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EXHIBIT 10.7
NOTE AND STOCK PURCHASE AGREEMENT
DECEMBER 31, 1996
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TABLE OF CONTENTS
SECTION 1. SALE AND PURCHASE ................................... 1
1.1. Issuance of Notes and Common Shares.................. 1
1.2. The Closing.......................................... 1
1.3. Use of Proceeds...................................... 2
1.4. Definitions.......................................... 2
SECTION 2. PURCHASERS' CONDITIONS TO CLOSING ................... 2
2.1. Escrow Agreement .................................... 3
2.2. Accuracy of Representations and Warranties........... 3
2.3. Compliance with Agreements; No Defaults.............. 3
2.4. Officers' Certificate ............................... 3
2.5. Proceedings.......................................... 3
2.6. Original Notes; Subordination of Original Notes ..... 3
2.7. Agreement of ▇▇▇▇ ▇▇▇▇▇▇............................. 4
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........ 4
3.1. Corporate Existence, Power and Authority............. 4
3.2. Capitalization....................................... 4
3.3. Subsidiaries......................................... 5
3.4. Business............................................. 5
3.5. No Defaults or Conflicts............................. 5
3.6. Use of Proceeds...................................... 6
3.7. Outstanding Securities; Offering of Securities ...... 6
3.8. Litigation........................................... 6
3.9. Validity of the Letters of Intent.................... 6
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS..... 7
SECTION 5. AFFIRMATIVE COVENANTS................................ 7
5.1. Maintenance of Existence, Properties and
Franchises; Compliance with Law...................... 8
5.2. Listing of Shares.................................... 8
5.3. Exchange Act Registration............................ 8
5.4. Delivery of Information for Rule 144A Transactions... 8
5.5. Failure to Consummate the IPO; Sale of Company
Assets............................................... 9
5.6. Status of Acquisition of the Founding Companies
and the IPO.......................................... 9
5.7. Amendment of the Subordinated Notes.................. 9
SECTION 6. NEGATIVE COVENANTS................................... 9
6.1. Indebtedness......................................... 9
6.2. No Change in Business................................ 9
6.3. Consolidation, Merger and Sale....................... 10
6.4. Liens................................................ 10
6.5. Private Placement Status............................. 10
6.6. Issuances of Stock................................... 10
6.7. Amendments to Charter or By-Laws;
Other Agreements..................................... 10
6.8. Restricted Payments.................................. 10
6.9. Transactions with Related Parties.................... 11
SECTION 7. EVENTS OF DEFAULT.................................... 11
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SECTION 8. REMEDIES................................................ 12
SECTION 9. AMENDMENTS AND WAIVERS; CONSENT......................... 13
SECTION 10. EXCHANGE OF SECURITIES; ACCRUED INTEREST;
CANCELLATION OF SURRENDERED NOTES; REPLACEMENT.......... 14
SECTION 11. RESTRICTIONS ON TRANSFER................................ 15
SECTION 12. REGISTRATION RIGHTS..................................... 16
12.1. Demand Registration Rights.............................. 16
12.2. Number of Demand Registrations.......................... 16
12.3. Right of Majority Common Shareholders to Revoke
Registration Demand..................................... 16
12.4. Right of Company to Delay or Postpone Registration...... 17
12.5. Selection of Underwriters............................... 17
12.6. Piggyback Rights........................................ 17
12.7. Expenses................................................ 18
12.8. Procedures.............................................. 18
12.9. Indemnification......................................... 20
SECTION 13. NOTICES................................................. 20
SECTION 14. DEFINITIONS............................................. 21
SECTION 15. MISCELLANEOUS........................................... 26
15.1. Entire Agreement........................................ 26
15.2. Survival................................................ 26
15.3. Counterparts............................................ 26
15.4. Headings................................................ 27
15.5. Binding Effect, Benefit and Assignment.................. 27
15.6. Severability............................................ 27
15.7. Governing Law........................................... 27
15.8. Consent to Jurisdiction and Service of Process.......... 27
15.9. Waiver of Jury Trial.................................... 28
Schedule A List of Purchasers
Schedule B Disclosure Schedule
Schedule C List of Founding Companies
Exhibit A Form of Note
Exhibit B Form of Escrow Agreement
Exhibit C Form of Subordination Agreement
Exhibit D Letter Agreement of ▇▇▇▇ ▇▇▇▇▇▇
▇▇
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NOTE AND STOCK PURCHASE AGREEMENT dated as of December 31,
1996 by and between Vestcom International, Inc., a New Jersey corporation (the
"Company"), and each individual or entity listed on the signature page of this
Agreement (each of such entities and individuals referred to as a "Purchaser"
and collectively referred to as the "Purchasers").
W I T N E S E T H:
WHEREAS, commencing in early 1995 the Company, Comvestrix
Corp., ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ & Co., Inc. and its affiliates have conducted
ongoing discussions regarding a possible investment in the Company by the
Purchasers;
WHEREAS, as a result of such discussions, the Company,
Comvestrix Corp., ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ & Co., Inc. and its affiliates
reached an agreement in July 1996 with respect to such aforementioned
investment;
WHEREAS, the Company issued a series of notes in the aggregate
amount of $160,035 (the "Original Notes") and 791,346 shares of Common Stock for
aggregate consideration of $200,000 to a group of investors in September 1996,
and such group has agreed to subordinate the Original Notes (the "Subordinated
Notes") to the Notes to be issued by the Company pursuant to this Agreement;
NOW, THEREFORE, to memorialize this prior understanding of the
parties hereto, and in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Purchasers and the Company
agree as follows:
SECTION 1. SALE AND PURCHASE
1.1. Issuance of Notes and Common Shares.
The Company will authorize the issuance of $1,132,697
principal amount of the Company's Senior Notes Due 1997 (the "Notes") and
503,846 shares of the Company's common stock, no par value (the "Common Stock"),
to the investors as set forth on Schedule A hereto. The Notes shall be due upon
the earlier of (x) the consummation of the Company's initial public offering
(the "IPO") of Common Stock or (y) June 30, 1997. Each Note will be
substantially in the form of Exhibit A attached hereto. The shares of Common
Stock being acquired under this Agreement are collectively referred to as the
"Common Shares." The Common Shares and the Notes are collectively referred to as
the "Securities." The Purchasers hereby authorize ▇▇▇▇▇▇▇▇▇▇▇ to act, in its
sole discretion, as their Representative for the determination of certain
matters as set forth in this Agreement.
1.2. The Closing.
(a) The Company agrees to sell to the Purchasers and, subject
to the terms and conditions hereof and in reliance upon the representations and
warranties of the Company contained herein or made pursuant hereto, each
Purchaser agrees to purchase from the Company, the number of Notes and Common
Shares, as the case may be, set forth opposite such Purchaser's name on Schedule
A attached hereto. The Notes shall be purchased at the aggregate purchase price
of 100% of the principal amount thereof. No further payment shall be required
from the Purchasers for the Securities.
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(b) The closing of the purchase and sale of the Notes and the
Common Shares to be purchased by the Purchasers (the "Closing") will take place
at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ at 10:00 A.M., New York City time, on December 31, 1996 or such other time
and date as shall be mutually agreed to by the Company and the Majority
Noteholders. Such time and date are herein referred to as the "Closing Date."
(c) At the Closing (i) the Company will deliver to each
Purchaser a Note or Notes payable to such Purchaser (or its nominee, if any is
specified on Schedule A hereto), and dated the Closing Date, in the aggregate
principal amount set forth opposite such Purchaser's name on Schedule A hereto,
(ii) the Company will deliver to each Purchaser, registered in such Purchaser's
name (or its nominee, if any is specified on Schedule A hereto) a certificate
evidencing the number of Common Shares set forth opposite such Purchaser's name
on Schedule A hereto, and (iii) upon the Purchasers' receipt of all Notes and
certificates evidencing Common Shares as set forth in clauses (i) and (ii) of
this Section 1.2(c), each Purchaser will deliver into an escrow account by wire
transfer of federal or other immediately available funds an aggregate amount
equal to the purchase price for such Securities (as set forth opposite such
Purchaser's name on Schedule A attached hereto). Once the purchase price of the
Securities is deposited into such escrow account, such funds are to be disbursed
in accordance with the terms of the Escrow Agreement the form of which is
attached hereto as Exhibit B.
1.3. Use of Proceeds.
The proceeds from the sale of the Notes and the Common Shares
received by the Company on the Closing Date will be used to pay certain of the
Company's costs and expenses incident to its formation, the acquisition of the
Founding Companies and the IPO.
1.4. Definitions.
Capitalized terms in this Agreement are used as defined in
Section 14 hereof unless otherwise defined herein.
