SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
October 3, 1995
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Date of Report (Date of earliest event reported)
CPAC, INC.
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(Exact name of registrant as specified in its charter)
New York 0-9600
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State or other jurisdiction Commission File Number
of incorporation
16-0961040
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IRS Employer ID Number
2364 Leicester Road, Leicester, New York 14481
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(Address of Principal Executive Offices)
(716) 382-3223
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(Registrant's telephone number, including area code)
THE EXHIBIT INDEX IS LOCATED AT PAGE 6 OF THIS REPORT.
ITEM 1: CHANGES IN CONTROL OF REGISTRANT
See Answer to ITEM 5 of this Current Report
ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS
Not Applicable
ITEM 3: BANKRUPTCY OR RECEIVERSHIP
Not Applicable
ITEM 4: CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not Applicable
ITEM 5: OTHER EVENTS
On October 3, 1995, the Registrant announced the successful
completion of a private placement, on a best efforts basis, of one million, five
hundred thousand (1,500,000) shares of its $.01 par value common stock to a
number of accredited investors at $11.00 per common share. As a result of the
completion of the placement, the number of the Registrant's issued and
outstanding $.01 par value common stock increased from 4,341,114 common shares
to 5,841,114 common shares. The purchase price for the placement shares
represented a discount of 22.8% from the market price of the Registrant's common
stock on the date of the offering, which discount was considered appropriate by
management in the light of the nature and size of the offering.
One million (1,000,000) of the placement shares representing a
17.12% interest in the Registrant, were sold to a limited liability company
organized under the laws of the State of Delaware. Such investor has informed
the Registrant that it acquired the shares for investment.
In connection with the placement, the Registrant granted demand and
piggyback registration rights to the investors with the expenses of such
registration to be borne by the Registrant.
The Registrant intends to utilize the net proceeds of the placement
(estimated to be $15,482,000, after payment of the expenses incurred in
connection with the issuance and distribution of the placement shares, certain
of which are estimated as of the date of this Current Report) to amortize
existing indebtedness, for working capital and for future acquisitions.
For its services rendered in connection with the placement, the
Registrant's investment banker received a 6% placement agency fee and 50,000
stock options exercisable at the market value of the Registrant's common stock
on the day of the placement's closing.
ITEM 6: RESIGNATIONS OF REGISTRANT'S DIRECTORS
Not Applicable
ITEM 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION, AND EXHIBITS
A. FINANCIAL STATEMENT OF BUSINESS ACQUIRED
Not Applicable
B. PRO FORMA FINANCIAL INFORMATION
Not Applicable
C. EXHIBITS
The following Exhibits, as applicable, are attached to this
Current Report (Form 8-K). The Exhibit Index is found on the page immediately
succeeding the signature page and the Exhibits follow on the pages immediately
succeeding the Exhibit Index.
ITEM DESCRIPTION PAGE
---- ----------- ----
1. Underwriting Agreement N/A
2. Plan of acquisition, reorganization,
arrangement, liquidation, or succession N/A
4. Instruments defining the rights of security
holders, including indentures N/A
16. Letter re: change in certifying accountant N/A
17. Letter re: director resignation N/A
20. Other documents or statements to security
holders N/A
23. Consents of experts and counsel N/A
24. Power of Attorney N/A
27. Financial Data Schedule N/A
99. Additional Exhibits
99.1 Form of Subscription Agreement
Utilized by the Registrant for
the Private Placement of 500,000
Shares 7
99.2 Form of Amendment No. 1 to
Subscription Agreement Utilized
by Registrant for the Private
Placement of 500,000 Shares 18
99.3 Form of Subscription Agreement
Utilized by Registrant for
Private Placement of 1,000,000
Shares 23
ITEM 8: CHANGE IN FISCAL YEAR
Not Applicable
ITEM 9: CHANGE IN SECURITY RATINGS
Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CPAC, INC.
Date October 5, 1995 By /s/ Thomas N. Hendrickson
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Thomas N. Hendrickson,
President and Chief Executive
Officer
EXHIBIT INDEX
ITEM DESCRIPTION PAGE
---- ----------- ----
1. Underwriting Agreement N/A
2. Plan of acquisition, reorganization,
arrangement, liquidation, or succession N/A
4. Instruments defining the rights of security
holders, including indentures N/A
16. Letter re: change in certifying accountant N/A
17. Letter re: director resignation N/A
20. Other documents or statements to security
holders N/A
23. Consents of experts and counsel N/A
24. Power of Attorney N/A
27. Financial Data Schedule N/A
99. Additional Exhibits
99.1 Form of Subscription Agreement
Utilized by the Registrant for
the Private Placement of 500,000
Shares 7
99.2 Form of Amendment No. 1 to
Subscription Agreement Utilized
by Registrant for the Private
Placement of 500,000 Shares 18
99.3 Form of Subscription Agreement
Utilized by Registrant for
Private Placement of 1,000,000
Shares 23
EXHIBIT 99.1
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September , 1995
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Board of Directors
CPAC, Inc.
2364 Leicester Road
Leicester, New York 14481
Re: Subscription to Purchase Shares of CPAC, Inc. Common Stock,
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$.01 par value per share
Gentlemen:
(1) Subscription:
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The Purchaser hereby subscribes to purchase shares of the
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$.01 par value common stock of CPAC, Inc. ("Shares") at $11.00 per Share and
hereby tenders payment for the subscribed for number of Shares by certified
check, bank draft or Federal Funds wire transfer made payable to CPAC, Inc. (the
"Company") in the amount of $ . In connection with this subscription, the
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Purchaser hereby executes this Subscription Agreement and hereby acknowledges
that the Purchaser and/or the Purchaser's authorized representatives have
received, read, reviewed, understand and are familiar with:
(i) the Company's Annual Report (Form 10-K) filed with the Securities
and Exchange Commission for the fiscal year ended March 31, 1995;
(ii) the Company's Annual Report and Definitive Proxy Statement
distributed to shareholders in connection with the annual meeting
of shareholders held August 9, 1995;
(iii) Quarterly Report (Form 10-Q) filed with the Securities and
Exchange Commission for the quarter ended June 30, 1995;
The Purchaser further acknowledges that, except as set forth in such
reports, proxy statement, documents and other information made available by the
Company as described above, no representations or warranties have been made to
the Purchaser, or to the Purchaser's authorized representatives by the Company,
or by any person acting on behalf of the Company, with respect to the offer or
sale of the Shares and/or the economic, tax, or any other aspects or
consequences of a purchase of the Shares and/or the investment made thereby.
Further, the Purchaser has not relied upon any information concerning the
Company, written or oral, other than that contained in the aforementioned
reports, proxy statements, documents, or other information.
The Purchaser hereby acknowledges that the Purchaser and/or the
Purchaser's authorized representatives have had an opportunity to ask questions
of, and receive answers from persons acting on behalf of the Company to verify
the accuracy and completeness of the information set forth in such reports,
proxy statement, documents, and other information prior to sale and the
Purchaser hereby acknowledges that the Purchaser and/or the Purchaser's
authorized representatives have not requested the Company to provide any
additional information which the Company possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy and
completeness of the information made available.
(2) Purchaser's Representations and Warranties:
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The Purchaser further represents and warrants to the Company:
(a) The Shares are being issued to the Purchaser by the Company for
investment only, for the Purchaser's own account, and are not
being purchased by the Purchaser with a view to distribution of
such Shares, or for the offer and/or sale in connection with any
distribution thereof. The Purchaser is not participating,
directly or indirectly, in an underwriting of the Shares or in
any similar undertaking. The Purchaser has no present plans to
enter into any contract, undertaking, agreement or arrangement
which would entail an underwriting of such Shares or any similar
distribution thereof;
(b) The Purchaser is an "accredited investor" as that term is defined
in Rule 501 of Regulation D promulgated by the Securities and
Exchange Commission, in that
(i) the undersigned is a natural person whose net worth or
joint net worth, taking the Purchaser's spouse into consideration, at the time
of the Purchaser's purchase of these Shares herein, exceeds One Million Dollars
($1,000,000), or
(ii) the undersigned is a natural person whose income in each of
the last two years exceeded Two Hundred Thousand Dollars ($200,000) (Three
Hundred Thousand Dollars [$300,000] joint income taking the Purchaser's spouse
into consideration) and the undersigned has a reasonable expectation of reaching
the same income level in this current year; or
(iii) as otherwise defined in Regulation D.
