INVESTOR SECURITIES PURCHASE AGREEMENT
CDI GROUP, INC.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
As of January 30, 1995
To the Investors Set Forth
on Schedule 2.1 hereto
Ladies and Gentlemen:
The undersigned, CDI Group, Inc., a Delaware corporation (the
"Company"), hereby agrees with you as follows:
1. DEFINITIONS.
For all purposes of this Agreement, the following terms shall have the
meanings set forth herein or elsewhere in the provisions hereof:
"Acquisition" shall mean the acquisition by Newrxco of all of the
issued and outstanding capital stock of CDI pursuant to the Acquisition
Documents.
"Acquisition Documents" shall mean, collectively, (i) the Stock
Purchase Agreement, dated as of August 26, 1994, among Newrxco, Xxxxx Xxxxxx,
Xxxxxx Xxxxxx and Xxxxxx Xxxxxxx and (ii) all agreements and documents required
to be entered into or delivered pursuant thereto or in connection with the
Acquisition.
"Affiliate" shall mean any Person directly or indirectly controlling,
controlled by or under direct or indirect common control with the Company (or
other specified Person) and shall include (a) any Person who is an officer or a
member of the Board of Directors or a beneficial holder of at least five percent
(5%) of the then outstanding capital stock (or other shares of beneficial
interest) of the Company (or other specified Person) and Family Members of any
such Person, (b) any Person of which the Company (or other specified Person) or
any Affiliate (as defined in clause (a) above) of the Company (or other
specified Person) directly or
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indirectly, either beneficially owns at least five percent (5%) of the then
outstanding capital stock (or other shares of beneficial interest) or
constitutes at least a five percent (5%) equity participant, and (c) in the case
of a specified Person who is an individual, Family Members of such Person.
"BBV" shall mean BancBoston Ventures Inc., a Massachusetts corporation.
"CDI" shall mean Community Distributors, Inc., a Delaware corporation.
"Charter" shall include the articles or certificate of incorporation,
statute, constitution, joint venture or partnership agreement or articles or
other charter of any Person other than an individual, each as from time to time
amended and in effect.
"Class A Common Stock" shall have the meaning specified in Section
3.5(a) hereof.
"Class B Common Stock" shall have the meaning specified in Section
3.5(a) hereof.
"Closing" shall have the meaning specified in Section 2.2 hereof.
"Closing Date" shall have the meaning specified in Section 2.2 hereof.
"Commission" shall mean the Securities and Exchange Commission.
"Common Shares" shall mean (a) the shares of Common Stock issued to the
Investors hereunder, (b) any shares of Common Stock into which such shares of
Common Stock have been converted, (c) any capital stock or other securities into
which or for which such Common Stock shall have been converted or exchanged
pursuant to any recapitalization, reorganization or merger of the Company and
(d) any shares of capital stock issued with respect to the foregoing pursuant to
a stock split or stock dividend; provided that no Common Shares which have been
sold pursuant to a Public Sale shall be considered to be outstanding Common
Shares or Securities hereunder.
"Common Stock" shall mean, collectively, the Class A Common Stock and
the Class B Common Stock, each having the rights and privileges set forth in
Exhibit A hereto, and any capital stock or other securities into which or for
which such Class A Common Stock or Class B
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Common Stock shall have been converted or exchanged pursuant to any
recapitalization, reorganization or merger of the Company.
"Credit Agreement" shall mean the Credit Agreement, of even date
herewith, among CDI, the lenders named therein, and Banque Paribas as agent, as
the same may be amended, renewed or extended from time to time.
"Disposition Event" shall mean the occurrence of any of the merger,
consolidation, or sale of all or substantially all of the assets of the Company
or any Subsidiary comprising a majority of the Company or the sale or other
transfer of a majority of the capital stock of the Company or any such
Subsidiary.
"Distribution" shall mean (a) the declaration or payment of any
dividend on or in respect of any shares of any class of capital stock of the
Company or other specified Person or the repayment of any of the principal or
accrued interest on the Notes, (b) the purchase, redemption or other retirement
of any of the Notes or any shares of any class of capital stock of the Company
or other specified Person, directly or indirectly or otherwise, or (c) any other
distribution on or in respect of any of the Notes or any shares of any class of
capital stock of the Company or other specified Person.
"Employment Agreements" shall mean, collectively, the Employment and
Non-Competition Agreements, each dated as of the date hereof, entered into by
Newrxco and each of Xxxxx Xxxxxxx, Xxxx Xxxxxxxx, Xxxx Xxxxxxxxxx and Xxxxxxx
Xxxxxxxx, as such Employment Agreements may be amended, restated, modified or
supplemented from time to time.
"Family Members" shall mean, as applied to any individual, any parent,
spouse, child, spouse of a child, brother or sister of such individual, and any
trust created for the benefit of any of such Persons and each custodian of any
property of any of such Persons.
"Harvest Stockholders" shall mean, collectively, HPI, HTP, European
Development Capital Corporation N.V. and Deutsche Beteiligungsgesellschaft mbH.
"HPI" shall mean Harvest Partners International, LP.
"HTP" shall mean Harvest Technology Partners, LP.
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"Investor Stockholder" shall mean (a) each Investor for so long as such
Investor holds Securities and any other Person to whom such Investor transfers
Securities in accordance with the Stockholder Agreement (other than pursuant to
the Management Option Agreement) and (b) Banque Paribas for so long as Banque
Paribas holds Paribas Warrant Securities and any other Person to whom Banque
Paribas transfers Paribas Warrant Securities in accordance with the Stockholder
Agreement.
"Investors" shall mean, BBV and the Harvest Stockholders.
"Major Holder" shall mean the Harvest Stockholders and any other
Investor Stockholder, who together with its Affiliates, holds at the relevant
time of determination (i) in the case of Common Shares and Warrant Shares, at
least five percent (5%) of the then outstanding number of Common Shares and
Warrant Shares, (ii) in the case of Preferred Shares, at least five percent (5%)
of the then outstanding number of Preferred Shares or (iii) in the case of the
Notes, at least five percent (5%) of the then outstanding principal amount of
the Notes.
"Majority Holders of the Common Shares" shall mean the holder or
holders at the relevant time of determination (excluding the Company) of
fifty-one percent (51%) or more of the number of then issued and outstanding
Common Shares.
"Majority Holders of the Notes" shall mean the holder or holders at the
relevant time of determination (excluding the Company) of fifty-one percent
(51%) or more of the then outstanding principal amount of the Notes.
"Majority Holders of the Preferred Shares" shall mean the holder or
holders at the relevant time of determination (excluding the Company) of
fifty-one percent (51%) or more of the then outstanding number of Preferred
Shares.
"Management Fee Agreement" shall mean (a) the Management Fee Agreement
of even date herewith between Newrxco and BBV and (b) the Management Fee
Agreement of even date herewith between Newrxco and Harvest Partners, Inc., each
as amended and in effect from time to time.
