Exhibit 2
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STOCK AGREEMENT
by and between
Micro Warehouse, Inc.
and
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Revocable Trust U/T/A
and
▇▇▇▇▇▇ 1995 Charitable Remainder Unit Trust U/T/A
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Dated as of November 30, 1995
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Table of Contents
Page
1. Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Option . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Prohibited Transfers . . . . . . . . . . . . . . . . . . 4
2. Representations and Warranties of each of the Stockholders . . . 4
2.1 Authorization, Validity and Effect of Agreement . . . . . 4
2.2 No Conflict; Required Filings and Consents . . . . . . . 4
2.3 Ownership of Owned Shares . . . . . . . . . . . . . . . . 5
2.4 Purchase Not for Distribution . . . . . . . . . . . . . . 5
2.5 No Brokers . . . . . . . . . . . . . . . . . . . . . . . 5
3. Representations and Warranties of Parent . . . . . . . . . . . . 5
3.1 Authorization, Validity and Effect of Agreement . . . . . 5
3.2 No Conflict; Required Filings and Consents . . . . . . . 5
3.3 Purchase Not for Distribution . . . . . . . . . . . . . . 6
3.4 No Brokers . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Issuance of Parent Common Shares . . . . . . . . . . . . 6
4. Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Voting of Shares . . . . . . . . . . . . . . . . . . . . 6
4.2 No Solicitation . . . . . . . . . . . . . . . . . . . . . 7
4.3 Transfer of Shares . . . . . . . . . . . . . . . . . . . 7
4.4 Registration Rights and Indemnification . . . . . . . . . 7
4.5 Delivery on Exercise . . . . . . . . . . . . . . . . . . 11
4.6 Tax-Free Reorganization . . . . . . . . . . . . . . . . . 11
5. General Provisions . . . . . . . . . . . . . . . . . . . . . . . 11
5.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Assignment; Binding Effect . . . . . . . . . . . . . . . 12
5.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . 12
5.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . 12
5.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . 12
5.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . 12
5.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . 12
5.8 Interpretation . . . . . . . . . . . . . . . . . . . . . 12
5.9 Severability . . . . . . . . . . . . . . . . . . . . . . 13
5.10 Termination . . . . . . . . . . . . . . . . . . . . . . . 13
5.11 Specific Performance and Attorney Fees . . . . . . . . . 13
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Stock Agreement
Stock Agreement (this "Agreement"), dated as of November 30, 1995, by
and between Micro Warehouse, Inc., a Delaware corporation ("Parent"), and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, trustees of the ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Revocable Trust U/T/A, dated November 28, 1983, as amended as of
January 19, 1990 (the "Revocable Trust"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, trustee of
the ▇▇▇▇▇▇ 1995 Charitable Remainder Unit Trust U/T/A, dated as of September
14, 1995 (the "Charitable Trust")(each of the Revocable Trust and the
Charitable Trust being a "Stockholder" and collectively the "Stockholders").
Recitals
A. Parent, Micro Warehouse, Inc., Indigo Holding Company, Inc. a
Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub"),
and Inmac Corp., a Delaware corporation (the "Company"), have entered into an
Agreement and Plan of Merger, dated the date hereof (the "Merger Agreement"),
pursuant to which the parties thereto have agreed, on the terms and subject
to the conditions set forth therein, to merge Merger Sub with and into the
Company (the "Merger").
B. As of the date hereof, each of the Revocable Trust and the
Charitable Trust is the record, beneficial and pecuniary owner of, and has
the sole right to vote and dispose of, 1,954,235 shares and 800,000 shares,
respectively, (the "Owned Shares") of Common Stock, par value $.01 per share,
of the Company ("Company Common Shares").
C. As a condition to its willingness to enter into the Merger
Agreement, Parent has required that simultaneously with the execution of the
Merger Agreement the Stockholders agree, and the Stockholders are willing to
agree, to the matters set forth herein.
