Exhibit 1
STOCK PURCHASE AGREEMENT
by and between
NUTRAMAX PRODUCTS, INC.,
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Dated as of November 6, 1998
TABLE OF CONTENTS
-----------------
Page
----
I. PURCHASE AND SALE 2
1.1. Purchase and Sale 2
1.2. Purchase Price
1.3. Closing 2
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 7
2.1. Due Organization, etc. 7
2.2. Compliance with Law 8
2.3. Authorization; Execution and Delivery of Agreement 8
2.4. No Conflict; No Consent 9
2.5. Capital Stock 10
2.6. SEC Reports 11
2.7. Financial Statements 12
2.8. No Brokers 13
2.9. Litigation and Claims 13
2.10. Use of Proceeds 13
i
Page
----
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 14
3.1. Authorization; Execution and Delivery of Agreement 14
3.2. No Conflict; No Consent 14
3.3. No Brokers 14
3.4. Litigation and Claims 15
3.5. Investment Purposes 15
IV. COVENANTS OF THE COMPANY 16
4.1. Conduct of Business 16
4.2. Exchange of Stock Certificates 17
4.3. Lost, Stolen, Destroyed or Mutilated Stock Certificates 17
4.4. Course of Dealings with Lenders 17
4.5. Other Purchase Agreements 18
V. COVENANTS OF THE PURCHASER AND THE COMPANY 18
5.1. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act Filings 18
5.2. Public Disclosure and Confidentiality 18
5.3. Certain Notifications 19
ii
Page
----
5.4. Efforts to Consummate; Further Actions 19
5.5. Proxy Statement; Stockholder Approval 19
VI. REGISTRATION RIGHTS 20
6.1. "Piggyback" Registration 20
6.2. Demand Registration 22
6.3. General Provisions 23
6.4. Information, Documents, Etc. 25
6.5. Expenses 25
6.6. Cooperation 26
6.7. Action to Suspend Effectiveness; Supplement to Registration
Statement 28
6.8. Indemnification 29
VII. INDEMNIFICATION 36
7.1. Indemnification by the Company 36
7.2. Indemnification by the Purchaser 36
VIII. TERMINATION 36
8.1 Termination 36
iii
Page
----
IX. GENERAL PROVISIONS 38
9.1. Survival of Representations, Warranties and Agreements 38
9.2. Notices 38
9.3. General 39
9.4. Governing Law 40
9.5. Severability of Provisions 40
9.6. Captions 41
9.7. Expenses 41
9.8. Equitable Relief 41
9.9. Definitions 41
SCHEDULE 2.5(b)
SCHEDULE 2.7(c)
iv
STOCK PURCHASE AGREEMENT (this "Agreement") dated as of November 6,
---------
1997 by and between NUTRAMAX PRODUCTS, INC., a Delaware corporation (the
"Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Purchaser").
-------- ---------
WHEREAS, the Company recently has defaulted on certain financial
covenants contained in the Company's Credit Facilities (as hereinafter defined),
waivers of which defaults were obtained from the Company's lenders under such
credit agreements (the "Lenders");
-------
WHEREAS, subject to the terms and conditions of this Agreement, the
Purchaser wishes to purchase from the Company, and the Company wishes to sell to
the Purchaser, additional shares (the "Shares") of the Company's Common Stock,
------
par value $0.001 per share (the "Common Stock");
------------
WHEREAS, the Purchaser and the Company are entering into this
Agreement to provide for such purchase and sale and to establish various rights
and obligations in connection therewith;
WHEREAS, in conjunction with the transactions contemplated by this
Agreement, the Company is also entering into agreements with each of Cape ▇▇▇
Investors, L.L.C. ("Cape ▇▇▇") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the Chairman of the Board
--------
of Directors of the Company, with respect to the purchase from the Company by
Cape ▇▇▇ and ▇▇. ▇▇▇▇▇▇ (the "Cape ▇▇▇ Purchase" and the "▇▇▇▇▇▇ Purchase,"
----------------- ---------------
respectively) of approximately 1,162,790 and 232,558 additional shares of Common
Stock, respectively (such agreements, the "Cape ▇▇▇
--------
1
Purchase Agreement" and the "▇▇▇▇▇▇ Purchase Agreement," respectively, and,
------------------ --------------------------
collectively, the "Purchase Agreements"); and
-------------------
WHEREAS, the proceeds from the sale of the Shares, together with the
proceeds from the sale of shares of Common Stock pursuant to the Purchase
Agreements, shall be used to facilitate the Company's negotiation of amendments
to the financial covenants and other terms of the Credit Facilities and to
enable the Company to retire existing indebtedness and to provide the Company
with additional working capital;
NOW THEREFORE, in consideration of these premises and other good and
valuable consideration, the parties hereto hereby agree as follows:
I. PURCHASE AND SALE
1.1. Purchase and Sale. Upon the terms and subject to the
-----------------
conditions set forth in this Agreement, the Company agrees to issue, sell and
deliver to the Purchaser, and the Purchaser agrees to purchase from the Company,
46,512 Shares. The Shares purchased and sold hereunder shall be free and clear
of any liens, security interests, pledges, voting agreements, claims, options
and encumbrances of every kind, character and description whatsoever
("Encumbrances"), except as contemplated by this Agreement.
--------------
1.2. Purchase Price. As consideration for the sale of the Shares,
--------------
at the Closing (as hereinafter defined) the Purchaser shall pay the Company, in
immediately available funds, a purchase price of $4.30 per share.
2
1.3. Closing. (a) The closing of the transactions provided for in
-------
this Agreement (the "Closing") shall take place on the second business day after
-------
the satisfaction or waiver of the conditions set forth in Sections 1.3(b) and
1.3(c) of this Agreement at the offices of ▇▇▇▇▇▇▇, Procter & ▇▇▇▇, LLP,
Exchange Place, Boston, Massachusetts, or at such other time and place as the
parties may mutually agree.