(c) The Purchaser understands that there is no guarantee of profits
or against loss as a result of purchasing the Shares and the
Purchaser hereby states that the Purchaser can afford a complete
loss of the investment in such Shares. The Purchaser further
warrants that the Purchaser's present financial condition is such
that the Purchaser has no present or perceived future need to
dispose of any portion of the Shares to satisfy any existing or
contemplated undertaking, obligation, need or indebtedness.
Consequently, the Purchaser represents that the Purchaser has
sufficient liquid assets to pay the full purchase price of the
Shares, has adequate means for providing for the Purchaser's
current needs and possible contingencies and has no current need
to liquidate any of the Purchaser's investment in the Company.
(d) The Purchaser has been represented by such legal counsel and
other advisors, each of whom has been personally selected by the
Purchaser, as the Purchaser has found necessary to consult,
concerning the purchase of the Shares, and such representation
has included an examination of applicable documents and an
analysis of all relevant tax, financial, recording and securities
law aspects of an investment in the Shares. The Purchaser, the
Purchaser's counsel, advisors, and such other persons with whom
the Purchaser has found it necessary or advisable to consult,
have represented to the Purchaser that they have knowledge or
experience in business and financial matters to evaluate the
information set forth in the aforementioned reports, proxy
statement, documents and other information made available by the
Company, the risks associated with this investment, and to make
an informed investment decision with respect hereto. To the
extent that the Purchaser has found it necessary to consult with
any such counsel and/or advisors concerning the purchase of the
Shares, the Purchaser has relied upon their advice and counsel in
making such investment decision.
(e) The Purchaser is a resident of the jurisdiction set forth below
the Purchaser's name on the signature page of this Subscription
Agreement.
(3) Company's Representations and Warranties
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The Company represents and warrants to the Purchaser:
(a) the information contained in the reports, proxy statement,
documents and other information made available by the Company as
described in paragraph (1) of this Subscription Agreement contain
no untrue statements of material fact or omit to state a material
fact necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not
misleading;
(b) as of the date of the execution of this Subscription Agreement
and closing of the Subscription, there have been no material,
adverse changes in the Company's operations or financial
condition since the applicable dates of the aforementioned
reports, proxy statement, documents, and other information
distributed by the Company.
(4) Securities Law Restrictions on Transfers
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The Purchaser understands that the offer and/or sale of the Shares to the
Purchaser is not required to be registered under the Securities Act of 1933 (the
"1933 Act") by reason of a specific exemption for the offer and sale of the
Shares under the provisions of Regulation D promulgated by the Securities and
Exchange Commission. The Purchaser further understands that, except as provided
in paragraph (5) below, the Company has not agreed to register the Shares for
distribution and/or resale in accordance with the provisions of the 1933 Act or
the Securities Exchange Act of 1934 (the "1934 Act"), or to register the Shares
for distribution and/or resale under any applicable state securities laws.
Hence, it is the Purchaser's understanding that by virtue of the provisions of
certain rules respecting "restricted securities" promulgated under such federal
and/or state laws, unless such secondary distribution and/or resale is
registered as provided in paragraph (5) below, the Shares which the Purchaser is
purchasing by virtue of this Subscription Agreement must be held indefinitely
and may not be sold, transferred, pledged, hypothecated or otherwise encumbered
for value, unless and until such secondary distribution and/or resale is
subsequently registered under such federal and/or state securities laws or
unless an exemption from registration is available, in which case the Purchaser
still may be limited as to the amount of the Shares that may be sold,
transferred, pledged and/or encumbered for value.
The Purchaser, therefore, agrees that any certificates evidencing the
Shares received by the Purchaser by virtue of this Subscription Agreement shall
be stamped or otherwise imprinted with a conspicuous legend to give notice of
the securities law transfer restrictions set forth herein and the Purchaser
acknowledges that the Company may cause stop transfer orders to be placed on the
Purchaser's account. The legend shall be in substantially the following form:
NO SALE, OFFER TO SELL, OR TRANSFER OF THE COMMON SHARES REPRESENTED BY
THIS CERTIFICATE SHALL BE MADE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND IN COMPLIANCE
WITH ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF SAID ACT AND IS IN COMPLIANCE WITH APPLICABLE
STATE SECURITIES LAWS.
(5) Registration Rights
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(a) Registration Rights; Requests for Registration.
(1) The Purchaser understands that the Company is offering,
concurrently with its sale to the Purchaser, up to Five Hundred Thousand
(500,000) Shares of its $.01 par value common stock (including the Shares
subscribed for by the Purchaser) to other "accredited investors" in a private
placement of such stock who shall be granted registration rights which are, in
substance, identical to those granted to Purchaser by this Section (5). The
holders of a majority of the aggregate number of shares actually sold in such
offering ("Registerable Shares") shall be entitled at any time after the
expiration of the six month period immediately following September 30, 1995 to
make a written request that the Company register for resale under the 1933 Act,
all or any number of the Registerable Shares, provided that with respect to any
such request, the Company shall not be required by the registration rights
granted under this section (5) to file a Registration Statement or cause a filed
Registration Statement to become effective if such filing, in compliance with
and pursuant to the regulations and rules contained in Regulation S-X dealing
with the age of financial statements at the effective date of a registration
statement, would require the Company to include in such Registration Statement
audited financial statements of the Company which, but for such request, would
not otherwise have been required, in compliance with such applicable rules and
regulations, to have been furnished by the Company in the normal course of its
business and operations.
Within 30 days after receipt of any such request, the Company
will give written notice of such request to all other holders of Registerable
Shares and will include in such registration all Registerable Shares with
respect to which the Company has received written requests for inclusion therein
within 15 days after the Company's notice is mailed. The registration requested
pursuant to this paragraph (5)(a)(1) is referred to herein as the "Demand
Registration".
For purposes of this right to demand registration, a registration
will not count as the Demand Registration until (i) it has become effective and
(ii) the holders of the Registerable Shares are able to sell the Registerable
Shares requested to be included in such registration. The Demand Registration
shall be made on a short registration form (on Form S-3 or any similar short
registration form) whenever the Company is permitted under applicable rules
promulgated by the Securities and Exchange Commission to use such short form.
(2) Whenever the Company proposes to register (either on its
own behalf or on behalf of holders of its equity securities other than the
holders of Registerable Shares in their capacity as holders of the Registerable
Shares) any of its equity securities under the 1933 Act (other than pursuant to
the Demand Registration or registration of equity securities to be sold under
one or more of the Company's employee benefit plans on Form S-8), and the
registration form to be used may be used for a registration of the Registerable
Shares, the Company will give prompt written notice to all holders of the
Registerable Shares of its intention to effect such a registration and will
include in such registration all Registerable Shares with respect to which the
Company has received written request by the holders thereof for inclusion
therein within 15 days after the mailing of the Company's notice. Any
registrations requested pursuant to this paragraph (5)(a)(2) are referred to
herein as "Piggyback Registrations".
(b) The Demand Registration
(1) Priority of Demand Registration
The Company will not include in the Demand Registration any other
of its equity securities without the written consent of the holders of a
majority of the Registerable Shares requesting such registration. If a Demand
Registration is an underwritten offering, and the managing underwriters of such
offering advise the Company in writing that, in their opinion, the number of
Registerable Shares and other equity securities to be included exceeds the
number of Registerable Shares and other equity securities which can be sold in
such offering, the Company will include in such registration prior to the
inclusion of any other of the Company's equity securities, the number of
Registerable Shares requested to be included which in the opinion of such
underwriters can be sold, pro rata among the respective holders based on a
fraction, with respect to each holder, the numerator of which is the number of
Registerable Shares requested to be sold by such holder, and the denominator of
which is the number of Registerable Shares requested to be included in such
Demand Registration by all holders of the Registerable Shares.