1. Option
1.1 Option. (a) Each of the Stockholders hereby grants to Parent
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an irrevocable option (the "Option") to purchase, on the terms and subject to
the conditions set forth herein, all of the Owned Shares, together with
(i) any additional shares of capital stock of the Company which such
Stockholder is or becomes entitled to receive from the Company by reason of
being a record holder of the Owned Shares, (ii) any securities or other
property into which any such Owned Shares shall have been or shall be
converted or changed (other than Parent Common Shares (as defined below)),
whether by amendment to the Certificate of Incorporation of the Company,
merger, consolidation, reorganization, capital change or otherwise, (iii) any
additional Company Common Shares acquired by such Stockholder as the result
of such Stockholder exercising an option, warrant or other right to acquire
shares of capital stock from the Company (all of the foregoing hereinafter
collectively referred to as the "Additional Owned Shares"), and (iv) any
shares of capital stock referred to in clauses (i), (ii), and (iii) above
that are issued or issuable in respect of Additional Owned Shares (the Owned
Shares, the Additional Owned Shares and any securities referred to in clause
(iv) above hereinafter collectively referred to as the "Option Shares").
(b) Subject to the conditions set forth in Section 1.1(h), the
Option may be exercised in whole but not in part by notice given by Parent to
each Stockholder on or subsequent to the date of receipt of an Alternative
Proposal (as defined in the Merger Agreement) by the Company or its
stockholders and at any time prior to the termination of this Agreement as
provided in Section 5.10.
(c) In the event Parent wishes to exercise the Option, Parent
first will send a written notice to each Stockholder specifying a place, date
(not less than two and more than five business days from the date such notice
is given) and time for the closing of the purchase of the Option Shares (the
"Closing"). Parent will send a copy of any such notice to the Company at the
address set forth in the Merger Agreement.
(d) The total price payable to a Stockholder upon exercise of the
Option will be the number of shares of Common Stock, par value $.01 per
share, of Parent ("Parent Common Share") equal to the product of (i) the
Conversion Rate (as defined in the Merger Agreement) calculated using the
date of exercise of the Option in lieu of the Closing Date (as defined in the
Merger Agreement) and (ii) the number of Option Shares to be purchased upon
such exercise; provided, however, that if any additional shares of capital
stock of the Company or any of its Subsidiaries (as defined in the Merger
Agreement) are issued by the Company or any of its Subsidiaries or any of
their respective successors, other than those set forth in Section 4.3 to the
Merger Agreement (the "Excess Shares"), the total number of Parent Common
Shares payable to such Stockholder for all of the Option Shares, including
any Excess Shares owned beneficially or of record by such Stockholder, will
be the number of Parent Common Shares equal to the product of (A) the
Conversion Rate and (B) the total number of Option Shares, less the total
number of Excess Shares owned beneficially or of record by such Stockholder.
(e) At the Closing, each Stockholder will deliver to Parent a
certificate or certificates representing the Option Shares, duly endorsed for
transfer or accompanied by appropriate stock powers, duly executed in blank,
and Parent will issue or deliver to such Stockholder a certificate
representing the number of Parent Common Shares to which such Stockholder is
entitled pursuant to Section 1.1(d). Parent agrees to exercise the Option
only in states where there are no transfer taxes.
(f) In the event that (i) the Option has been exercised, (ii) the
Merger has not been consummated, (iii) within one year after the exercise of
the Option Parent sells the Option Shares to, or the Company enters into an
agreement providing for a merger, consolidation or transaction involving any
purchase of all or any significant portion of the assets or equity interests
of the Company (the events referred to in this clause (iii) are hereinafter
referred to as a "Transaction"), with, a third party (other than an affiliate
of Parent), and (iv) the Transaction closes within one year thereafter,
Parent will notify each Stockholder, within two business days of such event,
of the receipt of proceeds paid to Parent in a Transaction with respect to
the Option Shares, and Parent will pay to the Stockholders within five
business days after its receipt of such proceeds, by delivery of a certified
check or an official bank check in immediately available funds payable to
each of the Stockholders or by wire transfer of immediately available funds
to an account specified in writing by each of the Stockholders, an amount in
cash or in kind (in accordance with the consideration paid in the
Transaction) equal to one-half of the excess (if any) of (A) the total
consideration received by Parent or its affiliates with respect to the Option
Shares upon the closing of a Transaction over (B) the total consideration
received by the Stockholders pursuant to Section 1.1(d) hereof upon exercise
of the Option. For purpose of this Section 1.1(f), any non-cash
consideration will be valued as follows: (1) any publicly traded securities
(other than Parent Common Shares) will be valued at the average of the
closing prices for such securities for the 20 trading days ending five days
prior to the date of the closing of the Transaction and (2) any non-cash
consideration other than publicly traded securities will be valued at its
fair market value; in the event Parent and the Stockholders cannot agree on
the fair market value, Parent and the Stockholders will, in good faith,
mutually select an appraiser, whose determination will be final and binding,
with the expenses of the appraiser being shared equally by Parent and the
Stockholders.