(b) Conditions Precedent to the Purchaser's Obligations. The
---------------------------------------------------
obligation of the Purchaser to consummate the transactions described in this
Agreement shall be subject to the satisfaction of the following conditions on or
prior to the Closing: (i) the representations and warranties of the Company
contained in this Agreement shall have been true and correct when made and shall
be true and correct in all material respects on the date of Closing with the
same effect as if they were made on such date; (ii) the Company shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by the
Company on or prior to the Closing; (iii) the Company shall have delivered to
the Purchaser a certificate, dated the date of Closing and signed by a duly
authorized officer of the Company, certifying as to the matters described in the
foregoing clauses (i) and (ii); (iv) no action, suit,
3
investigation or proceeding shall have been instituted before any court,
administrative body or governmental agency (a "Governmental Entity") which seeks
-------------------
to restrain the consummation of, prohibit or declare illegal, or obtain a
material amount of damages arising from the transactions contemplated by this
Agreement and which is likely, in the Purchaser's reasonable judgment, to be
successful on the merits, and no temporary restraining order or injunction shall
have been issued by any Governmental Entity restraining or prohibiting, and no
other Legal Requirement (as hereinafter defined) shall have come into effect
making illegal, the performance of this Agreement or the consummation of any of
the transactions contemplated hereby; (v) all consents, approvals, permits and
authorizations required to be obtained from, and all filings required to be made
with, any Authority (as hereinafter defined) in connection with the consummation
of the transactions contemplated hereby shall have been obtained or made, and
all waiting periods specified under applicable Legal Requirements (including any
such waiting period applicable to the transactions contemplated hereby under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "▇▇▇▇-
-----
▇▇▇▇▇-▇▇▇▇▇▇ Act")), and all extensions thereof, the passing of which is
----------------
required for such
4
consummation, shall have passed, except as to such consents,
approvals, permits, authorizations or filings that, individually or in the
aggregate, would not have a material adverse effect on the condition (financial
or otherwise), business, operations, properties, assets or liabilities of the
Company and its Subsidiaries (as hereinafter defined) taken as a whole (a
"Material Adverse Effect"); (vi) the issuance and sale of Common Stock
------------------------
contemplated by this Agreement shall have been approved by the requisite
affirmative vote of the stockholders of the Company; (vii) from and after the
date of this Agreement, there shall not have occurred any changes concerning the
Company that, when combined, without duplication, with all other changes
concerning the Company from and after the date of this Agreement, have had or
would reasonably be expected to have a Material Adverse Effect; (viii) the
Company shall have obtained a waiver from the Lenders of any covenant defaults
under the Credit Facilities during the fourth quarter of fiscal 1998 and shall
have entered into amendments (the "Credit Facility Amendments") to each of the
--------------------------
Revolving Credit and Term Loan Agreement, dated as of December 30, 1996, as
amended, between the Company, The First National Bank of Boston ("FNBB"), Fleet
----
National Bank, National Bank of Canada, The Sumitomo Bank, Limited,
5
and FNBB, as Agent (the "Loan Agreement"), and the Purchase Agreement, dated as
--------------
of December 30, 1996, as amended, between the Company and ING (U.S.) Capital
Corporation (together with the Loan Agreement, the "Credit Facilities"), the
-----------------
terms of which amendments shall be reasonably satisfactory to the Purchaser, and
such waiver and amendments shall be in full force and effect without waiver or
change in the material terms thereof; and (viii) all conditions precedent to
consummation of the Cape ▇▇▇ Purchase and the ▇▇▇▇▇▇ Purchase shall have been
satisfied or waived by the appropriate party, and no amendment to the Cape ▇▇▇
Purchase Agreement or the ▇▇▇▇▇▇ Purchase Agreement shall have been executed or
agreed to that changes the material terms thereof in a manner adverse to the
Company without the Purchaser's prior written consent. In the event any of the
foregoing conditions to the Purchaser's obligation to close hereunder is not
satisfied on or before the Closing, the Purchaser may waive such condition and
proceed to Closing. As used herein, "Legal Requirements" shall include laws,
------------------
regulations, ordinances, orders, decrees, permits, licenses, consents,
approvals, registrations, authorizations and qualifications required by or from
any federal, state, local or foreign governmental or regulatory authority (each,
6
an "Authority").
---------
(c) Conditions Precedent to the Company's Obligations. The obligation
-------------------------------------------------
of the Company to consummate the transactions described in this Agreement shall
be subject to the satisfaction of the following conditions on or prior to the
Closing: (i) the representations and warranties of the Purchaser contained in
this Agreement shall have been true and correct when made and shall be true and
correct in all material respects on the date of Closing with the same effect as
if they were made on such date; (ii) the Purchaser shall have performed and
complied in all material respects with all covenants and agreements required by
this Agreement to be performed or complied with by the Purchaser on or prior to
the Closing; (iii) the Purchaser shall have delivered to the Company a
certificate, dated the date of Closing and signed by a duly authorized signatory
of the Purchaser, certifying as to the matters described in the foregoing
clauses (i) and (ii); (iv) no action, suit, investigation or proceeding shall
have been instituted before any Governmental Entity which seeks to restrain the
consummation of, prohibit or declare illegal, or obtain a material amount of
damages arising from the transactions contemplated by this Agreement and which
is likely,
7
in the Company's reasonable judgment, to be successful on the merits and no
temporary restraining order or injunction shall have been issued by any
Governmental Entity restraining or prohibiting, and no other Legal Requirement
shall have come into effect making illegal, the performance of this Agreement or
the consummation of any of the transactions contemplated hereby; (v) all
consents, approvals, permits and authorizations required to be obtained from,
and all filings required to be made with, any Authority in connection with the
consummation of the transactions contemplated hereby shall have been obtained or
made, and all waiting periods specified under applicable Legal Requirements
(including any such waiting period applicable to the transactions contemplated
hereby under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act), and all extensions thereof, the passing
of which is required for such consummation, shall have passed, except as to such
consents, approvals, permits, authorizations or filings that, individually or in
the aggregate would not have a Material Adverse Effect; and (vi) the issuance
and sale of Common Stock contemplated by this Agreement shall have been approved
by the requisite affirmative vote of the stockholders of the Company. In the
event any of the foregoing conditions to the Company's obligation to close
hereunder is
8
not satisfied on or before the Closing, the Company may waive such
condition and proceed to Closing.
(d) Company Closing Deliveries. At the Closing, the Company will
--------------------------
deliver to the Purchaser the following:
(i) a stock certificate or certificates representing the Shares;
and
(ii) a certificate of the Secretary of the Company certifying as
to the adoption and effect of resolutions of the Board of
Directors of the Company (the "Board") authorizing the
-----
execution, delivery and performance of this Agreement.
(e) Purchaser Closing Deliveries. At the Closing, the Purchaser will
----------------------------
deliver to the Company payment of the purchase price provided by Section 1.2.
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1. Due Organization, etc. The Company and each of its
---------------------
Subsidiaries (as hereinafter defined) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, and each has all requisite corporate power and authority to own,
operate and lease its respective properties and assets and to conduct its
respective businesses as now conducted and is qualified to do business in each
state or other jurisdiction where the nature of its properties, assets or
businesses requires such qualification other than where the failure to be so
qualified would not, individually or in the aggregate have a
9
Material Adverse Effect. All of the outstanding shares of capital stock of each
Subsidiary of the Company are validly issued, fully paid and non-assessable,
other than the shares of capital stock of foreign Subsidiaries which are not
fully paid and which failure to be fully paid, individually or in the aggregate,
does not have a Material Adverse Effect, and all of such outstanding shares are
owned, directly or indirectly, by the Company free and clear of all
Encumbrances, except for liens or security interests or pledge arrangements
involving the capital stock of the Subsidiaries in favor of the Company's
lenders. "Subsidiary" means a corporation or other business arrangement a
----------
majority of the outstanding voting securities or ownership interests of which is
owned, directly or indirectly, by the Company, by one or more other Subsidiaries
or by the Company and one or more other Subsidiaries.
2.2. Compliance with Law. The Company and each Subsidiary has
-------------------
obtained and maintains in full force and effect all permits, licenses, consents,
approvals, registrations, memberships, authorizations and qualifications under
all federal, state, local and foreign laws and regulations, and with all
Authorities, required for the conduct by it of its businesses and the ownership
or possession by it of its properties and assets other than where the failure to
obtain or maintain such permits, licenses, consents, approvals, registrations,
memberships, authorizations or qualifications would not, individually or in the
aggregate, have a Material Adverse Effect. The Company and each Subsidiary are
in compliance with all laws, regulations, ordinances, orders and decrees
(including, without limitation, all environmental and occupational, health and
10
safety laws) of any Authority applicable to the conduct by the Company and each
Subsidiary of their respective businesses and to their ownership and possession
of their respective properties and assets, other than where the failure so to
comply would not, individually or in the aggregate, have a Material Adverse
Effect.
