SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 5)
NutraMax Products, Inc.
-----------------------
(Name of Issuer)
Common Stock, par value $.001 per share
---------------------------------------
(Title of Class of Securities)
67061A30
--------------
(CUSIP Number)
David M. Schulte
Chilmark Fund II, L.P.
875 North Michigan Avenue
Chicago, Illinois 60611
(312) 984-9711
-------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 6, 1998
-----------------------------
(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 [ ].
Page 1 of 68 Pages
Exhibit Index Appears on Page 11
<PAGE>
SCHEDULE 13D
CUSIP NO. 67061A30
- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Cape Ann Investors, L.L.C.
- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
- -----------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- -----------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- -----------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -----------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF None
SHARES -------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,316,893
EACH -------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON None
WITH -------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,316,893
- -----------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,316,893
- -----------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- -----------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.3%
- -----------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
- -----------------------------------------------------------------
Page 2 of 68 Pages
<PAGE>
SCHEDULE 13D
CUSIP NO. 67061A30
- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Chilmark Fund II, L.P.
- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
- -----------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- -----------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- -----------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -----------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF None
SHARES -------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,321,893
EACH -------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON None
WITH -------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,321,893
- -----------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,321,893
- -----------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- -----------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.4%
- -----------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- -----------------------------------------------------------------
Page 3 of 68 Pages
<PAGE>
SCHEDULE 13D
CUSIP NO. 67061A30
- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Chilmark II, L.L.C.
- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
- -----------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- -----------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- -----------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -----------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF None
SHARES -------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,321,893
EACH -------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON None
WITH -------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,321,893
- -----------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,321,893
- -----------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- -----------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.4%
- -----------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
- -----------------------------------------------------------------
Page 4 of 68 Pages
<PAGE>
SCHEDULE 13D
CUSIP NO. 67061A30
- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Chilmark Partners, L.L.C.
- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
- -----------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- -----------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- -----------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -----------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF None
SHARES -------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,321,893
EACH -------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON None
WITH -------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,321,893
- -----------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,321,893
- -----------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- -----------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.4%
- -----------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
- -----------------------------------------------------------------
Page 5 of 68 Pages
<PAGE>
SCHEDULE 13D
CUSIP NO. 67061A30
- -----------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
David M. Schulte
- -----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
- -----------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------
4 SOURCE OF FUNDS
PF
- -----------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- -----------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- -----------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF None
SHARES -------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,321,893
EACH -------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON None
WITH -------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,321,893
- -----------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,321,893
- -----------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- -----------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.4%
- -----------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- -----------------------------------------------------------------
Page 6 of 68 Pages
<PAGE>
This Amendment No. 5 (this "Amendment") amends and
supplements the Schedule 13D filed on September 22, 1997, as
previously amended (the "Schedule 13D"), by Cape Ann Investors,
L.L.C. ("Cape Ann"), Chilmark Fund II, L.P. ("Chilmark Fund"),
Chilmark II, L.L.C. ("Chilmark II"), Chilmark Partners, L.L.C.
("Chilmark Partners") and David M. Schulte (collectively, the
"Reporting Persons") with respect to the Common Stock, par value
$.001 per share ("Common Stock"), of NutraMax Products, Inc. (the
"Issuer"). All capitalized terms used in this Amendment and not
otherwise defined herein have the meanings ascribed to such terms
in the Schedule 13D.
Item 4. Purpose of Transaction.
-----------------------
In order to facilitate an improvement in the Issuer's
working capital and the Issuer's negotiation of amendments to
certain financial covenants contained in its credit agreements,
Cape Ann has agreed to purchase up to an additional 1,162,790
shares of Common Stock, as part of the private placement by the
Issuer of up to 1,441,860 shares of Common Stock to Cape Ann and
certain other affiliates of the Issuer. The purchase price for
such additional shares of Common Stock to be purchased by Cape
Ann will be $4.30 per share for an aggregate purchase price of
approximately $5,000,000. Cape Ann's purchase of such shares will
be pursuant to a Stock Purchase Agreement, dated as of November
6, 1998, between Cape Ann, Chilmark Fund and the Issuer (the
"1998 Superseding Agreement"), the terms of which are
substantially the same as the terms of the Agreement, as
previously amended, and as previously described in the Schedule
13D. A copy of the 1998 Superseding Amendment is attached hereto
as Exhibit 9 and incorporated herein by reference. As set forth
in the 1998 Superseding Agreement, Cape Ann's purchase is
conditioned upon, among other things, there being no material
adverse change in the Issuer, the approval by the stockholders of
the Issuer of the issuance of shares and the agreement by the
Issuer's senior and subordinated lenders to amendments to the
financial covenants contained in the Issuer's credit agreements
that are reasonably satisfactory to Cape Ann.
The 1998 Superseding Agreement contains certain
provisions and agreements as to certain aspects of the
relationship between Cape Ann, as stockholder, and the Issuer.
Pursuant to the 1998 Superseding Agreement, Cape Ann and Chilmark
Fund agreed that Cape Ann and Chilmark Fund and their affiliates
will not take any of the following actions without the prior
written consent of the Issuer, subject to specified limited
exceptions: (a) except as set forth below, increase their
percentage ownership of Common Stock (or acquire other securities
of the Issuer or securities convertible into or exchangeable for
equity securities of the Issuer); (b) transfer any Common Stock
(other than (i) pursuant to a tender offer which the Issuer's
Board of Directors (the "Board") has voted to recommend, (ii)
pursuant to the exercise of the registration rights described
below, (iii) pursuant to open market sales made in accordance
with Rule 144 under the Securities Act of 1933, as amended, (iv)
to the members or investors of Cape Ann, and to their members or
investors, by distribution, dissolution or otherwise, or (v)
after complying with the provisions of a right of first refusal
granted to the Issuer); (c) form, join or participate in any
other way in a "partnership, limited partnership, syndicate or
other group" (within the meaning of Section 13(d) of the Exchange
Act); or (d) engage in certain other specified takeover actions
or take any other actions, alone or in concert with any other
person, to seek control of the Issuer.