(2) Restrictions on Demand Registration.
The Company will not be obligated to effect more than two Demand
Registrations and shall be so obligated only if the holders of the majority of
the Registerable Shares so request such registration. Further, the Company will
not be obligated to effect the Demand Registration within three months after the
effective date of a registration in which the holders of the Registerable Shares
exercised their "piggyback registration" rights pursuant to paragraph (5)(a)(2)
hereof.
(3) Selection of Underwriters
The Company shall have the exclusive right to select the
underwriter(s), including the exclusive right to designate the managing
underwriter(s), with respect to the Demand Registration offering. Nothing
herein shall prevent the holders of the Registerable Shares who have requested
the Demand Registration from submitting a recommendation(s) with respect to any
underwriters and/or managing underwriters.
(4) Expenses of the Demand Registration
The Company shall pay all expenses incident to the Demand
Registration, including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, and fees and disbursements of counsel
for the Company and all independent certified public accountants, underwriters
(excluding discounts and commissions) and other persons retained by the Company
in connection with the Demand Registration. The holders of the Registerable
Shares requesting the Demand Registration will be required to pay their pro rata
share of any underwriter and/or brokerage commissions, attributable to the
inclusion of the Registerable Shares in the Demand Registration.
(c) Piggyback Registration.
(1) Priority on Primary Registrations.
If a Piggyback Registration is an underwritten primary
registration on behalf of the Company, and the managing underwriters advise the
Company in writing that, in their opinion, the number of equity securities
requested to be included in such registration exceeds the number which can be
sold in such offering, the Company will include in such registration (i) the
equity securities the Company proposes to sell, (ii) the Registerable Shares
requested to be included in such Piggyback Registration, pro rata among the
holders of such Registerable Shares based upon a fraction, with respect to each
holder, the numerator of which is the number of Registerable Shares requested to
be sold by such holder, and the denominator of which is the total number of
Registerable Shares requested to be included in such Piggyback Registration by
all holders of the Registerable Shares and (iii) any other equity securities
requested to be included in such registration.
(2) Priority on Secondary Registrations.
If a Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Company's equity securities (other than
holders of the Registerable Shares in their capacity as holders of the
Registerable Shares), and the managing underwriters advise the Company in
writing that, in their opinion, the number of equity securities requested to be
included in such registration exceeds the number which can be sold in such
offering, the Company will include in such registration (i) the equity
securities to be sold in the secondary offering by the holders of the Company's
equity securities, (ii) the Registerable Shares requested to be included in such
Piggyback Registration, pro rata among the holders thereof based upon a
fraction, with respect to each holder, the numerator of which is the number of
Registerable Shares requested to be sold by such holder, and the denominator of
which is the number of Registerable Shares requested to be included in such
Piggyback Registration by all holders of Registerable Shares, and (iii) any
other equity securities requested to be included in such registration.
(3) Expenses of Piggyback Registrations
The Company shall pay all expenses incident to the Piggyback
Registration, including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, and fees and disbursements of counsel
for the Company and all independent, certified public accountants, underwriters
(excluding discounts and commissions) and any other persons retained by the
Company in connection with such Piggyback Registrations. The holders of the
Registerable Shares requesting the Piggyback Registration will be required to
pay their pro rata share of any underwriter and/or brokerage commissions
attributable to the inclusion of the Registerable Shares in the Piggyback
Registration.
(d) Other Registrations
If the Company has previously filed a registration statement with
respect to the Registerable Shares pursuant to a Demand Registration or pursuant
to a Piggyback Registration and if such previous registration has not been
withdrawn or abandoned, the Company will not file or cause to be effective any
other registration statement with respect to any of its equity securities or
securities convertible or exchangeable into or exercisable for its equity
securities under the 1933 Act (except with respect to securities to be sold
under other demand registration rights granted to one or more accredited
investors or under any of the Company's employee benefit plans registered on
Form S-8), whether on its own behalf or at the request of any holder or holders
of such securities, until a period of at least six months has elapsed from the
effective date of such previous Demand or Piggyback Registration.
(e) Holdback Agreement.
(1) Each holder of Registerable Shares agrees not to effect any
public sale or distribution of equity securities of the Company, or any
securities convertible into or exchangeable or exercisable for such securities,
during the seven days prior to and the ninety day period beginning on the
effective date of any underwritten Demand Registration or any underwritten
Piggyback Registration (except as part of such underwritten Registration),
unless the underwriters managing the registered Demand or Piggyback public
offering otherwise agree. This restriction shall not apply in the case of
Registerable Shares which have been registered previously in either the Demand
or a Piggyback Registration.
(2) The Company agrees not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and the ninety day period beginning on the effective date of any underwritten
Demand Registration or any underwritten Piggyback Registration (except as part
of such underwritten registration or with respect to sales of its securities
under any employee benefit plan pursuant to registration on Form S-8), unless
the underwriters managing the registered Demand or Piggyback public offering
otherwise agree.
(f) Scope of Registration Rights; Registration Procedures.
The Company's registration obligations under this Subscription
Agreement are "best efforts" obligations only. Whenever the holders of
Registerable Shares have requested that any Registerable Shares be registered
(either Demand or Piggyback), the Company will use its best efforts to effect
the registration and the sale of such Registerable Shares with the intended
method of disposition thereof, and pursuant thereto the Company will as
expeditiously as possible:
(1) Prepare and file with the Securities and Exchange
Commission a registration statement (which shall be, to the extent the Company
is permitted to do so under applicable rules promulgated by the Securities and
Exchange Commission, a short-form registration statement) with respect to such
Registerable Shares and use its best efforts to cause such registration
statement to become effective;
(2) Prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective under Rule 415 promulgated by the Securities
and Exchange Commission and comply with the provisions of the 1933 Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended method of
distribution by the sellers thereof set forth in such registration statement;
(3) Furnish to each seller of the Registerable Shares such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus, if any) and such other documents as such seller may
reasonably request in order to facilitate the disposition of the Registerable
Shares owned by such seller;
(4) Use its best efforts to register or qualify such
Registerable Shares in such jurisdictions as any seller reasonably requests and
do any and all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registerable Shares owned by such seller provided that the
Company will not be required to
(i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this
subparagraph;
(ii) subject itself to taxation in any jurisdiction where
it would not otherwise be subject to taxation but for this subparagraph;
(iii) consent to general service of process in any
jurisdiction where it would not otherwise be subject to process but for
this subparagraph;
(5) notify each seller of such Registerable Shares, at any time
when a prospectus relating thereto is required to be delivered under the 1933
Act, of the happening of any event as a result of which the prospectus included
in such registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, and, at the request of
any such seller, the Company will prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registerable Shares, such prospectus will not contain an untrue statement of
material fact or omit to state any fact necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading;
(6) enter into any such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the holders of the Registerable Shares being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
registered Registerable Shares;
(7) make available for inspection by any seller of the
Registerable Shares, any underwriter participating in any disposition pursuant
to such registration statement, and any attorney, accountant or other agent
retained by such seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors, employees and independent accountants to supply
all information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement.
(g) Indemnification.