2.3. Authorization; Execution and Delivery of Agreement. (a)
--------------------------------------------------
Except to the extent that the By-laws of, or other rules or regulations
promulgated by, the National Association of Securities Dealers ("NASD")
----
applicable to Nasdaq SmallCap listed companies may require stockholder approval
of the issuance of shares hereunder, the execution and delivery of this
Agreement, the issuance and sale of the Shares to the Purchaser and the
consummation of the transactions contemplated hereby (i) do not require the
approval or consent of any stockholders of the Company and (ii) have been duly
authorized by all necessary corporate action on the part of the Company for all
purposes, including Section 203 of the Delaware General Corporation Law. Except
to the extent that the By-laws of, or other rules or regulations promulgated by,
the NASD applicable to Nasdaq SmallCap listed companies may require stockholder
approval of the issuance of shares hereunder, this Agreement has been duly
executed and delivered by the Company and this Agreement constitutes the legal,
valid, binding and enforceable obligation of the Company, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity. The Company has full corporate power
and authority to enter into this Agreement and to perform its obligations
hereunder.
11
(b) Except to the extent that the By-laws of, or other rules or
regulations promulgated by, the NASD applicable to Nasdaq SmallCap listed
companies may require stockholder approval of the issuance of shares hereunder,
(i) the Shares have been duly authorized by all necessary corporate action on
the part of the Company, and, when issued and delivered by the Company pursuant
to this Agreement against payment of the consideration therefor set forth
herein, the Shares will be validly issued, fully paid and non-assessable and
(ii) the Purchaser will acquire valid and marketable title to the Shares, free
and clear of any Encumbrances except as contemplated by this Agreement.
2.4. No Conflict; No Consent. Except to the extent that the By-
-----------------------
laws of, or other rules or regulations promulgated by, the NASD applicable to
Nasdaq SmallCap listed companies may require stockholder approval of the
issuance of shares hereunder, the execution and delivery of this Agreement, the
issuance and sale of the Shares to the Purchaser and the consummation of the
transactions contemplated hereby do not, and will not, conflict with, or result
in any violation of or default under, or permit the acceleration of any
obligation under, or the creation or imposition of any Encumbrance on any of the
properties or assets of the Company or any Subsidiary under, (i) any provision
of the certificate of incorporation or by-laws or similar constituent documents
of the Company or any Subsidiary, (ii) any indenture, lease, mortgage, deed of
trust, loan agreement or other agreement or instrument, or any permit, license,
registration, membership, authorization or qualification from any Authority, of
the Company or
12
any Subsidiary or (iii) any judgment, order, decree, statute, law, ordinance,
rule or regulation of any Authority to which the Company or any of its
Subsidiaries is a party or by which any of them is bound, other than, in the
case of clause (ii) above, where such conflict, violation, default, acceleration
or Encumbrance would not, individually or in the aggregate, have a Material
Adverse Effect. No consent, approval, order or authorization of, or
registration, declaration, filing with or notice to, any Authority or third
party is required to be made or obtained by the Company or any Subsidiary
(including, without limitation, under any environmental or occupational, health
and safety laws) in order to execute or deliver this Agreement, issue and sell
the Shares or to consummate the transactions contemplated hereby, other than (A)
as may be required by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, (B) as a result of the periodic
reporting requirements under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and (C) the listing requirements of the NASDAQ SmallCap
------------
Market, or except where the failure to make or obtain any such consent,
approval, order, authorization, registration, declaration, filing or notice
would not have a Material Adverse Effect.
2.5. Capital Stock. (a) The authorized capital stock of the
-------------
Company consists of 20,000,000 shares of Common Stock, of which, as of October
3, 1998, 5,682,168 shares were outstanding and 9,665 shares were held in
treasury and 1,296,633 shares are reserved for future issuance pursuant to any
option, warrant or other rights agreement, arrangement or other commitment. All
of the issued and outstanding shares of Common Stock have been validly
13
issued and are fully paid and non-assessable.
(b) (i) Other than this Agreement, the Cape ▇▇▇ Purchase Agreement,
the ▇▇▇▇▇▇ Purchase Agreement and the warrants to purchase Common Stock issued
to Cape ▇▇▇ and others or as set forth on Schedule 2.5(b) hereto, there are not
authorized or outstanding any subscriptions, options, conversion rights,
warrants or other agreements, securities or commitments of any nature whatsoever
(whether oral or written and whether firm or conditional) obligating the Company
or any Subsidiary to issue, deliver or sell, or cause to be issued, delivered or
sold, to any person any shares of Common Stock or any other shares of the
capital stock of the Company or any shares of the capital stock of any
Subsidiary, or any securities convertible into or exchangeable for any such
shares, or obligating any such person to grant, extend or enter into any such
agreement or commitment; and (ii) except as set forth on Schedule 2.5(b) hereto,
there is no obligation, contingent or otherwise, of the Company to repurchase,
redeem or otherwise acquire any share of capital stock or other equity interests
of the Company or any Subsidiary. No class of capital stock of the Company is
entitled to preemptive rights.
2.6. SEC Reports. Except with respect to the amendment to the
-----------
Current Report on Form 8-K dated September 11, 1998 (filed with the Commission
(as hereinafter defined) on September 26, 1998) contemplated by the disclosure
contained in Items 7(a) and (b) thereof, the Company has filed with the
Securities and Exchange Commission (the "Commission") all proxy statements,
----------
reports, forms and other documents required to be filed by it after January 1,
1995
14
under the Exchange Act (collectively, the "SEC Reports"). As of their respective
-----------
dates, the SEC Reports (i) complied as to form in all material respects with the
applicable requirements of the Exchange Act and the rules and regulations of the
Commission thereunder and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
2.7. Financial Statements. (a) The financial statements
--------------------
(including any related notes) included in the SEC Reports (the "Financial
---------
Statements") have been prepared in accordance with generally accepted accounting
----------
principles consistently applied throughout the periods involved (except as may
be noted therein) and fairly present the consolidated financial condition,
results of operations and cash flows of the Company and its consolidated
Subsidiaries as of the dates thereof and for the periods ended on such dates (in
each case subject, as to interim statements, to changes resulting from year-end
adjustments (none of which were or, except as otherwise disclosed to the
Purchaser in writing, will be material in amount or effect) and except as
permitted by Form 10-Q pursuant to Section 13 or 15(d) of the Exchange Act).
(b) On the date hereof, except as disclosed in the SEC Reports,
neither the Company nor any Subsidiary has any liabilities or obligations of any
nature, whether accrued, absolute, contingent or otherwise, and whether due or
to become due and whether or not required to be disclosed in the SEC Reports,
other than liabilities that have been disclosed to the
15
Purchaser in writing, have been incurred in the ordinary course of business or
are not in the aggregate material to the Company and its Subsidiaries taken as a
whole. Since September 28, 1996, the Company has not declared or paid any
dividends to any of its stockholders.
(c) Except as set forth on Schedule 2.7(c), since September 28, 1996,
the Company and each of its Subsidiaries have conducted their respective
businesses only in the ordinary course in substantially the same manner as
theretofore conducted and the Company and its Subsidiaries, taken as a whole,
have not undergone or suffered any Material Adverse Effect, except as otherwise
disclosed to the Purchaser in writing.
2.8. No Brokers. No broker, finder or investment banker is
----------
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or on
behalf of the Company.
2.9. Litigation and Claims. There is no claim, prosecution, suit,
---------------------
action, arbitration, proceeding, investigation or review pending or, to the
knowledge of the Company, threatened against or affecting the Company, any of
its Subsidiaries or any of their respective properties or assets (nor, to the
knowledge of the Company, are there any facts or circumstances providing a basis
for any such claim, prosecution, suit, action, arbitration, proceeding,
investigation or review) which, if adversely determined, would be reasonably
likely to have a Material Adverse Effect or would prohibit or impose any
limitations on the Purchaser's ownership of the Shares or would prohibit or make
illegal the acceptance for payment, purchase
16
of or payment for the Shares. Neither the Company nor any of its Subsidiaries is
in default with respect to any judgment, decree, injunction, rule or order of
any court, arbitrator or Authority outstanding against or binding upon the
Company or any of its Subsidiaries, other than where any such defaults would
not, individually or in the aggregate, have a Material Adverse Effect.
