UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
COMC, INC.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
12614F 10 9
(CUSIP Number)
Warren Nimetz, Esq.
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Phone: 212-318-3000
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
August 10, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box.
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss.240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
CUSIP No. 12614F 10 9 Page 2 of 10 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Christopher R. Smith
SS#: ###-##-####
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) |_|
(b) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO (See Item 3.)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY - 0 -
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING 10,841,558 shares
PERSON
WITH 9 SOLE DISPOSITIVE POWER
200,000 shares
10 SHARED DISPOSITIVE POWER
- 0 -
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,478,896 shares (includes 2,463,896 shares of
which Mr. Smith has a right to purchase
upon exercise of options that are
exercisable within 60 days and excludes
10,579,804 shares beneficially owned by
third parties that are subject to a
Stockholders Agreement).
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
|X|
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.4%
14 TYPE OF REPORTING PERSON*
IN *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
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<PAGE>
SCHEDULE 13D
Item 1. Security and Issuer.
Common Stock, $.01 par value.
COMC, Inc. (the "Company")
400 North Glenoaks Boulevard
Burbank, California 91502
Item 2. Identity and Background.
1. (a) Name:
Christopher R. Smith
(b) Residence:
21 Middlesex Road
Darien, CT 06820
(c) Principal Occupation and Business Address:
Occupation: Chief Financial Officer of the
Company and Executive Vice President of
ICF Communication Solutions, Inc., a
wholly-owned subsidiary of the Company
Address: 400 North Glenoaks Blvd.,
Burbank, CA 91502
(d) Criminal Convictions: None
(e) Civil Proceedings: None
(f) Citizenship: United States
Mr. Smith may be deemed to be a member of a group by virtue of his being a party
to a Stockholders Agreement with John J. Ackerman, the Chairman and Chief
Executive Officer of the Company, Charles E. Lincoln, the President of the
Company, William M. Burns, the Chief Operating Officer of the Company, and the
Company. Mr. Smith disclaims any obligation to report with respect to such other
persons. The Stockholders Agreement is described in Item 4.
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SCHEDULE 13D
Item 3. Source and Amount of Funds or Other Consideration. Mr. Smith
purchased 200,000 shares of the Common Stock from John J. Ackerman,
the Chairman and Chief Executive Officer of the Company, pursuant to a
Stock Purchase Agreement, dated August 10, 1999, among Mr. Smith, Mr.
Ackerman and the Company. Mr. Smith paid $100,000 in cash from his
personal funds for such shares.
In addition, several private, accredited investors purchased an
aggregate of 815,000 shares of Common Stock from Mr. Ackerman.
Concurrently with the purchase of such shares, these investors each
executed an Irrevocable Proxy appointing Mr. Smith as the lawful
attorney and proxy to attend meetings of the stockholders and vote
such shares, or to execute consents of the stockholders of the
Company, in their name place and stead. All of such Irrevocable
Proxies terminate on the earlier of (i) the termination of a
Stockholders Agreement (described in Item 4 below) among the Company,
and Messrs. Smith, Ackerman, Lincoln and Burns and (ii) the date on
which the Company is reincorporated in the State of Delaware.
Mr. Smith also has been granted an option to purchase 2,463,896
shares of Common Stock at a price per share of $.08. All of such
options shall be funded by the Company from an aggregate of 3,651,948
shares contributed to the Company by Mr. Ackerman on August 10, 1999.
Item 4. Purpose of Transaction.
On August 10, 1999, Mr. Smith acquired 200,000 shares of Common
Stock from John J. Ackerman, the Chairman and Chief Executive Officer
of the Company. Some of the conditions of the purchase of the 200,000
shares of Common Stock by Mr. Smith, all of which were satisfied,
were,
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SCHEDULE 13D
among other things: (i) that Mr. Smith be employed as the Chief Financial
Officer of the Company, (ii) that 3,651,948 outstanding shares of Common Stock
owned by Mr. Ackerman be contributed to the Company by Mr. Ackerman for the
purpose of funding option grants by the Company, (iii) that Mr. Smith be granted
options to purchase 2,463,896 shares of the Common Stock of the Company, (iv)
that Mr. Smith and others parties enter a Registration Rights Agreement with the
Company granting certain registration rights to such parties with respect to
their shares of Common Stock and (v) that the Company and Messrs. Smith,
Ackerman, Lincoln and Burns enter a Stockholders Agreement, providing for, among
other things,
(A) the ability of each of Messrs. Smith, Ackerman (3,333,052 shares),
Lincoln (3,246,753 shares) and Burns (3,246,753 shares) to nominate
one member of the Board of Directors at each annual meeting and the
four of them together to nominate a fifth member of the Board of
Directors,
(B) an agreement to vote for the election of those five nominated
directors, and
(C) certain rights of first refusal on sales of Common
Stock by the parties to the agreement.
It is anticipated that the Company will incorporate an entity in the State
of Delaware and then merge into such entity such that the Company will become a
Delaware corporation. In addition, as soon as practicable, the Company plans to
fill a vacancy on the Board of Directors to bring the number of directors of the
Company back to the currently authorized five members.
Mr. Smith reserves his right to increase his beneficial ownership through
the acquisition of additional shares of Common Stock and to sell all or a
portion of his shares in the over-the-counter
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SCHEDULE 13D
market, or in privately negotiated sales.
Except for the foregoing, Mr. Smith does not have a plan or proposal
which relates to or would result in:
(a) The acquisition by any person of additional securities of the Company,
or the disposition of securities of the Company;
(b) An extraordinary corporate transaction such as a merger,
reorganization or liquidation involving the Company or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of the Company or
any of its subsidiaries;
(d) Any change in the present Board of Directors or management of the
Company, including any plans or proposals to change the number of or
term of Directors or to fill any existing vacancies on the Board;
(e) Any material change in the present capitalization or dividend policy
of the Company;
(f) Any other material change in the Company's business or corporate
structure;
(g) Changes in the Company's charter, by-laws, or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the company by any person;
(h) Causing the Common Stock to cease to be authorized to be quoted in the
inter-dealer quotation system of the National Association of
Securities Dealers, Inc.;
(i) Although the Common Stock may be eligible for termination of
registration pursuant to Section 12(g)(4) of the Securities Act of
1933, to have such registration terminated; or
(j) Any action similar to any of those enumerated above.
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<PAGE>
SCHEDULE 13D
Item 5. Interest in the Securities of the Issuer.
(a) Mr. Smith beneficially owns 3,478,896 shares of Common Stock
(approximately 15.4% of the shares outstanding), consisting of
200,000 shares which he owns directly, 815,000 shares which he
has power to vote pursuant to the Irrevocable Proxies described
in Item 3, and 2,463,896 shares subject to an option which is
currently exercisable. This amount excludes 10,579,804 shares of
Common Stock beneficially owned by Messrs. Ackerman, Lincoln and
Burns, all of which are subject to the Stockholders Agreement
described in Item 4. To the best of Mr. Smith's knowledge (i) Mr.
Ackerman beneficially owns 3,333,052 shares of Common Stock
(approximately 16.6% of the shares outstanding), all of which he
owns directly, (ii) Mr. Lincoln beneficially owns 3,623,376
shares of Common Stock (approximately 17.7% of the shares
outstanding), consisting of 3,246,753 shares which he owns
directly and 376,623 shares subject to an option which is
currently exercisable, and (iii) Mr. Burns beneficially owns
3,623,376 shares of Common Stock (approximately 17.7% of the
shares outstanding), consisting of 3,246,753 shares which he owns
directly and 376,623 shares subject to an option which is
currently exercisable.
(b) Mr. Smith does not have the sole power to vote any shares of
Common Stock, but has the sole authority to dispose or direct the
disposition of 200,000 shares of Common Stock. To the best of Mr.
Smith's knowledge, Messrs. Ackerman, Lincoln and Burns do not
have the sole power to vote any shares of Common Stock, but have
the sole authority to dispose or direct the disposition of
3,333,052, 3,246,753 and 3,246,753 shares of Common Stock,
respectively. Messrs. Smith, Ackerman, Lincoln and Burns have
shared power to vote 10,841,558 shares of Common Stock, by virtue
of the Stockholders Agreement described in Item 4, but do not
share dispositive
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SCHEDULE 13D
power with respect to any shares.
(c) Other than the transactions set forth herein, Mr. Smith, and to
the best of Mr. Smith's knowledge, Messrs. Ackerman, Lincoln and
Burns have not effected any transaction in the shares of Common
Stock during the past sixty (60) days.
(d) Mr. Smith owns and presently has the right to receive dividends
on 200,000 shares of Common Stock. To the best of Mr. Smith's
knowledge (i) Mr. Ackerman owns and presently has the right to
receive dividends on 3,333,052 shares of Common Stock, (ii) Mr.
Lincoln owns and presently has the right to receive dividends on
3,246,753 shares of Common Stock and (iii) Mr. Burns owns and
presently has the right to receive dividends on 3,246,753 shares
of Common Stock.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
(i) the Contribution Agreement between the Company and Mr. Ackerman
pursuant to which Mr. Ackerman contributed an aggregate of
3,651,948 shares of Common Stock owned by him to the Company to
fund option grants, (ii) a stock option granted to Mr. Smith by
the Company to purchase 2,463,896 shares of Common Stock at $.08
per share, (iii) the Stockholders Agreement, dated August 10,
1999, among the Company, and Messrs. Smith, Ackerman, Lincoln and
Burns and (iv) a Registration Rights Agreement, dated August 10,
1999, among the Company, Messrs. Smith, Ackerman, Lincoln and
Burns, and other investors in the Company.
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<PAGE>
SCHEDULE 13D
Item 7. Material to be filed as Exhibits.
Exhibits
(1) Copy of Stock Purchase Agreement among the Company, Mr.
Ackerman and Mr. Smith
(2) Copy of the Contribution Agreement
(3) Copy of the Stock Option Agreement
(4) Copy of the Stockholders Agreement
(5) Copy of the Registration Rights Agreement
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<PAGE>
SCHEDULE 13D
SIGNATURES
After reasonable inquiry and to the best of his knowledge and belief, the
undersigned certifies that the information set forth in this Statement is true,
complete and correct.
Date: August 12, 1999
/s/ Christopher R. Smith
-------------------------------
Christopher R. Smith
<PAGE>
Exhibit 1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of August 10,
1999, by and among John Ackerman ("Seller"), COMC, Inc., an Illinois corporation
(the "Company") and Christopher R. Smith ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller owns an aggregate of 8,000,000 shares of the Common
Stock, $.01 par value (the "Common Stock"), of the Company; and
WHEREAS, Purchaser wishes to purchase from Seller, and Seller wishes to
sell to Purchaser, an aggregate of 200,000 shares of the Common Stock (the
"Shares") on the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, and intending to
be legally bound, the parties hereto hereby agree as follows:
1. Purchase of Shares. (a) On the basis of the representations,
warranties, agreements and covenants herein contained and subject to the terms
and conditions herein set forth, Purchaser will purchase the Shares from the
Seller for an aggregate purchase price of $100,000.00 (the "Purchase Price")
payable at the Closing (as defined below).