Page 7 of 68 Pages
<PAGE>
Under the 1998 Superseding Agreement, Cape Ann and
Chilmark Fund and their affiliates continue to be permitted to
purchase from time to time, in the open market or in privately
negotiated transactions, up to an aggregate of 146,700 additional
shares of Common Stock, as had been the case under the August
1998 Amendment previously disclosed in the Schedule 13D, and to
make such purchases to maintain their percentage ownership of
Common Stock.
Pursuant to the 1998 Superseding Agreement, Cape Ann
remains entitled to designate one representative to serve on the
Board for as long as Cape Ann beneficially owns at least 5% of
the then outstanding Common Stock. Mr. Schulte currently is a
member of the Board pursuant to the comparable provision of the
Agreement.
Pursuant to the 1998 Superseding Agreement, Cape Ann
and Chilmark Fund agreed that each of them and their affiliates
will, so long as Cape Ann and Chilmark Fund collectively
beneficially own at least 5% of the then outstanding Common Stock
or an individual designated by Cape Ann is a member of the Board,
vote their Common Stock (and any other voting securities of the
Issuer) in favor of the election of the nominees for election to
the Board designated or nominated by the Board.
Pursuant to the 1998 Superseding Agreement and subject
to certain exceptions, the Issuer extended the demand and
"piggyback" registration rights previously granted to Cape Ann in
the Agreement in connection with certain permitted sales of
shares of Common Stock to include sales of shares to be acquired
under the 1998 Superseding Agreement.
The summaries contained in this Amendment of certain
provisions of the 1998 Superseding Agreement are not intended to
be complete and are qualified in their entirety by reference to
the 1998 Superseding Agreement attached as an exhibit hereto and
incorporated herein by reference.
The Reporting Persons intend to continue to review
their investment in Common Stock and, from time to time depending
upon certain factors, including without limitation the financial
performance of the Issuer, the availability and price of shares
of Common Stock, other general economic, market and investment
conditions and options available to them, may determine to
acquire through open market purchases or otherwise additional
shares of Common Stock, or may determine to sell through the open
market or otherwise, in each case, subject to applicable law and
the limitations of the 1998 Superseding Agreement.
Except as stated above, no Reporting Person has any
plans or proposals of the type referred to in clauses (a) through
(j) of Item 4 of Schedule 13D, as promulgated by the Securities
and Exchange Commission.
Item 5. Interest in Securities of the Issuer.
-------------------------------------
(a) and (b) As previously disclosed in the Schedule
13D, Cape Ann is the holder of Warrants to purchase 215,425
shares of Common Stock. In accordance with their terms, the
Warrants became exercisable and the exercise price for the
Warrants was determined on October 14, 1998. The exercise price
for the Warrants was determined by Cape Ann and the Issuer to
Page 8 of 68 Pages
<PAGE>
be $3.60 per share. A letter agreement, dated November 6, 1998,
setting forth such determination of Cape Ann and the Issuer is
attached as Exhibit 10 hereto and incorporated herein by
reference. In accordance with Rule 13d-3 under the Exchange Act,
the Reporting Persons may now be deemed to beneficially own the
shares of Common Stock underlying the Warrants. Accordingly, as
of the date hereof, the Reporting Persons beneficially own,
including all shares underlying the Warrants, 1,321,893 shares of
Common Stock (1,316,893, in the case of Cape Ann). To the best
knowledge of the Reporting Persons, there are 5,682,168 shares of
Common Stock outstanding (as represented by the Issuer in the
1998 Superseding Agreement). The 1,321,893 shares beneficially
owned by the Reporting Persons represent approximately 22.4% of
the Common Stock issued and outstanding, including, for these
purposes, the 215,425 shares of Common Stock that would be issued
upon exercise of the Warrants in accordance with Rule 13d-3.
Subject to the limitations of the Agreement, the Reporting
Persons share the power to vote or to direct the vote of, and the
power to dispose or to direct the disposition of, the Common
Stock beneficially owned by them (except that Cape Ann does not
share such powers with respect to the 5,000 shares of Common
Stock held directly by Chilmark Fund).
(c) Except as set forth herein, during the last sixty
days, no transactions in Common Stock were effected by the
Reporting Persons (or, to the best knowledge of the Reporting
Persons, any of the persons listed in Appendix A to the Schedule
13D).
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer.
--------------------------------------------------------
As described above, Cape Ann and Chilmark Fund are
parties to the 1998 Superseding Agreement, a copy of which is
attached hereto as Exhibit 9 and is incorporated herein by
reference. In addition, Cape Ann is a party to the letter
agreement relating the determination of the exercise price of the
Warrants, a copy of which is attached hereto as Exhibit 9 and is
incorporated herein by reference.
Item 7. Material to be Filed as Exhibits.
---------------------------------
Exhibit 9 - 1998 Superseding Agreement.
Exhibit 10 - Letter Agreement Regarding the Determination
of the Exercise Price of the Warrants.
Page 9 of 68 Pages
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in the statement
is true, complete and correct.
Dated: November 6, 1998
Cape Ann Investors, L.L.C.
By: /s/ David Schulte
------------------------
Name: David Schulte
Title: President
Chilmark Fund II, L.P.
By: Chilmark II, L.L.C.
By: /s/ David Schulte
------------------------
Name: David Schulte
Title: President
Chilmark II, L.L.C.
By: /s/ David Schulte
------------------------
Name: David Schulte
Title: President
Chilmark Partners, L.L.C.
By: /s/ David Schulte
------------------------
Name: David Schulte
Title: Managing Member
/s/ David Schulte
---------------------------
David Schulte
Page 10 of 68 Pages
<PAGE>
EXHIBIT INDEX
Exhibit Page
Number Description Number
- ------ ----------- ------
1 Joint Filing Agreement, dated *
September 19, 1997, among the
Reporting Persons.
2 Stock Purchase Agreement. *
3 Amendment No. 1. *
4 Form of Share Purchase Agreement, *
dated as of September 18, 1997.
5 October Agreement. *
6 Amendment to October Agreement. *
7 August 1998 Amendment to Stock *
Purchase Agreement.
8 Purchases of Common Stock by the *
Reporting Persons during the sixty
days leading up to and including
August 31, 1998.
9 1998 Superseding Agreement. 12
10 Letter Agreement Regarding the 68
Determination of the Exercise Price
of the Warrants.