2.10. Use of Proceeds. The Company intends to use the proceeds
---------------
from the sale of Shares to retire debt of the Company under the revolving credit
facility under the Loan Agreement and for other general corporate purposes.
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Company that:
3.1. Authorization; Execution and Delivery of Agreement. The
--------------------------------------------------
Purchaser has all requisite power and authority to execute this Agreement, to
perform his obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary action on the part of the Purchaser. This Agreement has been
duly executed and delivered by the Purchaser and this Agreement constitutes the
legal, valid, binding and enforceable obligation of the Purchaser, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
3.2. No Conflict; No Consent. The execution and delivery of this
-----------------------
Agreement, the issuance and sale of the Shares to the Purchaser and the
consummation of the transactions
17
contemplated hereby do not, and will not, conflict with, or result in any
violation of or default under, or permit the acceleration of any obligation
under, or the creation or imposition of any Encumbrance on any of the properties
or assets of the Purchaser under, (i) any indenture, lease, mortgage, deed of
trust, loan agreement or other agreement or instrument, or any permit, license,
registration, membership, authorization or qualification from any Authority, of
the Purchaser or (ii) any judgment, order, decree, statute, law, ordinance, rule
or regulation of any Authority to which the Purchaser is a party or by which he
is bound. Other than as required by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act or as a result of
the reporting requirements of the Exchange Act, no consent, approval, order or
authorization of, or registration, declaration, filing with or notice to, any
Authority is required to be made or obtained by the Purchaser in order to
execute or deliver this Agreement or to consummate the transactions contemplated
hereby.
3.3. No Brokers. No broker, finder or investment banker is
----------
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or on
behalf of the Purchaser.
3.4. Litigation and Claims. There is no claim, prosecution, suit,
---------------------
action, arbitration, proceeding, investigation or review pending or, to the
knowledge of the Purchaser, threatened against or affecting the Purchaser, or
any of his properties or assets which, if adversely determined, would prohibit
or make illegal the purchase of or payment for the Shares.
3.5. Investment Purposes. (a) The Purchaser, by reason of his
-------------------
business and
18
financial experience, has such knowledge, sophistication and experience in
business and financial matters as to be capable of evaluating the merits and
risks of his investment in the Shares, and is purchasing the Shares hereunder
for his own account, for investment only and not with a view to, or any present
intention of, effecting a distribution of such securities or any part thereof.
The Purchaser acknowledges that the Shares to be purchased hereunder have not
been registered under the Securities Act of 1933, as amended (the "Securities
----------
Act"), or the securities laws of any state or other jurisdiction and cannot be
---
disposed of unless they are subsequently registered under the Securities Act and
any applicable state laws or exemption from such registration is available.
(b) The Purchaser is an "accredited investor" as that term is defined
in Rule 501 promulgated under the Securities Act.
(c) The Purchaser has had the opportunity to ask questions and to
receive answers concerning the financial condition, operations and prospects of
the Company and the terms and conditions of the Purchaser's investment, as well
as the opportunity to obtain any additional information necessary to verify the
accuracy of information furnished in connection therewith that the Company
possesses or can acquire without unreasonable effort or expense.
IV. COVENANTS OF THE COMPANY
The Company covenants and agrees that:
4.1. Conduct of Business. Except as specifically consented to in
-------------------
writing by the Purchaser or expressly contemplated by this Agreement, during the
period from the date of this
19
Agreement up to and including the date of the Closing, the Company shall, and
shall cause each of its Subsidiaries to, (i) conduct its business in the usual
and ordinary course consistent with past practice and use its reasonable best
efforts to preserve its business organization intact, to keep available the
services of its key employees, material independent contractors and material
consultants currently employed, to preserve the present relationships with
customers, suppliers and other Persons (as hereinafter defined) with whom it has
significant business relations, to maintain books and records in the usual and
ordinary manner, and to preserve the goodwill and ongoing business; and (ii)
except pursuant to agreements or commitments entered into by the Company or its
Subsidiaries prior to the date of this Agreement and listed on Schedule 2.5(b)
hereto, not issue or sell (or agree to issue or sell) any stock of any class or
any other securities, or any options, warrants, conversion or other rights to
purchase any such securities, or grant, or agree to grant, any such options or
modify or alter the terms of any of the above. As used herein, "Person" means
any individual, partnership, joint venture, firm, corporation, association,
trust or other entity or any government or political subdivision or agency,
department or instrumentality thereof.
4.2. Exchange of Stock Certificates. Promptly upon surrender of
------------------------------
any certificates representing Shares at the office of the Company, the Company
will, at its expense, execute and deliver to the Purchaser a new certificate or
certificates in denominations specified by the Purchaser for an aggregate number
of Shares equal to the number of Shares represented by
20
the certificates surrendered.
4.3. Lost, Stolen, Destroyed or Mutilated Stock Certificates. Upon
-------------------------------------------------------
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of any certificate for Shares and, in the case of loss, theft or
destruction, upon delivery of an indemnity satisfactory to the Company (which,
in the case of the Purchaser may be an undertaking by the Purchaser to so
indemnify the Company), or, in the case of mutilation, upon surrender and
cancellation thereof, the Company will issue a new certificate of like tenor for
a number of Shares equal to the number of Shares represented by the certificate
lost, stolen, destroyed or mutilated.
4.4. Course of Dealings with Lenders. The Company shall use its
-------------------------------
reasonable best efforts to obtain the consents and approvals of the Lenders, and
to negotiate and enter into Credit Facility Amendments, necessary for the
consummation of the transactions contemplated by this Agreement. The Company
shall keep the Purchaser apprised of all material developments in connection
with the negotiation of the Credit Facility Amendments. Without limiting the
foregoing, the Company shall provide to the Purchaser, promptly after receipt
thereof by the Company, a copy of each draft of the proposed amendments to the
Credit Facilities and shall consult with the Purchaser in connection with the
negotiation thereof.
4.5. Other Purchase Agreements. The Company shall provide to the
-------------------------
Purchaser, promptly after receipt or completion thereof by the Company, a copy
of the proposed final draft
21
of each of the Cape ▇▇▇ Purchase Agreement and the ▇▇▇▇▇▇ Purchase Agreement and
of any proposed amendment of either thereof (or any proposed waiver of any of
the terms or conditions of either thereof).
V. COVENANTS OF THE PURCHASER AND THE COMPANY
5.1. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act Filings. Each party covenants and
-----------------------------
agrees to file, if required, on a date no later than ten days from the date
hereof a notification and report form pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act with
respect to the purchase by the Purchaser of the Shares pursuant to this
Agreement and will provide promptly any supplemental information that may be
requested in connection therewith. Each party will comply with all reasonable
requests of the other party for information necessary in connection with the
preparation by such other party of its notification and report form.
5.2. Public Disclosure and Confidentiality. Each party hereby
-------------------------------------
agrees that, prior to the Closing, except as required by applicable law (or
under the rules and regulations of the Nasdaq Stock Market (or any national
securities exchange on which the Common Stock is listed)), no press release or
public announcement or communication will be made or caused to be made
concerning the execution or performance of this Agreement, the terms hereof or
the transactions contemplated hereby unless specifically approved in advance by
both parties. In the event that a party views disclosure as required by
applicable law (or the rules and regulations of the Nasdaq Stock Market or any
such national stock exchange) as contemplated by the previous
22
sentence, such disclosing party shall provide a copy of such disclosure to the
other party within a reasonable period of time prior to such disclosure.