2. Closing. The closing of the sale and purchase of the Shares
hereunder (the "Closing") shall take place upon execution of this Agreement and
satisfaction of the terms and conditions set forth herein at the offices of
Fulbright & Jaworski L.L.P. on the date hereof. The date of the Closing is
referred to herein as the "Closing Date."
3. Representations and Warranties of Seller. Seller represents and
warrants to Purchaser that:
(a) Seller is the sole record and beneficial owner of
8,000,000 shares of the Common Stock of the Company, including the Shares, and
subject to Section 6 hereof, is acting solely on his behalf and for his own
account in selling the Shares to Purchaser and has all requisite authority to
transfer good and lawful title in and to the Shares to Purchaser free of any
security interests, liens, encumbrances, equities, claims or other defects;
(b) neither Seller nor to Seller's knowledge anyone acting on
his behalf has taken any action which would subject the sale of the Shares to
the registration provisions of Section 5 of the Securities Act of 1933, as
amended (the "Act") and, to the best of Seller's knowledge, and relying
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in part on Purchaser's representations set forth herein, the sale of the Shares
from Seller to Purchaser does not require registration under the Act;
(c) neither Seller nor anyone acting on Seller's behalf
offered to sell or is selling the Shares by means of general solicitation or
general advertising. Seller has not solicited anyone in connection with the sale
of shares of Common Stock;
(d) the consummation of the transactions contemplated hereby
does not (A) require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as have been
obtained, or (B) subject to Section 6(b) hereof, conflict with or result in a
breach or violation of any of the terms and provisions of, or constitute a
default under any indenture, mortgage, deed of trust, lease or other agreement
or instrument to which Seller or the Company is a party or by which Seller or
the Company or any of his or its properties are bound, or any statute or any
judgment, decree, order, rule or regulation of any court or other governmental
authority or any arbitrator applicable to Seller or the Company.
4. Representations and Warranties of the Company and Seller. The
Company and Seller hereby jointly and severally represent and warrant to
Purchaser as follows:
(a) The Company is a corporation duly organized and validly
existing and in good standing under the laws of the State of Illinois and is
qualified to conduct business and is in good standing in each other jurisdiction
in which the character of its properties or the nature of its business requires
such qualification, except where the failure to qualify would not have,
individually or in the aggregate, any material adverse effect on the assets,
properties, financial condition, operating results or business of the Company or
prevent the consummation of the transactions contemplated hereby (any such
effect being referred to herein as a "Material Adverse Effect"). The Company has
the requisite corporate power to own properties owned by it and to conduct
business as now being conducted by it and as proposed to be conducted by it (as
disclosed to Purchaser), and possesses all governmental and other permits,
licenses and other authorizations to own its properties as now owned and to
conduct its businesses as now conducted and as presently contemplated to be
conducted, except where the failure to hold such permit or license would not
have a Material Adverse Effect. The Company has furnished counsel to Purchasers
with true, correct and complete copies of its Charter, as amended to date (the
"Charter") and By-Laws, as amended to date (the "By-Laws").
(b) Except as set forth in Schedule 4(b) hereto, each of the
Company's subsidiaries, ICF Communication Solutions, Inc., a California
corporation, and Complete Communications, Inc., a California corporation (the
"Subsidiaries") has been duly organized and is validly existing as a corporation
in good standing under the laws of the jurisdiction of its incorporation, with
requisite corporate power to own properties owned by it and to conduct business
as now being conducted by it and as proposed to be conducted by it (as disclosed
to Purchaser), and possesses all governmental and other permits, licenses and
other authorizations to own its properties as now owned and to conduct its
businesses as now conducted, except where the failure to hold such
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permit or license would not have a Material Adverse Effect. The Subsidiaries are
the only subsidiaries, direct or indirect, of the Company.
(c) The Company has all requisite corporate power to enter
into this Agreement. The Company has the corporate power, including having
obtained all necessary consents and authorizations as required under Section
11.75 of the Illinois Business Corporation Act of 1983, to carry out and perform
its obligations under the terms of (i) this Agreement, (ii) the Contribution
Agreement, described in Section 6(d)(vi) hereof, by and between the Company and
Seller (the "Contribution Agreement") in the form attached hereto as Exhibit B,
(iii) the Option Agreement, described in Section 6(d)(vii) hereof, by and
between the Company and Purchaser (the "Option Agreement") in the form attached
hereto as Exhibit C, (iv) the Stockholders Agreement, described in Section
6(d)(viii) hereof, by and among the Company, Purchaser and the other
stockholders set forth in the stockholders agreement (the "Stockholders
Agreement") in the form attached hereto as Exhibit D, (v) the Senior Note, Loan
Agreement and Guaranty, described in Section 6(d)(x) hereof (collectively, the
"Loan Restructure Agreements"), in the forms attached hereto in Exhibit F and
(vi) the Registration Rights Agreement, described in Section 6(d)(xi) hereof, by
and between the Company and certain stockholders of the Company (the
"Registration Rights Agreement") in the form attached hereto as Exhibit G. The
Contribution Agreement, the Option Agreement, the Stockholders Agreement, the
Loan Restructure Agreements and the Registration Rights Agreement are referred
to collectively herein as the "Related Agreements."
(d) The authorized capital stock of the Company immediately
prior to the Closing shall consist of 40,000,000 shares of Common Stock, of
which (A) 20,054,946 shares (less 3,651,948 shares of Common Stock contributed
to the Company by Seller on the date hereof ) shall have been validly issued and
shall be outstanding, fully paid and nonassessable, with no personal liability
attaching to the ownership thereof, (B) 3,651,948 shares shall have been duly
reserved initially for issuance upon exercise of currently outstanding options
or warrants of the Company, (C) 306,666 shares shall have been duly reserved
initially for issuance upon exercise of currently outstanding warrants of the
Company issued in connection with its July 1998 private placement and (D)
7,000,000 shares shall have been duly reserved initially for issuance upon
conversion in the event of a payment default of outstanding indebtedness of the
Company. Other than as disclosed in this Section 4(d) and in Schedule 4(d)
hereto, there are no outstanding preemptive, conversion or other rights,
options, warrants or agreements granted or issued by or binding on the Company
for the purchase or acquisition of any shares of its capital stock;
(e) (i) All corporate action on the part of the Company and
its directors and stockholders necessary to be taken on or prior to the
Closing for the authorization, execution, delivery and performance by
the Company of this Agreement and the Related Agreements and the
consummation of the transactions contemplated herein and therein has
been or will be taken on or prior to the Closing. There is no action
which the Company has failed to take that would inhibit the
transactions contemplated hereby from being consummated. The Company
has obtained all necessary consents and authorizations as required
under Section
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11.75 of the Illinois Business Corporation Act of 1983 so as not to
limit the ability of Purchaser to purchase additional shares of the
Common Stock of the Company in the future.
(ii) This Agreement and the Related Agreements are
valid and binding obligations of the Company, enforceable in accordance
with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws of
general application affecting enforcement of creditors' rights
generally and to general equitable principles. The execution, delivery
and performance by the Company of this Agreement and the Related
Agreements, and its compliance herewith and therewith and the sale and
delivery by Seller of the Shares will not result in any violation of
and will not conflict with, or result in a breach of any of the terms
of, or constitute a default under, the Charter or By-Laws, and will not
result in any violation of and will not conflict with, or result in a
material breach of any of the terms of, or constitute a material
default under, any mortgage, indenture, agreement, instrument,
judgment, decree, order, rule or regulation or other restriction to
which the Company is a party or by which it is bound or any provision
of state or Federal law to which the Company is subject, or result in
the creation of any mortgage, pledge, lien, encumbrance or charge of
any kind whatsoever upon any of the properties or assets of the Company
pursuant to any such term or result in the suspension, revocation,
impairment, forfeiture or non-renewal of any permit, license,
authorization or approval applicable and material to the Company's
operations or any of its assets or properties.
(iii) The Shares, when sold by Seller in compliance
with the provisions of this Agreement, shall be validly issued, fully
paid and nonassessable, and shall be free of any mortgage, pledge,
lien, encumbrance or charge of any kind whatsoever.
(f) Except as set forth on Schedule 4(f) hereto, the Company
has no outstanding indebtedness for borrowed money under any loan or other
agreements, notes, indentures, or instruments relating to or evidencing
indebtedness for borrowed money or security interest or other encumbrance on any
of the Company's property and is not a guarantor or otherwise contingently
liable for any indebtedness for borrowed money (including, without limitation,
liability by way of agreement, contingent or otherwise, to purchase, provide
funds for payment, supply funds or otherwise invest in any debtor or otherwise
to insure any creditor against loss). Except as set forth in Schedule 4(f),
there exists no default under the provisions of any instrument evidencing any
such indebtedness or otherwise or of any agreement relating thereto.
(g) Except as set forth on Schedule 4(g), the Company has
filed or will file within the time prescribed by law (including valid extensions
of time in which to make such filings) all tax returns and reports required to
be filed with the United States Internal Revenue Service and with the State of
Illinois and (except to the extent that the failure to file would not have a
Material Adverse Effect) with all other jurisdictions where such filing is
required by law. Except as set forth on Schedule 4(g), the Company has paid, or
made adequate provision for the payment of, all taxes, interest, penalties,
assessments or deficiencies shown to be due or claimed to be due on or in
respect
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of such tax returns and reports. Except as set forth in Schedule 4(g) hereto,
the Company does not know of (i) any other tax returns or reports which are
required to be filed which have not been so filed and (ii) any unpaid assessment
for additional taxes for any fiscal period or any basis therefor. There are no
audits or investigations of the Company by any taxing authority or proceedings
relating to taxes of the Company threatened or in progress.
(h) Each of the Company and the Subsidiaries has good and
marketable title to all of its material properties and assets, both real and
personal, tangible and intangible, which the Company and the Subsidiaries
purport to own as reflected on the latest balance sheet disclosed to Purchaser
in connection with this Agreement or acquired after the date thereof (except
inventory or other personal property disposed of in the ordinary course of
business subsequent to the date thereof), and except as set forth in Schedule
4(h) hereto, such properties and assets are not subject to any mortgage, pledge,
lien, security interest, conditional sale agreement, encumbrance or charge other
than (i) liens of current taxes not yet due and payable or (ii) liens securing
obligations reflected in Section 4(f) above. Neither the Company nor any of the
Subsidiaries is in default or in breach of any provision of its leases or
licenses and they each hold valid leasehold or licensed interests in the
property which it leases or which is licensed to it. No other party to any lease
or license to which the Company or any of the Subsidiaries is a party is in
default under or breach of any such lease or license.
(i) Except as set forth in Schedule 4(i) hereto, in connection
with the conduct of its business and ownership of its properties, each of the
Company and the Subsidiaries has complied with all applicable statutes and
regulations of all governmental authorities having jurisdiction over it except
where the failure to so comply would not have a Material Adverse Effect. Neither
the Company nor any of its Subsidiaries has received notice of any violation or
any claim of violation of any law, rule, regulation, permit or license
affecting, involving or relating to the conduct of its business, the failure to
comply with which would have a Material Adverse Effect.
