EXHIBIT 10.1
STOCK PURCHASE AND REDEMPTION AGREEMENT
by and among
SUBURBAN OSTOMY SUPPLY CO., INC.
SUMMIT VENTURES III, L.P.
SUMMIT INVESTORS II, L.P.
SUMMIT SUBORDINATED
DEBT FUND, L.P.
THE BEAR STEARNS COMPANIES, INC.
and
THE STOCKHOLDERS PARTIES HERETO
July 3, 1995
TABLE OF CONTENTS
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Page
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Section 1. Purchase and Sale......................................... 1
(a) Purchase and Sale of Shares........................... 1
(b) Subordinated Debt Investment.......................... 2
(c) Closing............................................... 2
(d) Use of Proceeds....................................... 2
(e) Allocation of Purchase Price.......................... 2
(f) Stock Dividend........................................ 3
Section 2. Redemption of Shares by the Company....................... 3
(a) Redemption by the Company on the Closing
Date.................................................. 3
(b) Redemption Consideration.............................. 3
(c) Surrender and Exchange of Stock
Certificates; Payment of Redemption
Consideration......................................... 3
(d) Stock Transfer Books.................................. 4
Section 3. Covenants and Agreements of the Parties................... 4
(a) Access to Information;
Confidentiality....................................... 4
(b) Agreement to Cooperate................................ 6
(c) Public Announcements.................................. 7
(d) Directors' and Officers' Indemnification.............. 7
(e) New Indebtedness...................................... 7
(f) Life Insurance........................................ 7
(g) Exclusivity; No Solicitation.......................... 7
(h) Investment Bankers.................................... 8
Section 4. Representations, Warranties and Covenants
of the Company and the Stockholders....................... 9
(a) Organization; Power and Authority;
Effect of Transaction................................. 9
(b) Financial Information................................. 11
(c) Condition and Title to
Properties; Leases.................................... 12
(d) Compliance with Private
Authorizations....................................... 12
(e) Compliance with Governmental
Authorizations and Applicable Law.................... 13
(f) Intellectual Property................................ 14
(g) Related Transactions................................. 14
(h) Insurance............................................ 14
(i) Tax Matters.......................................... 15
(j) Employee Retirement Income Security
Act of 1974.......................................... 16
(k) Inapplicability of Specified Statutes................ 17
(l) [Intentionally Omitted].............................. 17
(m) Employment Arrangements.............................. 17
(n) Material Agreements.................................. 18
(o) Ordinary Course of Business.......................... 18
(p) Broker or Finder..................................... 19
(q) Environmental Protection............................. 20
(r) Accounts Receivable.................................. 21
(s) Inventories.......................................... 21
(t) Records and Books.................................... 21
(u) Disclosure of Material Information................... 21
Section 5. Representations, Warranties and Covenants
of the Purchasers........................................ 23
(a) Organization and Business; Power and
Authority; Effect of Transaction; Ordinary
Course of Business................................... 23
(b) Investment........................................... 25
(c) Financial Capacity................................... 25
(d) Broker or Finder..................................... 25
(e) Financing............................................ 25
Section 6. Covenants................................................ 26
(a) Interim Conduct of Business.......................... 26
(b) Disclosure Supplements............................... 27
Section 7. Closing Conditions....................................... 28
(a) Conditions of the Purchasers and
the Stockholders..................................... 28
(b) Conditions of the Purchasers......................... 29
(c) Conditions of the Stockholders....................... 30
Section 8. Indemnification.......................................... 30
(a) Survival of Representations and
Warranties........................................... 30
(b) Indemnification by Stockholders...................... 30
(c) Indemnification by the Purchasers.................... 32
(d) Minimum Indemnification.............................. 32
(e) Notice and Opportunity to Defend..................... 32
(f) Set-Off.............................................. 33
Section 9. Definition............................................... 34
Section 10. Miscellaneous............................................ 34
(a) Nature and Survival of
Representations and Warranties....................... 34
(b) Entire Agreement..................................... 35
(c) Rights and Remedies.................................. 35
(d) Expenses............................................. 35
(e) Termination.......................................... 35
(f) Waivers; Amendments.................................. 37
(g) Assignment; Successors and Assigns................... 37
(h) Notices.............................................. 38
(i) Severability......................................... 39
(j) Counterparts......................................... 40
(k) Section Headings..................................... 40
(l) Further Acts......................................... 40
(m) Relationship of Parties.............................. 40
(n) Conflict Among Attachments........................... 40
(o) Governing Law........................................ 41
Schedules
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A Definitions (see Section 7)
B Disclosure Schedule
1 List of Purchasers and Shares to be Acquired
2 List of Stockholders and Shares to be Redeemed
Exhibits
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A Terms of Series A Preferred Stock
B Form of Note
C Form of Shareholders' Agreement
D Form of Registration Rights Agreement
E Form of Employment Agreement
F Form of Stock Option Plan
G Form of Stock Option Agreement
H Aronson Non-Competition Agreement
STOCK PURCHASE AND REDEMPTION AGREEMENT made as of July 3, 1995 by and among
Suburban Ostomy Supply Co., Inc., a Massachusetts corporation (the "Company"),
each of the undersigned stockholders of the Company (individually, a
"Stockholder" and collectively, the "Stockholders"), and the Purchasers listed
on the signature page hereof (individually, a "Purchaser" and collectively, "the
Purchasers").
WITNESSETH:
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WHEREAS, the Company is engaged in the business of distributing disposable
home health care products and owning and operating the properties and assets
associated therewith (the Subject Business" and such properties and assets, the
"Subject Assets");
WHEREAS, the Stockholders own all of the issued and outstanding capital stock
of the Company;
WHEREAS, the Purchasers desire to acquire, and the Company desires to issue
and sell, securities of the Company upon the terms and conditions hereinafter
set forth; and
WHEREAS, the Company desires to repurchase shares of its Common Stock from the
Stockholders;
NOW, THEREFORE, in consideration of the premises, of the mutual covenants and
agreements herein set forth, and other valuable consideration, the receipt,
adequacy and sufficiency whereof are hereby acknowledged, the parties hereto,
intending to be legally bound, do hereby covenant and agree as follows:
SECTION 1. Purchase and Sale.
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(a) Purchase and Sale of Shares. Subject to the provisions of this Agreement,
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the Company shall issue and sell to the Purchasers, and the Purchasers agree to
purchase and accept the delivery of, an aggregate of 66,500 shares of the
Company's Series A Redeemable Preferred Stock, par value $.01 per share (the
"Series A Preferred Stock"), at a price of $100 per share, for an aggregate
purchase price of $6,650,000, and an aggregate of 280 shares of the Company's
Common Stock, no par value per share (the "Common Stock"), at a price of $357.14
per share, for an aggregate purchase price of approximately $100,000. The
Series A Preferred Stock shall have the rights, terms and privileges set forth
on Exhibit A attached hereto. The shares of Series A Preferred Stock and Common
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Stock purchased pursuant to this Section 1(a) are referred to herein as the
"Preferred Shares" and "Common Shares," respectively. The number of Preferred
Shares and Common Shares to be sold by the Company to each Purchaser is set
forth in Schedule 1 attached hereto.
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(b) Subordinated Debt Investment. Pursuant to a certain Subordinated
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Debenture Purchase Agreement of even date (the "Subordinated Debenture
Agreement"), Summit Subordinated Debt Fund, L.P. and Summit Investors II, L.P.
have committed to purchase
$6,750,000 in principal amount of newly-issued subordinated debentures (the
"Debentures") of the Company. The closing of the transactions contemplated by
the Subordinated Debenture Agreement shall occur at the Closing and currently
with the closing of the purchase of the Preferred Shares and Common Shares
hereunder.
(c) Closing. Subject to the satisfaction or waiver of the conditions set
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forth in Section 7 below, the purchase of the Preferred Shares and Common Shares
shall be made at a closing (the "Closing") to be held at the offices of
Hutchins, Wheeler & Dittmar, 101 Federal Street, Boston, MA 02110 on June 30,
1995, or at such other time and on such other date on or prior to July 19, 1995
as the Purchasers, the Company and the Stockholders may mutually agree (the
"Closing Date"). Payment at the Closing for the Preferred Shares and Common
Shares shall be by wire transfer payable in immediately available federal funds.
Each Purchaser shall pay that amount for the Preferred Shares and Common Shares
being acquired by it at the Closing as described on Schedule 1 hereof. At the
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Closing, (i) the Company will deliver to each Purchaser one or more certificates
representing the Preferred Shares and Common Shares purchased by such Purchaser,
in such denominations and issued in such names as may be requested by such
Purchaser, and (ii) each Purchaser shall deliver to the Company a duly completed
Internal Revenue Service Form W-9 or Internal Revenue Service Form W-8 and its
taxpayer identification number.
(d) Use of Proceeds. The proceeds of the sale of the Preferred Shares and
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Common Shares, together with the proceeds of the sale of the Debentures and the
New Company Debt, shall be used to redeem shares of Common Stock from the
Stockholders as provided in Section 2 hereof.
(e) Allocation of Purchase Price. The total consideration paid by the
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Purchasers to the Company pursuant to this Agreement and the Subordinated
Debenture Agreement is $13,500,000. The parties hereto agree that such amount
shall be allocated among the Common Shares, Preferred Shares and Debentures as
set forth in Sections 1(a) and 1(b) above, and the Company shall file all tax
returns and reports in a manner consistent with such allocation.
(f) Stock Dividend. Immediately after giving effect to the purchase and sale
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of Series A Preferred Stock and Common Stock as provided in Section 1(a), and
before execution of the option agreements evidencing the options specified in
Section 7(c)(iii), there shall be declared and effected a 100 for 1 stock split,
effected in the form of a stock dividend of 99 shares of Common Stock for each
share of Common Stock outstanding.
SECTION 2. REDEMPTION OF SHARES BY THE COMPANY.
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(a) Redemption by the Company on the Closing Date. On the Closing Date,
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immediately after the issuance and sale of the Preferred Shares and Common
Shares to the Purchasers, the Company shall redeem and purchase from each
Stockholder, and each
Stockholder hereby agrees to sell and deliver to the Company, the number of
shares of Common Stock set forth opposite his name on Schedule 2 attached hereto
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(the "Redemption Shares").
(b) Redemption Consideration. The aggregate consideration payable to the
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Stockholders for the repurchase of the Redemption Shares contemplated hereby
(the "Redemption Consideration") shall be as follows:
(i) Twenty-Seven Million Dollars ($27,000,000) payable in immediately
available funds at the Closing; and
(ii) Two Million Five Hundred Thousand Dollars ($2,500,000) payable to
the Stockholders through the issuance of subordinated notes in the principal
amount of $2,500,000 (the "Notes"), which Notes will bear interest at the rate
of 12% per annum, payable quarterly in arrears. The Notes will be in the form
of Exhibit B attached hereto.
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(c) Surrender and Exchange of Stock Certificates; Payment of Redemption
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Consideration. At the Closing, each Stockholder shall cease to have any rights
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as a shareholder relating to his Redemption Shares. At the Closing, each
Stockholder shall be entitled to receive, upon surrender to the Company of a
certificate or certificates or other documents or instruments (collectively,
"Certificates") representing the Redemption Shares set forth opposite his name
in Schedule 2, accompanied by a duly completed and executed stock transfer power
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and IRS Form W-9, the cash Redemption Consideration for such Redemption Shares,
which amount shall be paid by wire transfer of immediately available funds to an
account specified by such Stockholder and a Note in the principal amount set
forth opposite his name on Schedule 2.
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(d) Stock Transfer Books. From and after the Closing Date, no transfer of the
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Redemption Shares shall be registered on the stock transfer books of the
Company.
SECTION 3. Covenants and Agreements of the Parties.
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The parties do hereby, jointly and severally, covenant and agree as follows:
(a) Access to Information; Confidentiality.
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(i) The Company shall afford to the Purchasers and their officers,
directors, employees, attorneys, accountants, financial advisors and other
representatives or agents full access during normal business hours throughout
the period from the date hereof to the Closing Date to all of its properties,
books, contracts, commitments and records (including without limitation Tax
Returns) and, during such period, shall furnish promptly to the Purchasers (A) a
copy of each report, schedule and other document filed or received by it
pursuant to the requirements of any Applicable Law (including without limitation
federal or state securities
laws) or filed by it with any Authority in connection with the transactions
contemplated by this Agreement or which may have a material effect on its
business, operations, properties, prospects, personnel, condition, financial or
other, or results of operations and (B) such other information concerning any of
the foregoing as the Purchasers shall reasonably request.
(ii) Each party hereto shall, whether or not the transactions
contemplated hereby are consummated, maintain on the same basis as it does with
respect to its own confidential and proprietary information the confidentiality
of all information concerning any other party or any Affiliate of any other
party provided to or discovered by it, its officers, directors, employees,
attorneys, accountants, financial advisors or other representatives or agents
and which is not otherwise available on a nonconfidential basis to such party
and shall not (except as may otherwise be required by Applicable Law, including
without limitation federal and state securities laws, or by summons or subpoena)
disclose such information, subject to the provisions of this Section, to anyone
other than (A) those persons directly involved in the investigation and
negotiations pertaining to the transactions contemplated hereby, including,
without limitation, attorneys, accountants, financial advisors and other
representatives and agents, (B) such lenders or investors as may be necessary to
finance the transactions contemplated hereby or thereby, (C) such Persons or
Governmental Authorities, whose consent or approval may be necessary to permit
consummation of the transactions contemplated hereby or thereby, and (D) those
persons directly involved in any Legal Action based upon or in connection with
the subject matter of this Agreement, including, without limitation, the failure
of the transactions contemplated hereby to be consummated. The provisions of
this paragraph are in addition to, and not in replacement of, any
confidentiality agreement between the Company and the Purchasers or any
Affiliate of the Purchasers.