- --------
* previously filed
Page 11 of 68 Pages
Exhibit 9
STOCK PURCHASE AGREEMENT
by and between
NUTRAMAX PRODUCTS, INC.,
and
CAPE ANN INVESTORS, L.L.C.
Dated as of November 6, 1998
<PAGE>
TABLE OF CONTENTS
Page
I. PURCHASE AND SALE..........................................2
1.1. Purchase and Sale.............................2
1.2. Purchase Price................................3
1.3. Closing.......................................3
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............8
2.1. Due Organization, etc.........................8
2.2. Compliance with Law...........................8
2.3. Authorization; Execution and Delivery
of Agreement.................................9
2.4. No Conflict; No Consent......................10
2.5. Capital Stock................................11
2.6. SEC Reports..................................12
2.7. Financial Statements.........................13
2.8. No Brokers...................................14
2.9. Litigation and Claims........................14
2.10. Use of Proceeds.............................14
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.........15
3.1. Due Organization, etc........................15
3.2. Authorization; Execution and Delivery
of Agreement................................15
3.3. No Conflict; No Consent......................15
3.4. No Brokers...................................16
3.5. Litigation and Claims........................16
3.6. Investment Purposes..........................16
IV. COVENANTS OF THE COMPANY.................................17
4.1. Conduct of Business..........................17
4.2. Exchange of Stock Certificates...............18
4.3. Lost, Stolen, Destroyed or Mutilated
Stock Certificates..........................18
4.4. Course of Dealings with Lenders..............19
4.5. Board Representation.........................19
4.6. Other Purchase Agreements....................19
V. COVENANTS OF THE PURCHASER AND THE COMPANY................20
5.1. Access; Confidentiality......................20
5.2. Hart-Scott-Rodino Act Filings................21
5.3. Public Disclosure and Confidentiality........21
i
<PAGE>
5.4. Certain Notifications........................22
5.5. Efforts to Consummate; Further Actions.......22
5.6. Standstill Obligations of the Purchaser......22
5.7. Proxy Statement; Stockholder Approval........29
VI. REGISTRATION RIGHTS......................................30
6.1. "Piggyback" Registration.....................30
6.2. Demand Registration..........................32
6.3. General Provisions...........................33
6.4. Information, Documents, Etc..................35
6.5. Expenses.....................................35
6.6. Cooperation..................................36
6.7. Action to Suspend Effectiveness;
Supplement to Registration Statement.........38
6.8. Indemnification..............................40
VII. INDEMNIFICATION.........................................46
7.1. Indemnification by the Company...............46
7.2. Indemnification by the Purchaser.............46
VIII. TERMINATION............................................47
8.1 Termination...................................47
IX. GENERAL PROVISIONS.......................................48
9.1. Survival of Representations, Warranties
and Agreements..............................48
9.2. Notices......................................49
9.3. General......................................50
9.4. Governing Law................................52
9.5. Severability of Provisions...................52
9.6. Captions.....................................52
9.7. Expenses.....................................52
9.8. Equitable Relief.............................53
9.9. Definitions..................................53
SCHEDULE 2.5(b)
SCHEDULE 2.7(c)
ii
<PAGE>
STOCK PURCHASE AGREEMENT (this "Agreement") dated as
of November 6, 1997 by and between NUTRAMAX PRODUCTS, INC., a
Delaware corporation (the "Company"), and CAPE ANN INVESTORS,
L.L.C., a Delaware limited liability company (the "Purchaser").
WHEREAS, the parties hereto are party to a Stock
Purchase Agreement dated as of August 12, 1997 (as amended
through the date hereof, the "1997 Stock Purchase Agreement"),
pursuant to which the Purchaser purchased from the Company shares
of the Company's Common Stock, par value $0.001 per share (the
"Common Stock");
WHEREAS, the parties hereto are also party to an
Agreement dated as of October 14, 1997 (as amended through the
date hereof, the "October Agreement"), pursuant to which, among
other things, the Purchaser purchased from the Company additional
shares of Common Stock and the Company granted to the Purchaser
and others certain warrants to purchase an aggregate of up to
225,000 shares of Common Stock (the "Warrants");
WHEREAS, the Company recently has defaulted on certain
financial covenants contained in the Company's Credit Facilities
(as hereinafter defined), waivers of which defaults were obtained
from the Company's lenders under such credit agreements (the
"Lenders");
WHEREAS, subject to the terms and conditions of this
Agreement, the Purchaser wishes to purchase from the Company, and
the Company wishes to sell to the Purchaser, additional shares
(the "Shares") of Common Stock;
WHEREAS, the Purchaser and the Company are entering
into this Agreement to provide for such purchase and sale and to
establish various rights and obligations in connection therewith;
<PAGE>
WHEREAS, in conjunction with the transactions
contemplated by this Agreement, the Company is also entering into
agreements with each of Donald E. Lepone, the President and Chief
Executive Officer of the Company, and Bernard J. Korman, the
Chairman of the Board of Directors of the Company, with respect
to the purchase from the Company by Messrs. Lepone and Korman
(the "Lepone Purchase" and the "Korman Purchase," respectively)
of approximately 279,070 additional shares of Common Stock (such
agreements, the "Lepone Purchase Agreement" and the "Korman
Purchase Agreement," respectively, and, collectively, the
"Purchase Agreements"); and
WHEREAS, the proceeds from the sale of the Shares,
together with the proceeds from the sale of shares of Common
Stock pursuant to the Purchase Agreements, shall be used to
facilitate the Company's negotiation of amendments to the
financial covenants and other terms of the Credit Facilities and
to enable the Company to retire existing indebtedness and to
provide the Company with additional working capital;
NOW THEREFORE, in consideration of these premises and
other good and valuable consideration, the parties hereto hereby
agree as follows:
I. PURCHASE AND SALE
1.1. Purchase and Sale. Upon the terms and subject to
the conditions set forth in this Agreement, the Company agrees to
issue, sell and deliver to the Purchaser, and the Purchaser
agrees to purchase from the Company, 1,162,790 Shares. The Shares
purchased and sold hereunder shall be free and clear of any
liens, security interests, pledges, voting agreements, claims,
options and encumbrances of every kind, character and description
whatsoever ("Encumbrances"), except as contemplated by this
Agreement.