(j) Except as set forth in Schedule 4(j) hereto, the Company
has timely made, and is up to date with, all filings with the Securities and
Exchange Commission (the "Commission") required under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and all such filings, including
the financial statements included therein, conform, in all material respects to
the requirements of the Exchange Act, and the rules and regulations of the
Commission thereunder. Such filings, the financial statements included therein,
and any amendment thereto, do not contain, and will not contain, any untrue
statement of a material fact and do not omit, and will not omit, to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
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(k) (i) Except as set forth in Schedule 4(k)(i) hereto, there
is neither pending nor, to the Company's knowledge, threatened, any
action, suit, proceeding, claim or investigation, or any basis therefor
or threat thereof, whether or not purportedly on behalf of the Company
or any of the Subsidiaries, to which the Company or any of the
Subsidiaries is or may be named as a party or its property is or may be
subject or to its knowledge, after due inquiry, to which any founder,
officer, key employee or principal stockholder of the Company or any of
the Subsidiaries is subject that relate in any material respect to the
Company or the Subsidiaries or their business, assets or financial
condition; and neither the Company nor any of the Subsidiaries has
knowledge of any unasserted claim, the assertion of which is likely and
which, if asserted, will seek damages, an injunction or other legal,
equitable, monetary or nonmonetary relief.
(ii) Other than as set forth in Schedule 4(k)(ii)
hereto, neither the Company nor any of the Subsidiaries has admitted in
writing its inability to pay its debts generally as they become due,
filed or consented to the filing against it of a petition in bankruptcy
or a petition to take advantage of any insolvency act, made an
assignment for the benefit of creditors, consented to the appointment
of a receiver for itself or for the whole or any substantial part of
its property, or had a petition in bankruptcy filed against it, been
adjudicated a bankrupt, or filed a petition or answer seeking
reorganization or arrangement under the Federal bankruptcy laws or any
other similar law or statute of the United States of America or any
other jurisdiction.
(l) Since the dates as of which information regarding the
Company has been given to Purchaser, there has not been any change in the
Company's business or prospects which would have a Material Adverse Effect,
whether or not occurring in the ordinary course of business, and there has not
been any material transaction entered into by the Company or any of the
Subsidiaries, other than transactions in the ordinary course of business. The
Company and the Subsidiary have no material contingent obligations which have
not been disclosed to Purchaser.
(m) The Company and each of the Subsidiaries do not own or
possess any trademarks, trade names, patent rights, copyrights, licenses,
approvals, trade secrets and other similar rights other than as may be inferred
from common law. Neither the Company nor any of its Subsidiaries has received
any notice of infringement or conflict with asserted Intellectual Property
Rights of others, which infringement or conflict, if the subject of an
unfavorable decision, would have a Material Adverse Effect.
(n) Except as set forth on Schedule 4(n) hereto, the Company
has no currently existing contract, obligation, agreement, plan, arrangement,
commitment or the like (written or oral) of any material nature (involving more
than $25,000, either individually or in the aggregate if such contracts are of a
similar nature or with the same party) including, without limitation, the
following:
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(i) Agreements with dealers, sales
representatives, brokers or other distributors, jobbers, advertiser or
sales agencies;
(ii) Agreements with any labor union or collective
bargaining organization or other labor agreements;
(iii) Any contract or series of contracts with the
same person for the furnishing or purchase of machinery, equipment,
goods or services, including without limitation agreements with
processors and subcontractors;
(iv) Any indenture, agreement or other document
(including private placement brochures) relating to the sale or
repurchase of shares;
(v) Any joint venture contract or arrangement or
other agreement involving a sharing of profits or expenses to which the
Company is a party;
(vi) Agreements expressly limiting the freedom of the
Company to compete in any line of business or in any geographic area or
with any person;
(vii) Agreements providing for disposition of the
business, assets or shares of the Company, agreements of merger or
consolidation to which the Company is a party or letters of intent with
respect to the foregoing; and
(viii) Letters of intent or agreements with respect
to the acquisition of the business, assets or shares of any other
business.
(o) To the Company's knowledge, no employee or consultant of
the Company or any of the Subsidiaries is, or is now believed to be, in
violation of any term of any employment contract, patent disclosure agreement,
noncompetition agreement, proprietary information and inventions, assignment,
agreement or any other contract or agreement or any restrictive covenant or any
other common law obligation to a former employer or other person or entity
relating to the right of any such employee or consultant to be employed by the
Company or any of the Subsidiaries because of the nature of the business
conducted or to be conducted by the Company or any of the Subsidiaries or to the
use of trade secrets or proprietary information of others, and the employment of
the Company's or any of the Subsidiaries' employees or the retainer of their
consultants does not subject the Company or any of the Subsidiaries to any
liability to a third party.
(p) Except as set forth in Schedule 4(p) hereto, other than
the Company's discretionary bonus plan, neither the Company nor any of the
Subsidiaries has a collective bargaining, labor, profit sharing, pension,
retirement, stock option, incentive, benefit or other similar contract, plan or
arrangement. Neither the Company nor any of its Subsidiaries sponsors, nor is it
obligated
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to contribute to, any employee benefit plan (as such term is defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
(q) Neither the Company, nor to the Company's knowledge, any
of its affiliates, has taken or will take, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Common Stock.
(r) No consent, permit, approval, qualification, order or
authorization of, or filing with, any governmental authority, including, without
limitation, the Secretary of State of Illinois and the Secretary of State of
California, is required to be taken on or prior to the date hereof in connection
with the Company's valid execution, delivery or performance of this Agreement or
the Related Agreements or the consummation of any other transaction contemplated
on the part of the Company hereby.
(s) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(t) The Company and each of its Subsidiaries carry, or are
covered by, or will be covered within 90 days after the date of this Agreement,
insurance (including Directors and Officers Insurance) in such amounts and
covering such risks as the Company reasonably considers adequate for the conduct
of their respective businesses and the value of their respective properties.
(u) The Company has not used any broker or finder in
connection with the transactions contemplated by this Agreement and the Related
Agreements and has no liability for any commission or compensation in the nature
of an agent's fee to any broker or finder or any other person.
5. Representations and Warranties of Purchaser. Purchaser represents
and warrants to each of the Company and Seller that:
(a) Purchaser understands that Shares have not been registered
under the Act or any applicable state securities law, and may not be sold except
pursuant to an effective registration statement under the Act, or pursuant to a
duly available exemption from such registration requirements;
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(b) Purchaser is purchasing the Shares for his own account and
not with a view to or for sale which would be in violation of the Act;
(c) in effecting the purchase of the Shares, Purchaser has not
engaged in any activities which would necessitate registration of the Shares
under the Act or any applicable state securities laws;
(d) Purchaser is a sophisticated investor, and qualifies as an
accredited investor under the Act, with such experience in financial and
business matters that he is capable of evaluating the merits and risks of the
purchase of the Shares; and Purchaser has had access to, and has been furnished
with all such information as he has considered necessary, including the
Company's Annual Report on Form 10-K for the year ended December 31, 1998, and
Purchaser has concluded that he is able to bear these risks;
(e) the Shares were not offered or sold to Purchaser by any
form of general solicitation or general advertising;
(f) Purchaser acknowledges that if any transfer of the Shares
is to be made in reliance on an exemption under the Act, the Company, as issuer
of the Shares, may require an opinion of counsel satisfactory to it that such
transfer may be made pursuant to an exemption under the Act;
(g) in making any subsequent offer or sale of the Shares,
Purchaser will be acting for himself and not as part of a sale or planned
distribution which would be in violation of the Act or any applicable state
securities laws; and
(h) Purchaser acknowledges that for so long as appropriate,
the legend concerning transfer of the Shares currently set forth on the Shares
will remain on the Shares.
6. Conditions to Closing
(a) Conditions to All Parties' Obligations. The obligations of all the
parties to this Agreement to effect the purchase and sale of the Shares shall be
subject to the fulfillment of the following conditions:
(i) No temporary restraining order, preliminary or permanent
injunction or other order or restraint issued by any court of competent
jurisdiction, no order, decree, restraint or pronouncement by any
governmental entity, and no other legal restraint or prohibition which
would prevent or have the effect of preventing the consummation of the
sale of the Shares shall have been issued or adopted or be in effect.
(ii) The parties shall have received all necessary contractual
and regulatory consents to effect the transactions contemplated hereby.
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(iii) There shall not be any litigation or governmental
proceeding seeking to enjoin or challenging, or seeking damages in
connection with, or having been threatened with respect to, the sale of
the Shares that, in the parties' respective judgment, makes it
inadvisable to proceed with the sale of the Shares.
(iv) The Company and Purchaser shall have executed and
delivered an Employment Agreement (the "Employment Agreement"), whereby
Purchaser is employed as the Chief Financial Officer of the Company, in
the form of Exhibit A attached hereto.
(v) Seller shall have executed and delivered to the Company
the Contribution Agreement, by which Seller has contributed an
aggregate of 3,651,948 shares of the Company's Common Stock to fund
options to be granted to Purchaser in connection with his employment as
Chief Financial Officer of the Company, in the form of Exhibit B
hereto.
(vi) The Company shall have executed and delivered the Option
Agreement in the form of Exhibit C attached hereto.
(vii) The Company, Purchaser and certain other stockholders of
the Company's Common Stock shall have executed and delivered the
Stockholders Agreement in the form of Exhibit D attached hereto.
(viii) The Company shall have executed and delivered to
William M. Burns ("WMB") and Charles E. Lincoln ("CEL") a note
restructuring agreement (the "Restructure Agreement") in the form of
Exhibit E attached hereto.
(ix) The Company shall have executed and delivered the
Registration Rights Agreement in the form of Exhibit F attached hereto.
(x) The spouse of Seller shall have executed and delivered the
spousal consent (the "Spousal Consent"), in the form of Exhibit F
attached hereto.
(b) Conditions to the Obligations of Seller. The obligations of Seller
under this Agreement to consummate the sale of the Shares are subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(i) The representations and warranties of Purchaser set forth
herein shall be true and correct as of the Closing Date.
(ii) Purchaser shall have duly performed and complied with the
covenants, agreements and conditions required by this Agreement to be
performed by or complied with by each of them, respectively, prior to
or at the Closing Date.
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(iii) All corporate proceedings of the Company to be taken or
required to be taken in connection with the transactions contemplated
hereby have been taken on or prior to the Closing Date and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Seller, and Seller shall have received all such
information and such counterpart originals or certified or other copies
of such documents as Seller may reasonably request.
(iv) The Company shall have released Seller from any and all
lock-up provisions of with respect to an aggregate of 4,671,948 shares
of Common Stock to enable Seller to enter into the this Agreement and
the Related Agreements.
(c) Conditions to the Obligations of the Company. The obligations of
the Company under this Agreement to consummate the sale of the Shares are
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(i) The representations and warranties of Purchaser and Seller
set forth herein shall be true and correct as of the Closing Date.
(ii) Purchaser and Seller shall have duly performed and
complied with the covenants, agreements and conditions required by this
Agreement to be performed by or complied with by each of them,
respectively, prior to or at the Closing Date.