(iii) It shall be a condition of the disclosure of any confidential
information to any of the Persons described in clauses (ii)(A), (B) or (C) above
that such Persons (other than Governmental Authorities) execute and deliver to
the party whose confidential information is being disclosed an agreement in
form, scope and substance reasonably satisfactory to such party embodying the
provisions of this Section 3(a).
(iv) Each party further agrees that in the event that the transactions
contemplated by this Agreement shall not be consummated, it will return all
documents and records obtained by it, its officers, directors, employees,
attorneys, accountants and other representatives or agents from the other party
during the course of its investigation or negotiations pertaining to the
transactions contemplated hereby, and all copies thereof (other than one record
copy to be kept by independent counsel to such party). Without limiting the
generality of the foregoing, in such event, the parties hereto agree that they
shall not retain or permit any Person to whom they have furnished the same to
retain, any memoranda, copies, summaries, extracts or other reproductions in
whole or in part of such written information or material or any oral information
so provided (other than the one copy to be delivered to independent counsel).
In such event all documents, memoranda, notes and other writing whatsoever
prepared by a Purchaser or the Company based on the information in such
information or material shall except as provided in the preceding sentence be
destroyed (and the Purchasers and the Company shall use their respective
reasonable business efforts to cause all Persons to whom they have furnished the
same to similarly destroy their documents, memoranda and notes), and such
destruction (and efforts) shall be certified in writing by the authorized
officer supervising such destruction.
(v) The provisions of paragraphs (ii) and (iv) of this Section 3(a)
shall survive any termination of this Agreement or the consummation of the
transactions contemplated hereby.
(b) Agreement to Cooperate. Subject to the terms and conditions herein
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provided, each of the parties hereto shall cooperate and use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under Applicable Laws to
consummate and make effective the transactions contemplated by this Agreement,
including without limitation using its reasonable efforts to:
(i) prepare and file with the applicable Authorities (including without
limitation the Federal Trade Commission and the Department of Justice), as
promptly as practicable after the execution of this Agreement, all requisite
applications, notifications, registrations, filings and submissions, amendments
thereto, and publications and requests for extensions and waivers in connection
therewith, together with all related information, data and exhibits, as may be
necessary to obtain all Governmental Authorizations legally required for, or
otherwise required by Applicable Law in connection with, the consummation of the
transactions contemplated by this Agreement;
(ii) defend vigorously against any Legal Actions in which such party is
named as a defendant which seeks to enjoin, restrain or prohibit the
consummation of the transactions contemplated hereby or seeks damages with
respect to such transaction, including to lift any injunction or other legal bar
to such consummation (and, in such case, to proceed with such consummation as
expeditiously as possible); and
(iii) obtain the satisfaction of the conditions specified in Section 7.
Without limiting the generality of the foregoing, the parties recognize that the
consummation of the transactions contemplated hereby is subject to the
preacquisition notification requirements of the HSR Act. Each of the parties
agrees, accordingly, that it will (x) file with the Antitrust Division of the
Department of Justice and the Federal Trade Commission a Notification and Report
Form in a manner so as to constitute substantial compliance with the
notification requirements of the HSR Act, and (y) use its reasonable business
efforts to achieve the prompt termination or expiration of the waiting period or
any extension thereof under the HSR Act.
(c) Public Announcements. Until such time, including following any
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termination of this Agreement as may be mutually agreed upon by the parties to
this Agreement, none of the parties shall, without the approval of the Summit
Purchasers and the Company, which approval shall not unreasonably be withheld,
delayed or conditioned, make or cause to be made any press release or other
public announcement that directly or indirectly discloses the transactions
contemplated by this Agreement, except as and to the extent that it is required
to make by Law. Prior to making any press release or other public announcement
that may be required by Law, the party proposing to make the same shall advise
the others and afford them the opportunity to review and comment upon its
content.
(d) Directors' and Officers' Indemnification. The Company shall not take, and
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the Purchasers shall not permit the Company to take, for a period of six years
after the Closing, any action that would diminish the rights to indemnification
of each present and former director, officer, employee and agent of the Company
contained in the Articles of Organization or By-Laws, respectively, of the
Company as in effect on the Closing Date.
(e) New Indebtedness. Prior to the Closing, the Summit Purchasers and the
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Company shall cooperate in obtaining financing for the Company in a minimum
principal amount equal to $16,000,000 (the "New Company Debt"), including a
working credit line of not less than $2,500,000 (the "Working Credit Line") on
reasonable terms approved by the Board of Directors of the Company. Immediately
prior to the sale and purchase of the Common Shares and Preferred Shares
pursuant to this Agreement, the Company shall draw down $13,500,000 of the New
Company Debt in order to consummate the redemption of shares of Common Stock
from the Stockholders pursuant to Section 2 of this Agreement.
(f) Life Insurance. The Company shall use its reasonable best efforts to
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obtain and maintain in full force and effect, at its expense, insurance payable
to the Company upon the lives of Herbert Gray and Donald Benovitz in the amount
of $1,000,000 each with insurers and upon terms approved by the Board of
Directors of the Company.
(g) Exclusivity; No Solicitation. In recognition and consideration of the
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fact that the Summit Purchasers have invested and will invest substantial time
and effort, and have incurred and will incur substantial expenses in their
detailed investigation of the Company and its business and in the negotiation
and preparation of this Agreement and other documents relating to the
transactions contemplated hereby, from and after the date hereof until the
earlier of July 15, 1995 and the date on which negotiations concerning the
transactions contemplated hereby cease to continue in good faith, the Company
and the Stockholders agree with the Summit Purchasers that the Company shall
not, and shall not permit any of its officers, directors, employees, advisers,
agents or other representatives, directly or indirectly, to solicit, initiate,
participate in, consider or entertain (including by way of furnishing any non-
public information concerning the Company's business, properties or assets)
discussions, inquiries or proposals whether or not solicited by the Company or
participate in any negotiation for the purpose or with the intention of leading
to any such discussion, inquiry or
proposal concerning any acquisition of all or substantially all of the assets
of, or any merger, consolidation or business combination with, the Company or
the sale of any material amount of assets of the Company or for the purchase of
any material amount of equity securities of the Company (including a sale to the
public) (collectively, a "Purchase Proposal"), except for the transactions with
the Purchasers contemplated by this Agreement; provided, however, that if the
Stockholders believe that the Summit Purchasers have ceased to negotiate with
them in good faith, they shall so notify the Purchasers specifying the reasons
for their belief in reasonable particularity, and the Summit Purchasers shall
have five business days to resume negotiations in good faith. Promptly after
this Agreement is signed, the Company and the Stockholders and any agents of any
of them shall notify any persons or entities with whom the Company or any of the
Stockholders or their agents are now engaged in discussions concerning a
Purchase Proposal that the Company and the Stockholders have signed this
Agreement to engage in a transaction with the Summit Purchasers. The Company
will promptly inform the Summit Purchasers of any inquiry (including the terms
thereof and the Person making such inquiry) which it may receive in respect of
ny Purchase Proposal.
(h) Investment Bankers. The parties acknowledge that while the Company has no
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present intention of offering its securities for sale to the public under the
Securities Act, it may choose to do so in the future. In such event, the
Company agrees that it shall inform BSC of such intent, and shall invite BSC to
make a presentation to the Board of Directors of the Company should BSC desire
to manage such an offering. The Company further agrees that given BSC's
expertise and knowledge of the Company, if the Company elects to name three or
more managers of such an offering, BSC shall be one of such managers, with the
lead underwriter to be selected by the Board of Directors of the Company.
SECTION 4. Representations, Warranties and Covenants of the Company and
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the Stockholders. The Company and each Stockholder, jointly and severally,
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hereby represents, warrants, covenants and agrees to and with the Purchasers as
follows:
(a) Organization, Power and Authority; Effect of Transaction.
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(i) The Company (A) is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization as set forth
in the Disclosure Schedule, (B) has all requisite power and authority (corporate
and other) to own or hold under lease its properties and to conduct its business
as now conducted and as presently proposed to be conducted, and has in full
force and effect all Governmental Authorizations and Private Authorizations, to
the extent required for such ownership or lease of its property and conduct of
its business, except where the failure to have such Governmental Authorizations
and Private Authorizations does not, in the aggregate, have a Material Adverse
Effect on the Company, and (C) has duly qualified and is authorized to do
business and is in good standing as a foreign corporation in each jurisdiction
(a true and correct list of which is set forth in the Disclosure Schedule) in
which the character of its property or the nature of its business or
operations requires such qualification or authorization, except where the
failure to so qualify does not, in the aggregate, have a Material Adverse Effect
on the Company.
(ii) The Company has all requisite power and authority (corporate and
other) and has in full force and effect all Governmental Authorizations and
Private Authorizations in order to enable it to execute and deliver, and to
perform its obligations under, this Agreement and each agreement, instrument or
other document executed or required to be executed pursuant hereto or thereto,
and the execution, delivery and performance of this Agreement and each
agreement, instrument or other document executed or required to be executed
pursuant hereto or thereto have been duly authorized by all requisite corporate
or other action. This Agreement has been duly executed and delivered by the
Company and constitutes, and each agreement, instrument or other document
executed or required to be executed pursuant hereto or thereto when executed and
delivered by the Company will constitute, legal, valid and binding obligations
of the Company, enforceable in accordance with their respective terms, except as
(A) the enforceability thereof may be limited by bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance or other laws of general
applicability affecting the enforcement of creditors' or secured parties' rights
or debtors' obligations generally; (B) the availability of specific performance
or other equitable remedies may be limited by equitable principles of general
applicability (whether such matter is considered in a proceeding at law or in
equity); and (C) the indemnification provisions with respect to securities law
matters may be limited by applicable securities laws or principles of public
policy.
(iii) Except as set forth in the Disclosure Schedule, neither the
execution and delivery of this Agreement or any agreement instrument or other
document executed or required to be executed pursuant hereto or thereto, nor the
consummation of the transactions herein or therein contemplated nor compliance
with the terms, conditions and provisions hereof or thereof by the Company:
(A) will conflict with, or result in a breach or violation of, or
constitute a default under, any Applicable Law on the part of the Company or
will conflict with, or result in a breach or violation of, or constitute a
default under, or permit the acceleration of any obligation or liability in, or
but for any requirement of giving of notice or passage of time or both would
constitute such a conflict with, breach or violation of, or default under, or
permit any such acceleration in, any material agreement to which the Company is
a party or by which it or its property is bound,
(B) will result in or permit the creation or imposition of any Lien
upon any property now owned or leased by the Company, or
(C) will, based on the representations and warranties of the
Purchasers set forth in Section 5(b), require any Governmental Authorization or
Governmental Filing or Private Authorization, except pursuant to the HSR Act
and for filings contemplated by the Registration Rights Agreement referred to
in Section 7(a)(v)(B).
(iv) The Company does not have any Subsidiaries.
(v) The authorized and outstanding capital stock of the Company and the
ownership thereof will as of the Closing Date be as set forth in the Disclosure
Schedule. All issued and outstanding shares of capital stock are, and when
issued in accordance with the terms hereof, all Preferred Shares and Common
Shares will be, duly authorized, validly issued, fully paid, non-assessable and
free from any restrictions on transfer, and are not subject to any preemptive or
similar rights, except (A) as set forth in the Disclosure Schedule, (B) for
restrictions imposed by federal or state securities or "blue-sky" laws and
(C) for those imposed pursuant to this Agreement or any Related Agreement.
Except as contemplated by this Agreement or as set forth in the Disclosure
Schedule, (A) there is neither outstanding nor has the Company agreed to grant
or issue any shares of its capital stock or any Option Security or Convertible
Security and (B) the Company is not a party to and is not bound by any
agreement, put or commitment pursuant to which it is obligated to purchase,
redeem or otherwise acquire any shares of capital stock or any Option Security
or Convertible Security. All issued and outstanding shares of capital stock of
the Company were, and, based on the representations and warranties of the
Purchasers set forth in Section 5(b), the Preferred Shares and Common Shares
will be, issued (A) in transactions exempt from the registration provisions of
the Securities Act of 1933, as amended (the "Securities Act") and (B) in
compliance with or in transactions exempt from the registration provisions of
applicable state securities or "blue-sky" laws. The Company has complied and
will comply, in all material respects, with all applicable federal or state
securities laws in connection with the issuance and sale of the Preferred Shares
and Common Shares. Neither the Company nor anyone acting on its behalf has
offered any of the Preferred Shares and Common Shares, or similar securities, or
solicited any offers to purchase any of such securities to any Person other than
the Purchasers and other than in connection with soliciting offers to acquire
the Company as a whole.