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(g) In the event that (i) the Option has been exercised, (ii) the
Merger is consummated, and (iii) Parent has increased the price per share
reflected in the numerator of the Conversion Rate (the "New Conversion
Rate"), Parent will issue to the Stockholders contemporaneously with the
issuance of shares pursuant to Section 3.2 of the Merger Agreement, a number
of Parent Common Shares equal to one-half of the excess of (A) Parent Common
Shares calculated using the New Conversation Rate over (B) the Parent Common
Shares calculated using the Conversion Rate applicable to the Stockholders
upon exercise of the Option.
(h) The obligations of Parent and each of the Stockholders to
consummate the purchase and sale of the Option Shares pursuant to this
Section 1.1 will be subject to the fulfillment of the following conditions,
if applicable:
(i) The expiration or termination of the waiting period
applicable to the consummation of such transactions under the ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR Act"); and
(ii) None of the parties hereto shall be subject to any order
or injunction of a court of competent jurisdiction which prohibits the
consummation of such transactions.
Each of the parties will promptly make, and cause each of their respective
affiliates to make, all such filings and take all such actions as may be
reasonably required in order to permit the lawful exercise of the Option, as
promptly as possible, including without limitation the filing contemplated by
this Section 1.1(h).
1.2 Prohibited Transfers. Neither of the Stockholders will
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during the term of the Option, except pursuant to this Agreement or the
Merger Agreement (a) sell, pledge or otherwise dispose of any Option Shares
or any interest therein, (b) deposit any Option Shares into a voting trust or
enter into a voting agreement or arrangement with respect to any Option
Shares or grant any proxy with respect thereto, or (c) enter into any
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contract, option or other arrangement or undertaking with respect to the
foregoing or the direct or indirect acquisition or sale, assignment, transfer
or other disposition of any Company Common Shares or any interest therein.
2. Representations and Warranties of each of the Stockholders
Each of the Stockholders hereby represents and warrants to Parent
as follows:
2.1 Authorization, Validity and Effect of Agreement. This
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Agreement has been duly executed and delivered by each of the Stockholders
and constitutes the valid and binding obligation of such Stockholder,
enforceable against such Stockholder in accordance with its terms.
2.2 No Conflict; Required Filings and Consents. (a) The
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execution and delivery of this Agreement by each of the Stockholders does
not, and the consummation by each of the Stockholders of the transactions
contemplated hereby will not, (i) subject to making the filings and obtaining
the approvals identified in Section 2.2(b), conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to either of the
Stockholders or by which either of the Stockholders or any Option Shares is
bound or affected, or (ii) result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a
default) under, result in the loss of a material benefit under, or give to
others any right of purchase or sale, or any right of termination, amendment,
acceleration, increased payments or cancellation of, or result in the
creation of a lien or other encumbrance on any Option Shares pursuant to any
contract, agreement or other instrument or obligation to which either of the
Stockholders is a party or by which either of the Stockholders or any
property or asset of the Stockholders is bound or affected.
(b) The execution and delivery of this Agreement by the
Stockholders does not, and the performance of this Agreement and the
consummation by the Stockholders of the transactions contemplated hereby will
not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, domestic
or foreign (each a "Governmental Entity"), except for (i) applicable
requirements, if any, of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and (ii) the notification requirements under the HSR Act.
2.3 Ownership of Owned Shares. Each of the Stockholders is the
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sole record and beneficial owner of the Owned Shares, free and clear of any
security interests, liens, charges, encumbrances, equities, claims, options
(other than the Option), proxies, stockholder agreements or limitations of
whatever nature and free of any other limitation or restriction (including
any restriction on the right to vote, sell or otherwise dispose of the Owned
Shares or any interest therein) except pursuant to this Agreement. The Owned
Shares constitute collectively all of the Company Common Shares in which the
Stockholders have a beneficial and pecuniary interest.
2.4 Purchase Not for Distribution. The Parent Common Shares to be
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acquired upon exercise of the Option will be so acquired without a view to
the public
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distribution thereof except when registered as contemplated herein and such
shares will not be transferred or otherwise disposed of except in a
transaction registered or exempt from registration under the Securities Act
of 1933, as amended (the "Securities Act"), and in compliance with applicable
state securities laws.