(d) Conditions to the Obligations of Purchaser. The obligations of
Purchaser under this Agreement to effect the transactions contemplated hereby
are subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(i) The representations and warranties of the Company and
Seller set forth herein shall be true and correct as of the Closing
Date.
(ii) The Company and Seller shall have duly performed and
complied with the covenants, agreements and conditions required by this
Agreement to be performed by or complied with by it or him,
respectively, prior to or on the Closing Date.
(iii) All corporate proceedings of the Company to be taken or
required to be taken in connection with the transactions contemplated
hereby have been taken on or prior to the Closing Date and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Purchaser and his counsel, and Purchaser and his counsel
shall have received all such information and such counterpart originals
or certified or other copies of such documents as Purchaser and his
counsel may reasonably request.
(iv) The Company shall have delivered, or cause to be
delivered, to Purchaser a certificate or certificates representing the
Shares to be sold by Seller hereunder in negotiable form.
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(v) The Company has obtained, or will obtain within 90 days of
the date hereof, Directors and Officers Insurance, to the extent that
the Company qualifies for such insurance.
(vi) On the Closing Date, the Company shall have delivered to
Fulbright & Jaworski L.L.P. a check or wire transfer in payment of the
legal fees and disbursements of Fulbright & Jaworski L.L.P., counsel to
Purchaser with respect to the transactions contemplated hereby.
(vii) On the Closing Date, Seller shall pay, and shall hold Purchaser
harmless from and against, all transfer, sales, stamp, registration,
documentary or other similar taxes ("Transfer Taxes") payable in
connection with the transactions contemplated hereby and will prepare
and file any tax returns and other filings relating thereto. Seller and
Purchaser shall be responsible for their own personal income tax gain
which is based on the purchase price contemplated hereby. The Company
shall pay when due any and all other taxes which become payable and all
fees and charges in connection with the transactions contemplated
hereby.
7. Survival of Representations and Warranties; Indemnification. (a) All
representations and warranties by the Company, Seller and Purchaser shall
survive the Closing and shall remain in full force and effect for a period equal
to three years following the Closing Date, notwithstanding any investigation at
any time by or on behalf of any party or parties to this Agreement, and shall
not be considered waived by consummation of the transactions contemplated by
this Agreement, notwithstanding any alleged knowledge of any breach. No claim
for damages with respect to Sections 3, 4 and 5 may be brought after the third
anniversary of the date hereof.
(b) Each of Purchaser, on the one hand, and Seller and the Company, on
the other hand, agrees to indemnify and hold each other harmless from and
against and to reimburse the other with respect to, any and all loss, damage,
liability, cost or expense, including reasonable attorneys' fees, incurred by
the other by reason of or arising out of or in connection with: (i) a breach by
each such party of their respective representations or warranties contained
herein, or in any certificate delivered by any such party, as the case may be,
pursuant to this Agreement; and (ii) the failure of any such party to perform
any act required by this Agreement to be performed by it, respectively.
Notwithstanding any contrary provision of this agreement, in no event shall
either party be liable for indirect, special, incidental, punitive or
consequential damages in connection with this agreement, even if advised of the
possibility of such damages. In no event shall either party's liability,
including for direct damages, exceed an aggregate of $650,000.
8. Further Assurances. To the extent that applicable laws require the
execution and delivery of additional agreements, documents or instruments or the
taking of any other action in order to effectively transfer beneficial ownership
of the Shares to Purchaser, each of the parties hereto agrees to execute and
deliver all such agreements, documents or instruments and to take such action as
soon as reasonably possible and to effectuate the intentions and purposes of
this Agreement.
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9. Notices. Any notice or other communication under this Agreement
shall be in writing and shall be considered given when received and shall be
delivered personally, mailed by registered or certified mail, return receipt
requested, or, to the extent available, sent by facsimile transmission to the
parties at the addresses set forth below (or at such other address as a party
may specify by notice to the other):
If to Seller: John J. Ackerman
c/o COMC, Inc.
400 N. Glenoaks Boulevard
Burbank, California 91502
Fax No.: _______________
If to the Company: COMC, Inc.
400 N. Glenoaks Boulevard
Burbank, California 91502
Attention: President
Fax No.: _______________
with a copy to: Rick Usher, Esq.
Furman Usher, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
Fax No.: 310-201-0313
If to Purchaser: Christopher R. Smith
21 Middlesex Road
Darien, Connecticut 06820
Phone No.: 201-363-0380
with a copy to: Warren Nimetz, Esq.
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Fax No.: 212-752-5958
10. Assignment; Transferees. Purchaser may not assign his rights or
obligations under this Agreement without the prior written consent of Seller.
Subject to the foregoing, this Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
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11. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without giving effect to
any provisions relating to conflicts of laws.
12. Entire Agreement. This Agreement, including the agreements and
Exhibits referred to herein, states the entire agreement between the parties
with respect to the subject matter hereof and no provision hereof may be
modified, waived or terminated orally, but only by a writing signed by the
parties.
13. Headings. The headings in this Agreement are inserted for
convenience and reference only and are not to be used in construing or
interpreting any of the provisions of the Agreement.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above mentioned.
---------------------------------
John J. Ackerman
COMC, INC.
By:______________________________
Name:
Title:
---------------------------------
Christopher R. Smith
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Exhibit 2
CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT (the "Agreement"), dated as of August 10, 1999,
by and between John J. Ackerman ("Contributor"), and COMC, Inc., an Illinois
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Seller owns an aggregate of 8,000,000 shares of the Common
Stock, $.01 par value (the "Common Stock"), of the Company;
WHEREAS, Seller desires to contribute a portion of his shares of Common
Stock on the terms set forth in this Agreement in consideration of the release
of Seller from the lock-up with respect to a portion of the shares of Common
Stock of the Company.
NOW, THEREFORE, for good and valuable consideration, and intending to
be legally bound, the parties hereto hereby agree as follows:
1. Contribution of Shares. (a) On the basis of the representations and
warranties herein contained, Contributor will contribute an aggregate of
3,651,948 shares of Common Stock (the "Shares") to the treasury of the Company
at the Closing (as defined below) to be used by the Company to fund stock
options and warrants granted by the Company to Christopher R. Smith, Gramercy
National Partners LLC, William M. Burns and Charles E. Lincoln pursuant to
option agreements, dated the date hereof, between the Company and each of them.
2. Closing. The closing of the contribution of the Shares hereunder
(the "Closing") shall take place upon execution of this Agreement and
satisfaction of the terms and conditions set forth herein at the offices of
Fulbright & Jaworski L.L.P. on the date hereof. The date of the Closing is
referred to herein as the "Closing Date."
3. Representations of Contributor. Contributor represents and warrants
to the Company that:
(a) Contributor is the sole record and beneficial owner of
8,000,000 shares of the Common Stock of the Company, including the Shares, and
is acting solely on his behalf and for his own account in contributing the
Shares to the Company and has all requisite authority to transfer good and
lawful title in and to the Shares to the Company free of any security interests,
liens, encumbrances, equities, claims or other defects. This representation
shall be subject to the Spousal Consent of Contributor's wife to this
Contribution, attached hereto as Exhibit I, and the consent of the Board of
Directors of the Company; and
<PAGE>
(b) Contributor has good and marketable title to the Shares,
and there are no options, warrants, calls, commitments or agreements of any type
to which Contributor is a party or by which Contributor may be bound under
which any person or entity has a right to purchase or acquire, own or
maintain any rights in, of or to any of the Shares.
4. Representations of the Company. The Company represents and warrants
to Contributor that the Shares shall be used by the Company only to fund stock
options and warrants, a form of which is attached hereto as Exhibit II, granted
by the Company to Christopher R. Smith, Gramercy National Partners LLC, William
M. Burns and Charles E. Lincoln pursuant to option agreements, dated the date
hereof, between the Company and each of them.
5. Conditions. The contribution of the Shares will be subject to (i)
the Company's receipt of the Shares, (ii) the Company's designating the Shares
as treasury shares to fund options and warrants granted by the Company to
Christopher R. Smith, Gramercy National Partners LLC, William M. Burns and
Charles E. Lincoln pursuant to option agreements, dated the date hereof, between
the Company and each of them (iii) the receipt by Contributor of an executed the
Spousal in the from of Exhibit A, and (iv) the execution and delivery of the
Stock Purchase Agreements (the "Stock Purchase Agreements"), dated August 10,
1999, the Registration Rights Agreement, dated August 10, 1999, among the
Company, the Contributor and the investors who are parties to the Stock Purchase
Agreements, and the Stockholders Agreement, dated August 10, 1999, among the
Company, Contributor and other stockholders of the Company.
6. Miscellaneous.
(a) This agreement may be executed in counterparts, each of
which shall be deemed an original, and taken together shall constitute one in
the same.
(b) This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above mentioned.
---------------------------------
John J. Ackerman
COMC, INC.
By:______________________________
Name:
Title:
<PAGE>
Exhibit 3
STOCK OPTION AGREEMENT
OPTION AGREEMENT, dated as of August 10, 1999, between COMC, INC., an
Illinois corporation (the "Company") and Christopher R. Smith (the "Optionee").
WHEREAS, the Company, in consideration for the Optionee's agreement to
enter into an employment agreement (the "Employment Agreement") providing for
the employment of the Optionee as the Chief Financial Officer of the Company
commencing on the date hereof, desires to grant to the Optionee an option to
either acquire or increase, as the case may be, his proprietary interest in the
Company and its subsidiaries;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter set forth, the parties hereto mutually agree as follows:
1. Grant of Option.
A. Subject to the terms and conditions hereinafter set forth, the
Company hereby grants to the Optionee, the option (the "Option") to purchase,
during the period specified in Paragraph 2 and at the purchase price specified
in Paragraph 3, all or any part of 2,463,896 shares, or 12.3% of the
fully-diluted common stock of the Company on the date hereof (including the
adjustments, if any, in Paragraph 6) (the "Shares"), of the Common Stock of the
Company, $.01 par value (the "Common Stock"), which, when issued upon the
exercise of the Option, and paid for in accordance with the terms hereof, shall
be fully paid and nonassessable.
2. Period and Exercise.
A. Subject to the provisions of Paragraphs 3 and 9, the Option
shall be exercisable by the Optionee at any time during the term of the Option,
in whole or in part, on the date his employment with the Company begins. The
Option and all rights thereunder shall terminate on a date 10 years from the
date of this Agreement (the "Termination Date").
B. The Option may be exercised pursuant to its terms by the
Optionee's giving written notice thereof to the Secretary or Treasurer of the
Company at its then principal office. Such notice shall state the number of
Shares with respect to which the Option is being exercised and shall be
accompanied by payment in full of the exercise price for such Shares in cash, by
check payable in good funds to the order of the Company, by the delivery of a
recourse promissory note, by the delivery of shares of Common Stock of the
Company valued at their fair market value on the date of exercise, or by the
surrender of options with respect to such number of other shares which, when
multiplied by the excess of the fair market value of a share of Common Stock on
the date of exercise over the exercise price of such surrendered option, equals
the exercise price, or the portion thereof, to be satisfied on such surrender.