(b) Financial Information. The Company has heretofore furnished to Purchaser
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copies of the financial statements of the Company listed in the Disclosure
Schedule (the "Financial Statements"). The Financial Statements, including in
each case the notes thereto, have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby, except as
otherwise noted therein, and fairly present the financial condition and results
of operations of the Company, on the bases therein stated, as of the respective
dates thereof, and for the respective periods covered thereby subject, in the
case of unaudited financial statements, to normal year-end audit adjustments and
accruals. Between the date of the most recent financial statements forming part
of the Financial Statements and the date of this Agreement, except to the extent
described in the Disclosure Schedule, there has been no Material Adverse Change
in the Company. Except as set forth in the April 30, 1995 balance sheet forming
part of the Financial Statements (the "Most Recent Balance Sheet"),
there are no material liabilities of the Company, whether accrued, absolute,
contingent or otherwise (including, without limitation, liabilities as guarantor
or otherwise with respect to obligations of any other Person, or liabilities for
Taxes due or then accrued or to become due), of a nature required by GAAP to be
set forth in the Financial Statements, or the notes thereto, except for
liabilities which have arisen in the ordinary course of business of the Company
since the date of the Most Recent Balance Sheet and except as contemplated by
this Agreement, the Related Agreements and the agreements relating to the New
Company Debt.
(c) Condition and Title to Properties; Leases. The Company owns no real
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property and has good indefeasible and merchantable title to all assets,
tangible and intangible, reflected on the Most Recent Balance Sheet forming part
of the Financial Statements, or acquired by the Company since such date, except
inventory sold and other tangible personal property used up or retired since
such date, in each case in the ordinary course of business consistent with past
practice of the Company, free and clear of all Liens, except such as are
reflected in such balance sheet, or the notes thereto, or set forth in the
Disclosure Schedule, or which do not, in the aggregate, have a Material Adverse
Effect on the Company. The Company has a valid leasehold interest in and enjoys
peaceful and undisturbed possession under all leases pursuant to which it holds
any real property. The Company is not in default in the performance, observance
or fulfillment of any obligation, covenant or condition contained in any such
lease, which could, in the aggregate for all such defaults, have a Material
Adverse Effect on the Company. The Disclosure Schedule contains a list of all
real property leased by the Company and all leases of real property. None of
the tangible personal property (other than inventory) is subject to contracts of
sale, none is held by the Company as lessee or as conditional sales vendee under
any lease or conditional sales contract and none is subject to any title
retention agreement, except as set forth in the Most Recent Balance Sheet or the
Disclosure Schedule. The Company owns or leases all real, personal, tangible
and intangible property and assets necessary for the conduct of the Subject
Business as such business is presently conducted and proposed to be conducted.
To the knowledge of each of the Stockholders and the Company, all tangible
properties and assets owned or leased by the Company are in satisfactory
operating condition and repair, ordinary wear and tear excepted, have been
maintained in accordance with reasonable business practice, and conform in ll
material respects with all Applicable Laws.
(d) Compliance with Private Authorizations. The Disclosure Schedule sets
--------------------------------------
forth a list of each material Private Authorization of the Company. The Company
has obtained all Private Authorizations which are necessary for the ownership by
it of its properties and the conduct of its business substantially as now
conducted or as presently proposed to be conducted or which, if not obtained and
maintained, could, in the aggregate, have a Material Adverse Effect on the
Company. The Company is not in breach or violation of, and is not in default in
the performance, observance or fulfillment of, any Private Authorization, and no
event exists or has occurred, which constitutes, or but for any requirement of
giving of notice or passage of time or both would constitute, such a breach,
violation or default, under any Private Authorization, except for such defaults,
breaches or violations, as do not and will not,
in the aggregate, have a Material Adverse Effect on the Company. No material
Private Authorization is the subject of any pending or, to the Company's
knowledge, threatened attack, revocation or termination, except as set forth in
the Disclosure Schedule
(e) Compliance with Governmental Authorizations and Applicable Law. The
--------------------------------------------------------------
Disclosure Schedule contains a list of
(i) all Legal Actions which are pending or in which the Company or its
business, operations or, properties or, to the Company's knowledge, any of its
officers or directors in connection therewith, is, or at any time since January
1, 1993 has been, engaged, or which involve, or at any time during such period
involved, the business, operations or properties of the Company or, to the
Company's knowledge, which are threatened or contemplated against the Company or
its business, operations or properties, or its officers or directors, in
connection therewith; and
(ii) each Governmental Authorization which, if not obtained and
maintained, could individually or in the aggregate, have any Material Adverse
Effect on the Company (a "Material Governmental Authorization").
No Material Governmental Authorization is the subject of any pending or, to
the Company's knowledge, threatened attack, revocation, expiration or
termination. Neither the Company nor, to the Company's knowledge, any officer
or director, in connection with the business, operations and properties of the
Company, is or at any time since January 1, 1993 has been
(A) in breach or violation or, or in default in the performance of,
or
(B) charged with any such breach or violation of, or default under,
or
(C) to the Company's knowledge, threatened with or under
investigation with respect to any such breach or violation of, or default
under,
any Material Governmental Authorization or any Applicable Law, and no event
exists or has occurred, which constitutes, or but for any requirement of giving
of notice or passage of time or both would constitute, such a breach or
violation of or default under any Material Governmental Authorization or any
Applicable Law, or except as otherwise set forth in the Disclosure Schedule.
(f) Intellectual Property. The present and planned future conduct of business
---------------------
by the Company is not materially dependent upon any one or more patents,
trademarks, trade names, service marks or copyrights. There are no Claims of
any Person pertaining to any of
the aforesaid, no proceedings have been instituted, are pending or, to the
Company's knowledge, threatened which challenge the Company's rights in respect
to any of the aforesaid, and, to the Company's knowledge, none of the aforesaid
infringes upon or otherwise violates the rights of any other Person or is being
infringed or violated by any other Person, except as set forth on the Disclosure
Schedule. No licenses, sublicenses or agreements pertaining to any of the
aforesaid are in effect, except as set forth in the Disclosure Schedule.
(g) Related Transactions. The Disclosure Schedule sets forth a list of any
--------------------
agreement or transaction between the Company and any of its officers, directors
or stockholders, or any Affiliate of any thereof (other than for services as, or
loans and advances in the ordinary course of business to, officers, and
directors and dividends to stockholders), now existing or which, at any time
since January 1, 1993, existed or occurred, including without limitation any
providing for the furnishing of services to or by, providing for rental of
property, real, personal or mixed, to or from, or providing for the lending or
borrowing of money to or from or otherwise requiring payments to or from, any
officer, director or stockholder, or any Affiliate of any thereof.
(h) Insurance. The Disclosure Schedule sets forth a list of all insurance
---------
maintained by the Company, including those with respect to loss or damage by
fire, theft, burglary, pilferage, loss in transit, explosion, hazards insured
against by extended coverage, and hazards, risks and liability to persons and
property, including larceny, embezzlement or other criminal misappropriation
insurance and business interruption insurance. Each such policy of insurance
is, to the knowledge of the Company, valid, binding and enforceable and in full
force and effect. The Company is not in breach or violation of or in default
under any such policy such as the insurer could cancel such policy or avoid
payment thereunder.
(i) Tax Matters. The Company has in accordance with all Applicable Laws filed
-----------
all Tax Returns which are required to be filed, and has paid, or made adequate
provision for the payment of, all Taxes which have or may become due and payable
pursuant to said returns, all estimated Taxes due and payable and all other
governmental charges and assessments received to date. The Tax Returns of the
Company have been prepared in accordance with all Applicable Laws and generally
accepted accounting principles applicable to taxation consistently applied. All
Taxes which the Company is required by law to withhold and collect have been
duly withheld and collected, and have been paid over, in a timely manner, to the
proper Authorities to the extent due and payable. The Company has not executed
any waiver to extend, or otherwise taken or failed to take any action that would
have the effect of extending, the applicable statute of limitations in respect
of any Tax liabilities of the Company for the fiscal years prior to and
including the most recent fiscal year, except as otherwise set forth on the
Disclosure Schedule. Adequate provision has been made on the most recent
balance sheet forming part of the Financial Statements for all Taxes of any
kind, including interest and penalties in respect thereof, whether disputed or
not, and whether past, current or deferred, accrued or unaccrued, fixed,
contingent, absolute or other, and to the
Company's knowledge, there are no transactions or matters or any basis which
might or could result in additional Taxes of any material nature to the Company
for which an adequate reserve has not been provided on such balance sheet. The
Company has at all times since September 1, 1987 and will until the Closing be a
corporation organized under Subchapter S of the Code. The Company is an accrual
basis taxpayer for federal income tax purposes.
(j) Employee Retirement Income Security Act of 1974. The Company has no
------------------------------------------------
current obligation to make any contribution to any Plans, except as set forth in
the Disclosure Schedule. As to all Plans listed in the Disclosure Schedule,
except as set forth on the Disclosure Schedule:
(i) All Plans comply and have been administered in form and in operation
with all Applicable Laws, except where the failure to so comply does not, in
the aggregate, have a Material Adverse Effect on the Company, and the Company
has not received any notice from any Authority to the effect that any Plan
does not so comply.
(ii) All Plans maintained by the Company that are or were intended to
comply with Sections 401 and 501 of the Code have been the subject of
favorable determination letters from the Service, and, to the Company's
knowledge, no event has occurred which will or could give rise to
disqualification of any such Plan under such sections or to a material tax
liability under Section 511 of the Code.
(iii) None of the assets of any Plan are invested in employer securities
or employer real property.
(iv) There have been no non-exempt "prohibited transactions" (as described
in Section 406 of ERISA or Section 4975 of the Code) with respect to any Plan
and the Company has not otherwise engaged in any such prohibited transaction.
(v) There have been no acts or omissions by the Company which have given
rise to or may give rise to material unpaid fines, penalties, taxes or
related charges under Sections 502(c), 502(i) or 4071 or ERISA or Chapter 43
of the Code for which the Company may be liable.
(vi) There are no Claims (other than routine claims for benefits) pending
or, to the Company's knowledge, threatened involving such Plans or the assets
of such Plans except such Claims which do not, in the aggregate, have a
Material Adverse Effect on the Company.
(vii) As to any Plan which is subject to Title IV of ERISA, there have been
no "reportable events" (as described in Section 4043 of ERISA), other than
"reportable events" with respect to which notice has been waived pursuant to
29 C.F.R. Part 2615, and no steps have been taken to terminate any such Plan.
(viii) All group health Plans of the Company have been operated in
compliance with the group health plan continuation coverage requirements of
Section 4980B(f) of the Code and Section 601 of ERISA to the extent such
requirements are applicable except where the failure to so comply does not, in
the aggregate, have a Material Adverse Effect on the Company.
(ix) Actuarially adequate accruals for all obligations under the Plans
are reflected in the most recent balance sheet forming part of the Financial
Statements and such obligations include a pro rata amount of the contributions
which would otherwise have been made in accordance with past practices for the
Plan years which include the Closing Date.
(x) Neither the Company nor, to its knowledge, any of its directors,
officers, employees or any other fiduciary has committed any breach of
fiduciary responsibility imposed by ERISA that would subject the Company to
material liability under ERISA.
(xi) No Plan which is subject to Part 3 of Subtitle B of Title I of ERISA
or Section 412 of the Code had an accumulated funding deficiency (as defined
in Section 302 of ERISA and Section 412 of the Code), whether or not waived,
as of the last day of the most recent fiscal year of such Plan to which Part 3
of Subtitle B of Title I of ERISA or Section 412 of the Code applied, nor
would have had an accumulated funding deficiency on such date if such year
were the first year of such Plan to which Part 3 of Subtitle B of Title I of
ERISA or Section 412 of the Code applied.
(xii) No material liability to the PBGC (other than payment of insurance
premiums) has been incurred by the Company with respect to any Plan.
(xiii) The Company is not and never has been a party to any Multiemployer
Plan or made contributions to any such plan.
(k) Inapplicability of Specified Statutes. The Company is not a "holding
-------------------------------------
company," or a "subsidiary company" or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended, or an "investment company" or a company "controlled" by or acting on
behalf of an "investment company", as defined in the Investment Company Act of
1940, as amended, or a "carrier" or a person which is in control of a "carrier",
as defined in sections 10102 or 11301 of Title 49, U.S.C.
(l) [Intentionally Omitted]
(m) Employment Arrangements. The Company has no obligation or liability,
-----------------------
contingent or other, under any Employment Arrangement, other than those listed
in the Disclosure Schedule. Except as set forth on the Disclosure Schedule,
none of the employees of the Company are represented by any labor union or other
employee collective bargaining organization or are parties to any labor or other
collective bargaining agreement, and there are no pending grievances, disputes
or controversies with any union or any other organization of such employees, or
threats of strikes, work stoppages or any pending demands for collective
bargaining by any union or organization, or, to the Company's knowledge, any
active organizing or recruiting of such employees with respect to becoming
members of any union or other employee or collective bargaining organization.
The Company has performed all obligations required to be performed under all
Employment Arrangements and is not in breach or violation of or in default or
arrears under any of the terms, provisions or conditions thereof, except such as
do not, in the aggregate, have a Material Adverse Effect on the Company.
(n) Material Agreements. Listed on the Disclosure Schedule are all Material
-------------------
Agreements relating to the ownership or operation of the business and property
of the Company presently held or used by the Company or to which the Company is
a party or to which it or any of its property is subject or bound. The Company
has complied in all material respects with all of the terms and conditions of
each Material Agreement and has not done or performed, or failed to do or
perform (and there is no pending or, to the knowledge of the Company,
threatened, Claim that the Company has not so complied, done and performed or
failed to do and perform) any act, and the Company is not aware of any such
noncompliance, nonperformance or failure on the part of any other Person to the
Material Agreements.
