Exhibit 99.5
STOCK PURCHASE AGREEMENT
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THIS IS A STOCK PURCHASE AGREEMENT (the "Agreement") dated
___________, 1999, by and between SAFEGUARD SCIENTIFICS, INC., a Pennsylvania
corporation ("Safeguard"), SAFEGUARD 98 CAPITAL, L.P., a Delaware limited
partnership ("Safeguard 98"), PAC-WEST TELECOMM, INC., a California corporation
(the "Company") and BEAR, XXXXXXX & CO. INC. ("Bear Xxxxxxx").
Background
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A. The Company is contemplating an initial public offering (the
"Public Offering") of its common stock, par value $.001 per share (the "Common
Stock").
B. As part of the Public Offering, the Company will offer _________
shares of Common Stock (the "Offered Common Stock") to certain shareholders of
Safeguard pursuant to a directed share subscription program (the "Directed Share
Subscription Program").
C. In the event that any of the shares of Offered Common Stock are
not subscribed for or, if subscribed for, are not purchased by the shareholders
of Safeguard under the Directed Share Subscription Program, Safeguard and the
Company wish to provide for Safeguard's purchase of these remaining shares.
D. In the event that the shareholders of Safeguard subscribe for more
shares of Common Stock than the number of shares of Offered Common Stock,
Safeguard 98 will make an offer of up to _________ shares of common stock of the
Company, par value $.001 per share, owned by it prior to the Public Offering
(the "Safeguard Pac-West Stock"), and the Safeguard Pac-West Stock shall be
included in the Directed Share Subscription Program.
E. [_______________________] will act as the offering agent (the
"Offering Agent") for the Directed Share Subscription Program and as the
Company's transfer agent. The Offering Agent will determine the record date
shareholders eligible to participate in the Directed Share Subscription Program
and will collect subscriptions and subscription payments from the eligible
shareholders until 5:00 p.m. on the [third] [fourth] business day following the
date the Company determines the initial public offering price of its shares.
F. Bear Xxxxxxx has and will provide certain advisory services to the
Company, Safeguard and Safeguard 98 with respect to the Directed Share
Subscription Program and shall receive an advisory fee of 3% of the aggregate
initial offering price of all of the shares sold by either the Company or
Safeguard 98, as appropriate, for such advisory services.
ARTICLE 1.
THE TRANSACTION
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1.1 Purchase and Purchase Price.
(a) In the event that any of the shares of Offered Common Stock are not
subscribed for or, if subscribed for, are not purchased by the shareholders of
Safeguard under the Directed Share
Subscription Program, Safeguard shall, or shall cause its wholly-owned
subsidiary, Safeguard Delaware, Inc. to, purchase these remaining shares.
(b) The purchase price for the Common Stock (the "Purchase Price") shall
be equal to the product of (i) the aggregate number of shares of Offered Common
Stock, and (ii) the price per share of Common Stock sold pursuant to the Public
Offering.
(c) Safeguard shall transfer or Safeguard shall cause Safeguard Delaware,
Inc. to transfer or shall cause the Offering Agent to pay out of subscription
funds received, on behalf of Safeguard's shareholders participating in the
Directed Share Subscription Program, to the Company an amount equal to the
Purchase Price on the day of the closing of the Public Offering by wire
transfer.
(d) In the event that the shareholders of Safeguard subscribe for more
shares of Common Stock than the number of shares of Offered Common Stock,
Safeguard 98 shall make an offer of the Safeguard Pac-West Stock, and the
Safeguard Pac-West Stock shall be included in the Directed Share Subscription
Program.
1.2 Closing.
(a) Time and Place. The closing under this Agreement (the "Closing") will
take place at 10:00 a.m., Chicago, Illinois time, on the day of the closing of
the Public Offering, at the offices of Xxxxxx & Xxxxxxx, or at such other time,
date or place as the parties shall mutually agree. The date on which the Closing
occurs is sometimes referred to herein as the "Closing Date."
(b) Deliveries and Proceedings. On the Closing Date, the Company shall
instruct the transfer agent to accept instructions from Xxxxxxx Xxxxxxxxx, or
her designee at Safeguard, for:
(i) delivery of the subscription funds collected by the Offering
Agent to the extent not paid to the Company at the Closing;
(ii) delivery of the shares of Offered Common Stock purchased in the
Directed Share Subscription Program;
(iii)delivery to Safeguard of shares of Offered Common Stock not
purchased by Safeguard shareholders; and
(iv) the return to Safeguard 98 of any shares of Safeguard Pac-West
Stock that were not purchased in the Directed Share Subscription Program.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company hereby represents and warrants to Safeguard, Safeguard 98
and Bear Xxxxxxx as follows:
2.1 Organization. The Company is a corporation duly incorporated, validly
existing and in good
standing under the laws of the State of California.
