Exhibit 10(dd)
STOCK PURCHASE AGREEMENT
by and between
NUTRAMAX PRODUCTS, INC.,
and
CAPE ▇▇▇ INVESTORS, L.L.C.
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 3
1.3. Closing 3
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 7
2.1. Due Organization, etc. 7
2.2. Compliance with Law 8
2.3. Authorization; Execution and Delivery of Agreement 9
2.4. No Conflict; No Consent 10
2.5. Capital Stock 11
2.6. SEC Reports 12
2.7. Financial Statements 12
2.8. No Brokers 13
2.9. Litigation and Claims 13
2.10. Use of Proceeds 14
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III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 14
3.1. Due Organization, etc. 14
3.2. Authorization; Execution and Delivery of Agreement 14
3.3. No Conflict; No Consent 15
3.4. No Brokers 16
3.5. Litigation and Claims 16
3.6. Investment Purposes 16
IV. COVENANTS OF THE COMPANY 17
4.1. Conduct of Business 17
4.2. Exchange of Stock Certificates 18
4.3. Lost, Stolen, Destroyed or Mutilated Stock Certificates 18
4.4. Course of Dealings with Lenders 18
4.5. Board Representation 19
4.6. Other Purchase Agreements 19
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V. COVENANTS OF THE PURCHASER AND THE COMPANY 19
5.1. Access; Confidentiality 19
5.2. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act Filings 20
5.3. Public Disclosure and Confidentiality 21
5.4. Certain Notifications 21
5.5. Efforts to Consummate; Further Actions 21
5.6. Standstill Obligations of the Purchaser 22
5.7. Proxy Statement; Stockholder Approval 29
VI. REGISTRATION RIGHTS 30
6.1. "Piggyback" Registration 30
6.2. Demand Registration 31
6.3. General Provisions 32
6.4. Information, Documents, Etc. 34
6.5. Expenses 35
6.6. Cooperation 36
6.7. Action to Suspend Effectiveness; Supplement to
Registration Statement 37
6.8. Indemnification 39
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VII. INDEMNIFICATION 45
7.1. Indemnification by the Company 45
7.2. Indemnification by the Purchaser 45
VIII. TERMINATION 46
8.1 Termination 46
IX. GENERAL PROVISIONS 47
9.1. Survival of Representations, Warranties and Agreements 47
9.2. Notices 47
9.3. General 49
9.4. Governing Law 51
9.5. Severability of Provisions 51
9.6. Captions 51
9.7. Expenses 51
9.8. Equitable Relief 52
9.9. Definitions 52
SCHEDULE 2.5(b)
SCHEDULE 2.7(c)
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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 CAPE ▇▇▇ INVESTORS, L.L.C., a Delaware limited liability company
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(the "Purchaser").
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WHEREAS, the parties hereto are party to a Stock Purchase Agreement
dated as of August 12, 1997 (as amended through the date hereof, the "1997 Stock
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Purchase Agreement"), pursuant to which the Purchaser purchased from the Company
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shares of the Company's Common Stock, par value $0.001 per share (the "Common
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Stock");
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WHEREAS, the parties hereto are also party to an Agreement dated as of
October 14, 1997 (as amended through the date hereof, the "October Agreement"),
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pursuant to which, among other things, the Purchaser purchased from the Company
additional shares of Common Stock and the Company granted to the Purchaser and
others certain warrants to purchase an aggregate of up to 225,000 shares of
Common Stock (the "Warrants");
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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 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 ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, the President and Chief Executive Officer of the Company, and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, the Chairman of the Board of Directors of the Company, with respect to
the purchase from the Company by Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ (the "▇▇▇▇▇▇
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Purchase" and the "▇▇▇▇▇▇ Purchase," respectively) of approximately 279,070
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additional shares of Common Stock (such agreements, the "▇▇▇▇▇▇ Purchase
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Agreement" and the "▇▇▇▇▇▇ Purchase Agreement," respectively, and, collectively,
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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:
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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,
1,162,790 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 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
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Obligations. The obligation of the Purchaser to consummate the transactions
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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
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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, administrative body or governmental agency (a
"Governmental Entity") which seeks to restrain the consummation of, prohibit or
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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
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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 "▇▇▇▇-
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▇▇▇▇▇-▇▇▇▇▇▇ 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, permits, authorizations or filings that, individually or in the
aggregate, would not have a material adverse effect on the condition (financial
or otherwise), business, operations, properties, assets or liabilities of the
Company and its Subsidiaries (as hereinafter defined) taken as a whole (a
"Material Adverse Effect"); (vi) the issuance and sale of Common Stock
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contemplated by this Agreement shall have been approved by the requisite
affirmative vote of the stockholders of the Company; (vii) from and after the
date of this Agreement, there shall not have occurred any changes concerning the
Company that, when combined, without duplication, with
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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
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Amendments") to each of the Revolving Credit and Term Loan Agreement, dated as
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of December 30, 1996, as amended, between the Company, The First National Bank
of Boston ("FNBB"), Fleet National Bank, National Bank of Canada, The Sumitomo
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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 ▇▇▇▇▇▇ Purchase and the ▇▇▇▇▇▇
Purchase shall have been satisfied or waived by the appropriate party, and no
amendment to the ▇▇▇▇▇▇ Purchase Agreement or the ▇▇▇▇▇▇ Purchase Agreement
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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
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of the Company to consummate the transactions described in this Agreement shall
be subject to the satisfaction of the following conditions on or prior to the
Closing: (i) the representations and warranties of the Purchaser contained in
this Agreement shall have been true and correct when made and shall be true and
correct in all material respects on the date of Closing with the same effect as
if they were made on such date; (ii) the Purchaser shall have performed and
complied in all material respects with all covenants and
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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 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
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(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; (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; and (vii)
from and after the date of this Agreement, there shall not have occurred any
changes concerning the Purchaser that, when combined, without duplication, with
all other changes concerning the Purchaser from and after the date of this
Agreement, have had or would reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), business, operations,
properties, assets or liabilities of the Purchaser (a "Purchaser Material
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Adverse Effect"). In the event any of the foregoing conditions to the Company's
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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
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deliver to the Purchaser the following:
(i) a stock certificate or certificates representing the Shares;
and
(ii) a certificate of the Secretary of the Company certifying as
to the adoption and effect of resolutions of the Board of
Directors of the Company (the "Board") authorizing the
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execution, delivery and performance of this Agreement.