(o) Ordinary Course of Business. The Company from the end of its most recent
---------------------------
fiscal year to the date hereof, except as may be described on the Disclosure
Schedule or as may be required by the terms of this Agreement:
(i) has operated its business in the ordinary course;
(ii) has not sold or otherwise disposed of, or contracted to sell or
otherwise dispose of, any of its properties or assets, other than inventory in
the ordinary course of its business and nonmaterial amounts of machinery and
equipment no longer needed in the operation or business or replaced with assets
of like kind or better kind and quality;
(iii) except in each case in the ordinary course of business has not
incurred any Material obligations or liabilities;
(iv) has not made any additions to its property or any purchases of
machinery or equipment, except for normal maintenance and replacements;
(v) has not discharged or satisfied, any Lien or paid any obligation
or liability (absolute or contingent) other than current liabilities or
obligations under contracts then existing or thereafter entered into in the
ordinary course of business, and commitments under leases of real property
existing on that date or incurred since that date in the ordinary course of
business;
(vi) has not committed or suffered to exist any Act of Bankruptcy;
(vii) has not materially increased the compensation payable or to become
payable to any of its officers, employees, advisers, consultants, salesmen or
agents, has not otherwise altered, modified or changed in any material
respect the terms of their employment or engagement, and has not entered into
new employment arrangements, other than in the ordinary course of business
and on terms and conditions substantially consistent with prior practices;
(viii) has not suffered any material damage, destruction or loss
(whether or not covered by insurance) or any acquisition or taking of
property by any Authority;
(ix) has not amended in any material respect, terminated or entered
into or become (or permit any of its property to be) bound by or subject to
any Governmental Authorization, Private Authorization, Material Agreement,
Employment Arrangement or Plan or any transaction with any Affiliate;
(x) has not done any act or failed to do any act, if such act or
failure to act might result in the expiration, revocation, suspension or
modification of any of its Material Governmental or material Private
Authorizations;
(xi) has not issued, sold or purchased or agreed to issue, sell or
purchase any shares of capital stock or any Convertible Securities or Option
Securities;
(xii) has not declared, made or paid or agreed to declare, make or pay,
any Distribution; and
(xiii) has not entered into any other transaction or series of related
transactions or suffered any change which individually or in the aggregate is
Material to the Company.
(p) Broker or Finder. No Person assisted in or brought about the
----------------
negotiation of this Agreement or the subject matter of the transactions
contemplated hereby in the capacity of broker, agent or finder or in any similar
capacity on behalf of the Company or any of the Stockholders other than BSC,
and, except for the fees and expenses of BSC, neither any Stockholder nor the
Company has incurred any brokers, finders or similar fees or commissions payable
with respect to the transactions contemplated by this Agreement.
(q) Environmental Protection.
-------------------------
(i) Except as set forth in the Disclosure Schedule, (A) the Company has
obtained all Governmental Authorizations (including without limitation all
Environmental Permits) and made all Governmental Filings which are required to
be obtained by the Company for the ownership of its property, facilities and
assets and the operation of its businesses under all Environmental Laws, except
where the failure to obtain such Authorizations or to make such filings would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company, (B) the Company is and at all times since January 1, 1993 has been in
compliance with the terms and conditions of all such required Governmental
Authorizations and all Environmental Requirements, except where the failure to
so be in compliance, does not, in the aggregate, have a Material Adverse Effect
on the Company, and (C) the Company is not the subject of or, to the Company's
knowledge, threatened with any Legal Action involving a demand for damages or
other potential liability with respect to violations or breaches of any
Environmental Requirement, except for such Legal Actions which, if determined
adversely, would not, in the aggregate, have a Material Adverse Effect on the
Company.
(ii) There have not been any past or present events, activities,
practices, incidents, actions or plans of the Company, which constitute a breach
of any Environmental Requirements or which may interfere with or prevent
continued compliance with all Environmental Requirements or which may give rise
to any common law, statutory or other legal liability, or otherwise form the
basis of any Claim, clean-up cost, fine, penalty or assessment based on or
related to the transportation, transmission, gathering, processing,
distribution, use, treatment, storage, disposal or handling. or the emission,
discharge, release or threatened emission, discharge or release into the
environment of any pollutant, contaminant, hazardous or toxic material,
substance or waste with respect to the Company or its business, operations or
property which have, in the aggregate for all of the aforesaid, a Material
Adverse Effect on the Company.
(iii) The Company has not stored or disposed of (or engaged in the
business of storing or disposing) or released or caused the release of any
hazardous waste, contaminants, oil, radioactive or other material thereon, the
removal of which is required or the maintenance of which is prohibited or
penalized by any Environmental Laws. All real property leased by the Company is
free from any such hazardous waste, contaminants, oil, radioactive and other
materials owned or used by the Company.
(r) Accounts Receivable. All of the accounts receivable of the Company are
-------------------
properly reflected in the Financial Statements and are, subject to the allowance
for doubtful accounts set forth therein, valid and enforceable claims, subject
to no set-off or counterclaim, and are collectible in the ordinary course of
business at least to the extent, in the aggregate, as reflected.
(s) Inventories. Except as disclosed in the Disclosure Schedule, (i) the
-----------
inventories of the Company are properly reflected in the Most Recent Balance
Sheet and are of a quality and quantity saleable in the ordinary course of
business of the Company at prevailing market prices, are priced at the lower of
cost (first in, first out) or market and (ii) the values of the inventories
stated in the Financial Statements reflect the Company's normal inventory
valuation policies and were determined in accordance with generally accepted
accounting principles consistently applied.
(t) Records and Books. Except as disclosed in the Disclosure Schedule, (i)
-----------------
the minute books of the Company accurately record all corporate action taken by
the stockholders and boards of directors and committees thereof from the date of
organization through the date hereof, and (ii) the stock transfer ledgers or
record books of the Company completely and accurately set forth all transfers of
the Company's capital stock from the date of organization through the date
hereof.
(u) Disclosure of Material Information. Neither this Agreement (including
----------------------------------
the Schedules and Exhibits hereto) nor any document, certificate or instrument
furnished in connection herewith, when taken in their entirety, contains, with
respect to the Company, or any Stockholder, any untrue statement of a material
fact or omits to state a material fact necessary to made the statements therein
not misleading; provided, however, that it is agreed that this representation
and warranty shall not be deemed to apply to the confidential placement
memorandum dated January, 1995 prepared by the Company and distributed by BSC.
Each Stockholder severally and not jointly represents and warrants that:
(1) He has adequate power and authority and all necessary Governmental
Authorizations and Private Authorizations in order to enable him to execute and
deliver, and to perform his obligations under, this Agreement and each other
agreement, instrument and document executed or required to be executed pursuant
hereto or thereto, and the execution, delivery and performance of this Agreement
and each other agreement, instrument and document executed or required to be
executed pursuant hereto or thereto have, or on or prior to the Closing Date
will have, been duly executed and delivered;
(2) This Agreement constitutes, and each other agreement, instrument and
document executed or required to be executed pursuant hereto or thereto when
executed and delivered by him will constitute, his valid and binding
obligations, enforceable in accordance with its respective terms, except as (a)
the enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
fraudulent conveyance or similar laws affecting the enforcement of creditors' or
secured parties' rights or debtors' obligations generally, (b) the availability
of specific performance or other equitable remedies may be limited by equitable
principles of general applicability (whether in a court of law or in equity),
and (c) the indemnification provisions with respect to securities law matters
may be limited by applicable securities laws or principles of public policy.
(3) He owns and has good, indefeasible and merchantable title to the shares
of Common Stock set forth opposite his name on the Disclosure Schedule
(including the Redemption Shares set forth on Schedule 2 hereto), free and clear
----------
of all Liens, puts, calls, options, pre-emptive rights, stockholder agreements
and voting rights, except as otherwise set forth in the Disclosure Schedule;
(4) After giving effect to the consummation of the transactions contemplated
bv this Agreement, as of the Closing Date, he will be Solvent; and
(5) Except as set forth in the Disclosure Schedule, neither the execution and
delivery of this Agreement or any agreement, instrument or other Agreement
executed or required to be executed pursuant hereto or thereto, nor the
consummation of the transactions herein or therein contemplated, nor compliance
with the terms, conditions and provisions hereof or thereof by him:
(x) will conflict with, or result in a breach or violation of, or
constitute a default under, any Applicable Law on his part or will
conflict with, or result in a breach or violation of, or constitute a
default in the performance, observance or fulfillment of, or a default
under, or permit the acceleration of any obligation or liability in, or
but for any requirement of giving of notice or passage of time or both
would constitute such a conflict with, breach or violation of, or default
under, or permit any such acceleration in, any material agreement to
which he is a party or by which he or his property is bound,
(y) will result in or permit the creation or imposition of any
Encumbrance upon any of his property or assets, or
(z) will require any Governmental Authorization or Governmental
Filing, except pursuant to the HSR Act.
(6) He is acquiring the Note acquired by him under Section 2 above for
investment and not with a view to the distribution thereof in violation of the
Securities Act.
SECTION 5. Representations, Warranties and Covenants of the Purchasers.
-----------------------------------------------------------
Each Purchaser, acting severally and not jointly, hereby represents, warrants,
covenants and agrees to and with the Company and each Stockholder as follows:
(a) Organization and Business; Power and Authority; Effect of Transaction;
----------------------------------------------------------------------
Ordinary Course of Business
- ---------------------------
(i) Each Purchaser (A) is a partnership validly existing and in good
standing under the laws of the Commonwealth of Massachusetts or, in the case of
BSC, a
corporation validly existing and in good standing under the laws of [the State
of Delaware], and (B) has all requisite power and authority (corporate
partnership and other) to own or hold under lease the properties which it
proposes to own or hold under lease and to conduct its business as presently
proposed to be conducted, and has in full force and effect all Governmental
Authorizations and Private Authorizations and has made all Governmental Filings,
to the extent required for such ownership or lease of its property and conduct
of its business.
(ii) Each Purchaser has all requisite power and authority (corporate
partnership and other) and has in full force and effect all Governmental
Authorizations and Private Authorizations in order to enable it to execute and
deliver, and to perform its obligations under, this Agreement and each agreement
instrument or other document executed or required to be executed pursuant hereto
or thereto, and the execution, delivery and performance of this Agreement and
each agreement, instrument or other document executed or required to be executed
pursuant hereto or thereto have been duly authorized bv all requisite
partnership or other action. This Agreement has been duly executed and
delivered by each Purchaser and constitutes, and each agreement, instrument and
other document executed or required to be executed pursuant hereto or thereto
when executed and delivered by each Purchaser will constitute, legal, valid and
binding obligations of such Purchaser, enforceable in accordance with their
respective terms, except as (A) the enforceability thereof may be limited by
bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or
other laws of general applicability affecting the enforcement of creditors' or
secured parties' rights or debtors' obligations generally, (B) the availability
of specific performance or other equitable remedies may be limited by equitable
principles of general applicability (whether such matter is considered in a
proceeding at law or in equity), and (C) the indemnification provisions with
respect to securities law matters may be limited by applicable securities laws
or principles of public policy.
(iii) Neither the execution and delivery of this Agreement or any
agreement, instrument or other document executed or required to be executed
pursuant hereto and thereto, nor the consummation of of the transaction herein
or therein contemplated, nor compliance with the terms, conditions and
provisions hereof or thereof by any Purchaser:
(A) will conflict with, or result in a breach or violation of, or
constitute a default under, any Applicable Law on the part of such Purchaser
or any such other party or will conflict with, or result in a breach or
violation of, or constitute a default under, or permit the acceleration of
any obligation or liability in, or but for any requirement of giving of
notice or passage of time or both would constitute such a conflict with,
breach or violation of, or default under, or permit any such acceleration in,
any material agreement to which Purchaser is a party or by which it or its
property is bound;
(B) will result in or permit the creation or imposition of any Lien upon
any property now owned or leased by such Purchaser, or
(C) will require any Governmental Authorization or Governmental Filing or
Private Authorization, except as applicable securities laws may apply to
compliance by such Purchaser with the provisions of the Registration Rights
Agreement and pursuant to the HSR Act.
(b) Investment.
----------
(i) Each Purchaser is acquiring the Securities for its own account for
investment and not with a view to, or for sale in connection with, any
transaction which would constitute, a distribution within the meaning of the
Securities Act.
(ii) Each Purchaser understands that none of the Securities have been
registered under the Securities Act or the securities laws of any state, and in
the absence of such registration (or an exemption therefrom), it may be required
to hold the Securities for an indefinite period of time; that the exemptions
from registration under the Securities Act provided by Rule 144 promulgated
thereunder are not presently available and may not necessarily be available, to
it; and that even if available, such rule may permit resales of the Securities
only in limited amounts and upon compliance with the terms and conditions of
such rule.
(iii) Each Purchaser (A) has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
this investment in the Securities; (B) is able to bear the complete loss of its
investment in the Securities; and (C) has had the opportunity to ask questions
of, and receive answers from, the Company concerning the terms and conditions of
the offering of the Securities and to obtain additional information.
(iv) Each Purchaser acknowledges and agrees that until such time as it
is no longer required under the Securities Act and the rules and regulations
thereunder, the certificates representing the Preferred Shares and the Common
Shares shall bear a legend referencing the Securities Act.