"Management Option Agreement" shall mean the Option Agreement of even
date herewith among BBV, the Harvest Stockholders and Xxxxx Xxxxxxx, on behalf
of the executive officers of the Company, pursuant to which each of BBV and the
Harvest Stockholders have granted certain options to such officers to purchase
the number of shares of Common
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Stock and Preferred Stock specified therein during the period from the date
hereof until July 31, 1995.
"Management Options" shall mean the options for the purchase of shares
of Class A Common Stock issued pursuant to the Stock Option Agreements.
"Management Purchase Agreements" shall mean the Management Securities
Purchase Agreement pursuant to which Xxxxx Xxxxxxx purchases Common Stock and
Preferred Stock.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, properties, condition (financial or otherwise), performance,
results of operations, or prospects of the Company, (b) the ability of the
Company to perform its obligations under this Agreement and the Related
Agreements, or (c) the validity or enforceability of this Agreement or any of
the Related Agreements or the rights or remedies thereunder.
"Merger" shall have the meaning specified in Section
5.7 hereof.
"Merger Documents" shall mean (a) the Certificate of Ownership and
Merger, of even date herewith, filed with the Delaware Secretary of State and
(b) all other related documents with respect to the Merger.
"Newrxco" shall mean Newrxco, Inc., a Delaware
corporation.
"Notes" shall mean the Company's Senior Subordinated Notes, in the
aggregate principal amount of $12,907,780, in the form of Exhibit B hereto,
issued pursuant to Section 2.1 hereof, and any other Notes transferred to any
other holders pursuant to Section 10 hereof.
"Paribas" shall mean Paribas Principal, Inc.
"Paribas Option Agreement" shall mean the Option Agreement of even date
herewith among BBV, the Harvest Stockholders and Paribas pursuant to which BBV
and the Harvest Stockholders have granted an option to Paribas to purchase the
shares of Common Stock and Notes specified therein.
"Paribas Warrant" shall mean the Warrants of the Company issued
pursuant to the Paribas Warrant Agreement, as amended and in effect from time to
time.
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"Paribas Warrant Agreement" shall mean the Warrant Agreement of even
date herewith between the Company and Banque Paribas, as amended, renewed or
extended from time to time.
"Paribas Warrant Securities" shall mean the Paribas Warrant and the
Warrant Shares.
"Person" shall mean an individual, partnership, corporation,
association, trust, joint venture, unincorporated organization, or any
government, governmental department or agency or political subdivision thereof.
"Preferred Shares" shall mean (a) the shares of Preferred Stock issued
to the Investors pursuant to this Agreement, and (b) any capital stock or other
securities into which or for which any such shares of Preferred Stock shall have
been converted or exchanged pursuant to any recapitalization, reorganization or
merger of the Company, provided that the foregoing capital stock shall be
Preferred Shares only so long as such capital stock has not been sold pursuant
to a Public Sale.
"Preferred Stock" shall have the meaning specified in Section 3.5(a)
hereof.
"Principal Holder" shall mean any Person, who together with its
Affiliates, holds at the relevant time of determination (i) in the case of
Common Shares and Warrant Shares, at least ten percent (10%) of the then
outstanding number of Common Shares and Warrant Shares, (ii) in the case of the
Notes, at least ten percent (10%) of the then outstanding principal amount of
the Notes, or (iii) in the case of Preferred Shares, at least ten percent (10%)
of the then outstanding number of Preferred Shares. For purposes of this
definition, the Harvest Stockholders shall be deemed to be Affiliates of each
other.
"Public Sale" shall mean any sale of Common Stock or Preferred Stock to
the public pursuant to a public offering registered under the Securities Act, or
to the public through a broker or market-maker pursuant to the provisions of
Rule 144 (or any successor rule) adopted under the Act.
"Purchase Price" shall have the meaning set forth in Section 2.1
hereof.
"Purchased Securities" shall have the meaning set forth in Section 2.1
hereof.
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"Qualified Public Offering" shall mean the Company's underwritten
public offering pursuant to an effective registration statement under the
Securities Act covering the offer and sale of shares of Common Stock in which
not less than $20,000,000 of gross proceeds from such public offering are
received by the Company for the account of the Company.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated as of the date hereof, among the Company, the Investors,
Paribas Principal, Inc., Banque Paribas, TA Holding, Inc., Xxx Xxxxxxxx and
Xxxxx Xxxxxxx in the form of Exhibit C hereto, as the same may be amended,
restated, modified or supplemented from time to time.
"Related Agreements" shall mean, collectively, the Notes, the
Stockholder Agreement, the Registration Rights Agreement, the Charters of the
Company and each of its Subsidiaries, the Management Purchase Agreement, the
Employment Agreements, the Stock Option Agreements, the Management Option
Agreement, the Acquisition Documents, the Merger Documents, the Credit
Agreement, the Senior Loan Documents, the Paribas Option Agreement, the Paribas
Warrant, the Paribas Warrant Agreement, the Management Fee Agreement, the
Subscription Agreement between the Company and the Subscription Agreement
between the Company and Xxx Xxxxxxxx.
"Restricted Payment" shall mean any payment (whether in cash,
securities or other property, and including any management, consulting or
investment banking fees) to or for the benefit of any Affiliate of the Company
or any of its Subsidiaries, other than Distributions.
"Securities" shall mean the Preferred Shares, the Common Shares and the
Notes; provided, that no Securities which have been sold pursuant to the terms
of the Management Option Agreement shall be considered to be outstanding
Securities hereunder.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Senior Loan Documents" shall mean the "Credit Documents" as such term
is defined in the Credit Agreement, as the same may be amended, restated,
modified or supplemented from time to time.
"Small Business Act" shall mean the Small Business Investment Act of
1958, as amended, or any successor federal statute, and the rules and
regulations of the Small Business Administration thereunder, all as the same
shall be in effect from time to time.
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"Stock Option Agreements" shall mean (i) the Incentive Stock Option
Agreement of even date herewith between the Company and Xxxxx Xxxxxxx and (ii)
the Disposition Event Stock Option Agreement between the Company and Xxxxx
Xxxxxxx.
"Stockholder Agreement" shall mean the Stockholder Agreement, among the
Company, the Investors, Banque Paribas, Paribas Principal Inc., TA Holding,
Inc., Xxx Xxxxxxxx and Xxxxx Xxxxxxx, in the form of Exhibit D hereto.
"Subsidiary" shall mean any corporation, association, trust, or other
business entity, of which the designated parent shall at any time own or control
directly or indirectly through a Subsidiary or Subsidiaries at least a majority
(by number of votes) of the outstanding shares of capital stock (or other shares
of beneficial interest) entitled ordinarily to vote for the election of such
business entity's directors (or in the case of a business entity that is not a
corporation, for those Persons exercising functions similar to directors of a
corporation).
"Transfer Notice" shall have the meaning specified in Section 10.2
hereof.
"Warrant Shares" shall mean (a) all shares of Common Stock issued or
issuable upon exercise of the Paribas Warrants in accordance with their terms,
(b) any shares of Common Stock into which such shares of Common Stock have been
converted, (c) any capital stock or other securities into which or for which
such Common Stock shall have been converted or exchanged pursuant to any
recapitalization, reorganization or merger of the Company and (d) any shares of
capital stock issued with respect to the foregoing pursuant to a stock split or
stock dividend; provided that no Warrant Shares which have been sold pursuant to
a Public Sale shall be considered to be outstanding Warrant Shares or Securities
hereunder.