2.5 No Brokers. Neither of the Stockholders have entered into any
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contract, arrangement or understanding with any person or firm which may
result in the obligation of Parent to pay any finder's fees, brokerage or
agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
3. Representations and Warranties of Parent
Parent hereby represents and warrants to the Stockholders as
follows:
3.1 Authorization, Validity and Effect of Agreement. Parent has
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the requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Parent and constitutes the
valid and binding obligation of Parent, enforceable against Parent in
accordance with its terms.
3.2 No Conflict; Required Filings and Consents. (a) The
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execution and delivery of this Agreement by Parent do not, and the
consummation by Parent and of the transactions contemplated hereby will not,
(i) conflict with or violate the certificate of incorporation or by-laws of
Parent, (ii) subject to making the filings and obtaining the approvals
identified in Section 3.2(b), conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Parent or by which any
property or asset of Parent is bound or affected, or (iii) subject to making
the filings and obtaining the approvals identified in Schedule 4.6(a) of the
Merger Agreement, result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default)
under, result in the loss of a material benefit under, or give to others any
right of termination, amendment, acceleration, increased payments or
cancellation of, or result in the creation of a lien or other encumbrance on
any property or asset of Parent pursuant to, any contract, agreement or other
instrument or obligation to which Parent is a party or by which Parent or any
property or asset of Parent is bound or affected.
(b) The execution and delivery of this Agreement by Parent do not,
and the performance of this Agreement and the consummation by Parent of the
transactions contemplated hereby will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any
Governmental Entity, except for (i) applicable requirements, if any, of the
Exchange Act and (ii) the notification requirements under the HSR Act.
3.3 Purchase Not for Distribution. The Option and the securities
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to be acquired upon exercise of the Option (the "Acquired Shares") are and
will be acquired by Parent without a view to the public distribution thereof
and the Acquired Shares will not be
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transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act and in compliance with
applicable state securities laws.
3.4 No Brokers. Parent has not entered into any contract,
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arrangement or understanding with any person or firm which may result in the
obligation of the Stockholders to pay any finder's fees, brokerage or agent's
commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions
contemplated hereby.
3.5 Issuance of Parent Common Shares. The Parent Common Shares to
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be paid to the Stockholders upon exercise of the Option pursuant to this
Agreement will, when issued in accordance with this Agreement, be duly
authorized, validly issued, fully paid and nonassessable.
4. Certain Covenants
4.1 Voting of Shares. (a) Each of the Stockholders will, with
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respect to (i) all Owned Shares and (ii) any other Option Shares that it owns
of record or beneficially on the record date for voting at the meeting of the
stockholders called to consider and vote upon the Merger (the "Stockholders'
Meeting"), vote or cause to be voted such Option Shares (or execute or cause
to be executed written consents with respect to such Option Shares) (A) in
favor of the adoption of the Merger Agreement and approval of the Merger and
the other transactions contemplated by the Merger Agreement, (B) against any
Alternative Proposal (as defined in the Merger Agreement), and (C) in favor
of any other matter necessary for the consummation of the transactions
contemplated by the Merger Agreement and considered and voted upon at the
Stockholders' Meeting. The Stockholders acknowledge receipt and review of a
copy of the Merger Agreement.
(b) Following the acquisition of the Option Shares by Parent upon
the exercise of the Option, Parent will, with respect to the Option Shares
that it owns of record or beneficially on the record date for the
Stockholders' Meeting, vote or cause to be voted such Option Shares (or
execute or cause to be executed written consents with respect to such Option
Shares) (i) in favor of the adoption of the Merger Agreement and approval of
the Merger and the other transactions contemplated by the Merger Agreement,
(ii) against any Alternative Proposal, and (iii) in favor of any other matter
necessary for the consummation of the transactions contemplated by the Merger
Agreement and considered and voted upon at the Stockholders' Meeting.