5.3. Certain Notifications. At all times prior to the Closing,
---------------------
each party hereto shall promptly notify the other party in writing of the
occurrence of any event which will or could reasonably result in the failure of
any of the conditions contained in Article I hereof to be satisfied. Such
notice shall be in additional to and not in lieu of the other notices and
communications provided for herein.
5.4. Efforts to Consummate; Further Actions. Subject to the terms
--------------------------------------
and conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement.
5.5. Proxy Statement; Stockholder Approval. (a) The Company
-------------------------------------
shall, as promptly as practicable following the date of this Agreement, prepare
and file with the Commission, and will use its best efforts to have cleared by
the Commission and thereafter shall mail to its stockholders as promptly as
practicable a proxy statement and a form of proxy in connection with, among
other things, the vote of the Company's stockholders to approve the issuance and
sale of Common Stock contemplated by this Agreement. The proxy statement, and
any amendments thereof or supplements thereto, will not, at the time of the
mailing of the proxy statement or any amendments thereof or supplements thereto
and at the time of the Stockholders
23
Meeting (as hereinafter defined), contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading, except that no representation is made
by the Company with respect to information supplied in writing by the Purchaser
specifically for inclusion in the proxy statement. The proxy statement will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations promulgated thereunder.
(b) The Company shall duly call, give notice of, convene and hold its
annual, or a special, meeting of its stockholders (the "Stockholders Meeting")
--------------------
and shall use its best efforts to obtain the requisite affirmative approval of
its stockholders at the Stockholders Meeting of the issuance and sale of the
Common Stock contemplated by this Agreement. The Purchaser shall be present, in
person or by proxy, at the Stockholders Meeting and shall vote or cause to be
voted all shares of Common Stock held of record or beneficially owned (with the
power to vote or direct the vote) by him and eligible to vote as of the record
date for such meeting in favor of the proposal seeking such approval.
VI. REGISTRATION RIGHTS
The Company covenants and agrees to provide the following registration
rights:
6.1. "Piggyback" Registration. If, at any time while the Purchaser
-----------------------
shall hold shares of Common Stock, the Company proposes to file a registration
statement relating to the
24
offering of any of its capital stock under the Securities Act (other than (i) a
registration statement required to be filed in respect of employee benefit plans
of the Company on Form S-8 or any similar form from time to time in effect, (ii)
any registration statement on Form S-4 or similar successor form, or (iii) a
registration statement relating to a transaction pursuant to Rule 145 of the
Securities Act), whether or not for sale for its own account, the Company shall,
at least twenty-one days (or if such twenty-one day period is not practicable,
then a reasonable shorter period which shall not be less than seven days) prior
to such filing, give written notice of such proposed filing to the Purchaser.
Upon receipt by the Company not more than seven days (unless the notice given to
the Purchaser pursuant to the previous sentence is less than ten days, in which
case such seven-day period shall be shortened to five days) after such notice of
a written request from the Purchaser for registration of Purchaser's Stock (as
hereinafter defined), (i) the Company shall, subject to Section 6.3, include
such Purchaser's Stock in such registration statement, and shall use all
reasonable efforts to cause such registration statement to become effective with
respect to such Purchaser's Stock, unless the managing underwriter therefor
concludes in its reasonable judgment that the number of securities requested to
be included in such registration exceeds the number which can reasonably be sold
in (or during the time of) such offering, in which case the Company may (i)
include all securities initially proposed by the Company to be sold for its own
account and (ii) decrease the number of shares of Purchaser's Stock and any
other securities (other than securities included by virtue of clause (i) above)
25
proposed to be sold to the extent necessary to reduce the number of securities
to be included in the registration to the level recommended by the managing
underwriter; provided, however, that there shall be no such decrease in the
number of shares of Purchaser's Stock unless the number of shares of Purchaser's
Stock and such other securities (other than the securities included by virtue of
clause (i) above) proposed to be sold has been decreased on a pro rata basis,
calculated according to the number of shares of Purchaser's Stock and other
securities requested to be included by the respective holders of each.
"Purchaser's Stock" means any shares of Common Stock acquired by the Purchaser
-----------------
pursuant to this Agreement or otherwise for which the Purchaser requests
registration pursuant to Section 6.1 or 6.2.
6.2. Demand Registration. If the Company shall receive at any time
-------------------
or from time to time a written request from the Purchaser requesting the Company
to register any shares of Purchaser's Stock under the Securities Act on Form S-3
(or if the Company is not eligible to use Form S-3, then on Form S-1 or S-2), or
any other similar form then in effect, the Company agrees that it will use all
reasonable efforts to cause the prompt registration of all shares of Purchaser's
Stock as to which such request is made (or will amend or supplement an effective
registration statement to include Purchaser's Stock). The Company may postpone
for a limited time, which in no event shall be longer than 90 days, compliance
with a request for registration pursuant to this Section 6.2 if (i) the Company
shall have given notice to the Purchaser of the occurrence of a Suspension Event
(as hereinafter defined) or (ii) the Company is conducting a
26
public offering of capital stock and the managing underwriter concludes in its
reasonable judgment that such compliance would materially adversely affect such
offering. Notwithstanding anything in this Section 6.2 to the contrary, the
Company shall not be required to: (a) comply with more than two (2) requests of
the Purchaser pursuant to this Section 6.2 or (b) prepare or cause to be
prepared audited financial statements of the Company other than those prepared
in the normal course of the Company's business at its fiscal year end. Any
underwriter selected by the Purchaser to act as such in connection with a
registration pursuant to this Section 6.2 shall be reasonably acceptable to the
Company. The Company shall not be required to file and effect a new registration
pursuant to this Section 6.2(b) until a period of nine (9) months has elapsed
from the termination of the registration statement with respect to Purchaser's
Stock covered by a prior registration request. The Company agrees that in the
event the Purchaser makes a request under this Section 6.2 to cause the Company
to effect a demand registration and the Company is precluded from effecting such
registration with respect to 25% or more of the shares of Purchaser's Stock
subject to such request as a consequence of the terms of registration rights
previously granted by the Company to any of the Other Holders, then, under such
circumstances, such request shall not be counted against the number of demand
requests granted to Purchaser under this Section 6.2.
6.3. General Provisions. (a) The Company will use all reasonable
------------------
efforts to cause any registration statement referred to in Sections 6.1 and 6.2
to become effective and to
27
remain effective (with a prospectus at all times meeting the requirement of the
1933 Act) until the earlier of 180 days from the effective date of the
registration statement and the date the Purchaser completes its distribution of
Purchaser's Stock, subject, however, to the Company's suspension rights set
forth in Section 6.7(b). The Company will use all reasonable efforts to effect
such qualifications under applicable Blue Sky or other state securities laws as
may be reasonably requested by the Purchaser (provided that the Company shall
not be obligated to file a general consent to service of process or qualify to
do business as a foreign corporation or otherwise subject itself to taxation in
any jurisdiction solely for the purpose of any such qualification) to permit or
facilitate such sale or other distribution. The Company will cause the
Purchaser's Stock to be listed on the principal stock exchange on which the
shares of Common Stock are listed.