(e) Purchaser Closing Deliveries. At the Closing, the Purchaser will
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deliver to the Company the following:
(i) a certificate of the Managing Member of the Purchaser
certifying as to the adoption and effect of resolutions of
the Purchaser authorizing the execution, delivery and
performance of this Agreement; and
(ii) payment of the purchase price provided by Section 1.2.
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1. Due Organization, etc. The Company and each of its Subsidiaries
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(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
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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 of foreign
Subsidiaries which are not fully paid and which failure to be fully paid,
individually or in the aggregate, does not have a Material Adverse Effect, and
all of such outstanding shares are owned, directly or indirectly, by the Company
free and clear of all Encumbrances, except for liens or security interests or
pledge arrangements involving the capital stock of the Subsidiaries in favor of
the Company's lenders. "Subsidiary" means a corporation or other business
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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,
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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.
2.3. Authorization; Execution and Delivery of Agreement. (a) Except
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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
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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.
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(b) Except to the extent that the By-laws of, or other rules or
regulations promulgated by, the NASD applicable to Nasdaq SmallCap listed
companies may require stockholder approval of the issuance of shares hereunder,
(i) the Shares have been duly authorized by all necessary corporate action on
the part of the Company, and, when issued and delivered by the Company pursuant
to this Agreement against payment of the consideration therefor set forth
herein, the Shares will be validly issued, fully paid and non-assessable and
(ii) the Purchaser will acquire valid and marketable title to the Shares, free
and clear of any Encumbrances except as contemplated by this Agreement.
2.4. No Conflict; No Consent. Except to the extent that the By-laws
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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,
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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 them is bound, other than, in
the case of clause (ii) above, where such conflict, violation, default,
acceleration or Encumbrance would not, individually or in the aggregate, have a
Material Adverse Effect. No consent, approval, order or authorization of, or
registration, declaration, filing with or notice to, any Authority or third
party is required to be made or obtained by the Company or any Subsidiary
(including, without limitation, under any environmental or occupational, health
and safety laws) in order to execute or deliver this Agreement, issue and sell
the Shares or to consummate the transactions contemplated hereby, other than (A)
as may be required by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, (B) as a result of the periodic
reporting requirements under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and (C) the listing requirements of the NASDAQ SmallCap
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Market, or except where the failure to make or obtain any such consent,
approval, order, authorization, registration, declaration, filing or notice
would not have a Material Adverse Effect.
2.5. Capital Stock. (a) The authorized capital stock of the Company
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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
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commitment. All of the issued and outstanding shares of Common Stock have been
validly issued and are fully paid and non-assessable.
(b) (i) Other than this Agreement, the ▇▇▇▇▇▇ Purchase Agreement,
the ▇▇▇▇▇▇ Purchase Agreement and the Warrants 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
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statements, 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
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their respective dates, the SEC Reports (i) complied as to form in all material
respects with the applicable requirements of the Exchange Act and the rules and
regulations of the Commission thereunder and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
2.7. Financial Statements. (a) The financial statements
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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
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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.
(c) Except as set forth on Schedule 2.7(c), since September 28, 1996,
the Company and each of its Subsidiaries have conducted their respective
businesses only in the ordinary course in substantially the same manner as
theretofore conducted and the Company and its Subsidiaries, taken as a whole,
have not undergone or suffered any Material Adverse Effect, except as otherwise
disclosed to the Purchaser in writing.
2.8. No Brokers. No broker, finder or investment banker is entitled
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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,
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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
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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 outstanding against or
binding upon the Company or any of its Subsidiaries, other than where any such
defaults would not, individually or in the aggregate, have a Material Adverse
Effect.
2.10. Use of Proceeds. The Company intends to use the proceeds from
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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. Due Organization, etc. The Purchaser is a limited liability
---------------------
company duly organized, validly existing and in good standing under the laws of
the State of Delaware. The Purchaser has no direct or indirect subsidiaries.
3.2. Authorization; Execution and Delivery of Agreement. The
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Purchaser has all requisite power and authority to execute this Agreement, to
perform its 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
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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.