SECTION 2. PURCHASERS' CONDITIONS TO CLOSING
The Purchasers' obligation to purchase the Notes and the
Common Shares hereunder is subject to satisfaction of the following conditions
at the Closing (any of which may be waived by the Representative):
2.1. Escrow Agreement.
The Escrow Agreement in the form attached hereto as Exhibit B
and in form and substance satisfactory to the Representative shall have been
entered into between the Company, the Escrow Agent and the Purchasers.
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2.2. Accuracy of Representations and Warranties.
All representations and warranties of the Company herein or in
any certificate or document delivered pursuant hereto shall be correct and
complete on and as of the Closing Date with the same effect as though made on
and as of the Closing Date.
2.3. Compliance with Agreements; No Defaults.
The Company shall have performed and complied with all
agreements, covenants and conditions contained in this Agreement and any other
document contemplated hereby which are required to be performed or complied with
by it on or before the Closing Date. On the Closing Date there shall be no
Potential Default or Event of Default.
2.4. Officers' Certificate.
The Purchasers shall have received from the Company a
certificate dated the Closing Date and signed by the President and by the
Secretary or the Treasurer of the Company (each of the President, the Secretary
or the Treasurer, an "Authorized Officer") to the effect that the conditions set
forth in Sections 2.1, 2.2 and 2.3 have been satisfied.
2.5. Proceedings.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents incident thereto,
shall be in form and substance satisfactory to the Purchasers and their counsel,
and the Purchasers shall have received all such originals or certified or other
copies of such documents as the Purchasers or their counsel may reasonably
request.
2.6. Original Notes; Subordination of Original Notes.
Evidence of the following shall have been provided to the
Purchasers: (i) execution of the Original Notes; and (ii) execution of the
Subordination Agreement, which, among other things, amends the Original Notes to
change the maturity date from the earlier of (i) an IPO or (ii) March 31, 1997
to the earlier of (i) an IPO or (ii) June 30, 1997. The current holders of the
Original Notes shall have agreed to subordinate such indebtedness to the Notes,
and the Purchasers shall have received the Subordination Agreement from the
Company and the purchasers of the Original Notes, which agreement shall be in
the form attached hereto as Exhibit C and in form and substance satisfactory to
the Purchasers.
2.7. Agreement of ▇▇▇▇ ▇▇▇▇▇▇.
The Purchasers shall have received a letter agreement (the
"Letter Agreement") from ▇▇▇▇ ▇▇▇▇▇▇, which agreement shall be in the form
attached hereto as Exhibit D and in form and substance satisfactory to the
Purchasers.
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers that,
except as set forth in the Disclosure Schedule attached hereto as Schedule B, as
of the date hereof and as of the Closing Date:
3.1. Corporate Existence, Power and Authority.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey.
(b) The Company has all requisite power, authority (corporate
and other) and legal right to execute, deliver, enter into, consummate and
perform this Agreement, including, without limitation, the issuance by the
Company of the Notes and the Common Shares as contemplated herein. The
execution, delivery and performance by the Company of this Agreement (including,
without limitation, the issuance by the Company of the Notes and the Common
Shares, as contemplated herein) have been duly authorized by all required
corporate and other actions. The Company has duly executed and delivered this
Agreement and, at Closing, the Company will duly execute and deliver the Notes
and the Common Shares. This Agreement and the Notes at Closing will constitute
the legal, valid and binding obligations of the Company enforceable against it
in accordance with their respective terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to the rights of
creditors generally and the availability of equitable remedies.
3.2. Capitalization.
(a) The authorized capital stock of the Company consists of
20,000,000 shares of Common Stock and 3,000,000 shares of preferred stock, no
par value (the "Preferred Stock"). At the time of the Closing Date the Company
shall have issued and outstanding 791,346 shares of Common Stock and no shares
of Preferred Stock. The Disclosure Schedule attached as Schedule B hereto sets
forth the shares of Common Stock of the Company and the Preferred Stock that
will be outstanding on the Closing Date and the owners thereof, which ownership
in each case is free and clear of all Liens, options or claims of any kind
(other than those created by such owner). At Closing, all of such shares of
capital stock will be duly authorized and validly issued and will be outstanding
and fully paid and non-assessable.
(b) Except for options contemplated to be issued by the
Company as compensation under its Employee Stock Compensation Program and 1996
Stock Option Plan for Independent Directors and to be issued to ▇▇▇▇▇▇ ▇▇▇▇▇
pursuant to the letter of intent between Lirpaco Inc. and the Company, such
options covering shares of Common Stock not exceeding in the aggregate 8% of the
shares of Common Stock outstanding after the IPO, there are no outstanding
options, warrants, subscriptions, rights, convertible securities or other
agreements or plans under which the Company may become obligated to issue, sell
or transfer shares of its capital stock or other securities.
(c) Except as set forth in Section 12 of this Agreement, there
are no registration rights with respect to any capital stock of the Company
which will be outstanding on the Closing Date
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or with respect to any capital stock referred to in Section 3.2(b) above. Except
as set forth on the Disclosure Schedule, there are no voting agreements, voting
trusts, proxies or other agreements or understandings with respect to the voting
of any capital stock of the Company.
3.3. Subsidiaries
The Company has no Subsidiaries.
3.4. Business.
The Company was incorporated for the purpose of effecting a
consolidation transaction in the electronic document processing industry and, in
connection therewith, shall acquire the Founding Companies and consummate the
IPO. Prior to the Closing Date, the Company has not been and will not be engaged
in any material business, has no material agreements and has not and will not
have any material assets or material liabilities, other than in connection with
this Agreement, the IPO and the other transactions contemplated herein.
3.5. No Defaults or Conflicts.
(a) No Event of Default or Potential Default has occurred and
is continuing.
(b) The Company is not in violation or default under any
agreement or instrument to which it is a party or by which it or its properties
may be bound and is not in default under any order, writ, injunction, judgment
or decree of any court or other governmental authority or arbitrator(s).
(c) The execution, delivery and performance by the Company of
this Agreement (including, without limitation, the issuance by the Company of
the Notes and the Common Shares as contemplated herein) does not and will not
(i) violate or conflict with (A) the certificate of incorporation or by-laws of
the Company or (B) any law, rule, regulation or order of any governmental
authority, or any order, writ, injunction, judgment, decree, award or other
action of any court or governmental authority or arbitrator(s), or any agreement
or other instrument applicable to the Company or any of its respective
properties, (ii) result in the creation of any Lien upon any of the Company's
properties, assets or revenues or (iii) require the consent, waiver, approval,
order or authorization of, or declaration, registration, qualification or filing
with, any Person (whether or not a governmental authority and including, without
limitation, any shareholder approval). No provision referred to in the preceding
clause (i) materially adversely affects or will materially adversely affect the
assets, properties, liabilities, business, affairs, results of operations,
condition (financial or otherwise) or business prospects of the Company or its
ability to perform any of its respective obligations under this Agreement or any
of the transactions contemplated hereby.
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3.6. Use of Proceeds.
The net proceeds realized from the sale of the Notes and the
Common Shares shall be disbursed in connection with the payment of certain of
the Company's costs and expenses incident to its formation, the acquisition of
the Founding Companies and the IPO in accordance with the Escrow Agreement to be
entered into between the Company, the Escrow Agent and the Purchasers.
3.7. Outstanding Securities; Offering of Securities.
All securities (as defined in the Securities Act) of the
Company have been offered, issued, sold and delivered in compliance with, or
pursuant to exemptions from, all applicable federal and state laws, and the
rules and regulations of federal and state regulatory bodies governing the
offering, issuance, sale and delivery of securities. Neither the Company, nor
any agent or other Person acting on its behalf has, directly or indirectly, (i)
offered any of the Notes, the Common Shares or any other security of the Company
(A) by any form of general solicitation or general advertising (within the
meaning of Regulation D under the Securities Act) or (B) for sale to or
solicited offers to buy any thereof from, or otherwise approached or negotiated
with respect thereto with, any Person other than the Purchasers each of which
the Company reasonably believed was (x) an "accredited investor" within the
meaning of Regulation D under the Securities Act or (y) has an adequate net
worth and means of providing for its current financial needs and possible
contingencies, has no need for liquidity in this investment, is able to bear the
substantial economic risks of an investment in the Notes and Common Shares, can
afford a complete loss of such investment, and does not have an overall
commitment to investments which are not readily marketable that is
disproportionate to such Purchaser's net worth, including the investment
contemplated pursuant to this Agreement, or (ii) done or caused to be done (or
has omitted to do or to cause to be done) any act which act (or which omission)
would result in bringing the issuance or sale of the Securities within the
provisions of Section 5 of the Securities Act or the filing, notification or
reporting provisions of any state securities laws.