2
<PAGE>
1.2. Purchase Price. As consideration for the sale of
the Shares, at the Closing (as hereinafter defined) the Purchaser
shall pay the Company, in immediately available funds, a purchase
price of $4.30 per share.
1.3. Closing. (a) The closing of the transactions
provided for in this Agreement (the "Closing") shall take place
on the second business day after the satisfaction or waiver of
the conditions set forth in Sections 1.3(b) and 1.3(c) of this
Agreement at the offices of Goodwin, Procter & Hoar, LLP,
Exchange Place, Boston, Massachusetts, or at such other time and
place as the parties may mutually agree.
(b) Conditions Precedent to the Purchaser's
Obligations. The obligation of the Purchaser to consummate the
transactions described in this Agreement shall be subject to the
satisfaction of the following conditions on or prior to the
Closing: (i) the representations and warranties of the Company
contained in this Agreement shall have been true and correct when
made and shall be true and correct in all material respects on
the date of Closing with the same effect as if they were made on
such date; (ii) the Company shall have performed and complied in
all material respects with all covenants and agreements required
by this Agreement to be performed or complied with by the Company
on or prior to the Closing; (iii) the Company shall have
delivered to the Purchaser a certificate, dated the date of
Closing and signed by a duly authorized officer of the Company,
certifying as to the matters described in the foregoing clauses
(i) and (ii); (iv) no action, suit, investigation or proceeding
shall have been instituted before any court, administrative body
or governmental agency (a "Governmental Entity") which seeks to
restrain the consummation of, prohibit or declare illegal, or
obtain a material amount of damages arising from the transactions
contemplated by this Agreement and which is likely, in the
Purchaser's reasonable judgment, to be successful on the merits,
and no temporary restraining
3
<PAGE>
order or injunction shall have been issued by any Governmental
Entity restraining or prohibiting, and no other Legal Requirement
(as hereinafter defined) shall have come into effect making
illegal, the performance of this Agreement or the consummation of
any of the transactions contemplated hereby; (v) all consents,
approvals, permits and authorizations required to be obtained
from, and all filings required to be made with, any Authority (as
hereinafter defined) in connection with the consummation of the
transactions contemplated hereby shall have been
obtained or made, and all waiting periods specified under
applicable Legal Requirements (including any such waiting period
applicable to the transactions contemplated hereby under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "Hart-Scott-Rodino Act")), and all extensions thereof, the
passing of which is required for such consummation, shall have
passed, except as to such consents, approvals, permits,
authorizations or filings that, individually or in the aggregate,
would not have a material adverse effect on the condition
(financial or otherwise), business, operations, properties,
assets or liabilities of the Company and its Subsidiaries (as
hereinafter defined) taken as a whole (a "Material Adverse
Effect"); (vi) the issuance and sale of Common Stock contemplated
by this Agreement shall have been approved by the requisite
affirmative vote of the stockholders of the Company; (vii) from
and after the date of this Agreement, there shall not have
occurred any changes concerning the Company that, when combined,
without duplication, with all other changes concerning the
Company from and after the date of this Agreement, have had or
would reasonably be expected to have a Material Adverse Effect;
(viii) the Company shall have obtained a waiver from the Lenders
of any covenant defaults under the Credit Facilities during the
fourth quarter of fiscal 1998 and shall have entered into
amendments (the "Credit Facility Amendments") to each of the
Revolving
4
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Credit and Term Loan Agreement, dated as of December 30, 1996, as
amended, between the Company, The First National Bank of Boston
("FNBB"), Fleet National Bank, National Bank of Canada, The
Sumitomo Bank, Limited, and FNBB, as Agent (the "Loan
Agreement"), and the Purchase Agreement, dated as of December 30,
1996, as amended, between the Company and ING (U.S.) Capital
Corporation (together with the Loan Agreement, the "Credit
Facilities"), the terms of which amendments shall be reasonably
satisfactory to the Purchaser, and such waiver and amendments
shall be in full force and effect without waiver or change in the
material terms thereof; and (viii) all conditions precedent to
consummation of the Lepone Purchase and the Korman Purchase shall
have been satisfied or waived by the appropriate party, and no
amendment to the Lepone Purchase Agreement or the Korman Purchase
Agreement shall have been executed or agreed to that changes the
material terms thereof in a manner adverse to the Company without
the Purchaser's prior written consent. In the event any of the
foregoing conditions to the Purchaser's obligation to close
hereunder is not satisfied on or before the Closing, the
Purchaser may waive such condition and proceed to Closing. As
used herein, "Legal Requirements" shall include laws,
regulations, ordinances, orders, decrees, permits, licenses,
consents, approvals, registrations, authorizations and
qualifications required by or from any federal, state, local or
foreign governmental or regulatory authority (each, an
"Authority").
(c) Conditions Precedent to the Company's Obligations.
The obligation of the Company to consummate the transactions
described in this Agreement shall be subject to the satisfaction
of the following conditions on or prior to the Closing: (i) the
representations and warranties of the Purchaser contained in this
Agreement shall have been true and correct when made and shall be
true and correct in all material respects on the date of Closing
with the same effect as if they were made on such date; (ii) the
Purchaser shall have performed and complied in
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<PAGE>
all material respects with all covenants and agreements required
by this Agreement to be performed or complied with by the
Purchaser on or prior to the Closing; (iii) the Purchaser shall
have delivered to the Company a certificate, dated the date of
Closing and signed by a duly authorized signatory of the
Purchaser, certifying as to the matters described in the
foregoing clauses (i) and (ii); (iv) no action, suit,
investigation or proceeding shall have been instituted before any
Governmental Entity which seeks to restrain the consummation of,
prohibit or declare illegal, or obtain a material amount of
damages arising from the transactions contemplated by this
Agreement and which is likely, in the Company's reasonable
judgment, to be successful on the merits and no temporary
restraining order or injunction shall have been issued by any
Governmental Entity restraining or prohibiting, and no other
Legal Requirement shall have come into effect making illegal, the
performance of this Agreement or the consummation of any of the
transactions contemplated hereby; (v) all consents, approvals,
permits and authorizations required to be obtained from, and all
filings required to be made with, any Authority in connection
with the consummation of the transactions contemplated hereby
shall have been obtained or made, and all waiting periods
specified under applicable Legal Requirements (including any such
waiting period applicable to the transactions contemplated hereby
under the Hart-Scott-Rodino Act), and all extensions thereof, the
passing of which is required for such consummation, shall have
passed, except as to such consents, approvals, permits,
authorizations or filings that, individually or in the aggregate
would not have a Material Adverse Effect; (vi) the issuance and
sale of Common Stock contemplated by this Agreement shall have
been approved by the requisite affirmative vote of the
stockholders of the Company; and (vii) from and after the date of
this Agreement, there shall not have occurred any changes
concerning the Purchaser that,
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when combined, without duplication, with all other changes
concerning the Purchaser from and after the date of this
Agreement, have had or would reasonably be expected to have a
material adverse effect on the condition (financial or
otherwise), business, operations, properties, assets or
liabilities of the Purchaser (a "Purchaser Material Adverse
Effect"). In the event any of the foregoing conditions to the
Company's obligation to close hereunder is not satisfied on or
before the Closing, the Company may waive such condition and
proceed to Closing.