(b) The Purchaser acknowledges that the Company has previously granted
registration rights to other holders of Common Stock and/or other securities
issued by the Company that are convertible into or exercisable for shares of
Common Stock (collectively, the "Other Holders"). The Purchaser further
-------------
acknowledges that, notwithstanding anything to the contrary provided in this
Agreement, the registration rights granted to the Purchaser under this Agreement
shall, in every case, be subject to the rights of the Other Holders and, to the
extent, if any, that any of the provisions of this Article VI conflict or are
inconsistent with any of such rights of the Other Holders, such rights of the
Other Holders shall govern with respect to the
28
subject matter of such conflict or inconsistency.
(c) The Purchaser agrees, if requested by the managing underwriter or
underwriters in an underwritten offering (an "Offering"), not to effect any
--------
public sale or distribution of any of the securities of the Company of any class
included in such Offering, including a sale pursuant to Rule 144 or Rule 144A
under the Securities Act (except as part of such Offering), during the 15-day
period prior to, and during the 90-day period beginning on, the date of pricing
of each Offering, to the extent timely notified in writing by the Company or the
managing underwriters. Furthermore, notwithstanding anything to the contrary
set forth in the Agreement, the Company's obligation under this Agreement to
cause a registration statement and any filings with any state securities
commission to be made or to become effective or to amend or supplement such
registration statement shall be suspended in the event and during such period as
the Company is proceeding with an Offering if the Company is advised by the
underwriters that the sale of shares of Purchaser's Stock under such
registration statement would have a material adverse effect on the Offering.
(d) Following the effectiveness of a registration statement and the
filings with any state securities commissions, the Purchaser agrees that he will
not effect any sales of the Purchaser's Stock pursuant to such registration
statement or any such filings at any time after he has received notice from the
Company to suspend sales (i) as a result of the occurrence or existence of any
Suspension Event, or (ii) so that the Company may amend or supplement such
29
registration statement or such filing. The Purchaser may recommence effecting
sales of the Purchaser's Stock pursuant to the registration statement or such
filings following further notice to such effect from the Company, which notice
shall be given by the Company not later than three (3) business days after the
conclusion of any such Suspension Event or amendment or supplement.
6.4. Information, Documents, Etc. Upon making a request for
---------------------------
registration pursuant to Sections 6.1 or 6.2, the Purchaser shall furnish to the
Company such information regarding its holdings and the proposed manner of
distribution thereof as the Company may reasonably request and as shall be
required in connection with any registration, qualification or compliance
referred to in this Article VI. The Company agrees that it will furnish to the
Purchaser the number of prospectuses, offering circulars or other documents, or
any amendments or supplements thereto, incident to any registration,
qualification or compliance referred to in this Article VI as the Purchaser from
time to time may reasonably request.
6.5. Expenses. The Company will bear all expenses of registrations
--------
pursuant to Section 6.1 and one-half of all expenses of the registrations (and
amendments and supplements related thereto) pursuant to Section 6.2 (in each
case, other than underwriting discounts and commissions and brokerage
commissions and fees, if any, payable with respect to shares of Purchaser's
Stock sold by the Purchaser, and fees and expenses of any accountants, counsel
or other parties retained or employed by the Purchaser) including, without
limitation, registration
30
fees, printing expenses, expenses of compliance with Blue Sky or other state
securities laws, and legal and audit fees incurred by the Company in connection
with such registration and amendments or supplements in connection therewith.
The Purchaser will bear one-half of all expenses of the registrations (and
amendments and supplements related thereto) pursuant to Section 6.2, including,
without limitation, registration fees, printing expenses, expenses of compliance
with Blue Sky or other state securities laws, and legal and audit fees incurred
by the Company and the Purchaser. Notwithstanding the foregoing, the Company
agrees that in the event that subsequent to the date hereof the Company shall
grant demand registration rights to a third party and shall agree in connection
therewith to bear all or a greater portion of the expenses of such demand
registrations than as set out above, then this Section 6.5 shall be deemed to
have been amended to provide for the Company to bear, and the Company shall
bear, the same portion of the expenses of any subsequent registration pursuant
to Section 6.2 of this Agreement as the Company shall have agreed to bear for
such third party.
6.6. Cooperation. In connection with any registration of
-----------
Purchaser's Stock pursuant to this Article VI, the Company agrees to:
(a) enter into such customary agreement (including an underwriting
agreement containing such representations and warranties by the Company and such
other terms and provisions, including indemnification provisions, as are
customarily contained in underwriting agreements for comparable offerings and,
if no underwriting agreement is entered
31
into, an indemnification agreement on such terms as is customary in transactions
of such nature) and take all such other actions as the Purchaser or the
underwriters, if any, participating in such offering and sale may reasonably
request in order to expedite or facilitate such offering and sale;
(b) furnish, at the request of the Purchaser or any underwriters
participating in such offering and sale, (i) a comfort letter or letters, dated
the date of the final prospectus with respect to the Purchaser's Stock and/or
the date of the closing for the sale of the Purchaser's Stock from the
independent certified public accountants of the Company and addressed to the
Purchaser and any underwriters participating in such offering and sale, which
letter or letters shall state that such accountants are independent with respect
to the Company within the meaning of Rule 1.01 of the Code of Professional
Ethics of the American Institute of Certified Public Accountants and shall be in
form reasonably satisfactory to the managing underwriter (or, if none, to the
Purchaser) and shall cover matters of the type customarily covered in "cold
comfort" letters in connection with transactions of a similar nature for similar
entities and (ii) an opinion, dated the date of the closing for the sale of the
Purchaser's Stock, of the counsel representing the Company with respect to such
offering and sale (which counsel may be the General Counsel of the Company or
other counsel reasonably satisfactory to the Purchaser), addressed to the
Purchaser and any such underwriters, which opinion shall be in form reasonably
satisfactory to the managing underwriter (or, if none, to the Purchaser) and
shall address such matters as are customary in transactions of a similar nature
for similar entities;
32
(c) make available for inspection by the Purchaser, the underwriters,
if any, participating in such offering and sale (which inspecting underwriters
shall, if reasonably possible, be limited to any manager or managers for such
participating underwriters), the counsel for the Purchaser, one accountant or
accounting firm retained by the Purchaser and any such underwriters, or any
other agent retained by the Purchaser or such underwriters, all financial and
other records, corporate documents and properties of the Company, and supply
such additional information, as they shall reasonably request; provided that any
---------
such party shall keep the contents thereof confidential.
6.7. Action to Suspend Effectiveness; Supplement to Registration
-----------------------------------------------------------
Statement. (a) The Company will notify the Purchaser and its counsel
---------
promptly of (i) any action by the Commission to suspend the effectiveness of the
registration statement covering the Purchaser's Stock or the institution or
threatening of any proceeding for such purpose (a "Stop Order") or (ii) the
----------
receipt by the Company of any notification with respect to the suspension of the
qualification of the Purchaser's Stock for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose. Immediately upon
receipt of any such notice, the Purchaser shall cease to offer or sell any
Purchaser's Stock pursuant to the registration statement in the jurisdiction to
which such Stop Order or suspension relates. The Company will use all
reasonable efforts to prevent the issuance of any such Stop Order or the
suspension of any such qualification and, if any such Stop Order is issued or
any such qualification is suspended, to
33
obtain as soon as possible the withdrawal or revocation thereof, and will notify
the Purchaser and his counsel at the earliest practicable date of the date on
which the Purchaser may offer and sell Purchaser's Stock pursuant to the
registration statement.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation under this Agreement to cause the
registration of Purchaser's Stock and any filings with any state securities
commission to be made or to become effective or to amend or supplement a
registration statement shall be suspended in the event and during such period
that there are pending negotiations relating to, or consummation of, a
transaction or the occurrence of an event that would require additional
disclosure of material information by the Company in such registration statement
or such filing (such circumstances being hereinafter referred to as a
"Suspension Event") that would make it impractical or inadvisable to cause such
-----------------
registration statement or such filings to be made or to become effective or to
amend or supplement such registration statement, but such suspension shall
continue only for so long as such event or its effect is continuing but in no
event will that suspension exceed ninety (90) days. Immediately upon receipt by
the Purchaser of notice of a Suspension Event, the Purchaser shall cease to
offer or sell any Purchaser's Stock pursuant to such registration statement,
cease to deliver or use such registration statement and, if so requested by the
Company, return to the Company, at its expense, all copies (other than permanent
file copies) of such registration statement.