3.8. Litigation.
There are no actions, suits or proceedings pending or, to the
best of the Company's knowledge, threatened against or affecting the Company or
the properties of the Company before any federal, state or local governmental
authority or arbitrator.
3.9. Validity of the Letters of Intent.
The Company has entered into a letter of intent (each, a
"Letter of Intent," and collectively, the "Letters of Intent") with each of the
Founding Companies. Each Letter of Intent is currently in full force and effect,
constitutes a binding obligation to the extent set forth therein, has not been
amended or terminated and, to the best of the Company's knowledge, sets forth an
accurate description in all material respects of the current expectations and
understandings of the parties thereto through the date hereof. To the best of
the Company's knowledge, no event, occurrence or circumstance has happened which
could (i) cause any party to any Letter of Intent to terminate such letter or
(ii) jeopardize the transactions described in the Letters of Intent.
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, jointly and severally, hereby makes the
representations and warranties to the Company contained in this Section 4, as of
the date hereof and as of the Closing Date.
(a) Each Purchaser has all requisite power, authority and
legal right to execute, deliver and perform this Agreement. If the Purchaser is
an entity in corporate or partnership form, the execution, delivery and
performance of this Agreement by such Purchaser has been duly authorized by all
required corporate or partnership actions. Each Purchaser has duly executed and
delivered this Agreement, and this Agreement constitutes the legal, valid and
binding obligation of such Purchaser enforceable against such Purchaser in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to the rights of creditors generally
and the availability of equitable remedies.
(b) Except as any Purchaser has otherwise advised the Company
and such Purchaser's counsel in writing, each Purchaser is purchasing the
Securities to be purchased by it for its own account. The Securities are being
purchased by each Purchaser for investment and not with a present view to any
distribution thereof in violation of any applicable securities laws. If any
Purchaser should in the future decide to dispose of any of its Securities, it is
understood that it may do so but only in compliance with the Securities Act and
applicable securities laws. Each Purchaser is either (i) an "accredited
investor" as defined in Rule 501(a) under the Securities Act or (ii) has an
adequate net worth and means of providing for its current financial needs and
possible contingencies, has no need for liquidity in this investment, is able to
bear the substantial economic risks of an investment in the Notes and Common
Shares, can afford a complete loss of such investment, and does not have an
overall commitment to investments which are not readily marketable that is
disproportionate to such Purchaser's net worth, including the investment
contemplated pursuant to this Agreement.
SECTION 5. AFFIRMATIVE COVENANTS
So long as the Notes remain unpaid, the Company will comply
with the following requirements, unless the Representative shall otherwise
consent in writing:
5.1. Maintenance of Existence, Properties and Franchises;
Compliance with Law.
The Company agrees to:
(a) maintain its corporate existence, rights and other
franchises in full force and effect;
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(b) comply in all material respects with all applicable laws,
rules, regulations, orders, rules, rulings, certificates, licenses, regulations,
demands, judgments, writs, injunctions, awards and decrees; and
(c) pay promptly when due all taxes, fees, assessments and
other governmental charges imposed upon its properties, assets or income and all
claims or indebtedness (including, without limitation, materialmen's, vendors,
workmen's and like claims) which might become a lien upon such properties or
assets.
5.2. Listing of Shares.
The Company agrees that if any shares of the Company's Common
Stock are listed on any national securities exchange (or on the National
Association of Securities Dealers, Inc., Automated Quotation System or
comparable system), then the Company will take such action as may be necessary,
from time to time, to list all outstanding Common Shares on such exchange (or
system, as the case may be).
5.3. Exchange Act Registration.
The Company agrees that as soon as the Company is either
required to or chooses to file a registration statement with respect to Common
Stock of the Company under Section 6 of the Securities Act or Section 12(b) or
Section 12(g), whichever is applicable, of the Exchange Act, then thereafter:
The Company will maintain effective a registration statement
(containing such information and documents as the Commission shall specify and
otherwise complying with the Exchange Act), under Section 12(b) or Section
12(g), whichever is applicable, of the Exchange Act, with respect to the Common
Stock of the Company, and the Company will file on time such information,
documents and reports as the Commission may require or prescribe for companies
whose stock has been registered pursuant to such Section 12(b) or Section 12(g),
whichever is applicable.
5.4. Delivery of Information for Rule 144A Transactions.
If a holder of Securities proposes to transfer any such
Securities pursuant to Rule 144A under the Securities Act (as in effect from
time to time), the Company agrees to provide (upon the request of such holder or
the prospective transferee) to such holder and (if requested) to the prospective
transferee any financial or other information concerning the Company which is
required to be delivered by such holder to any transferee of such Securities
pursuant to such Rule 144A.
5.5. Failure to Consummate the IPO; Sale of Company Assets.
In the event that the IPO is not consummated by June 30, 1997,
the Company shall use its best efforts to liquidate all of its assets in order
to satisfy any and all of its obligations. Without
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limiting the foregoing, such assets shall be deemed to include any partially
completed or completed audits performed in furtherance of the registration of
the Common Stock in connection with the IPO. The Company shall use its best
efforts to sell such audits to the company or companies to which such audits
relate at the prevailing market rate for comparable audits.
5.6. Status of Acquisition of the Founding Companies and the
IPO.
The Company agrees to advise the Representative, to the extent
required to keep the Purchasers reasonably informed, of the progress and status
of the negotiations between the Company and the Founding Companies relating to
the acquisition of the Founding Companies and the IPO. The Company will promptly
notify the Representative of the happening of any event, occurrence or
circumstance which could (i) cause any party to any Letter of Intent to
terminate such letter or (ii) jeopardize the transactions described in the
Letters of Intent or the consummation of the IPO.
5.7. Amendment of the Subordinated Notes.
The Company agrees that it shall not amend, modify or change
any term or provision of the Subordinated Notes, other than to amend the
maturity date to June 30, 1997, without the prior written consent of the
Representative.
SECTION 6. NEGATIVE COVENANTS
So long as the Notes remain unpaid, the Company will comply
with the following requirements, unless the Representative shall otherwise
consent in writing:
6.1. Indebtedness.
The Company will not create, incur, assume or be or remain
liable on any Indebtedness other than Indebtedness represented by or incurred
under the Notes, the Subordinated Notes and any bank line of credit to become
effective after the closing of an IPO.
6.2. No Change in Business.
The Company will not change substantially the character of its
business as conducted on the Closing Date as represented in Section 3.4 hereof.
6.3. Consolidation, Merger and Sale.
The Company will not do any of the following (or agree to do
any of the following): (a) wind up, liquidate or dissolve its affairs; (b) sell,
lease, transfer or otherwise dispose of any of its assets to any other Person;
or (c) consolidate with or merge into or with any other Person, irrespective of
whether the Company is the surviving corporation in such transaction.
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6.4. Liens.
The Company will not create, incur, assume or suffer to exist
any Lien upon or with respect to any of its properties, revenues or assets,
whether now owned or hereafter acquired, other than in connection with any bank
line of credit to become effective after the closing of an IPO.
6.5. Private Placement Status.
Neither the Company nor any agent nor other Person acting on
the Company's behalf will do or cause to be done (or will omit to do or to cause
to be done) any act which act (or which omission) would result in bringing the
issuance or sale of the Securities within the provisions of Section 5 of the
Securities Act or the filing, notification or reporting requirements of any
state securities law; provided, that this Section 6.5 shall not restrict filings
required to be made to perfect exemptions from the provision of any state
securities law.
6.6. Issuances of Stock.
The Company shall not issue for whatever reason, (i) any
capital stock of the Company or (ii) any option, warrant or other right to
acquire, purchase or receive any capital stock of the Company or other
securities convertible into capital stock of the Company, whether or not such
option, warrant or rights are immediately exercisable or such other securities
are immediately convertible, other than in connection with (x) the Employee
Stock Compensation Program or the 1996 Stock Option Plan for Independent
Directors, not to exceed in the aggregate 8% of the number of shares of Common
Stock to be outstanding after the IPO, and (y) Letters of Intent.
6.7. Amendments to Charter or By-Laws; Other Agreements.
The Company shall not (i) amend its certificate or articles of
incorporation or by-laws or (ii) agree to, consent to or request any agreement
or instrument, or any amendment, modification, supplement or waiver of any of
the provisions of any agreement or instrument, evidencing the terms of
(including the purchase and sale of) any form of capital stock of (or any
option, warrant or other right to acquire, purchase or receive capital stock of)
the Company.
6.8. Restricted Payments.
The Company shall not declare or make or permit to be declared
or made any Restricted Payment.