2. SALE AND PURCHASE OF PURCHASED SECURITIES.
2.1. Sale and Purchase of Purchased Securities. The Company agrees to
issue and sell to the Investors, and, subject to all of the terms and conditions
hereof and in reliance on the representations and warranties set forth or
referred to herein, each of the Investors severally agrees to purchase, the
Securities set forth opposite such Investor's name on Schedule 2.1 hereto (the
"Purchased Securities"), in consideration for the purchase price designated for
such Purchased Securities on Schedule 2.1 (the "Purchase Price"). The
obligations of the Investors hereunder are
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several and not joint and none of the Investors shall have any obligation or
liability for the obligations of any of the other Investors hereunder.
2.2. Closing. The closing of the purchase and sale of the Purchased
Securities (the "Closing") will take place at the offices of White & Case, 1155
Avenue of the Americas, New York, New York on January 30, 1995 or such other
date as the parties hereto may agree upon (the "Closing Date"). At the Closing,
the Company will deliver to each Investor the Purchased Securities purchased by
such Investor against payment by such Investor of the Purchase Price set forth
on Schedule 2.1 opposite such Investor's name in immediately available funds.
The Purchased Securities purchased by each Investor will be issued to such
Investor on or before the Closing Date and registered in such Investor's name in
the Company's records.
2.3. Use of Proceeds. The Company agrees that it will use the proceeds
from the sale of the Purchased Securities hereunder solely to finance part of
the Acquisition. The Company further agrees that it will not use any part of the
proceeds from the sale of the Purchased Securities to purchase or carry any
"margin security" or "margin stock", as such terms are defined in any
regulation, rule or interpretation of the Board of Governors of the Federal
Reserve System.
3. REPRESENTATIONS AND WARRANTIES.
In order to induce each of the Investors to enter into this Agreement
and to purchase the Purchased Securities to be purchased by such Investor, the
Company hereby represents and warrants that, both before and immediately after
giving effect to the Closing, the Acquisition and the Merger:
3.1. Organization and Good Standing. The Company and each of its
Subsidiaries is duly organized and existing in good standing in its jurisdiction
of incorporation, is duly qualified as a foreign corporation and authorized to
do business in all other jurisdictions in which the nature of its business or
property makes such qualification necessary, and has the corporate power to own
its properties and to carry on its business as now conducted and as proposed to
be conducted.
3.2. Authorization. The execution, delivery and performance by the
Company of this Agreement and the execution and delivery by the Company and each
of its Subsidiaries of each Related Agreement to which it is a party, and the
issuance and sale by the Company of the Securities hereunder, (a) are within the
Company's or such Subsidiary's corporate power and authority, (b) have been duly
authorized by all necessary
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corporate proceedings, and (c) do not conflict with or result in any breach of
any provision of or the creation of any lien upon any of the property of the
Company or any of its Subsidiaries or require any consent or approval pursuant
to the Charter or bylaws of the Company or any of its Subsidiaries or any law,
regulation, order, judgment, writ, injunction, license, permit, agreement or
instrument.
3.3. Enforceability. The execution and delivery by the Company of this
Agreement and the execution and delivery by the Company and each of its
Subsidiaries of each Related Agreement to which it is a party, and the issuance
and sale by the Company of the Securities hereunder, will result in legally
binding obligations of the Company or such Subsidiary, enforceable against it in
accordance with the respective terms and provisions hereof and thereof, except
to the extent that (a) such enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally the
enforcement of creditors' rights, (b) the availability of the remedy of specific
performance or injunctive or other equitable relief will be subject to the
discretion of the court before which any proceeding therefor may be brought, and
(c) the enforceability of the indemnities contained in the Registration Rights
Agreement may be limited under federal securities laws.
3.4. Governmental Approvals. Except as set forth in Schedule 3.4
hereto, the execution, delivery and performance by the Company of this Agreement
and the execution and delivery by the Company and each of its Subsidiaries of
each Related Agreement to which it is a party, and the issuance and sale by the
Company of the Securities hereunder, do not require the approval or consent of,
or any filing with, any governmental authority or agency prior to the Closing
other than those already obtained or filed.
3.5. Capitalization.
(a) Capital Stock. The authorized capital stock of the Company consists
solely of (i) 7,500 shares of Preferred Stock, $1.00 par value per share (the
"Preferred Stock"), (ii) 600,000 shares of Class A Voting Common Stock, $.00001
par value per share (the "Class A Common Stock") and (iii) 600,000 shares of
Class B Non-Voting Common Stock, $.00001 par value per share ("Class B Common
Stock"). On the Closing Date, after giving effect to the transactions
contemplated hereby and by the Related Agreements, the Company will have no
outstanding capital stock other than 7,500 shares of Preferred Stock, 311,285
shares of Class A Common Stock and 88,715 shares of Class B Common Stock, all of
which will be owned as set forth in Schedule 3.5(a) hereto, and all of
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which will be duly authorized, validly issued, fully paid and nonassessable.
(b) Options, Etc. Except for the Management Options and the Paribas
Warrant, the Company has no outstanding rights (either preemptive or other) or
options to subscribe for or purchase from the Company and no warrants or other
agreements providing for or requiring the issuance by the Company, of any of its
capital stock or any securities convertible into or exchangeable for its capital
stock.
(c) Reservation, Etc. Sufficient shares of authorized but unissued
Class A Common Stock and Class B Common Stock have been reserved by appropriate
corporate action in connection with the conversion of shares of Class A Common
Stock into shares of Class B Common Stock and the conversion of shares of Class
B Common Stock into shares of Class A Common Stock, as provided in the Charter
of the Company. Neither the conversion of shares of Class A Common Stock into
shares of Class B Common Stock, nor the conversion of shares of Class B Common
Stock into shares of Class A Common Stock, as provided in the Charter of the
Company, will (i) require any further corporate action by the stockholders or
directors of the Company, (ii) be subject to any preemptive rights of any
present or future stockholders of the Company, or (iii) conflict with any
provision of any agreement to which the Company is a party or by which it is
bound.
3.6. Subsidiaries. Immediately prior to the Closing, other than
Newrxco, the Company does not have any Subsidiaries and does not own or hold of
record and/or beneficially any shares of any class in the capital of any other
corporation. Immediately prior to the Merger, the authorized capital stock of
Newrxco consists solely of 1,000 shares of Common Stock, $.01 par value per
share of which 1,000 shares are issued and outstanding, all of which are owned
by the Company and are validly issued, fully paid and nonassessable. At the
Closing, after giving effect to the Acquisition and the Merger, other than CDI,
the Company does not have any Subsidiaries and does not own or hold of record
and/or beneficially any shares of any class in the capital of any other
corporation. After giving effect to the Merger, the authorized capital stock of
CDI consists solely of 1,000 shares of Common Stock, $.01 par value per share of
which 1,000 shares are issued and outstanding, all of which are owned by the
Company, free and clear of any lien other than liens permitted by the Credit
Agreement, and are validly issued and outstanding, fully paid and nonassessable.
