EXHIBIT 10.25
PURCHASE AGREEMENT
By and Among
▇▇▇▇▇ HOLDINGS, INC.,
and
THE PURCHASERS NAMED HEREIN
December 16, 1997
TABLE OF CONTENTS
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Page
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1. Authorization and Closing.............................................. 1
1A. Authorization of the Class A Preferred and the Warrants........... 1
1B. Purchase and Sale of Class A Preferred and the Warrants........... 1
1C. The Closing....................................................... 2
2. Conditions of Each Purchaser's Obligation.............................. 2
2A. Conditions of Each Purchaser's Obligations at the
First Closing................................................... 2
2B. Conditions of Each Purchaser's Obligations at a
Subsequent Closing.............................................. 4
3. Covenants.............................................................. 6
3A. Financial Statements and Other Information........................ 6
3B. Inspection of Property; Consultation Rights....................... 7
3C. Covenants......................................................... 7
3D. Current Public Information........................................ 9
3E. Reservation of Common Stock....................................... 9
4. Transfer of Restricted Securities...................................... 9
4A. General Provisions................................................ 9
4B. Opinion Delivery.................................................. 10
4C. Rule 144A......................................................... 10
4D. Legend Removal.................................................... 10
5. Representations and Warranties of the Company.......................... 10
5A. Organization, Corporate Power and Licenses........................ 10
5B. Capital Stock and Related Matters................................. 11
5C. Subsidiaries; Investments......................................... 12
5D. Authorization; No Breach.......................................... 12
5E. Financial Statements.............................................. 12
5F. Absence of Undisclosed Liabilities................................ 13
5G. No Material Adverse Change........................................ 13
5H. Absence of Certain Developments................................... 13
5I. Litigation, etc................................................... 14
5J. Brokerage......................................................... 14
5K. Governmental Consent, etc......................................... 14
5L. Compliance with Laws.............................................. 15
5M. Affiliated Transactions........................................... 15
5N. Environmental Protection.......................................... 15
5O. ERISA............................................................. 16
5P. Title to Properties............................................... 17
5Q. Leasehold Interests............................................... 17
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6. Definitions............................................................ 17
6A. Definitions....................................................... 17
7. Miscellaneous.......................................................... 21
7A. Expenses.......................................................... 21
7B. Remedies.......................................................... 21
7C. Legend............................................................ 22
7D. Registration Rights............................................... 22
7E. Restrictions on Transfer of Stockholder Shares.................... 24
7F. Sale of the Company............................................... 26
7G. Purchaser's Investment Representations............................ 27
7H. Consent to Amendments............................................. 27
7I. Survival of Representations and Warranties........................ 28
7J. Successors and Assigns............................................ 28
7K. Severability...................................................... 28
7L. Counterparts...................................................... 28
7M. Descriptive Headings; Interpretation.............................. 28
7N. Governing Law..................................................... 28
7O. Notices........................................................... 29
7P. Consideration for Warrants........................................ 29
7Q. Understanding Among the Purchasers................................ 29
List of Exhibits
Exhibit A - Articles of Incorporation
Exhibit B - Opinion of Counsel
List of Schedules
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Schedule of Purchasers
Capitalization Schedule
Subsidiary Schedule
Restrictions Schedule
Financial Statements Schedule
Liabilities Schedule
Adverse Change Schedule
Developments Schedule
Litigation Schedule
Consents Schedule
Compliance Schedule
Affiliated Transactions Schedule
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Environmental Protection Schedule
Employee Benefit Schedule
Title to Properties Schedule
Leasehold Interests Schedule
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▇▇▇▇▇ HOLDINGS, INC.
PURCHASE AGREEMENT
THIS AGREEMENT is made as of December 16, 1997, between ▇▇▇▇▇
Holdings, Inc., a Nevada corporation (the "Company"), and the Persons listed on
the Schedule of Purchasers attached hereto (collectively referred to herein as
the "Purchasers" and individually as a "Purchaser"). Except as otherwise
indicated herein, capitalized terms used herein are defined in Section 6 hereof.
The parties hereto agree as follows:
Section 1. Authorization and Closing.
1A. Authorization of the Class A Preferred and the Warrants. The
Company shall authorize the issuance and sale to the Purchasers of up to 20,000
shares of its 12% Cumulative Redeemable Senior Preferred Stock, par value $.01
per share (the "Class A Preferred"), having the rights and preferences set forth
in Exhibit A attached hereto, and warrants to purchase up to 595,895 shares of
the Company's common stock, par value $.01 per share (the "Common Stock"), at an
exercise price of $.01 per share (the "Warrants").
1B. Purchase and Sale of Class A Preferred and the Warrants.
(i) At the First Closing (as hereinafter defined), the Company
shall sell to each Purchaser and, subject to the terms and conditions
set forth herein, each Purchaser shall purchase from the Company the
number of shares of Class A Preferred and the number of Warrants at
the price set forth opposite such Purchaser's name on the Schedule of
Purchasers attached hereto. The sale of Class A Preferred and Warrants
to each Purchaser at the First Closing shall constitute a separate
sale hereunder.
(ii) At any time and from time to time during the first two years
following the First Closing, and upon delivery of 15 days prior
written notice to each Purchaser (a "Subsequent Closing Notice"), the
Company may sell to each Purchaser and, subject to the terms and
conditions set forth herein, each Purchaser may at its sole option
purchase from the Company, all or any portion of the number of shares
of Class A Preferred and the number of Warrants at the price set forth
opposite such Purchaser's name on the Subsequent Closing Schedule
attached hereto. Each Subsequent Closing Notice shall set forth (i)
the number of shares of Class A Preferred and Warrants to be purchased
by each Purchaser, (ii) the purchase price therefor, (iii) the date
scheduled for the closing of such purchases and sales (a "Subsequent
Closing"), and (iv) the number of shares of Class A Preferred and
Warrants available for subsequent purchase and sale hereunder. The
number of shares of Class A Preferred and Warrants to be purchased by
the Purchasers at a Subsequent Closing (x) shall be allocated among
the Purchasers as mutually determined by the Purchasers and the
Company, and (y) shall be determined so that
the ratio of shares of Class the ratio of shares of Class A Preferred
to Warrants purchased at such Subsequent Closing shall be equal to the
ratio of shares of Class A Preferred to Warrants purchased by the
Purchasers at the First Closing. The sale of Class A Preferred and
Warrants to each Purchaser at a Subsequent Closing shall constitute a
separate sale hereunder.
1C. The Closing. The first closing of the separate purchases and
sales of the Class A Preferred and the Warrants (the "First Closing") shall take
place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ at 10:00 a.m. on December 16, 1997, or at such other place or on such
other date as may be mutually agreeable to the Company and each Purchaser. Each
Subsequent Closing shall take place at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, at 10:00 a.m. on the date specified in the
Subsequent Closing Notice, or at such other place or on such other date as may
be mutually agreeable to the Company and each Purchaser. At the First Closing
or any Subsequent Closing, the Company shall deliver to each Purchaser stock
certificates evidencing the Class A Preferred to be purchased by such Purchaser
and the Warrants to be purchased by such Purchaser, registered in such
Purchaser's or its nominee's name, upon payment of the aggregate purchase price
thereof by a cashier's or certified check, or by wire transfer of immediately
available funds to an account designated by the Company.
Section 2. Conditions of Each Purchaser's Obligation.
2A. Conditions of Each Purchaser's Obligations at the First Closing
The obligation of each Purchaser to purchase and pay for Class A Preferred and
the Warrants at the First Closing is subject to the satisfaction as of the First
Closing of the following conditions:
(i) Representations and Warranties; Covenants. The
representations and warranties contained in Section 5 hereof shall be
true and correct in all material respects at and as of the First
Closing, and the Company shall have performed in all material respects
all of the covenants required to be performed by it hereunder prior to
the First Closing.
(ii) Articles of Incorporation. The Company shall have duly
adopted, executed and filed with the Secretary of State of Nevada a
Second Amended and Restated Articles of Incorporation in the form set
forth in Exhibit A hereto (the "Articles of Incorporation"). The
Articles of Incorporation shall be in full force and effect as of the
First Closing under the laws of Nevada and shall not have been further
amended or modified.
(iii) Sale of Class A Preferred and Warrants to Each Purchaser.
The Company shall have simultaneously sold to each Purchaser the Class
A Preferred and the Warrants to be purchased by such Purchaser
hereunder at the First Closing and shall have received payment
therefor in full.
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(iv) Securities Law Compliance. The Company shall have made all
filings under all applicable federal and state securities laws
necessary to consummate the issuance of Class A Preferred and Warrants
at the First Closing pursuant to this Agreement in compliance with
such laws.
(v) Amendment of Stockholders Agreements. The Company and the
requisite parties to the Stockholders Agreement, dated as of August 4,
1995, as amended, (the "Stockholders Agreement"), among the Company,
MDCP and the executives listed on Schedule I thereto (the
"Executives"), shall have amended the Stockholders Agreement so as to
allow the Purchasers to participate with the Executives on a pari
passu basis in any piggyback registration as provided in paragraph 7D
below.