(v) Each Purchaser is a financial institution or institutional buyer or
broker-dealer within the meaning of Section 402(b)(8) of chapter 110A of the
General Laws of Massachusetts.
(c) Financial Capacity. Each Purchaser has the financial capacity and
------------------
ability to consummate the transactions contemplated by this Agreement. As of the
execution and delivery of this Agreement, and after giving effect to the
consummation of the transactions contemplated by this Agreement, each Purchaser
is and, as of the Closing Date, will be Solvent.
(d) Broker or Finder. No Person assisted in or brought about the negotiation
----------------
of this Agreement or the subject matter of the transactions contemplated hereby
in the capacity of broker, agent or finder or in any similar capacity on behalf
of any of the Purchasers and none of the Purchasers has incurred any broker's,
finder's or similar fees or commissions payable with respect to the transactions
contemplated by this Agreement.
(e) Financing. The Summit Purchasers, jointly and severally, represent and
---------
warrant that the New Company Debt will be obtained from non-affiliated lenders
on commercially reasonable terms or, if not obtained from such sources, will be
provided by the Summit Purchasers or their Affiliates in an amount not less than
$16,000,000, including the Working Credit Line, on such commercially reasonable
terms or other terms reasonably satisfactory to the Company.
SECTION 6. Covenants. The Company and each of the Stockholders hereby agree
---------
with each Purchaser to keep, perform and fully discharge the following covenants
and agreements:
(a) Interim Conduct of Business. From the date hereof until the Closing, the
---------------------------
Company shall operate its business as a going concern consistent with prior
practice and in the ordinary course of business. Without limiting the
generality of the foregoing, from the date hereof until the Closing Date, except
for transactions contemplated by this Agreement or contemplated by matters set
forth in the Disclosure Schedule or expressly approved in writing by the Summit
Purchasers, the Company shall not:
(i) enter into or amend any employment, bonus, severance or retirement
contract or arrangement, or increase any salary or other form of compensation
payable or to become payable to any executive or employee other than in the
ordinary course of business consistent with past practices and other than
salary increases for employees of the Company who are not Stockholders and
whose current salary is less than $75,000 per annum; notwithstanding this
clause (a)(i), payments provided for in the Company's bonus plan for fiscal
year 1995, as heretofore furnished to the Purchasers, will be made as
contemplated;
(ii) purchase, lease or otherwise acquire any real estate or any
interest therein;
(iii) declare, set aside or pay any dividend or make any other
distribution with respect to any Equity security of the Company (other than
dividends and distributions to Stockholders to fund taxes on their allocable
share of S Corporation income within a reasonable period prior to the time
those taxes are due and payable);
(iv) merge or consolidate with or agree to merge or consolidate with, or
purchase or agree to purchase all or substantially all of the assets of,
acquire securities of or otherwise acquire, any Person;
(v) sell, lease or otherwise dispose of or agree to sell, lease or
otherwise dispose of any of its assets, properties, rights or claims, whether
tangible or intangible, except in the ordinary course of business consistent
with prior practice;
(vi) authorize for issuance, issue, sell or deliver any of of its equity
securities;
(vii) split, combine or reclassify any class of equity security or redeem
or otherwise acquire, directly or indirectly, any of its equity securities;
(viii) incur any liability, guaranty or obligation (including without
limitation for money borrowed) (fixed or contingent) other than in the
ordinary course of business consistent with prior practice;
(ix) place or permit to be placed any Lien on any of its assets or
properties, other than statutory Liens arising in the ordinary course of
business;
(x) make or authorize any amendments or changes to its corporate charter
or By-Laws not approved in writing by the Summit Purchasers;
(xi) make any investment in excess of $100,000, whether singly or in the
aggregate, in property, plant and equipment and other items of capital
expenditure; or
(xii) accelerate receivables or delay or postpone payment of any accounts
payable or other liability, except in the ordinary course of business
consistent with prior practice.
(b) Disclosure Supplements. From time to time prior to the Closing, the
----------------------
Company and the Stockholders will supplement or amend the Disclosure Schedule
hereto with respect to any matter hereafter arising which, if existing or
occurring at or prior to the date of this Agreement, would have been required to
be set forth or described in any such Schedule or which is necessary to complete
or correct any information in any such Schedule or in any representation or
warranty of the Company and the Stockholders which has been rendered inaccurate
thereby. For purposes of determining the satisfaction of the conditions set
forth in Section 7 hereof, no such supplement or amendment shall be given
effect.
SECTION 7. Closing Conditions
------------------
The obligations of each Purchaser and each Stockholder to consummate the
transactions contemplated by this Agreement are subject the truth, accuracy and
completeness in all material respects of the certificates to be furnished to it
pursuant to the provisions of this Section, and to the condition that all
agreements, certificates, opinions, letters and other documents and all
corporate and other matters incident to the transactions contemplated by this
Agreement shall be reasonably satisfactory in form, scope and substance to such
party and its counsel, and that such party shall have received all information
and copies of all documents, including records of corporate proceedings, which
it or its counsel may reasonably request in connection therewith, such
documents, where appropriate, to be certified by proper corporate officers or
Authorities, and to the satisfaction in all material respects on the Closing
Date of the following further conditions, except to the extent that any such
condition may have been waived in writing by such party at or prior to the
Closing Date.
(a) Conditions of the Purchasers and the Stockholders.
-------------------------------------------------
(i) No Opposition. No Legal Action or other Claim shall be pending on
-------------
the Closing Date before or by any Authority seeking to restrain or prohibit
the consummation of the transactions contemplated hereby.
(ii) Representations and Covenants. The representations, warranties,
-----------------------------
covenants and agreements of the other party (which in the case of the
Purchasers shall mean the Company and the Stockholders) contained in this
Agreement or otherwise made in writing by it or on its behalf pursuant
hereto or otherwise made in connection with the transactions contemplated
hereby shall be true and correct in all material respects at and as of the
Closing Date with the same force and effect as though made on and as of
such date except those which speak as of a certain date which shall
continue to be true and correct as of such date in all material respects on
the Closing Date, each and all of the agreements and conditions to be
performed or satisfied by the other party hereunder at or prior to the
Closing Date shall have been duly performed or satisfied in all material
respects, and each party shall have furnished the other party with such
certificates and other documents evidencing the truth of such
representations, warranties, covenants and agreements and the performance
of such agreements or conditions as any such other party shall have
reasonably requested.
(iii) HSR Act. The filing and waiting period requirements under the HSR
-------
Act relating to the consummation of the transactions contemplated by this
Agreement shall have been complied with.
(iv) Consents and Modifications, Governmental and Private
----------------------------------------------------
Authorizations. The Company shall have obtained consents to the assignment
--------------
and continuation of all Material Agreements, if any, listed in the
Disclosure Schedule as requiring such consents .
(v) Other Agreements. The Stockholders, the Company and the
----------------
Purchasers shall have executed and delivered to one another (A) a
Shareholders' Agreement substantially in the form of Exhibit C hereto and
---------
(B) a Registration Rights Agreement substantially in the form of Exhibit D
---------
hereto. The Company and each of the persons named therein shall have
executed and delivered to one another employment agreements substantially
in the form of Exhibit E hereto. Melvin Aronson shall enter into a Non-
Competition Agreement substantially in the form of Exhibit H hereto.
---------
(b) Conditions of the Purchasers.
----------------------------
(i) Opinions of Counsel. Each Purchaser shall have received favorable
-------------------
opinions, dated the Closing Date, of Sullivan & Worcester, counsel for the
Company and the Stockholders, in form reasonably acceptable to the
Purchasers and their counsel.
(ii) No Material Adverse Change. As of the Closing Date, there shall
--------------------------
not have occurred and be continuing any Material Adverse Change affecting
the Company.
(iii) Instruments of Consummation. The parties hereto shall have
---------------------------
delivered the instruments required to be delivered under Sections 1 and 2
above.
(iv) Certain Matters Relating to Leases. The Lease and Agreement
----------------------------------
between GBA Realty Corp. and the Company dated August 1, 1993 shall have
been amended on terms reasonably acceptable to the Purchasers. The Lease
Agreement between the Company and Suburban Grayson Atlatna Partnership
dated August 1, 1986, as amended, shall have been amended so as to extend
the term thereof until August 4, 2006.
(v) Termination of Certain Agreements. Each of the Redemption
---------------------------------
Agreement dated August 17, 1993 by and among Herbert Gray, Melvin Aronson,
Donald Benovitz, Stephen Aschettino and Patrick Bohan, the Shareholder
Agreement dated August 17, 1993 by and among the Company and Messrs. Gray,
Aronson, Benovitz, Aschettino, the Voting Agreement dated as of February
27, 1987 by and among the Company and Messrs. Gray and Benovitz, and the
employee stock options for the benefit of Messrs. Benovitz, Bohan and
Aschettino shall have been terminated, effective prior to the Closing.
(c) Conditions of the Stockholders.
------------------------------
(i) Opinions of Counsel. The Stockholders shall have received
-------------------
favorable opinions, dated the Closing Date, of Hutchins, Wheeler & Dittmar,
A Professional Corporation, and counsel for BSC in form reasonably
acceptable to the Stockholders and their counsel.
(ii) New Company Debt. The New Company Debt and the Working Credit Line
----------------
shall have been obtained.
(iii) Incentive Stock Option Plan. The Company shall have established an
---------------------------
Incentive Stock Ownership Plan (the "ISOP") substantially in the form of
Exhibit F hereto and options shall have been granted thereunder with
---------
respect to an aggregate of four thousand (4,000) shares (after giving
effect to the stock dividend described in Section 1(g)) to those persons
and for the number of shares of Common Stock set forth on Schedule 7(c)
-------------
attached hereto, which options shall be evidenced by option agreements
substantially in the form of Exhibit G attached hereto.
---------
SECTION 8. Indemnification
---------------
(a) Survival of Representations and Warranties. The parties hereto agree
------------------------------------------
to shorten the applicable period of limitation of claims made under
representations and warranties, and for that purpose each and every such
representation and warranty set forth in this Agreement (including any
certificates furnished in connection therewith) shall survive until the earlier
of (a) ten days after the receipt by the Purchasers of the audited financial
statements of the Company for the fiscal year ending August 31, 1996 and (b)
December 15, 1996, except with respect to (i) the representations and warranties
set forth in Sections 4(l), 4(p), 4(3) and 5(b), which shall survive the Closing
for the applicable period of limitation; and (ii) the representations and
warranties set forth in Section 4(i), which shall survive the Closing until the
first to occur of (x) the expiration of the statute of limitations (and any
extensions thereof) applicable to the Tax in respect of which indemnification is
being sought without the assertion of a deficiency in respect thereof by the
applicable governmental entity, or (y) the completion of the final audit and
determination by the applicable governmental entity with respect to such Tax and
final disposition of any deficiency resulting therefrom. From and after the
applicable period of survival with respect to such respective representations
and warranties of the Company, Stockholders and the Purchasers, none of the
Stockholders, Company or the Purchasers or any Affiliate of the Stockholders or
the Purchasers shall have any liability whatsoever with respect to any such
representation or warranty, except for breaches as to which any party shall have
notified the other party prior to such date. This Section 8.1 shall have no
effect upon any other obligation of the parties hereto, whether to be performed
before or after the Closing Date.
(b) Indemnification by Stockholders. Each Stockholder hereby agrees,
-------------------------------
jointly and severally, to indemnify, defend and hold each Purchaser, its
officers, directors, employees, owners, agents and Affiliates, harmless from and
in respect of any and all losses, damages, costs and expenses of any kind and
nature whatsoever (including, without limitation, interest and penalties,
reasonable expenses of investigation and court costs, reasonable attorneys' fees
and disbursements and the reasonable fees and disbursements of other
professionals) which may be sustained or suffered by any of them (collectively,
"Losses"), arising out of or resulting from any breach or inaccuracy of any
representation or warranty or the breach of or
failure to perform any warranty, covenant, undertaking or other agreement of the
Company or such Stockholder contained in this Agreement or any other document or
instrument executed in connection therewith; provided, however, that in the
-------- -------
event the transactions contemplated by this Agreement are consummated, the
maximum liability of the Stockholders hereunder or otherwise with respect to
such representations, warranties, covenants, undertakings, or other agreements
contained in this Agreement and under the Subordinated Debenture Agreement shall
not exceed $2,500,000; and provided further, however, that the obligations of
-------- -------
the Stockholders pursuant to this Section 8(b) shall first be satisfied by set
offs against the Notes in accordance with Section 8(f) below before any claim
shall be made against the Stockholders. For all purposes of this Section 8,
"Losses" for breach of any representation, warranty or covenant contained in
this Agreement shall be determined without giving effect to any qualification or
limitation in such representation, warranty or covenant as to materiality or
Material Adverse Effect.
(c) Indemnification by the Purchasers. Each Purchaser hereby agrees to
---------------------------------
indemnify, defend and hold each Stockholder, the Company, its officers,
directors, employees, consultants, owners, agents and Affiliates, harmless from
and in respect of any and all Losses which may be sustained or suffered by any
of them arising out of or resulting from any breach or inaccuracy of any
representation or warranty of such Purchaser or the breach of or failure to
perform any warranty, covenant, undertaking or other agreement of such Purchaser
contained in this Agreement or any other document or instrument executed in
connection herewith; provided, however, that in the event the transactions
--------
contemplated by this Agreement are consummated, the maximum aggregate liability
of the Purchasers hereunder or otherwise with respect to such representations,
warranties, covenants, undertakings or other agreements contained in this
Agreement and under the Subordinated Debenture Agreement shall not exceed
$2,500,000.