3.3. No Conflict; No Consent. The execution and delivery of this
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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 Purchaser under, (i) any
provision of the certificate of organization and limited liability company
agreement or similar constituent documents of the Purchaser, (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 Purchaser or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation of any Authority to which the
Purchaser is a party or by which it 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 Purchaser Material Adverse
Effect. 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.
19
3.4. No Brokers. No broker, finder or investment banker is
----------
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by or on
behalf of the Purchaser.
3.5. 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 its properties or assets which, if adversely determined, would prohibit
or make illegal the purchase of or payment for the Shares.
3.6. Investment Purposes. (a) The Purchaser, by reason of its
-------------------
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 its investment in the Shares, and is purchasing the Shares
hereunder for its own account, for investment only and not with a view to, or
any present intention of, effecting a distribution of such securities or any
part thereof. The Purchaser acknowledges that the Shares to be purchased
hereunder have not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), or the securities laws of any state or other
--------------
jurisdiction and cannot be disposed of unless they are subsequently registered
under the Securities Act and any applicable state laws or exemption from such
registration is available.
(b) The Purchaser is an "accredited investor" as that term is
defined in Rule 501 promulgated under the Securities Act.
(c) The Purchaser has had the opportunity to ask questions and to
receive
20
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 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
21
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 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
22
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. Board Representation. At each annual meeting of the
--------------------
stockholders of the Company after the Closing, so long as the Purchaser shall
own Shares representing 5% or more of the total issued and outstanding shares of
Common Stock as of the date which is thirty (30) days immediately preceding the
record date of such meeting, the Company shall include in the slate of nominees
for election as the Board at such meeting, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or one other officer
or individual member of the Purchaser designated by the Purchaser (which
designee shall not include any individual whose membership on the Board would be
a violation of law), provided that the Company has consented to such other
designee, which consent shall not be unreasonably withheld.
4.6. 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 ▇▇▇▇▇▇ 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).
23
V. COVENANTS OF THE PURCHASER AND THE COMPANY
5.1. Access; Confidentiality. (a) At the reasonable request of
-----------------------
the Purchaser, the Company shall give the officers, attorneys, accountants and
other authorized representatives of the Purchaser access, during normal business
hours and upon reasonable notice, to all of the Company's, and the Subsidiaries'
offices, facilities, properties and personnel. The Company will furnish the
representatives of the Purchaser with all such information concerning the
Company and its Subsidiaries as such representatives may reasonably request and
cause the employees, accountants, independent accountants and attorneys of the
Company and its Subsidiaries to cooperate fully with such representatives in
connection with such review and examination and to make full disclosure to the
Purchaser of all material facts concerning the Company and its Subsidiaries;
provided, however, that the Purchaser will hold in strict confidence and not use
-------- -------
for its own benefit (other than in connection with the transactions contemplated
by this Agreement), prior to the Closing, the documents and information
(including all evaluation material relating to employees) furnished to the
Purchaser concerning the Company and its Subsidiaries; and, if the transactions
contemplated by this Agreement shall not be consummated, such confidence shall
be maintained and all such documents and all copies thereof shall promptly
thereafter be returned to the Company. The Purchaser further agrees that it
shall be responsible for any breach of this Section 5.1 by any of its officers,
attorneys, accountants and other authorized representatives.
24
No investigation by the Purchaser or any of its representatives pursuant to this
Section 5.1 shall affect any representation, warranty or closing condition of
any party hereto.
(b) Chilmark Fund II, L.P. ("Chilmark") agrees that it shall be
---------
bound by the obligations of the Purchaser set forth in Section 5.1(a) as if it
were the Purchaser for purposes of said section.
5.2. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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.
5.3. 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
25
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.
5.4. 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.
5.5. 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.
5.6. Standstill Obligations of the Purchaser. (a) As of the date
---------------------------------------
of this Agreement, none of the Purchaser, Chilmark or any Affiliate (as
hereinafter defined) thereof beneficially owns any shares of Common Stock,
except as disclosed in filings through the date hereof on Schedule 13D under the
Exchange Act or as may be deemed to exist under the Exchange Act in respect of
the Warrants. From and after the date of this Agreement until the Closing, none
of the Purchaser or Chilmark (collectively, the "Stockholders") or any of their
------------
Affiliates will acquire any securities issued by the Company or convertible into
or exchangeable
26
for any equity securities of the Company (collectively referred to as "Stock"),
-----
except pursuant to the terms of this Agreement. For purposes of this Agreement,
an "Affiliate" of any person, entity or corporation shall mean and include (i)
---------
any person, entity or corporation, now or hereafter, directly or indirectly
through one or more intermediaries, controlling, controlled by or under common
control with (through the ownership of voting securities or interests, by
contract or otherwise) such person, entity or corporation, or (ii) any other
person, entity or corporation acting in concert with such person, entity or
corporation in connection with the Company with respect to any matter referred
to in Section 5.6(d) of this Agreement or clauses (a)-(j) of Item 4 of Schedule
13D under the Exchange Act, or with respect to acquiring, holding, voting or
disposing of any Stock. Each of the Stockholders acknowledges and agrees that a
breach of any provision of this Agreement by any Stockholder or any Affiliate
thereof shall constitute a breach by each Stockholder and that each Stockholder
shall be fully liable for any breach of this Agreement by any other Stockholder
or by any Affiliate of any Stockholder, it being understood that notwithstanding
any other provision of this Agreement, any of the Stockholders and their
Affiliates shall be entitled to act in concert with one another with respect to
any action which a Stockholder or an Affiliate of a Stockholder would be
permitted to take individually hereunder. For the purposes of this Agreement,
beneficial ownership shall be determined pursuant to Rule 13d-3 ("Rule 13d-3")
----------
promulgated by the Commission pursuant to the Exchange Act.