6.9. Transactions with Related Parties.
Except for this Agreement, the Securities and the other
documents contemplated in connection herein or therein, the consulting agreement
and agreement with ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and his firm for the payment of consulting
fees at the closing of an IPO and the Subordinated Notes, the Company will not
enter into, assume or suffer to exist any transaction, including the purchase,
sale or
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exchange of property or the rendering of any services, with any Affiliate of the
Company, any officer or director thereof or any Person which beneficially owns
or holds 5% or more of the equity securities, or 5% or more of the equity
interest thereof (each a "Related Party"), or enter into, assume or suffer to
exist any employment or consulting contract with any Related Party, except a
transaction or contract which is in the ordinary course of the Company's
business and which is upon fair and reasonable terms not less favorable to the
Company than it would obtain in a comparable arm's length transaction with a
Person that is not a Related Party.
SECTION 7. EVENTS OF DEFAULT
(a) Any of the following shall constitute an "Event of
Default" with respect to the Notes:
(i) the Company defaults in the payment of (A) any
part of the principal of or premium, if any, on any Note, when the same shall
become due and payable, whether at maturity or at a date fixed for prepayment or
by acceleration or otherwise, or (B) the interest on any Note, when the same
shall become due and payable; or
(ii) the Company defaults in the performance of any
other agreement or covenant contained in this Agreement, the Notes or any other
agreement or covenant in favor of the holders of the Notes and such default or
violation shall not have been remedied within ten (10) days of receipt of notice
thereof; or
(iii) any representation or warranty by the Company
in this Agreement or in any certificate delivered by the Company pursuant hereto
or pursuant to any other agreement contemplated hereby proves to have been
incorrect in any material respect when made; or
(iv) with respect to any Indebtedness of the Company,
(A) the Company defaults in the payment of any part of the principal of or
premium, if any, on any such Indebtedness, when the same shall become due and
payable; or (B) the Company defaults in the payment of any interest due and
payable in connection with such Indebtedness; or (C) such Indebtedness shall
become due and payable prior to its stated or scheduled maturity as a result of
acceleration or optional or mandatory prepayment for any reason; or
(v) a final judgment or order is rendered by a court
of competent jurisdiction against the Company and such judgment or order shall
have continued undischarged or unstayed for thirty (30) days after entry
thereof; or
(vi) the Company shall make an assignment for the
benefit of creditors, or shall admit in writing its inability to pay its debts;
or a receiver or trustee is appointed for the Company or for substantially all
of its assets and, if appointed without its consent, such appointment is not
discharged or stayed within thirty (30) days; or proceedings under any law
relating to bankruptcy, insolvency, or the reorganization or relief of debtors
are instituted by or against the Company, and, if contested by it, are not
dismissed or stayed within thirty (30) days; or any writ of attachment or
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execution or any similar process is issued or levied against the Company or any
significant part of its property and in not released, stayed, bonded or vacated
within thirty (30) days after its issue or levy; or the Company takes corporate
action in furtherance of any of the foregoing.
(b) If an Event of Default occurs pursuant to any of clauses
(i) through (v) or clause (vii) of Section 7(a) hereof, then and in each such
event the Majority Noteholders may at any time (unless all Events of Default
shall theretofore have been waived or remedied) at its or their option, by
written notice or notices to the Company, declare all the Notes to be due and
payable. Upon any such declaration or upon the occurrence of an Event of Default
pursuant to clause (vi) of Section 7(a) hereof (in which case no declaration is
required), all Notes shall forthwith immediately mature and become due and
payable, together with interest accrued thereon all without presentment, demand,
protest or notice, all of which are hereby waived. However, if, at any time
after the principal of the Notes shall so become due and payable and prior to
the date of maturity stated in the Notes, all arrears of principal and interest
on the Notes (with interest at the rate specified in the Notes on any overdue
principal and any overdue premium and, to the extent legally enforceable, on an
overdue interest) shall be paid to the holders of Notes by or for the account of
the Company, then the Majority Noteholders, by written notice or notices to the
Company, may waive such Event of Default and its consequences and rescind or
annul such declaration, provided, that at the time of such waiver, rescission or
annulment (x) no judgment or decree shall have been entered for the payment of
any amounts due to any holder of Notes under the Notes or this Agreement and (y)
all other Events of Default or Potential Defaults under this Agreement shall
have been waived pursuant to this Section 7(b) or cured. No waiver pursuant to
the preceding sentence shall extend to or affect any subsequent Event of Default
or impair any right or remedy resulting therefrom.
(c) If any holder of a Note shall give any notice or take any
other action with respect to a claimed Potential Default or Event of Default,
the Company, forthwith upon receipt of such notice or obtaining knowledge of
such other action, will give written notice thereof to all other holders of the
Notes then outstanding, describing such notice or other action and the nature of
the claimed Potential Default or Event of Default.
SECTION 8. REMEDIES
Upon the occurrence of an Event of Default or at any time
thereafter until such Event of Default is cured to the written satisfaction of
the Representative of the Purchasers, as is specified in this Section 8, such
holders may exercise any or all of the following rights and remedies:
(a) The Representative of the Purchasers may, by notice to the
Company, declare the entire unpaid principal amount of the Notes, all interest
accrued and unpaid thereon, and all other amounts payable under this Agreement
to be forthwith due and payable, whereupon the Notes, all such accrued interest
and all such amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Company.
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(b) The Representative of the Purchasers may, without notice
to the Company and without further action, apply any and all money owing by the
holders of Notes to the Company to the payment of the Notes, including interest
accrued thereon, and of all other sums then owing by the Company hereunder.
(c) The Representative of the Purchasers may exercise any
other rights and remedies available to it by law or agreement.
(d) All amounts payable by the Company in connection with the
Notes shall be paid without counterclaim, setoff, deduction or defense and
without abatement, suspension, deferment, diminution or reduction.
(e) No course of dealing and no delay on the part of any
holder of any Notes or any party to this Agreement in exercising any rights or
remedies shall operate as a waiver thereof or otherwise prejudice such holder's
or party's rights. No right or remedy conferred hereby shall be exclusive of any
other right or remedy referred to herein or therein in such Note or available at
law, in equity, by statute or otherwise.
(f) Holders of Notes shall, in addition to other remedies
provided by law, have the right and remedy to have the provisions of this
Agreement or such Notes specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any breach or threatened
breach of the provisions of this Agreement or any Notes will cause irreparable
injury to holders of Notes and that money damages will not provide an adequate
remedy. Nothing contained herein shall be construed as prohibiting a holder of
Notes from pursuing any other remedies available to such holder for such breach
or threatened breach, including, without limitation, the recovery of damages
from the Company.
Notwithstanding the foregoing, prior to any payment made pursuant to this
Section 8, payment shall be made first to satisfy any accrued amounts of fees
and disbursements, in accordance with the terms of the Escrow Agreement.
SECTION 9. AMENDMENTS AND WAIVERS; CONSENT
(a) This Agreement may be amended (or any provision hereof
waived) only with the written consent of the Majority Noteholders and the
Majority Common Shareholders; the Notes may be amended (or any provision thereof
waived) only with the written consent of the Majority Noteholders; provided,
however, that no such amendment or waiver shall (i) extend the fixed maturity of
any Note, reduce the rate or change the time of payment of interest thereon,
reduce the principal amount thereof, change the currency in which payments are
to be made without the consent of each holder of each Note so affected or (ii)
modify the definition in Section 14 hereof of "Majority Noteholders" or modify
clause (i) of this proviso, without the consent of the holders of all the Notes
then outstanding, or (iii) modify the definition in Section 14 hereof of
"Majority Common Shareholders," without the consent of the holders of all the
Common Shares then outstanding.
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(b) The Company agrees that all holders of Securities shall be
notified by the Company in advance of any proposed amendment or waiver, but
failure to give such notice shall not in any way affect the validity of any such
amendment or waiver. In addition, promptly after obtaining the written consent
of the holders herein provided, the Company shall transmit a copy of any
amendment or waiver which has been adopted to all holders of Securities then
outstanding, but failure to transmit copies shall not in any way affect the
validity of any such amendment or waiver.
(c) The Company and each holder of Securities then or
thereafter outstanding shall be bound by any amendment or waiver effected in
accordance with the provisions of this Section 9(c). In the case of a Note, the
foregoing shall apply whether or not any Note shall have been marked to indicate
such modification, but any Note issued thereafter shall bear a notation as to
any such modification (but the failure to bear any such notation shall not
affect the validity of any such subsequently issued Note, which shall be
enforceable in accordance with its terms subject to any such modification).
(d) Any provision of this Agreement relating to the consent,
determination, decision or waiver of a holder or holders of Securities or of the
Majority Noteholders or of the Majority Common Shareholders, as the case may be,
means such holder's or Majority Noteholders' or Majority Common Shareholders',
as the case may be, consent, determination, decision or waiver, as the case may
be, in such holder's or Majority Noteholders' or Majority Common Shareholders',
as the case may be, sole discretion.