Neither the Company nor any of its Subsidiaries owns any legal and/or beneficial
interests in any partnerships, business trusts
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or joint ventures or in any other unincorporated trade or business enterprises.
3.7. Small Business Concern. The Company meets the criteria established
under the Small Business Act for classification as a "small business concern"
within the meaning of the Small Business Act.
3.8. Governmental Regulations. Neither the Company nor any of its
Subsidiaries is a "holding company", or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company", as such terms are defined in
the Public Utility Holding Company Act of 1935; nor is the Company or any of its
Subsidiaries a "registered investment company", or an "affiliated person" or a
"principal underwriter" of a "registered investment company", as such terms are
defined in the Investment Company Act of 1940, as amended.
3.9. Disclosure. No representation, warranty or statement made by the
Company or any of its Subsidiaries in this Agreement, any Related Agreement or
any agreement, certificate, statement or document furnished by or on behalf of
the Company or any of its Subsidiaries in connection herewith or therewith
contains any untrue statement of material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein, in light
of the circumstances in which they were made, not misleading.
4. INVESTMENT REPRESENTATION.
Each of the Investors represents and warrants to the Company that (a)
such Investor is an "accredited investor" as such term is defined in Rule 501
promulgated under the Securities Act and (b) such Investor is acquiring the
Purchased Securities for investment, and not with a view to selling or otherwise
distributing the Purchased Securities; provided, however, that the disposition
of such Investor's property shall at all times be and remain in such Investor's
control, subject to the provisions of Section 10 hereof. Each of HPI and HTP
represents and warrants that its principal place of business is in the State of
New York and that it is an "institutional investor" for purposes of Section
359(e)(i)(a) of the New York General Business Law.
5. CONDITIONS TO PURCHASE.
The obligation of each Investor to purchase the Purchased Securities to
be purchased by such Investor pursuant to this Agreement is subject to
compliance by the Company with its agreements contained
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herein, and to the satisfaction, on or prior to the Closing Date, of the
following conditions:
5.1. This Agreement; Related Agreements. This Agreement and each of the
Related Agreements shall have been executed and delivered in a form reasonably
satisfactory to you, shall be in full force and effect and no term or condition
hereof or thereof shall have been amended, modified or waived except with your
prior written consent. All covenants, agreements and conditions contained herein
or in the Related Agreements which are to be performed or complied with on or
prior to the Closing Date shall have been performed or complied with (or waived
with your prior written consent) in all material respects.
5.2. Charter Documents; Good Standing Certificates. You shall have
received from the Company and each of its Subsidiaries a copy, certified by a
duly authorized officer of the Company to be true and complete as of the Closing
Date, of the Charter and the bylaws of the Company and each of its Subsidiaries
and a certificate, dated not more than ten (10) days prior to the Closing Date,
of the Secretary of State or other appropriate official of each state in which
the Company or any of its Subsidiaries is incorporated, organized or qualified
to do business, as to the Company's good standing or qualification to do
business in such state.
5.3. Proof of Corporate Action; Approvals. You shall have received from
the Company and each of its Subsidiaries copies, certified by a duly authorized
officer thereof to be true and complete as of the Closing Date, of the records
of all corporate action taken to authorize the execution, delivery and
performance of this Agreement or any of the Related Agreements to which the
Company or such Subsidiary is or is to become a party.
5.4. Incumbency Certificate. You shall have received from the Company
and each of its Subsidiaries an incumbency certificate, dated the Closing Date,
signed by a duly authorized officer of the Company or such Subsidiary, as
applicable, and giving the name and bearing a specimen signature of each
individual who shall be authorized to sign, in the name and on behalf of the
Company or such Subsidiary, as applicable, this Agreement and each of the
Related Agreements to which the Company or such Subsidiary is or is to become a
party, and to give notices and to take other action on such Person's behalf
under each of such documents.
5.5. Representations and Warranties; Officers' Certificates. The
representations and warranties of the Company or any of its Subsidiaries
contained or incorporated by reference herein shall be true and correct after
completion of the Acquisition and the Merger on and as of the
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Closing Date; and the Company and each of its Subsidiaries shall have performed
and complied with all conditions and agreements required to be performed or
complied with by it hereunder and under the Related Agreements prior to the
Closing; and each of you shall have received on the Closing Date a certificate
to these effects signed by the President and the Chief Financial Officer of the
Company.
5.6. Legality; Governmental Authorization. The purchase of the
Purchased Securities shall not be prohibited by any law, governmental order or
regulation, and shall not subject any of you to any penalty, special tax, or
other onerous condition. All necessary consents, approvals, licenses, permits,
orders and authorizations of, or registrations, declarations and filings with,
any governmental or administrative agency or other Person, with respect to any
of the transactions contemplated by this Agreement or any of the Related
Agreements, shall have been duly obtained or made and shall be in full force and
effect.
5.7. Completion of Acquisition and Merger. On the Closing Date,
simultaneously with the purchase and sale of the Purchased Securities hereunder,
(i) Newrxco shall have completed the Acquisition pursuant to the Acquisition
Documents, and (ii) Newrxco and CDI shall have completed the merger (the
"Merger") of Newrxco with and into CDI pursuant to the Merger Documents, with
CDI as the survivor of the Merger, each on terms satisfactory to you in all
respects.
5.8. SBIC Documentation. The Company shall have executed and delivered
to BBV and any other Investor which is a "small business investment company" all
documents required by such Investor in connection with the investment
contemplated hereby under the rules and regulations applicable to such Investor
by virtue of its status as a "small business investment company".
5.9. Debt Financing. Simultaneously with the purchase and sale of the
Purchased Securities hereunder, CDI shall have obtained financing on terms
satisfactory to you from one or more senior lenders pursuant to the Credit
Agreement, providing total credit of not less than $58,000,000.
5.10. No Material Change. Since July 31, 1994, no event or change
(other than the Acquisition and the Merger) shall have occurred that would cause
or evidence a Material Adverse Effect.
5.11. Expenses. Xxxxxxx, Xxxx & Xxxxx, special counsel to the Investors
and the Company, shall have received from the Company payment in full for all
legal fees charged and all costs and expenses incurred by such counsel through
the Closing Date in connection with the
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transactions contemplated by this Agreement and the Related Agreements. All of
the other fees, expenses and disbursements incurred by you or your accountants
and other consultants in connection with your due diligence investigation of the
Company and its Subsidiaries shall have been paid in full by the Company.
5.12. Legal Opinion. Each of the Investors shall have received from
special counsel their favorable opinion, substantially in the form of Exhibit E
hereto.
5.13. No Litigation. No restraining order or injunction shall prevent
the transactions contemplated by this Agreement and no action, suit or
proceeding shall be pending or threatened before any court or administrative
body in which it will be, or is, sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the consummation of
the transactions contemplated hereby.
5.14. Amendment of Charter. The Company shall have amended its Charter
to read as set forth in Exhibit A hereto.