(d) Company Closing Deliveries. At the Closing, the
Company will deliver to the Purchaser the following:
(i) a stock certificate or certificates
representing the Shares; and
(ii) a certificate of the Secretary of the
Company certifying as to the adoption and
effect of resolutions of the Board of
Directors of the Company (the "Board")
authorizing the execution, delivery and
performance of this Agreement.
(e) Purchaser Closing Deliveries. At the Closing, the
Purchaser will deliver to the Company the following:
(i) a certificate of the Managing Member of the
Purchaser certifying as to the adoption and
effect of resolutions of the Purchaser
authorizing the execution, delivery and
performance of this Agreement; and
(ii) payment of the purchase price provided by
Section 1.2.
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1. Due Organization, etc. The Company and each of
its Subsidiaries (as hereinafter defined) is a corporation duly
organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, and each has all
requisite corporate power and
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authority to own, operate and lease its respective properties and
assets and to conduct its respective businesses as now conducted
and is qualified to do business in each state or other
jurisdiction where the nature of its properties, assets or
businesses requires such qualification other than where the
failure to be so qualified would not, individually or in the
aggregate have a Material Adverse Effect. All of the outstanding
shares of capital stock of each Subsidiary of the Company are
validly issued, fully paid and non-assessable, other than the
shares of capital stock of foreign Subsidiaries which are not
fully paid and which failure to be fully paid, individually or in
the aggregate, does not have a Material Adverse Effect, and all
of such outstanding shares are owned, directly or indirectly, by
the Company free and clear of all Encumbrances, except for liens
or security interests or pledge arrangements involving the
capital stock of the Subsidiaries in favor of the Company's
lenders. "Subsidiary" means a corporation or other business
arrangement a majority of the outstanding voting securities or
ownership interests of which is owned, directly or indirectly, by
the Company, by one or more other Subsidiaries or by the Company
and one or more other Subsidiaries.
2.2. Compliance with Law. The Company and each
Subsidiary has obtained and maintains in full force and effect
all permits, licenses, consents, approvals, registrations,
memberships, authorizations and qualifications under all federal,
state, local and foreign laws and regulations, and with all
Authorities, required for the conduct by it of its businesses and
the ownership or possession by it of its properties and assets
other than where the failure to obtain or maintain such permits,
licenses, consents, approvals, registrations, memberships,
authorizations or qualifications would not, individually or in
the aggregate, have a Material Adverse Effect. The Company and
each Subsidiary are in compliance with all laws, regulations,
ordinances, orders and decrees (including, without limitation,
all environmental and occupational, health and
8
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safety laws) of any Authority applicable to the conduct by the
Company and each Subsidiary of their respective businesses and to
their ownership and possession of their respective properties and
assets, other than where the failure so to comply would not,
individually or in the aggregate, have a Material Adverse Effect.
2.3. Authorization; Execution and Delivery of
Agreement. (a) Except to the extent that the By-laws of, or other
rules or regulations promulgated by, the National Association of
Securities Dealers ("NASD") applicable to Nasdaq SmallCap listed
companies may require stockholder approval of the issuance of
shares hereunder, the execution and delivery of this Agreement,
the issuance and sale of the Shares to the Purchaser and the
consummation of the transactions contemplated hereby (i) do not
require the approval or consent of any stockholders of the
Company and (ii) have been duly authorized by all necessary
corporate action on the part of the Company for all purposes,
including Section 203 of the Delaware General Corporation Law.
Except to the extent that the By-laws of, or other rules or
regulations promulgated by, the NASD applicable to Nasdaq
SmallCap listed companies may require stockholder approval of the
issuance of shares hereunder, this Agreement has been duly
executed and delivered by the Company and this Agreement
constitutes the legal, valid, binding and enforceable obligation
of the Company, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights
and general principles of equity. The Company has full corporate
power and authority to enter into this Agreement and to perform
its obligations hereunder.
(b) Except to the extent that the By-laws of, or other
rules or regulations promulgated by, the NASD applicable to
Nasdaq SmallCap listed companies may require stockholder approval
of the issuance of shares hereunder, (i) the Shares have been
duly authorized by all necessary corporate action on the part of
the Company, and, when issued and
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<PAGE>
delivered by the Company pursuant to this Agreement against
payment of the consideration therefor set forth herein, the
Shares will be validly issued, fully paid and non-assessable and
(ii) the Purchaser will acquire valid and marketable title to the
Shares, free and clear of any Encumbrances except as contemplated
by this Agreement.