2.2 Power and Authority. The Company has full corporate power and authority to
make, execute, deliver and perform this Agreement.
2.3 Authorization and Enforceability. The execution, delivery and performance
of this Agreement by the Company have been duly authorized by all necessary
corporate action on the part of the Company, and this Agreement constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
ARTICLE 3.
REPRESENTATION AND WARRANTIES OF SAFEGUARD
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Each of Safeguard and Safeguard 98 represent and warrant to the
Company and Bear Xxxxxxx as follows:
3.1 Organization. Safeguard is a corporation and Safeguard 98 is a limited
partnership duly incorporated or organized, respectively, validly existing and
in good standing under the laws of the Commonwealth of Pennsylvania and the
State of Delaware, respectively.
3.2 Power and Authority. Safeguard and Safeguard 98 each have full corporate
power and authority to make, execute, deliver and perform this Agreement.
3.3 Authorization and Enforceability. The execution, delivery and performance
of this Agreement by Safeguard and Safeguard 98 have been duly authorized by all
necessary corporate or limited partnership action on the part of Safeguard and
Safeguard 98, respectively, and this Agreement constitutes the legal, valid and
binding obligation of each of Safeguard and Safeguard 98, enforceable against
each of Safeguard and Safeguard 98 in accordance with its terms.
ARTICLE 4.
CONDITIONS TO CLOSING; TERMINATION
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4.1 Conditions Precedent to Obligations of Safeguard and Safeguard 98. The
obligations of Safeguard and Safeguard 98 to proceed with the Closing under this
Agreement are subject to the fulfillment prior to or at Closing of the following
conditions (any one or more of which may be waived in whole or in part by
Safeguard and Safeguard 98 at their option):
(a) Bringdown of Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and correct
on and as of the time of Closing, with the same force and effect as though such
representations and warranties had been made on, as of and with reference to
such time, and Safeguard shall have received a certificate, signed by an
executive officer of the Company, to such effect.
(b) Performance and Compliance. The Company shall have performed all of
the covenants and complied with all of the provisions required by this Agreement
to be performed or complied with by it on or before the Closing, and Safeguard
and Safeguard 98 shall have received a certificate, signed by an executive
officer of the Company, to such effect.
(c) Public Offering. The closing of the Public Offering shall occur
contemporaneously with the Closing under this Agreement.
4.2 Conditions Precedent to the Obligations of the Company. The obligations of
the Company to proceed with the Closing hereunder are subject to the fulfillment
prior to or at Closing of the following conditions (any one or more of which may
be waived in whole or in part by the Company at the Company's option):
(a) Bringdown of Representations and Warranties. The representations and
warranties of Safeguard and Safeguard 98 contained in this Agreement shall be
true and correct on and as of the time of Closing, with the same force and
effect as though such representations and warranties had been made on, as of and
with reference to such time, and Safeguard and Safeguard 98 shall have delivered
to the Company a certificate, signed by an executive officer of Safeguard and
Safeguard 98, to such effect.
(b) Performance and Compliance. Safeguard and Safeguard 98 shall have
performed all of the covenants and complied with all the provisions required by
this Agreement to be performed or complied with by it on or before the Closing
and Safeguard and Safeguard 98 shall have delivered to the Company a
certificate, signed by an executive officer of Safeguard and Safeguard 98, to
such effect.
(c) Public Offering. The closing of the Public Offering shall occur
contemporaneously with the Closing under this Agreement.
4.3 Termination.
(a) When Agreement May Be Terminated. This Agreement may be terminated at
any time prior to Closing:
(i) by mutual consent of Safeguard, Safeguard 98, the Company and
Bear Xxxxxxx; or
(ii) by Safeguard, Safeguard 98, the Company, or Bear Xxxxxxx if the
Company shall have withdrawn its Registration Statement on Form S-1 relating to
the Public Offering (Reg. No. 333-86607).
(b) Effect of Termination. In the event of termination of this Agreement
by Safeguard, Safeguard 98, the Company, or Bear Xxxxxxx as provided above, this
Agreement shall forthwith terminate and there shall be no liability on the part
of Safeguard, Safeguard 98, the Company, or Bear Xxxxxxx, except for liabilities
arising from a breach of this Agreement prior to such termination; provided,
however, that the obligations set forth in Section 5.2 hereof shall survive such
termination.
ARTICLE 5.