4.2 No Solicitation. Prior to the Effective Time (as defined in
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the Merger Agreement), (a) neither of the Stockholders will (except ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ in his capacity as a director of the Company and then only to the
extent permitted in the Merger Agreement), and will cause its agents or
representatives (including, without limitation, any investment banker,
attorney or accountant retained by it) not to, initiate, solicit or
encourage, directly or indirectly, any inquiries or the making or
implementation of any Alternative Proposal or engage in any negotiations
concerning, or provide any confidential information or data to, or
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have any discussions with, any person relating to an Alternative Proposal, or
otherwise facilitate any effort or attempt to make or implement an
Alternative Proposal, and (b) the Stockholders will notify Parent orally and
in writing immediately if any such inquiries or proposals are received by,
any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, it.
4.3 Transfer of Shares. Prior to the Effective Time or, if
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earlier, the termination of the Merger Agreement in accordance with its
terms, neither of the Stockholders will directly or indirectly, through any
affiliate or associate, sell, assign, transfer, pledge or otherwise dispose
of or acquire, or enter into any put, call or other contract, option or other
arrangement or undertaking with respect to the direct or indirect acquisition
or sale, assignment or other disposition of any Parent Common Shares.
4.4 Registration Rights and Indemnification. (a) As promptly as
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practicable after the exercise of the Option, Parent shall file, and
thereafter use its reasonable best efforts to cause to become and to remain
effective, for so long as neither of the Stockholders may not resell free of
restrictions without registration under the Securities Act the Parent Common
Shares, if any, delivered to the Stockholders pursuant to Section 1.1(d) (the
"Parent Stock"), a registration statement (the "Registration Statement")
registering the resale by each of the Stockholders of the Parent Stock;
provided, however, that Parent shall in no event be required to cause such
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Registration Statement to remain in effect beyond the second anniversary of
the date of exercise of the Option, and (b) the Stockholders will promptly
notify Parent when all shares subject to such registration shall have been
earlier sold or otherwise disposed of by the Stockholders. For so long as
Parent is required to cause such Registration Statement to remain in effect,
Parent shall use its reasonable best efforts to cause the Parent Stock to be
(i) registered or qualified (to the extent not exempt from such registration
or qualification) for sale under the blue sky laws of such states as Seller
may reasonably request and (ii) listed on the Nasdaq National Market or other
nationally recognized exchange. All costs and expenses related to such
registration and listing (excluding any of such Stockholder's related or
unrelated costs and expenses) shall be borne by Parent. Parent will provide
the Stockholders with such number of copies of the Prospectus as the
Stockholders may reasonably request, including all amendments and supplements
thereto that are necessary so that the Registration Statement and Prospectus
at the time of each sale of stock by the Stockholders is not false or
misleading with respect to any material fact and does not omit to state any
material fact necessary in order to make the statements therein in light of
the circumstances under which they are made not misleading.
(b) For the first 90 days upon effectiveness of the Registration
Statement, the Stockholders may distribute Parent Stock without any
restrictions. Thereafter, if Parent determines in good faith that the
distribution of Parent Stock (i) would materially impede, delay or interfere
with any pending financing, acquisition, corporate reorganization or other
significant transaction involving Parent or (ii) would require disclosure of
non-public material information, the disclosure of which would materially and
adversely affect Parent, and, in the case of clause (ii), Parent is
concurrently forbidding purchases or sales in the open market by senior
executives of Parent, Parent will promptly give the stockholder written
notice of such determination and will be entitled to postpone the
distribution of Parent Stock
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for a reasonable period of time not to exceed two periods of 60 calendar days
in any one year (a "Blackout Period"). Parent will promptly notify the
Stockholders of the expiration or earlier termination of a Blackout Period.
Further, the Stockholders will not engage in a distribution of Parent Stock
during any window period during which Parent is concurrently forbidding
purchases or sales in the open market by senior executives of Parent in
connection with its existing company policy in connection with the
preparation and filing of Parent's Exchange Act reports provided such
forbidden window period may not exceed forty-five (45) days for each calendar
quarter.
(c) Parent will indemnify and hold harmless each of the
Stockholders and its agents against all losses, claims, damages, liabilities
and expenses (including reasonable attorneys' fees, disbursements and
expenses) incurred by it pursuant to any actual or threatened action, suit,
proceeding or investigation arising out of or based upon (A) any violation by
Parent (or its officers, directors or controlling persons) of any federal or
state law, rule or regulation applicable to Parent and relating to any action
required or inaction by Parent (or such other person) in connection with or
relating to any Registration Statement, (B) any untrue or alleged untrue
statement of material fact contained in the Registration Statement, any
Prospectus or preliminary Prospectus, or any amendment or supplement to any
of the foregoing, or (C) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein (in the case of a Prospectus or a preliminary Prospectus,
in light of the circumstances then existing) not misleading, except in each
case insofar as the same arise out of or are based upon any such untrue
statement or omission made in reliance on and in conformity with information
with respect to such indemnified party furnished in writing to Parent by such
indemnified party or its counsel expressly for use therein. In connection
with an underwritten offering, Parent will indemnify the underwriters
thereof, their officers, directors, agents, trustees and each person who
controls such underwriters (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) to the same extent as
provided above with respect to the indemnification of the Stockholders.