5.15. Subscription Agreements. Simultaneously with the purchase and
sale of the Purchased Securities hereunder, the Company and each of TA Holding,
Inc. and Xxx Xxxxxxxx shall have executed and delivered Subscription Agreements
providing total capital to the Company of not less than $420,000.
5.16. Closing Fees. The Company shall have paid to (i) First Capital
Corporation a closing fee in the amount of $500,000 and (ii) Harvest Partners,
Inc. a closing fee in the amount of $500,000.
5.17. Simultaneous Purchase of Purchased Securities. It shall be a
condition concurrent to each Investor's obligation to purchase the Purchased
Securities to be purchased by such Investor that the other Investors purchase
the Purchased Securities to be purchased by such Investors.
5.18. General. All instruments and legal, governmental, administrative
and corporate proceedings in connection with the transactions contemplated by
this Agreement and the Related Agreements shall be satisfactory in form and
substance to you, and you shall have received copies of all documents,
including, without limitation, records of corporate or other proceedings,
opinions of counsel, consents, licenses, approvals, permits and orders, which
you may have requested in connection therewith.
-16-
6. INFORMATION RIGHTS AND OTHER COVENANTS.
The Company hereby agrees that so long as any Securities or Paribas
Warrant Securities are outstanding, it will comply and will cause its
Subsidiaries to comply with the following provisions unless otherwise consented
to by each of the Investor Stockholders:
6.1. Delivery of Financial Information. The Company will deliver to
each Investor Stockholder copies of all financial reports, notices and all other
documents or reports which the Company or any of its Subsidiaries furnishes to
any lender to the Company or any of its Subsidiaries promptly upon providing
such notices, reports or documents to such lenders; provided, that, in any
event, the Company shall deliver to each Investor Stockholder the notices,
financial reports and other information described in Section 8.01 of the Credit
Agreement as in effect on the date hereof, without giving any effect to any
amendment or modification of the terms of such provisions, any payment on or
discharge of the indebtedness outstanding thereunder, any termination thereof,
or any approval, consent, or waiver given pursuant thereto.
6.2. Rights to Attend Meetings.
(a) Board Meetings. The Company will give each Major Holder at least
five (5) business days' prior written notice (unless exigent circumstances
require a shorter time period) of the time, place and subject matter of any
proposed meeting (or action by written consent) of the board of directors or
executive committee of the Company or any of its Subsidiaries, such notice to
include true and complete copies of all documents furnished to any director in
connection with such meeting or consent. Any two (2) of such Major Holder's
officers and authorized representatives (in addition to any of such Major
Holder's officers or representatives who have been elected to the board of
directors) will be entitled to attend as an observer at any such meeting or, if
a meeting is held by telephone conference, to participate therein for the
purpose of listening thereto. The Company will, and will cause its Subsidiaries
to, call and hold a meeting of its board of directors or executive committee at
least once each fiscal quarter.
(b) Annual Meetings. Within sixty (60) days after the Company's annual
audited financial statements are furnished and on not less than thirty (30)
days' and not more than sixty (60) days' prior written notice, each of the
Company and its Subsidiaries will hold an annual meeting of its stockholders at
which the principal executive, financial and operations officers of the Company
or such Subsidiary, as applicable, will present a review of, and will discuss
with those in attendance, in reasonable detail,
-17-
the general affairs, management, financial condition, results of operations and
business prospects of the Company or such Subsidiary, as applicable. The Company
will give each holder of Securities at least thirty (30) days' advance written
notice of each such meeting and will allow each holder of Securities to attend
each such meeting.
6.3. Other Information. From time to time upon the request of any
representative designated by any Investor Stockholder who holds at least three
percent (3%) of the then outstanding (i) number of Common Shares and Warrant
Shares, (ii) number of Preferred Shares or (iii) principal amount of the Notes,
the Company will furnish to any authorized officer or representative of such
Person such information regarding the business, affairs, prospects and financial
condition of the Company and its Subsidiaries as such officer or representative
may reasonably request. Each such officer or representative shall have the right
during normal business hours to examine the books and records of the Company, to
make copies, notes and abstracts therefrom, and to make an independent
examination of the books and records of the Company and its Subsidiaries and to
inspect the properties of the Company and its Subsidiaries.
6.4. Confidentiality. Each Investor Stockholder (other than Paribas and
Banque Paribas) and its officers and representatives will hold, and use its best
efforts to require others to hold, in confidence all proprietary or confidential
information of the Company and its Subsidiaries provided or made available to
such Investor Stockholder pursuant to this Section 6 until such time as such
information has been publicly disclosed other than as a consequence of any
breach by an Investor Stockholder of its confidentiality obligations hereunder.
Upon exercise of its option under the Paribas Option Agreement, Paribas and
Banque Paribas agree to comply with the provisions of Section 14.18 of the
Credit Agreement as in effect on the Closing Date, as if such provisions are
incorporated herein by reference, with respect to all proprietary and
confidential information of the Company and its Subsidiaries provided or made
available to Paribas and Banque Paribas hereunder.
6.5. Post-Closing Review. Within 90 days following the Closing Date,
the Company shall deliver to BBV and any other Investor Stockholder which is a
"small business investment company" a certificate of the President of the
Company stating that the proceeds from the sale of the Purchased Securities were
used for the purposes specified in Section 2.3 hereof.
-18-
6.6. Distributions. Except for (a) the repayment of all of the Notes
and the redemption of all of the outstanding shares of Preferred Stock (i) on
January 31, 2005, or (ii) in connection with the closing of a Disposition Event,
(b) the prepayment of all of the Notes and the redemption of all of the
Preferred Stock prior to January 31, 2005, or (c) repurchases of Common Stock
and Preferred Stock held by executive employees of the Company and its
Subsidiaries pursuant to management securities purchase agreements entered into
pursuant to the Management Option Agreement, the Company will not make any
Distribution to any Principal Holder unless each Investor Stockholder is given
the option to receive concurrently therewith a pro rata portion (based upon the
respective number of Common Shares and Warrant Shares or the principal amount of
the Notes or Preferred Stock then held by such Investor Stockholders) of the
amount of such Distribution on the same terms and conditions as such Principal
Holder.
6.7. Transactions with Affiliates. Neither the Company nor any of its
Subsidiaries will (a) engage in any transaction with any Affiliate on terms more
favorable to such Affiliate than would have been obtainable on an arms-length
basis in the ordinary course of business, (b) engage in any merger,
consolidation or other similar transaction with, or sale of a material amount of
assets to, any Affiliate or (c) make any Restricted Payment other than (i)
compensation payable to Xxxxx Xxxxxxx, Xxxx Xxxxxxxx, Xxxx Xxxxxxxxxx, and
Xxxxxxx Xxxxxxxx pursuant to the terms of the Employment Agreements, (ii)
payments of base salary to each other executive employee of the Company as
currently in effect and any increases thereto or bonuses approved by Company's
Board of Directors, (iii) the reasonable compensation for and reimbursement of
out-of-pocket expenses of any member of the Board of Directors of the Company or
any of its Subsidiaries who is not an employee, officer or shareholder of the
Company or any of its Subsidiaries, (iv) the reasonable costs and expenses
associated with any rights of board or executive committee attendance or
observation or inspection and lodging expenses related thereto, (v) any payments
to BBV and Harvest Partners, Inc. or their Affiliates pursuant to the Management
Fee Agreement not to exceed $500,000 in aggregate amount in any year, (vi)
Distributions permitted pursuant to Section 6.6 hereof or (vii) any Restricted
Payment permitted pursuant to the Credit Agreement as in effect on the Closing
Date.