C. The Company may in its discretion require, whether or not a
registration statement under the Securities Act of 1933 (the "Act") is then in
effect with respect to the Shares issuable upon such exercise, that as a
condition precedent to the exercise of the Option, the
1
<PAGE>
person exercising the Option give to the Company a written representation and
undertaking, satisfactory in form and substance to the Company, that he is
acquiring the Shares for his or her own account for investment and not with a
view to the distribution or resale thereof and otherwise establish to the
Company's satisfaction that the offer or sale of the Shares issuable upon the
exercise of the Option will not constitute or result in any breach or violation
of the Act, or any similar act or statute or any rulings or regulations
thereunder.
In the event this Option shall be exercised pursuant to Paragraph 10 by
any person other than the Optionee, the aforesaid notice shall also be
accompanied by appropriate proof of the right of such person to exercise the
same.
3. Option Price. Subject to the provisions of Paragraph 5, the option
price per share shall be $.08 per share (the "Option Price").
4. Listing, Registration and other Legal Requirements.
A. The granting and exercise of this Option and the Company's
obligation to deliver Shares pursuant to an exercise of the Option shall be
subject to all applicable federal and state laws, rules and regulations, and to
obtaining such approvals by registration or qualification with a regulatory or
governmental agency as may be required. Pending the satisfaction of the
foregoing, such exercise shall be deemed suspended and there shall be returned
to the person exercising the Option the proceeds representing the exercise
price. In such event, the Company shall provide notice to the Optionee or his
representative of the satisfaction of the foregoing condition, whereupon the
right to exercise the Option shall be reinstated.
B. As soon as practicable, but in any event no later than 120 days
after the date hereof, the Company shall file a registration statement on Form
S-8 with the Securities and Exchange Commission, and use its best efforts to
effect such registration, including, without limitation, the execution of an
undertaking to file post-effective amendments, and shall take all actions to
comply with applicable regulations issued under the Act, as may be so requested
and as would permit or facilitate the sale and distribution of all of the
Shares.
5. Adjustments for Reorganization, Liquidation, Stock Dividends or
Stock Splits.
A. If the Company is reorganized, or merged or consolidated with
another corporation while the Option, or any portion thereof, remains
outstanding, there shall be substituted for the shares subject to the
unexercised portion of the Option an appropriate number of shares of each class
of stock or other securities of the reorganized, or merged or consolidated
corporation which were distributed to the shareholders of the Company in respect
of such shares; provided, however, that this Option may be exercised in full by
the Optionee as of the effective date of any such reorganization, merger or
consolidation by the Optionee's giving notice in writing to the Company of his
intention to so exercise.
B. If the Company is liquidated or dissolved while the Option, or
any portion thereof, remains unexercised, then such unexercised portion of the
Option may be exercised in full by the
2
<PAGE>
Optionee as of the effective date of any such liquidation or dissolution of the
Company by the Optionee's giving notice in writing to the Company of his
intention to so exercise.
C. If the outstanding shares of common stock of the Company shall
at any time be changed or exchanged by declaration of a stock dividend, stock
split, combination or exchange of shares, recapitalization, extraordinary
dividend payable in stock of a corporation other than the Company, or otherwise
in cash, or any other like event by or of the Company, and as often as the same
shall occur, then the number, class and kind of shares subject to this Option,
and the Option Price, shall be appropriately and equitably adjusted so as to
maintain the proportionate number of Shares without changing the Option Price;
provided, however, that no adjustment shall be made by reason of the
distribution of subscription rights on outstanding stock.
6. Adjustments for Increase in Outstanding Shares of Common Stock. This
Option is meant to be an option to purchase the number of Shares that, upon
exercise, equal to 12.3% of the total outstanding capital of the Company, on a
fully diluted basis, on the date hereof. If the shares of common stock in the
Company's treasury (which shares have been contributed for the sole purpose of
issuing options to the Optionee) are removed for any reason and required to be
issued and outstanding shares of common stock, then the number of shares
issuable upon exercise of this Option shall be increased so that the aggregate
shares issuable to Optionee hereunder represent 12.3% of the total outstanding
capital of the Company, after solely taking account of the shares that have been
removed from treasury, on a fully diluted basis, upon exercise.
7. Corporate Reorganization; Liquidation. In the event of a
reorganization by means of merger or consolidation of the Company with, or sale
or substantially all the assets of the Company to, another corporation or the
dissolution or liquidation of the Company while all or part of the Option
remains outstanding under this Agreement, there shall be substituted for the
Shares subject to the unexercised portion of the Option an appropriate number of
shares of each class of stock, other securities or other assets of the
reorganized corporation or, if liquidated, the Company, which would have been
distributed in respect of such Shares if the Option had been exercised
immediately prior to the record date of the applicable foregoing transaction;
provided, however, that the Optionee may exercise in full the Option granted
hereunder as of the effective date of any such reorganization or dissolution or
liquidation of the Company by giving notice to the Company of his intention to
so exercise.
8. No Rights in Shares Prior to Exercise. The Optionee shall not be
considered a record holder of any of the Shares subject to an unexercised
portion of the Option until the date on which he or she shall exercise the
Option as to such Shares in accordance with Paragraph 2 hereof; provided,
however, in the event the exercise is effected within 10 days prior to the
record date for the determination of holders entitled to vote at a meeting of
shareholders, the holder of the Shares received upon exercise of the Option
shall not have any right to vote the Shares received at such meeting.
9. Stock Reserved. The Company shall at all times during the term of
this Agreement reserve and keep available such number of shares of Common Stock
as will be sufficient to satisfy the requirements of this Agreement and shall
pay all original issue taxes, if any, on the exercise of
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the Option, and all other fees and expenses necessarily incurred by the Company
in connection therewith.
10. Exercise Upon Termination of Employment. In the event the
employment of the Optionee is terminated by the Company for any reason the
Option may be exercised, in whole or in part, by the Optionee at any time
following termination of the Optionee. In the event of termination as a result
of death or disability of the Optionee, the Option may be exercised by the
Optionee or his legal representative or by the executor or administrator of the
Optionee or the person to whom the Optionee's rights under the Option shall pass
by the Will of the Optionee or the laws of descent and distribution at any time,
in whole or in part.
11. Not Employment Agreement. This Agreement does not constitute an
employment agreement and shall not confer on the Optionee any right to continue
in the employ of the Company or any of its subsidiaries.
12. Successors. This Agreement shall be binding upon any successor of
the Company.
13. Amendment. This agreement may not be amended at any time unless the
option agreements of Charles E. Lincoln and William M. Burns are amended
concurrently to the same effect with each of their written consent.
14. Notices. Any notice or other communication under this Agreement
shall be in writing and shall be considered given when received and shall be
delivered personally, mailed by registered or certified mail, return receipt
requested, or, to the extent available, sent by facsimile transmission to the
parties at the addresses set forth below (or at such other address as a party
may specify by notice to the other):
If to the Company: COMC, Inc.
400 N. Glenoaks Boulevard
Burbank, California 91502
Attention: Secretary or Treasurer
Fax No.: _______________
with a copy to: Rick Usher, Esq.
--------------------
--------------------
--------------------
Fax No.: _______________
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If to Optionee: Christopher R. Smith
21 Middlesex Road
Darien, Connecticut 06820
Phone No.: 201-363-0380
with a copy to: Warren Nimetz, Esq.
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Fax No.: 212-752-5958
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of California.
16. Fractional Share. The Company shall not be required to issue any
fractional share upon exercise of the Option, but it shall pay to the Optionee
or to his or her personal representative or beneficiary who acquires the right
to exercise the Option by bequest or inheritance on the death of the Optionee,
the cash equivalent of any fractional share interests, as determined in the sole
discretion of the Board or the Committee.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
COMC, INC.
By:_______________________________
Name: John J. Ackerman
Title: Chief Executive Officer
-------------------------------
Optionee
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Exhibit 4
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT (the "Agreement") made as of this 10th
day of August, 1999, by and among COMC, Inc., an Illinois corporation (the
"Company"), John J. Ackerman ("JA"), William M. Burns and Nellie Burns as
Trustees for The Burns Family Trust and ("MB"), Charles E. Lincoln and Caroline
Lincoln as Trustees for The Lincoln Family Trust ("CL") and Christopher R. Smith
("CRS," and together with JA, MB and CL, the "Stockholders").
W I T N E S S E T H
WHEREAS, simultaneously with the execution and delivery of
this Agreement, CRS shall purchase 200,000 shares of the common stock, $.01 par
value (the "Common Stock") of COMC, Inc., an Illinois corporation (the
"Company") pursuant to the Stock Purchase Agreement, dated as of the date
hereof, by and among JA, the Company and CRS (the "Stock Purchase Agreement");
WHEREAS, simultaneously with the execution and delivery of
this Agreement, the Company shall grant CRS an option to purchase 2,463,896
shares of the Common Stock of the Company pursuant to an option agreement (the
"CRS Option");
WHEREAS, simultaneously with the execution and delivery of
this Agreement, MB and CL are restructuring notes issued to them by the Company
pursuant to a senior subordinated note, a loan agreement and a guaranty (the
"Note Restructure Agreements") by and between the Company and each of them, and
are each being issued an option to purchase aggregate of 376,623 shares of the
Company (together with the CRS Option, the "Option Agreements");
WHEREAS, JA currently owns 3,333,052 shares of Common stock
and MB and CL each beneficially own 3,246,753 shares of Common Stock through The
Burns Family Trust and The Lincoln Family Trust, respectively;
WHEREAS, CRS has the power to vote on behalf of certain
individuals with respect to 815,000 shares of Common Stock pursuant to a Voting
Proxy, dated August 10, 1999, among CRS and such individuals.
WHEREAS, the execution and delivery of this Agreement is a
condition precedent to the performance of the obligations of CRS under the Stock
Purchase Agreement;
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WHEREAS, the parties hereto wish to provide for certain rights
and procedures upon certain proposed issuances of securities of the Company and
sales of the Company's securities.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
ELECTION OF BOARD OF DIRECTORS
1. Election; Removal. Except as set forth below, during the term of
this Agreement, all shares of capital stock held by each Stockholder, whether
now owned or hereafter acquired, shall be voted in accordance with the
provisions hereof on all of the following matters on which the stockholders of
the Company vote:
(a) Each of the Stockholders shall have the right to designate
candidates for nomination to be elected as members of the Board as
follows: (i) JA shall have the right to designate one candidate; (ii)
MB shall have the right to designate one candidate; (iii) CL shall have
the right to designate one candidate, (iv) CRS shall have the right to
designate one candidate and (v) JA, MB, CL and CRS shall, by majority
vote, have the right to designate one candidate. Each Stockholder
hereby agrees (x) to be present in person or by proxy at any meeting of
stockholders to elect directors for purposes of establishing a quorum
and (y) to vote all of such Stockholder's shares of capital stock for,
or give such Stockholder's written consent to, the election of each of
the foregoing candidates, subject to and in accordance with the terms
of this Agreement. In the event that the Board of Directors is elected
by cumulative voting, then each of the Stockholders shall divide his
votes equally among each of the five above designees or equally among
each of the four Stockholders' individual designees, respectively, if
agreed upon by all of the Stockholders.