34
(c) In the event the Company shall determine that it is necessary to
amend or supplement any registration statement relating to Purchaser's Stock,
the Company will furnish copies of such proposed amendment or supplement to the
Purchaser and his counsel and will not file or distribute such amendment or
supplement without the prior consent of the Purchaser, which consent shall not
be unreasonably withheld.
6.8. Indemnification. In the event any Purchaser's Stock is
---------------
included in a registration statement under this Article VI:
(a) To the full extent permitted by law, the Company will indemnify
and hold harmless the Purchaser and each subsequent holder of Purchaser's Stock
as set forth in Section 9.3(d) hereof (each, a "Holder") from and against any
------
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
---------
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus, any final prospectus contained
therein or any amendments or supplements thereto, (ii) any omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company in connection with the registration of
Purchaser's Stock under the Securities Act, the
35
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law; and the
Company will pay to each such Holder, as incurred, any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, that the indemnity
agreement contained in this Section 6.8(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable hereunder in any
such case for any such loss, claim, damage, liability or action to the extent
that it arises out of or is based upon a Violation which occurs in reliance upon
and in conformity with written information furnished expressly for use in
connection with such registration by the Purchaser; and provided, further, that
-------- -------
the Company shall not be liable hereunder in any such case to the extent it is
determined that any such loss, claim, damage, liability or expense arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made:
(A) in any such preliminary prospectus, if (I) it was the
responsibility of such Holder to provide the person asserting such loss,
claim, damage, liability or expense with a current copy of the prospectus
and such Holder failed to deliver or cause to be delivered a current copy
of the prospectus to such person after the Company had furnished such
Holder with a sufficient number of copies of the same and (II) the current
prospectus
36
corrected such untrue statement or omission; or
(B) in such prospectus, if such untrue statement or omission is
corrected in an amendment or supplement to such prospectus and the Holder
thereafter fails to deliver the prospectus as so amended or supplemented
prior to or concurrently with the sale of Purchaser's Stock to the person
asserting such loss, claim, damage, liability or expense after the Company
had furnished such Holder with a sufficient number copies of the same.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Holder or any such director, officer,
employee, general or limited partner, member, agent, representative or
controlling person and shall survive the transfer of such securities by such
Holder. Each Holder shall furnish such information regarding itself or the
claim in question as the Company may reasonably request in writing and as shall
be reasonably required in connection with defense of such claim and litigation
resulting therefrom.
(b) To the full extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter,
any other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims,
37
damages or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon (i) any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration or (ii) an untrue
statement or alleged untrue statement or omission or alleged omission made in
the circumstances described in clauses (A) or (B) of Section 6.8(a); and each
such Holder will pay, as incurred, any legal or other expenses reasonably
incurred by any person intended to be indemnified pursuant to this Section
6.8(b), in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, that the indemnity agreement contained in
this Section 6.8(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Holder, which consent shall not be unreasonably withheld;
provided, that, in no event shall any indemnity under this Section 6.8(b) exceed
--------
the gross proceeds from the offering received by such Holder; and provided,
--------
further, that the obligation to provide indemnification pursuant to this Section
-------
6.8(b) shall be several, and not joint and several, among such indemnifying
parties. Such indemnity shall remain in full force and effect, regardless of
any investigation made by or on behalf of the Company or any such director,
officer, representative or controlling person and shall survive the transfer of
such securities by
38
such prospective seller.
(c) Promptly after receipt by an indemnified party under this Section
6.8 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 6.8, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel selected by the
indemnifying party or parties. The failure to deliver written notice to the
indemnifying party within a reasonable time after the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 6.8 to the extent of such prejudice, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 6.8.
The indemnified party shall have the right, but not the obligation, to
participate in the defense of any action referred to above through counsel of
its own choosing and shall have the right, but not the obligation, to assert any
and all separate defenses, cross claims or counterclaims which it may have, and
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of such counsel has been
specifically authorized in advance by the indemnifying party, (ii) there is a
39
conflict of interest that prevents counsel for the indemnifying party from
adequately representing the interests of the indemnified party or there are
defenses available to the indemnified party that are different from, or
additional to, the defenses that are available to the indemnifying party, or
(iii) the indemnifying party fails to assume the defense or does not reasonably
contest such action in good faith, in which case, if the indemnified party
notifies the indemnifying party that it elects to employ separate counsel, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party and the reasonable fees and expenses of such
separate counsel shall be borne by the indemnifying party; provided, however,
that, the indemnifying party shall not, in connection with any proceeding or
related proceedings, be liable for the reasonable fees and expenses of more than
one separate firm (in addition to one firm acting as local counsel) for all
indemnified parties.
(d) Contribution. If for any reason (other than the reasons expressly
------------
specified in this Section 6.8) the foregoing indemnity and payment obligation is
unavailable or is insufficient to hold harmless an indemnified party under
paragraphs (a) or (b) of this Section 6.8, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of any loss, claim, damage or liability (or actions or proceedings in respect
thereof), including, without limitation, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, action or proceeding, in such proportion as is
appropriate to reflect the relative fault of the indemnifying
40
party on the one hand and the indemnified party on the other. The relative fault
shall be determined by reference to, among other things, whether the action in
question, including any untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact has been taken or made
by, or relates to information supplied by, the indemnifying party or the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, untrue statement
or omission. If, however, the allocation provided in the second preceding
sentence is not permitted by applicable law, or if the allocation provided in
the second preceding sentence provides a lesser sum to the indemnified party
than the amount hereinafter calculated, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative fault but also
the relative benefits to the indemnifying party and the indemnified party as
well as any other relevant equitable considerations. The parties agree that it
would not be just and equitable if contributions pursuant to this Section 6.8(d)
were to be determined by pro rata allocation or by any other method of
--------
allocation which does not take account of the equitable considerations referred
to in the preceding sentences of this Section 6.8(d). Notwithstanding anything
in this Section 6.8(d) to the contrary, no indemnifying party (other than the
Company) shall be required pursuant to this Section 6.8(d) to contribute any
amount in excess of the gross proceeds received by such indemnifying party from
the sale of Purchaser's Stock in the offering to which the losses, claims,
damages or liabilities of the
41
indemnified parties relate. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The obligations of the Company and the Holders under this Section
6.8 shall survive the completion of any offering of Purchaser's Stock in a
registration statement under this Article VI.
(f) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement (if
any) entered into in connection with any underwritten public offering of the
Purchaser's Stock are in conflict with the foregoing provisions, the provisions
in such underwriting agreement shall control.
VII. INDEMNIFICATION
7.1. Indemnification by the Company. The Company shall indemnify
------------------------------
and hold the Purchaser harmless from and against any and all losses, claims,
damages or liabilities whatsoever (including legal fees and expenses) incurred
by him based upon, resulting from or arising out of (i) any material breach of
any representation, warranty, covenant or agreement of the Company contained in
this Agreement or (ii) except as provided in Section 7.2, any claim brought,
directly or indirectly, by a third party relating to the transactions
contemplated by this Agreement.