27
(b) Each of the Stockholders hereby jointly and severally covenants
and agrees that from and after the date hereof none of the Stockholders or their
Affiliates will, without the prior written consent of the Company specifically
expressed in a vote adopted after the Closing by the Board, directly or
indirectly, purchase or cause to be purchased or otherwise acquire (other than
pursuant to a stock split, stock dividend or similar transaction) or agree to
acquire, or become or agree to become the beneficial owner of, any additional
Stock, except that the Stockholders and their Affiliates may purchase shares of
Common Stock (A) upon exercise of some or all of the Warrants, (B) from time to
time, in the open market or in privately negotiated transactions, up to an
aggregate of 146,700 shares of Common Stock, and (C) from time to time, in the
open market or in privately negotiated transactions, up to an aggregate number
of shares of Common Stock which, when added to the shares of Common Stock then
owned by the Stockholders and their Affiliates, would result in the Stockholders
and their Affiliates owning no more than the highest percentage of voting
securities of the Company held by the Stockholders and their Affiliates
immediately following the Closing or any purchase permitted by clauses (A) or
(B) above. Nothing contained in Section 5.6(a) or the preceding sentence of this
Section 5.6(b) shall limit the ability under the 1997 Stock Purchase Agreement
of any member of the Advisory Board of Chilmark who acquired shares of Common
Stock from the Purchaser on September 18, 1997 in accordance with the 1997 Stock
Purchase Agreement to acquire, from time to time, in the open market or
privately negotiated transactions, up to an aggregate number of shares of Common
Stock equal to 50% of the number of shares so acquired
28
from the Purchaser or otherwise prohibit the acquisition of Shares by any such
member in accordance with Section 9.3(d) hereof. Each of the Stockholders agrees
that none of the Stockholders or their Affiliates will, without the prior
written consent of the Board specifically expressed in a vote adopted by the
Board, directly or indirectly, transfer any shares of Stock now owned or
hereafter acquired by them, except for transfers made: (i) pursuant to the
provisions of Section 5.6(c) below, (ii) pursuant to a publicly announced tender
offer for any shares of Stock by any corporation, entity, person or group (other
than any of the Stockholders or their Affiliates) which the Board has voted to
recommend to holders of any shares of Stock, (iii) pursuant to the exercise of
the registration rights provided in Article VI hereof, (iv) pursuant to open
market sales made in accordance with Rule 144 under the Securities Act,
including, if applicable, paragraph (k) thereof or (v) to the members or
investors of the Purchaser, and to their members or investors, by distribution,
dissolution or otherwise; provided, however, that in no event shall any such
-------- -------
member or investor referred to in clause (v) above who is an Affiliate of either
of the Stockholders be permitted to, directly or indirectly, transfer any shares
of Stock now owned or hereafter acquired, except in accordance with this Section
5.6(b). For purposes of this Agreement, "transfer" shall mean and include any
sale, assignment, gift, pledge, the imposition of any other encumbrance or any
other disposition or any agreement or obligation to do any of the foregoing.
29
(c) If any Stockholder or any Affiliate thereof desires to sell any
shares of Stock (a "Selling Stockholder") (other than pursuant to clause (ii),
-------------------
(iii), (iv) or (v) of Section 5.6(b) hereof), the following requirements shall
be satisfied:
(i) The Selling Stockholder shall notify the Company in writing of
the proposed sale (the "Notice of Proposed Transfer"). The Notice of Proposed
---------------------------
Transfer shall identify and provide reasonable information concerning the
background, business experience and business affiliations of the proposed
transferee (the "Transferee"), the purchase price or other consideration, if
----------
any, the number of shares and type of Stock to be transferred and the complete
terms of the proposed transaction.
(ii) For a period of ten (10) business days following the receipt of
the Notice of Proposed Transfer, the Company and/or any substitute purchaser(s)
as designated by the Company (the Company and/or such substituted purchaser is
hereinafter sometimes called the "Buyer") shall have the option to purchase all,
-----
but not less than all, the Stock specified in the Notice of Proposed Transfer at
the price and upon the terms set forth in the Notice of Proposed Transfer;
provided, however, that if the type of consideration that was to be paid was
non-cash consideration, then the amount payable by the Buyer for such Stock
shall be determined in good faith by the Board, after consultation with the
Company's investment banker. In the event that Buyer elects to purchase all,
but not less than all, of the Stock specified in the Notice of Proposed
Transfer, it shall give written notice to the Selling Stockholder of its
election, in which case settlement for said Stock shall be made and the Buyer
shall purchase such Stock for such price,
30
in cash within ten (10) business days after the date the Company receives the
Notice of Proposed Transfer. In the event that Buyer elects not to purchase all
of the Stock specified in the Notice of Proposed Transfer, the Selling
Stockholder may consummate the proposed transfer of said Stock with the
Transferee, provided, however, that such transfer shall not be consummated
unless and until such Transferee agrees in writing to be bound by all of the
terms of and to perform all of the obligations of the Stockholders contained in
Section 5.6(b), this Section 5.6(c) and in Section 5.6(d) of this Agreement in
the same manner as if such Transferee were a party to this Agreement.