(vi) Senior Credit Facility. Simultaneously with the First
Closing, ▇▇▇▇▇ II, Inc. shall make borrowings under that certain
Credit Agreement dated as of December 16, 1997 among ▇▇▇▇▇ II, Inc.,
and the Lenders listed therein, in such amounts as shall be
satisfactory to each Purchaser.
(vii) Payment of Closing Fee. Simultaneously with the First
Closing, the Company shall pay to ▇▇▇▇▇▇ Capital 1330 Investors I, LP,
a closing fee in an amount equal to 2% of the aggregate purchase price
to be paid by ▇▇▇▇▇▇ Capital 1330 Investors I, LP at the First Closing
for the securities purchased hereunder.
(viii) Opinion of the Company's Counsel. Each Purchaser shall
have received from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Nevada counsel for the Company, an
opinion with respect to the matters set forth in Exhibit B attached
hereto, which shall be addressed to each Purchaser, dated the date of
the First Closing and in form and substance reasonably satisfactory to
each Purchaser.
(ix) Closing Documents. The Company shall have delivered to each
Purchaser all of the following documents:
(a) an Officer's Certificate, dated the date of the First
Closing, stating that the conditions specified in paragraphs
2A(i) through 2A(vi), inclusive, have been fully satisfied;
(b) certified copies of (x) the resolutions duly adopted by
the Company's board of directors authorizing the execution,
delivery and performance of this Agreement and each of the other
agreements contem plated hereby, the filing of the Articles of
Incorporation, the issuance and sale of the Class A Preferred,
the issuance and sale of the Warrants, the reservation for
issuance upon exercise of the Warrants of an aggregate of 595,895
shares of Common Stock and the consummation of all other
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transactions contemplated by this Agreement, and (y) the
resolutions duly adopted by the Company's stockholders adopting
the Articles of Incorporation;
(c) certified copies of the Articles of Incorporation and
the Company's bylaws, each as in effect at the First Closing; and
(d) copies of all third party and governmental consents,
approvals and filings required in connection with the
transactions to be consummated at the First Closing (including,
without limitation, all blue sky law filings and waivers of all
preemptive rights and rights of first refusal).
(x) Proceedings. All corporate and other proceedings taken or
required to be taken by the Company in connection with the
transactions contemplated hereby to be consummated at or prior to the
First Closing and all documents incident thereto shall be reasonably
satisfactory in form and substance to each Purchaser and its special
counsel.
(xi) Waiver. Any condition specified in this Section 2A may be
waived if consented to by each Purchaser; provided that no such waiver
shall be effective against any Purchaser unless it is set forth in a
writing executed by such Purchaser.
2B. Conditions of Each Purchaser's Obligations at a Subsequent
Closing. The obligation of each Purchaser to purchase and pay for Class A
Preferred and Warrants at a Subsequent Closing is subject to the satisfaction as
of such Subsequent Closing of the following conditions:
(i) Representations and Warranties; Covenants. The
representations and warranties contained in Section 5 hereof (as
modified by the Subsequent Closing Disclosure Schedules) shall be true
and correct in all material respects at and as of such Subsequent
Closing, and the Company shall have performed in all material respects
all of the covenants required to be performed by it hereunder prior to
such Subsequent Closing.
(ii) Articles of Incorporation. The Articles of Incorporation
shall be in full force and effect as of the Subsequent Closing under
the laws of Nevada and shall not have been further amended or
modified.
(iii) Securities Law Compliance. The Company shall have made all
filings under all applicable federal and state securities laws
necessary to consummate the issuance of Class A Preferred and Warrants
at such Subsequent Closing pursuant to this Agreement in compliance
with such laws.
(iv) No Material Adverse Effect. There shall have occurred no
event which could reasonably be expected to have a material adverse
effect upon the
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financial condition, operating results, assets or operations of the
Company and its Subsidiaries taken as a whole.
(v) Senior Credit Facility. Simultaneously with such Subsequent
Closing, ▇▇▇▇▇ II, Inc. shall make borrowings under that certain
Credit Agreement dated as of December 16, 1997 among ▇▇▇▇▇ II, Inc.,
and the Lenders listed therein in such amounts as shall be
satisfactory to each Purchaser.
(vi) Payment of Closing Fee. Simultaneously with such Subsequent
Closing, the Company shall pay to ▇▇▇▇▇▇ Capital 1330 Investors I, LP,
a closing fee in an amount equal to 2% of the aggregate purchase price
to be paid by ▇▇▇▇▇▇ Capital 1330 Investors I, LP at such Subsequent
Closing for the securities purchased hereunder.
(vii) Closing Documents. The Company shall have delivered to each
Purchaser all of the following documents:
(a) a "Subsequent Closing Disclosure Schedule," dated the
date of such Subsequent Closing, setting forth any event, fact,
circumstance or occurrence which came into existence after the
date of the most recent closing hereunder and would have been
required to be disclosed on the schedules hereto had such event,
fact, circumstance or occurrence been in existence on the date of
such closing; the parties hereto acknowledge and agree that any
matter described in any Subsequent Closing Disclosure Schedule
shall not be deemed to constitute a breach of any representation
or warranty contained herein;
(b) an Officer's Certificate, dated the date of such
Subsequent Closing, stating that the conditions specified in
paragraphs 2B(i) through 2B(v), inclusive, have been fully
satisfied;
(c) copies of all third party and governmental consents,
approvals and filings required in connection with the
transactions to be consummated at such Subsequent Closing
(including, without limitation, all blue sky law filings and
waivers of all preemptive rights and rights of first refusal).
(viii) Proceedings. All corporate and other proceedings taken or
required to be taken by the Company in connection with the
transactions contemplated hereby to be consummated at or prior to the
Subsequent Closing and all documents incident thereto shall be
reasonably satisfactory in form and substance to each Purchaser and
its special counsel.
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(ix) Waiver. Any condition specified in this Section 2B may be
waived if consented to by each Purchaser; provided that no such waiver
shall be effective against any Purchaser unless it is set forth in a
writing executed by such Purchaser.
Section 3. Covenants.
3A. Financial Statements and Other Information. The Company shall
deliver to each Purchaser (so long as such Purchaser holds any Class A
Preferred):
(i) as soon as available but in any event within 45 days after
the end of each monthly accounting period in each fiscal year,
unaudited consolidating and consolidated statements of income and cash
flows of the Company and its Subsidiaries for such monthly period and
for the period from the beginning of the fiscal year to the end of
such month, and unaudited consolidating and consolidated balance
sheets of the Company and its Subsidiaries as of the end of such
monthly period, setting forth in each case comparisons to the
corresponding period in the preceding fiscal year and to the budget
described in clause (iii) below, and all such statements shall be
prepared in accordance with generally accepted accounting principles,
consistently applied, subject to the absence of footnote disclosures
and to normal year-end adjustments;
(ii) within 120 days after the end of each fiscal year,
consolidating and consolidated statements of income and cash flows of
the Company and its Subsidiaries for such fiscal year, and
consolidating and consolidated balance sheets of the Company and its
Subsidiaries as of the end of such fiscal year, setting forth in each
case comparisons to the preceding fiscal year, all prepared in
accordance with United States generally accepted accounting
principles, consistently applied, and accompanied by, with respect to
the consolidated portions of such statements, an opinion of an
independent accounting firm of recognized national standing;
(iii) at least 30 days but not more than 90 days prior to the
beginning of each fiscal year, an annual budget prepared on a monthly
basis for the Company and its Subsidiaries for such fiscal year
(displaying anticipated statements of income and cash flows and
balance sheets); and
(iv) within 10 days after transmission thereof, copies of all
financial statements, proxy statements, reports and any other general written
communications which the Company sends to its stockholders and copies of all
registration statements and all regular, special or periodic reports which it
files, or any of its officers or directors file with respect to the Company,
with the Securities and Exchange Commission or with any securities exchange on
which any of its securities are then listed.
Each of the financial statements referred to in subparagraph (i) and (ii) shall
present fairly in all material respects the financial condition and results of
operations as of the dates and for the periods stated therein, subject in the
case of the unaudited financial statements to changes resulting from
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normal year-end adjustments. Notwithstanding the foregoing, the provisions of
this paragraph 3A shall cease to be effective so long as the Company is subject
to the periodic reporting requirements of the Securities Exchange Act and
continues to comply with such requirements. Except as otherwise required by law
or judicial order or decree or by any governmental agency or authority, each
Person entitled to receive information regarding the Company and its
Subsidiaries under paragraph 3A or 3B shall use its best efforts to maintain the
confidentiality of all nonpublic information obtained by it hereunder.