Notwithstanding the foregoing provisions of this Section 4.4(c), Parent will
not be liable to the Stockholders (or any agent thereof), any person who
participates as an underwriter in the offering or sale of Parent Stock or any
other person, if any, who controls underwriter (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act), under the
indemnity agreement in this Section 4.4(c) for any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense that arises
out of either of the Stockholders' or such other person's failure to send or
deliver a copy of the final Prospectus 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 the Parent Stock to such
person if such statement or omission was corrected in such final Prospectus
and Parent had previously furnished copies thereof to the Stockholders or
such other person in accordance with this Agreement.
(d) In connection with the Registration Statement, the
Stockholders will furnish to Parent in writing such information, including
the name, address and the amount of Parent Stock held by such Stockholder, as
Parent reasonably requests for use in such Registration Statement or the
related Prospectus and will indemnify and hold harmless (in the same manner
and to the same extent as set forth in Section 4.4(c)) Parent or any
underwriter, as the case may be, and any of their respective affiliates,
directors, officers, agents, trustees and controlling persons (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act), against any losses, claims, damages, liabilities and expenses resulting
from (A) any violation by either of the Stockholders (or their agents), of
any federal or state law, rule or regulation relating to action required of
or inaction by either of the Stockholders (or such other person) in
connection with their offer and sale of Parent Stock and (B) any untrue or
alleged untrue statement of a material fact contained in, or any omission or
alleged omission of a material fact required to be stated in, such
Registration Statement or Prospectus or any amendment or supplement to either
of them or necessary to make the statements therein (in the case of a
Prospectus, in the light of the circumstances then existing) not misleading,
but only to the extent that any such untrue statement or omission is made in
reliance on and in conformity with information with respect to the
Stockholders furnished in writing to Parent by the Stockholders or their
agent or counsel specifically for inclusion therein. Each of the
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Stockholders' indemnification obligations under this Section 4 shall be
limited to an amount not to exceed the net proceeds received by such
Stockholder upon the sale of Parent Common Stock pursuant to the Registration
Statement.
(e) Any person entitled to indemnification hereunder agrees to
give prompt written notice to the indemnifying party after the receipt by
such indemnified party of any written notice of the commencement of any
action, suit, proceeding or investigation or threat thereof made in writing
for which such indemnified party may claim indemnification or contribution
pursuant to this Agreement (provided that failure to give such notification
will not affect the obligations of the indemnifying party pursuant to this
Section 4.4 except to the extent the indemnifying party shall have been
actually prejudiced as a result of such failure). In case any such action is
brought against any indemnified party and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it wishes, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who may not, except with the
consent of the indemnified party, be counsel to the indemnifying 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 under these indemnification provisions for
any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation, unless in the
reasonable judgment of any indemnified party a conflict of interest is likely
to exist, based on the written opinion of counsel, between such indemnified
party and any other of such indemnified parties with respect to such claim,
in which event the indemnifying party will be obligated to pay the reasonable
fees and expenses of such additional counsel. No indemnifying party, in
defense of any such action, suit, proceeding or investigation, may, except
with the consent of each indemnified party, consent to the entry of any
judgment or entry into any settlement (which consent will not be unreasonably
withheld) which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such action, suit, proceeding or investigation to the
extent the same is covered by the indemnity obligation set forth in this
Section 4.4. No indemnified party may consent to entry of any judgment or
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enter into any settlement without the consent of each indemnifying party
(which consent will not be unreasonably withheld).