(b) In the case of any vacancy in the Board of Directors, the
Board of Directors agrees to nominate the designee of the Stockholder
whose designee created such vacancy. In the event that such
Stockholder, his heirs or assigns, or any other substitute designated
by him does not name a designee within 90-days of a notice of such
vacancy, then the then-current Board of Directors may fill such vacancy
until the next annual meeting of stockholders of the Company.
(c) Within five (5) days after a record date is set for any
annual meeting for the election of directors or for mailing of any
consent solicited for such purpose, the Secretary of the Company shall
give to each person or entity entitled to designate candidate(s)
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notice of any upcoming election of directors and the anticipated date
thereof and request that each person or entity so entitled to designate
candidate(s) take all necessary action to designate its candidate(s)
(the "Notice of Election"). The Stockholders agree to cause the Company
to send the notice of record date by certified mail at least 30 days
prior to such record date. Each person or entity entitled to designate
candidate(s) shall notify the Secretary of the Company of such person's
or entity's candidate(s) within fifteen (15) days of receipt of the
Notice of Election. A failure by a person or entity entitled to
designate candidate(s) to provide such notification shall be deemed to
be a designation by such person or entity of the same candidate(s), if
any, as were last designated by such person or entity. Any designation
pursuant to this Article I shall be made in writing.
(d) Subject to governing law, the Company agrees to cause the
Stockholders' designees to be nominated for election to the Board of
Directors of the Company at each annual meeting of its stockholders and
shall use its best efforts to cause the stockholders of the Company to
elect such nominees to the Board of Directors at each annual meeting of
its stockholders.
(e) Each Stockholder hereby agrees to cast such Stockholder's
votes for, or give such Stockholder's written consent to, the removal
of a designee on the Board at any time upon receipt of instructions in
writing to such effect, signed by the person or entity who has
designated that candidate, in accordance with Section 8.35 of the BCA.
2. Transferees. Except in the event of a Public Transaction (as defined
below), each Stockholder hereby agrees that it shall be a condition to any
transfer of any securities of the Company now owned or hereafter acquired by
such Stockholder that the transferee thereof agrees in writing to sign a
counterpart signature page to this Agreement and be bound by the provisions
hereof. The Stockholders agree that they will not transfer any of their
securities, including a transfer involving a Public Transaction, if the total
voting power of the securities represented by this Agreement falls below 65% of
the total voting power of the Company. For the purposes of this Agreement, a
"Public Transaction" shall be defined as a transfer of Common Stock of the
Company that are (a) registered under the Securities Act of 1933 pursuant to an
effective registration statement filed thereunder and disposed of in accordance
with the registration statement covering such shares of Common Stock or (b)
publicly sold pursuant to Rule 144 of the Securities Act.
3. Directors of Subsidiaries. The Company and the Stockholders shall
take all such action as may be necessary to cause the persons who are directors
of the Company to be elected as the directors of each subsidiary of the Company.
4. Expenses. The Company will reimburse each director for his or her
reasonable out-of-pocket travel expenses incurred in attending any meeting of
the Board.
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ARTICLE II
RESTRICTION ON STOCKHOLDER SALES
1. No Sale Unless to a Stockholder. No shares may be sold, pledged,
assigned or transferred (any such transaction is herein referred to as a
"Transfer") by any of the Stockholders (the "Selling Stockholder") unless such
shares are offered to and purchased by the other Stockholders on a pro rata
basis, based on the fully diluted shares of capital stock owned by such
Stockholders.
2. Stockholders' Right to Purchase. In the event of a proposed sale by
a Stockholder pursuant to this Article II, each of the Stockholders shall have
fifteen (15) days from the date of receipt of any such notice to agree to
purchase from the Selling Stockholder a pro rata portion of the shares, based on
the fully diluted shares owned by such Stockholder, being sold by the Selling
Stockholder for the price and upon the terms specified in the written notice by
giving written notice to the Selling Stockholder or to elect not to exercise
such right. The Stockholders shall each have a right of over-allotment such that
for each Stockholder that fails to exercise its right to purchase its portion of
the shares, each participating Stockholder shall be entitled to purchase a pro
rata portion of the shares which the non-purchasing Stockholder elected not to
purchase. Such right of over-allotment shall be exercised with respect to any
non-purchasing Stockholder by giving written notice to the Selling Stockholder
within five (5) days from the date of the non-purchasing Stockholder's failure
to exercise its rights hereunder.
3. Exempt Transactions. Notwithstanding anything herein to the
contrary, the foregoing restriction on Transfers shall not apply to:
(a) a sale, assignment or transfer (i) to a Selling
Stockholder's estate, (ii) to a revocable family trust created for the
benefit of the Stockholder and/or his spouse or issue or (iii) in the
case of any employee, to the Company upon leaving employment in
accordance with any stock purchase or disposition agreement pursuant to
which the employee initially purchased the stock from the corporation;
or
(b) any Transfer such that, following such Transfer, the
aggregate voting power held by the Stockholders remains greater than
65% of the outstanding capital stock of the Company (collectively,
"Exempt Transactions").
4. Transfers in Bankruptcy or Divorce. In the event that any shares
held by any pf the Stockholders are required to be transferred as a result of
any legal proceeding (including, but not limited to bankruptcy, divorce and any
attachment proceedings), then Stockholder shall, to the extent permitted by
applicable laws, require the transferee or assignee to sign a counterpart
signature page to this Agreement and become an additional Stockholder and party
to this Agreement bound by all the terms and provisions of this Agreement.
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ARTICLE III
STOCKHOLDERS' RIGHT OF PARALLEL SALE
If any Selling Stockholder at any time proposes to sell, assign or
transfer shares of Common Stock pursuant to a Exempt Transaction pursuant to
Article II, Section 3(b), then such Selling Stockholder shall, as a condition
precedent to any such sale, assignment or transfer, afford the other
Stockholders the right to sell shares of the Company's capital stock held by the
Stockholders as follows:
1. Notice by the Selling Stockholder. The Selling Stockholder shall
give written notice to the Stockholders at least 15 days prior to any such
proposed sale, assignment or transfer of any of the shares, and such notice
shall specify (i) the number of shares which the Selling Stockholder desires to
sell, (ii) the percentage of Common Stock then held by such Selling Stockholder
represented by the shares the Selling Stockholder proposes to sell (the "Sales
Percentage"), (iii) the identity of the proposed purchaser of such shares, (iv)
the time within which the Selling Stockholder proposes to sell such shares and
(v) the material terms, including the price, of the proposed sale.
2. Stockholders' Option. Each of the Stockholders shall notify the
Selling Stockholder in writing, within 15 days after receipt of the Selling
Stockholder's notice, whether such Stockholder desires to sell any of his shares
of Common Stock concurrently with the sale of shares by the Selling Stockholder
in accordance with the terms and provisions of this Article III. Failure to
provide such written notice by any Stockholder after actual receipt of notice
from the Selling Stockholder within said 15 day period shall, for the purpose
hereof, be deemed to constitute a refusal by that Stockholder to sell any of his
shares of Common stock concurrently with the sale of shares by the Selling
Stockholder. Concurrently with the delivery of the notice referred to in
subparagraph (a) above, the Selling Stockholder shall offer each other
Stockholder the opportunity to sell to the proposed purchaser a percentage of
such shares equal to a percentage that such Stockholder owns of the total shares
held by all of the Stockholders. As a result, the number of Shares to be sold by
the Selling Stockholder shall be reduced by the number of shares elected to be
sold by the Stockholders electing this right of parallel sale. This
Stockholders' right shall exist only to the extent that the aggregate voting
power held by the Stockholders remains greater than 65% of the outstanding
capital stock of the Company after the sale of shares. In the event that the
shares being sold pursuant to this Article III would reduce the number of shares
represented by this Agreement below 65% of the total outstanding capital stock
of the Company, the selling Stockholders shall exclude such number of shares
from the sale, on a pro rata basis, that would create a voting power represented
by this Agreement that remains greater than 65% of the total outstanding capital
stock of the Company.
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3. Agreements and Commitments from Purchaser. It is agreed and
understood that the Selling Stockholder shall obtain the same agreements and
commitments from the purchaser of the other shares of Common Stock to be sold by
the Stockholders as he has obtained from the purchaser of the shares proposed to
be sold by him, her or it, including the time of purchase, the purchase price
and the other terms and conditions upon which the purchase of the Selling
Stockholder's shares is to be made. In the event that the Selling Stockholder
cannot obtain agreements or commitments from the purchaser or other purchasers
to purchase that percentage of the other Stockholders' shares then held by the
Stockholders who elect to participate which is equal to the Sales Percentage as
set forth in Subsection (b) above, then the Selling Stockholder shall reduce the
number of Shares which he proposes to sell and allow the Stockholders to sell a
number of their shares, so that the Selling Stockholder and the Stockholders
shall be entitled to sell a pro rata percentage of shares of capital stock as
described above. If the Selling Stockholder is unable to provide the
Stockholders with an opportunity to participate as set forth herein, no sale by
the Selling Stockholder shall be consummated.
4. No Obligation to Sell. The Stockholders shall not be obligated to
sell any of their shares pursuant to any notice furnished in accordance with the
provisions of this Article III or otherwise. Nothing herein shall be deemed to
require that any Selling Stockholder consummate the proposed sale, assignment or
transfer of the subject shares, notwithstanding the giving of notice to the
Stockholders hereunder of such proposed sale or the intent of any Stockholder to
sell his hares hereunder.
5. Timing of Parallel Sale. Any sale of shares by the Stockholders
pursuant to the provisions of this Article III shall be made either concurrently
with or prior to the sale of shares by the Selling Stockholder.
ARTICLE IV
TERM OF AGREEMENT
This Agreement shall terminate upon the earlier of (a) a closing and
receipt of funds by the Company from a firm commitment underwritten registered
public offering of the Common Stock of the Company, provided that such offering
results in an aggregate of $25,000,000 or more in gross proceeds to the Company
and (b) three years from the date hereof. This Agreement may also be terminated
upon the unanimous written consent of the Stockholders.
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ARTICLE V
MISCELLANEOUS
1. Amendments and Waiver. This Agreement may be amended only by written
instruments signed by the Company and all of the Stockholders; provided,
however, that (i) this Agreement may not be amended to deprive CRS, MB or CL,
without their consent, of their respective rights under Article I to designate
nominees for election as directors and to require the Stockholders to vote their
shares in favor of the election of such nominees; and (ii) this sentence and the
next sentence of this Section may not be amended without the prior consent of
all Stockholders. No waiver of any right or remedy provided for in this
Agreement shall be effective unless it is set forth in writing signed by all of
the Stockholders. No waiver of any right or remedy granted in one instance shall
be deemed to be a continuing waiver under the same or similar circumstances
thereafter arising.
2. Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and assigns, including any transferee of
the Common Stock; provided, however, that the Company is given written notice by
an Stockholder at the time of or within a reasonable time after such transfer or
assignment, stating the name and address of such transferee or assignee and
identifying the securities being transferred or assigned; provided, further,
that such transferee and spouse thereof (if required) shall sign a counterpart
signature page to this Agreement and become an additional Stockholder and party
to this Agreement bound by all the terms and provisions of this Agreement. As
used herein the term "Stockholders" shall include their respective successors,
assigns and transferees of their Common Stock.
3. Injunctive Relief. It is acknowledged that it will be impossible to
measure the damages that would be suffered by the parties hereto if any party
fails to comply with the provisions of this Agreement and that in the event of
any such failure, the other parties hereto will not have an adequate remedy at
law. The nondefaulting parties shall, therefore, be entitled to obtain specific
performance of the defaulting party's obligations hereunder and to obtain
immediate injunctive relief. No party shall urge, as a defense to any proceeding
for such specific performance or injunctive relief, that the nondefaulting
parties have an adequate remedy at law.
4. Expenses. The Company shall pay the legal fees and expenses incurred
in connection with the transactions contemplated by the Stock Purchase
Agreement, the Note Restructure Agreements, the Option Agreements, the
Registration Rights Agreement and any employment agreements. In connection with
the drafting and execution of this Agreement, the Stockholders shall share all
fees and expenses equally. In connection with the resolution of any dispute
arising from this Agreement the unsuccessful party shall pay all fees and
expenses, including reasonable attorneys fees, in connection with the resolution
of the dispute.
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5. Dispute Resolution. Any and all controversies, claims or disputes
arising out of or relating to this Agreement, or the breach thereof, shall be
solely and exclusively settled by arbitration in accordance with the Commercial
Arbitration Rules then in effect (the "Arbitration Rules") of the American
Arbitration Association. The arbitration shall take place in California, and the
arbitrator shall be appointed by the mutual consent of the parties. If the
parties are unable to agree upon the appointment of an arbitrator, then the
arbitration shall take place before a panel of three arbitrators selected in
accordance with the Arbitration Rules. The arbitrator appointed by the parties
or such panel, as the case may be, is sometimes referred to herein as the
"Arbitrator". Each party hereby irrevocably consents to the sole and exclusive
jurisdiction and venue of the state and Federal courts located in California, in
connection with any matter arising out of the foregoing arbitration or this
Agreement, including but not limited to confirmation of the award rendered by
the Arbitrator and enforcement thereof by entry of judgment thereon or by any
other legal remedy. Service of process in connection with any such arbitration
or any proceeding to enforce an arbitration award may be made in any manner
permitted by applicable law.
6. Notice. As the terms "notice" or "notices" are used herein as
between the parties, such term shall mean a written document, explaining the
reason for the notice, and the same shall be mailed by United States Postal
Service Via Certified Mail, Return Receipt Requested, addressed as follows:
If to the Company: COMC, Inc.
400 N. Glenoaks Boulevard
Burbank, California 91502
Attention: President
Fax No.: _______________
with a copy to: Rick Usher, Esq.
Furman Usher, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
Fax No.: 310-201-0313
If to Stockholders: to the respective address set forth on Schedule I
attached hereto;
Such notice shall be deemed to have been given on the date placed in the U.S.
Mails, and sent by fax to counsel, whether actually received by the addressee or
not. The parties shall, as a matter of convenience and courtesy, send each party
receiving notice a copy of said notice by facsimile or other electronic means,
or by courier, Federal Express, or similar service, but such notifications shall
not be deemed lawful "notice" as required hereby. The parties may, from time to
time, amend the above addresses and names by written notice to the other party.
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7. Further Documentation. Each party hereto shall execute and deliver
such other agreements and instruments as from time to time that the parties
collectively agree are advisable or appropriate to effect the intent and purpose
of this Agreement.
8. Section Headings. The captions to the Articles and Sections in this
Agreement are for reference only and shall not affect the meaning or
interpretation hereof.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive domestic laws of the State of California,
without application of the conflicts of laws principles thereof.
10. Complete Agreement. Except as set forth herein, this Agreement
contains the complete agreement between the parties and controls and supersedes
any prior understandings, agreements or representations by or between the
parties, written or oral, which conflicts with, or may have related to, the
subject matter hereof in any way.
11. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner so as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement. If any provision contained in this
Agreement is determined to be invalid, illegal or unenforceable as written, a
court of competent jurisdiction shall, at any party's request, reform the terms
of this Agreement to the extent necessary to cause such otherwise invalid
provisions to be enforceable under applicable law.
12. Multiple Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which will
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
COMC, INC.
By:______________________________
Name:
Title:
---------------------------------
John J. Ackerman
THE BURNS FAMILY TRUST
By:___________________________
William M. Burns, Trustee
THE LINCOLN FAMILY TRUST
By:___________________________
Charles E. Lincoln, Trustee
-------------------------------
Christopher R. Smith
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SCHEDULE I
John J. Ackerman
- ----------------
- ----------------
- ----------------
Phone:_____________
Christopher R. Smith
21 Middlesex Road
Darien, Connecticut 06820
Phone: 201-363-0380
The Burns Family Trust
- ------------------
- ------------------
- ------------------
Attention: William M. Burns
Phone:______________
The Lincoln Family Trust
- ------------------
- ------------------
- ------------------
Attention: Charles E. Lincoln
Phone:______________
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Exhibit 5
REGISTRATION RIGHTS AGREEMENT
Agreement made as of this 10th day of August, 1999, by and among COMC,
Inc., an Illinois corporation (the "Company"), John J. Ackerman, ("JA"),
Christopher R. Smith ("CRS"), William M. Burns ("MB"), Charles E. Lincoln
("CL"), Gramercy National Partners, LLC ("Gramercy"), Andre A. Cappon ("AAC"),
Guy Manuel ("GM"), Summer Associates, L.P. ("Summer"), Paul Graf ("PAG"), Peter
Graf ("PEG"), Steven Richman ("SR") and Gerhard Waldschutz ("GW", and together
with JA, CRS, MB, CL, Gramercy, AAC, GM, Summer, PAG, PEG and SR, the
"Investors").
1. CERTAIN DEFINITIONS
Section 1. As used in this Agreement, the following terms shall have
the following meanings:
1.1. Commission means the Securities and Exchange Commission,
or any other federal agency at the time administering the Securities Act and the
Exchange Act.
1.2. Common Stock means the Company's Common Stock, $.01 par
value.
1.3. Exchange Act means the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
1.4. Person means an individual, corporation, partnership,
joint venture, trust, or unincorporated organization, or a government or any
agency or political subdivision thereof.
1.5. Registrable Securities means any shares of Common Stock
owned as of the date hereof or acquired hereafter by Investors or by their
permitted successors and assigns, including but not limited to shares of Common
Stock issued to Investors pursuant to the Stock Purchase Agreements, dated
August 10, 1999, between the Company and each of Investors but excluding any
such shares of Common Stock that have been (a) sold by such parties other than
to a permitted transferee of Investors, as defined in Section 5 hereof, (b)
registered under the Securities Act pursuant to an effective registration
statement filed thereunder and disposed of in accordance with the registration
statement covering such shares of Common Stock or (c) publicly sold pursuant to
Rule 144 of the Securities Act.
1.6. Securities Act means the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
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2. REGISTRATION RIGHTS
Section 2.1. Requested Registrations.
(a) Request for Registration. If at any time after the date
hereof, the Company shall receive from the Investors, holding at least 20% of
the Registrable Securities, a written request that the Company effect any
registration with respect to all or a part of the Registrable Securities, the
Company shall do the following:
(i) within ten (10) days of receipt of such request from such
Investor(s), give written notice of the proposed registration to any
other Investors; and
(ii) as soon as practicable, but in any event no later than
ninety (90) days after receipt of such request from the Investor(s),
file a registration statement with the Commission, and use its best
efforts to effect such registration, including, without limitation, the
execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state
securities laws (except that the Company shall not be required to
qualify the offering under the blue sky laws of any jurisdiction in
which the Company would be required to execute a general consent to
service of process unless the Company is already subject to service in
such jurisdiction), and appropriate compliance with applicable
regulations issued under the Securities Act, as may be so requested and
as would permit or facilitate the sale and distribution of all
Registrable Securities as are specified in such request, together with
all Registrable Securities of any other Investor joining in such
request as are specified in a written request by the other Investors
within twenty (20) days after receipt of such written notice from the
Company.
(b) Underwriting.
(i) If the registration of which the Investors give notice is
for a registered public offering involving an underwriting, the
Investors shall so advise the Company as a part of their request made
pursuant to Section 2.1(a) above. The Company shall include such
information in the written notice of the Company referred to in Section
2.1(a)(i) above, including the name of the underwriter or
representative thereof selected for such underwriting. In such event,
the right of any Investor to registration pursuant to this Section 2.1
shall be conditioned upon such Investor participating in such
underwriting and the inclusion of such Investor's Registrable
Securities in such underwriting to the extent provided herein. Any
underwriter requested by the Investors shall be subject to the
Company's approval.
(ii) The Company shall (together with all Investors proposing
to distribute their Registrable Securities through such underwriting)
enter into an underwriting agreement in customary form with the
underwriter or representative thereof selected for
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such underwriting. Notwithstanding any other provision of this Section
2.1, if the underwriter or representative thereof advises the Investors
in writing that, in its opinion, marketing factors require a limitation
on the number of shares to be underwritten, the number of shares of
Registrable Securities that are entitled to be included in the
registration and underwriting shall be allocated in the following
manner: the securities of the Company held by officers or directors
(other than Registrable Securities) of the Company and other
stockholders, and the securities to be sold by the Company for its own
account shall be excluded from such registration to the extent so
required by such limitation, and if a limitation of the number of
shares is still required, the number of shares of Registrable
Securities that may be included in the registration and underwriting
shall be allocated among all Investors in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities which
they had requested to be included in such registration at the time of
filing the registration statement. No Registrable Securities or any
other securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such
registration. If the Company or any holder of Registrable Securities,
officer, director or other stockholder who has requested inclusion in
such registration as provided above disapproves of the terms of any
such underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the underwriter and the other Investors.
The securities so withdrawn shall also be withdrawn from registration.
Any Registrable Securities or other securities excluded shall also be
withdrawn from such registration.
Section 2.2. Piggyback Registrations. If at any time or times the
Company shall determine to register any of its Common Stock or securities
convertible into or exchangeable for Common Stock under the Securities Act,
whether in connection with a public offering of securities by the Company (a
"primary offering"), a public offering thereof by stockholders (a "secondary
offering"), or both (but not in connection with a registration effected solely
to implement an employee benefit plan or a transaction to which Rule 145 or any
other similar rule of the Commission under the Securities Act is applicable),
the Company will promptly give written notice thereof to the Investors, and will
use its best efforts to effect the registration under the Securities Act of all
Registrable Securities which Investors may request in a writing delivered to the
Company within fifteen (15) days after the notice given by the Company;
provided, however, that in the event that any registration pursuant to this
Section 2.1 shall be, in whole or in part, an underwritten public offering of
Common Stock, the number of shares of Registrable Securities to be included in
such an underwriting may be reduced (pro rata among Investors and any other
holder of Registrable Securities based upon the number of shares of Registrable
Securities owned by Investors and such holders) if and to the extent that the
managing underwriter shall be of the opinion that such inclusion would adversely
affect the marketing of the securities to be sold by the Company therein,
provided, however, that, prior to any such reduction, the Company shall first
exclude from such registration, in the following order, all shares of Common
Stock sought to be included therein by (i) any holder thereof not having any
such contractual, incidental registration rights, and (ii) any holder thereof
having contractual, incidental registration rights subordinate or junior to the
rights of Investors.