7. SALE OR TRANSFER OF PREFERRED SHARES, COMMON SHARES AND NOTES; REGISTRATION
RIGHTS.
You shall have certain rights with respect to the sale of the Preferred
Shares, Common Shares and Notes as set forth in the
-19-
Stockholder Agreement. You also shall have certain registration rights with
respect to the Common Shares as set forth in the Registration Rights Agreement.
8. SUBSEQUENT HOLDERS OF SECURITIES.
Whether or not any express assignment has been made in this Agreement,
the provisions of this Agreement and the Related Agreements that are for your
benefit as the holder of any Securities or Paribas Warrant Securities are also
for the benefit of, and enforceable by, all subsequent holders of Securities or
Paribas Warrant Securities, except any holder of Securities or Paribas Warrant
Securities which have been sold pursuant to a Public Sale, and except as
otherwise expressly provided herein. Furthermore, no Securities or Paribas
Warrant Securities which have been sold pursuant to a Public Sale shall be
deemed to be outstanding Preferred Shares, Common Shares or Notes, as
applicable, Securities or Paribas Warrant Securities for any purposes of this
Agreement.
9. REGISTRATION AND TRANSFER OF SECURITIES.
9.1. Registration, Transfer and Exchange of Notes.
(a) The Company shall keep at its principal office a register in which
shall be entered the names and addresses of the registered holders of the Notes
issued by it and particulars of the respective Notes held by them and of all
transfers of such Notes. References to the "holder" or "holder of record" of any
Note shall mean the payee thereof unless the payee shall have presented such
Note to the Company for transfer and the transferee shall have been entered in
said register as a subsequent holder, in which case the terms shall mean such
subsequent holder. The ownership of any of the Notes shall be proven by such
register and the Company may conclusively rely upon such register.
(b) The holder of any of the Notes may at any time and from time to
time prior to maturity or redemption thereof surrender any Note held by it for
exchange or (subject to compliance with the applicable provisions of Section 10
hereof) transfer at said office of the Company. Within a reasonable time
thereafter and without expense (other than transfer taxes, if any) to such
holder, the Company shall issue, at its expense, in exchange therefor another
Note or Notes, dated the date to which interest has been paid on the surrendered
Note, for the same aggregate principal amount as the unpaid principal amount of
the Note or Notes so surrendered, having the same maturity and rate of interest,
containing the same provisions and subject to the same terms and conditions as
the
-20-
Note or Notes so surrendered. Each such new Note shall be in the denominations
and registered in the name of such person or persons as the holder of such
surrendered Note or Notes may designate in writing, and such exchange shall be
made in a manner such that no additional or lesser amount of principal or
interest shall result. The Company will pay shipping and insurance charges, from
and to each holder's principal office, involved in the exchange or transfer of
any Note.
(c) Each Note issued hereunder, whether originally or in substitution
for, or upon transfer or exchange of, any Note shall be registered on the date
of execution thereof by the Company. The registered holder of record shall be
deemed to be the owner of the Note for all purposes of this Agreement. All
notices given hereunder to the holder of record shall be deemed validly given if
given in the manner specified in Section 12 hereof.
9.2. Transfer and Exchange of Common Stock and Preferred Stock.
(a) The Company shall keep at its principal office a register in which
shall be entered the names and addresses of the holders of the Common Stock and
the Preferred Stock and the particulars (including, without limitation, the
class thereof) of the respective shares of Common Stock and the Preferred Stock
held by them and of all transfers or conversions of shares of Common Stock from
one class to another. References to the "holder" or "holder of record" of any
Common Stock or Preferred Stock shall mean the holder thereof unless the holder
shall have presented stock certificates evidencing same to the Company for
transfer and the transferee shall have been entered in said register as a
subsequent holder, in which case the terms shall mean such subsequent holder.
The ownership of any of the Common Stock and Preferred Stock shall be proven by
such register and the Company may conclusively rely upon such register.
(b) Upon surrender at such office of any certificate representing
shares of Common Stock or Preferred Stock for registration of exchange or
(subject to compliance with the applicable provisions of this Agreement,
including, without limitation, the conditions set forth in Section 10 hereof or
the Stockholder Agreement) transfer or, in the case of Common Stock, conversion,
the Company shall issue, at its expense, one or more new certificates, in such
denomination or denominations as may be requested, for shares of Preferred Stock
or of such class or series of Common Stock as may be requested, and registered
as such holder may request. Any certificate representing shares of Common Stock
or Preferred Stock
-21-
surrendered for registration of transfer shall be duly endorsed, or accompanied
by a written instrument of transfer duly executed by the holder of such
certificate or such holder's attorney duly authorized in writing. The Company
will pay shipping and insurance charges, from and to each holder's principal
office, upon any transfer, exchange or conversion provided for in this Section
9.2.
(c) Each stock certificate evidencing Common Stock and Preferred Stock,
whether originally or in substitution for, or upon transfer or exchange of, any
Common Stock or Preferred Stock shall be registered on the date of execution
thereof by the Company. The registered holder of record shall be deemed to be
the owner of the Common Stock and Preferred Stock for all purposes of this
Agreement. All notices given hereunder to the holder of record shall be deemed
validly given if given in the manner specified in Section 12 hereof.
9.3. Replacement of Securities. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Security and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity bond in such reasonable amount as the Company may determine (or,
in the case of any Security held by you or another institutional holder, of an
unsecured indemnity agreement from you or such other holder reasonably
satisfactory to the Company), or, in the case of any such mutilation, upon the
surrender of such Security for cancellation to the Company at its principal
office, the Company, at its own expense, will execute and deliver, in lieu
thereof, a new Security of like tenor, dated in the case of a Note so that there
will be no loss of interest. Any Security in lieu of which any such new Security
has been so executed and delivered by the Company shall not be deemed to be
outstanding for any purpose of this Agreement.
10. RESTRICTIONS ON TRANSFER.
10.1. General Restriction. The Securities shall be transferable only
upon satisfaction of the conditions set forth in this Section 10 and any
applicable provisions of the Stockholder Agreement.
10.2. Notice of Transfer. Prior to any transfer of any Securities, the
holder thereof shall be required to give written notice to the Company
describing in reasonable detail the manner and terms of the proposed transfer
and the identity of the proposed transferee (the "Transfer Notice"), accompanied
by (a) if reasonably determined by the Company to be necessary with respect to
such transfer, an opinion of Xxxxxxx, Xxxx & Xxxxx addressed to the Company, or
other counsel reasonably acceptable to the Company, that such transfer may be
effected without
-22-
registration of such Securities under the Securities Act, and (b) the written
agreement of the proposed transferee to be bound by all of the provisions hereof
and, where required by the terms thereof, the Stockholder Agreement and the
Registration Rights Agreement.