SECTION 10. EXCHANGE OF SECURITIES; ACCRUED INTEREST; CANCELLATION OF
SURRENDERED NOTES; REPLACEMENT
(a) Subject to Section 11 hereof, at any time at the request
of any holder of one or more of the Notes made to the Company at the Company's
office, the Company at its expense will issue and deliver (insured to such
holder's reasonable satisfaction) to or upon the order of the holder in exchange
therefor new Notes, in such denomination or denominations as such holder may
request (which must be in denominations of $10,000 or any larger multiple of
$10,000, plus one Note in a lesser denomination, if required), in aggregate
principal amount equal to the unpaid principal amount of the Note or Notes
surrendered and substantially in the form thereof, dated as of the date to which
interest has been paid on the Note or Notes surrendered (or, if no interest has
yet been so paid thereon, then dated the date of the Note or Notes so
surrendered) and payable to such person or persons order as may be designated by
such holder. Any such new Note shall bear any notation required by Section 9(c)
hereof (but any failure to bear any such notation shall not affect the validity
or enforceability of the Note.)
(b) Subject to Section 11 hereof, at any time at the request
of any holder of Common Shares to the Company at its office, the Company at its
expense (except for any transfer tax or any other tax arising out of the
exchange) will issue and deliver (insured to such holder's reasonable
satisfaction) to or upon the order of the holder in exchange therefor a new
Common Share certificate or certificates of like tenor, in such amount or
amounts as such holder may request, in the aggregate
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representing the number of Common Shares represented by such surrendered
certificate or certificates, and in the name of such holder or as such holder
may direct.
(c) Upon receipt of evidence satisfactory to the Company of
the loss, theft, destruction or mutilation of any Securities and, in the case of
any such loss, theft or destruction, upon delivery of an indemnity agreement
reasonably satisfactory to the Company (if requested by the Company and
unsecured in the case of the original Purchasers as of the Closing Date or an
institutional holder), or in the case of any such mutilation, upon surrender of
such Securities (which surrendered Securities shall be canceled by the Company),
the Company will issue and deliver (insured to the holder's reasonable
satisfaction) a new Note or a new Common Share certificate of like tenor in lieu
of such lost, stolen, destroyed or mutilated Note or certificate as if the lost,
stolen, destroyed or mutilated Note or certificate were then surrendered for
exchange.
SECTION 11. RESTRICTIONS ON TRANSFER
(a) Each holder of any Securities by acceptance thereof agrees
that it will not sell or otherwise dispose of any Securities unless (i) such
Securities have been registered under the Securities Act and, to the extent
required, under any applicable state securities laws, or (ii) such Securities
are sold in accordance with the applicable requirements and limitations of Rule
144 or Rule 144A and any applicable state securities laws or (iii) the Company
has been furnished with an opinion or opinions from counsel to such holder to
the effect that registration under the Securities Act is not required for the
transfer as proposed (which opinion may be conditioned upon the transferee's
assuming the obligations of a holder of Securities under this Section) or (iv)
the Company has been furnished with a letter from the Division of Corporate
Finance of the Commission to the effect that such Division would not recommend
any action to the Commission if such proposed transfer were effected without a
registration statement effective under the Securities Act.
(b) The Company may endorse on all Notes and certificates
representing the other Securities a legend stating or referring to the transfer
restrictions contained in paragraph (a) above; provided, that no such legend
shall be endorsed on any Notes or certificates representing the other Securities
which, when issued, are no longer subject to the restrictions of this Section
11; provided, further, that if a transfer is made pursuant to clause (i), (ii)
(other than pursuant to Rule 144A) or (iv) (if the letter referred to therein
also applies to future transfers) of paragraph (a) or if an opinion of counsel
provided pursuant to clause (iii) of paragraph (a) concludes that the legend is
no longer necessary, the Company will deliver upon transfer Notes or
certificates, as the case may be, without such legends.
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SECTION 12. REGISTRATION RIGHTS
12.1. Demand Registration Rights.
(a) At any time after the first anniversary but prior to the
seventh anniversary of the consummation of the IPO, the Majority Common
Shareholders may make a Registration Demand requesting registration under the
Securities Act of all or part of the Common Shares. The Company shall use its
best efforts to cause the Common Shares as to which registration is requested in
the Registration Demand to be promptly registered under the Securities Act (and
in any event, such registration shall be effected within ninety (90) days
following receipt of a Registration Demand). Within ten (10) days after receipt
of any such Registration Demand, the Company shall give written notice of the
proposed registration to all other holders of Common Shares. All holders of
Common Shares and any Founding Company shareholder that received shares of
Common Stock in connection with the merger of such companies into the Company
shall have the option to include all or part of their Common Shares or shares of
Common Stock, as the case may be, in any registration under this Section 12.1;
provided that in the event that the underwriters of a registered offering
propose to reduce such offering, all participants in such offering shall have
their participation reduced pro rata. Any holder may exercise such option by
delivering written notice of exercise to the Company within fifteen (15) days
after receiving notice from the Company of the proposed registration. Any such
notice to the Company shall specify the number of Common Shares to be included
in such registration and the Company shall be obligated to include such Common
Shares in any such registration (except as provided herein).
12.2. Number of Demand Registrations. Subject to the terms and
conditions hereof, the Majority Common Shareholders shall be entitled to request
(and the Company shall be required to effect) one (1) registration under the
Securities Act of all or part of the Common Shares. For purposes hereof, if (i)
the Company withdraws a registration statement prior to the effectiveness
thereof, (ii) the sale of securities subject to a registration statement filed
pursuant to any Registration Demand is not consummated because of the failure of
the Company to comply with the terms of this Agreement, (iii) upon the
consummation of a sale of Common Stock subject to a registration statement filed
pursuant to any Registration Demand, less than eighty percent (80%) of the
Common Stock registered for sale or requested to be registered for sale
thereunder are sold, or (iv) a revocation notice has been delivered and expenses
of the Company have been paid as provided in Section 12.3 hereof, such
registration statement shall not be counted as the registration to which such
Majority Common Shareholders are entitled under this Section 12.2.
12.3. Right of Majority Common Shareholders to Revoke
Registration Demand. After the delivery of a Registration Demand under this
Section 12, at any time prior to the effective date of the registration relating
to such Registration Demand, the Majority Common Shareholders making such
Registration Demand may revoke such request by providing written notice of such
revocation to the Company. Any such revocation shall count as the registration
to which such revoking Majority Common Shareholders are entitled under Section
12.2 hereof unless the revoking holders of Common Shares pay all of the
Company's out-of-pocket expenses with respect to such
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registration and qualification incurred to the date of the revocation notice. In
any such event, the registration statement initiated by the revoked Registration
Demand need not be filed.
12.4. Right of Company to Delay or Postpone Registration. The
Company may delay or postpone the registration of Common Shares following a
Registration Demand for a period of not more than ninety (90) days after receipt
of such Registration Demand if the Company furnishes to each holder of Common
Shares to be included in the applicable registration a copy of a resolution of
the Board of Directors certified by the Secretary of the Company stating that
(i) such registration would, in the good faith judgment of the Company's Board
of Directors (the "Board"), adversely affect a material pending third party
financing, reorganization, recapitalization, merger, consolidation or similar
transaction, or (ii) such registration would, in the good faith judgment of the
Board, have a Material Adverse Effect on the Company's business or financial
condition and, in each case, stating the basis of such good faith judgment;
provided, however, that the Company during such delay or postponement may not
file a registration statement for securities to be issued and sold for anyone
other than the holders of Common Shares (but may file a registration statement
for its own account).
12.5. Selection of Underwriters. The managing underwriter and
all other underwriters participating in any underwritten public offering covered
by a Registration Demand shall be selected by the Majority Common Shareholders
that participate in such registration.
12.6. Piggyback Rights.
(a) At any time prior to the seventh anniversary of the date
hereof, if the Company at any time proposes to file a registration statement
under the Securities Act for any sales of Common Stock (or any warrants,
convertibles, rights or other securities related or linked to any shares of
Common Stock) on behalf of the Company or otherwise, the Company shall give
written notice of such registration no later than thirty (30) days before its
filing with the Commission to all holders of Common Shares; provided, that
registrations relating solely to securities to be issued by the Company in
connection with any employee stock option or employee stock purchase or savings
plan on Form S-8 (or successor forms) or on Form S-4 (or successor forms) under
the Securities Act shall not be subject to this Section 12.1.