(d) Minimum Indemnification. Notwithstanding anything to the contrary
-----------------------
contained herein, no party hereto shall be entitled to recover from any other
party unless and until the total of all claims for indemnity or damages with
respect to any inaccuracy or breach of any such representations or warranties
other than those contained in Sections 4(l), 4(p), 4(3) and 5(b) above or breach
of or default in the performance of any covenants, undertakings or other
agreements, whether such claims are brought under this Section 8 or otherwise,
exceeds $300,000, and then only to the extent such claims exceed $150,000.
(e) Notice and Opportunity to Defend. If there occurs an event which a
--------------------------------
party asserts is an indemnifiable event pursuant to Section 8(b) or 8(c), the
parties seeking indemnification shall promptly notify the other parties
obligated to provide indemnification (collectively, the "Indemnifying Party").
If such event involves (i) any Claim or (ii) the commencement of any action,
suit or proceeding by a third person, the party seeking indemnification will
give such Indemnifying Party prompt written notice of such Claim or the
commencement of such action, suit or proceeding; provided, however, that the
-------- -------
failure to provide prompt notice as provided herein will relieve the
Indemnifying Party of its obligations
hereunder only to the extent that such failure prejudices the Indemnifying Party
hereunder. Such notice shall summarize the basis for the claim and any claim of
liability being asserted by a third party. In case any such action, suit or
proceeding shall be brought against any party seeking indemnification and it
shall notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate therein and, to the extent
that it desires to do so, to assume the defense thereof, with counsel reasonably
satisfactory to such party seeking indemnification and, after notice from the
Indemnifying Party to such party seeking indemnification of such election so to
assume the defense thereof, the Indemnifying Party shall not be liable to the
party seeking indemnification hereunder for any attorneys' fees or any other
expenses, in each case subsequently incurred by such party, in connection with
the defense of such action, suit or proceeding. The party seeking
indemnification agrees to cooperate fully with the Indemnifying Party and its
counsel in the defense against any such action, suit or proceeding. In any
event, the party seeking indemnification shall have the right to participate at
its own expense in the defense of such action, suit or proceeding. In no event
shall an Indemnifying Party be liable for any settlement or compromise effected
without its prior consent, which consent shall not unreasonably be withheld,
delayed or conditioned.
(f) Set-Off. If a claim for indemnification is made by a Purchaser as the
-------
Indemnified Party under this Section 8, then to the extent Notes remain
outstanding, such Purchaser shall be obligated to cause the Company to withhold
on a pro rata basis in accordance with the original principal amounts thereof
--- ----
the amount of such claimed indemnify from the amount of any payments otherwise
due under the Notes up to an aggregate amount of $2,500,000 for all of the
Purchasers. Such Purchaser shall give written notice to the Stockholders of its
claim specifying the amount and the nature of the claim. Any amounts so
withheld shall be held in a separate interest-bearing account reserved for such
purpose pending resolution of such claim for indemnity. If such Purchaser
prevails upon final determination of such claim, the Company shall reduce the
principal of the Notes or any interest payments or payment of principal
thereunder, at Purchaser's election, by the amount to which it is entitled
hereunder up to an aggregate amount of $2,500,000. Notwithstanding the
foregoing, the Purchasers may (i) cause the Company to collect from the
Stockholders legal damages to the extent the aggregate principal amount of the
Notes outstanding is less than $2,500,000; provided, however, that in no event
shall the aggregate liability of the Stockholders, through the payment of legal
damages and set off against Notes exceed $2,500,000; (ii) nothing herein shall
prevent the Company from seeking equitable relief in the event a Stockholder
breaches a covenant or undertaking contained herein; and (iii) nothing herein
shall be deemed to prevent the Purchasers or the Company from pursuing remedies
in tort.
SECTION 9. Definitions.
-----------
As used herein, except as otherwise specifically set forth below in this
Section or unless the context otherwise requires, the terms (or any variant in
the form thereof) set forth in Schedule A attached hereto and made a part hereof
with the same force and effect as though set forth hereafter in its entirety
have the respective meanings set forth in Schedule A. Terms
defined in the singular shall have a comparable meaning when used in the plural,
and vice versa, and the reference to any gender shall be deemed to include all
----------
genders. Unless otherwise defined or the context otherwise clearly requires,
terms for which meanings are provided herein shall have such meanings when used
in the Disclosure Schedule and each, agreement, notice, certificate,
communication, opinion or other document executed or required to be executed
pursuant hereto or thereto or otherwise delivered, from time to time, pursuant
hereto or thereto.
SECTION 10. Miscellaneous.
-------------
(a) Nature of Representations and Warranties. The parties shall not be
----------------------------------------
liable or bound in any manner by expressed or implied representations,
warranties, covenants, conditions, agreements or indemnifications pertaining to
the subject matter of this Agreement, or any other matter whatsoever, made or
furnished by any officer, director, employee, stockholder, attorney, principal,
controlling person, agent or other person representing or purporting to
represent one of the parties unless such representations, warranties, covenants,
conditions, agreements or indemnifications are expressly and specifically set
forth herein or in any schedule, exhibit or other document expressly made a part
hereof or in any agreement, instrument, certificate or other document delivered
pursuant to the provisions hereof or thereof. The representations, warranties,
covenants, agreements and indemnifications of the parties shall not be deemed
waived or otherwise affected by any investigation made by or on behalf of any
party hereto.
Certain of the representations and warranties are made "to the knowledge"
of a particular party. The parties hereto agree that the meaning of such
expression shall in all cases be understood as comprising actual knowledge and
belief of the party making such representations and warranties or any executive
officer of such party after a reasonable investigation thereof under the
circumstances, provided that the "knowledge of the Company" shall be deemed to
include the knowledge of the Stockholders.
(b) Entire Agreement. This Agreement (which term, unless the context
----------------
otherwise specifically requires, includes any exhibits or schedules hereto
including without limitation the Disclosure Schedule and all agreements,
instruments, financial statements, opinions, or other documents and certificates
delivered pursuant hereto or thereto) constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes all prior
agreements, arrangements, commitments, covenants, promises, conditions,
understandings, inducements, representations and negotiations, expressed or
implied, written or oral, between or among them as to such subject matter,
including without limitation any so-called "letters of intent" but excluding any
confidentiality agreements with respect thereto. The express terms hereof
control and supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof.
(c) Rights and Remedies. Anything in this Agreement to the contrary
-------------------
notwithstanding, upon any termination of this Agreement each party shall be
entitled to actual damages only and in no event to incidental, consequential or
punitive damages, measured by loss of anticipated profits or otherwise. This
Agreement is not intended to limit or abridge any rights of any party which may
exist apart from this Agreement. The rights and remedies of the parties under
this Agreement are cumulative and are not in lieu of, but are in addition to,
any other rights and remedies which the parties shall have under or by virtue of
any Applicable Law, or in equity, or any other agreement or obligation between
or among the parties or any of them.
(d) Expenses. If the transactions contemplated hereby do not close, each
--------
party shall pay its own expenses. If the transactions contemplated hereby are
consummated, (i) each of (A) the Company and (B) the Stockholders shall pay 50%
of the fees and expenses of BSC, (ii) the Company shall pay all reasonable costs
and expenses of the Summit Purchasers, and (iii) the Company shall pay the costs
and expenses of the Stockholders, exclusive of costs and expenses referred to in
(i) above.
(e) Termination. Anything contained in this Agreement to the contrary
-----------
notwithstanding, this Agreement may be terminated:
(i) By mutual agreement of the Summit Purchasers and the Stockholders;
or
(ii) By any Summit Purchaser or any Stockholder, if, other than as a
result of a breach or violation of or default under this Agreement by the
terminating party, the Closing shall not have occurred on or before July 19,
1995; or
(iii) By the Stockholders upon notice to each Purchaser if (a) a
condition to the performance of the Stockholders set forth in Section 7 hereof
shall not be fulfilled at the time specified for the fulfillment thereof, (b) a
material default under or a material breach of this Agreement shall be made by a
Purchaser or (c) any representation or warranty set forth in this Agreement or
in any instrument delivered by a Purchaser pursuant hereto shall be materially
false or misleading; or
(iv) By any Summit Purchaser by notice to the Company if (x) a
condition to the performance of such Summit Purchaser set forth in Section 7
hereof shall not be fulfilled at the time specified for the fulfillment thereof,
(y) a material default under or a material breach of this Agreement shall be
made by the Company or the Stockholders or (z) any representation set forth in
this Agreement or in any instrument delivered by the Company or the Stockholders
pursuant hereto shall be materially false or misleading.
(v) By any party, if, other than as a result of a breach or violation
of or default under this Agreement by the terminating party which resulted
therein, an Authority of competent jurisdiction shall have issued a Governmental
Order (which Order the parties hereto
shall use their reasonable business efforts to lift or reverse), in each case
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such Order shall have become a final order.
Written notice setting forth the reasons for any termination (other than
pursuant to paragraph (i)) shall be given by the terminating party to each other
party, and the party receiving the same shall have seven (7) days within which
to cure the default specified in such notice.
If this Agreement shall be terminated as herein set forth, all parties
hereto agree that they will remain obligated under, and will comply with, the
provisions of Sections (3)(a) (to the extent therein provided) and 3(c) and
there shall continue any liability which would otherwise exist hereunder for any
breach or violation of or default under this Agreement, including without
limitation a refusal or failure to perform obligations, covenants or agreements
to be preformed on or prior to the Closing Date and any breach of or any
erroneous or untrue representation and warranty. Except as set forth in this
paragraph, upon the termination of this Agreement, it shall become void and have
no further force and effect, and there shall be no liability hereunder on the
part of any party or any of its respective officers, directors, employees,
agents, stockholders, controlling persons or principals.
(f) Waivers; Amendments. Anything in this Agreement to the contrary
-------------------
notwithstanding, amendments to and modifications of this Agreement may be made,
require consents and approvals may be granted, compliance with any term,
covenant, agreement, condition or other provision set forth herein may be
omitted or waived, and misrepresentations and breaches of warranties may be
waived, either generally or in a particular instance and either retroactively or
prospectively with, but only with, the written consent of the party or parties
entitled to the benefit thereof; provided, however, that no such written
consent, unless it, by its own terms, explicitly provides to the contrary shall
be construed to effect a continuing waiver or consent and no such waiver in any
instance shall constitute a waiver or consent in any other instance or for any
other purpose or impair the right of the party against whom such waiver or
consent is claimed in all other instances or for all other purposes to require
full compliance with this Agreement.
Except when a specific time period is set forth within which period a right
or remedy must be exercised, (i) no delay on the part of any party at any time
or times in the exercise of any right or remedy shall operate as a waiver
thereof, and (ii) the failure of a party hereto at any time or times to insist
upon strict compliance with any term, covenant, agreement, condition or other
provision or to exercise any right or remedy with respect to such failure or to
require performance of any thereof shall in no manner affect its right at a
later time to enforce the same or constitute a waiver of any such term,
covenant, agreement, condition or other provision or any breach or default in
connection therewith.
Whenever any provision of this Agreement provides for the consent or
approval of one party as a condition to some action or omission to act of the
other party, such consent or approval shall not be unreasonably withheld,
delayed or conditioned.
(g) Assignment; Successors and Assigns. This Agreement shall not be
----------------------------------
assignable by any party without the prior written consent of the others,
provided that the Purchasers may assign their rights under Section 7 to any
senior lender to the Company. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, legal representatives, successors and permitted assigns, including,
without limitation, successors by operation of law pursuant to any merger,
consolidation or sale of assets involving any of the parties. Nothing in this
Agreement expressed or implied is intended to and shall not be construed to
confer upon or create in any person (other than the parties hereto and their
permitted successors and assigns and the Persons named in Section 3(d) any
rights or remedies under or by reason of this Agreement, including without
limitation any rights to enforce this Agreement.
(h) Notices. All notices and other communications which by any provision
-------
of this Agreement are required or permitted to be given shall be given in
writing and shall be (i) mailed by first-class or express mail, postage prepaid,
(ii) sent by telex, telegram, telecopy or other form of rapid transmission,
confirmed by mailing (by first class or express mail, postage prepaid) written
confirmation at substantially the same time as such rapid transmission, or (iii)
personally delivered to the receiving party (which if other than an individual
shall be an officer or other responsible party of the receiving party). All
such notices and communications shall be mailed, sent or delivered to it at the
address set forth below or to such other telex or facsimile number(s) or
address(es) as the party entitled to receive any such communication or notice
may have designated by written notice to the other parties as follows:
If to the Company or any Stockholder:
Suburban Ostomy Supply Co., Inc.
75 October Hill Road
Holliston, MA 01746
Attention: Herbert Gray, Chairman, and
Stephen Aschettino, Vice President
and Chief Financial Officer
Facsimile: (508) 429-6669
with a copy to each other party and to:
Sullivan & Worcester
One Post Office Square
Boston, MA 02109
Attention: Norman A Bikales, Esquire
Facsimile: (617) 338-2880
If to any Summit Purchaser:
Summit Partners
One Boston Place
34th Floor
Boston, MA 02108
Attention: Joseph F. Trustey
with a copy to:
Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, MA 02110
Attention: James Westra, Esquire
If to BSC:
The Bear Stearns Companies, Inc.