CERTAIN ADDITIONAL COVENANTS
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5.1 Advisory Fee to Bear Xxxxxxx. In connection with the advisory services
provided by Bear Xxxxxxx relating to the Directed Share Subscription Program
administered as part of the proposed Public
Offering by the Company, the Company hereby agrees to pay an advisory fee of 3%
of the aggregate initial offering price of all of the Offered Common Stock sold
as part of the Directed Share Subscription Program (up to ____ million shares),
and Safeguard hereby agrees to pay an advisory fee of 3% of the aggregate
initial offering price of all of the Safeguard Pac-West Stock sold as part of
the Directed Share Subscription Program (up to _______ million shares). All such
advisory fees shall be payable at the closing of the initial public offering by
wire transfer in immediately available funds. The Company agrees to pay all
costs and expenses of the underwriters, including the fees and expenses of Bear
Xxxxxxx' counsel, in connection with matters related to the Directed Share
Subscription Program. The parties hereto agree that any shares sold in the
Directed Share Subscription Program will be separate from and in addition to the
shares of Common Stock of the Company being underwritten by Bear Xxxxxxx.
The Company, Safeguard and Safeguard 98 each understand that this is
not a commitment by Bear Xxxxxxx to underwrite shares in the Public Offering,
which commitment would be evidenced by an executed underwriting agreement.
5.2 Indemnification.
(a) Safeguard hereby agrees to indemnify Bear Xxxxxxx, the Company and its
underwriters and each of their affiliates, officers, employees, representatives
and directors (the "Indemnified Persons") against, and hold them harmless from,
any loss, liability, claim, damage or expense, joint or several ("Losses"),
arising directly or indirectly, out of or in connection with, the Directed Share
Subscription Program, including, without limitation, (i) costs and expenses
associated with the failure of any shareholders of Safeguard to consummate
purchases of Offered Common Stock for which they have subscribed, (ii) any
claims by shareholders of Safeguard or other persons arising from the Directed
Share Subscription Program, and (iii) other costs and expenses, including
printing costs and legal fees and expenses, arising from the establishment,
execution and performance of the Directed Share Subscription Program.
Notwithstanding the foregoing, Safeguard shall not indemnify the Company
against, and the term "Losses" shall not include, liabilities arising from any
untrue or allegedly untrue statement of a material fact, or omission or alleged
omission of a material fact required to be stated to make the statements not
misleading, in the prospectus contained in the Company's Registration Statement
on Form S-1 (Reg. No. 333-86607) (the "Prospectus"), except for statements or
omissions regarding the Directed Share Subscription Program and except for any
materials related to the Directed Share Subscription Program delivered to
Safeguard's shareholders and not to other recipients of the Prospectus
generally. Safeguard agrees to reimburse the Indemnified Persons, as incurred,
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any Losses.
(b) Promptly after receipt by an Indemnified Person of notice of the
commencement of any action for which indemnification or contribution may be
sought hereunder, such Indemnified Person will notify Safeguard in writing of
the commencement thereof. The failure to so notify Safeguard will not relieve
Safeguard from liability under Section 5.1(a) above unless and to the extent
that Safeguard did not otherwise learn of such action and such failure results
in the
forfeiture of substantial rights and defenses. Safeguard shall be entitled to
appoint counsel at Safeguard's expense to represent the Indemnified Person in
any action for which indemnification is sought (in which case Safeguard shall
not thereafter be liable for the fees and expenses of separate counsel retained
by the Indemnified Person except as set forth below); provided, however, that
such counsel shall be reasonably satisfactory to the Indemnified Person.
Notwithstanding Safeguard's election to appoint counsel to represent the
Indemnified Person in an action, the Indemnified Person shall have the right to
employ separate counsel (including local counsel), and Safeguard shall bear the
reasonable fees, costs and expenses of such counsel if (i) the use of counsel
chosen by Safeguard to represent the Indemnified Person would present such
counsel with a conflict of interest, (ii) the actual or potential defendants in,
or targets of, any such action include both Safeguard and the Indemnified Person
and the Indemnified Person shall have reasonably concluded that there may be
legal defenses available to it that are different from or in addition to those
available to Safeguard, (iii) Safeguard shall not have employed counsel
reasonably satisfactory to the Indemnified Person within a reasonable time after
notification of the commencement of such action or (iv) Safeguard shall have
authorized the Indemnified Person to employ separate counsel at the expense of
Safeguard.
(c) Safeguard shall not, without the prior written consent of the relevant
Indemnified Person, settle or compromise or consent to' the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder unless such settlement, compromise or consent includes an
unconditional release of such Indemnified Person from all liability arising from
such claim, action, suit or proceeding. An Indemnified Person may not settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder without the consent of
Safeguard, such consent not to be unreasonably withheld.