(b) The Company shall not be obligated to so include the
Common Shares to the extent any underwriter or underwriters of such securities
being otherwise registered by the Company determines in good faith that the
inclusion of such Common Shares would jeopardize the successful sale of such
other securities proposed to be sold by such underwriter or underwriters, in
which case holders of Common Shares desiring to participate in such registration
shall be entitled to participate in any such reduced number of Common Shares (if
any) which may be included in such registration (along with other holders of
Common Stock exercising piggyback rights with respect to such registration) in
proportion to the amount of shares of Common Stock held by such holders.
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12.7. Expenses.
Subject to the limitations contained in this Section 12.7 and
except as otherwise specifically provided in this Section 12, all costs and
expenses of registration and qualification pursuant to Section 12.1 or 12.6
hereof shall be borne by the Company. Such costs and expenses shall include,
without limitation, underwriting fees or commissions in connection with the
registration and qualification pursuant to Section 12.1 or 12.6 hereof (other
than with respect to the Common Shares to be sold by the holders of such shares,
as to which underwriting discounts and commissions shall be paid by the selling
holders), the fees and expenses of counsel for the Company and of its
accountants, all other costs, fees and expenses of the Company incident to the
preparation, printing, registration and filing under the Securities Act of the
registration statement and all amendments and supplements thereto, the
reasonable fees and expenses of one counsel to the holders of Common Shares
relating to such registration and qualification, the cost of furnishing copies
of each preliminary prospectus, each final prospectus and each amendment or
supplement thereto to underwriters, dealers and other purchasers of the Common
Shares and the costs and expenses (including reasonable fees and disbursements
of counsel) incurred in connection with the qualification of the Common Shares
under the Blue Sky laws of various jurisdictions.
12.8. Procedures.
(a) In the case of each registration or qualification pursuant
to this Section 12, the Company will keep all holders of Common Shares advised
in writing as to the initiation of proceedings for such registration and
qualification and as to the completion thereof, and will advise any such holder,
upon request, of the progress of such proceedings. The Company shall prepare and
file with the Commission a registration statement with respect to the Common
Shares and shall use its best efforts to cause such registration statement to
become effective.
(b) At the Company's expense, the Company will keep each
registration and qualification under this Section 12 effective (and in
compliance with the Securities Act) by such action as may be necessary or
appropriate for a period of one hundred twenty (120) days after the effective
date of such registration statement, including, without limitation, the filing
of post-effective amendments and supplements to any registration statement or
prospectus necessary to keep the registration statement current and the further
qualification under any applicable Blue Sky or other state securities laws to
permit such sale or distribution, all as requested by such holder or holders.
(c) The Company will immediately notify each holder on whose
behalf Common Shares have been registered pursuant to this Section 12, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing and, at the request of
any holder of Common Shares, the Company will prepare a supplement or amendment
to such prospectus so that, as thereafter delivered to purchasers of Common
Shares, such prospectus will not
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contain an untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading.
(d) Without limiting any other provision hereof, in connection
with any registration of Common Shares under this Section 12, the Company will
use its best efforts to comply with the Securities Act, the Exchange Act and all
applicable rules and regulations of the Commission, and will make generally
available to its securities holders, as soon as reasonably practicable, an
earning statement covering a period of at least twelve (12) months, beginning
with the first month of the first fiscal quarter after the effective date of
such registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act.
(e) In connection with any registration of Common Shares under
this Section 12, the Company will provide a transfer agent and registrar for the
Common Shares not later than the effective date of such registration statement.
(f) In the event of the issuance of any stop order suspending
the effectiveness of a registration statement filed pursuant to this Section 12,
or of any order suspending or preventing the use of any related prospectus or
suspending the qualification of any securities included in such registration
statement for sale in any jurisdiction, the Company will use its best efforts
promptly to obtain the withdrawal of such order.
(g) The Company shall not be required to include any of the
holders' Common Shares in an underwritten offering of the Company's securities
unless such holders accept the terms of the underwriting as agreed upon between
the Company and the underwriters (which, in the case of a Registration Demand
shall be selected by the Majority Common Shareholders pursuant to Section 12.5
and in the case of the exercise of a piggyback registration right, shall be
selected by the Company), which terms shall include customary provisions with
respect to indemnification and contribution and customary representations and
warranties by the Company (which shall be made to and for the benefit of the
underwriters and the holders of Common Shares to be sold in such offering).
(h) In connection with the preparation and filing of each
registration statement registering Common Shares under this Section 12, the
Company will give the holders of the Common Shares on whose behalf such shares
are to be so registered and their underwriters, if any, and their respective
counsel and accountants, the opportunity to participate in the preparation of
such registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers, its counsel and the independent
public accountants who have certified its financial statements, as shall be
reasonably necessary, in the reasonable opinion of such holders or such
underwriters or their counsel, in order to conduct a reasonable and diligent
investigation within the meaning of the Securities Act.
(i) In connection with the preparation and filing of each
registration statement registering Common Shares under this Section 12, the
Company will obtain a comfort letter from its
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independent public accountants in customary form and covering such matters of
the type customarily covered by comfort letters as the Majority Common
Shareholders shall reasonably request.
(j) In connection with the preparation and filing of each
registration statement registering Common Shares under this Section 12, the
Company will obtain a legal opinion of its outside counsel, dated the closing
date under the underwriting agreement, with respect to the registration
statement, each amendment and supplement thereto, the prospectus included
therein (including the preliminary prospectus) and such other documents relating
thereto in customary form and covering such matters of the type customarily
covered by legal opinions of such nature.
12.9. Indemnification.
The Company will indemnify and hold harmless each holder of
Common Shares and any underwriter (as defined in the Securities Act) for such
holder and each person, if any, who controls the holder or underwriter within
the meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several, and expenses (including reasonable attorneys'
fees and expenses and reasonable costs of investigation) to which the holder or
underwriter or such controlling person may be subject, under the Securities Act
or otherwise, insofar as any thereof arise out of or are based upon (a) any
untrue statement or alleged untrue statement of a material fact contained in (i)
any registration statement under which such Common Shares were registered under
the Securities Act pursuant to this Section 12 hereof, any prospectus or
preliminary prospectus contained therein, or any amendment or supplement thereto
or (ii) any other document incident to the registration of the Common Shares
under the Securities Act or the qualification of the Common Shares under any
state securities laws applicable to the Company or (b) the omission or alleged
omission to state in any item referred to in the preceding clause (a) a material
fact required to be stated therein or necessary to make the statements therein
not misleading or (c) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act or any other federal or state securities law,
rule or regulation applicable to the Company and relating to action or inaction
by the Company in connection with any such registration or qualification, except
insofar as such losses, claims, damages, liabilities or expenses arise out of or
are based upon any untrue statement or alleged untrue statement or omission or
alleged omission based upon information furnished to the Company in writing by
such holder or by any underwriter for such holder expressly for use therein
(with respect to which information such holder or underwriter shall so indemnify
and hold harmless the Company, any underwriter for the Company and each person,
if any, who controls the Company or such underwriter within the meaning of the
Securities Act).
SECTION 13. NOTICES
Unless otherwise expressly specified or permitted by the terms
hereof, all notices, requests, elections, demands, consents and other
communications hereunder or with respect to any Securities shall be in writing
and shall be delivered by hand or shall be sent by telecopy (and if sent by
telecopy, shall be confirmed by registered mail, return receipt requested, or by
overnight mail or courier, postage and delivery charges prepaid), to the
following addresses:
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(a) if to any Purchaser, at such Purchaser's address as set
forth in Schedule A hereto, or at such other address as may be furnished to the
Company by such Purchaser in writing; or
(b) if to any other holder of any Securities, at such address
as the payee or registered holder thereof shall have designated to the Company
in writing; or
(c) if to the Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, Attention: President, or at such other address as may be
furnished in writing by the Company to the Purchasers and to the other holders
of Securities.
Whenever any notice is required to be given hereunder, such notice shall be
deemed given and such requirement satisfied only when such notice is delivered
or, if sent by telecopier, when received. Addresses may be changed upon notice
of such change given as provided in this Section 13.
SECTION 14. DEFINITIONS
(a) For purposes of this Agreement and the Securities, the
following definitions shall apply (such definitions to be equally applicable to
both the singular and plural forms of the terms defined):
"Affiliate", when used with respect to any Person, means (i)
if such Person is a corporation, any officer or director thereof and
any Person which is, directly or indirectly, the beneficial owner (by
itself or as part of any group) of more than five percent (5%) of any
class of any equity security (within the meaning of the Exchange Act)
thereof, and, if such beneficial owner is a partnership, any general or
limited partner thereof, or if such beneficial owner is a corporation,
any Person controlling, controlled by or under common control with such
beneficial owner, or any officer or director of such beneficial owner
or of any corporation occupying any such control relationship, (ii) if
such Person is a partnership, any general or limited partner thereof,
and (iii) any other Person which, directly or indirectly, controls or
is controlled by or is under common control with such Person. For
purposes of this definition, "control" (including the correlative terms
"controlling", "controlled by" and "under common control with"), with
respect to any Person, shall mean possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
"Agreement" means this Agreement (together with exhibits and
schedules) as from time to time assigned, supplemented or amended or as
the terms hereof may be waived.
