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