10.3. Restrictive Legends. Except as otherwise permitted by this
Section 10, each Security shall bear the legend specified for such Security in
Schedule 10.3 hereto.
10.4. Termination of Restrictions. The restrictions imposed by this
Section 10 upon the transferability of any Securities shall terminate as to such
Securities upon the sale of such Securities pursuant to a Public Sale. Whenever
any of such restrictions shall terminate as to any Securities, the holder
thereof shall be entitled to receive from the Company, at the Company's expense,
new securities without such legends.
10.5. Paribas Warrant Securities. The Paribas Warrant Securities shall
be transferable only upon satisfaction of the conditions set forth in Section 5
of the Paribas Warrant Agreement and any applicable provisions of the
Stockholder Agreement.
11. EXPENSES; INDEMNITY.
(a) The Company hereby agrees to pay on demand (i) all reasonable out-
of-pocket expenses incurred by the Investors in connection with the transactions
contemplated by this Agreement and the Related Agreements, (ii) all reasonable
out- of-pocket expenses incurred by the Investors in connection with any rights
of board or executive committee attendance or inspection and travel and lodging
expenses related thereto, (iii) the reasonable fees and expenses of one counsel
representing the Investors in connection with (A) any amendments or waivers
(whether or not the same become effective) to this Agreement and the Related
Agreements and (B) the exercise or enforcement of any rights hereunder or under
or with respect to any Related Agreement and (iv) the reasonable expenses of
publicizing the investment contemplated by this Agreement, in accordance with
Section 15 hereof, by means of a customary advertisement in newspapers and other
periodicals.
(b) The obligations of the Company under this Section 11 shall survive
payment or transfer of the Securities and the termination of this Agreement.
-23-
12. NOTICES.
Any notice provided for in this Agreement or the Securities will be in
writing and will be deemed properly delivered if either personally delivered or
sent by telecopier, overnight courier or mailed certified or registered mail,
return receipt requested, postage prepaid, to the recipient at the address
specified below:
If to the Company, to it at the address set forth on page 1 hereof, to
the attention of the President, or at such other address as such person
shall have specified by notice actually received by the addressor.
If to any of the Investors, then to such Investor at the address and to
the attention of the Person set forth on Schedule 2.1 hereto, or at
such other address as such Investor shall have specified by notice
actually received by the addressor.
If to any other holder of record of any Security, to it at its address
set forth in the applicable register referred to in Section 9 hereof.
Any such notice shall be effective (a) if delivered personally or by telecopier,
when received, (b) if sent by overnight courier, when receipted for, and (c) if
mailed, three (3) days after being mailed as described above.
13. TERMINATION; SURVIVAL AND TERMINATION OF COVENANTS.
This Agreement shall terminate on that date which is the earlier of (i)
the date on which there are no longer any Securities issued and outstanding or
(ii) the date on which the Company shall complete and close a Qualified Public
Offering. All covenants, agreements, representations and warranties made herein
or in any other document referred to herein or delivered to you pursuant hereto
shall be deemed to have been relied on by you, notwithstanding any investigation
made by you or on your behalf, and shall survive the execution and delivery to
you of this Agreement and of the Securities.
14. AMENDMENTS AND WAIVERS.
Any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the Company and the Majority Holders of the Preferred Shares, the
Majority Holders of the Common Shares and the Majority
-24-
Holders of the Notes, respectively, with respect to any provision of this
Agreement which by its terms operates for the benefit of such respective
holders. Any term of the Notes may be amended and the observance of any term of
the Notes may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
the Majority Holders of the Notes with respect to whom such amendment or waiver
is made. Notwithstanding the foregoing, (a) without the prior written consent of
each holder of Notes with respect to whom such amendment or waiver is made, no
such amendment or waiver shall extend the fixed maturity or reduce the principal
amount of, or reduce the rate or extend the time of payment of interest on, or
reduce the amount or extend the time of payment of any principal payable on any
prepayment of, any Note with respect to whom such amendment or waiver is made,
(b) without the prior written consent of each Investor Stockholder, no such
amendment or waiver may amend or waive any provision of Sections 6 and 13
(including any definitions used in such sections) so as to affect such Investor
Stockholder's rights thereunder, or (c) without the prior written consent of the
Investor Stockholders, no such amendment or waiver shall reduce the aforesaid
percentage of Securities the holders of which are required to consent to any
such amendment or waiver pursuant to the foregoing clause (b). Any amendment or
waiver effected in accordance with this Section 14 shall be binding upon each
holder of any Security sold pursuant to this Agreement and the Company.
15. RIGHT TO PUBLICIZE.
Each of the Investors hereby agrees that it will not publicize its
investment in the Company as contemplated hereby without the prior consent of
BBV and the Harvest Stockholders.
16. CONSTRUCTION.
The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rule of strict
construction will be applied against any party.
17. MISCELLANEOUS.
This Agreement (including Exhibits and Schedules) and the Related
Agreements set forth the entire understanding of the parties hereto with respect
to the transactions contemplated hereby and supersede any prior written or oral
understandings with respect thereto. The invalidity or unenforceability of any
term or provision hereof shall not affect the validity or enforceability of any
other term or provision hereof. The
-25-
headings in this Agreement are for convenience of reference only and shall not
alter or otherwise affect the meaning hereof. THIS AGREEMENT MAY BE EXECUTED IN
ANY NUMBER OF COUNTERPARTS WHICH TOGETHER SHALL CONSTITUTE ONE INSTRUMENT, SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC SUBSTANTIVE LAWS OF
THE COMMONWEALTH OF MASSACHUSETTS WITHOUT GIVING EFFECT TO ANY CHOICE OR
CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE
DOMESTIC SUBSTANTIVE LAWS OF ANY OTHER STATE, AND SHALL BIND AND INURE TO THE
BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.
-26-
If the foregoing corresponds with your understanding of our agreement,
kindly sign this letter and the accompanying copies thereof in the appropriate
space below and return one counterpart of the same to the Company at the address
first listed above.
Very truly yours,
CDI GROUP, INC.
By: __________________________________
Title:__________________________
Accepted and agreed to:
BANCBOSTON VENTURES INC.
By: __________________________________
Title: __________________________________
HARVEST PARTNERS INTERNATIONAL, LP
By: __________________________________
Title: __________________________________
HARVEST TECHNOLOGY PARTNERS, LP
By: __________________________________
Title: __________________________________
EUROPEAN DEVELOPMENT CAPITAL CORPORATION N.V.
By: __________________________________
Title: __________________________________
DEUTSCHE BETEILIGUNGSGESELLSCHAFT
By: __________________________________
Title: __________________________________
-27-
List of Schedules
-----------------
Schedule 2.1 Investors
Schedule 3.4 Governmental Approvals
Schedule 3.5(a) Ownership of Capital Stock
Schedule 10.3 Restrictive Legend
List of Exhibits
----------------
Exhibit A Description of Capital Stock
Exhibit B Form of Senior Subordinated Note
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Stockholder Agreement
Exhibit E Form of Legal Opinion
FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT
This FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT, dated as of
October 16, 1997, is made by and among CDI Group, Inc., a corporation organized
and existing under the laws of the State of Delaware (the "Company"), and the
Investors set forth on the signature pages hereto (each, an "Investor", and
collectively, the "Investors").