"Authorized Officer" has the meaning set forth in Section 2.3
hereof.
"Closing" has the meaning set forth in Section 1.2(b) hereof.
"Closing Date" has the meaning set forth in Section 1.2(b)
hereof.
21
25
"Commission" means the Securities and Exchange Commission and
any other similar or successor agency of the federal government
administering the Securities Act or the Exchange Act.
"Common Shares" has the meaning set forth in Section 1.1
hereof and shall also include any capital stock or other securities
into which Common Shares are changed or for which such Common Stock may
be exchanged after giving effect to the terms of such change or
exchange (by any of reorganization, recapitalization, merger,
consolidation or otherwise) and any capital stock or other securities
resulting from or comprising a reclassification, combination or
subdivision of, or a stock dividend on, Common Shares. In the event
that any Common Shares are sold either in a public offering pursuant to
a registration statement under Section 6 of the Securities Act or
pursuant to a Rule 144 Transaction, then the transferees of such Common
Shares shall not be entitled to any benefits under this Agreement with
respect to such Common Shares and such Common Shares shall no longer be
considered to be "Common Shares" for purposes of any consent or waiver
provision of this Agreement.
"Common Stock" of the Company shall mean the Company's
presently authorized Common Stock and any stock into which such Common
Stock may hereafter be changed or for which such Common Stock may be
exchanged after giving effect to the terms of such change or exchange
(by way of reorganization, recapitalization, merger, consolidation or
otherwise) and shall also include any common stock of the Company
hereafter authorized and any capital stock of any other class hereafter
authorized which is not preferred as to dividends or assets over any
other class of capital stock of the Company or which has ordinary
voting power for the election of directors of the Company.
"Disclosure Schedule" means the Disclosure Schedule attached
as Schedule B hereto.
"Escrow Agreement" means the agreement, in the form attached
hereto as Exhibit B, to be entered into between the Company, the Escrow
Agent and the Purchasers.
"Event of Default" has the meaning set forth in Section 7
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules, regulations and
interpretations thereunder.
"Founding Companies" means the companies listed on Schedule D
attached hereto, each of which has entered into a Letter of Intent with
the Company.
"Guaranty Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of that Person
with respect to any Indebtedness, lease, dividend, letter of credit or
other obligation (the "primary obligations") of another Person (the
"primary obligor"), including any obligation of that Person (i) to
purchase, repurchase or otherwise acquire such primary obligations or
any property constituting direct or indirect security
22
26
therefor, or (ii) to advance or provide funds (A) for the payment or
discharge of any such primary obligation, or (B) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet item, level of
income or financial condition of the primary obligor, or (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation, or (iv)
otherwise to assure or hold harmless the holder of any such primary
obligation against loss in respect thereof.
"Indebtedness" of any Person means, without duplication, as of
any date as of which the amount thereof is to be determined: (i) all
indebtedness or other obligations of such Person for borrowed money or
for the deferred purchase price of property or services; (ii) all
obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (iii) all
indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender
under such agreement in the event of default are limited to
repossession or sale of such property); (iv) all obligations of such
Person under any lease of real or personal property; (v) all
reimbursement or other obligations of such Person under or in respect
of letters of credit and bankers acceptances; (vi) all indebtedness of
another Person secured by any Lien upon or in property owned by the
Person for whom indebtedness is being determined, whether or not such
Person has assumed or become liable for the payment of such
indebtedness of such other Person; and (vii) all Guaranty Obligations
of such Person.
"IPO" has the meaning set forth in Section 1.1 hereof.
"Letter of Intent" or "Letters of Intent" has the meaning set
forth in Section 3.9 hereof.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other) or
preference, priority or other security interest of any kind or nature
whatsoever (including, without limitation, any conditional sale or
other title retention agreement, any financing lease having
substantially the same effect as any of the foregoing, any assignment
or other conveyance of any right to receive income and any assignment
of receivables with recourse against the assignor), any filing of a
financing statement as debtor under the Uniform Commercial Code or any
similar statute and any agreement to give or make any of the foregoing.
"Majority Common Shareholders" means the holder or holders, at
the time, of at least a majority of the outstanding Common Shares.
"Majority Noteholders" means the holder or holders, at the
time, of at least a majority of the aggregate principal amount of the
Notes then outstanding.
23
27
"Material Adverse Effect" means any event, matter, condition
or circumstance which (i) has a material adverse effect on the assets,
properties, liabilities, business, affairs, results of operations,
condition (financial or otherwise) or business prospects of the
Company, (ii) has an effect on the ability of the Company to perform
its obligations under this Agreement or any of the Securities to be or
issued by it or (iii) materially or adversely affects the legality,
validity, binding effect or enforceability of this Agreement or the
Securities.
"Note" or "Notes" has the meaning set forth in Section 1.1
hereof.
"▇▇▇▇▇▇▇▇▇▇▇" means ▇▇▇▇▇▇▇▇▇▇▇ & Co., Inc.
"Outstanding" or "outstanding" means, when used with reference
to the Notes, or the Common Shares (as the case may be) as of a
particular time, all such Securities theretofore duly issued except (i)
Securities theretofore reported as lost, stolen, mutilated or destroyed
or surrendered for transfer, exchange or replacement, in respect of
which new or replacement Securities have been issued by the Company and
(ii) Notes theretofore paid in full; provided, however, that for the
purpose of determining whether holders of the requisite amount of Notes
or Common Shares (as the case may be) have made or concurred in any
declaration, waiver, consent, approval, notice, annulment of
acceleration or other communication under this Agreement or under any
Securities, Securities registered in the name of the Company shall not
be deemed to be outstanding.
"Person" or "person" means an individual, corporation,
company, partnership, firm, association, joint venture, trust,
unincorporated organization, government, governmental body, agency,
political subdivision or other entity.
"Potential Default" means a condition or event which, with
notice or lapse of time or both, would constitute an Event of Default.
"Purchaser" or "Purchasers" has the meaning set forth in the
first line of this Agreement.
"Registration Demand" shall mean a written notice from the
Majority Common Shareholders to the Company stating that holders of a
majority of the Common Shares desire to sell all or part of such Common
Shares under circumstances requiring registration under the Securities
Act and requesting that the Company effect registration with respect to
such Common Shares.
"Representative" shall mean ▇▇▇▇▇▇▇▇▇▇▇, acting in its sole
discretion, on behalf of the Purchasers.
"Restricted Payment" means:
24
28
(i) every dividend or other distribution paid, made or
declared by the Company on or in respect of any class
of its capital stock (as defined below);
(ii) every payment in connection with the redemption,
purchase, retirement or other acquisition by or on
behalf of the Company of any shares of the Company's
capital stock, whether or not owned by the Company;
(iii) any prepayments or repayments made on Indebtedness of
the Company;
(iv) every payment to or on behalf of any Affiliate of the
Company on account of or with respect to any lease
arrangements; and
(v) every payment by or on behalf of the Company (whether
as repayment or prepayment of principal or as
interest or otherwise) on or with respect to (A) any
obligation to repay money borrowed owing to any
Affiliate of the Company, or (B) any obligation, to
any Person, of any Affiliate of the Company or to any
other holder of shares of the Company's capital stock
(as defined below), which obligation is assumed, or
is the subject of a guaranty, by the Company.
provided, however, that none of the foregoing clauses shall
apply to any payments, distributions or other transfers or
actions on or with respect to (x) the Purchasers (or holders
of any of the Securities) under this Agreement or (y) the
Securities. For purposes of this definition, "capital stock"
shall also include warrants and other rights and options to
acquire shares of capital stock (whether upon exercise,
conversion, exchange or otherwise).
"Rule 144" means (i) Rule 144 under the Securities Act as such
rule is in effect from time to time, and (ii) any successor rule,
regulation or law, as in effect from time to time.
"Rule 144A" means (i) Rule 144A under the Securities Act as
such rule is in effect from time to time and (ii) any successor rule,
regulation or law, as in effect from time to time.
"Rule 144 Transaction" means a transfer of Common Shares (a)
complying with Rule 144 as such rule is in effect on the date of such
transfer (but not including a sale other than pursuant to "brokers'
transactions" as defined in clauses (1) and (2) of paragraph (g) of
such Rule as in effect on the date hereof) and (B) occurring at a time
when Common Shares are registered pursuant to Section 12 of the
Exchange Act (or any successor to such Section).