3B. Inspection of Property; Consultation Rights. The Company shall
permit any representatives designated by any Purchaser (so long as such
Purchaser holds any equity securities of the Company) upon reasonable notice and
during normal business hours to (i) visit and inspect any of the properties of
the Company and its Subsidiaries, (ii) examine the corporate and financial
records of the Company and its Subsidiaries and make copies thereof or extracts
therefrom and (iii) discuss the affairs, finances and accounts of any such
corporations with the directors, officers, key employees and independent
accountants of the Company and its Subsidiaries. The presentation of an
executed copy of this Agreement by any Purchaser or any such holder of Class A
Preferred to the Company's independent accountants shall constitute the
Company's permission to its independent accountants to participate in
discussions with such Persons. Each Purchaser shall have the right to consult
with and advise the officers of the Company with respect to the management of
the Company and its Subsidiaries including, without limitation, with regard to
the slate of nominees submitted to the shareholders of the Company for election
to the Company's board of directors, the appointment of senior officers, the
consummation of any material transaction or change in the business of the
Company, and any Purchaser shall be entitled, from time to time, to make
proposals, recommendations and suggestions to the Company regarding the business
and affairs of the Company and its Subsidiaries, and the Company shall consider
in good faith any such legitimate proposal; provided that nothing contained
herein shall obligate the Company or its Subsidiaries to adopt or implement any
such proposal, recommendation or suggestion.
3C. Covenants. So long as any of the Class A Preferred remains
outstanding, the Company shall, and shall cause each Subsidiary to:
(i) at all times cause to be done all things necessary to maintain,
preserve and renew its corporate existence and all material licenses,
authorizations and permits required for the conduct of its businesses,
except where the failure to so maintain, preserve or renew would not
reasonably be expected to have a material adverse effect on the financial
condition, operating results, assets, properties and prospects of the
Company and its Subsidiaries taken as a whole;
(ii) maintain and keep its material properties in good repair, working
order and condition, and from time to time make all necessary or desirable
repairs, renewals and replacements, so that its businesses may be properly
conducted in all material respects at all times;
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(iii) pay and discharge when payable all material taxes, assessments
and governmental charges imposed upon its properties or upon the income or
profits therefrom (in each case before the same becomes delinquent and
before penalties accrue thereon) and all material claims for labor,
materials or supplies to the extent to which the failure to pay or
discharge such obligations would reasonably be expected to have a material
adverse effect upon the financial condition, operating results, assets or
operations of the Company and its Subsidiaries taken as a whole, unless and
to the extent that the same are being contested in good faith and by
appropriate proceedings and adequate reserves (as determined in accordance
with generally accepted accounting principles, consistently applied) have
been established on its books with respect thereto;
(iv) comply with all other material obligations which it incurs
pursuant to any contract or agreement, whether oral or written, express or
implied, as such obligations become due to the extent to which the failure
to so comply would reasonably be expected to have a material adverse effect
upon the financial condition, operating results, assets or operations of
the Company and its Subsidiaries taken as a whole, unless and to the extent
that the same are being contested in good faith and by appropriate
proceedings and adequate reserves (as determined in accordance with
generally accepted accounting principles, consistently applied) have been
established on its books with respect thereto;
(v) comply with all applicable laws, rules and regulations of all
governmental authorities, the violation of which would reasonably be
expected to have a material adverse effect upon the financial condition,
operating results, assets or operations of the Company and its Subsidiaries
taken as a whole;
(vi) maintain proper books of record and account which present fairly
in all material respects its financial condition and results of operations
and make provisions on its financial statements for all such proper
reserves as in each case are required in accordance with generally accepted
accounting principles, consistently applied;
(vii) refrain from entering into any transaction with any Purchaser or
any Affiliate thereof, except on an arms-length basis or as approved by a
majority of the disinterested members of the Company's board of directors;
and
(viii) without the consent of the holders of a majority of the Class A
Preferred then outstanding, the Company shall not authorize, issue or enter
into any agreement providing for the issuance of (whether directly or upon
conversion or exercise of any other securities) (1) any shares of Class A
Preferred except as contemplated by this Agreement or (2) any shares of
capital stock which are senior to or on a parity with the Class A Preferred
with respect to the payment of dividends, redemptions or distributions upon
liquidation or otherwise.
3D. Current Public Information. At all times after the Company has
filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements
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of either the Securities Act or the Securities Exchange Act, the Company shall
file all reports required to be filed by it under the Securities Act and the
Securities Exchange Act and the rules and regulations adopted by the Securities
and Exchange Commission thereunder and shall take such further action as any
holder or holders of Restricted Securities may reasonably request, all to the
extent required to enable such holders to sell Restricted Securities pursuant to
(i) Rule 144 adopted by the Securities and Exchange Commission under the
Securities Act (as such rule may be amended from time to time) or any similar
rule or regulation hereafter adopted by the Securities and Exchange Commission
or (ii) a registration statement on Form S-2 or S-3 or any similar registration
form hereafter adopted by the Securities and Exchange Commission. Upon request,
the Company shall deliver to any holder of Restricted Securities a written
statement as to whether it has complied with such requirements.
3E. Reservation of Common Stock. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of issuance upon the exercise of the Warrants,
such number of shares of Common Stock issuable upon the exercise of all
outstanding Warrants, and prior to consummation of the Company's initial
Qualified Public Offering shall reserve for issuance all shares of Common Stock
issuable upon conversion of the Class A Preferred pursuant to the terms of the
Articles of Incorporation. All shares of Common Stock which are so issuable
shall, when issued, be duly and validly issued, fully paid and nonassessable and
free from all Liens. The Company shall take all such actions as may be
necessary to assure that all such shares of Common Stock may be so issued
without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which shares of Common
Stock may be listed (except for official notice of issuance which shall be
immediately transmitted by the Company upon issuance).
Section 4. Transfer of Restricted Securities.
4A. General Provisions. Except as provided in paragraph 7E below,
the Class A Preferred and Warrants purchased by each Purchaser hereunder are
only transferrable by any Purchaser to its Affiliates or if a Purchaser is a
limited partnership as a distribution to its limited partners upon the
dissolution thereof; provided that such Affiliate or limited partner agrees to
be bound in all respects by the provisions hereof, including, without
limitation, restrictions on transfer. Notwithstanding the foregoing, in
connection with the dissolution of any Purchaser, such Purchaser shall be
entitled, not more than nine months prior to the anticipated date of dissolution
and upon 30 days prior written notice to the Company to sell all, but not part
only, of the Class A Preferred and Warrants purchased by it hereunder to one or
more third parties reasonably acceptable to the Company. Subject to the
preceding sentences, the shares of Underlying Common Stock are trans ferable
only pursuant to (i) public offerings registered under the Securities Act, (ii)
Rule 144 or Rule 144A of the Securities and Exchange Commission (or any similar
rule or rules then in force) if such rule is available and (iii) subject to the
conditions specified in paragraph 4B below, any other legally available means of
transfer.
4B. Opinion Delivery. In connection with the permitted transfer of
any Restricted Securities (other than a transfer described in paragraph 4A(i) or
(ii) above or paragraph 7E below),
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the holder thereof shall deliver written notice to the Company describing in
reasonable detail the transfer or proposed transfer, together with an opinion of
counsel which (to the Company's reason able satisfaction) is knowledgeable in
securities law matters to the effect that such transfer of Restricted Securities
may be effected without registration of such Restricted Securities under the
Securities Act. In addition, if the holder of the Restricted Securities delivers
to the Company an opinion of counsel that no subsequent transfer of such
Restricted Securities shall require registration under the Securities Act, the
Company shall promptly upon such contemplated transfer deliver new certificates
for such Restricted Securities which do not bear the Securities Act legend set
forth in paragraph 7C. If the Company is not required to deliver new
certificates for such Restricted Securities not bearing such legend, the holder
thereof shall not transfer the same until the prospective transferee has
confirmed to the Company in writing its agreement to be bound by the conditions
contained in this paragraph and paragraph 7C.
4C. Rule 144A. Upon the request of any Purchaser, the Company shall
promptly supply to such Purchaser or its prospective transferees all information
regarding the Company required to be delivered in connection with a transfer
pursuant to Rule 144A of the Securities and Exchange Commission.
4D. Legend Removal. If any Restricted Securities become eligible for
sale pursuant to Rule 144(k) and such transfer is otherwise permitted hereunder,
the Company shall, upon the request of the holder of such Restricted Securities,
promptly remove the legend set forth in paragraph 7C from the certificates for
such Restricted Securities.
Section 5. Representations and Warranties of the Company. As a
material inducement to the Purchasers to enter into this Agreement and purchase
the Class A Preferred and the Warrants hereunder, the Company hereby represents
and warrants that:
5A. Organization, Corporate Power and Licenses. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of Nevada and is qualified to do business in every jurisdiction in which the
failure to so qualify has had or would reasonably be expected to have a material
adverse effect on the financial condition, operating results, assets or
operations of the Company and its Subsidiaries taken as a whole. The Company
possesses all requisite corporate power and authority and all material licenses,
permits and authorizations necessary to own and operate its properties, to carry
on its businesses as now conducted and presently proposed to be conducted and to
carry out the transactions contemplated by this Agreement. The copies of the
Company's and each Subsidiary's charter documents and bylaws which have been
furnished to the Purchasers' special counsel reflect all amendments made thereto
at any time prior to the date of this Agreement and are correct and complete.
The designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class and series of authorized capital stock of
the Company are as set forth in the Articles of Incorporation, a copy of which
is attached hereto as Exhibit A, and all such designations, powers, preferences,
rights, qualifications, limitations and restrictions are valid, binding and
enforceable and in accordance with all applicable laws.