(d) Each of the Stockholders hereby agrees that, prior to the date
on which the Stockholders beneficially own collectively less than 0.5% of the
total issued and outstanding shares of Common Stock, none of the Stockholders or
their Affiliates will, directly or indirectly, or will solicit, request, advise,
assist or encourage others, directly or indirectly, to:
(i) form, join in or in any other way participate in a "partnership,
limited partnership, syndicate or other group" within the meaning of Section
13(d)(3) of the Exchange Act with respect to shares of Stock or deposit any
Stock in a voting trust or similar arrangement or subject any Stock to any
voting agreement or pooling arrangement, other than solely with one or more
other Stockholders or Affiliates with respect to shares of Common Stock
permitted to be owned hereunder;
31
(ii) solicit proxies or written consents of shareholders with respect
to Stock under any circumstances, or make, or in any way participate in, any
"solicitation" of any "proxy" to vote any shares of Stock, or become a
"participant" in any election contest with respect to the Company (as such terms
are defined or used in Rules 14a-1 and 14a-11 under the Exchange Act);
(iii) seek to call, or to request the call of, a special meeting of
the shareholders of the Company or seek to make, or make, a shareholder
proposal, or seek to make or make, any nomination of any candidate as a director
of the Company other than a designee of the Purchaser pursuant to Section 4.5
hereof or any candidate nominated by the Board, at any meeting of the
shareholders of the Company;
(iv) commence or announce any intention to commence any tender offer
for any shares of Stock;
(v) make a proposal or bid with respect to, announce any intention
or desire to make, or discuss with any person, or publicly make or disclose,
cause to be made or disclosed publicly, facilitate the making public or public
disclosure of, any proposal or bid with respect to, the acquisition of any
substantial portion of the assets of the Company or of the assets or stock of
any of its Subsidiaries or of all or any portion of the outstanding Stock, or
any merger, consolidation, other business combination, restructuring,
recapitalization, liquidation or other extraordinary transaction involving the
Company or any of its Subsidiaries;
32
(vi) otherwise act alone or in concert with others to seek to
control or influence in any manner the management or the Board (including the
composition thereof) or the business, operations or affairs of the Company;
provided, however, that this provision shall not prevent the Purchaser's
designee on the Board from participating in, or otherwise seeking to affect the
outcome of, discussions and votes of the Board with respect to matters coming
before it;
(vii) arrange, or in any way participate in, any financing for any
transaction referred to in clauses (i) through (vi) above inclusive;
(viii) make public, or cause or facilitate the making public
(including by disclosure to any journalist or other representative of the media)
of, any request, or otherwise seek, to obtain any waiver or amendment of any
provision of this Agreement, or to take any action restricted hereby.
Notwithstanding the foregoing, (i) the Stockholders may make such
filings with the Commission pursuant to Sections 13(d) and 16(a) of the Exchange
Act to reflect changes in the beneficial ownership of any shares of Stock of any
Stockholder (to the extent such changes reflect action taken by such Stockholder
which is permitted by this Agreement) and (ii) the Purchaser may exercise its
rights with respect to the election of a director to the Board pursuant to
Section 4.5 of this Agreement.
(e) So long as the Stockholders beneficially own collectively 5.0% or
more of the total issued and outstanding shares of Common Stock or an individual
designated by the
33
Purchaser pursuant to Section 4.5 is a member of the Board, whenever there shall
be submitted to the stockholders of the Company nominees for election to the
Board, each of the Stockholders and any Affiliate of such Stockholder controlled
directly or indirectly by such Stockholder hereby agrees to vote, or to cause to
be voted, all Stock then held by such Stockholder, whether beneficially or of
record, and entitled to vote on such matter, in favor of such nominees
designated or nominated by the Board, and, unless otherwise requested by the
Company, not in favor of any other nominee or nominees other than a designee of
the Purchaser pursuant to Section 4.5.
(f) Each of the Stockholders hereby covenants and agrees that each
Stockholder will promptly notify the Company when and if such Stockholder
receives or learns of (A) any oral or written request to any of the Stockholders
or any of their Affiliates to participate in any of the transactions or actions
referred to in paragraphs (i) through (viii) of subsection (d) above inclusive
or (B) any oral or written communication from or by any person or entity (other
than the Company) with respect to any of the transactions or actions referred to
in paragraphs (i) through (viii) of subsection (d) above inclusive, if such
person or entity could reasonably be deemed to be capable of effecting,
participating in or materially assisting in such an action or transaction
(through one or more Affiliates or otherwise) and such oral or written
communication was of a nature that could reasonably be deemed to indicate a
serious interest in effecting, participating in or materially assisting in such
an action or transaction.
34
5.7. 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 Purchaser or any affiliate of the
Purchaser specifically for inclusion in the proxy statement. The proxy
statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations promulgated thereunder.