BACKGROUND
WHEREAS, the Company and the Investors entered into an Investor
Securities Purchase Agreement, dated as of January 30, 1995 (the "Purchase
Agreement"), in connection with the acquisition by the Company of Community
Distributors, Inc., a corporation organized and existing under the laws of the
State of Delaware ("CDI");
WHEREAS, the Company and CDI entered into a Credit Agreement, dated as
of January 30, 1995, with the various banks named therein and Banque Paribas as
Agent (the "Old Credit Facility");
WHEREAS, CDI intends to issue approximately $80,000,000 in Senior Notes
due 2004, (the "Notes") and use the proceeds thereof to (i) repay the amounts
outstanding under the Old Credit Facility, and (ii) pay a dividend of
approximately $45,000,000 to the Company, its sole stockholder;
WHEREAS, in connection with the repayment of the Old Credit Facility,
CDI intends to enter into a new Loan and Security Agreement with PNC Bank,
National Association, which Loan and Security Agreement shall provide for a
revolving line of credit in the maximum principal amount of $20,000,000 (the
"New Credit Facility"); and
WHEREAS, the Company and the Investors desire to amend the Purchase
Agreement to change the reference to the Old Credit Facility to a reference to
the New Credit Facility and to add references to the Indenture under which the
Company will guarantee CDI's obligations under the Notes.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Investors do
hereby agree as follows:
2
1. Amendment of Purchase Agreement.
The Purchase Agreement is hereby amended, conditional upon the
repayment and termination of the Old Credit Facility and entrance by CDI into
the New Credit Facility, as follows:
(a) The definition of the "Credit Agreement" appearing on the second
page thereof is hereby deleted in its entirety and the following paragraph is
substituted therefor:
"Credit Agreement" shall mean the Loan and Security Agreement, dated as
of October 16, 1997, by and between CDI and PNC Bank, National Associaton, as
the same may be amended, renewed or extended from time to time."
(b) Section 1 of the Purchase Agreement is hereby amending by including
the following definition therein:
"Indenture" shall mean the Indenture dated as of October 16, 1997, of
the Company and CDI, and the Bank of New York as Trustee for the Senior Notes
due 2004.
(c) Section 6.1 of the Purchase Agreement is hereby deleted in its
entirety and the following paragraph is substituted therefor:
"6.1. Delivery of Financial Information. The Company will
deliver to each Investor Stockholder copies of all financial reports,
notices and all other documents or reports which the Company or any of
its Subsidiaries furnishes to any lender to the Company or any of its
Subsidiaries promptly upon providing such notices, reports or documents
to such lenders; provided, that, in any event, the Company shall
deliver to each Investor Stockholder the notices, financial reports and
other information described in Section 5.5(a) and (b) of the Credit
Agreement as in effect on October 16, 1997 without giving any effect to
any amendment or modification of the terms of such provisions, any
payment on or discharge of the indebtedness outstanding thereunder, any
termination thereof, or any approval, consent, or waiver given pursuant
thereto."
(d) Section 6.4 of the Purchase Agreement is hereby deleted in its
entirety and the following paragraph is inserted therefor:
"6.4. Confidentiality. Each Investor Stockholder (other than
Paribas and Banque Paribas) and its officers and representatives
3
will hold, and use its best efforts to require others to hold,
in confidence all proprietary or confidential information of the
Company and its Subsidiaries provided or made available to such
Investor Stockholder pursuant to this Section 6 until such time as such
information has been publicly disclosed other than as a consequence of
any breach by an Investor Stockholder of its confidentiality
obligations hereunder. Upon exercise of its option under the Paribas
Option Agreement, Paribas and Banque Paribas agree to comply with the
provisions of Section 14.18 of the Credit Agreement, dated as of
January 30, 1995, by and among the Company, Community Distributors,
Inc., the banks named therein and Banque Paribas as agent as in effect
on the Closing Date, regardless of whether or not such agreement
remains in force, as if such provisions are incorporated herein by
reference, with respect to all proprietary and confidential information
of the Company and its Subsidiaries provided or made available to
Paribas and Banque Paribas hereunder."
(e) Section 6.7 of the Purchase Agreement is hereby deleted in its
entirety and the following paragraph is substituted therefor:
"6.7. Transactions with Affiliates. Neither the Company nor
any of its Subsidiaries will (a) engage in any transaction with any
Affiliate on terms more favorable to such Affiliate than would have
been obtainable on an arms- length basis in the ordinary course of
business, (b) engage in any merger, consolidation or other similar
transaction with, or sale of a material amount of assets to, any
Affiliate or (c) make any Restricted Payment other than (i)
compensation payable to Xxxxx Xxxxxxx, Xxxx Xxxxxxxx, Xxxx Xxxxxxxxxx,
and Xxxxxxx Xxxxxxxx pursuant to the terms of the Employment
Agreements, (ii) payments of base salary to each other executive
employee of the Company as currently in effect and any increases
thereto or bonuses approved by Company's Board of Directors, (iii) the
reasonable compensation for and reimbursement of out-of-pocket expenses
of any member of the Board of Directors of the Company or any of its
Subsidiaries who is not an employee, officer or shareholder of the
Company or any of its Subsidiaries, (iv) the reasonable costs and
expenses associated with any rights of board or executive committee
attendance or observation or inspection and lodging expenses related
thereto, (v) any payments to BBV and Harvest Partners, Inc. or their
Affiliates pursuant to the Management Fee Agreement not to exceed
$500,000 in aggregate amount in any year, (vi) Distributions permitted
4
pursuant to Section 6.6 hereof or (vii) any "Permitted Payments" or
"Exempted Affiliate Transaction," each as defined in the Indenture."
2. No Other Amendment.
Except as specifically provided herein, the Purchase Agreement shall
remain in full force and effect in the form in which it existed on the date
hereof prior to giving effect to the terms of this First Amendment to Investor
Securities Purchase Agreement and the Company and the Investors ratify and
reaffirm the Purchase Agreement in its entirety, as modified hereby.
[Signature pages follow.]
5
IN WITNESS WHEREOF, the parties hereto have cause this First Amendment
to Securities Purchase Agreement to be duly executed as an instrument under seal
as of the date first above written.
COMPANY:
CDI GROUP, INC.
By: _____________________________________
Title: ____________________________
INVESTORS:
BANCBOSTON VENTURES INC.
By: ______________________________________
Title: _____________________________
HARVEST PARTNERS INTERNATIONAL, LP
By: ______________________________________
Title: _____________________________
HARVEST TECHNOLOGY PARTNERS, LP
By: ______________________________________
Title: _____________________________
EUROPEAN DEVELOPMENT CAPITAL
CORPORATION N.V.
By: ______________________________________
Title: _____________________________
6
DBG AUSLANDS-HOLDING GMBH
By: ______________________________________
Title: _____________________________
PARIBAS PRINCIPAL, INCORPORATED
By: ______________________________________
Title: _____________________________