(1) The Company agrees to indemnify, to the extent permitted by
law, each holder of the Registerable Shares, its officers and directors and each
person who controls such holder (within the meaning of the 1933 Act) against all
losses, claims, damages, liabilities and expenses caused by any untrue statement
of material fact contained in any registration statement, prospectus or
preliminary prospectus or any amendment thereto or supplement thereto or any
omission of a material fact required to be stated therein or necessary to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading except insofar as the same are caused by or contained
in any information furnished in writing to the Company by such holder expressly
for use therein or by such holder's failure to deliver a copy of the
registration statement or prospectus or any amendments of supplements thereto
after the Company has furnished such holder with a sufficient number of copies
of the same;
(2) In connection with any registration statement in which a
holder of Registerable Shares is participating, each such holder will furnish to
the Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, will indemnify the Company, its
directors and officers and each person who controls the Company (within the
meaning of the 1933 Act) against any losses, claims, damages, liabilities and
expenses resulting from any untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any statement
thereof or supplement thereto or any omission of a material fact required to be
stated therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading, but only to the
extent that such untrue statement or omission is contained in any information or
affidavit so furnished in writing by such holder; provided that the obligation
to indemnify as set forth herein will be several, not joint and several, among
such holders of Registerable Shares and the liability of each such holder of
Registerable Shares will be in proportion to and limited to the net amount
received by such holder from the sale of the Registerable Shares pursuant to
such registration statement;
(3) Any person entitled to indemnification hereunder will
(i) give prompt written notice to the indemnifying party
of any claim with respect to which such person seeks indemnification, and
(ii) unless in such indemnified party's reasonable
judgment, a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit the
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party will not be subject to any liability for
any settlement made by the indemnified party without its consent, but
such consent will not be unreasonably withheld. An indemnifying party
who is not entitled to or elects not to assume the defense of the claim,
will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with
respect to such claim unless in the reasonable judgment of any
indemnified party, a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect
to such claim.
(6) Notices
-------
Any notices or other communication required or permitted herein shall be
sufficiently given if sent by registered or certified mail, postage prepaid,
return receipt requested, and if to the Company, to the address set forth above,
and if to the Purchaser, to the address set forth below the Purchaser's
signature hereto, or to such other addresses as the Company or the Purchaser
shall designate to the other by notice in writing.
(7) Successors and Assigns
----------------------
This subscription for Shares and Subscription Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and to the successors
and assigns of the Company and to the personal and legal representatives of the
Purchaser, and to the extent applicable, his spouse and children.
(8) Applicable Law
--------------
Except when an interpretation of federal and/or state securities laws is
necessary or such law governs, this Subscription Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
(9) Certification with Respect to Federal Dividend and Interest Payments;
---------------------------------------------------------------------
Back-up Withholding
-------------------
Under penalties of perjury, the Purchaser hereby certified to the Company
as follows:
(a) The number shown below is the Purchaser's Social
Security or other taxpayer identification number and such number is the
Purchaser's correct taxpayer identification number; and
(b) the Purchaser is not subject to back-up withholding
either because the Purchaser has not been notified by the Internal
Revenue Service that the Purchaser is subject to back-up withholding as a
result of failure to report all interest or dividends, or the Internal
Revenue Service has notified the Purchaser that the Purchaser is no
longer subject to back-up withholding.
IN WITNESS WHEREOF, the Purchaser has executed and delivered this
Subscription Agreement as of this day of September, 1995.
-----
Subscription: ( ) Shares of the $.01 par value common
-------------- -----------
stock of CPAC, Inc. at $11.00 per Share.
- -------------------------------- -------------------------------------
Signature of Subscriber Residence and/or Business Address
- -------------------------------- -------------------------------------
Typed or Printed Name City State Zip
Social Security or Tax
Identification No. of Subscriber
ACCEPTED:
CPAC, INC.
Dated: By:
------------------------ -------------------------------------
Thomas N. Hendrickson
President and Chief Executive
Officer
EXHIBIT 99.2
------------
AMENDMENT NO. 1 TO SUBSCRIPTION AGREEMENT
-----------------------------------------
WHEREAS, (the "Purchaser") has entered into a
-----------------------
Subscription Agreement ("Subscription Agreement") subscribing for the purchase
of shares of the $.01 par value common stock of CPAC, Inc. (the
---------
"Company") at a purchase price of $11.00 per common share; and
WHEREAS, Purchaser understands that the Company has consummated a sale of
one million (1,000,000) shares of its $.01 par value common stock to an
accredited investor ("Accredited Investor") at $11.00 per common share; and
WHEREAS, such Accredited Investor was granted demand registration rights
having priority to those granted to the Purchaser in the limited circumstances
of an underwritten offering; and
WHEREAS, the Purchaser has agreed to accept subordination in the
application of the demand registration rights granted to the Purchaser in the
Subscription Agreement in the limited circumstances of an underwritten offering.
NOW THEREFORE, it is agreed that the Subscription Agreement is hereby
amended to reflect such subordination and as amended remains in full force and
effect:
1. Section 5(a) of the Subscription Agreement is hereby amended, and as
amended, shall read as follows:
(5) Registration Rights
-------------------
(a) Registration Rights; Requests for Registration.
(1) The Purchaser understands that the Company is offering,
concurrently with its sale to the Purchaser, up to Five Hundred
Thousand (500,000) Shares of its $.01 par value common stock (including
the Shares subscribed for by the Purchaser) to other "accredited
investors" in a private placement of such stock who shall be granted
registration rights which are, in substance, identical to those granted
to Purchaser by this Section (5). The holders of a majority of the
aggregate number of shares actually sold in such offering
("Registerable Shares") shall be entitled at any time after the
expiration of the six month period immediately following September 30,
1995 to make a written request that the Company register for resale
under the 1933 Act, all or any number of the Registerable Shares,
provided that with respect to any such request, the Company shall not
be required by the registration rights granted under this section (5)
to file a Registration Statement or cause a filed Registration
Statement to become effective if such filing, in compliance with and
pursuant to the regulations and rules contained in Regulation S-X
dealing with the age of financial statements at the effective date of a
registration statement, would require the Company to include in such
Registration Statement audited financial statements of the Company
which, but for such request, would not otherwise have been required, in
compliance with such applicable rules and regulations, to have been
furnished by the Company in the normal course of its business and
operations.
Within 30 days after receipt of any such request, the
Company will give written notice of such request to all other holders
of Registerable Shares and will include in such registration all
Registerable Shares with respect to which the Company has received
written requests for inclusion therein within 15 days after the
Company's notice is mailed. The registration requested pursuant to
this paragraph (5)(a)(1) is referred to herein as the "Demand
Registration".
For purposes of this right to demand registration, a
registration will not count as the Demand Registration until (i) it has
become effective and (ii) the holders of the Registerable Shares are
able to sell the Registerable Shares requested to be included in such
registration. The Demand Registration shall be made on a short
registration form (on Form S-3 or any similar short registration form)
whenever the Company is permitted under applicable rules promulgated by
the Securities and Exchange Commission to use such short form.
Within 30 days after receipt of the request set forth above,
the Company will give written notice of such request to the Accredited
Investor and will include in such registration all shares with respect
to which the Company has received a written request for inclusion
therein from such Accredited Investor within 15 days after the
Company's notice is mailed.
(2) Whenever the Company proposes to register (either on its
own behalf or on behalf of holders of its equity securities other than
the holders of Registerable Shares in their capacity as holders of the
Registerable Shares) any of its equity securities under the 1933 Act
including the shares sold to the Accredited Investor (other than
pursuant to registrations of equity securities to be sold under one or
more of the Company's employee benefit plans on Form S-8), and the
registration form to be used may be used for a registration of the
Registerable Shares, the Company will give prompt written notice to all
holders of the Registerable Shares of its intention to effect such a
registration and will include in such registration all Registerable
Shares with respect to which the Company has received written request
by the holders thereof for inclusion therein within 30 days after the
mailing of the Company's notice. Any registrations requested pursuant
to this paragraph (5)(a)(2) are referred to herein as "Piggyback
Registrations".
