negotiate in respect thereof with, any person or
persons, so as to require registration of the Debentures or the Reserved Shares
under the Securities Act.
(g) Increase in Authorized Capital. At its next annual
meeting of shareholders which shall be held prior to July 1, 2000, the Company
shall propose to its shareholders an amendment to its Articles of Incorporation
which would increase the number of authorized shares of common stock to at least
200,000,000 and shall use its best efforts to cause such amendment to be adopted
by its shareholders.
9. Survival of Representations, Warranties and Agreements
Etc. All representations and warranties hereunder shall survive the Closing. All
statements contained in any certificate or other instrument delivered by the
Company or pursuant to this Agreement or in connection with the transactions
contemplated by this Agreement shall constitute representations and warranties
by the Company under this Agreement.
10. Miscellaneous.
(a) Entire Agreement. This Agreement and the Schedules and Exhibits hereto
contain the entire agreement between the Company and the Purchaser with respect
to the transactions contemplated hereby and supersede all prior agreements or
understandings among the parties with respect thereto.
(b) Headings. Descriptive headings are for convenience only and shall not
control or affect the meaning or construction of any provision of this
Agreement.
(c) Notices. All notices or other communications provided for in this Agreement
shall be in writing and shall be sent by confirmed telecopy (with an undertaking
to provide a hard copy) or delivered by hand or sent by overnight courier
service prepaid to the address specified below.
If to the Company:
CHS Electronics, Inc.
0000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxxxxx
Telecopy: (000) 000-0000
with a copy to: Xxxxxx & Xxxxx
0000 Xxxxx Xxxxxx
000 X. Xxxxxxxx Xxxx.
Xxxxx, Xxxxxxx 00000
Attn: Xxxx X. xx Xxxxx
Telecopy: (000) 000-0000
If to the Purchaser:
Computer Associates International, Inc.
Xxx Xxxxxxxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: President
Telecopy: 000-000-0000
with a copy to:
Computer Associates International, Inc.
Xxx Xxxxxxxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
Telecopy: 000-000-0000
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith.
(d) Counterparts. This Agreement may be executed in any number of counterparts,
and each such counterpart hereof shall be deemed to be an original instrument,
but all such counterparts together shall constitute but one agreement.
(e) Amendments. This Agreement shall not be altered or otherwise amended except
pursuant to an instrument in writing signed by each of (i) the Company, and (ii)
the holders of 51% of the aggregate principal amount of the Debentures (or, if
the Debentures have been converted, the holders of 51% of the number of the
Reserved Shares issued upon such conversion). (f) Assignment. This Agreement
shall not be assignable by either party without the consent of the other party,
except that it, or the rights under this Agreement, in whole or in part, may be
assigned by the Purchaser to any party or parties who purchase the Debenture or
Debentures owned by the Purchaser (or, if the Debentures have been converted, to
any party or parties who purchase the Reserved Shares issued upon such
conversion). (g) Expenses; Documentary Taxes; Indemnification. (i) The Company
shall pay (A) all out-of-pocket expenses of each Holder, including fees and
disbursements of counsel for such Holder, in connection with the preparation of
this Agreement, (B) all out-of-pocket expenses of each Holder, including fees
and disbursements of counsel for such Holder, in connection with any waiver or
consent under this Agreement or under the Debentures or any amendment of this
Agreement or the Debentures or any default or alleged default under this
Agreement or under the Debentures and (C) if an Event of Default, as defined in
the Debentures, occurs, all out-of-pocket expenses incurred by each Holder,
including fees and disbursements of counsel, in connection with such Event of
Default and collection, bankruptcy, insolvency and other enforcement proceedings
resulting therefrom. The Company shall indemnify each Holder against any
transfer taxes, documentary taxes, assessments or charges made by any
governmental authority by reason of the execution and delivery of this Agreement
or the Debentures.
(ii) The Company hereby indemnifies and holds
each Holder and its affiliates, shareholders, officers, directors, employees and
agents (collectively, the "Indemnified Parties") harmless from and against any
and all actions, causes of action, suits, losses, costs, claims, liabilities and
damages, and expenses incurred in connection therewith (irrespective of whether
any such Indemnified Party is a party to the action for which indemnification
hereunder is sought), including attorneys' and other experts' fees and
disbursements (collectively, the "Indemnified Liabilities"), incurred by the
Indemnified Parties or any of them as a result of, or arising out of, or
relating to (A) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds from the sale of the Debentures; or
(B) the entering into and performance of this Agreement and any other document
delivered in connection herewith byany of the Indemnified Parties, but excluding
Indemnified Liabilities arising under agreements entered into by the Purchaser
prior to the date hereof which are unrelated to this Agreement.
An Indemnified Party shall be entitled to be represented by the counsel of such
Indemnified Party's choice in connection with the defense (including any
investigation) of any third party claim against or involving such Indemnified
Party for which indemnification is sought under this Agreement and, on demand
(and as incurred), the Company shall pay, or reimburse such Indemnified Party
for, the fees and expenses of such counsel and all other expenses relating to
such defense. This indemnity shall survive repayment or transfer of the
Debentures, the conversion of any Debenture into Reserved Shares or the transfer
of any Reserved Shares. The Company's obligation to any Indemnified Party under
this indemnity shall be without regard to fault on the part of the Company with
respect to the violation or condition which results in
liability of any Indemnified Party If and to the extent that the foregoing
undertaking is determined to be unenforceable for any reason, the Company hereby
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.
(h) CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(i) CONSENT TO JURISDICTION. EACH OF THE HOLDERS AND THE COMPANY HEREBY SUBMITS
TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE HOLDERS AND
THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE
HOLDERS AND THE COMPANY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH
PROCEEDING BY THE DELIVERY (BY OVERNIGHT COURIER) TO IT AT ITS ADDRESS SPECIFIED
IN SECTION 10(c) OF THIS AGREEMENT (OR IN THE CASE OF A HOLDER OTHER THAN THE
PURCHASER, TO ITS ADDRESS AS IT APPEARS IN THE REGISTER MAINTAINED BY THE
COMPANY). EACH OF THE HOLDERS AND THE COMPANY FURTHER AGREES THAT A FINAL
JUDGMENT IN ANY SUCH PROCEEDING SHALL BE CONCLUSIVE AND BINDING AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.
(j) WAIVER OF JURY TRIAL. THE COMPANY AND EACH OF THE HOLDERS
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, this Debenture Purchase Agreement has been
duly executed by an officer of each of the parties hereto thereunto duly
authorized all on the date first above written.
CHS ELECTRONICS, INC.
By:/s/ Xxxxxxx Xxxxxxxxxxx
------------------------
Name: Xxxxxxx Xxxxxxxxxxx
Title: Chief Officer - Mergers and Acquisitions
COMPUTER ASSOCIATES INTERNATIONAL, INC.
By:/s/ Xxxxxxx X. XxXxxx
-----------------------
Name: Xxxxxxx X. XxXxxx
Title: Senior Vice President