- 10 -
5B. Capital Stock and Related Matters.
(i) As of the First Closing and immediately thereafter, the
authorized capital stock of the Company shall consist of (a) 22,050,000 shares
of preferred stock, of which 50,000 shares shall be designated as 12% Cumulative
Redeemable Senior Preferred Stock (39,500 of which shall be issued and
outstanding) and 22,000,000 shares shall be designated as 12% Cumulative
Redeemable Junior Preferred Stock, 20,847,986 of which shall be issued and
outstanding) and (b) 30,000,000 shares of Common Stock, of which 10,492,014
shares shall be issued and outstanding and 1,113,051 shares shall be reserved
for issuance upon exercise of warrants. As of the First Closing, neither the
Company nor any Subsidiary shall have outstanding any stock or securities
convertible or exchangeable for any shares of its capital stock or containing
any profit participation features, nor shall it have outstanding any rights or
options to subscribe for or to purchase its capital stock or any stock or
securities convertible into or exchangeable for its capital stock or any stock
appreciation rights or phantom stock plans, except for the Class A Preferred and
Warrants and except as set forth on the attached "Capitalization Schedule." As
of the First Closing, neither the Company nor any Subsidiary shall be subject to
any obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock or any warrants, options or other rights
to acquire its capital stock, except as set forth on the Capitalization Schedule
and except pursuant to the Articles of Incorporation. As of the First Closing,
all of the outstanding shares of the Company's capital stock shall be validly
issued, fully paid and nonassessable. The 595,895 shares of Common Stock
issuable upon exercise of all of the Warrants which may be purchased hereunder
(if issued on the date hereof) represent 5% of the fully dilluted shares of
Common Stock after giving effect to the issuance of any shares of Common Stock
required under any agreement set forth on the Capitalization Schedule other than
shares issuable upon conversion of any promissory note.
(ii) There are no contractual stockholders preemptive rights or
rights of refusal with respect to the issuance of the Class A Preferred or the
Warrants hereunder or the issuance of the Common Stock upon exercise of the
Warrants. Assuming the accuracy of each Purchaser's representations and
warranties made hereunder, the Company has not violated any applicable federal
or state securities laws in connection with the offer, sale or issuance of any
of its capital stock, and the offer, sale and issuance of the Class A Preferred
or the Warrants hereunder do not require registration under the Securities Act
or any applicable state securities laws. To the best of the Company's
knowledge, except as set forth on the Capitalization Schedule, there are no
voting trusts or agreements, stockholders' agreements, pledge agreements, buy-
sell agreements, rights of first refusal, contractual preemptive rights or
proxies relating to any securities of the Company or any of its Subsidiaries
(whether or not the Company or any of its Subsidiaries is a party thereto). Each
Purchaser shall receive title to the Class A Preferred and the Warrants
purchased by it hereunder free and clear of all taxes and Liens other than Liens
created by such Purchaser.
5C. Subsidiaries; Investments. The attached "Subsidiary Schedule"
lists each of the Company's Subsidiaries. Each of the Company's Subsidiaries is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, possesses all requisite corporate power and
authority and all material licenses, permits and authorizations necessary to own
- 11 -
its properties and to carry on its businesses as now being conducted and is
qualified to do business in every jurisdiction in which the failure to so
qualify has had or would reasonably be expected to have a material adverse
effect on the financial condition, operating results, assets or operations of
the Company and its Subsidiaries taken as a whole. All of the outstanding
shares of capital stock of each Subsidiary are validly issued, fully paid and
nonassessable, and all such shares are owned by the Company or another
Subsidiary free and clear of any Liens other than Liens arising under agreements
pertaining to the Company's existing indebtedness, and are not subject to any
option or right to purchase any such shares. Except for the Subsidiaries listed
on the Subsidiary Schedule, the Company does not (i) own of record or
beneficially, directly or indirectly, (A) any shares of capital stock or
securities convertible into capital stock of any other corporation or (B) any
participating interest in any partnership, limited liability company, joint
venture or other non-corporate business enterprise or (ii) control, directly or
indirectly, any other entity.
5D. Authorization; No Breach. The execution, delivery and
performance of this Agreement and the Warrants, and the filing of the Articles
of Incorporation have been duly authorized by the Company. This Agreement, the
Warrants and the Articles of Incorporation each constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms. Except as
set forth on the attached "Restrictions Schedule," and except where such fact or
circumstance is not reasonably likely to have a material adverse effect on the
financial condition, operating results, assets, operations, employee relations
or customer or supplier relations of the Company and its Subsidiaries taken as a
whole or the ability of the Company to fulfill its obligations to the Purchasers
under this Agreement, the Warrant or the Articles of Incorporation, the
execution and delivery by the Company of this Agreement, the offering, sale and
issuance of the Class A Preferred and the Warrants hereunder, the issuance of
the Common Stock upon exercise of Warrants or conversion of the Class A
Preferred, the filing of the Articles of Incorporation, and the fulfillment of
and compliance with the respective terms hereof and thereof by the Company, do
not and shall not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, (iii) result in
the creation of any Lien upon the Company's or any Subsidiary's capital stock or
assets pursuant to, (iv) give any third party the right to modify, terminate or
accelerate any obligation under, (v) result in a violation of or (vi) require
any authorization, consent, approval, exemption or other action by or notice or
declaration to, or filing with, any court or administrative or governmental body
or agency pursuant to, the Articles of Incorporation or the charter or bylaws of
the Company or any Subsidiary, or any law, statute, rule or regulation to which
the Company or any Subsidiary is subject, or any agreement, instrument, order,
judgment or decree to which the Company or any Subsidiary is subject.
5E. Financial Statements. Attached hereto as the "Financial
Statements Schedule" are the following financial statements:
(i) the audited consolidated balance sheets of the Company and its
Subsidiaries as of December 31, 1995 and December 31, 1996, and the related
statements of income and cash flows (or the equivalent) for the respective
twelve-month periods then ended; and
- 12 -
(ii) the unaudited consolidated balance sheet of the Company and its
Subsidiaries as of October 31, 1997 (the "Latest Balance Sheet"), and the
related statements of income and cash flows (or the equivalent) for the
ten-month period then ended.
Each of the foregoing financial statements (including in all cases the notes
thereto, if any) presents fairly in all material respects the consolidated
financial condition, results of operations and cash flows of the Company and its
Subsidiaries in accordance with generally accepted accounting principles applied
on a consistent basis as of the dates and for the periods set forth therein,
except in the case of unaudited financial statements, for the absence of
footnote disclosures and subject to normal year-end adjustments.
5F. Absence of Undisclosed Liabilities. Except as set forth on the
attached "Liabilities Schedule," the Company and its Subsidiaries do not have
any material obligation or liability (whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known to the Company or any
Subsidiary, whether due or to become due and regardless of when asserted)
arising out of transactions entered into at or prior to the First Closing, or
any action or inaction at or prior to the First Closing, or any state of facts
existing at or prior to the First Closing other than: (i) liabilities set forth
on the Latest Balance Sheet (including any notes thereto), (ii) liabilities
arising under agreements, contracts, leases, licences and other arrangements,
(iii) liabilities and obligations which have arisen after the date of the Latest
Balance Sheet in the ordinary course of business and are not reasonably likely
to have a material adverse effect on the financial condition, operating results,
assets, operations, employee relations or customer or supplier relations of the
Company and its Subsidiaries taken as a whole and (iv) other liabilities and
obligations expressly disclosed in the other Schedules to this Agreement.
5G. No Material Adverse Change. Except as set forth on the attached
"Adverse Change Schedule," since the date of the Latest Balance Sheet, there has
been no material adverse change in the financial condition, operating results,
assets, operations, employee relations or customer or supplier relations of the
Company and its Subsidiaries taken as a whole.
5H. Absence of Certain Developments. Except as expressly
contemplated by this Agreement or as set forth on the attached "Developments
Schedule," since the date of the Latest Balance Sheet, neither the Company nor
any Subsidiary have:
(a) issued any notes, bonds or other debt securities or any
capital stock or other equity securities or any securities convertible,
exchangeable or exercisable into any capital stock or other equity
securities;
(b) declared or made any payment or distribution of cash or other
property to its stockholders with respect to its capital stock or other
equity securities or purchased or redeemed any shares of its capital stock
or other equity securities (including, without limitation, any warrants,
options or other rights to acquire its capital stock or other equity
securities);
- 13 -
(c) mortgaged or pledged any of its material properties or assets
or subjected them to any material Lien, except Liens for current property
taxes not yet due and payable and Liens arising in the ordinary course of
business;
(d) sold, assigned or transferred any of its material assets,
except in the ordinary course of business, or canceled any material debts
or claims;
(e) suffered any material extraordinary losses;
(f) made any Investment in or taken steps to incorporate any
Subsidiary; or
(g) entered into any other material transaction other than in the
ordinary course of business.