2.4. No Conflict; No Consent. Except to the extent
that the By-laws of, or other rules or regulations promulgated
by, the NASD applicable to Nasdaq SmallCap listed companies may
require stockholder approval of the issuance of shares hereunder,
the execution and delivery of this Agreement, the issuance and
sale of the Shares to the Purchaser and the consummation of the
transactions contemplated hereby do not, and will not, conflict
with, or result in any violation of or default under, or permit
the acceleration of any obligation under, or the creation or
imposition of any Encumbrance on any of the properties or assets
of the Company or any Subsidiary under, (i) any provision of the
certificate of incorporation or by-laws or similar constituent
documents of the Company or any Subsidiary, (ii) any indenture,
lease, mortgage, deed of trust, loan agreement or other agreement
or instrument, or any permit, license, registration, membership,
authorization or qualification from any Authority, of the Company
or any Subsidiary or (iii) any judgment, order, decree, statute,
law, ordinance, rule or regulation of any Authority to which the
Company or any of its Subsidiaries is a party or by which any of
them is bound, other than, in the case of clause (ii) above,
where such conflict, violation, default, acceleration or
Encumbrance would not, individually or in the aggregate, have a
Material Adverse Effect. No consent, approval, order or
authorization of, or registration, declaration, filing with or
notice to, any Authority or third party is required to be made or
obtained by the Company or any Subsidiary (including, without
limitation, under any environmental or occupational, health and
safety laws) in order to execute or deliver this Agreement, issue
and sell
10
<PAGE>
the Shares or to consummate the transactions contemplated hereby,
other than (A) as may be required by the Hart-Scott-Rodino Act,
(B) as a result of the periodic reporting requirements under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
and (C) the listing requirements of the NASDAQ SmallCap Market,
or except where the failure to make or obtain any such consent,
approval, order, authorization, registration, declaration, filing
or notice would not have a Material Adverse Effect.
2.5. Capital Stock. (a) The authorized capital stock
of the Company consists of 20,000,000 shares of Common Stock, of
which, as of October 3, 1998, 5,682,168 shares were outstanding
and 9,665 shares were held in treasury and 1,296,633 shares are
reserved for future issuance pursuant to any option, warrant or
other rights agreement, arrangement or other commitment. All of
the issued and outstanding shares of Common Stock have been
validly issued and are fully paid and non-assessable.
(b) (i) Other than this Agreement, the Lepone Purchase
Agreement, the Korman Purchase Agreement and the Warrants or as
set forth on Schedule 2.5(b) hereto, there are not authorized or
outstanding any subscriptions, options, conversion rights,
warrants or other agreements, securities or commitments of any
nature whatsoever (whether oral or written and whether firm or
conditional) obligating the Company or any Subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, to any
person any shares of Common Stock or any other shares of the
capital stock of the Company or any shares of the capital stock
of any Subsidiary, or any securities convertible into or
exchangeable for any such shares, or obligating any such person
to grant, extend or enter into any such agreement or commitment;
and (ii) except as set forth on Schedule 2.5(b) hereto, there is
no obligation, contingent or otherwise, of the Company to
repurchase, redeem or otherwise acquire any share of capital
stock or other equity interests of the
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<PAGE>
Company or any Subsidiary. No class of capital stock of the
Company is entitled to preemptive rights.
2.6. SEC Reports. Except with respect to the amendment
to the Current Report on Form 8-K dated September 11, 1998 (filed
with the Commission (as hereinafter defined) on September 26,
1998) contemplated by the disclosure contained in Items 7(a) and
(b) thereof, the Company has filed with the Securities and
Exchange Commission (the "Commission") all proxy statements,
reports, forms and other documents required to be filed by it
after January 1, 1995 under the Exchange Act (collectively, the
"SEC Reports"). As of their respective dates, the SEC Reports (i)
complied as to form in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations of
the Commission thereunder and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
2.7. Financial Statements. (a) The financial
statements (including any related notes) included in the SEC
Reports (the "Financial Statements") have been prepared in
accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as
may be noted therein) and fairly present the consolidated
financial condition, results of operations and cash flows of the
Company and its consolidated Subsidiaries as of the dates thereof
and for the periods ended on such dates (in each case subject, as
to interim statements, to changes resulting from year-end
adjustments (none of which were or, except as otherwise disclosed
to the Purchaser in writing, will be material in amount or
effect) and except as permitted by Form 10-Q pursuant to Section
13 or 15(d) of the Exchange Act).
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<PAGE>
(b) On the date hereof, except as disclosed in the SEC
Reports, neither the Company nor any Subsidiary has any
liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to become
due and whether or not required to be disclosed in the SEC
Reports, other than liabilities that have been disclosed to the
Purchaser in writing, have been incurred in the ordinary course
of business or are not in the aggregate material to the Company
and its Subsidiaries taken as a whole. Since September 28, 1996,
the Company has not declared or paid any dividends to any of its
stockholders.
(c) Except as set forth on Schedule 2.7(c), since
September 28, 1996, the Company and each of its Subsidiaries have
conducted their respective businesses only in the ordinary course
in substantially the same manner as theretofore conducted and the
Company and its Subsidiaries, taken as a whole, have not
undergone or suffered any Material Adverse Effect, except as
otherwise disclosed to the Purchaser in writing.
2.8. No Brokers. No broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of the
Company.
2.9. Litigation and Claims. There is no claim,
prosecution, suit, action, arbitration, proceeding, investigation
or review pending or, to the knowledge of the Company, threatened
against or affecting the Company, any of its Subsidiaries or any
of their respective properties or assets (nor, to the knowledge
of the Company, are there any facts or circumstances providing a
basis for any such claim, prosecution, suit, action, arbitration,
proceeding, investigation or review) which, if adversely
determined, would be reasonably likely to have a Material Adverse
Effect or would prohibit or impose any limitations on the
Purchaser's ownership of the Shares or would prohibit or make
illegal the acceptance for payment, purchase
13
<PAGE>
of or payment for the Shares. Neither the Company nor any of its
Subsidiaries is in default with respect to any judgment, decree,
injunction, rule or order of any court, arbitrator or Authority
outstanding against or binding upon the Company or any of its
Subsidiaries, other than where any such defaults would not,
individually or in the aggregate, have a Material Adverse Effect.
2.10. Use of Proceeds. The Company intends to use the
proceeds from the sale of Shares to retire debt of the Company
under the revolving credit facility under the Loan Agreement and
for other general corporate purposes.
III. REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER
The Purchaser represents and warrants to the Company
that:
3.1. Due Organization, etc. The Purchaser is a limited
liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Purchaser
has no direct or indirect subsidiaries.