(b) The Company shall duly call, give notice of, convene and hold
its annual, or a special, meeting of its stockholders (the "Stockholders
------------
Meeting") and shall use its best efforts to obtain the requisite affirmative
-------
approval of its stockholders at the Stockholders Meeting of the issuance and
sale of the Common Stock contemplated by this Agreement. The Purchaser and
35
Chilmark 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 it 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 or Warrants, 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 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
36
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
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 Warrants or shares of Common Stock acquired by the Purchaser pursuant
to this Agreement or the 1997 Stock Purchase Agreement, or by a Stockholder in
accordance with Section 5.6(b) hereof or Section 5.6(b) of the 1997 Stock
Purchase Agreement, for which any Stockholder requests registration pursuant to
Section 6.1 or 6.2.
37
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 three (3) requests of the
Purchaser pursuant to this Section 6.2 or (b) prepare or cause to be prepared
audited financial statements of the Company other than those prepared in the
normal course of the Company's business at its fiscal year end. Any underwriter
selected by the Purchaser to act as such in connection with a registration
pursuant to this Section 6.2 shall be reasonably acceptable to the Company. The
Company shall not be required to file and effect a new registration pursuant to
this Section 6.2(b) until a period of nine (9) months has
38
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 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.
39
(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 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
40
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 it will
not effect any sales of the Purchaser's Stock pursuant to such registration
statement or any such filings at any time after it 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.
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
41
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 first two
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 holders of
Purchaser's Stock) 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 first two registrations (and
amendments and supplements related thereto) and all expenses of the third
registration (and amendments and supplements related thereto) pursuant to
Section 6.2, including, without limitation, registration fees, printing
expenses, expenses of compliance with Blue Sky or other state securities laws,
and legal and audit fees incurred by the Company and the Purchaser and the
holders of Purchaser's Stock. Notwithstanding the foregoing, the Company agrees
that in the event that subsequent to the date
42
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 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
43
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 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 in the manner prescribed by Section 5.1.
44
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 its counsel
at the earliest practicable date of the date on which the Purchaser may offer
and sell Purchaser's Stock pursuant to the registration statement.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation under this Agreement to cause the
registration of Purchaser's Stock and any filings with any state securities
commission to be made or to become effective or to amend or supplement a
registration statement shall be suspended in the event and during such period
45
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 its counsel and will not file or distribute such amendment or
supplement without the prior consent of the Purchaser, which consent shall not
be unreasonably withheld.
6.8. Indemnification. In the event any Purchaser's Stock is
---------------
included in a registration statement under this Article VI:
46
(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") and the affiliates of
------
such Holder, and their respective directors, officers, employees, general and
limited partners, members, agents and representatives (and the directors,
officers, affiliates and controlling persons thereof), and each other person, if
any, who controls such Holder within the meaning of the Securities Act or the
Exchange Act, 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, affiliate or
controlling person, as incurred, any legal or other expenses reasonably incurred
by them in connection with
47
investigating or defending any such loss, claim, damage, liability or action;
provided, that the indemnity agreement contained in this Section 6.8(a) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable hereunder in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
the Purchaser or controlling person; 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
48
prospectus as so amended or supplemented prior to or concurrently with the
sale of Purchaser's Stock to the person asserting such loss, claim, damage,
liability or expense after the Company had furnished such Holder with a
sufficient number copies of the same.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Holder or any such director, officer,
employee, general or limited partner, member, agent, representative or
controlling person and shall survive the transfer of such securities by such
Holder. Each Holder shall furnish such information regarding itself or the
claim in question as the Company may reasonably request in writing and as shall
be reasonably required in connection with defense of such claim and litigation
resulting therefrom.
(b) To the full extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter,
any other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, 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
49
(i) any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration
or (ii) an untrue statement or alleged untrue statement or omission or alleged
omission made in the circumstances described in clauses (A) or (B) of Section
6.8(a); and each such Holder will pay, as incurred, any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
Section 6.8(b), in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, that the indemnity agreement
contained in this Section 6.8(b) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder, which consent shall not be
unreasonably withheld; provided, that, in no event shall any indemnity under
--------
this Section 6.8(b) exceed the gross proceeds from the offering received by such
Holder; and provided, further, that the obligation to provide indemnification
-------- -------
pursuant to this Section 6.8(b) shall be several, and not joint and several,
among such indemnifying parties. Such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of the Company or
any such director, officer, representative or controlling person and shall
survive the transfer of such securities by 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
50
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 6.8, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel selected by the indemnifying party or parties.
The failure to deliver written notice to the indemnifying party within a
reasonable time after the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
6.8 to the extent of such prejudice, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 6.8. The
indemnified party shall have the right, but not the obligation, to participate
in the defense of any action referred to above through counsel of its own
choosing and shall have the right, but not the obligation, to assert any and all
separate defenses, cross claims or counterclaims which it may have, and the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment of such counsel has been specifically authorized in
advance by the indemnifying party, (ii) there is a 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
51
(iii) the indemnifying party fails to assume the defense or does not reasonably
contest such action in good faith, in which case, if the indemnified party
notifies the indemnifying party that it elects to employ separate counsel, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party and the reasonable fees and expenses of such
separate counsel shall be borne by the indemnifying party; provided, however,
that, the indemnifying party shall not, in connection with any proceeding or
related proceedings, be liable for the reasonable fees and expenses of more than
one separate firm (in addition to one firm acting as local counsel) for all
indemnified parties.