5I. Litigation, etc. Except as set forth on the attached "Litigation
Schedule," there are no actions, suits, proceedings, orders, investigations or
claims pending or, to the best of the Company's knowledge, threatened against or
affecting the Company or any Subsidiary at law or in equity, or before or by any
governmental department, commission, board, bureau, agency or instru mentality
(including, without limitation, any actions, suit, proceedings or investigations
with respect to the transactions contemplated by this Agreement), which would
reasonably be expected to have a material adverse effect upon the financial
condition, operating results, assets or operations of the Company and its
Subsidiaries taken as a whole.
5J. Brokerage. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement binding
upon the Company or any Subsidiary. The Company shall pay, and hold each
Purchaser harmless against, any liability, loss or expense (including, without
limitation, reasonable attorneys' fees and out-of-pocket expenses) arising in
connection with any such claim.
5K. Governmental Consent, etc. No permit, consent, approval or
authorization of, or declaration to or filing with, any governmental authority
is required in connection with the execution, delivery and performance by the
Company of this Agreement or the other agreements contemplated hereby, or the
consummation by the Company of any other transactions contemplated hereby or
thereby, except as set forth on the attached "Consents Schedule" and except as
expressly contemplated herein or in the exhibits hereto.
5L. Compliance with Laws. Except as set forth on the attached
"Compliance Schedule," neither the Company nor any Subsidiary has violated any
law or any governmental regulation or requirement which violation has had or
would reasonably be expected to have a material adverse effect upon the
financial condition, operating results, assets or operations of the Company and
its Subsidiaries taken as a whole, and neither the Company nor any Subsidiary
has received notice of any such violation.
- 14 -
5M. Affiliated Transactions. Except as set forth on the attached
"Affiliated Transactions Schedule," no Affiliate of the Company or any
Subsidiary or any individual related by blood, marriage or adoption to any such
individual or any entity in which any such Person or individual owns any
beneficial interest, is a party to any material agreement, contract, commitment
or transaction with the Company or any Subsidiary or has any material interest
in any material property used by the Company or any Subsidiary.
5N. Environmental Protection. Except as set forth on the attached
"Environmental Protection Schedule" or as would not reasonably be expected to
have a material adverse effect on the financial condition, operating results,
assets, properties or prospects of the Company and its Subsidiaries taken as a
whole: (a) the Company has not caused or allowed, or contracted with any party
for, the generation, use, transportation, treatment, storage or disposal of any
Hazardous Substances (as defined below) in connection with the operation of its
business or otherwise in violation of applicable Environmental Laws (as defined
below); (b) the Company, the operation of its business, and any real property
that the Company owns, leases or otherwise occupies or uses (the "Premises") are
in compliance with all applicable Environmental Laws and lawful orders or
directives of any governmental authorities having jurisdiction under such
Environmental Laws; (c) the Company has not received any citation, directive,
letter or other written communication, or any notice of any proceeding, claim or
lawsuit, from any Person arising under applicable Environmental Laws out of the
ownership or occupation of the Premises, or the conduct of its operations; (d)
the Company has obtained and is maintaining in full force and effect all
necessary permits, licenses and approvals required by all Environmental Laws
applicable to the Premises and the business operations conducted thereon
(including operations conducted by tenants on the Premises), and is in
compliance with all such permits, licenses and approvals; (e) the Company has
not caused or allowed a release, or a threat of release, of any Hazardous
Substance on, under, within, at or near the Premises, and, to the Company's
knowledge, neither the Premises nor any property at or near the Premises has
ever been subject to a release, or a threat of release, of any Hazardous
Substance; (f) there are not now nor have there ever been any underground
storage tank systems or related piping for Hazardous Substances, active or
abandoned, at the Premises. For the purposes of this Agreement, the term
"Environmental Laws" shall mean any Federal, state or local law or ordinance or
regulation pertaining to the protection of human health or the environment,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Sections 9601, et seq., the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Sections 11001, et seq., and
the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq. as
enacted and in effect on or prior to the Closing Date. For purposes of this
Agreement, the term "Hazardous Substances" shall mean all hazardous or toxic
materials, wastes and pollutants, including, without limitation, oil and
petroleum products, asbestos, polychlorinated biphenyls, urea formaldehyde,
pesticides, fertilizers and any other materials classified as hazardous,
biohazardous, radioactive or toxic under any Environmental Laws. This Section
5N constitutes the sole and exclusive representation and warranty of the Company
with respect to environmental, health and safety matters including, without
limitation, any arising under or relating to Environmental Laws.
▇▇. ▇▇▇▇▇. Except as set forth on the "Employee Benefits Schedule"
attached hereto:
- 15 -
(a) to the knowledge of the Company, no Employee Plan is a
Multiemployer Plan and no Employee Plan is subject to Title IV of ERISA and
neither the Company nor its Affiliates have incurred any material liability
under Title IV of ERISA arising in connection with the termination of any plan
covered or previously covered by Title IV of ERISA that has not been satisfied
in full;
(b) to the knowledge of the Company, no "prohibited transaction," as
defined in Section 406 of ERISA or Section 4975 of the Code, has occurred with
respect to any Employee Plan which could subject the Company to any material
liability;
(c) the United States Internal Revenue Service has determined that
each Employee Plan that is intended to be qualified under Section 401(a) of the
United States Internal Revenue Code of 1986, as amended (the "Code"), is so
qualified and the Company is not aware of any event or circumstance that would
adversely effect such determination;
(d) all contributions and payments under each Employee Plan and
Benefit Arrangement which are due have been paid and if not yet due have been
properly accrued;
(e) to the knowledge of the Company, there is no contract, agreement,
plan or arrangement covering any employee or former employee of the Company
that, individually or collectively, could give rise to the payment of any amount
that would not be deductible pursuant to the terms of Section 280G of the Code;
(f) to the knowledge of the Company, no tax under Section 4980B of the
Code has been incurred in respect of any Employee Plan that is a group health
plan, as defined in Section 5000(b)(1) of the Code;
(g) to the knowledge of the Company, with respect to the employees and
former employees of the Company, there are no employee post-retirement medical
or health plans in effect, except as required by Section 4980B of the Code;
(h) no employee of the Company will become entitled to any bonus,
retirement, severance or similar benefit or enhanced benefit solely as a result
of the transactions contemplated hereby; and
(i) to the knowledge of the Company, the Company does not have, nor is
it reasonably expected to have, any liability under Title IV of ERISA.
5P. Title to Properties. The Company and its subsidiaries have good,
clear and marketable title to their respective material properties and assets
reflected on the Latest Balance Sheet or acquired by them since the date of the
Latest Balance Sheet (other than properties and assets disposed of in the
ordinary course of business since the date of the Latest Balance Sheet), and all
such properties and assets are free and clear of all Liens except for Permitted
Encumbrances. Except as set forth on the "Title to Properties Schedule," the
Company and its Subsidiaries have not received
- 16 -
written notice of any condemnation, environmental, zoning or other land use
regulation proceedings or any special assessment proceedings, which if
determined adversely to the Company or its Subsidiaries would reasonably be
expected to materially and adversely affect the financial condition, results of
operations, properties, assets and prospects of the Company and its Subsidiaries
taken as a whole.
5Q. Leasehold Interests. Except as set forth on the "Leasehold
Interests Schedule," (i) each lease or agreement to which the Company is a party
under which it is a lessee of any material property, real or personal, is a
valid and subsisting agreement, duly authorized and entered into, without any
default of the Company thereunder and, to the Company's knowledge, without any
default thereunder of any other party thereto, (ii) to the Company's knowledge,
no event has occurred and is continuing which, with due notice or lapse of time
or both, would constitute a default or event of default by the Company under any
such lease or agreement or, to the best of the Company's knowledge, by any other
party thereto and (iii) to the Company's knowledge, the Company's possession of
such property has not been disturbed and the Company has not received written
notice of any claim asserted against the Company adverse to its rights in such
leasehold interests.
Section 6. Definitions.
6A. Definitions. For the purposes of this Agreement, the following
terms have the meanings set forth below:
"Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise.
"Benefit Arrangement" means each employment, severance or other
similar contract, arrangement of policy (written or oral) and each plan or
arrangement (written or oral) providing for severance benefits, insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits which (i) is not an Employee
Plan and (ii) covers any employee or former employee of the Company or any of
its Subsidiaries.
"Employee Plan" means each "employee benefit plan," as such term is
defined in Section 3(3) of ERISA, that (A)(i) is subject to any provision of
ERISA and (ii) is maintained or contributed to by the Company, or (B)(i) is
subject to any provision of Title IV or ERISA and (ii) is maintained or
contributed to by any of the Company's ERISA Affiliates.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
- 17 -
"ERISA Affiliate" of any entity means any other entity that, together
with such entity, would be treated as a single employer under Section 414 of the
Code.
"Independent Third Party" means any Person who, immediately prior to
the contemplated transaction, does not own in excess of 5%, on a fully-diluted
basis, of the Company's voting capital stock (a "5% Owner"), who is not
controlling, controlled by or under common control with any such 5% Owner and
who is not the spouse or descendent (by birth or adoption) of any such 5% Owner
or a trust for the benefit of such 5% Owner and/or such other Persons.