2. Section 5(b) of the Subscription Agreement is hereby amended, and as
amended, shall read as follows:
(b) The Demand Registration
(1) Priority of Demand Registration
The Company will not include in the Demand Registration
any other of its equity securities without the written consent of the
holders of a majority of the Registerable Shares requesting such
registration. If a Demand Registration is an underwritten offering,
and the managing underwriters of such offering advise the Company in
writing that, in their opinion, the number of Registerable Shares, the
shares requested to be included by the Accredited Investor and other
equity securities to be included, exceeds the number of Registerable
Shares, the shares requested to be included by the Accredited Investor
and other equity securities which can be sold in such offering, the
Company will include in such registration prior to the inclusion of the
Registerable Shares and any other of the Company's equity securities,
the shares requested to be sold by the Accredited Investor without
regard to the inclusion of any Registerable Shares and/or other equity
securities. If in the opinion of the managing underwriters a number of
Registerable Shares requested to be included in such registration can
be sold, such Registerable Shares shall be included, pro rata among the
respective holders based on a fraction, with respect to each holder,
the numerator of which is the number of Registerable Shares requested
to be sold by such holder, and the denominator of which is the number
of Registerable Shares requested to be included in such Demand
Registration by all holders of the Registerable Shares.
(2) Restrictions on Demand Registration.
The Company will not be obligated to effect more than
two Demand Registrations and shall be so obligated only if the holders
of the majority of the Registerable Shares so request such
registration. Further, the Company will not be obligated to effect the
Demand Registration within three months after the effective date of a
registration in which the holders of the Registerable Shares exercised
their "piggyback registration" rights pursuant to paragraph (5)(a)(2)
hereof.
(3) Selection of Underwriters
The Company shall have the exclusive right to select the
underwriter(s), including the exclusive right to designate the managing
underwriter(s), with respect to the Demand Registration offering.
Nothing herein shall prevent the holders of the Registerable Shares who
have requested the Demand Registration from submitting a
recommendation(s) with respect to any underwriters and/or managing
underwriters.
(4) Expenses of the Demand Registration
The Company shall pay all expenses incident to the
Demand Registration, including, without limitation, all registration
and filing fees, fees and expenses of compliance with securities or
blue sky laws, printing expenses, messenger and delivery expenses, and
fees and disbursements of counsel for the Company and all independent
certified public accountants, underwriters (excluding discounts and
commissions) and other persons retained by the Company in connection
with the Demand Registration. The holders of the Registerable Shares
requesting the Demand Registration will be required to pay their pro
rata share of any underwriter and/or brokerage commissions,
attributable to the inclusion of the Registerable Shares in the Demand
Registration.
3. Section 5(c) of the Subscription Agreement is hereby amended, and as
amended, shall read as follows:
(c) Piggyback Registration.
(1) Priority on Primary Registrations.
If a Piggyback Registration is an underwritten primary
registration on behalf of the Company, and the managing underwriters
advise the Company in writing that, in their opinion, the number of
equity securities requested to be included in such registration exceeds
the number which can be sold in such offering, the Company will include
in such registration (i) the equity securities the Company proposes to
sell, (ii) the Accredited Investor's shares and the Registerable Shares
requested to be included in such Piggyback Registration, pro rata among
the holders thereof based upon a fraction, with respect to each holder,
the numerator of which is the number of the shares requested to be sold
by such holder, and the denominator of which is the total number of the
Accredited Investor's and the Registerable Shares requested to be
included in such Piggyback Registration by the Accredited Investor and
all holders of the Registerable Shares and (iii) any other equity
securities requested to be included in such registration.
(2) Priority on Secondary Registrations.
If a Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Company's equity securities
(other than the Accredited Investor and the holders of the Registerable
Shares in their capacity as holders of the Registerable Shares), and
the managing underwriters advise the Company in writing that, in their
opinion, the number of equity securities requested to be included in
such registration exceeds the number which can be sold in such
offering, the Company will include in such registration (i) the equity
securities to be sold in the secondary offering by the holders of the
Company's equity securities, (ii) the Accredited Investor's and the
Registerable Shares requested to be included in such Piggyback
Registration, pro rata among the holders thereof based upon a fraction,
with respect to each holder, the numerator of which is the number of
shares requested to be sold by such holder, and the denominator of
which is the total number of the Accredited Investor's and the
Registerable Shares requested to be included in such Piggyback
Registration by the Accredited Investor and by all holders of
Registerable Shares, and (iii) any other equity securities requested to
be included in such registration.
(3) Expenses of Piggyback Registrations
The Company shall pay all expenses incident to the
Piggyback Registration, including, without limitation, all registration
and filing fees, fees and expenses of compliance with securities or
blue sky laws, printing expenses, messenger and delivery expenses, and
fees and disbursements of counsel for the Company and all independent,
certified public accountants, underwriters (excluding discounts and
commissions) and any other persons retained by the Company in
connection with such Piggyback Registrations. The holders of the
Registerable Shares requesting the Piggyback Registration will be
required to pay their pro rata share of any underwriter and/or
brokerage commissions attributable to the inclusion of the Registerable
Shares in the Piggyback Registration.
IN WITNESS WHEREOF, the Purchaser has executed and delivered this
Amendment No. 1 to the Subscription Agreement as of this day of September,
---
1995.
- -------------------------------- -------------------------------------
Signature of Subscriber Residence and/or Business Address
- -------------------------------- -------------------------------------
Typed or Printed Name City State Zip
Social Security or Tax
Identification No. of Subscriber
ACCEPTED:
CPAC, INC.
Dated: By:
------------------------ -------------------------------------
Thomas N. Hendrickson
President and Chief Executive
Officer
EXHIBIT 99.3
------------
September 22, 1995
Board of Directors
CPAC, Inc.
2364 Leicester Road
Leicester, New York 14481
Re: Subscription to Purchase 1,000,000 Shares of CPAC, Inc. Common Stock,
$.01 par value per share
Gentlemen:
(1) Subscription:
------------
The Purchaser, CPAC Investors, L.L.C., a limited liability company
organized under the laws of the State of Delaware (the "Purchaser"), hereby
subscribes to purchase 1,000,000 shares ("Shares") of the $.01 par value common
stock of CPAC, Inc. at $11.00 per Share and hereby tenders payment for the
subscribed number of Shares by certified check, bank draft or Federal Funds wire
transfer made payable to CPAC, Inc. (the "Company") in the amount of
$11,000,000. In connection with this subscription, the Purchaser hereby
executes this Subscription Agreement and hereby acknowledges that the Purchaser
and/or the Purchaser's authorized representatives have received from the Company
or its counsel, read, reviewed, understand and are familiar with:
(i) the Company's Annual Report (Form 10-K), as well as any
amendments thereof, filed with the Securities and Exchange
Commission for the fiscal years ended March 31, 1992 through and
including 1995;
(ii) the Company's annual reports and definitive proxy statements
distributed to shareholders in connection with the annual meeting
of shareholders held in August 1992 through and including 1995;
(iii) Quarterly Reports (Form 10-Q) filed with the Securities and
Exchange Commission for the quarters ended June 30, 1992 through
and including June 30, 1995;
(iv) Current Reports (Form 8-K, and any amendments thereto) filed with
the Securities and Exchange Commission for reportable events
taking place on October 13, 1994 and January 16, 1995;
(v) Copies of the Company's Certificate of Incorporation, all
amendments thereto and the Company's By-Laws and all amendments
thereto;
(vi) The Closing Books maintained by the Company with respect to the
acquisition of The Fuller Brush Company on October 13, 1994 as
well as copies of certain documentation detailing the
environmental problems associated with the Company's acquisition
of the Great Bend facility and arrangements for the remediation
thereof;
(vii) Material contracts executed in connection with the Company's
licensing arrangement with Stanhome, Inc.;
(viii) The responses of Company counsel to the Company's request to
provide the Company's independent auditors with certain
information in connection with the preparation of the Company's
audited financial statements for the fiscal years ended March 31,
1992 through and including 1995; and
(ix) Certain information, both oral and written, with respect to
developments pertaining to the Company's ongoing operations.