(d) In the event that the indemnity provided for in this Section 5.2 is
unavailable to or insufficient to hold harmless an Indemnified Person for any
reason, the Indemnified Persons and Safeguard shall contribute to the Losses
(including the legal and other expenses attributable to investigating or
defending same) to which the Indemnified Person may be subject in such
proportion as is appropriate to reflect the relative fault of the Indemnified
Person and Safeguard in connection with the statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations,
including that the Company performed the Directed Share Subscription Program as
an accommodation to Safeguard without any legal obligation to do so. Relative
fault shall be determined by reference to, among other things, whether any
untrue or allegedly untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information provided by the
Indemnified Person or Safeguard, the intent of the Indemnified Person and
Safeguard, and their relative knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The parties agree that
it would not be just and equitable if contribution was determined by any method
of allocation that does not take into account the equitable considerations
discussed above.
ARTICLE 6.
MISCELLANEOUS
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6.1 Nature and Survival of Representations. The representations, warranties,
covenants and agreements of the parties contained in this Agreement, and all
statements contained in this Agreement or any exhibit hereto or any certificate
or other document delivered pursuant to this Agreement or in connection with the
transactions contemplated hereby, shall be deemed to constitute representations,
warranties, covenants and agreements of the respective party delivering the
same. All such representations, warranties, covenants and agreements shall
survive the Closing.
6.2 Notices. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered or, if mailed, when mailed by United States first-class, certified or
registered mail, postage prepaid, to the other party at the following addresses
(or at such other address as shall be given in writing by any party to the
other).
(a) If to Safeguard or Safeguard 98, to:
Safeguard Scientifics, Inc.
800 The Safeguard Building
000 Xxxxx Xxxx Xxxxx
Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
(b) If to the Company, to:
Pac-West Telecomm, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
With a required copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X'Xxxxxx, Esq.
(c) If to Bear Xxxxxxx, to:
Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxx
With a required copy to:
Xxxxxx & Xxxxxxx
000 X. Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxxxxx Xxxxxxx, Esq.
6.3 Third Party Beneficiaries. Safeguard and Safeguard 98 acknowledge that
each of the underwriters of the Public Offering shall be a third party
beneficiary entitled to exercise the rights and remedies provided for herein
directly against Safeguard and Safeguard 98. The Company shall cooperate with
and assist each of the underwriters of the Public Offering with respect to any
action such underwriters of the Public Offering with respect to any action such
underwriters take to exercise such rights and remedies directly against
Safeguard and Safeguard 98.
6.4 Successors and Assigns. This Agreement, and all rights, powers and
obligations granted hereby, will bind and inure to the benefit of the parties
hereto and their respective successors and permitted assigns but shall not be
assignable or delegable by any party.
6.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to principles of conflicts of laws.
6.6 Headings. The headings preceding the text of the sections and subsections
hereof are inserted solely for convenience of reference, and shall not
constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
6.7 Counterparts. This Agreement may be executed in two counterparts, each of
which shall be deemed an original, but which together shall constitute one and
the same instrument.
6.8 Further Assurances. Each party shall cooperate and take such action as may
be reasonably requested by the other party in order to carry out the provisions
and purposes of this Agreement and the transactions contemplated hereby.
6.9 Amendment and Waiver. The parties may by mutual agreement amend this
Agreement in any respect, and either party, as to such party, may (a) extend the
time for the performance of any of the obligations of the other party, (b) waive
any inaccuracies in representations by the other party, (c) waive compliance by
the other party with any of the agreements contained herein and performance of
any obligations by the other party, and (d) waive the fulfillment of any
condition that is precedent to the performance by such party of any of its
obligations under this Agreement. To be effective, any such amendment or waiver
must be in writing and be signed by the party against whom enforcement of the
same is sought.
6.10 Entire Agreement. This Agreement sets forth all of the promises,
covenants, agreements, conditions and undertakings between the parties hereto
with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written.
6.11 Interpretations. No party to this Agreement shall be considered the
draftsman. This Agreement has been reviewed, negotiated and accepted by all
parties and their attorneys and shall be construed and interpreted according to
the ordinary meaning of the words used so as fairly to accomplish the purposes
and intentions of all parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
SAFEGUARD SCIENTIFICS, INC.
By:
Name:
Title:
XXXXXXXXX 00 XXXXXXX, X.X.
By:
Name:
Title:
PAC-WEST TELECOMM, INC.
By:
Name:
Title:
BEAR, XXXXXXX & CO. INC.
By:
Name:
Title:
