Exhibit 3
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EXECUTION COPY
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SERIES A CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT
DATED MAY 20, 1997
BY AND AMONG
ANICOM, INC.
AND
EACH OF THE PURCHASERS LISTED ON EXHIBIT A
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TABLE OF CONTENTS
PAGE
SECTION 1 Definitions................................................................................... 1
1.1 Defined Terms................................................................................. 1
SECTION 2 Authorization and Sale of Convertible Preferred Stock......................................... 4
2.1 Authorization of Convertible Preferred Stock.................................................. 4
2.2 Sale and Purchase of Convertible Preferred Stock.............................................. 4
2.3 Use of Proceeds............................................................................... 4
SECTION 3 Closing Date; Delivery........................................................................ 5
3.1 Closing Date.................................................................................. 5
3.2 Delivery...................................................................................... 5
SECTION 4 Representations and Warranties of the Company................................................. 5
4.1 Organization, Good Standing and Qualification................................................. 5
4.2 Capitalization................................................................................ 6
4.3 Subsidiaries.................................................................................. 6
4.4 Partnerships.................................................................................. 7
4.5 Authorization................................................................................. 7
4.6 Consents...................................................................................... 7
4.7 Absence of Litigation......................................................................... 7
4.8 Insurance..................................................................................... 7
4.9 Patents and Trademarks........................................................................ 7
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4.10 Compliance with Other Instruments and Legal Requirements...................................... 8
4.11 Material Agreements; Action................................................................... 8
4.12 Disclosure.................................................................................... 9
4.13 Brokers' Fees................................................................................. 9
4.14 Registration Rights........................................................................... 9
4.15 Real Property................................................................................. 9
4.16 Tangible Personal Property.................................................................... 10
4.17 Environmental Matters......................................................................... 10
4.18 Company SEC Reports and Financial Statements.................................................. 11
4.19 Changes....................................................................................... 12
4.20 Employee Benefit Plans........................................................................ 13
4.21 Taxes......................................................................................... 15
4.22 Minute Books.................................................................................. 15
4.23 Labor and Employment Matters.................................................................. 16
SECTION 5 Representations, Warranties and Covenants of the Purchasers................................... 16
5.1 Accredited Investor; Experience; Risk......................................................... 16
5.2 Investment.................................................................................... 17
5.3 Authorization................................................................................. 17
5.4 Consents...................................................................................... 17
5.5 Brokers' Fees................................................................................. 17
5.6 Plan Assets................................................................................... 17
5.7 Restrictive Legends........................................................................... 17
SECTION 6 Conditions to Closing of Purchasers........................................................... 18
6.1 Representations and Warranties Correct........................................................ 18
6.2 Covenants..................................................................................... 18
6.3 Opinion of Company's Counsel.................................................................. 18
6.4 No Material Adverse Change.................................................................... 18
6.5 Certificate of Designation.................................................................... 18
6.6 State Securities Laws......................................................................... 19
6.7 Issuance of Shares............................................................................ 19
6.8 Certificates.................................................................................. 19
6.9 Organizational Documents...................................................................... 19
6.10 Stockholders' Agreement....................................................................... 19
SECTION 7 Conditions to Closing of the Company.......................................................... 19
7.1 Representations............................................................................... 19
7.2 Covenants..................................................................................... 19
7.3 Purchase Price................................................................................ 19
7.4 Certificate................................................................................... 19
7.5 Stockholders' Agreement....................................................................... 20
SECTION 8 Covenants of the Company...................................................................... 20
8.1 Information................................................................................... 20
8.2 Preemptive Rights............................................................................. 21
8.3 Shelf Registration............................................................................ 22
8.4 Delay and Holdback of Registration............................................................ 26
8.5 Negative Covenants............................................................................ 26
SECTION 9 Miscellaneous................................................................................. 27
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9.1 Amendment; Waiver............................................................................. 27
9.2 Notices....................................................................................... 27
9.3 Survival of Representations, Warranties and Covenants......................................... 28
9.4 Severability.................................................................................. 28
9.5 Successors and Assigns........................................................................ 28
9.6 Entire Agreement.............................................................................. 28
9.7 Choice of Law................................................................................. 28
9.8 Counterparts.................................................................................. 28
9.9 Costs and Expenses............................................................................ 29
9.10 Indemnification............................................................................... 29
9.11 No Third-Party Beneficiaries.................................................................. 30
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ANICOM, INC.
SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT dated May 20,
1997 (this "Agreement"), by and between ANICOM, INC., a Delaware corporation
(the "Company") and each purchaser set forth on Exhibit A hereto (each a
"Purchaser" and collectively, the "Purchasers").
WHEREAS, the Company has issued and outstanding the shares of capital
stock described in Section 4.2 hereof and the Company has reserved for issuance
additional shares of capital stock upon the exercise of the outstanding
convertible securities identified in Section 4.2;
WHEREAS, the Company proposes to issue and sell, and the Purchasers
wish to purchase, shares of the Company's Series A Convertible Preferred Stock,
par value $.01 per share (the "Convertible Preferred Stock") on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
Definitions
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Defined Terms. The following terms are defined as follows:
"Affiliate" means, with respect to any Person, (i) any Person in which
such Person holds direct or indirect beneficial ownership (as defined in Rule
13d-3 under the Securities Exchange Act of 1934) of voting securities or other
voting interests representing at least 10% of the outstanding voting power of a
Person or equity securities or other equity interests representing at least 10%
of the outstanding equity securities or equity interests in a Person and (ii)
any brother, sister, parent, child or spouse of such Person or any Person
described in clause (i).
"Benefit Arrangement" means any benefit arrangement, obligation,
custom, or practice, to provide benefits, other than salary, as compensation for
services rendered, other than any obligation, arrangement, custom or practice
that is an Employee Benefit Plan, including, without limitation, employment or
change of control agreements, severance agreements, executive compensation
arrangements, incentive programs or arrangements, sick leave, vacation pay,
severance pay policies, plant closing benefits, salary continuation for
disability, consulting, or other compensation arrangements, workers'
compensation, retirement, deferred compensation, bonus, stock option or
purchase, hospitalization, medical insurance, life insurance, tuition
reimbursement or scholarship programs and employee discounts, in each case with
respect to any present or former employees, directors, or agents.
"Code" means the Internal Revenue Code of 1986 (or any successor
thereto), as amended from time to time.
"Company Benefit Arrangement" means any Benefit Arrangement sponsored
or maintained by the Company or its Subsidiaries or with respect to which the
Company or a Subsidiary has or will have any liability (whether actual,
contingent, direct or indirect) as of the Closing Date, in each case with
respect to any present or former directors, employees, or agents of the Company
or the Subsidiaries.
"Company Plan" means, as of the Closing Date, any Employee Benefit Plan
for which the Company or any Subsidiary has or will have any liability (whether
actual, contingent, direct or indirect).
"Company's Knowledge" or derivations thereof shall mean knowledge of
the executive officers of the Company, including without limitation, Xxxx X.
Xxxxxxx, Xxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx, Xxxx X. Xxxxxx, Xxxxxx X. Xxxxxxx,
Xxxxxx Xxxxxxxxxxx, Xx., Xxxx X. Xxxx and Xxx Xxxxx.
"Effectiveness Period" means the period commencing on the Closing Date
and ending on the second (2nd) anniversary of the Closing Date.
"Employee Benefit Plan" means any Employee Benefit Plan within the
meaning of Section 3(3) of ERISA.
"Environmental Law" means any foreign, federal, state or local statute,
regulation, ordinance or rule of common law as now or hereafter in effect in any
way relating to the protection of the environment including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. xx.xx. 9601 et seq.), the Hazardous Materials Transportation Act (49
U.S.C. App. xx.xx. 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. xx.xx. 6901 et seq.), the Clean Water Act (33 U.S.C. xx.xx. 1251 et
seq.), the Clean Air Act (42 U.S.C. xx.xx. 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. xx.xx. 2601 et seq.), the Federal Insecticide, Fungicide,
and Rodenticide Act (7 U.S.C. xx.xx. 136 et seq.), and the Occupational Safety
and Health Act (29 U.S.C. xx.xx. 651 et seq.) and the regulations promulgated
pursuant thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any Person that is or was at any time treated
as a single employer with the Company under Section 414 of the Code or Section
4001 of ERISA.
"Hazardous Material" means any substance, material or waste that is
regulated by the United States, the foreign jurisdictions in which the Company
or its Subsidiaries conducts business, or any state or local governmental
authority including, without limitation, petroleum and its by-products,
asbestos, and any material or substance that is defined as a "hazardous waste,"
"hazardous substance," "hazardous material," "restricted hazardous waste,"
"industrial waste," "solid waste," "contaminant," "pollutant," "toxic waste" or
"toxic substance" under any provision of Environmental Law.
"Lien" means any lien, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction under any shareholder or similar agreement,
encumbrance or any other restriction or limitation whatsoever.
"Multiemployer Plan" means any Employee Benefit Plan described in
Section 3(37) of ERISA.
"New Securities" means shares of Common Stock of the Company and any
securities or other rights convertible or exchangeable into or exercisable for
shares of Common Stock; provided, however, "New Securities" does not include (i)
Common Stock issued or issuable upon conversion of the Convertible Preferred
Stock issued to Purchasers; (ii) securities issued by the Company as part of any
public offering pursuant to an effective registration statement under the
Securities Act; (iii) equity securities issued in connection with any stock
split, stock dividend or recapitalization of the Company; (iv) equity securities
issued to management, directors or employees of the Company pursuant to plans
and options to purchase equity securities issued in accordance with such plans
approved by the Board; or (v) securities issued in connection with any merger,
acquisition or other business combination by the Company.
"Permits" means any approvals, authorizations, consents, licenses,
permits or certificates.
"Permitted Exceptions" means (i) all defects, exceptions, restrictions,
easements, rights of way and encumbrances disclosed in policies of title
insurance that have been made available to the Purchasers; (ii) statutory Liens
for current taxes, assessments or other governmental charges not yet delinquent
or the amount or validity of which is being contested in good faith by
appropriate proceedings, provided an appropriate reserve is established
therefor; (iii) mechanics', carriers', workers', repairers' and similar Liens
arising or incurred in the ordinary course of business that are
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not material to the business, operations and financial condition of the property
so encumbered or the Company or its Subsidiaries; (iv) zoning, entitlement and
other land use and environmental regulations by any governmental body, provided
that such regulations have not been violated; and (v) such other imperfections
in title, charges, easements, restrictions and encumbrances that do not
materially detract from the value of or materially interfere with the present
use of any Company Property (as hereinafter defined) subject thereto or affected
thereby.
"Person" means an individual, partnership, limited liability company,
corporation, joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Qualified Plan" means any Employee Benefit Plan that meets or is
intended to meet the requirements of Section 401(a) of the Code.
"Registrable Securities" means, (i) shares of Common Stock or other
securities issued or issuable upon exercise of the Convertible Preferred Stock;
(ii) shares issued in connection with the exercise of the Preemptive Rights as
set forth in Section 8.2; and (iii) any other shares of Common Stock or
securities issued in respect of such shares (because of stock splits, stock
dividends, reclassifications, recapitalization, mergers, consolidation, share
exchange or similar events).
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal or leaching into the indoor
or outdoor environment, or into or out of any property;
"Remedial Action" means all actions to (x) clean up, remove, treat or
in any other way address any Hazardous Material; (y) prevent the Release of any
Hazardous Material so it does not endanger or threaten to endanger public health
or welfare or the indoor or outdoor environment; or (z) perform pre-remedial
studies and investigations or post-remedial monitoring and care.
"Subsidiaries" means each corporation in which the Company owns or
controls, directly or indirectly, capital stock or other equity interests
representing at least 50% of the outstanding voting stock or other equity
interests.
"Welfare Plan" means any Employee Benefit Plan described in Section 3(1) of
ERISA.
Authorization and Sale of Convertible Preferred Stock
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Authorization of Convertible Preferred Stock. At Closing, the Company
will have authorized the issuance and sale to Purchasers of 27,000 shares of
Convertible Preferred Stock, having the rights, preferences, privileges and
restrictions set forth in the Certificate of Designation attached to this
Agreement as Exhibit B hereto (the "Certificate of Designation").
Sale and Purchase of Convertible Preferred Stock. In reliance on the
representations and warranties of the Company contained herein and subject to
the terms and conditions hereof, each Purchaser agrees to purchase from the
Company, severally, and the Company agrees to sell to each Purchaser that number
of shares of Convertible Preferred Stock set forth next to its name on Exhibit A
hereto, for the purchase price of $1,000 per share.
Use of Proceeds. The Company agrees to use the full proceeds from the
sale of the Convertible Preferred Stock to pay acquisition costs, fees and
expenses and other transaction costs and for working capital purposes.
Closing Date; Delivery
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Closing Date. The closing of the purchase and sale of the
Convertible Preferred Stock hereunder (the "Closing") shall be held at the
offices of Xxxxxx Xxxxxx & Zavis, 000 X. Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx
00000 on May 23, 1997, or on such other date or at such other place as
Purchasers and the Company shall mutually agree (the date of the Closing being
referred to herein as the "Closing Date"); provided that Xxxxxxx US Discovery
Fund III, L.P., and Xxxxxxx US Discovery Offshore Fund III, L.P. (the "Xxxxxxx
Funds") will close on or about June 4, 1997, or on such other date as the
Xxxxxxx Funds and the Company shall mutually agree.
Delivery. At the Closing, the Company shall deliver to each
Purchaser a certificate or certificates evidencing the shares of Convertible
Preferred Stock being purchased by it registered in such Purchaser's name
against delivery to the Company of payment in an amount equal to the full
purchase price of the shares of Convertible Preferred Stock being purchased by
such Purchaser by certified check or wire transfer to an account designated by
the Company.
Representations and Warranties of the Company
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The Company hereby represents and warrants to, and agrees with,
Purchasers as follows:
Organization, Good Standing and Qualification. Each of the
Company and its Subsidiaries (i) is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
(ii) has all requisite power and authority to carry on its business, (iii) is
duly qualified to transact business and is in good standing in all jurisdictions
where its ownership, lease or operation of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified would not, and reasonably could not be expected to, have a material
adverse effect on the business, operations, assets, financial condition, results
of operations or business prospects of the Company and its Subsidiaries (a
"Material Adverse Effect"). The Company has the corporate power and authority
and is in possession of all material franchises, grants, authorizations,
licenses, permits, easements, consents, certificates, approvals and orders to
(i) own, lease and operate its properties and to carry on its business as now
being conducted and (ii) execute and deliver this Agreement and the documents
and instruments contemplated hereby and to consummate the transactions
contemplated hereby.
Capitalization.
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The authorized capital stock of the Company consists
of 30,000,000 shares of common stock, par value $.001 per share ("Common Stock")
of which 15,912,999 shares are issued and outstanding, and 1,000,000 shares of
preferred stock, par value $.01 per share ("Preferred Stock"), of which 27,000
shares are Convertible Preferred Stock authorized for issuance hereunder. Other
than the Convertible Preferred Stock issued pursuant to this Agreement, there
are no other shares of Preferred Stock outstanding. The Company has reserved for
issuance 3,130,435 shares of Common Stock upon conversion of the authorized
shares of Convertible Preferred Stock. Except as listed on Schedule 4.2 and
other than obligations arising under any Company Plan also identified on
Schedule 4.2, there are no outstanding securities of the Company convertible
into or evidencing the right to purchase or subscribe for any shares of capital
stock of the Company, there are no outstanding or authorized options, warrants,
calls, subscriptions, rights, commitments or any other agreements of any
character obligating the Company to issue any shares of its capital stock or any
securities convertible into or evidencing the right to purchase or subscribe for
any shares of such stock, and there are no agreements or understandings with
respect to the voting, sale, transfer or registration of any shares of capital
stock of the Company. No outstanding options, warrants or other securities
exercisable for or convertible into shares of capital stock of the Company
require anti-dilution adjustments by reason of the consummation of the
transactions contemplated hereby.
The issued and outstanding shares of capital stock of
the Company are duly authorized, validly issued, fully paid and nonassessable.
The shares of Convertible Preferred Stock to be issued pursuant to this
Agreement, upon delivery to Purchaser of certificates therefor against payment
in accordance with the terms of this Agreement, and the shares of Common Stock
issuable upon conversion of such Convertible Preferred Stock of the
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Company when issued upon conversion of such Convertible Preferred Stock in
accordance with the Certificate of Designation, (i) will be validly issued,
fully paid and nonassessable, (ii) will be free and clear of all Liens
(excluding those of Purchasers) and (iii) assuming that the representations of
Purchasers in Section 5 hereof are true and correct, will be issued in
compliance with all applicable federal and state securities laws.
Subsidiaries. Schedule 4.3 sets forth a complete and accurate
list of all Subsidiaries of the Company, showing (as to each such Subsidiary)
the date of its incorporation and the jurisdiction of its incorporation. The
Company is the sole stockholder of each Subsidiary. The outstanding shares of
capital stock of each Subsidiary are validly issued, fully paid and
nonassessable and all such shares represented as being owned by the Company are
owned by it, free and clear of all Liens, other than Liens held by Xxxxxx Trust
and Savings Bank, the Company's senior lender. There are no outstanding
securities of any Subsidiary convertible into or evidencing the right to
purchase or subscribe for any shares of capital stock of any Subsidiary, there
are no outstanding or authorized options, warrants, calls, subscriptions,
rights, commitments or any other agreements of any character obligating any
Subsidiary to issue any shares of its capital stock or any securities
convertible into or evidencing the right to purchase or subscribe for any shares
of such stock, and there are no agreements or understandings with respect to the
voting, sale, transfer or registration of any shares of capital stock of any
Subsidiary.
Partnerships. The Company is not a party to, and does not
hold, any equity interests in any partnership or limited partnership of any
kind.
Authorization. The Company has all requisite corporate power
and authority to execute and deliver this Agreement and each agreement, document
or instrument adopted, entered into or delivered in connection herewith (the
"Transaction Documents") and to perform its obligations hereunder and
thereunder. The execution, delivery and performance of the Agreement and the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate, including stockholder, action on the part of the Company.
Each Transaction Document has been duly and validly executed and delivered by
the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity) and except
to the extent that rights to indemnification and contribution under this
Agreement and may be limited by federal or state securities laws or public
policy relating thereto.
Consents. Except as set forth in Schedule 4.6, other than
filing the Certificate of Designation with the Delaware Secretary of State
contemporaneously herewith, no material consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, or local governmental authority or other Person
on the part of the Company is required in connection with the valid execution
and delivery by the Company of the Transaction Documents to which it is a party,
or the consummation by the Company of the transactions contemplated by the
Transaction Documents to which it is a party.
Absence of Litigation. There are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries, or any properties or
rights of the Company or its Subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign, that could reasonably be expected to have a Material Adverse Effect.
Insurance. The Company and it Subsidiaries maintain adequate
insurance with respect to their respective businesses and are in compliance with
all material requirements and provisions thereof.
Patents and Trademarks. The Company and its Subsidiaries have
sufficient title and ownership of (or rights under license agreements to use)
all patents, trademarks, service marks, trade names, copyrights, trade secrets,
proprietary rights and processes ("Intellectual Property") necessary for the
conduct of their businesses in the ordinary
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course. There are no outstanding options, licenses or agreements of any kind
relating to the foregoing, nor is the Company or any of its Subsidiaries bound
by or a party to any options, licenses or agreements of any kind with respect to
the patents, trademarks, service marks, trade names, copyrights, trade secrets,
proprietary rights and processes of any other Person. A list of all patents and
trademarks owned by the Company or any of its Subsidiaries is set forth on
Schedule 4.9(a). Except as set forth on Schedule 4.9(b), within the past five
years, the Company has not received any communications alleging that the Company
or any of its Subsidiaries has violated or, by conducting its business as
proposed, would violate any of the patents, trademarks, service marks, trade
names, copyrights, trade secrets, proprietary rights and processes of any other
Person, nor is the Company aware of any such violations.
Compliance with Other Instruments and Legal Requirements.
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None of the Company or any of its Subsidiaries is in
violation or default of any provisions of its certificate of incorporation,
by-laws, or comparable organizational documents. None of the Company or any of
its Subsidiaries is in violation or default in any material respect under any
provision, instrument, judgment, order, writ, decree, contract or agreement to
which it is a party or by which it is bound or of any provision of any federal,
state or local statute, rule or regulation applicable to the Company or any of
its Subsidiaries (including, without limitation, any law, rule or regulation
relating to protection of the environment and the maintenance of safe and
sanitary premises). The execution, delivery and performance of each Transaction
Document and the consummation of the transactions contemplated hereby and
thereby will not result in any such violation or be in conflict with or
constitute, with or without the passage of time and giving of notice, either a
default under any such provision, instrument, judgment, order, writ, decree,
contract or agreement, or require any consent, waiver or approval thereunder, or
constitute an event that results in the creation of any Lien upon any assets of
the Company or any of its Subsidiaries.
The Company and its Subsidiaries have all Permits of
all governmental entities required to conduct their respective businesses as
proposed to be conducted, except to the extent that the failure to have such
Permits would not, and reasonably could not be expected to, have a Material
Adverse Effect.
Material Agreements; Action. Except as set forth on Schedule
4.11, there are no material contracts, agreements, commitments, understandings
or proposed transactions, whether written or oral, to which the Company or any
of its Subsidiaries is a party or by which it is bound which call for an
expenditure by the Company of over $100,000 in any single year regarding: (i)
any of their respective officers, directors stockholders or partners or any
Affiliate thereof; (ii) the sale of any of the assets of the Company or any of
its Subsidiaries other than in the ordinary course of business; (iii) covenants
of the Company or any of its Subsidiaries not to compete in any line of business
or with any Person in any geographical area or covenants of any other Person not
to compete with the Company or any of its Subsidiaries in any line of business
or in any geographical area, provided, however, that this subsection (iii) is
not subject to the limitation of expenditure of over $100,000 in any single
year; (iv) the acquisition by the Company or any of its Subsidiaries of any
operating business or the capital stock of any other Person; (v) the borrowing
of money; or (vi) the license of any Intellectual Property, other material
proprietary right to or from the Company or any of its Subsidiaries. To the
Company's Knowledge, all such agreements are in full force and effect and are
the legal, valid and binding obligation of the Company or its Subsidiaries,
enforceable against them in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). None of the Company or any of its Subsidiaries
is in material default under any such agreements nor, to the Company's
knowledge, is any other party to any such agreements in material default
thereunder in any respect.
Disclosure. Neither this Agreement nor any of the Transaction
Documents nor any exhibit hereto, nor any report, certificate, or instrument
furnished to Purchaser or its counsel in connection with the transactions
contemplated by this Agreement, when read together, contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading.
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Brokers' Fees. Except for Coopers & Xxxxxxx Securities LLC,
whose fees will be paid solely by the Company, no broker, finder, investment
banker or other Person is entitled to any brokerage fee, finder's fee or other
commission in connection with the transactions contemplated by this Agreement.
Registration Rights. Except as set forth in Schedule 4.14, the
Company has not granted or agreed to grant any registration rights, including
piggyback registration rights, to any Person.
Real Property.
--------------
None of the Company or its Subsidiaries owns real
property or interests in real property. Schedule 4.15 sets forth a complete list
of all real property and interests in real property leased by the Company and
its Subsidiaries (individually, a "Real Property Lease" and the real properties
specified in such leases being referred to herein individually as a "Company
Property" and collectively as the "Company Properties") as lessee or lessor. The
Company Properties constitute all interests in real property currently used or
currently held for use in connection with the business of the Company and its
Subsidiaries and which are necessary for the continued operation of the business
of the Company and its Subsidiaries as the business is currently conducted. The
Company and its Subsidiaries have a valid and enforceable leasehold interest
under each of the Real Property Leases, and none of the Company or any of its
Subsidiaries has received any written notice of any default or event which, with
notice or lapse of time, or both, would constitute a default by the Company or
any of its Subsidiaries under any of the Real Property Leases, except to the
extend such default would not, and reasonably could not be expected to, have a
Material Adverse Effect. All of the Company Property, buildings, fixtures and
improvements thereon owned or leased by the Company and its Subsidiaries are in
good operating condition and repair (subject to normal wear and tear) except for
deficiencies which do not have a Material Adverse Effect.
There does not exist any actual, or to the Company's
Knowledge, threatened or contemplated, condemnation or eminent domain
proceedings that affect any Company Property or any part thereof, and none of
the Company or any of its Subsidiaries has received any written notice of the
intention of any governmental body or other Person to take or use all or any
part thereof.
Tangible Personal Property.
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Schedule 4.16 sets forth all leases of personal
property ("Personal Property Leases") involving annual payments in excess of
$150,000 relating to personal property used in the business of the Company and
its Subsidiaries or to which the Company or any of its Subsidiaries is a party
or by which the properties or assets of the Company or any of its Subsidiaries
is bound.
Each of the Company and its Subsidiaries has a valid
leasehold interest under each of the Personal Property Leases under which it is
a lessee, and there is no material default under any Personal Property Lease by
the Company or any of its Subsidiaries, by any other party thereto, and no event
has occurred which, with the lapse of time or the giving of notice or both would
constitute a material default thereunder.
Except as set forth on Schedule 4.16, each of the
Company and its Subsidiaries has good and marketable title to all of the items
of tangible personal property reflected in the balance sheets referred to in
Section 4.18 (except as sold or disposed of subsequent to the date thereof in
the ordinary course of business consistent with past practice), free and clear
of any and all Liens other than the Permitted Exceptions. All such items of
tangible personal property that, individually or in the aggregate, are material
to the operation of the business of the Company and its Subsidiaries are in good
condition and in a state of good maintenance and repair (ordinary wear and tear
excepted) and are suitable for the purposes used.
-7-
All of the items of tangible personal property used
by the Company and its Subsidiaries under the Personal Property Leases are in
good condition and repair (ordinary wear and tear excepted) and are suitable for
the purposes used except for deficiencies which do not have a Material Adverse
Effect.
Environmental Matters.
The operations of each of the Company and its
Subsidiaries are in compliance in all material respects with all applicable
Environmental Laws and all Permits issued pursuant to Environmental Laws or
otherwise;
Each of the Company and its Subsidiaries has obtained
all Permits required under all applicable Environmental Laws necessary to
operate its business;
Neither the Company nor any of its Subsidiaries is
the subject of any outstanding written order, agreement or arrangement with any
governmental authority or Person respecting (i) Environmental Laws, (ii)
Remedial Action or (iii) any Release or threatened Release of a Hazardous
Material;
None of the Company or any of its Subsidiaries has
received any written communication alleging either or both that the Company or
any of its Subsidiaries may be in violation of any Environmental Law, or any
Permit issued pursuant to Environmental Law, or may have any liability under any
Environmental Law;
None of the Company or any of its Subsidiaries has
any current contingent liability in connection with any Release of any Hazardous
Materials into the indoor or outdoor environment (whether on-site or off-site);
There are no investigations of the business,
operations, or currently or previously owned, operated or leased property of the
Company or any of its Subsidiaries pending or, to the Company's Knowledge,
threatened that could lead to the imposition of any liability pursuant to
Environmental Law; and
There is not located at any of the properties owned,
leased or operated by the Company or any of its Subsidiaries any (i) underground
storage tanks, (ii) asbestos-containing material or (iii) equipment containing
polychlorinated biphenyls.
Company SEC Reports and Financial Statements.
---------------------------------------------
The Company has delivered to Purchaser true and
complete copies of all periodic reports, statements and other documents that the
Company has filed with the Securities and Exchange Commission (the "SEC") under
the Exchange Act of 1934 (the "Exchange Act") since December 31, 1995
(collectively, the "Company SEC Reports"), each in the form (including exhibits
and any amendments thereto) required to be filed with the SEC. As of their
respective dates, each of the Company's SEC Reports (i) complied in all material
respects with all applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act") and the Exchange Act, and the rules and
regulations promulgated thereunder, respectively, (ii) were filed in a timely
manner, and (iii) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. None of the Subsidiaries is required to file any
forms, reports or other documents with the SEC.
Each of the audited consolidated financial statements
of the Company (including any related notes and schedules thereto) included (or
incorporated by reference) in its Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1996, is accurate and complete and fairly presents, in
conformity with generally accepted accounting principles ("GAAP") applied on a
consistent basis through the periods involved (except as may be noted therein),
and in conformity with the SEC's Regulation S-B, the consolidated financial
position of the Company and its
-8-
consolidated subsidiaries as of its date and the consolidated results of
operations and changes in financial position for the period then ended.
Except as and to the extent set forth (or
incorporated by reference) in the Company's Annual Report on Form 10-KSB for the
calendar year ended December 31, 1996, neither the Company nor any of its
Subsidiaries has incurred any liability or obligation of any nature whatsoever
(whether due or to become due, accrued, fixed, contingent, liquidated,
unliquidated or otherwise) that would be required by GAAP to be accrued on,
reflected on, or reserved against it, in a consolidated balance sheet (or in the
applicable notes thereto) of the Company or any of its Subsidiaries prepared in
accordance with GAAP consistently applied, other than liabilities or obligations
which arose in the ordinary course of business and consistent with past
practices since such date and which do not or would not individually or in the
aggregate have a Material Adverse Effect.
Changes. Except as set forth on Schedule 4.19, since December
31, 1996, there has not been:
any change in the assets, liabilities, financial
condition or operating results of the Company or any of its Subsidiaries, except
changes in the ordinary course of business that have not had, in the aggregate,
a Material Adverse Effect;
any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the assets, properties,
financial condition, operating results or business of the Company or any of its
Subsidiaries;
any waiver by the Company or any of its Subsidiaries
of a valuable right or of a material debt owed to it outside of the ordinary
course of business or that otherwise could reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect;
any satisfaction or discharge of any Lien or payment
of any obligation by the Company or any of its Subsidiaries that could
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect;
any change or amendment to a contract or arrangement
by which the Company or any of its Subsidiaries or any of their respective
assets or properties is bound or subject that could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect;
other than in the ordinary course of business, any
material increase in any compensation arrangement or agreement with any employee
of the Company or any of its Subsidiaries receiving compensation in excess of
$50,000 annually;
any events or circumstances that otherwise could
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect; or
none of the Company nor any of its Subsidiaries has
(i) declared or paid any dividends, or authorized or made any distribution upon
or with respect to any class or series of its capital stock or equity interests,
(ii) incurred any indebtedness for money borrowed in excess of $100,000, other
than bank borrowings in the ordinary course of business, (iii) made any loans or
advances to any Person, other than ordinary advances for travel expenses not
exceeding $50,000, or (iv) sold, exchanged or otherwise disposed of any of its
assets or rights for consideration in excess of $50,000 in any one transaction
or series of related transactions.
Employee Benefit Plans.
-----------------------
Schedule 4.20(a) contains a complete and accurate
list of all Company Plans and Company Benefit Arrangements. Schedule 4.20(a)
specifically identifies all Company Plans (if any) that are Qualified Plans.
-9-
With respect, as applicable, to Employee Benefit
Plans and Benefit Arrangements and except as would not result in liability in
excess of $50,000 (for purposes of this Section 4.20, a Material Adverse
Effect):
each Qualified Plan that is a Company Plan qualifies
under Section 401(a) of the Code, and any trusts maintained pursuant thereto are
exempt from federal income taxation under Section 501 of the Code;
the Company and the Subsidiaries have no liability
(whether actual or contingent, direct or indirect) with respect to any Employee
Benefit Plan subject to Section 302 of ERISA or Section 412 of the Code or Title
IV of ERISA (including any Multiemployer Plan);
each Company Plan and each Company Benefit
Arrangement has been maintained in accordance with its constituent documents and
with all applicable provisions of the Code, ERISA and other laws, including
federal and state securities laws;
there are no pending claims or lawsuits by, against,
or relating to any Employee Benefit Plans or Benefit Arrangements that are not
Company Plans or Company Benefit Arrangements that would, if successful, result
in liability of the Company, and no such claim or lawsuit (other than routine
claims for benefits) has been asserted, instituted or, to the knowledge of the
Company and the Subsidiaries, threatened by, against, or relating to any Company
Plan or Company Benefit Arrangement, or the Company or the Subsidiaries. To the
knowledge of the Company and the Subsidiary, the Company Plans and Company
Benefit Arrangements are not presently under audit or examination (nor has
notice been received of a potential audit or examination) by the IRS, the
Department of Labor, or any other governmental agency or entity, and no matters
are pending with respect to a Qualified Plan under the IRS's Voluntary
Compliance Resolution program, its Closing Agreement Program, or other similar
programs;
no Company Plan or Company Benefit Arrangement
contains any provision or is subject to any law that would prohibit the
transactions contemplated by this Agreement or that would give rise to any
vesting of benefits, severance, termination, or other payments or liabilities as
a result of the transactions contemplated by this Agreement, and no payment
under any Company Plan or Company Benefit Plan arising as a result of the
transactions contemplated by this Agreement, would constitute an excess
parachute payment within the meaning of Section 280G of the Code;
with respect to each Company Plan, there has occurred
no non-exempt "prohibited transaction" (within the meaning of Section 4975 of
the Code) or transaction prohibited by Section 406 of ERISA or breach of any
fiduciary duty described in Section 404 of ERISA that would, if successful,
result in any liability for the Company or any Stockholder, officer, director,
or employee of the Company;
all material reporting, disclosure, and notice
requirements of ERISA and the Code have been satisfied with respect to each
Company Plan and each Company Benefit Arrangement;
payment has been made of all amounts that the Company
and each Subsidiary is required to pay as contributions to the Company Benefit
Plans as of the last day of the most recent fiscal year of each of the plans
ended before the date of this Agreement and all benefits accrued under any
unfunded Company Plan or Company Benefit Arrangement will have been paid,
accrued, or otherwise adequately reserved in accordance with GAAP as of the
Balance Sheet Date;
the Company and the Subsidiaries have no liability
(whether actual, contingent, with respect to any of its assets or otherwise)
with respect to any Employee Benefit Plan or Benefit Arrangement that is not a
Company Benefit Arrangement or with respect to any Employee Benefit Plan
sponsored or maintained (or which has been or should have been sponsored or
maintained) by any ERISA Affiliate;
-10-
all group health plans of the Company and its ERISA
Affiliates have been operated in material compliance with the requirements of
Sections 4980B (and its predecessor) and 5000 of the Code;
no employee or former employee of the Company or
beneficiary of any such employee or former employee is, by reason of such
employee's or former employee's employment, entitled to receive any welfare
benefits, including, without limitation, death or medical benefits (whether or
not insured) beyond retirement or other termination of employment as described
in Statement of Financial Accounting Standards No. 106, other than (i) deferred
compensation benefits accrued as liabilities on the Closing Statement or listed
in Schedule 4.20(a) or (ii) continuation coverage mandated under Section 4980B
of the Code or other applicable law.
Schedule 4.20(c) hereto sets forth an accurate list, as
of the date hereof, of all officers, directors, and key employees of the Company
and lists all employment agreements with such officers, directors, and key
employees and the rate of compensation (and the portions thereof attributable to
salary, bonus, and other compensation respectively) of each such Person as of
(a) December 31, 1996 and (b) the date hereof.
(d) The Company has not declared or paid any bonus
compensation in contemplation of the transactions contemplated by this
Agreement.
Taxes. All federal, state, local and foreign tax returns,
reports and statements required to be filed by the Company and its Subsidiaries
have been filed with the appropriate governmental agencies in all jurisdictions
in which such returns, reports and statements are required to be filed and all
such returns, reports and statements are true, complete and correct in all
respects. All taxes, charges and other impositions due and payable by the
Company and its Subsidiaries have been paid in full on a timely basis except
where contested in good faith and by appropriate proceedings if adequate
reserves therefor have been established on the books and records of the Company
or Subsidiary in accordance with GAAP consistently applied. The provision for
taxes of each of the Company and its Subsidiaries as shown in the Company SEC
Reports is sufficient for all unpaid taxes, charges and other impositions of any
nature due or accrued as of the date hereof, whether or not assessed or
disputed. Proper and accurate amounts have been withheld by the Company and its
Subsidiaries from their respective employees for all periods in full and
complete compliance with the tax, social security and unemployment withholding
provisions of applicable federal, state, local and foreign law and such
withholdings have been timely paid to the respective governmental agencies. The
Company has not received notice of any audit or of any proposed deficiencies
from any governmental authority, and no controversy with respect to taxes of any
type is pending or threatened. Except for routine filing extensions granted as a
matter of right under applicable law, none of the Company or any of its
Subsidiaries has executed or filed with the Internal Revenue Service or any
other governmental authority any agreement or other document extending, or
having the effect of extending, the period of assessment or collection of any
taxes, charges or other impositions. None of the Company or any of its
Subsidiaries has agreed or is required to make any adjustment under Section
481(a) of the Code by reason of a change in accounting method or otherwise.
Further, none of the Company or any of its Subsidiaries has any obligation under
any tax-sharing agreement.
Minute Books. The minute books of the Company and each of its
Subsidiaries contain a complete summary of all material actions by their
respective directors and stockholders since the date of their respective
incorporation and reflect all transactions referred to in such minutes
accurately in all material respects.
Labor and Employment Matters. With respect to employees of and
service providers to the Company and the Subsidiaries: (a) the Company and the
Subsidiaries are and have been in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, including without limitation any
such laws respecting employment discrimination, workers' compensation, family
and medical leave, the Immigration Reform and Control Act, and occupational
safety and health requirements, and have not and are not engaged in any unfair
labor practice; (b) there is not now, nor within the past three years has there
been, any unfair labor practice complaint against the Company or any Subsidiary
pending or, to the Company's or any Subsidiary's knowledge, threatened before
the National Labor Relations Board or any other comparable authority; (c) there
is not now, nor within the past three years has there been, any labor strike,
slowdown or stoppage actually pending
-11-
or, to the Company's or any Subsidiary's knowledge, threatened against or
directly affecting the Company or any Subsidiary; (d) to the Company's or any
Subsidiary's knowledge, no labor representation organization effort exists nor
has there been any such activity within the past three years; (e) no grievance
or arbitration proceeding arising out of or under collective bargaining
agreements is pending and, to the Company's or any Subsidiary's knowledge, no
claims therefor exist or have been threatened; (f) the employees of the Company
and the Subsidiaries are not and have never been represented by any labor union,
and no collective bargaining agreement is binding and in force against the
Company or any Subsidiary or currently being negotiated by the Company or any
Subsidiary; and (g) to the Company's knowledge, all Persons classified by the
Company or its Subsidiaries as independent contractors do satisfy and have
satisfied the requirements of law to be so classified, and the Company and its
Subsidiaries have fully and accurately reported their compensation on IRS Forms
1099 when required to do so. To the Company's knowledge, none of the employees
of the Company or any of its Subsidiaries is obligated under any contract or
other agreement (including licenses, covenants or commitments of any nature), or
subject to any judgment, decree or order of any court or administrative agency,
that materially interferes with the use of the employee's best efforts to
promote the interests of the Company and its Subsidiaries or conflicts with the
business as proposed to be conducted by the Company or its Subsidiaries.
Representations, Warranties and Covenants of the Purchasers
-----------------------------------------------------------
Each Purchaser severally hereby represents and warrants to and agrees
with the Company, as to itself only, as follows:
Accredited Investor; Experience; Risk. Purchaser is an
accredited investor within the definition of Regulation D promulgated under the
Securities Act. Purchaser has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
purchase of the Convertible Preferred Stock pursuant to this Agreement.
Investment. Purchaser is acquiring the Convertible Preferred
Stock for investment purposes only, for its own account and not with a view to,
or for resale in connection with, any distribution thereof in violation of
applicable law.
Authorization. Purchaser represents that it has all requisite
power and authority to enter into and perform its obligations under the
Transaction Documents to which it is a party. Assuming the due authorization,
execution and delivery of the Transaction Documents by each other party thereto,
each Transaction Document to which Purchaser is a party constitutes a valid and
binding obligation of Purchaser, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity) and except to the extent that rights to indemnification and
contribution under this Agreement may be limited by federal or state securities
laws or public policy relating thereto.
Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state, or local governmental authority or other Person on the part of
Purchaser is required in connection with the valid execution and delivery by
Purchaser of the Transaction Documents to which it is a party, or the
consummation by Purchaser of the transactions contemplated by the Transaction
Documents to which it is a party, except for such filings as have been made
prior to the Closing.
Brokers' Fees. No broker, finder, investment banker or other
Person is entitled to any brokerage fee, finder's fee or other commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by the Purchaser.
-12-
Plan Assets. Purchaser is not, and no source of the funds to
be used by Purchaser to acquire the Convertible Preferred Stock are, a "Plan
Asset" as such phrase is defined within the U.S. Department of Labor regulations
2510.3-101.
Restrictive Legends. Purchaser understands that the
certificates or other instruments representing each of the shares of Convertible
Preferred Stock and the shares of common stock issuable upon conversion thereof
(the "Conversion Shares"), shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of such
stock certificates) until such time as the sale of the Conversion Shares have
been registered under the Securities Act as contemplated hereunder:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
If such Purchaser desires to sell or otherwise dispose of all or any part of the
Convertible Preferred Stock or shares of any Conversion Shares owned by it under
an exemption from registration under the Securities Act, and if requested by the
Company, such Purchaser shall deliver to the Company an opinion of counsel,
which may be counsel for the Company, that such exemption is available.
Conditions to Closing of Purchasers
-----------------------------------
Each Purchaser's obligation to purchase the Convertible Preferred Stock
at the Closing is, at the option of that Purchaser, subject to the fulfillment
on or prior to the Closing Date of the following conditions:
Representations and Warranties Correct. The representations
and warranties made by the Company in Section 4 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date with the same force
and effect as if they had been made on and as of such date.
Covenants. All covenants, agreements and conditions contained
in this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all material respects.
Opinion of Company's Counsel. Purchasers shall have received
from Xxxxxx Xxxxxx & Xxxxx, counsel to the Company, an opinion addressed to
Purchasers, dated the Closing Date, in substantially the form of Exhibit C
hereto.
No Material Adverse Change. Since December 31, 1996, there
shall not have occurred any events or circumstances that could reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
Certificate of Designation. The Certificate of Designation
shall have been duly adopted and executed by the Company and filed with the
Delaware Secretary of State.
State Securities Laws. All registrations, qualifications and
Permits required under applicable state securities laws, if any, shall have been
obtained for the lawful execution, delivery and performance of this Agreement.
-13-
Issuance of Shares. The Company shall have issued at least
19,000 shares of Convertible Preferred Stock at the Closing pursuant to this
Agreement.
Certificates. Purchasers shall have received a certificate of
the President or the Chief Financial Officer of the Company to the effect set
forth in Sections 6.1, 6.2, 6.4, and 6.5.
Organizational Documents. The Company shall have delivered to
each Purchaser certified copies of the charter and bylaws of the Company in
effect at the Closing.
Stockholders' Agreement. The Company and Xxxxx Xxxxxxx shall
have executed and delivered to each Purchaser a stockholders' agreement
substantially in the form of Exhibit D hereto (the "Stockholders' Agreement").
Consents. The Company shall have received the consents, or
waivers thereto, set forth on Schedule 4.2.
Conditions to Closing of the Company
------------------------------------
The Company's obligation to issue and sell the Convertible Stock at the
Closing is, at the option of the Company, subject to the fulfillment of the
following conditions:
Representations. The representations and warranties made by
each Purchaser in Section 5 hereof shall be true and correct when made, and
shall be true and correct on the Closing Date with the same force and effect as
if they had been made on and as of such date.
Covenants. All covenants, agreements and conditions contained
in this Agreement to be performed by each Purchaser on or prior to the Closing
Date shall have been performed or complied with in all respects.
Purchase Price. Each Purchaser shall have tendered the
purchase price for the Convertible Preferred Stock as set forth on Exhibit A
hereto by certified check or wire transfer, subject to the later Closing
scheduled for the Xxxxxxx Funds.
Certificate. The Company shall have received a certificate
from each Purchaser to the effect set forth in Sections 7.1 and 7.2.
Stockholders' Agreement. Each Purchaser shall have executed
and delivered to the Company the Stockholders' Agreement.
Consents. The Company shall have obtained the consents, or
waivers thereto, set forth on Schedule 4.2.
Covenants of the Company
------------------------
Information. After the Closing Date and until a Purchaser (i)
no longer owns any shares of Convertible Preferred Stock or (ii) requests
otherwise, the Company will send each Purchaser any and all materials which it
sends to the holders of its Common Stock. Additionally, commencing on May 1,
1999, in the event that a Purchaser owns any of the shares of Convertible
Preferred Stock, the Company, upon written request of that Purchaser, shall
deliver to that Purchaser the information specified in this Section 8.1:
-14-
Monthly Financial Statements. As soon as available, but in any
event not later than forty-five (45) days after the end of each monthly fiscal
period (other than the last monthly fiscal period of the fourth fiscal quarter
of the Company), the unaudited consolidated balance sheet of the Company and its
Subsidiaries as at the end of each such period and the related unaudited
consolidated statements of income and cash flows of the Company and its
Subsidiaries for such period and for the elapsed period in such fiscal year, all
in reasonable detail and stating in comparative form the figures as of the end
of and for the comparable periods of the preceding fiscal year. All such
financial statements shall be prepared in accordance with GAAP on a consistent
basis throughout the periods reflected therein except as stated therein and
shall be accompanied by a certificate of the Company's president or chief
financial officer to such effect.
Board Materials. As soon as available, all materials which the
Company distributes to the members of the Board of Directors will be sent to
Purchaser.
Other Reports and Statements. Promptly (but in any event
within ten (10) days) after any distribution to its stockholders generally, to
its directors or to the financial community of an annual report, definitive
proxy statement, registration statement or other similar report or
communication, a copy of each such annual report, proxy statement, registration
statement or other similar report or communication and promptly (but in any
event within ten (10) days) after any filing by the Company with the SEC or with
any national securities exchange or market system, of any publicly available
annual or periodic or special report or proxy statement or registration
statement, a copy of such report or statement and copies of all press releases
and other statements made available generally by the Company to the public
concerning material developments in the Company's business.
A Purchaser who requests such information pursuant to this
Section 8.1 (a "Requesting Purchaser") hereby acknowledges that it is aware of
the restrictions imposed by federal and state securities laws on a person
possessing material nonpublic information about a company. In this regard, a
Requesting Purchaser hereby agrees that while it is in possession of material
nonpublic information with respect to the Company and its subsidiaries, such
Requesting Purchaser will not purchase or sell any securities of the Company, or
communicate such information to any third party, in violation of any such laws.
Such Requesting Purchaser also agrees that, if requested by the Company, such
Requesting Purchaser will cause any of its representatives, consultants or
advisors who have been or may become apprised of any material nonpublic
information about the Company to give a written undertaking to the same effect
to the Company.
Preemptive Rights. If, after the Closing Date, the Company
shall propose to issue or sell New Securities or enters into any contracts,
commitments, agreements, understandings or arrangements of any kind relating to
the issuance or sale of any New Securities and a Purchaser still holds twenty
percent (20%) of the Convertible Preferred Stock acquired hereby by such
Purchaser, then each such Purchaser shall have the right to purchase that number
of New Securities at the same price and on the same terms proposed to be issued
or sold by the Company so that such Purchaser would after the issuance and sale
of all such New Securities, hold the same proportional interest of the then
outstanding shares of Common Stock (assuming that any outstanding securities or
other rights, including the Convertible Preferred Stock, convertible or
exchangeable into or exercisable for Common Stock have been converted, exchanged
or exercised) as was held by such Purchaser immediately prior to such issuance
and sale (the "Proportionate Percentage").
The Company shall give each Purchaser written notice of its
intention to issue and sell New Securities, describing the type of New
Securities, the price and the general terms and conditions upon which the
Company proposes to issue the same. Each Purchaser shall have twenty-five (25)
days from the giving of such notice to agree to purchase all (or any part) of
its Proportionate Percentage of New Securities for the price and upon the terms
and conditions specified in the notice by giving written notice to the Company
and stating therein the quantity of New Securities to be purchased.
If Purchasers fail to exercise in full such right within
twenty-five (25) days, the Company shall have one hundred twenty-five (125) days
thereafter to sell the New Securities in respect of which Purchasers' rights
were not exercised, at a price and upon general terms and conditions no more
favorable to the buyers thereof than specified in the
-15-
Company's notice to Purchasers pursuant to this Section. If the Company has not
sold the New Securities within such one hundred twenty-five (125) day period,
the Company shall not thereafter issue or sell any New Securities, except by
giving Purchasers the right to purchase their Proportionate Percentage in the
manner provided above.
Shelf Registration.
-------------------
Within 45 days after the Closing Date, the Company
shall prepare and file with the SEC a Registration Statement for an offering to
be made on a delayed or continuous basis pursuant to Rule 415 of the Securities
Act (a "Shelf Registration") registering the resale from time to time by
Purchasers of all of the Registrable Securities (the "Initial Shelf
Registration"). The Registration Statement for any Shelf Registration shall be
on Form S-3 or another appropriate form permitting registration of such
Registrable Securities for resale by Purchasers in the manner or manners
designated by them. The Company shall use its best efforts to cause the Initial
Shelf Registration to become effective under the Securities Act as promptly as
is practicable and to keep the Initial Shelf Registration continuously effective
under the Securities Act until the end of the Effectiveness Period. If the
Company fails to file the Initial Shelf Registration within 45 days after the
Closing Date, then, unless such a delay is attributable to any Purchaser not
timely providing information reasonably requested by the Company, the dividend
payable upon the Convertible Preferred Stock shall increase to 15% per annum
until such Initial Shelf Registration is filed. In such instance, upon filing
such Initial Shelf Registration, the dividend shall revert to 5%.
Notwithstanding the foregoing, until the Initial Shelf Registration is declared
effective by the Securities and Exchange Commission, no shares of Convertible
Preferred Stock shall be converted pursuant to Section 4(b) of the Certificate
of Designation.
If the Initial Shelf Registration or any Subsequent
Shelf Registration (as defined below) ceases to be effective for any reason at
any time during the Effectiveness Period (other than because all Registrable
Securities shall have been sold or shall have ceased to be Registrable
Securities), the Company shall use its best efforts to obtain the prompt
withdrawal of any order suspending the effectiveness thereof, and in any event
shall within thirty days of such cessation of effectiveness amend the Shelf
Registration in a manner reasonably expected to obtain the withdrawal of the
order suspending the effectiveness thereof, or file an additional Shelf
Registration covering all of the Registrable Securities (a "Subsequent Shelf
Registration"). If a Subsequent Shelf Registration is filed, the Company shall
use all reasonable efforts to cause the Subsequent Shelf Registration to become
effective as promptly as is practicable after such filing and to keep such
Registration Statement continuously effective until the end of the Effectiveness
Period.
The Company shall supplement and amend the Shelf
Registration if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration, if
required by the Securities Act or the SEC, or if reasonably requested by
Purchasers.
From time to time, the Company shall prepare and file
with the SEC a post-effective amendment to the Shelf Registration or a
supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or any other required document, so
that such Registration Statement will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and so that, as
thereafter delivered to purchasers of the Registrable Securities being sold
thereunder, such Prospectus will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provide Purchasers copies of any documents filed in
such numbers as Purchasers shall reasonably request; and inform Purchasers that
the Company has complied with its obligations and that the Registration
Statement and related Prospectus may be used for the purpose of selling all or
any of such Registrable Securities (or that, if the Company has filed a
post-effective amendment to the Shelf Registration which has not yet been
declared effective, the Company will notify Purchasers to that effect, will use
its best efforts to secure promptly the effectiveness of such post-effective
amendment and will immediately so notify Purchasers when the amendment has
become effective).
Registration Expenses. All fees and expenses incident
to the Company's performance of or compliance with a Shelf Registration pursuant
to this Agreement shall be borne by the Company whether or not any
-16-
Registration Statement becomes effective. Such fees and expenses shall include,
without limitation, (i) all registration and filing fees (including, without
limitation, fees and expenses (x) with respect to filings required to be made
with the National Association of Securities Dealers, Inc. and (y) of compliance
with federal securities or Blue Sky laws (including, without limitation, fees
and disbursements of counsel to Purchasers in connection with Blue Sky
qualifications of the Registrable Securities under the laws of such
jurisdictions as Purchaser may designate)), (ii) printing expenses, (iii)
messenger, telephone and delivery expenses, (iv) reasonable fees and
disbursements of counsel for the Company and counsel for Purchasers in
connection with the Registration not to exceed $10,000, (v) fees and
disbursements of the Company's independent certified public accountants
(including the expenses of any special audit and "comfort" letters required by
or incident to such performance) and (vi) Securities Act liability insurance
obtained by the Company in its sole discretion. In addition, the Company shall
pay its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit, the fees and expenses incurred in connection
with the listing of the Registrable Securities on any securities exchange or the
Nasdaq Stock Market, as the case may be, on which similar securities issued by
the Company are then listed and the fees and expenses of any Person, including
special experts, retained by the Company. Notwithstanding the provisions of this
subsection, Purchasers shall pay all registration expenses to the extent the
Company is prohibited by applicable Blue Sky laws from paying for or on behalf
of Purchasers.
Indemnity.
----------
In the event of the registration or qualification of
any Registrable Securities pursuant to a Shelf Registration, the Company agrees
to indemnify and hold harmless each Purchaser, each officer, director, employee,
agent and representative of each Purchaser, each underwriter, broker or dealer,
if any, of such Registrable Securities, and each other Person, if any, who
controls such Purchaser, underwriter, broker or dealer within the meaning of the
Securities Act, Exchange Act or any other applicable securities laws, from and
against any and all losses, claims, damages or liabilities (or actions in
respect thereof), joint or several, to which any of them may become subject
under the Securities Act or any other applicable securities laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Registration Statement
(including all documents incorporated therein by reference) under which such
Registrable Securities were registered or qualified under the Securities Act or
any other applicable securities laws, any preliminary prospectus or final
prospectus relating to such Registrable Securities, or any amendment or
supplement thereto, 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 any violation by the
Company of any rule or regulation under the Securities Act or any other
applicable securities laws applicable to the Company or relating to any action
or inaction required by the Company in connection with any such registration or
qualification and will reimburse each Purchaser, each officer, director,
employee, agent and representative of each Purchaser, each such underwriter,
broker or dealer and each such controlling Person for any legal or 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 will not be liable 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 omission made in such Registration Statement, such preliminary
prospectus, such final prospectus or such amendment or supplement thereto or
violation in reliance upon and in conformity with written information furnished
to the Company by any Purchaser, or any officer, director, employee, agent or
representative of any Purchaser specifically and expressly for use in the
preparation thereof; and provided, further, that the Company shall not be liable
to any Person who participates as an underwriter in the offering or sale of
Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure to send or give
a copy of the Prospectus, as the same may be then supplemented or amended, to
the Person asserting an untrue statement or alleged untrue statement or omission
or alleged omission at or prior to the written confirmation of the sale of
Registrable Securities to such Person if such statement or omission was
corrected in such Prospectus so long as such Prospectus, and any amendments or
supplements thereto, have been furnished to such underwriter in sufficient
numbers and in a timely-manner to permit distribution thereof.
-17-
In the event of the registration or qualification of
any Registrable Securities pursuant to a Shelf Registration, each Purchaser
severally agrees to indemnify and hold harmless (in the same manner and to the
same extent as set forth in Section 8.3(f)(i) above) the Company, its officers
and directors and each other Person, if any, who controls the Company within the
meaning of the Securities Act with respect to any untrue statement or alleged
untrue statement in, or omission or alleged omission from, such registration
statement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, if such statement or omission (i) arises
from information provided by that Purchaser and (ii) was made in reliance upon
and in conformity with written information which that Purchaser furnished to the
Company through an instrument duly executed by it specifically stating that it
is for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect, regardless of any investigation made by or on
behalf of the Company or any such director, officer or controlling Person and
shall survive the transfer of such securities by that Purchaser. Notwithstanding
the foregoing, no Purchaser shall be liable under this Section 8.3(f)(ii) for an
amount in excess of that Purchaser's purchase price as set forth on Exhibit A.
Promptly after receipt by a Person entitled to
indemnification under this Section 8.3(f) (an "Indemnified Party") of notice of
the commencement of any action or claim relating to any Registration Statement
filed pursuant to a Shelf Registration or as to which indemnity may be sought
hereunder, such Indemnified Party will, if a claim for indemnification hereunder
in respect thereof is to be made against any other party hereto (an
"Indemnifying Party"), give written notice to such Indemnifying Party of the
commencement of such action or claim, but the omission to so notify the
Indemnifying Party will not relieve the Indemnifying Party from any liability
that it may have to any Indemnified Party except to the extent that the
Indemnifying Party is actually prejudiced thereby. In case any such action is
brought against an Indemnified Party, and it notifies an Indemnifying Party of
the commencement thereof, the Indemnifying Party will be entitled (at its own
expense) to participate in and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense, with counsel
reasonably satisfactory to such Indemnified Party, of such action provided that
the Indemnifying Party shall not settle or compromise such action, except upon
the prior written consent of the Indemnified Party and, after notice from the
Indemnifying Party to such Indemnified Party of its election so to assume the
defense thereof, the Indemnifying Party will not be liable to such Indemnified
Party for any legal or other expenses subsequently incurred by such Indemnified
Party in connection with the defense thereof, other than the reasonable cost of
investigation; provided, however, that the assumption of such defense shall not
give rise in the reasonable opinion of the Indemnified Party or its counsel to
any conflict. Notwithstanding the foregoing, the Indemnified Party shall have
the right to employ its own counsel in any such case, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party unless (A) the
employment of such counsel shall have been authorized in writing by the
Indemnifying Party in connection with the defense of such suit, action, claim or
proceeding, (B) the Indemnifying Party shall not have employed counsel
(reasonably satisfactory to the Indemnified Party) to take charge of the defense
of such action, suit, claim or proceeding, or (C) such Indemnified Party shall
have reasonably concluded, based upon the advice of counsel, that there may be
defenses available to it that are different from or additional to those
available to the Indemnifying Party which, if the Indemnifying Party and the
Indemnified Party were to be represented by the same counsel, could result in a
conflict of interest for such counsel or materially prejudice the prosecution of
the defenses available to such Indemnified Party. If any of the events specified
in clauses (A), (B) or (C) of the preceding sentence shall have occurred or
shall otherwise be applicable, then the fees and expenses of one counsel or firm
of counsel selected by the Indemnified Party (and reasonably acceptable to the
Indemnifying Party) shall be borne by the Indemnifying Party. If, in any such
case, the Indemnified Party employs separate counsel, the Indemnifying Party
shall not have the right to direct the defense of such action, suit, claim or
proceeding on behalf of the Indemnified Party and the Indemnified Party shall
assume such defense and/or settle or compromise such action; provided, however,
that an Indemnifying Party shall not be liable for the settlement or compromise
of any action, suit, claim or proceeding effected without its prior written
consent, which consent shall not be unreasonably withheld.
Mergers, Etc. The Company shall not, directly or indirectly,
enter into any merger, consolidation, or reorganization in which the Company
shall not be the surviving corporation unless the proposed surviving corporation
shall, prior to such merger, consolidation, or reorganization, agree in writing
to assume the obligations of the Company under this Section, and for that
purpose references hereunder to "Registrable Securities" shall
-18-
be deemed to be references to the securities that Purchasers would be entitled
to receive in exchange for Registrable Securities under any such merger,
consolidation, or reorganization.
Delay and Holdback of Registration.
-----------------------------------
(a) With regard to and notwithstanding Section 8.3, the
Company may delay filing a registration statement for a period of time not to
exceed thirty (30) trading days, and may withhold efforts to cause the
registration statement to become effective, if the Company determines in good
faith that such registration might (i) interfere with or affect the negotiation
or completion of any transaction that is being contemplated by the Company
(whether or not a final decision has been made to undertake such transaction) at
the time the right to delay is exercised, or (ii) involve initial or continuing
disclosure obligations that might not be in the best interest of the Company's
stockholders. The Company may exercise its rights under this Section 8.4(a) no
more than two times per calendar year. During any period (a "Tolling Period")
for which the Company has exercised its rights under this Section 8.4(a), any
mandatory conversion under Section 4(b) of the Certificate of Designation will
be delayed until the first business day after the Tolling Period.
(b) If, after a registration statement becomes effective, the
Company advises Purchasers that the Company considers it appropriate for the
registration statement to be amended, the Company shall use its best reasonable
efforts to amend such registration statement as soon as practicable and the
holders of such shares shall suspend any further sales of their registered
shares until the Company advises them that the registration statement has been
so amended.
Negative Covenants. So long as twenty percent (20%) of the
shares of Convertible Preferred Stock issued hereunder are then outstanding,
without the prior written consent of holders owning a majority of the then
outstanding shares of Convertible Preferred Stock, the Company shall not:
Issue any shares or class or series of Preferred
Stock or Common Stock which is senior to, or pari passu with, the Convertible
Preferred Stock (other than the Convertible Preferred Stock issued pursuant
hereto);
Declare or pay any dividend on its Common Stock if
any dividends are unpaid on the Convertible Preferred Stock; or
Redeem for cash any other securities issued by the
Company.
Directly or indirectly, enter into any merger,
consolidation or other reorganization in which the Company shall not be the
surviving corporation, unless (i) such merger, consolidation or reorganization
is completed in compliance with Section 8.3(g) of this Agreement and Section
4(d)(iv) of the Certificate of Designations, and (ii) the surviving corporation
shall, prior to such merger, consolidation or reorganization, agree in writing
to assume the obligations of the Company under this Agreement and the
Certificate of Designations.
Miscellaneous
-------------
Amendment; Waiver. Neither this Agreement nor any provision
hereof may be amended, modified, supplemented or waived, except by a written
instrument executed by (i) the Company and (ii) Purchasers holding a majority in
interest of the Convertible Preferred Stock issued and sold pursuant to this
Agreement and the shares of Common Stock issuable upon conversion thereof.
Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if in writing and delivered in
Person, transmitted by facsimile transmission (fax) or sent by registered or
certified mail (return receipt requested) or recognized overnight delivery
service, postage pre-paid, addressed as follows, or to such other address has
such party may notify to the other parties in writing:
-19-
if to the Company:
Anicom, Inc.
0000 Xxxxx Xxxxx Xxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxxxx 00000-0000
Attn: Chief Financial Officer
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx & Xxxxx
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxx
Facsimile No.: (000) 000-0000
if to the Purchaser:
To the address listed next to each such purchaser on
Exhibit A hereto.
A notice or communication will be effective (i) if delivered in Person or by
overnight courier, on the business day it is delivered, (ii) if transmitted by
telecopier, on the business day of actual confirmed receipt by the addressee
thereof, and (iii) if sent by registered or certified mail, three (3) business
days after dispatch.
Survival of Representations, Warranties and Covenants. All
representations and warranties made in, pursuant to or in connection with this
Agreement shall survive the execution and delivery of this Agreement, any
investigation at any time made by or on behalf of any Purchaser, and the sale
and purchase of the Convertible Preferred Stock and payment therefor for a
period of two (2) years; provided, however, that the representations and
warranties made in Sections 4.17 (Environmental), 4.20 (Benefits) and 4.21
(Taxes) shall survive the applicable statutory period of limitations with
respect to any liabilities covered thereby.
Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
Successors and Assigns. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors and assigns of the parties hereto, including, without limitation,
each transferee of all or any portion of the Convertible Preferred Stock. No
party hereto may assign its rights or delegate its obligations under this
Agreement without the prior written consent of the other parties hereto;
provided, however, a Purchaser may assign its rights and delegate its
obligations under this Agreement upon the Company's prior written consent which
consent will not be unreasonably withheld. The Parties agree that, among other
reasons, it will be reasonable for the Company to withhold such consent if the
proposed assignee is a competitor to the Company or an Affiliate thereof.
Entire Agreement. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subject matter hereof and
thereof and supersede and cancel all prior representations, alleged warranties,
statements, negotiations, undertakings, letters, acceptances, understandings,
contracts and communications, whether verbal or written, among the parties
hereto and thereto or their respective agents with respect to or in connection
with the subject matter hereof.
-20-
Choice of Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without regard
to principles of conflict of laws.
Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
Costs and Expenses. The Company shall pay all reasonable fees
and disbursements of Purchasers' legal counsel as well as other reasonable
out-of-pocket expenses incurred by Purchasers in connection with the negotiation
and execution of the Transaction Documents (including amounts paid or owed to
third parties), not to exceed the amounts set forth in Schedule 9.9.
Indemnification.
----------------
The Company agrees to indemnify and hold harmless
each Purchaser and its Affiliates, and its respective partners, co-investors,
officers, directors, employees, agents, consultants, attorneys and advisers
(each, a "Purchaser Indemnified Party"), from and against any and all actual
losses, claims, damages, liabilities, costs and expenses (including, without
limitation, environmental liabilities, costs and expenses and all reasonable
fees, expenses and disbursements of counsel), joint or several (hereinafter
collectively referred to as a "Loss" or "Losses"), which may be incurred by or
asserted or awarded against any Purchaser Indemnified Party in connection with
or in any manner arising out of or relating to any investigation, litigation or
proceeding or the preparation of any defense with respect thereto, arising out
of or in connection with or relating to this Agreement, the other Transaction
Documents or the transactions contemplated hereby or thereby or any use made or
proposal to be made with the proceeds of Purchasers' purchase of the Convertible
Preferred Stock pursuant to this Agreement, whether or not such investigation,
litigation or proceeding is brought by the Company, any of its Subsidiaries,
shareholders or creditors, whether or not any of the transactions contemplated
by this Agreement or the other Transaction Documents are consummated, except to
the extent such Loss is found in a final judgment by a court of competent
jurisdiction to have resulted from such Purchaser Indemnified Party's gross
negligence or willful misconduct.
Each Purchaser severally agrees to indemnify and hold
harmless the Company and its Affiliates, and its respective officers, directors,
employees, agents, consultants, attorneys and advisers (each, a "Company
Indemnified Party"), from and against any and all Losses, which may be incurred
by or asserted or awarded against any Company Indemnified Party in connection
with or in any manner arising out of or relating to any investigation,
litigation or proceeding or the preparation of any defense with respect thereto,
arising out of or in connection with or relating to any breach of any
representation, warranty or covenant made by such Purchaser in this Agreement.