The Purchaser further acknowledges that, except as set forth in such
reports, proxy statements, documents and other information made available by the
Company as described above as well as those representations made by the Company
herein and in the Stock Purchase Agreement between S. Daniel Abraham and the
Company dated as of September 15, 1995, no representations or warranties have
been made to the Purchaser, or to the Purchaser's authorized representatives by
the Company, or by any person acting on behalf of the Company, with respect to
the offer or sale of the Shares and/or the economic, tax, or any other aspects
or consequences of a purchase of the Shares and/or the investment made thereby.
Further, the Purchaser has not relied upon any information concerning the
Company, written or oral, other than that contained in the aforementioned
reports, proxy statements, documents, or other information.
The Purchaser hereby acknowledges that the Purchaser and/or the
Purchaser's authorized representatives have had an opportunity to ask questions
of, and receive answers from persons acting on behalf of the Company to verify
the accuracy and completeness of the information set forth in such reports,
proxy statements, documents, and other information prior to sale and the
Purchaser hereby acknowledges that the Purchaser and/or the Purchaser's
authorized representatives have not requested the Company to provide any
additional information which the Company possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy and
completeness of the information made available.
(2) Purchaser's Representations and Warranties:
------------------------------------------
The Purchaser further represents and warrants to the Company:
(a) The Shares are being issued to the Purchaser by the Company for
investment only, for the Purchaser's own account, and are not
being purchased by the Purchaser with a view to distribution of
such Shares, or for the offer and/or sale in connection with any
distribution thereof. The Purchaser is not participating,
directly or indirectly, in an underwriting of the Shares or in
any similar undertaking. The Purchaser has no present plans to
enter into any contract, undertaking, agreement or arrangement
which would entail an underwriting of such Shares or any similar
distribution thereof;
(b) The Purchaser is an "accredited investor" as that term is defined
in Rule 501 of Regulation D, promulgated by the Securities and
Exchange Commission.
(c) The Purchaser understands that there is no guarantee of profits
or against loss as a result of purchasing the Shares and the
Purchaser hereby states that the Purchaser can afford a complete
loss of the investment in such Shares. The Purchaser further
warrants that the Purchaser's present financial condition is such
that the Purchaser has no present or perceived future need to
dispose of any portion of the Shares to satisfy any existing or
contemplated undertaking, obligation, need or indebtedness.
Consequently, the Purchaser represents that the Purchaser has
sufficient liquid assets to pay the full purchase price of the
Shares, has adequate means for providing for the Purchaser's
current needs and possible contingencies and has no current need
to liquidate any of the Purchaser's investment in the Company.
(d) The Purchaser has been represented by such legal counsel and
other advisors, each of whom has been personally selected by the
Purchaser, as the Purchaser has found necessary to consult,
concerning the purchase of the Shares, and such representation
has included an examination of applicable documents and an
analysis of all relevant tax, financial and securities law
aspects of an investment in the Shares. The Purchaser, the
Purchaser's counsel, advisors, and such other persons with whom
the Purchaser has found it necessary or advisable to consult,
have represented to the Purchaser that they have knowledge or
experience in business and financial matters to evaluate the
information set forth in the aforementioned reports, press
releases and/or other public information statements issued by the
Company, the risks associated with this investment, and to make
an informed investment decision with respect hereto. To the
extent that the Purchaser has found it necessary to consult with
any such counsel and/or advisors concerning the purchase of the
Shares, the Purchaser has relied upon their advice and counsel in
making such investment decision.
(e) The Purchaser is a limited liability company organized under the
laws of the State of Delaware.
(3) Company's Representations and Warranties
----------------------------------------
The Company represents and warrants to the Purchaser:
(a) the information contained in the reports, proxy statements,
documents and other information made available by the Company as
described in paragraph (1) of this Subscription Agreement contain
no untrue statements of material fact or omit to state a material
fact necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not
misleading;
(b) as of the date of the execution of this Subscription Agreement
and closing of the Subscription, there have been no material,
adverse changes in the Company's assets, prospects, operations or
financial condition since the applicable dates of the
aforementioned reports, proxy statements, documents, and other
information distributed by the Company.
(4) Securities Law Restrictions on Transfers
----------------------------------------
The Purchaser understands that the offer and/or sale of the Shares to the
Purchaser is not required to be registered under the Securities Act of 1933 (the
"1933 Act") by reason of a specific exemption for the offer and sale of the
Shares under the provisions of Regulation D promulgated by the Securities and
Exchange Commission. The Purchaser further understands that, except as provided
in paragraph (5) below, the Company has not agreed to register the Shares for
distribution and/or resale in accordance with the provisions of the 1933 Act or
the Securities Exchange Act of 1934 (the "1934 Act"), or to register the Shares
for distribution and/or resale under any applicable state securities laws.
Hence, it is the Purchaser's understanding that by virtue of the provisions of
certain rules respecting "restricted securities" promulgated under such federal
and/or state laws, unless such secondary distribution and/or resale is
registered as provided in paragraph (5) below, the Shares which the Purchaser is
purchasing by virtue of this Subscription Agreement must be held indefinitely
and may not be sold, transferred, pledged, hypothecated or otherwise encumbered
for value, unless and until such secondary distribution and/or resale is
subsequently registered under such federal and/or state securities laws or
unless an exemption from registration is available, in which case the Purchaser
still may be limited as to the amount of the Shares that may be sold,
transferred, pledged and/or encumbered for value.
The Purchaser, therefore, agrees that any certificates evidencing the
Shares received by the Purchaser by virtue of this Subscription Agreement shall
be stamped or otherwise imprinted with a conspicuous legend to give notice of
the securities law transfer restrictions set forth herein and the Purchaser
acknowledges that the Company may cause stop transfer orders to be placed on the
Purchaser's account. The legend shall be in substantially the following form:
NO SALE, OFFER TO SELL, OR TRANSFER OF THE COMMON SHARES REPRESENTED BY
THIS CERTIFICATE SHALL BE MADE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND IN COMPLIANCE
WITH ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF SAID ACT AND IS IN COMPLIANCE WITH APPLICABLE
STATE SECURITIES LAWS.
(5) Registration Rights
-------------------
(a) Registration Rights; Requests for Registration.
(1) The Purchaser shall be entitled at any time after the
expiration of the six month period immediately following September 30, 1995 to
make a written request that the Company register for resale under the 1933 Act,
all or any number of the Shares, provided that with respect to any such request,
the Company shall not be required by the registration rights granted under this
Section (5) to file a Registration Statement or cause a filed Registration
Statement to become effective if such filing, in compliance with and pursuant to
the regulations and rules contained in Regulation S-X dealing with the age of
financial statements at the effective date of a registration statement, would
require the Company to include in such Registration Statement audited financial
statements of the Company which, but for such request, would not otherwise have
been required, in compliance with such applicable rules and regulations, to have
been furnished by the Company in the normal course of its business and
operations. Any registration requested pursuant to this paragraph (5)(a)(1) is
referred to herein as the "Demand Registration".
The Purchaser understands that the Company is offering,
concurrently with its sale to the Purchaser, up to Five Hundred Thousand
(500,000) of its $.01 par value common stock to other "accredited investors" in
a private placement of such stock. The Purchaser further understands that any
such other investors shall be granted rights which, if a majority of the
aggregate number of those shares sold so request, would enable the holders
thereof to request registration of their shares (the "Registerable Shares").
Within thirty days after receipt of the Purchaser's registration request, the
Company will give written notice of such request to all the holders of
Registerable Shares and will include in such registration all Registerable
Shares with respect to which the Company has received written requests for
inclusion therein within 15 days after the Company's notice is mailed.
For purposes of the Purchaser's right to demand registration, a
registration will not count as a Demand Registration until (i) it has become
effective and (ii) the Purchaser is able to sell the Shares requested to be
included in such registration. Any Demand Registration shall be made on a short
registration form (on Form S-3 or any similar short registration form) whenever
the Company is permitted under applicable rules promulgated by the Securities
and Exchange Commission to use such short form.