245 Park Avenue
New York, NY 10167
Attention: Robert Yedid
Facsimile: (212) 272-3092
with a copy to:
Schulte, Roth & Zabel
900 Third Avenue
New York, NY 10022
Attention: Stuart Freedman, Esquire
Facsimile: (212) 593-5955
A notice delivered in person shall be effective when given; a notice sent
by mail shall be deemed effective on the earlier of the date of receipt or
refusal to accept or the third business day after it has been mailed; a notice
sent by telex, telegram, telecopy or other form of rapid transmission shall be
deemed to be given when receipt of such transmission is acknowledged or other
evidence of receipt is evident; provided, however, that the failure to deliver a
copy of any such notice or other communication to the person(s) designated to
receive copies shall not affect the validity, force or effect of any notice or
other communication or subject a person so failing to deliver a copy to any
liability.
(i) Severability. If any provision of this Agreement shall be held or
------------
deemed to be, or shall in fact be, invalid, inoperative, illegal or
unenforceable as applied to any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions or in all cases, because of the
conflicting of any provision with any Applicable Law or for any other reason,
such circumstance shall not have the effect of rendering the provision or
provisions in question invalid, inoperative, illegal or unenforceable in any
other jurisdiction or in any other case or circumstance or of rendering any
other provision or provisions herein contained invalid, inoperative, illegal or
unenforceable to the extent that such other provisions are not themselves
actually in conflict with such Applicable Law, but this Agreement shall be
reformed and construed in any such jurisdiction or case as if such invalid,
inoperative, illegal or unenforceable provision had never been contained herein
and such provision reformed so that it would be valid, operative and enforceable
to the maximum extent permitted in such jurisdiction or in such case, except
when such reformation and construction could operate as an undue hardship on any
party, or constitute a substantial deviation from the general intent and purpose
of such party as reflected in this Agreement.
The parties shall endeavor in good faith negotiations to replace the
invalid, inoperative, illegal or unenforceable provisions with valid, operative,
legal and enforceable provisions the economic effect of which comes as close as
possible to that of the invalid, inoperative, illegal or unenforceable
provisions.
(j) Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument, binding upon all the parties hereto,
notwithstanding that all the parties are not signatories to the original or the
same counterpart. In pleading or proving any provision of this Agreement, it
shall not be necessary to produce more than one of such counterparts.
(k) Section Headings. The headings contained in this Agreement are for
----------------
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
(l) Further Acts. Each party agrees that at any time, and from time to
------------
time, before and after the consummation of the transactions contemplated by this
Agreement, it will do all such things and execute and deliver all such
agreements, assignments, instruments, other documents and assurances, as any
other party or its counsel deems reasonably necessary or desirable in order to
carry out the terms and conditions of this Agreement and the transactions
contemplated hereby or to facilitate the enjoyment of any of the rights created
hereby or to be created hereunder.
(m) Relationship of Parties. Nothing contained in this Agreement is
-----------------------
intended to create, nor shall any provision hereof be or be construed so as to
create, a partnership, joint venture, coverture, or joint undertaking by and
among the parties, it being the express
intention of the parties hereto that the relationship created hereby shall be
that of separate and independent contractors acting at all times in their sole
and individual capacities.
(n) Conflict Among Attachments. In the event of any conflict between the
--------------------------
provisions of this Agreement and any schedule or exhibit hereto, or any
agreement, instrument, other document or undertaking executed pursuant hereto,
unless otherwise specifically provided therein, the provisions of this Agreement
shall control.
(o) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
-------------
ENFORCED IN ACCORDANCE WITH THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA
AND THE LAW (OTHER THAN THE LAW GOVERNING CONFLICT OF LAW QUESTIONS) OF THE
COMMONWEALTH OF MASSACHUSETTS EXCEPT TO THE EXTENT THE LAWS OF ANY OTHER
JURISDICTION ARE MANDATORILY APPLICABLE.
[The Rest of this Page Intentionally Left Blank]
STOCK PURCHASE AND REDEMPTION AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed this Agreement all
pursuant to authority heretofore granted, to the extent applicable, by their
respective Boards of Directors, as of the date first written above.
STOCKHOLDERS: SUBURBAN OSTOMY SUPPLY CO.,
INC.
/s/ Herbert Gray By: /s/ Herbert Grey
- ---------------- -----------------
Herbert Gray Name:
Title:
/s/ Melvin Aronson
- -----------------
Melvin Aronson PURCHASERS:
/s/ Donald Benovitz SUMMIT VENTURES III, L.P.
- -------------------
Donald Benovitz By: Summit Partners, III, L.P.,
Its General Partner
/s/ Patrick Bohan
- -----------------
Patrick Bohan
By: Stamps, Woodsum & Co. III,
/s/ Stephen Aschettino Its General Partner
- ----------------------
Stephen Aschettino By: /s/ Martin J. Mannion
----------------------
General Partner
SUMMIT INVESTORS II, L.P.
BSC:
By: /s/ Martin J. Mannion
THE BEAR STEARNS COMPANIES, INC. ----------------------
Authorized Signatory
By: /s/ David Glaser
-----------------
Name:
Title:
SUMMIT SUBORDINATED DEBT
FUND, L.P.
By: Summit Partners SD, L.P.,
Its General Partner
By: /s/ Martin J. Mannion
----------------------
General Partner
SCHEDULE A
to
STOCK PURCHASE AND REDEMPTION AGREEMENT
By and among
SUMMIT VENTURES III, L.P.
SUMMIT INVESTORS II, L.P.
SUMMIT SUBORDINATED DEBT FUND, L.P.
THE BEAR STEARNS COMPANIES, INC.
and
THE STOCKHOLDERS PARTY THERETO
The following definitions are incorporated by reference in Section 9 of the
above referenced agreement with the same force and effect as though set forth
thereat in their entirety.
"Act of Bankruptcy" shall mean any of the following:
(a) the admission in writing of an inability, or being unable or deemed unable
under Applicable Law, or failing generally, to pay debts generally as they
become due; or
(b) the filing of a petition, answer, consent or other document seeking relief
as a debtor or otherwise commencing a voluntary case under the Bankruptcy
Code; or
(c) the commencement of proceedings or filing a petition, answer, consent or
other document seeking (i) reorganization, (ii) an arrangement with creditors,
(iii) to take advantage of or relief as a debtor under any Applicable Law,
other than the Bankruptcy Code, relating to bankruptcy, reorganization,
insolvency, readjustment of debts, relief of creditors, dissolution,
liquidation, or the modification or alteration of the rights of creditors;
(d) the seeking or consenting to or acquiescing in the appointment of a
receiver, trustee, sequestrator, conservator, assignee, custodian, liquidator,
fiscal agent or similar official for the Person or of all or any substantial
part of its property; or
(e) the commencement of proceedings or the filing against the person or all or
any substantial part of its property of a petition commencing an involuntary
case under the Bankruptcy Code or under any Applicable Law of a nature
referred to in paragraph (c) above, or its consenting to or acquiescing in
such relief or its admitting or acquiescing in or failing promptly and in any
event within thirty (30) days of the filing thereof, in an appropriate manner,
to deny the material allegations of any petition seeking such relief, or any
such involuntary petition shall remain undismissed for more than thirty (30)
days, or any order or decree approving relief adverse to such Person
thereunder shall be entered and remain unstayed and in effect for more than
thirty (30) days; or
(f) the entry of an order or decree (whether or not final) by any Authority of
competent jurisdiction (i) finding it to be bankrupt or insolvent, (ii)
ordering or approving its liquidation, dissolution or winding up, or
reorganization or any modification or alteration of the rights of its
creditors, or any composition or readjustment of debts, (iii) assuming custody
of, or appointing a receiver, trustee, sequestrator, conservator, assignee,
custodian, liquidator, fiscal agent or similar official for, such Person or
all or a substantial part of its property and any such order or decree shall
continue unstayed and in effect for a period of thirty (30) days; or
(g) the convening a meeting of creditors for the purpose of consummating an
out-of-court arrangement, or making an assignment for the benefit of, or
entering into a composition, extension or similar arrangement with, its
creditors in respect of all or a substantial portion of its debt; or
(h) the concealing, removing or transferring any of its assets or property in
violation of or evasion of the Bankruptcy Code or any other Applicable Law of
a nature referred to in paragraph (c) above; or
(i) the winding-up, liquidation or dissolution of the Person; or
(j) the taking of any action for the purpose of affecting any of the
foregoing, including without limitation any action of the Person's board of
directors, stockholders, partners or other governing body.
"Affiliate" shall mean, with respect to any Person, (a) any other Person at
the time directly or indirectly controlling, controlled by or under direct or
indirect common control with such Person, (b) any other Person of which such
Person at the time owns, or has the right to acquire, directly or indirectly,
twenty percent (20%) or more of any class of the capital
stock or beneficial interest, (c) any other Person which at the time owns, or
has the right to acquire, directly or indirectly, twenty percent (20%) or more
of any class of the capital stock or beneficial interest of such Person, (d) any
executive officer or director of such Person, (e) with respect to any
partnership, joint venture or similar Entity, any general partner thereof, and
(f) when used with respect to an individual, shall include any member of such
individual's immediate family or a trust for the benefit of any thereof. A
Person shall be deemed to be "controlled by" any other Person if such other
Person possesses, directly or indirectly, power to direct or cause the direction
of the management or policies of such Person or the disposition of its assets or
properties, whether by stock, equity or other ownership, by contract,
arrangement or understanding, or otherwise.
"Agreement" shall mean the Stock Purchase and Redemption Agreement of which
this Schedule is a part as originally in effect, including unless the context
otherwise specifically requires all schedules including the Disclosure Schedule
and exhibits hereto, and as the same may from time to time be supplemented,
amended, modified or restated in the manner herein or therein provided.
"Applicable Law" shall mean any Law of any Authority, including without
limitation all federal, state, local and foreign Laws, to which the Person in
question is subject or by which it or any of its business or operations is
subject or any of its property is bound.
"Authority" shall mean any governmental or quasi-governmental authority,
whether administrative, executive, judicial, legislative or other, or any
combination thereof, including without limitation any federal, state,
territorial, county, municipal or other government or governmental or quasi-
governmental agency, arbitrator, authority, board, body, branch, bureau, central
bank or comparable agency or Entity, commission, corporation, court, department,
instrumentality, master, mediator, panel, referee, system or other political
unit or subdivision or other Entity of any of the foregoing.
"Bankruptcy Code" shall mean 11 U.S.C. { 101 et seq., and the rules and
-------
regulations thereunder, all as from time to time in effect, or any successor
law, rules or regulations and any reference to any statutory or regulatory
provision shall be deemed to be a reference to any successor statutory or
regulatory provision.
"BSC" means The Bear Stearns Companies, Inc.
"Certificates" is defined in Section 2(c) of the Agreement.
"Claims" shall mean, with respect to any Person, any and all debts,
liabilities, obligations, losses, damages, deficiencies, assessments and
penalties of or against such Person, together with all Legal Actions pending or
threatened, claims and judgments of whatever kind and nature relating thereto,
and all fees, costs, expenses and disbursements (including without
limitation reasonable attorneys' and other legal fees, costs and expenses)
relating to any of the foregoing.
"Closing" is defined in Section 1(c) of the Agreement.
"Closing Date" is defined in Section 1(c) of the Agreement.
"Code" shall mean the United States Internal Revenue Code of 1986, and the
rules and regulations thereunder, all as from time to time in effect, or any
successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision. "Treas. Reg." shall mean the regulations, as
from time to time in effect, promulgated by the Service under the Code.
"Company" is defined in the first paragraph of the Agreement.
"Common Shares" is defined in Section 1(a) of the Agreement.
"Common Stock" is defined in Section 1(a) of the Agreement.
"Convertible Securities" shall mean, with respect to any Person, any evidences
of indebtedness, shares of capital stock (other than common stock) or other
securities directly or indirectly convertible into or exchangeable for shares of
common stock, whether or not the right to convert or exchange thereunder is
immediately exercisable or is conditioned upon the passage of time, the
occurrence or non-occurrence or existence or non-existence of some other event,
or both.
"Debentures" is defined in Section 1(b) of the Agreement.
"Disclosure Schedule" shall mean the disclosure schedule required to be
delivered pursuant to the provisions of the Agreement by the Company to the
Purchasers.
"Distribution" shall mean, with respect to any Person: (a) the declaration or
payment of any dividend (except dividends payable in common stock of such
Person) on or in respect of any shares of any class of capital stock or equity
security of such Person, (b) the purchase, redemption or other retirement of any
shares of any class of capital stock or equity security of such Person or any
shares of capital stock of any Subsidiary owned by a Person other than such
Person or a Subsidiary (otherwise than out of the substantially concurrent sale
to Persons other than such Person or its Subsidiaries of shares of stock of the
same class, provided that in case of any such capital stock of a Subsidiary, the
proportion of such Subsidiary's stock of that class held by Persons other than
such Person and its Subsidiaries does not increase), and (c) any other
distribution on or in respect of any shares of any class of capital stock of
such
Person or any shares of capital stock of any Subsidiary owned by a Person other
than such Person or a Subsidiary.