"Investment" as applied to any Person means (i) any direct or indirect
purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interest (including partnership
interests and joint venture interests) of any other Person and (ii) any capital
contribution by such Person to any other Person.
"Liens" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, without limitation, any conditional sale
or other title retention agreement or lease in the nature thereof).
"MDCP" means Madison Dearborn Capital Partners, L.P., a Delaware
limited partnership.
"Multiemployer Plan" means each Employee Plan that is a multiemployer
plan, as defined in Section 3(37) of ERISA.
"Permitted Encumbrances" shall mean (i) minor imperfections of title,
if any, none of which materially detracts from the value or impairs the use of
any such asset subject thereto, (ii) lessor's, materialmen's, mechanics',
warehousemen's, carriers', repairmen's or other like liens arising in the
ordinary course of business for amounts not yet due and which are not in the
aggregate material to the Company and its Subsidiaries, (iii) liens for current
taxes, assessments or other governmental charges not yet due, (iv) statutory
liens incurred or deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases, government contracts, performance and return-of-
money bonds, and similar obligations which are not yet delinquent and (v) liens
or encumbrances arising or existing under the Company's and its Subsidiaries
existing credit facilities.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Public Sale" means any sale of Stockholder Shares to the public
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
adopted under the Securities Act.
- 18 -
"Qualified Public Offering" means the sale in an underwritten public
offering registered under the Securities Act of shares of the Company's Common
Stock having an aggregate offering value of at least $10 million.
"Registrable Securities" means (i) any Common Stock issued upon the
conversion of any Class A Preferred issued pursuant to this Agreement or
otherwise acquired by any Purchaser, (ii) any Common Stock issued upon the
exercise of the Warrants and (iii) any Common Stock issued or issuable with
respect to the securities referred to in clause (i) and (ii) by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities when they have been distributed to the public pursuant to a offering
registered under the Securities Act or sold to the public through a broker,
dealer or market maker in compliance with Rule 144 under the Securities Act (or
any similar rule then in force). For purposes of this Agreement, a Person shall
be deemed to be a holder of Registrable Securities whenever such Person has the
right to acquire such Registrable Securities (upon conversion or exercise in
connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected.
"Restricted Securities" means (i) the Class A Preferred issued
hereunder, (ii) the Class A Preferred Stock of the Company outstanding prior to
the purchase and sale of Class A Preferred contemplated by this Agreement, (iii)
the Warrants issued hereunder, (iv) the Common Stock issued upon conversion of
Class A Preferred or upon exercise of the Warrants and (v) any securities issued
with respect to the securities referred to in clauses (i), (ii), (iii) or (iv)
above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Restricted Securities, such securities
shall cease to be Restricted Securities when they have (a) been effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (b) been distributed to the public through
a broker, dealer or market maker pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act or become eligible for sale pursuant to
Rule 144(k) (or any similar provision then in force) under the Securities Act or
(c) been otherwise transferred and new certificates for them not bearing the
Securities Act legend set forth in paragraph 7C have been delivered by the
Company in accordance with paragraph 4(ii). Whenever any particular securities
cease to be Restricted Securities, the holder thereof shall be entitled to
receive from the Company, without expense, new securities of like tenor not
bearing a Securities Act legend of the character set forth in paragraph 7C.
"Sale of the Company" means the sale of the Company to an Independent
Third Party or group of Independent Third Parties pursuant to which such party
or parties acquire (i) capital stock of the Company possessing the voting power
under normal circumstances to elect a majority of the Company's board of
directors (whether by merger, consolidation or sale or transfer of the Company's
capital stock) or (ii) all or substantially all of the Company's assets
determined on a consolidated basis.
- 19 -
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"Securities and Exchange Commission" means the United States
Securities and Exchange Commission and any governmental body or agency
succeeding to the functions thereof.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended, or any similar federal law then in force.
"Stockholder Shares" means (i) any Class A Preferred purchased
hereunder or otherwise acquired by any Purchaser, (ii) any Common Stock issued
or issuable directly or indirectly upon conversion of any Class A Preferred,
(iii) any Common Stock issued or issuable directly or indirectly upon exercise
of the Warrants and (iv) any Common Stock or Class A Preferred issued or
issuable with respect to the securities referred to in clauses (i), (ii) and
(iii) above by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Stockholder Shares, such shares shall cease
to be Stockholder Shares when they have been (a) effectively registered under
the Securities Act and disposed of in accordance with the registration statement
covering them or (b) distributed to the public through a broker, dealer or
market maker pursuant to Rule 144 under the Securities Act (or any similar
provision then in force).
"Subsequent Closing Disclosure Schedule" has the meaning set forth in
Section 2B.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control any managing director or general partner of such limited
liability company, partnership, association or other business entity.
"Underlying Common Stock" means (i) the Common Stock issued or
issuable upon conversion of the Class A Preferred or upon exercise of the
Warrants and (ii) any Common Stock issued or issuable with respect to the
securities referred to in clause (i) above by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. For purposes of this Agreement, any
Person who holds Class A Preferred or Warrants shall be deemed to be the holder
of the Underlying Common Stock
- 20 -
obtainable upon conversion of the Class A Preferred or exercise of the Warrants
in connection with the transfer thereof or otherwise regardless of any
restriction or limitation on the conversion of the Class A Preferred or exercise
of the Warrants. As to any particular shares of Underlying Common Stock, such
shares shall cease to be Underlying Common Stock when they have been (a)
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them, (b) distributed to the public
through a broker, dealer or market maker pursuant to Rule 144 under the
Securities Act (or any similar provision then in force) or (c) repurchased by
the Company or any Subsidiary.
Section 7. Miscellaneous.
7A. Expenses. The Company shall pay, and hold each Purchaser
harmless against liability for the payment of, (i) the reasonable expenses of
such Purchaser and its agents incurred in connection with the negotiation and
execution of this Agreement and the consummation of the transactions
contemplated by this hereby including, without limitation, the reasonable fees
and expenses of each Purchaser's special counsel, and reimbursement or payment
therefor shall be made at the First Closing, (ii) the fees and expenses incurred
with respect to any amendments or waivers (whether or not the same become
effective) under or in respect of this Agreement, the agreements contemplated
hereby or the Articles of Incorporation (including, without limitation, in
connection with any proposed merger, sale or recapitalization of the Company);
(iii) stamp and other taxes which may be payable in respect of the execution and
delivery of this Agreement or the issuance, delivery or acquisition of any
shares of Class A Preferred or any shares of Common Stock issuable upon
conversion of Class A Preferred; and (iv) the fees and expenses incurred with
respect to the enforcement of the rights granted under this Agreement, the
agreements contemplated hereby and the Articles of Incorporation.
7B. Remedies. Each holder of Class A Preferred and Underlying Common
Stock shall have all rights and remedies set forth in this Agreement, the
Articles of Incorporation and all rights and remedies which such holders have
been granted at any time under any other agreement or contract and all of the
rights which such holders have under any law. Any Person having any rights
under any provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
7C. Legend. Each certificate or instrument representing Restricted
Securities shall be imprinted with a legend in substantially the following form:
"The securities represented by this certificate were originally issued on
_________, and have not been registered under the Securities Act of 1933,
as amended. The transfer of the securities represented by this certificate
is subject to the conditions specified in the Purchase Agreement, dated as
of December 16, 1997 and as amended and modified from time to time, between
the issuer (the "Company") and certain investors, and the Company reserves
the right to refuse the transfer of such securities until such conditions
have been fulfilled with respect to such transfer. A copy of
- 21 -
such conditions shall be furnished by the Company to the holder hereof upon
written request and without charge."
7D. Registration Rights.
(i) At any time more than 180 days following a Qualified Public
Offering, the holders of Registrable Securities may request up to two
registrations under the Securities Act of all or any portion of their
Registrable Securities on Form S-2 or S-3 or any similar short-form registration
("Short-Form Demand Registrations") if available; provided that the aggregate
offering value of the securities so registered (net of all underwriting
discounts and sales commissions) is at least $3,000,000. Each request for a
Short-Form Demand Registration shall specify the approximate number of
Registrable Securities requested to be registered and the anticipated per share
price range for such offering. Within 10 days after receipt of any such
request, the Company shall give written notice of such requested registration to
all other holders of Registrable Securities and shall include in such
registration on a pro-rata basis all Registrable Securities with respect to
which the Company has received written requests for inclusion therein within 15
days after the receipt of the Company's notice.
(ii) Whenever the Company proposes to register any of its Common Stock
or securities convertible into or exchangeable for Common Stock under the
Securities Act (other than a registration statement on Form S-8 or Form S-4 or
successor forms thereto) and the registration form to be used may be used for
the registration of shares of Registrable Securities, the Company will give
prompt written notice to all holders of Registrable Securities of its intention
to effect such a registration and, subject to the provisions of this paragraph
7D, shall include in such registration all Registrable Securities with respect
to which the Company has received written requests for inclusion within 30 days
after the receipt of the Company's notice (a "Piggyback Registration").