3.2. Authorization; Execution and Delivery of
Agreement. The Purchaser has all requisite power and authority to
execute this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary action on the part of the Purchaser. This Agreement has
been duly executed and delivered by the Purchaser and this
Agreement constitutes the legal, valid, binding and enforceable
obligation of the Purchaser, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
3.3. No Conflict; No Consent. The execution and
delivery of this Agreement, the issuance and sale of the Shares
to the Purchaser and the consummation of the transactions
14
<PAGE>
contemplated hereby do not, and will not, conflict with, or
result in any violation of or default under, or permit the
acceleration of any obligation under, or the creation or
imposition of any Encumbrance on any of the properties or assets
of the Purchaser under, (i) any provision of the certificate of
organization and limited liability company agreement or similar
constituent documents of the Purchaser, (ii) any indenture,
lease, mortgage, deed of trust, loan agreement or other agreement
or instrument, or any permit, license, registration, membership,
authorization or qualification from any Authority, of the
Purchaser or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation of any Authority to which the
Purchaser is a party or by which it is bound, other than, in the
case of clause (ii) above, where such conflict, violation,
default, acceleration or Encumbrance would not, individually or
in the aggregate, have a Purchaser Material Adverse Effect. Other
than as required by the Hart-Scott-Rodino Act or as a result of
the reporting requirements of the Exchange Act, no consent,
approval, order or authorization of, or registration,
declaration, filing with or notice to, any Authority is required
to be made or obtained by the Purchaser in order to execute or
deliver this Agreement or to consummate the transactions
contemplated hereby.
3.4. No Brokers. No broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of the
Purchaser.
3.5. Litigation and Claims. There is no claim,
prosecution, suit, action, arbitration, proceeding, investigation
or review pending or, to the knowledge of the Purchaser,
threatened against or affecting the Purchaser, or any of its
properties or assets which, if adversely determined, would
prohibit or make illegal the purchase of or payment for the
Shares.
15
<PAGE>
3.6. Investment Purposes. (a) The Purchaser, by reason
of its business and financial experience, has such knowledge,
sophistication and experience in business and financial matters
as to be capable of evaluating the merits and risks of its
investment in the Shares, and is purchasing the Shares hereunder
for its own account, for investment only and not with a view to,
or any present intention of, effecting a distribution of such
securities or any part thereof. The Purchaser acknowledges that
the Shares to be purchased hereunder have not been registered
under the Securities Act of 1933, as amended (the "Securities
Act"), or the securities laws of any state or other jurisdiction
and cannot be disposed of unless they are subsequently registered
under the Securities Act and any applicable state laws or
exemption from such registration is available.
(b) The Purchaser is an "accredited investor" as that
term is defined in Rule 501 promulgated under the Securities Act.
(c) The Purchaser has had the opportunity to ask
questions and to receive answers concerning the financial
condition, operations and prospects of the Company and the terms
and conditions of the Purchaser's investment, as well as the
opportunity to obtain any additional information necessary to
verify the accuracy of information furnished in connection
therewith that the Company possesses or can acquire without
unreasonable effort or expense.
IV. COVENANTS OF THE COMPANY
The Company covenants and agrees that:
4.1. Conduct of Business. Except as specifically
consented to in writing by the Purchaser or expressly
contemplated by this Agreement, during the period from the date
of this Agreement up to and including the date of the Closing,
the Company shall, and shall cause each of its Subsidiaries to,
(i) conduct its business in the usual and ordinary course
consistent with past practice and use its reasonable best efforts
to preserve its business organization intact, to
16
<PAGE>
keep available the services of its key employees, material
independent contractors and material consultants currently
employed, to preserve the present relationships with customers,
suppliers and other Persons (as hereinafter defined) with whom it
has significant business relations, to maintain books and records
in the usual and ordinary manner, and to preserve the goodwill
and ongoing business; and (ii) except pursuant to agreements or
commitments entered into by the Company or its Subsidiaries prior
to the date of this Agreement and listed on Schedule 2.5(b)
hereto, not issue or sell (or agree to issue or sell) any stock
of any class or any other securities, or any options, warrants,
conversion or other rights to purchase any such securities, or
grant, or agree to grant, any such options or modify or alter the
terms of any of the above. As used herein, "Person" means any
individual, partnership, joint venture, firm, corporation,
association, trust or other entity or any government or political
subdivision or agency, department or instrumentality thereof.
4.2. Exchange of Stock Certificates. Promptly upon
surrender of any certificates representing Shares at the office
of the Company, the Company will, at its expense, execute and
deliver to the Purchaser a new certificate or certificates in
denominations specified by the Purchaser for an aggregate number
of Shares equal to the number of Shares represented by the
certificates surrendered.
4.3. Lost, Stolen, Destroyed or Mutilated Stock
Certificates. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of any
certificate for Shares and, in the case of loss, theft or
destruction, upon delivery of an indemnity satisfactory to the
Company (which, in the case of the Purchaser may be an
undertaking by the Purchaser to so indemnify the Company), or, in
the case of mutilation, upon surrender and cancellation thereof,
the Company will issue a new certificate of like tenor for a
number of
17
<PAGE>
Shares equal to the number of Shares represented by the
certificate lost, stolen, destroyed or mutilated.
4.4. Course of Dealings with Lenders. The Company
shall use its reasonable best efforts to obtain the consents and
approvals of the Lenders, and to negotiate and enter into Credit
Facility Amendments, necessary for the consummation of the
transactions contemplated by this Agreement. The Company shall
keep the Purchaser apprised of all material developments in
connection with the negotiation of the Credit Facility
Amendments. Without limiting the foregoing, the Company shall
provide to the Purchaser, promptly after receipt thereof by the
Company, a copy of each draft of the proposed amendments to the
Credit Facilities and shall consult with the Purchaser in
connection with the negotiation thereof.
4.5. Board Representation. At each annual meeting of
the stockholders of the Company after the Closing, so long as the
Purchaser shall own Shares representing 5% or more of the total
issued and outstanding shares of Common Stock as of the date
which is thirty (30) days immediately preceding the record date
of such meeting, the Company shall include in the slate of
nominees for election as the Board at such meeting, David M.
Schulte or one other officer or individual member of the
Purchaser designated by the Purchaser (which designee shall not
include any individual whose membership on the Board would be a
violation of law), provided that the Company has consented to
such other designee, which consent shall not be unreasonably
withheld.
4.6. Other Purchase Agreements. The Company shall
provide to the Purchaser, promptly after receipt or completion
thereof by the Company, a copy of the proposed final draft of
each of the Lepone Purchase Agreement and the Korman Purchase
Agreement and of any
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<PAGE>
proposed amendment of either thereof (or any proposed waiver of
any of the terms or conditions of either thereof).