(d) Contribution. If for any reason (other than the reasons expressly
------------
specified in this Section 6.8) the foregoing indemnity and payment obligation is
unavailable or is insufficient to hold harmless an indemnified party under
paragraphs (a) or (b) of this Section 6.8, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of any loss, claim, damage or liability (or actions or proceedings in respect
thereof), including, without limitation, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, action or proceeding, in such proportion as is
appropriate to reflect the relative fault of the indemnifying 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
52
material fact has been taken or made by, or relates to information supplied by,
the indemnifying party or the indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action, untrue statement or omission. If, however, the allocation provided
in the second preceding sentence is not permitted by applicable law, or if the
allocation provided in the second preceding sentence provides a lesser sum to
the indemnified party than the amount hereinafter calculated, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative fault but also the relative benefits to the indemnifying party and the
indemnified party as well as any other relevant equitable considerations. The
parties agree that it would not be just and equitable if contributions pursuant
to this Section 6.8(d) were to be determined by pro rata allocation or by any
--- ----
other method of allocation which does not take account of the equitable
considerations referred to in the preceding sentences of this Section 6.8(d).
Notwithstanding anything in this Section 6.8(d) to the contrary, no indemnifying
party (other than the Company) shall be required pursuant to this Section 6.8(d)
to contribute any amount in excess of the gross proceeds received by such
indemnifying party from the sale of Purchaser's Stock in the offering to which
the losses, claims, damages or liabilities of the 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.
53
(e) The obligations of the Company and the Holders under this Section
6.8 shall survive the completion of any offering of Purchaser's Stock in a
registration statement under this Article VI.
(f) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement (if
any) entered into in connection with any underwritten public offering of the
Purchaser's Stock are in conflict with the foregoing provisions, the provisions
in such underwriting agreement shall control.
VII. INDEMNIFICATION
7.1. Indemnification by the Company. The Company shall indemnify
------------------------------
and hold the Purchaser and each of its members, employees, 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 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 (and with
--------------------------------
respect to Sections 5.1, 5.2, 5.6 and 5.7, Chilmark) 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
54
(i) in the case of the Purchaser, resulting from or arising out of any material
breach of any representation, warranty, covenant or agreement of the Purchaser
contained in this Agreement and (ii) in the case of Chilmark, resulting from or
arising out of any material breach of any covenant or agreement of Chilmark
contained in Sections 5.1, 5.2, 5.6 or 5.7 of this Agreement.
VIII. TERMINATION
8.1 Termination. (a) This Agreement may be terminated and the
-----------
transactions contemplated herein may be abandoned at any time prior to the
Closing:
(i) by the Company or the Purchaser, if the Closing has not occurred
by January 31, 1999;
(ii) by mutual written consent of the Company and the Purchaser;
(iii) by the Company, if there has been a material misrepresentation
or breach of warranty on the part of the Purchaser in the representations and
warranties contained herein or a material breach of covenants on the part of the
Purchaser and the same has not been cured within 30 days after notice thereof;
(iv) by the Purchaser, if there has been a material misrepresentation
or breach of warranty on the part of the Company in the representations and
warranties contained herein or a material breach of covenants on the part of the
Company and the same has not been cured within 30 days after notice thereof;
(v) by the Purchaser, if the terms of the Credit Facility Amendments
are not reasonably satisfactory to the Purchaser; or
55
(vi) by either the Purchaser or the Company, if any Governmental
Entity shall have issued a final order, decree or ruling or taken any other
action permanently enjoining, restraining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and nonappealable, provided that the party
seeking to terminate shall have used its best efforts to appeal such order,
decree, ruling or other action.
(b) Notwithstanding anything herein to the contrary, the right to
terminate this Agreement under this Section 8.1 shall not be available to any
party to the extent the failure of such party to fulfill any of its obligations
under this Agreement has been the cause of, or resulted in, the failure of the
Closing to occur on or before such date (as a result, for example, of an action
or failure to act causing a failure of a condition precedent).
(c) A party terminating this Agreement pursuant to this Section 8.1
shall give written notice thereof the other party hereto, whereupon this
Agreement shall terminate and be of no further force and effect, the
transactions contemplated hereby shall be abandoned without further action by
any party and there shall be no liability on the part of the Company or the
Purchaser, except as provided in Section 9.7 hereof and except for any liability
for any willful breach hereof; provided however that the provisions of Sections
5.1, 7.1 and 7.2 shall survive any such termination.
56
IX. GENERAL PROVISIONS
9.1. Survival of Representations, Warranties and Agreements.
------------------------------------------------------
Notwithstanding any investigation conducted or notice or knowledge obtained by
or on behalf of any party hereto, each representation and warranty in this
Agreement and each agreement or covenant in this Agreement which does not by its
own terms expire on or prior to the Closing shall survive the Closing without
limitation as to time, except as specifically referred to herein.
9.2. Notices. Any notice, request, instruction or other document
-------
to be given hereunder by a party hereto shall be in writing and shall be deemed
to have been given, (i) when received if given in person, or (ii) on the date of
transmission if sent by nationally recognized overnight courier, certified or
registered mail, return receipt requested or (iii) three days after being
deposited in the U.S. mail, postage prepaid:
(a) if to the Purchaser, addressed as follows:
Cape ▇▇▇ Investors, L.L.C.