(iii) If a Piggyback Registration is an underwritten primary
registration on behalf of the Company and the managing underwriter advises the
Company that in its opinion the number of shares requested to be included in
such registration exceeds the number of shares which can be sold in such
offering, the Company will include in such registration (i) first, the
securities the Company proposes to sell and (ii) second, the Registrable
Securities requested to be included in such registration together with the other
securities requested to be included in such registration by stockholders
exercising contractual piggyback registration rights, pro rata among the holders
of Registrable Securities and such other holders on the basis of the number of
shares requested to be included therein by each holder.
(iv) If a Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Company's securities and the managing
underwriter advises the Company that in its opinion the number of shares
requested to be included in such registration exceeds the number which can be
sold in such offering, the Company will include in such registration (i) first,
the securities requested to be included therein by the holders initiating the
registration together with the other securities requested to be included in such
registration by stockholders exercising contractual rights to participate on a
pro rata basis with the initiating holder in any piggyback registration
- 22 -
(ii) second, the Registrable Securities requested to be included in such
registration together with the other securities requested to be included in such
registration by stockholders exercising other contractual piggyback registration
rights, pro rata among the holders of Registrable Securities and such other
holders on the basis of the number of shares requested to be included therein by
each holder.
(v) The Company shall bear the costs of (i) Short-Form Demand
Registrations and Piggyback Registrations pursuant to this paragraph 7D, and
(ii) each proposed registration which is initiated as a Short-Form Demand
Registration or Piggyback Registration, in each case including the reasonable
fees and expenses of one counsel for the selling holders of Registrable
Securities but excluding any underwriting discounts or commissions on the sale
of Registrable Securities or the fees and expenses of any additional counsel
retained by the selling holders of Registrable Securities. The Company shall,
and as a condition to the inclusion of Registrable Securities of any holder in
any registration, such holder shall, execute an underwriting agreement or
similar agreement in a form reasonably acceptable to the Company and the
underwriter(s), if any, for such offering containing customary indemnification
and holdback provisions and provisions obligating the selling holders of
Registrable Securities to supply customary information for inclusion in the
registration statement. Notwithstanding the foregoing, (i) no holder of
Registrable Securities shall be required to incur indemnification obligations in
excess of the net proceeds received by such holder pursuant to such registration
or that relate to information not supplied by such holder for inclusion in the
registration statement, and (ii) the Company shall indemnify each holder of
Registrable Securities with respect to liabilities arising from such
registration statement other than as a result of information supplied by such
holder of Registrable Securities for inclusion therein.
(vi) Each holder of Registrable Securities agrees not to effect any
public sale or distribution (including sales pursuant to Rule 144) of equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and the 90-day
period beginning on the effective date of any underwritten Short-Form Demand
Registration or any underwritten Piggyback Registration in which Registrable
Securities are included (except as part of such underwritten registration) if so
requested by the underwriters managing the registered public offering.
(vii) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and during the 90-day period beginning on the effective date of any underwritten
Short-Form Demand Registration or any underwritten Piggyback Registration
(except as part of such underwritten registration or pursuant to registrations
on Form S-8 or any successor form), unless the underwriters managing the
registered public offering otherwise agree, and (ii) to cause each holder of its
Common Stock, or any securities convertible into or exchangeable or exercisable
for Common Stock, purchased from the Company at any time after the date of this
Agreement (other than in a registered public offering) to agree not to effect
any public sale or dis tribution (including sales pursuant to Rule 144) of any
such securities during such period (except as part of such underwritten
registration, if otherwise permitted), unless the underwriters managing the
registered public offering otherwise agree.
- 23 -
7E. Restrictions on Transfer of Stockholder Shares.
(i) Transfer of Stockholder Shares. No holder of Stockholder Shares,
or in the case of MDCP any Stockholder Shares or other shares of Common Stock,
shall sell, transfer, assign, pledge or otherwise dispose of (whether with or
without consideration and whether voluntarily or involuntarily or by operation
of law) any interest in Stockholder Shares (a "Transfer"), except pursuant to
the provisions of this paragraph 7E or pursuant to a Sale of the Company or a
Public Sale. No holder of Stockholder Shares shall consummate any Transfer
(other than pursuant to a Public Sale or a Sale of the Company) until 30 days
after the later of the delivery to the Company and the other holders of
Stockholder Shares of such Person's Sale Notice (if any), unless the parties to
the Transfer have been finally determined pursuant to this paragraph 7E prior to
the expiration of such 30-day period (the "Election Period"). So long as any
Class A Preferred is outstanding, MDCP shall not Transfer any shares of capital
stock of the Company which are neither Stockholder Shares nor shares of Common
Stock without the prior written consent of the holders of a majority of
Stockholder Shares other than Stockholder Shares held by MDCP.
(ii) Participation Rights. At least 30 days prior to any Transfer of
Stockholder Shares (other than pursuant to a Public Sale or Sale of the
Company), the holder of Stockholder Shares, or in the case of MDCP any
Stockholder Shares or other shares of Common Stock, making such Transfer (the
"Transferring Stockholder") shall deliver a written notice (the "Sale Notice")
to the Company and the other holders of Stockholder Shares of the same class or
series as the shares of capital stock of the Company which the Transferring
Stockholder proposes to transfer (the "Other Stockholders"), specifying in
reasonable detail the identity of the prospective transferee(s), the class or
series of Stockholder Shares to be transferred, the number of shares to be
transferred and the terms and conditions of the Transfer. The Other
Stockholders may elect to participate in the contemplated Transfer at the same
price per share and on the same terms by delivering written notice to the
Transferring Stockholder within 30 days after delivery of the Sale Notice. If
any Other Stockholders have elected to participate in such Transfer, the
Transferring Stockholder and such Other Stock holders shall be entitled to sell
in the contemplated Transfer, at the same price and on the same terms, a number
of Stockholder Shares of such class or series equal to the product of (i) the
quotient determined by dividing the percentage of Stockholder Shares of such
class or series owned by such Person by the aggregate percentage of Stockholder
Shares of such class or series owned by the Transferring Stockholder and the
Other Stockholders participating in such sale and (ii) the number of Stockholder
Shares to be sold in the contemplated Transfer.
For example, if the Sale Notice contemplated a sale of 100 Stockholder
Shares of a certain class or series by the Transferring Stockholder, and if
the Transferring Stockholder at such time owns 30% of all Stockholder
Shares of such class or series and if one Other Stockholder elects to
participate and owns 20% of all Stockholder Shares of such class or series,
the Transferring Stockholder would be entitled to sell 60 such shares (30%
/ 50% x 100 shares) and the Other Stockholder would be entitled to sell 40
such shares (20% / 50% x 100 shares).
- 24 -
Each Transferring Stockholder shall use its best efforts to obtain the agreement
of the prospective transferee(s) to the participation of the Other Stockholders
in any contemplated Transfer, and no Transferring Stockholder shall transfer any
of its Stockholder Shares to any prospective transferee if such prospective
transferee(s) declines to allow the participation of the Other Stockholders.
Each Stockholder transferring Stockholder Shares pursuant to this paragraph
7E(ii) shall pay its pro rata share (based on the number of Stockholder Shares
to be sold) of the expenses incurred by the holders of Stockholder Shares in
connection with such transfer and shall be obligated to join on a pro rata basis
(based on the number of shares of capital stock to be sold) in any
indemnification or other obligations that the Transferring Stockholder agrees to
provide in connection with such transfer (other than any such obligations that
relate specifically to a particular holder of Stockholder Shares such as
indemnification with respect to representations and warranties given by a holder
of Stockholder Shares regarding such holder's title to and ownership of
Stockholder Shares; provided that no holder shall be obligated in connection
with such Transfer to agree to indemnify or hold harmless the transferees with
respect to an amount in excess of the net cash proceeds paid to such holder in
connection with such Transfer). In the event any Transfer by MDCP of shares of
capital stock of the Company gives any Person participation rights similar to
those set forth in this paragraph 7E under any agreement entered into prior to
the date hereof by and between the Company, MDCP and such other Person, each
Purchaser acknowledges and agrees that such participation rights shall reduce
(pro-rata based upon the number of Stockholders Shares held) the number of
shares of capital stock of the Company otherwise to be Transferred by such
Purchaser in accordance with the provisions of this paragraph 7E.
(iii) Permitted Transfers. The restrictions set forth in this
paragraph 7E shall not apply with respect to any Transfer of Stockholder Shares
by any holder of Stockholder Shares among its Affiliates (collectively referred
to herein as "Permitted Transferees"); provided that the restrictions contained
in this paragraph 7E shall continue to be applicable to the Stockholder Shares
after any such Transfer; and provided further that the transferees of such
Stockholder Shares shall have agreed in writing to be bound by the provisions of
this Agreement affecting the Stockholder Shares so transferred.
(iv) Termination of Restrictions. The provisions of this paragraph 7E
shall terminate upon completion of a Qualified Public Offering.
7F. Sale of the Company.
(i) If the board of directors of the Company, and holders of at least
a majority of all Common Stock outstanding approve a Sale of the Company (the
"Approved Sale"), the holders of Underlying Common Stock shall consent to and
raise no objections against the Approved Sale of the Company, and if the
Approved Sale of the Company is structured as a sale of stock, the holders of
Underlying Common Stock (determined as of the date of the consummation of the
Approved Sale) shall agree to sell all shares of Underlying Common Stock on the
terms and conditions so approved. The holders of Underlying Common Stock shall
take all necessary and desirable actions in connection with the consummation of
the Approved Sale.