(2) Whenever the Company proposes to register (either on its
own behalf or on behalf of holders of its equity securities other than the
Shares) any of its equity securities under the 1933 Act including the
Registerable Shares (other than pursuant to the registrations of equity
securities to be sold under one or more of the Company's employee benefit plans
on Form S-8), and the registration form to be used may be used for a
registration of the Shares, the Company will give prompt written notice to
Purchaser and to the holders of the Registerable Shares of its intention to
effect such a registration and will include in such registration, the
Purchaser's and all Registerable Shares with respect to which the Company has
received written request by the Purchaser and by the holders of the Registerable
Shares for inclusion therein within 30 days after the mailing of the Company's
notice. Any registrations requested pursuant to this paragraph (5)(a)(2) are
referred to herein as "Piggyback Registrations".
(b) The Demand Registration
(1) Priority of Demand Registration
The Company will not include in the Demand Registration any
other of its equity securities without the written consent of the Purchaser. If
a Demand Registration is an underwritten offering, and the managing underwriters
of such offering advise the Company in writing that, in their opinion, the
number of the Shares, the Registerable Shares and other equity securities to be
included exceeds the number of the Shares, Registerable Shares and other equity
securities which can be sold in such offering, the Company will include in such
registration prior to the inclusion of the Registerable Shares and any other of
the Company's equity securities, the Shares without regard to the inclusion of
any Registerable Shares and/or other equity securities. If in the opinion of
the managing underwriters a number of Registerable Shares requested to be
included in such registration can be sold (in addition to all of the Shares
requested to be sold), such Registerable Shares shall be included pro rata among
the respective holders thereof based on a fraction, with respect to each holder,
the numerator of which is the number of Registerable Shares requested to be sold
by such holder, and the denominator of which is the number of Registerable
Shares requested to be included in such Demand Registration by all holders of
the Registerable Shares.
(2) Restrictions on Demand Registration.
The Company will not be obligated to effect more than two
Demand Registrations. Further, the Company will not be obligated to effect any
Demand Registration within three months after the effective date of a
registration in which the Purchaser exercised its "piggyback registration"
rights pursuant to paragraph (5)(a)(2) hereof and all of the Shares requested by
the Purchaser to be included in the registration were so included.
(3) Selection of Underwriters
The Company shall have the exclusive right to select the
underwriter(s), including the exclusive right to designate the managing
underwriter(s), with respect to any Demand Registration offering, provided that
such selection is acceptable to the Purchaser, which acceptance shall not be
unreasonably withheld.
(4) Expenses of the Demand Registration
The Company shall pay all expenses incident to any Demand
Registration, including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, and fees and disbursements of counsel
for the Company and all independent certified public accountants, underwriters
(excluding discounts and commissions) and other persons retained by the Company
in connection with any Demand Registration. The Purchaser will be required to
pay its pro rata share of any underwriter and/or brokerage commissions
attributable to the inclusion of the Shares in the Demand Registration.
(c) Piggyback Registration.
(1) Priority on Primary Registrations.
If a Piggyback Registration is an underwritten primary
registration on behalf of the Company, and the managing underwriters advise the
Company in writing that, in their opinion, the number of equity securities
requested to be included in such registration exceeds the number which can be
sold in such offering, the Company will include in such registration (i) the
equity securities the Company proposes to sell, (ii) the Shares and the
Registerable Shares requested to be included in such Piggyback Registration, pro
rata among the holders thereof, based upon a fraction, with respect to each
holder, the numerator of which is the number of shares requested to be sold by
such holder, and the denominator of which is the total number of the Purchaser's
and the Registerable Shares requested to be included in such Piggyback
Registration by the Purchaser and by all holders of the Registerable Shares and
(iii) any other equity securities requested to be included in such registration.
(2) Priority on Secondary Registrations.
If a Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Company's equity securities (other than
the Purchaser or the holders of the Registerable Shares in their capacity as the
Purchaser or as holders of the Registerable Shares), and the managing
underwriters advise the Company in writing that, in their opinion, the number of
equity securities requested to be included in such registration exceeds the
number which can be sold in such offering, the Company will include in such
registration (i) the equity securities to be sold in the secondary offering by
the holders of the Company's equity securities requesting such registration,
(ii) the Purchaser's Shares and the Registerable Shares requested to be included
in such Piggyback Registration, pro rata among the holders thereof based upon a
fraction, with respect to each holder, the numerator of which is the number of
shares requested to be sold by such holder and the denominator of which is the
total number of the Purchaser's and the Registerable Shares requested to be
included in such Piggyback Registration by the Purchaser and by all holders of
Registerable Shares, and (iii) any other equity securities requested to be
included in such registration.
(3) Expenses of Piggyback Registrations
The Company shall pay all expenses incident to the
Piggyback Registration, including, without limitation, all registration and
filing fees, fees and expenses of compliance with securities or blue sky laws,
printing expenses, messenger and delivery expenses, and fees and disbursements
of counsel for the Company and all independent, certified public accountants,
underwriters (excluding discounts and commissions) and any other persons
retained by the Company in connection with such Piggyback Registrations. The
Purchaser will be required to pay its pro rata share of any underwriter and/or
brokerage commissions attributable to the inclusion of the Shares in the
Piggyback Registration.
(d) Other Registrations
If the Company has previously filed a registration statement with
respect to the Shares pursuant to a Demand Registration and if such previous
registration has not been withdrawn or abandoned, the Company will not file or
cause to be effective any other registration statement with respect to any of
its equity securities or securities convertible or exchangeable into or
exercisable for its equity securities under the 1933 Act (except with respect to
securities to be sold under any of the Company's employee benefit plans
registered on Form S-8), whether on its own behalf or at the request of any
holder or holders of such securities, until a period of at least six months has
elapsed from the effective date of such previous Demand Registration.
(e) Holdback Agreement.
(1) Provided the Company, its Directors and its Officers agrees
as provided in Section 5(e)(2) below, the Purchaser agrees not to effect any
public sale or distribution of equity securities of the Company, or any
securities convertible into or exchangeable or exercisable for such securities,
during the seven days prior to and the ninety day period beginning on the
effective date of any underwritten Demand Registration or any underwritten
Piggyback Registration (except as part of such underwritten Registration),
unless the underwriters managing the registered Demand or Piggyback public
offering otherwise agree. This restriction shall not apply in the case of the
Shares which have been registered previously in either the Demand or a Piggyback
Registration.
(2) The Company agrees, and shall cause its Directors and
Officers to agree, not to effect any public sale or distribution of its equity
securities, or any securities convertible into or exchangeable or exercisable
for such securities, during the seven days prior to and the ninety day period
beginning on the effective date of any underwritten Demand Registration or any
underwritten Piggyback Registration (except as part of such underwritten
registration or with respect to sales of its securities under any employee
benefit plan pursuant to registration on Form S-8), unless the underwriters
managing the registered Demand or Piggyback public offering otherwise agree.
(f) Scope of Registration Rights; Registration Procedures.