▇/▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇, ▇.▇.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to:
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
57
(b) if to the Company, addressed as follows:
NutraMax Products, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President and
Chief Financial Officer
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇, Procter & ▇▇▇▇, LLP
Exchange Place
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III, Esq.
58
or to such other individual or address as a party hereto my designate for itself
by notice given as herein provided.
9.3. General. (a) This Agreement (including the documents and
-------
instruments referred to or incorporated herein, including the Warrants)
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 1997 Stock Purchase Agreement and the October Agreement,
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.
59
(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 in the event Purchaser shall distribute the
Shares to its investors (whether as a result of dissolution or otherwise), (i)
the holders of such Shares shall succeed to the rights and obligations of the
Purchaser contained in Article VI hereof and (ii) Chilmark Fund II, L.P. shall
succeed to the rights and obligations of the Purchaser contained in Section 4.5
hereof so long as it shall hold any Shares; and provided further that the
members of the Advisory Board of Chilmark to whom the Purchaser transferred
shares of Common Stock in accordance with the 1997 Stock Purchase Agreement
shall have the rights and obligations of the Purchaser with respect to such
shares contained in Section 5.6 and Article VI hereof, other than Section 6.2
hereof; and provided further that, prior to the Closing, the Purchaser may,
without the prior written consent of the Company and without relieving the
Purchaser of its obligations hereunder, assign to such members of the Advisory
Board of Chilmark the right and obligation to purchase up to 75,060 Shares as
long as such member agrees in writing to be bound by all of the terms of and to
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perform all of the obligations of the Purchaser with respect to such Shares
contained in Section 5.6 and Article VI hereof, other than Section 6.2 hereof,
and makes a representation as to such member to the same effects set forth for
the Purchaser in Section 3.6 hereof or otherwise provides written evidence,
reasonably satisfactory to the Company, that such transfer may be effected in
compliance with the federal securities laws and applicable state securities
laws, in which case, upon consummation of the purchase of Shares by any such
member, such member shall have the rights and obligations of the Purchaser with
respect to such Shares contained in Section 5.6 and Article VI hereof, other
than Section 6.2 hereof. Any purported assignment of this Agreement in
violation of this Section 9.3 shall be null and void.
9.4. Governing Law. (a) THIS AGREEMENT AND THE RIGHTS AND
-------------
OBLIGATIONS OF THE PARTIES CREATED HEREBY SHALL BE GOVERNED BY THE INTERNAL LAWS
OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
(b) Each party agrees that any proceeding relating to this Agreement
shall be brought in a state court of Delaware. Each party hereby consents to
personal jurisdiction in any such action brought in any such Delaware court,
consents to service of process by mail made upon such party and such party's
agent and waives any objection to venue in any such Delaware court or to any
claim that any such Delaware court is an inconvenient forum.
9.5. Severability of Provisions. If any provision or any portion of
---------------------------
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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.
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.
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9.9. Definitions. The following terms shall have the respective
-----------
meanings specified in the indicated Sections of this Agreement:
Term Agreement Section
----- -----------------
1997 Stock Purchase Agreement Recitals
Affiliate 5.6(a)
Agreement Recitals
Authority 1.3(b)
Board 1.3(d)(ii)
Buyer 5.6(c)(ii)
Chilmark 5.1(b)
Closing 1.3(a)
Commission 2.6
Common Stock Recitals
Company Recitals
Credit Facilities 1.3(b)
Credit Facility Amendments 1.3(b)
Encumbrances 1.1
Exchange Act 2.4
Financial Statements 2.7(a)
FNBB 1.3(b)
Governmental Entity 1.3(b)
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act 1.3(b)
Holder 6.8(a)
▇▇▇▇▇▇ Purchase Recitals
▇▇▇▇▇▇ Purchase Agreement Recitals
Legal Requirements 1.3(b)
Lenders Recitals
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▇▇▇▇▇▇ Purchase Recitals
▇▇▇▇▇▇ Purchase Agreement Recitals
Loan Agreement 1.3(b)
Material Adverse Effect 1.3(b)
NASD 2.3(a)
Notice of Proposed Transfer 5.6(c)(i)
October Agreement Recitals
Offering 6.3(c)
Other Holders 6.3(b)
Person 4.1
Purchase Agreements Recitals
Purchaser Recitals
Purchaser Material Adverse Effect 1.3(c)
Purchaser's Stock 6.1
Rule 13d-3 5.6(a)
SEC Reports 2.6
Securities Act 3.6(a)
Selling Stockholder 5.6(c)
Shares Recitals
Stock 5.6(a)
Stockholders 5.6(a)
Stockholders Meeting 5.7(b)
Stop Order 6.7(a)
Subsidiary 2.1
Suspension Event 6.7(b)
Transferee 5.6(c)(i)
Violation 6.8(a)
Warrants Recitals
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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
CAPE ▇▇▇ INVESTORS, L.L.C.
By: Chilmark Fund II, L.P., its Managing
Member
By: Chilmark II, L.L.C., its General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
SOLELY FOR PURPOSES OF
SECTIONS 5.1, 5.2, 5.6, 5.7 AND 7.2:
CHILMARK FUND II, L.P.
By: Chilmark II, L.L.C., its General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
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