(f) If the indemnification from the indemnifying party provided
for in this Section 4.4 is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party, will contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities and expenses
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified party in connection with the actions which
resulted in such losses, claims, damages, liabilities and expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party will be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission
to state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified party, and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such action. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above will
be deemed to include, subject to the limitations set forth in Section 4.4(e),
any legal and other fees and expenses reasonably incurred by such indemnified
party in connection with any investigation or proceeding. The parties hereto
agree that it would not be just and equitable if contribution pursuant to
this Section 4.4(f) were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable
considerations referred to above. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. If indemnification is available under this
Section 4.4(f), the indemnifying parties will indemnify each indemnified
party to the full extent provided in Section 4.4(c) or 4.4(d), as the case
may be, without regard to the relative fault of said indemnifying parties or
indemnified party or any other equitable consideration provided for in this
Section 4.4(f).
(g) The provisions of this Section 4.4 will be in addition to any
liability which any indemnifying party may have to any indemnified party and
will survive the termination of this Agreement.
4.5 Delivery on Exercise. Upon exercise of the Option, counsel
--------------------
satisfactory to Parent shall deliver an opinion to Parent to the effect that
the Stockholders have the authority to sell the Option Shares and that such
sale will not violate the terms of the trust agreements.
4.6 Tax-Free Reorganization. The parties hereto intend that the
-----------------------
exchange of the Company Common Shares for the Parent Common Shares pursuant
to the exercise of the Option and completion of the transactions contemplated
by the Merger Agreement shall be treated as an exchange pursuant to a
reorganization within the meaning of Section 354 and 368(a)(1) of the
Internal Revenue Code of 1986 and shall report the transactions accordingly
for all purposes.
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5. General Provisions
5.1 Notices. Any notice required to be given hereunder will be
-------
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered
mail (return receipt requested and first class postage prepaid), addressed as
follows:
If to Parent: If to the Stockholders:
Micro Warehouse, Inc. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: ▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: With copies to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party shall specify by written notice so
given, and such notice will be deemed to have been delivered as of the date
so telecommunicated, personally delivered or mailed.
5.2 Assignment; Binding Effect. Neither this Agreement nor any of
--------------------------
the rights, interests or obligations hereunder may be assigned or delegated
by any of the parties hereto (whether by operation of law or otherwise).
This Agreement will be binding upon and inure solely to the benefit of the
parties hereto, and nothing in this Agreement, express or implied, is
intended to or will confer upon any person any right, benefit or remedy of
any nature whatsoever under or by reason of this Agreement.
5.3 Entire Agreement. This Agreement constitutes the entire
----------------
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings between the parties with
respect thereto.
5.4 Governing Law. This Agreement will be governed by and
-------------
construed in accordance with the laws of the State of Delaware without regard
to its rules of conflict of laws.
5.5 Amendments. This Agreement may not be amended except by an
----------
instrument in writing signed on behalf of the parties hereto.
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5.6 Counterparts. This Agreement may be executed by the parties
------------
hereto in separate counterparts, each of which when so executed and delivered
will be an original, but all such counterparts will together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than both, but together signed by all of the
parties hereto.
5.7 Headings. Headings of the Articles and Sections of this
--------
Agreement are for the convenience of the parties only, and will be given no
substantive or interpretive effect whatsoever.
5.8 Interpretation. In this Agreement, unless the context
--------------
otherwise requires, words describing the singular number will include the
plural and vice versa, and words denoting any gender will include all genders
and words denoting natural persons will include corporations and partnerships
and vice versa.
5.9 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
will nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination that any
term or other provisions is invalid, illegal or incapable of being enforced,
the parties hereto will negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent
possible.
5.10 Termination. If Parent has not purchased the Option Shares
-----------
pursuant to the Option or not then given notice of its desire to exercise the
Option pursuant to Section 1.1(c), this Agreement will terminate
automatically immediately upon the termination of the Merger Agreement as
provided therein. Notwithstanding the foregoing, if the Company receives an
Alternative Proposal while the Merger Agreement is in effect, this Agreement
will not terminate for at least 30 days from the date of receipt of such
Alternative Proposal.
5.11 Specific Performance and Attorney Fees. The parties hereto
--------------------------------------
agree that irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms hereof and that the
parties will be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or in equity. The prevailing party in
any such action shall be entitled to recover its reasonable attorney fees and
costs of such action.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
MICRO WAREHOUSE, INC.
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
President
▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
REVOCABLE TRUST U/T/A
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Trustee
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Trustee
▇▇▇▇▇▇ 1995 CHARITABLE
REMAINDER UNIT TRUST U/T/A
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Trustee
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