The Company's registration obligations under this Subscription
Agreement are "best efforts" obligations only. Whenever the Purchaser has
requested that any Shares be registered (either Demand or Piggyback), the
Company will use its best efforts to effect the registration and the sale of
such Shares with the intended method of disposition thereof, and pursuant
thereto the Company will as expeditiously as possible:
(1) Prepare and file with the Securities and Exchange
Commission a registration statement (which shall be, to the extent the Company
is permitted to do so under applicable rules promulgated by the Securities and
Exchange Commission, a short-form registration statement) with respect to such
Shares and use its best efforts to cause such registration statement to become
effective;
(2) Prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective as permitted by Rule 415 promulgated by the
Securities and Exchange Commission and comply with the provisions of the 1933
Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended method
of distribution by the sellers thereof set forth in such registration statement;
(3) Furnish to each Purchaser such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus,
if any) and such other documents as such Purchaser may reasonably request in
order to facilitate the disposition of the Shares, including copies of any legal
opinions and other "comfort" letters that counsel may prepare in connection with
the registration of such Shares;
(4) Use its best efforts to register or qualify such Shares in
such jurisdictions as any Purchaser reasonably requests and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
Purchaser to consummate the disposition in such jurisdictions of the Shares
provided that the Company will not be required to
(i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this
subparagraph;
(ii) subject itself to taxation in any jurisdiction where
it would not otherwise be subject to taxation but for this subparagraph;
(iii) consent to general service of process in any
jurisdiction where it would not otherwise be subject to process but for
this subparagraph;
(5) notify the Purchaser at any time when a prospectus relating
thereto is required to be delivered under the 1933 Act, of the happening of any
event as a result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading, and, at the request of the
Purchaser, the Company will prepare a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of such Shares, such
prospectus will not contain an untrue statement of material fact or omit to
state any fact necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading;
(6) enter into any such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the Purchaser or the underwriters, if any, reasonably request in order to
expedite or facilitate the disposition of such registered Shares;
(7) make available for inspection by any Purchaser, any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by such seller
or underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors,
employees and independent accountants to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement and cause the Company's attorneys
and accountants to deliver legal opinions and comfort letters to the Purchaser
which have been delivered in connection therewith.
(g) Indemnification.
(1) The Company agrees to indemnify and hold harmless, to the
extent permitted by law, the Purchaser, each underwriter of such Shares, its
members and managers and each person who controls such person or entity (within
the meaning of the 1933 Act) against all losses, claims, damages, liabilities
and expenses which arise out of or are based on any untrue statement or alleged
untrue statement of material fact contained in any registration statement,
prospectus or preliminary prospectus or any amendment thereto or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading or in violation of
the 1933 Act or Blue Sky laws except insofar as the same are caused by or
contained in any information furnished in writing to the Company by such holder
expressly for use therein or by such holders' failure to deliver a copy of the
registration statement or prospectus or any amendments of supplements thereto
after the Company has furnished such holder with a sufficient number of copies
of the same;
(2) In connection with any registration statement in which the
Purchaser is participating, the Purchaser will furnish to the Company in writing
such information and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to the extent
permitted by law, will indemnify the Company, its directors and officers and
each person who controls the Company (within the meaning of the 1933 Act)
against any losses, claims, damages, liabilities and expenses resulting from any
untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any statement thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading or in violation of
the 1933 Act or Blue Sky laws, but only to the extent that such alleged untrue
statement or omission is contained in any information or affidavit so furnished
in writing by such holder; provided that the obligation to indemnify as set
forth herein will be several, not joint and several, among such holders of
Shares and the liability of each such holder of Shares will be in proportion to
and limited to the net amount received by such holder from the sale of the
Shares pursuant to such registration statement;
(3) Any person entitled to indemnification hereunder will
(i) give prompt written notice to the indemnifying party
of any claim with respect to which such person seeks indemnification,
provided, however, that the failure to give such notice will not relieve
the indemnified party of any liability hereunder, and
(ii) unless in such indemnified party's reasonable
judgment, a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit the
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party will not be subject to any liability for
any settlement made by the indemnified party without its consent, but
such consent will not be unreasonably withheld. An indemnifying party
who is not entitled to or elects not to assume the defense of the claim,
will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with
respect to such claim unless in the reasonable judgment of any
indemnified party, a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect
to such claim.
(6) Company's Right of First Refusal
--------------------------------
The Purchaser agrees that if the Purchaser desires to sell Shares
representing 7.5 percent or more of the Company's issued and outstanding common
stock to the same purchaser or to any affiliated group of purchasers within the
meaning of Section 13 of the 1934 Act, in one or more related privately
negotiated transactions, the Purchaser shall first offer the Shares constituting
such percentage for sale to the Company to be purchased by the Company. Every
such offer to sell any or all of the Shares and the price of the Shares to the
Company, shall be set forth in writing. Such price shall reflect a bona fide
offer to the Purchaser (which offer shall be affirmed in writing by the
Purchaser and/or its counsel, to the reasonable satisfaction of the Company).
The Company shall have the right, within twenty-four (24) hours after the
receipt by it of such written offer by the Purchaser, to purchase the Shares
offered for sale by the Purchaser. Such purchase shall be made by the Company
by its tendering the full purchase price for the Shares for which the written
offer is received by means of a certified check, bank draft made payable to the
Purchaser, or by federal funds wire transfer to the Purchaser or to its
designee. Payment shall be made to the Purchaser or to its designee within
twenty (20) days after the receipt of the written offer by the Purchaser to sell
the Shares.
It is expressly agreed that if the Company shall have refused in writing,
or shall have failed to accept the offer by the Purchaser for it to purchase all
of the Shares offered for sale within the twenty-four hour period above
specified, then all such non-accepted Shares of the Purchaser shall be free from
the provisions of this Section. It is expressly agreed that immediately after
the date which is two years from September 22, 1995, the percentage referred to
in the first sentence of this Section (6) shall be 10%.
The Purchaser covenants and agrees that prior to registering the transfer
of greater than fifty percent (50%) of its membership interests to any person or
entity that does not own, or is not a beneficiary of any trust that owns,
membership interests on the date hereof (whether in one or more transactions),
it will require such transferee to agree in writing to be bound by the
provisions of Section (6) hereof. In addition, the Purchaser covenants and
agrees that prior to any distribution, by way of dividend or otherwise, of any
of the Shares to any member thereof, the Purchaser shall require such member to
agree in writing to be bound by the provisions of Section (6) hereof.
The Purchaser agrees that a legend reflecting the Company's right of first
refusal as set forth herein shall be affixed to the certificate(s) represent the
Shares.
(7) Notices
-------
Any notices or other communication required or permitted herein shall be
sufficiently given if sent by registered or certified mail, postage prepaid,
return receipt requested, and if to the Company, to the address set forth above,
and if to the Purchaser, to the address set forth below the Purchaser's
signature hereto, or to such other addresses as the Company or the Purchaser
shall designate to the other by notice in writing, with copies of any such
notices or other communication sent to:
If to the Purchaser: Eliot Lauer, Esq.
Curtis, Mallet-Prevost, Colt
& Mosle
101 Park Avenue
New York, New York 10178
If to the Company: Robert Oppenheimer, Esq.
Chamberlain, D'Amanda, Oppenheimer
& Greenfield
1600 Crossroads Office Building
Rochester, New York 14614
(8) Successors and Assigns
----------------------
This subscription for Shares and Subscription Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and to the successors
and assigns of the Company and to the personal and legal representatives of the
Purchaser, and to the extent applicable, its successors and assigns.
(9) Applicable Law
--------------
Except when an interpretation of federal and/or state securities laws is
necessary or such law governs, this Subscription Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
(10) Certification with Respect to Federal Dividend and Interest Payments;
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Back-up Withholding
-------------------
Under penalties of perjury, the Purchaser hereby certified to the Company
as follows:
(a) The number shown below is the Purchaser's Social
Security or other taxpayer identification number and such number is the
Purchaser's correct taxpayer identification number; and
(b) the Purchaser is not subject to back-up withholding
either because the Purchaser has not been notified by the Internal
Revenue Service that the Purchaser is subject to back-up withholding as a
result of failure to report all interest or dividends, or the Internal
Revenue Service has notified the Purchaser that the Purchaser is no
longer subject to back-up withholding.
IN WITNESS WHEREOF, the Purchaser has executed and delivered this
Subscription Agreement as of this 22nd day of September, 1995.
Subscription: ( ) Shares of the $.01 par value common
-------------- -----------
stock of CPAC, Inc. at $11.00 per Share.
- -------------------------------- -------------------------------------
Signature of Subscriber Residence and/or Business Address
- -------------------------------- -------------------------------------
Typed or Printed Name City State Zip
Social Security or Tax
Identification No. of Subscriber
ACCEPTED:
CPAC, INC.
Dated: By:
------------------------ -------------------------------------
Thomas N. Hendrickson
President and Chief Executive
Officer