"Securities" has the meaning set forth in Section 1.1 hereof.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and the rules, regulations and interpretations
thereunder.
25
29
"Subordinated Notes" means a series of notes in the aggregate
amount of $160,035 issued by the Company to a group of investors in
September 1996.
"Subordination Agreement" means the agreement in the form
attached hereto as Exhibit C, dated as of December 31, 1996, among each
of the holders of Subordinated Notes, the Company and the Purchasers,
pursuant to which the holders of the Subordinated Notes agree to
subordinate such notes to the Notes.
"Subsidiary", with respect to any Person, means any
corporation, association or other entity of which more than 50% of the
total voting power of shares of stock or other equity interests
entitled (without regard to the occurrence of any contingency or any
pledge of shares) to vote in the election of directors, managers or
trustees thereof is, at the time as of which any determination is being
made, owned or controlled, directly or indirectly, by such Person or
one or more of its Subsidiaries, or both.
SECTION 15. MISCELLANEOUS
15.1. Entire Agreement.
This Agreement and, upon the closing hereunder, the Securities
issued hereunder, together with any further agreements entered into by the
Purchasers and the Company at the closing hereunder, contain the entire
agreement among the Purchasers and the Company and supersede any prior oral or
written agreements, commitments, terms or understandings, regarding the subject
matter hereof.
15.2. Survival.
All agreements, representations and warranties contained in
this Agreement, the Securities or any document or certificate delivered pursuant
hereto or thereto shall survive, and shall continue in effect following, the
execution and delivery of this Agreement and such other documents and the
closings hereunder and thereunder, any investigation at any time made by the
Purchasers or on their behalf or by any other Person, the issuance, sale and
delivery of the Securities, any disposition thereof and any payment, exercise,
conversion or cancellation of the Securities, provided, that Section 6 (except
for Section 6.5) shall terminate in its entirety when no Notes are outstanding.
All statements contained in any certificate or other document delivered by or on
behalf of the Company pursuant hereto shall constitute representations and
warranties by the Company hereunder.
15.3. Counterparts.
This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument, and all signatures need not appear on any one counterpart.
26
30
15.4. Headings.
The headings and captions in this Agreement and the table of
contents are for convenience of reference only and shall not define, limit or
otherwise affect any of the terms or provisions hereof.
15.5. Binding Effect, Benefit and Assignment.
(a) The terms of this Agreement shall be binding upon, and
inure to the benefit of, the parties and their respective successors and
permitted assigns whether so expressed or not.
(b) The Company may not assign any of its respective
obligations, duties or rights under this Agreement, or under the Securities
issued hereunder, except with the Majority Noteholders' consent.
(c) In addition to any assignment by operation of law, the
Purchasers may assign, in whole or in part, any or all of their rights (and/or
obligations) under this Agreement or under the Securities to any permitted
transferee of any or all of its Securities, and (unless such assignment
expressly provides otherwise) any such assignment shall not diminish the rights
any Purchaser would otherwise have under this Agreement or with respect to any
remaining Securities held by any such Purchaser (including without limitation,
with respect to any indemnity or reimbursement rights).
15.6. Severability.
Any provision hereof, of the Securities or of any other
document or certificate delivered in connection herewith which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or thereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
15.7. Governing Law.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York (other than any conflicts of
law rule which might result in the application of the laws of any other
jurisdiction).
15.8. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
EACH PARTY HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK AND IRREVOCABLY AGREES
THAT, SUBJECT TO THE ELECTION OF THE MAJORITY NOTEHOLDERS, ALL ACTIONS OR
PROCEEDINGS RELATING TO THIS AGREEMENT, THE OTHER DOCUMENTS EXECUTED IN
CONNECTION HEREWITH OR THE SECURITIES MAY BE LITIGATED IN SUCH COURTS. THE
COMPANY ACCEPTS FOR ITSELF AND IN
27
31
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS AGREEMENT, THE OTHER DOCUMENTS EXECUTED IN CONNECTION
HEREWITH OR THE SECURITIES. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED
BY REGISTERED MAIL TO THE COMPANY AT THE ADDRESS OF THE COMPANY PROVIDED IN
SECTION 13 HEREOF, EXCEPT THAT UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY
FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS.
AS AN ALTERNATIVE TO SERVICE OF PROCESS ON SUCH AGENT (WHETHER OR NOT ANY SUCH
AGENT HAS BEEN APPOINTED), THE COMPANY HEREBY AGREES THAT SERVICE UPON IT BY
MAIL SHALL CONSTITUTE SUFFICIENT NOTICE AND SERVICE OF PROCESS. NOTHING HEREIN
SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT OF ANY PURCHASER OR ANY OTHER HOLDER OF SECURITIES TO
BRING PROCEEDINGS OR OBTAIN OR ENFORCE JUDGMENTS AGAINST THE COMPANY IN THE
COURTS OF ANY OTHER JURISDICTION.
15.9. WAIVER OF JURY TRIAL. EACH PARTY WAIVES ITS RESPECTIVE
RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT, THE DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR THE
SECURITIES, OR ANY DEALINGS BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER
OF THIS TRANSACTION. EACH PARTY ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON
SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF ANY PURCHASER. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY
FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER WITH ITS
LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO (OR ASSIGNMENTS OF) THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL (WITHOUT A JURY) BY THE
COURT.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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32
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
VESTCOM INTERNATIONAL, INC.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇▇▇▇▇ & CO., INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
OPCO SENIOR EXECUTIVE PARTNERSHIP, L.P.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
29
▇▇
▇▇▇▇▇ ▇▇▇▇ LIMITED PARTNERSHIP
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
COMVESTRIX INCORPORATED
/s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
By: ▇▇▇▇ ▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
30
34
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
31
35
SCHEDULE A
LIST OF PURCHASERS
Principal Amount Number of Aggregate Purchase
Name and Address of Purchaser of Notes Common Shares Price
----------------------------------- ---------------- ------------- ------------------
▇▇▇▇▇▇ ▇▇▇▇▇ 0 2,572.00 $ 1,874.99
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 0 367.00 $ 267.54
▇▇▇▇▇▇ ▇▇▇▇▇ $ 39,999.58 13,718.00 $ 50,000.00
c/o COS Information, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III 0 3,674.00 $ 2,678.35
▇▇▇▇ ▇▇▇▇▇▇ 0 118,444.00 $ 86,345.20
Comvestrix Incorporated $ 399,996.26 0 $ 399,996.26
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 0 1,469.00 $ 1,070.90
▇▇▇▇▇ ▇▇▇▇ Limited Partnership $ 79,999.16 27,436.00 $ 100,000.00
▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ & Co., Inc. $ 432,495.53 229,773.00 $ 600,000.00
One World Financial ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Opco Senior Executive $ 108,123.88 57,443.00 $ 150,000.00
Partnership, L.P.
One World Financial ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 0 9,552.00 $ 6,963.41
▇▇▇▇▇▇▇ ▇▇▇▇ 0 367.00 $ 267.54
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 0 735.00 $ 535.81
▇▇▇▇▇▇▇ ▇▇▇▇▇ $ 72,082.59 38,296.00 $ 100,000.00
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TOTAL $ 1,132,697.00 503,846.00 $1,500,000.00
-----------------------------
*Unless otherwise specified, the address of each purchaser shall be ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
iii
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SCHEDULE B
DISCLOSURE SCHEDULE
VESTCOM INTERNATIONAL, INC.
SHARES OUTSTANDING - AS OF DECEMBER 24, 1996
SUBSCRIBER SHARES OF COMMON STOCK
------------------------------------------ ----------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 197,837
▇▇▇▇ ▇▇▇▇▇▇* 512,446
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 41,326
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III 15,895
▇▇▇▇▇▇ ▇▇▇▇▇ 11,127
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 6,358
▇▇▇▇▇▇▇ ▇▇▇▇ 1,589
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 3,179
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 1,589
------------------------
*Includes 200,000 shares held by trusts for the benefit of ▇▇. ▇▇▇▇▇▇'▇
children.
No shares of preferred stock are outstanding.
iv
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SCHEDULE C
FOUNDING COMPANIES
Name Headquarters
---- ------------
Comvestrix Corporation Lyndhurst, New Jersey
Direct Mail Services Dover, New Jersey
Computer Output Systems, Inc. Stamford, Connecticut
COS Information, Inc. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇
Electronic Imaging Services, Inc. Little Rock, Arkansas
Image Printing Systems Milwaukee, Wisconsin
Mystic Graphic Systems, Inc. Woburn, Massachusetts
v