Notwithstanding the foregoing, no Purchaser shall be liable under this Section
9.10(b) for an amount in excess of that Purchaser's purchase price as set forth
on Exhibit A.
An indemnified party shall give written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
within ten (10) days after the discovery by such parties of any matters giving
arise to a claim for indemnification pursuant to this Section 9.10; provided
that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under this Section
9.10, except to the extent that the indemnifying party is actually prejudiced by
such failure to give notice. In case any such action or claim is brought against
any indemnified party, the indemnifying party shall be entitled to participate
in and, unless in the reasonable good faith judgment of the indemnified party a
conflict of interest between such indemnified party and the indemnifying party
may exist in respect of such action or claim, to assume the defense thereof,
with counsel satisfactory to the indemnified party and after notice from the
indemnifying party to the indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. In any event, unless and until the indemnifying party elects in
writing to assume and does so assume the defense of any such
-21-
action or claim the indemnified party's costs and expenses arising out of the
defense, settlement or compromise of any such action or claim shall be Losses
subject to indemnification hereunder. If the indemnifying party elects to defend
any such action or claim, then the indemnified party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense. The indemnifying party shall not be liable for any settlement of any
action or claim effected without its written consent. Anything in this Section
9.10 to the contrary notwithstanding, the indemnifying party shall not, without
the indemnified party's prior written consent, settle or compromise any claim or
consent to entry of any judgment in respect thereof that imposes any future
obligation on the indemnified party or that does not include, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the
indemnified party, a release from all liability in respect of such claim.
No Third-Party Beneficiaries. Nothing in this Agreement will
confer any third party beneficiary or other rights upon any Person (specifically
including any employees of the Company and its Subsidiaries) or entity that is
not a party to this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-22-
CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT SIGNATURE PAGE
IN WITNESS WHEREOF, the Company and the Purchasers have caused this
Agreement to be executed effective as of the date first above written.
ANICOM, INC.
By: ______________________________________
Xxxxxx X. Xxxxxxx,
Chief Financial Officer
PURCHASERS:
XXXXXX XXXXXXX STRATEGIC PARTNERS FUND, L.P.
By: XXXXXX XXXXXXX STRATEGIC PARTNERS, L.P.,
its general partner
By: ________________________________________
Xxxxx X. Xxxxxxx, a general partner
STRATEGIC ASSOCIATES, L.P.
By: XXXXXX XXXXXXX & COMPANY, L.L.C., its
general partner
By: ____________________________________
Xxxxx X. Xxxxxxx, a managing member
-23-
XXXXXXX US DISCOVERY FUND III, L.P.
By: XXXXXXX US DISCOVERY PARTNERS, L.P., its general partner
By: XXXXXXX US DISCOVERY, LLC, its general partner
By: ___________________________________________
Xxxxxx X. Xxxx, member
XXXXXXX US DISCOVERY OFFSHORE FUND III, L.P.
By: XXXXXXX US DISCOVERY PARTNERS, L.P., its general partner
By: XXXXXXX US DISCOVERY, LLC, its general partner
By: ___________________________________________
Xxxxxx X. Xxxx, member
________________________________________________________________
Xxxxx X. Xxxxxxxx
________________________________________________________________
Xxxxx X. Xxxxxxxx
XXXXX X. XXXXXXXX TESTAMENTARY TRUST
By: __________________________________________________________
Its: _______________________________________________________
XXXXX XXXXXXXX TRUST
By: __________________________________________________________
Its: _______________________________________________________
XXXXX XXXXXXXX TRUST
By: __________________________________________________________
Its: _______________________________________________________
XXXXX XXXXXXXX XX. TRUST
By: __________________________________________________________
-24-
Its: _______________________________________________________
XXXXXXX XXXX XXXXXXXX TRUST
By: __________________________________________________________
Its: _______________________________________________________
SUMMER HILL PARTNERS, L.P.
By: Summer Hill, Inc., its general partner
__________________________________________________________
By: ____________________________________________________
Xxxxxxx X. Xxxxxxx, President
-00-
XXXXXX XXXX X.X. ENTERPRISES LIMITED PARTNERSHIP
By: Summer Hill, Inc., its general partner
By: __________________________________________
Xxxxxxx X. Xxxxxxx, President
GARFAM INVESTORS LLC
By: ________________________________________________
Xxxxxx Xxxxxxx, Treasurer
S. XXXXX XXXXXX
______________________________________________________
XXXX XXXXXX
______________________________________________________
XXXX XXXXXX
______________________________________________________
KA TRADING
By: _________________________________________________
Xxx Xxxxxxx
Title:
KA MANAGEMENT
By: ______________________________________________
Xxx Xxxxxxx
Title:
-00-
XXX XXXXXXXX
By: __________________________________________________
Xxxxxxxx Xxxxxx
Title:
TRUST INVESTMENTS, INC.
By: __________________________________________________
M. Xxxxxxx Xxxxxxx
Title:
THE LINCOLN FUND, L.P.
By: MATLINS FINANCIAL CONSULTING, INC., its general partner
By: ___________________________________________
Xxxx Xxxxxxx, President
THE LINCOLN FUND TAX ADVANTAGE, L.P.
By: MATLINS FINANCIAL CONSULTING, INC., its general partner
By: ___________________________________________
Xxxx Xxxxxxx, President
THE XXXXXX FUND, L.P.
By: LIGHTHOUSE CAPITAL MANAGEMENT, L.L.C.
By: _______________________________________________
Xxxx Xxxxxxx, President
EXHIBIT A
---------
Number of Shares
of Convertible
Purchaser Address Preferred Stock Purchase Price
--------- ------- --------------- --------------
Xxxxxx, Xxxxxxx One South Street 7,580 $7,580,000
Strategic Partners Suite 2150
Fund, L.P. Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Xxxxxxxxx Xxx (Xxxx)
-27-
with a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Strategic Associates, L.P. One South Street 420 420,000
Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Xxxxxxxxx Xxx (Xxxx)
with a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Xxxxxxx US Discovery 000 Xxxx Xxxxxx 6,895 6,895,000
Fund III, L.P. Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxx
Xxxxx Xxxxx
Xxxxx Xxxxxxx
with a copy to:
Morgan, Lewis, Bockius, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
-28-
Number of Shares
of Convertible
Purchaser Address Preferred Stock Purchase Price
--------- ------- --------------- --------------
Xxxxxxx US Discovery 000 Xxxx Xxxxxx 1,105 1,105,000
Offshore Fund III, L.P. Xxx Xxxx, XX 00000
Attn: Xxxxxx X Xxxx
Xxxxx Xxxxx
Xxxxx Xxxxxxx
with a copy to:
Morgan, Lewis, Bockius, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Xxxxx X. Xxxxxxxx
Testamentary Trust 3,000 3,000,000
Xxxxx X. Xxxxxxxx 1,000 1,000,000
Xxxxx X. Xxxxxxxx 500 500,000
Xxxxx Xxxxxxxx Trust 125 125,000
Xxxxx Xxxxxxxx Trust 125 125,000
Xxxxx Xxxxxxxx Xx. Trust 125 125,000
Xxxxxxx Xxxx Xxxxxxxx Trust 125 125,000
in each case, c/o:
Xxxxxxxx Capital 0000 Xxxx Xxxx
Xxxxxxxxxx Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Xxxx Xxx
with a copy to:
Hlustik, Xxxxxxxx &
Vander Woude
00 X. Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxx Woude
Summer Hill Partners, L.P. 1,000 1,000,000
Summer Xxxx X.X. Enterprises
Limited Partnership 1,000 1,000,000
Garfam Investors, L.L.C. 200 200,000
in each case, c/o:
Summer Hill, Inc. 0000 Xxxxxx Xxxx.
Xxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxx
Xxxx Xxxxxxx, Xx.
-29-
S. Xxxxx Xxxxxx 0000 X. 00xx Xxx. 334 334,000
Xxxxxxxxx, XX 00000
Xxxx Xxxxxx 0000 X. 00xx Xxx. 000 000,000
Xxxxxxxxx, XX 00000
Xxxx Xxxxxx 0000 X. 00xx Xxx. 333 333,000
Xxxxxxxxx, XX 00000
KA Trading 1712 Xxxxxxx Crossroads 825 825,000
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Xxxxxxx Xxxxx
KA Management 1712 Xxxxxxx Crossroads 425 425,000
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Xxxxxxx Xxxxx
CEW Partners 00 Xxxxxxxxxxxx Xxxxx 500 500,000
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx Xxxxxx
Trust Investments, Inc. 00 Xxxxxx Xxxx 500 500,000
Xxxxx, XX 00000
Attn: M. Xxxxxxx Xxxxxxx
The Lincoln Fund, L.P. 0 Xxxx Xxx Xxxxx Xxxxxxx
Xxxxx 300 300,000
Xxxxx 000
Xxxxxxxxxxx, XX 00000
The Lincoln Fund Tax 0 Xxxx Xxx Xxxxx Xxxxxxx Xxxxx 100 100,000
Advantage, L.P. Xxxxx 000
Xxxxxxxxxxx, XX 00000
The Xxxxxx Fund, L.P. 0 Xxxx Xxx Xxxxx Xxxxxxx Xxxxx0 50 150,000
Xxxxx 000
Xxxxxxxxxxx, XX 00000
TOTAL 27,000 $27,000,000
-30-
Exhibit B
---------
Certificate of Designations, Preferences and Rights of Series A Convertible
Preferred Stock
-31-
Exhibit C
---------
Company's Counsel Legal Opinion
-32-