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Section 2.3. Registration Expenses. In the event of a registration
described in Section 2.1, all reasonable expenses of registration and offering
of Investors including, without limitation, printing expenses, fees and
disbursements of counsel, including counsel for Investors, and independent
public accountants, fees and expenses (including counsel fees incurred in
connection with complying with state securities or "blue sky" laws, fees of the
National Association of Securities Dealers, Inc. and fees of transfer agents and
registrars), shall be borne by the Company, except that each of the Investors
shall bear underwriting commissions and discounts attributable to his
Registrable Securities being registered.
Section 2.4. Further Obligations of the Company. Whenever, under the
preceding sections of this Agreement, the Company is required hereunder to
register Registrable Securities, it agrees that it shall also do the following:
(a) Use its best efforts to diligently prepare for filing with
the Commission a registration statement and such amendments and
supplements to said registration statement and the prospectus used in
connection therewith as may be necessary to keep said registration
statement effective for a period of at least 270 days and to comply
with the provisions of the Securities Act with respect to the sale of
securities covered by said registration statement for the period
necessary to complete the proposed public offering;
(b) Furnish to Investors such copies of each preliminary and
final prospectus and such other documents as such holder may reasonably
request to facilitate the public offering of his Registrable
Securities;
(c) Enter into any underwriting agreement with provisions
reasonably required by the proposed underwriter for Investor, if any,
and reasonably acceptable to the Company; and
(d) Use its best efforts to register or qualify the
Registrable Securities covered by said registration statement under the
securities or "blue-sky" laws of such jurisdictions as Investor may
reasonably request.
3. INDEMNIFICATION. Incident to any registration referred to in this Agreement,
and subject to applicable law, the Company will indemnify each underwriter, each
Investor, and each person controlling any of them against all claims, losses,
damages and liabilities, including legal and other expenses reasonably incurred
in investigating or defending against the same, arising out of any untrue
statement of a material fact contained in any prospectus or other document
(including any related registration statement) or any omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or arising out of any violation by the
Company of the Securities Act, any state securities or "blue-sky" laws or any
rule or regulation thereunder in connection with such registration, provided,
however, that the Company will not be liable in any case to the extent that any
such claim, loss, damage or liability (i) may have been caused by an untrue
statement or omission which is based upon
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information furnished in writing to the Company by Investors expressly for use
therein, or (ii) may have been suffered or incurred by the Company and resulted
from an action, claim or suit by a Person who purchased Registrable Securities
or other securities of the Company from any of the Investors in reliance upon
any untrue statement or omission which was contained or made in any preliminary
prospectus furnished by Investor to such Person in connection with such
registration and which was corrected in a final prospectus which such Investor
possessed, but which such Investor failed to deliver or provide a copy of such
final prospectus to such Person at or prior to the confirmation of the sale of
any such Registrable Securities in any case where such delivery is required by
the Securities Act. In the event of any registration of any of the Registrable
Securities under the Securities Act pursuant to this Agreement, each Investor
will indemnify and hold harmless the Company, each of its directors and officers
and each underwriter (if any) and each person, if any, who controls the Company
or any such underwriter within the meaning of the Securities Act or the Exchange
Act against any claim, losses, damages and liabilities, including legal and
other expenses reasonably incurred in investigating or defending it against the
same, (i) arising out of any untrue statement of a material fact contained in
any prospectus or other document (including any related registration statement)
or any omission to state therein a material fact required to be stated therein
or necessary to make the statement therein not misleading, if the statement or
omission was made in reliance upon and in conformity with information furnished
in writing to the Company by or on behalf of such Investor, specifically for use
in connection with the preparation of such registration statement, prospectus,
amendment or supplement, or (ii) which may have been suffered or incurred by the
Company and which resulted from an action, claim or suit by a Person who
purchased Registrable Securities or other securities of the Company from
Investor in reliance upon any untrue statement or omission which was contained
or made in any preliminary prospectus furnished by such Investor to such Person
and which was corrected in a final prospectus which Investor possessed, but
which such Investor failed to deliver or provide a copy of such final prospectus
to such Person at or prior to the confirmation of the sale of any such
Registrable Securities in any case where such delivery is required by the
Securities Act; provided, however, that the obligations of each Investor
hereunder shall be limited to an amount equal to the proceeds to such Investor
of Registrable Securities sold as contemplated herein.
4. RULE 144 REQUIREMENTS. If the Company remains subject to the reporting
requirements of either Section 13 or Section 15(d) of the Exchange Act, the
Company will use its best efforts to file with the Commission such information
as the Commission may require under either of said sections; and in such event,
the Company shall use its best efforts to take all action as may be required as
a condition to the availability of Rule 144 of the Securities Act (or any
successor exemptive rule hereinafter in effect). The Company shall furnish to
such Investor upon request, a written statement executed by the Company as to
the steps it has taken to comply with the current public information
requirements of Rule 144.
5. TRANSFER OF REGISTRATION RIGHTS. The registration rights of Investors under
this Agreement may be transferred to any transferee of any Registrable
Securities, who (i) is a holder of Registrable Securities as of the date of this
Agreement, (ii) is an affiliate of an entity that holds Registrable Securities,
as "affiliate" is defined in the Investment Company Act of 1940, as
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of the date of this Agreement (including a partner of such holder), or (iii)
acquires at least 10,000 shares of Registrable Securities (as adjusted for stock
splits, stock dividends, reclassification, recapitalizations or other similar
events). Each such transferee shall be deemed to be an "Investor" for purposes
of this Agreement; provided, however, that no transfer of registration rights by
Investor pursuant to this Section 5 shall create any additional rights in the
transferee beyond those rights granted to Investors pursuant to this Agreement.
6. MISCELLANEOUS
Section 6.1. Damages. The Company recognizes and agrees that Investors
will not have an adequate remedy if the Company fails to comply with this
Agreement and that damages may not be readily ascertainable, and the Company
expressly agrees that, in the event of such failure, it shall not oppose an
application by any Investor requiring specific performance of any and all
provisions hereof or enjoining the Company from continuing to commit any such
breach of this Agreement.
Section 6.2. No Waiver; Cumulative Remedies. No failure or delay on the
part of any party to this Agreement in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
Section 6.3. Amendments and Waivers. Except as hereinafter provided,
amendments to this Agreement shall require and shall be effective upon receipt
of the written consent of both the Company and Investors. Except as hereinafter
provided, compliance with any covenant or provision set forth herein may be
waived upon written consent by the party or parties whose rights are being
waived. Any waiver or amendments may be given subject to satisfaction of
conditions stated therein and any waiver or amendments shall be effective only
in the specific instance and for the specific purpose for which given.
Section 6.4. Notices.
As the terms "notice" or "notices" are used herein as between the parties, such
term shall mean a written document, explaining the reason for the notice, and
the same shall be mailed by United States Postal Service Via Certified Mail,
Return Receipt Requested, addressed as follows:
If to the Company: COMC, Inc.
400 N. Glenoaks Boulevard
Burbank, California 91502
Attention: President
Fax No.: _______________
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with a copy to: Rick Usher, Esq.
Furman Usher, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
Fax No.: 310-201-0313
If to Investors: to the respective address set forth on Schedule I
attached hereto;
Such notice shall be deemed to have been given on the date placed in the U.S.
Mails, and sent by fax to counsel, whether actually received by the addressee or
not. The parties shall, as a matter of convenience and courtesy, send each party
receiving notice a copy of said notice by facsimile or other electronic means,
or by courier, Federal Express, or similar service, but such notifications shall
not be deemed lawful "notice" as required hereby. The parties may, from time to
time, amend the above addresses and names by written notice to the other party.
Section 6.5. Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, successors and assigns, except that the Company shall not have the right
to delegate its obligations hereunder or to assign its rights hereunder or any
interest herein without the prior written consent of all of the Investors.
Section 6.6. Prior Agreements. This Agreement constitutes the
entire agreement between the parties and supersedes any prior understandings or
agreements concerning the subject matter hereof.
Section 6.7. Severability. The provisions of this Agreement are
severable and, in the event that any court of competent jurisdiction shall
determine that any one or more of the provisions or part of a provision
contained in this Agreement, shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of
this Agreement, but instead this Agreement shall be reformed and construed as if
such invalid or illegal or unenforceable provision, or part of a provision, had
never been contained herein, and such provisions or part reformed so that it
would be valid, legal and enforceable to the maximum extent possible.
Section 6.8. Governing Law. This Agreement shall be governed by and
construed in accordance with the substantive laws of the State of California.
Section 6.9. Headings. Article, section and subsection headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose.
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Section 6.10. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 6.11. Further Assurances. From and after the date of this
Agreement, upon the request of any party hereto, the other parties shall execute
and deliver such instruments, documents and other writings as may be reasonably
necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement.
COMC, Inc. SUMMER ASSOCIATES, L.P.
By:----------------------------- By:--------------------------
Name: Name:
Title: Title:
- ----------------------------- -----------------------------
John J. Ackerman Paul Graf
- ----------------------------- -----------------------------
Christopher R. Smith Peter Graf
GRAMERCY NATIONAL
PARTNERS, LLC -----------------------------
Steven Richman
By:-----------------------------
Name: -----------------------------
Title: Gerhard Waldshutz
- -----------------------------
Andre A. Cappon -----------------------------
William M. Burns
- -----------------------------
Guy Manuel -----------------------------
Charles E. Lincoln
582928.5
<PAGE>
SCHEDULE I
John J. Ackerman Peter Graf
c/o COMC Inc. c/o Graf, Repetti & Co.
400 North Glenoaks Blvd. 1114 Avenue of the Americas
Burbank, CA 17th Floor
New York, New York 10036
Christopher R. Smith
21 Middlesex Road Steven Richman
Darien, Connecticut 06820 9 Beech Lane.
King's Point, New York 11024
Gramercy National Partners, LLC
15 East Putnam Avenue Gerhard Waldschutz
Suite 408 c/o Graf, Repetti & Co.
Greenwich, Connecticut 06830 1114 Avenue of the Americas
17th Floor
Andre A. Cappon New York, New York 10036
531 Main Street, Apt. 603
Roosevelt Island, New York 10044 William M. Burns
------------------
Guy Manuel __________________
175 Riverside Drive, Apt 10H
New York, New York 10024 Charles E. Lincoln
------------------
Summer Associates, L.P. __________________
600 Third Avenue
New York, New York 10016
Paul Graf
c/o Graf, Repetti & Co.
1114 Avenue of the Americas
17th Floor
New York, New York 10036
<PAGE>