- 25 -
(ii) Upon the consummation of the Approved Sale, each holder of
Underlying Common Stock shall receive the form and amount of consideration as
set forth in subparagraph (v) below.
(iii) The holders of Underlying Common Stock shall bear their pro-rata
share (based upon the number of shares sold) of the costs of any sale of
Underlying Common Stock pursuant to an Approved Sale to the extent such costs
are incurred for the benefit of all holders of Underlying Common Stock and are
not otherwise paid by the Company or the acquiring party. Costs incurred by
holders of Underlying Common Stock on their own behalf shall not be considered
costs of the transaction hereunder. In addition, each Person transferring
Underlying Common Stock pursuant to this paragraph 7F shall be obligated to join
on a pro rata basis (based on the number of shares of Underlying Common Stock
to be transferred) in any indemnification or other obligations that the Board
agrees to provide in connection with such transfer (other than any such
obligations that relate specifically to a particular Person such as
indemnification with respect to representations and warranties given by a Person
regarding such Person's title to and ownership of Underlying Common Stock);
provided that no holder shall be obligated in connection with such transaction
to agree to indemnify or hold harmless the transferees with respect to an amount
in excess of the net cash proceeds paid to such holder in connection with such
transaction.
(iv) The provisions of this paragraph 7F shall terminate upon the
completion of a Qualified Public Offering.
(v) In the event of a Sale of the Company, each holder of Underlying
Common Stock shall receive in exchange for all of its Underlying Common Stock,
the same portion of the aggregate consideration from such transaction that such
holder of Underlying Common Stock would have received if such aggregate
consideration had been distributed by the Company in complete liquidation
pursuant to the rights and preferences set forth in the Company's Articles of
Incorporation as in effect immediately prior to such transaction. Each holder
of Underlying Common Stock shall take all necessary or desirable actions in
connection with the allocation and distribution of the aggregate consideration
from such transaction as reasonably requested by the Company in order to
effectuate the provisions of this paragraph 7F.
7G. Purchaser's Investment Representations. Each Purchaser hereby
represents and warrants to the Company as follows: (i) this Agreement has been
duly authorized, executed and delivered by Purchaser and constitutes a valid and
legally binding obligation of such Purchaser enforceable in accordance with its
terms, (ii) the execution, delivery and performance of this Agreement by
Purchaser does not conflict with, violate or result in the breach of any
agreement, instrument, order, judgement, decree, law or governmental regulation
to which such Purchaser is a party or by which it is bound, (iii) Purchaser is
an "Accredited Investor" as defined in Regulation D promulgated under the
Securities Act and has substantial experience in evaluating and investing in
similar private placement transactions, is capable of evaluating the merits and
risks of this investment in the Company and has the capacity to protect its own
interests, (iv) Purchaser understands and acknowledges that the purchase of
Class A Preferred and Warrants hereunder represents a speculative investment,
and that Purchaser is able, without impairing its financial
- 26 -
condition, to hold such investment for an indefinite period of time and/or to
suffer a complete loss of such investment, (v) Purchaser is acquiring the
Restricted Securities purchased hereunder for its own account with the present
intention of holding such securities for purposes of investment, and that it has
no intention of selling such securities in a public distribution in violation of
the federal securities laws or any applicable state securities laws, and (vi)
Purchaser is aware of and has investigated the Company's business, management
and financial condition, has had a satisfactory opportunity to ask questions of,
and receive answers from, agents and employees of the Company concerning the
business of the Company and the terms and conditions of this transaction and has
had access to such other information about the Company as Purchaser deemed
necessary or desirable to reach an informed and knowledgeable decision to
purchase Class A Preferred and Warrants.
7H. Consent to Amendments. Except as otherwise expressly provided
herein, the provisions of this Agreement may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
holders of at least a majority of the outstanding Class A Preferred purchased
hereunder; provided that if no Class A Preferred purchased hereunder is
outstanding, the provisions of this Agreement may be amended and the Company may
take any action herein prohibited, only if the Company has obtained the written
consent of the holders of at least a majority of the Underlying Common Stock;
provided further, that no amendment shall be enforceable against one holder of
Stockholder Shares without also being enforceable against all other holders of
Stockholder Shares. In exercising its rights hereunder, the Company shall
exercise such rights in the same manner with respect to each holder of Class A
Preferred, Warrants or Underlying Common Stock, as applicable. The Company
shall not enter into any other agreement or conduct any course of dealing which
alters the rights or obligations of any holder of Class A Preferred, Warrants or
Underlying Common Stock, without first offering to each other holder of Class A
Preferred, Warrants or Underlying Common Stock, as applicable, the opportunity
to enter into such agreement or course of dealing. No other course of dealing
between the Company and the holder of any Class A Preferred, Warrant or
Underlying Common Stock or any delay in exercising any rights hereunder or under
the Articles of Incorporation shall operate as a waiver of any rights of any
such holders. For purposes of this Agreement, shares of Class A Preferred or
Underlying Common Stock held by the Company or any Subsidiaries shall not be
deemed to be outstanding. The failure of any party at any time to insist upon
strict performance of any condition, promise, agreement or understanding set
forth herein shall not be construed as a waiver or relinquishment of the right
to insist upon strict performance of the same or any other condition, promise,
agreement or understanding at a future time.
7I. Survival of Representations and Warranties. All representations
and warranties contained herein shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby for a
period of one year, regardless of any investigation made by any Purchaser or on
its behalf.
7J. Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto
- 27 -
shall bind and inure to the benefit of the respective successors and assigns of
the parties hereto whether so expressed or not.
7K. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
7L. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
7M. Descriptive Headings; Interpretation. The descriptive headings
of this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. The use of the word "including" in this
Agreement shall be by way of example rather than by limitation.
7N. Governing Law. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of Nevada, without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of Nevada or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Nevada.
7O. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to each Purchaser at the address indicated on the
Schedule of Purchasers and to the Company at the address indicated below:
▇▇▇▇▇ Holdings, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
7P. Consideration for Warrants. The Purchasers and the Company
acknowledge and agree that as of the date hereof the fair market value of the
maximum number of shares of Class A Preferred which may be issued hereunder is
$19,170,000 and the fair market value of the
- 28 -
maximum number of shares of Common Stock issuable upon exercise of the Warrants
which may be issued hereunder is $830,000 and that, for all purposes (including
tax and accounting), the consideration for the issuance of the Warrants shall be
allocated by each Purchaser and the Company as set forth on the Schedule of
Purchasers attached hereto. Each Purchaser and the Company shall file their
respective federal, state and local tax returns in a manner which is consistent
with such valuation and allocation and shall not take any contrary position with
any taxing authority.
7Q. Understanding Among the Purchasers. The determination of each
Purchaser to purchase the Class A Preferred pursuant to this Agreement has been
made by such Purchaser independent of any other Purchaser and independent of any
statements or opinions as to the advisability of such purchase or as to the
properties, business, prospects or condition (financial or otherwise) of the
Company and its Subsidiaries which may have been made or given by any other
Purchaser or by any agent or employee of any other Purchaser.
* * * * *
- 29 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
▇▇▇▇▇ HOLDINGS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
Its: President
PURCHASERS
▇▇▇▇▇▇ CAPITAL 1330
INVESTORS I, LP
By: ▇▇▇▇▇▇ CAPITAL 1330
GENPAR I, LLC
Its: General Partner
By: signature illegible
Its: Manager
MADISON DEARBORN CAPITAL PARTNERS, L.P.
By: MADISON DEARBORN PARTNERS, L.P.
Its: General Partner
By: MADISON DEARBORN PARTNERS, INC.
Its: General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
Its: Managing Director
SCHEDULE OF PURCHASERS
----------------------
Total No. of
No. of Purchase Shares
Shares Price issuable
of for upon Purchase
Names and Class A Class A Exercise of Price for
Addresses Preferred Preferred Warrant Warrant
--------- --------- ---------- ----------- ---------
Madison Dearborn Capital Partners, L.P. 3,500 $3,354,750 104,282 $145,250
Three First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ Capital 1330 Investors I, LP 6,000 $5,751,000 178,769 $249,000
c/o Abbott Capital Management, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----- ---------- ------- --------
TOTAL 9,500 $9,105,750 283,051 $394,250
SUBSEQUENT CLOSING SCHEDULE
---------------------------
Total No. of
No. of Purchase Shares
Shares Price issuable
of for upon Purchase
Names and Class A Class A Exercise of Price for
Addresses Preferred Preferred Warrant Warrant
--------- --------- --------- ----------- ---------
Madison Dearborn Capital Partners, L.P. 1,500 $ 1,437,750 44,692 $ 62,250
Three First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ Capital 1330 Investors I, LP 9,000 $ 8,626,500 268,152 $373,500
c/o Abbott Capital Management, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------ ----------- -------- --------
TOTAL 10,500 $10,064,250 312,845 $435,750