7.2. Indemnification by the Purchaser. The Purchaser shall
--------------------------------
indemnify and hold
42
the Company and each of its employees, directors, officers and agents harmless
from and against any and all losses, claims, damages or liabilities whatsoever
(including legal fees and expenses) incurred by any of them resulting from or
arising out of any material breach of any representation, warranty, covenant or
agreement of the Purchaser contained in this Agreement.
VIII. TERMINATION
8.1 Termination. (a) This Agreement may be terminated and the
-----------
transactions contemplated herein may be abandoned at any time prior to the
Closing:
(i) by the Company or the Purchaser, if the Closing has not occurred
by January 31, 1999;
(ii) by mutual written consent of the Company and the Purchaser;
(iii) by the Company, if there has been a material misrepresentation
or breach of warranty on the part of the Purchaser in the representations and
warranties contained herein or a material breach of covenants on the part of the
Purchaser and the same has not been cured within 30 days after notice thereof;
(iv) by the Purchaser, if there has been a material misrepresentation
or breach of warranty on the part of the Company in the representations and
warranties contained herein or a material breach of covenants on the part of the
Company and the same has not been cured within 30 days after notice thereof;
(v) by the Purchaser, if the terms of the Credit Facility Amendments
are not
43
reasonably satisfactory to the Purchaser; or
(vi) by either the Purchaser or the Company, if any Governmental
Entity shall have issued a final order, decree or ruling or taken any other
action permanently enjoining, restraining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and nonappealable, provided that the party
seeking to terminate shall have used its best efforts to appeal such order,
decree, ruling or other action.
(b) Notwithstanding anything herein to the contrary, the right to
terminate this Agreement under this Section 8.1 shall not be available to any
party to the extent the failure of such party to fulfill any of its obligations
under this Agreement has been the cause of, or resulted in, the failure of the
Closing to occur on or before such date (as a result, for example, of an action
or failure to act causing a failure of a condition precedent).
(c) A party terminating this Agreement pursuant to this Section 8.1
shall give written notice thereof the other party hereto, whereupon this
Agreement shall terminate and be of no further force and effect, the
transactions contemplated hereby shall be abandoned without further action by
any party and there shall be no liability on the part of the Company or the
Purchaser, except as provided in Section 9.7 hereof and except for any liability
for any willful breach hereof; provided however that the provisions of Sections
7.1 and 7.2 shall survive any such termination.
44
IX. GENERAL PROVISIONS
9.1. Survival of Representations, Warranties and Agreements.
------------------------------------------------------
Notwithstanding any investigation conducted or notice or knowledge obtained by
or on behalf of any party hereto, each representation and warranty in this
Agreement and each agreement or covenant in this Agreement which does not by its
own terms expire on or prior to the Closing shall survive the Closing without
limitation as to time, except as specifically referred to herein.
9.2. Notices. Any notice, request, instruction or other document
-------
to be given hereunder by a party hereto shall be in writing and shall be deemed
to have been given, (i) when received if given in person, or (ii) on the date of
transmission if sent by nationally recognized overnight courier, certified or
registered mail, return receipt requested or (iii) three days after being
deposited in the U.S. mail, postage prepaid:
(a) if to the Purchaser, addressed as follows:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
c/o NutraMax Products, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
45
(b) if to the Company, addressed as follows:
NutraMax Products, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President and
Chief Financial Officer
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇, Procter & ▇▇▇▇, LLP
Exchange Place
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III, Esq.
46
or to such other individual or address as a party hereto my designate
for itself by notice given as herein provided.
9.3. General. (a) This Agreement (including the documents and
-------
instruments referred to or incorporated herein) constitutes the entire
agreement, and supersedes all of the prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof.
(b) This Agreement is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder other than as
contemplated in Article VI, Article VII and Section 9.3(d) and shall not be
assigned by any party by operation of law or otherwise.
(c) This Agreement may be executed in two or more counterparts which
47
together shall constitute a single agreement.
(d) This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors, heirs and permitted assigns. This
Agreement is not assignable except by consent of each of the parties hereto or
operation of law; provided that the heirs or legatees of the Purchaser shall
succeed to the rights and obligations of the Purchaser contained in Article VI
hereof. Any purported assignment of this Agreement in violation of this Section
9.3 shall be null and void.
9.4. Governing Law. (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
-------------
OF THE PARTIES CREATED HEREBY SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
(b) Each party agrees that any proceeding relating to this Agreement
shall be brought in a state court of Delaware. Each party hereby consents to
personal jurisdiction in any such action brought in any such Delaware court,
consents to service of process by mail made upon such party and such party's
agent and waives any objection to venue in any such Delaware court or to any
claim that any such Delaware court is an inconvenient forum.
9.5. Severability of Provisions. If any provision or any portion of
--------------------------
any provision of this Agreement or the circumstance, shall be held invalid or
unenforceable, to the extent permitted by
48
law, the remaining portion of such provision and the remaining provisions of
this Agreement, or the application of such provision or portion of such
provision as is held invalid or unenforceable to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall not be
affected thereby.
9.6. Captions. All section titles or captions contained in this
--------
Agreement are for convenience only, shall not be deemed a part of this Agreement
and shall not affect the meaning or interpretation of this Agreement. All
references herein to Sections shall be deemed references to such parts of this
Agreement, unless the context shall otherwise require.
9.7. Expenses. Except as otherwise expressly provided in this
--------
Agreement, the Company shall pay the expenses incidental to the preparation of
this Agreement, the carrying out of the provisions hereof and the consummation
of the transactions contemplated hereby.
9.8. Equitable Relief. Each party acknowledges that, in the event of
----------------
any breach of this Agreement by a party, the other party would be irreparably
and immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that such other party, in addition to any other remedy to
which it may be entitled, shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to compel specific
performance of this Agreement. Any requirements for the securing or posting of
any bond with respect to such remedy are hereby waived by each of the parties
hereto.
9.9. Definitions. The following terms shall have the respective
-----------
meanings specified in the indicated Sections of this Agreement:
49
Term Agreement Section
---- -----------------
Agreement Recitals
Authority 1.3(b)
Board 1.3(d)(ii)
Cape ▇▇▇ Recitals
Cape ▇▇▇ Purchase Recitals
Cape ▇▇▇ Purchase Agreement Recitals
Closing 1.3(a)
Commission 2.6
Common Stock Recitals
Company Recitals
Credit Facilities 1.3(b)
Credit Facility Amendments 1.3(b)
Encumbrances 1.1
Exchange Act 2.4
Financial Statements 2.7(a)
FNBB 1.3(b)
Governmental Entity 1.3(b)
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act 1.3(b)
Holder 6.8(a)
▇▇▇▇▇▇ Purchase Recitals
▇▇▇▇▇▇ Purchase Agreement Recitals
Legal Requirements 1.3(b)
Lenders Recitals
Loan Agreement 1.3(b)
Material Adverse Effect 1.3(b)
NASD 2.3(a)
Offering 6.3(c)
Other Holders 6.3(b)
50
Term Agreement Section
---- -----------------
Person 4.1
Purchase Agreements Recitals
Purchaser Recitals
Purchaser's Stock 6.1
SEC Reports 2.6
Securities Act 3.5(a)
Shares Recitals
Stockholders Meeting 5.5(b)
Stop Order 6.7(a)
Subsidiary 2.1
Suspension Event 6.7(b)
Violation 6.8(a)
51
IN WITNESS WHEREOF, each of the parties hereto have duly executed and
delivered this Agreement as of the date first above written.
NUTRAMAX PRODUCTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President, Chief Financial
Officer and Treasurer
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
52