"Dollars" and "$" shall mean the lawful money of the United States of America.
-
"Employment Arrangement" shall mean, with respect to any Person, any
employment, consulting, retainer, severance or similar contract, agreement,
plan, arrangement or policy (exclusive of any which is terminable within ninety
(90) days without liability, penalty or payment of any kind of such Person or
any of its Affiliates), or providing for severance, termination payments,
insurance coverage (including any self-insured arrangements), workers
compensation, disability benefits, life, health, medical, dental or
hospitalization benefits, supplemental unemployment benefits, vacation or sick
leave benefits, pension or retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights or other forms
of incentive compensation or post-retirement insurance, compensation or post-
retirement insurance compensation or benefits, or any collective bargaining or
other labor agreement, whether or not any of the foregoing is subject to the
provisions of ERISA.
"Entity" shall mean any corporation, firm, unincorporated organization,
association, partnership, limited liability company, trust (inter vivos or
testamentary), estate of a deceased, insane or incompetent individual, business
trust, joint stock company, joint venture or other organization, entity or
business, whether acting in an individual, fiduciary or other capacity, or any
Authority.
"Environmental Law" shall mean any present Applicable Law relating to or
otherwise imposing liability or standards of conduct concerning pollution or
protection of the environment or occupational health and safety, including
without limitation Laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals, noises, odors or
industrial, toxic or hazardous substances, materials or wastes, whether as
matter or energy, into the environment (including, without limitation, ambient
air, surface water, ground water, mining or reclamation or mined land, land
surface or subsurface strata) or otherwise relating to the manufacture,
processing, generation, distribution, use, treatment, storage, disposal,
cleanup, transport or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances, materials or wastes.
"Environmental Permit" shall mean any Governmental Authorization required by
or pursuant to any Environmental Law.
"Environmental Requirements" shall mean all applicable present Governmental
Authorizations, Private Authorizations or other requirements (including without
limitation those pertaining to reporting, licensing and permitting) relating to
or required by or pursuant to any Environmental Law, including without
limitation all requirements pertaining or relating to:
(a) the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of, or the remediation, emission,
discharge or release into the air, surface water, groundwater or land of,
Hazardous Material, chemical substances, pollutants, contaminants or
hazardous or toxic substances, materials or wastes, whether solid, liquid
or gaseous in nature;
(b) the protection of the health and safety of employees or the public;
(c) the reclamation or restoration of land; and
(d) the ownership or operation of underground storage tanks.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
from time to time in effect, and any successor law, and any reference to any
statutory provision shall be deemed to be a reference to any successor
provision.
"Financial Statements" is defined in Section 4(b) of the Agreement.
"GAAP" shall mean generally accepted accounting principles as in effect from
time to time in the United States of America.
"Governmental Authorizations" shall mean all approvals, concessions, consents,
franchises, licenses, permits, plans, registrations and other authorizations of
all Authorities. "Material Governmental Authorizations" is defined in Section
4(f) of the Agreement.
"Governmental Filings" shall mean all filings, including franchise and similar
tax filings, and the payment of all fees, assessments, interest and penalties
associated with such filings, with all Authorities.
"Governmental Order" shall mean all decisions, decrees, findings, judgments,
and orders, whether or not final, of any Authority in any Legal Action.
"herein", "hereof", "hereto", "hereunder" and similar terms contained in the
Agreement or any other instrument executed or required to be executed pursuant
hereto or thereto refer, except where the context clearly indicates the
contrary, to the Agreement or such other instrument, as the case may be, as a
whole and not to any particular Section, paragraph or provision of the Agreement
or such other instrument.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvement Act of 1976,
and the rules and regulations thereunder, all as from time to time in effect, or
any successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.
"including" and "includes" shall mean including without limiting the
generality of any description preceding such term.
"Indemnifying Parties" or "Party" is defined in Section 8(e) of the Agreement.
"IRS" or the "Service" shall mean the United States Internal Revenue Service
or any successor Authority.
"Law" shall mean any (a) administrative, judicial, legislative or other
action, code, consent decree, constitution, decree, directive, enactment,
finding, guideline, law, injunction, interpretation judgment, order, ordinance,
policy statement, proclamation, promulgation, regulation, requirement, rule,
rule of law, rule of public policy, settlement agreement, statute, or writ of
any Authority; (b) the common law, or other legal or quasi-legal precedent, or
(c) arbitrator's, mediator's or referee's award, decision, finding or
recommendation, including, in each such case or instance, and interpretation,
directive, guideline or request, whether or not having the force of law
including, in all cases, without limitation any particular section, part or
provision thereof.
"Legal Action" shall mean, with respect to any Person, any litigation or legal
or other actions arbitrations, investigations, proceedings or suits, at law or
in arbitration, equity or admiralty (whether or not purported to be brought on
behalf of such Person) affecting such Person or any of its business or property
or assets.
"Lien" shall mean any of the following: mortgage; lien (statutory or other);
preference, priority or other security agreement, arrangement or interest;
hypothecation, pledge or other deposit arrangement, assignment; charge; levy;
executory seizure; attachment, garnishment; encumbrance (including any easement,
exception, variance, reservation or limitation, right of way, zoning
restriction, building or use restriction, and the like); conditional sale, title
retention or other similar agreement arrangement, device or restriction;
preemptive or similar right; any financing lease involving substantially the
same economic effect as any of the foregoing; the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction; restriction on sale, transfer, assignment, disposition or other
alienation; or any option, equity, claim or right of or obligation to, any other
Person, of whatever kind and character.
"Losses" is defined in Section 8(b) of the Agreement.
"Material" or "Materiality" for the purposes of the Agreement, shall, unless
specifically stated to the contrary, be determined without regard to the fact
that various provisions of the Agreement set forth specific dollar amounts.
"Material Adverse" when used alone or in conjunction with other terms
(including without limitation "Affect", "Change" and "Effect") shall mean, with
respect to any Person,
any event or set of events which has a material adverse effect upon the
business, properties, financial condition or results of operation of such Person
and its Subsidiaries taken as a whole.
"Material Agreement" or "Material Commitment" shall mean, with respect to any
Person, any agreement, contract, arrangement, undertaking, commitment, license
or obligation which to the extent it relates to (a) any supplier of such Person,
accounted for more than ten percent (10%) of the purchases of such Person in any
of the three most recent fiscal years of such Person, (b) any customer of such
Person, accounted for more than five percent (5%) of the sales of such Person in
any of the three most recent fiscal years of such Person, or (c) any other
matter, involves in excess of Five Hundred Thousand Dollars ($500,000).
"Most Recent Balance Sheet" is defined in Section 4(b) of the Agreement.
"New Company Debt" is defined in Section 3(e) of the Agreement.
"Notes" is defined in Section 2(b)(ii) of the Agreement.
"Option Securities" shall mean all rights, options and warrants, and calls or
commitments evidencing the right, to subscribe for, purchase or otherwise
acquire shares of capital stock or Convertible Securities, whether or not the
right to subscribe for, purchase or otherwise acquire is immediately exercisable
or is conditioned upon the passage of time, the occurrence or non-occurrence or
the existence or non-existence of some other event.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" shall mean any natural individual or any Entity.
"Plan" shall mean, with respect to any Person and at a particular time, any
employee benefit plan which is covered by ERISA and in respect of which such
Person or an ERISA Affiliate (as defined in ERISA) is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to be) an
employer as defined in Section 3(5) of ERISA.
"Preferred Shares" is defined in Section 1(a) of the Agreement.
"Private Authorizations" shall mean, with respect to any Person, all approvals
concessions, consents, franchises, licenses, permits, and other authorizations
of all other Persons (other than Authorities).
"Purchase Consideration" is defined in Section 1 of the Agreement.
"Purchase Proposal" is defined in Section 3(e) of the Agreement.
"Purchasers" is defined in the first paragraph of the Agreement.
"Redemption Consideration" is defined in Section 2(b) of the Agreement.
"Redemption Shares" is defined in Section 2(a) of the Agreement.
"Related Agreement" or "Related Agreements" means the agreements referred to
in Section 7(a)(v)(A) and (B).
"Securities Act" is defined in Section 4(a)(v) of the Agreement.
"Series A Preferred Stock" is defined in Section 1(a) of the Agreement.
"Stockholders" is defined in the preamble of the Agreement.
"Solvent" shall mean, with respect to any Person on a particular date. that on
such date (a) the fair value of the assets of such Person (both at fair
valuation and at present fair saleable value) is on the date of determination,
greater than the total amount of liabilities, including, without limitation,
contingent and unliquidated liabilities, of such Person, (b) such Person is able
to pay all liabilities of such Person as they mature, and (c) such Person does
not have unreasonably small capital with which to carry on its business. In
computing the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed at the amount which in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
"Subject Assets" is defined in the first whereas clauses of the Agreement.
"Subject Business" is defined in the first whereas clauses of the Agreement.
"Subordinated Debenture Agreement" is defined in Section 1(b) of the
Agreement.
"Securities" is defined in the second whereas clause of the Agreement.
"Subsidiary" shall mean, with respect to any Person, any Entity a majority of
the capital stock ordinarily entitled to vote for the election of directors, or
if no such voting stock is outstanding a majority of the equity interests of
which is owned directly or indirectly by such Person or any subsidiary, of such
Person.
"Summit Purchasers" means Summit Ventures III, L.P., Summit Investors II, L.P.
and Summit Subordinated Debt Fund, L.P.
"Tax" (and with correlative meanings, "Taxes" and "Taxable"), shall mean, with
respect to any Person, (a) any net income, alternative or add-on minimum tax,
gross income, gross receipts, gains, sales, use, ad valorem, transfer,
franchise, profits, license, withholding on amounts paid to or by such Person or
any of its Subsidiaries. payroll, employment, excise, severance, stamp,
occupation premium, property, environmental or windfall profit tax, custom, duty
or other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or any penalty, addition to tax or
additional amount imposed by and Authority (a Taxing Authority) responsible for
the imposition of any such tax (domestic or foreign), (b) joint or several
liability of such Person or any of its Subsidiaries with any other Person for
the payment of any amounts of the type described in (a) and (c) liability of
such Person or any of its Subsidiaries for the payment of any amounts of the
type described in (a) as a result of any express or implied obligation to
indemnify any other Person.
"Tax Returns" shall mean all returns, declarations and reports consolidated or
otherwise (including without limitation information returns), required to be
filed in any jurisdiction with respect to Taxes.
"Transfer" shall mean any sale, assignment, conveyance, transfer or other
disposition, mortgage, pledge or other Lien, lease, exchange, abandonment,
parting with control of gift, granting of an option or proxy or other act of
alienation.
"Wholly-Owned Subsidiary" shall mean, with respect to any Person, a Subsidiary
all of the issued and outstanding shares (other than directors qualifying shares
if required by Applicable Law the certificates for which, duly endorsed in blank
or accompanied by a stock power duly endorsed in blank, shall be held by such
Person or such Subsidiary) of the capital stock and all other equity securities
of, or in the case of a partnership all of the outstanding partnership interests
in, which shall at the time be owned by, directly or indirectly, such Person or
one or more of its Wholly Owned Subsidiaries.
"Working Credit Line is defined in Section 3(e) of the Agreement.
"Written" or "in writing" shall mean any form of written communication or a
communication by means of telex, telecopier device telegraph or cable.
SUBURBAN OSTOMY SUPPLY CO., INC.
Schedule 1
----------
Number of Number of Purchase
Shares Series A Purchase Price Shares Common Price of Total
Preferred Stock of Series A Stock to be Common Purchase
Name and Address to be Purchased Preferred Stock Purchased (1) Stock Price
- ---------------- --------------- --------------- ------------- ----- -----
Summit Ventures III, L.P.
Suite 3400
One Boston Place
Boston, MA 02108 63,235.44 $6,323,544.12 232.7161 $83,112.88 $6,406,657
Summit Investors II, L.P.
Suite 3400
One Boston Place
Boston, MA 02108 1,290.52 $129,051.92 5.4546 $1,948.08 $266,000
Summit Subordinate Debt Fund,
L.P.
Suite 3400
One Boston Place
Boston, MA 02108 -- -- 34.5604 $12,343 $12,343
The Bear Stearns Companies, Inc.
245 Park Avenue
New York, NY 10167 1,974.04 $197,403.96 7.2689 $2,596.04 $200,000
Totals 66,500.00 $6,650,000.00 280.00 $100,000.00 $6,750,000.00
========= ============= ======= =========== =============
SUBURBAN OSTOMY SUPPLY CO., INC.
(1) After giving effect to the 100 for 1 stock split to be effected
immediately after the closing, the parties will own the following number of
shares of Common Stock: Summit Ventures III, L.P. (23,271.61), Summit
Investors II, L.P. (545.46), Summit Subordinated Debt Fund, L.P. (3,456.04)
and Bear Stearns & Co., Inc. (726.89).
Schedule 2
----------
Cash
Redemption Redemption
Stockholder Shares Consideration Notes
- ----------- ------ ------------- -----
Herbert Gray 7,952 10,800,000 1,000,000
Melvin Aronson 7,952 10,800,000 1,000,000
Donald Benovitz 2,982 4,050,000 375,000
Patrick Bohan 497 675,000 62,500
Stephen Aschettino 497 675,000 62,500
------ ----------- ----------
Totals 19,880 $27,000,000 $2,500,000