V. COVENANTS OF THE PURCHASER AND THE COMPANY
5.1. Access; Confidentiality. (a) At the reasonable
request of the Purchaser, the Company shall give the officers,
attorneys, accountants and other authorized representatives of
the Purchaser access, during normal business hours and upon
reasonable notice, to all of the Company's, and the Subsidiaries'
offices, facilities, properties and personnel. The Company will
furnish the representatives of the Purchaser with all such
information concerning the Company and its Subsidiaries as such
representatives may reasonably request and cause the employees,
accountants, independent accountants and attorneys of the Company
and its Subsidiaries to cooperate fully with such representatives
in connection with such review and examination and to make full
disclosure to the Purchaser of all material facts concerning the
Company and its Subsidiaries; provided, however, that the
Purchaser will hold in strict confidence and not use for its own
benefit (other than in connection with the transactions
contemplated by this Agreement), prior to the Closing, the
documents and information (including all evaluation material
relating to employees) furnished to the Purchaser concerning the
Company and its Subsidiaries; and, if the transactions
contemplated by this Agreement shall not be consummated, such
confidence shall be maintained and all such documents and all
copies thereof shall promptly thereafter be returned to the
Company. The Purchaser further agrees that it shall be
responsible for any breach of this Section 5.1 by any of its
officers, attorneys, accountants and other authorized
representatives. No investigation by the Purchaser or any of its
representatives pursuant to this Section 5.1 shall affect any
representation, warranty or closing condition of any party
hereto.
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<PAGE>
(b) Chilmark Fund II, L.P. ("Chilmark") agrees that it
shall be bound by the obligations of the Purchaser set forth in
Section 5.1(a) as if it were the Purchaser for purposes of said
section.
5.2. Hart-Scott-Rodino Act Filings. Each party
covenants and agrees to file, if required, on a date no later
than ten days from the date hereof a notification and report form
pursuant to the Hart-Scott-Rodino Act with respect to the
purchase by the Purchaser of the Shares pursuant to this
Agreement and will provide promptly any supplemental information
that may be requested in connection therewith. Each party will
comply with all reasonable requests of the other party for
information necessary in connection with the preparation by such
other party of its notification and report form.
5.3. Public Disclosure and Confidentiality. Each party
hereby agrees that, prior to the Closing, except as required by
applicable law (or under the rules and regulations of the Nasdaq
Stock Market (or any national securities exchange on which the
Common Stock is listed)), no press release or public announcement
or communication will be made or caused to be made concerning the
execution or performance of this Agreement, the terms hereof or
the transactions contemplated hereby unless specifically approved
in advance by both parties. In the event that a party views
disclosure as required by applicable law (or the rules and
regulations of the Nasdaq Stock Market or any such national stock
exchange) as contemplated by the previous sentence, such
disclosing party shall provide a copy of such disclosure to the
other party within a reasonable period of time prior to such
disclosure.
5.4. Certain Notifications. At all times prior to the
Closing, each party hereto shall promptly notify the other party
in writing of the occurrence of any event which will or could
reasonably result in the failure of any of the conditions
contained in Article I hereof to be
20
<PAGE>
satisfied. Such notice shall be in additional to and not in lieu
of the other notices and communications provided for herein.
5.5. Efforts to Consummate; Further Actions. Subject
to the terms and conditions herein provided, each of the parties
hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done,
all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement.
5.6. Standstill Obligations of the Purchaser. (a) As
of the date of this Agreement, none of the Purchaser, Chilmark or
any Affiliate (as hereinafter defined) thereof beneficially owns
any shares of Common Stock, except as disclosed in filings
through the date hereof on Schedule 13D under the Exchange Act or
as may be deemed to exist under the Exchange Act in respect of
the Warrants. From and after the date of this Agreement until the
Closing, none of the Purchaser or Chilmark (collectively, the
"Stockholders") or any of their Affiliates will acquire any
securities issued by the Company or convertible into or
exchangeable for any equity securities of the Company
(collectively referred to as "Stock"), except pursuant to the
terms of this Agreement. For purposes of this Agreement, an
"Affiliate" of any person, entity or corporation shall mean and
include (i) any person, entity or corporation, now or hereafter,
directly or indirectly through one or more intermediaries,
controlling, controlled by or under common control with (through
the ownership of voting securities or interests, by contract or
otherwise) such person, entity or corporation, or (ii) any other
person, entity or corporation acting in concert with such person,
entity or corporation in connection with the Company with respect
to any matter referred to in Section 5.6(d) of this Agreement or
clauses (a)-(j) of Item 4 of Schedule 13D under the Exchange Act,
or with respect to acquiring, holding, voting or disposing of any
Stock. Each of the Stockholders acknowledges and agrees that a
breach of any provision
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of this Agreement by any Stockholder or any Affiliate thereof
shall constitute a breach by each Stockholder and that each
Stockholder shall be fully liable for any breach of this
Agreement by any other Stockholder or by any Affiliate of any
Stockholder, it being understood that notwithstanding any other
provision of this Agreement, any of the Stockholders and their
Affiliates shall be entitled to act in concert with one another
with respect to any action which a Stockholder or an Affiliate of
a Stockholder would be permitted to take individually hereunder.
For the purposes of this Agreement, beneficial ownership shall be
determined pursuant to Rule 13d-3 ("Rule 13d-3") promulgated by
the Commission pursuant to the Exchange Act.
(b) Each of the Stockholders hereby jointly and
severally covenants and agrees that from and after the date
hereof none of the Stockholders or their Affiliates will, without
the prior written consent of the Company specifically expressed
in a vote adopted after the Closing by the Board, directly or
indirectly, purchase or cause to be purchased or otherwise
acquire (other than pursuant to a stock split, stock dividend or
similar transaction) or agree to acquire, or become or agree to
become the beneficial owner of, any additional Stock, except that
the Stockholders and their Affiliates may purchase shares of
Common Stock (A) upon exercise of some or all of the Warrants,
(B) from time to time, in the open market or in privately
negotiated transactions, up to an aggregate of 146,700 shares of
Common Stock, and (C) from time to time, in the open market or in
privately negotiated transactions, up to an aggregate number of
shares of Common Stock which, when added to the shares of Common
Stock then owned by the Stockholders and their Affiliates, would
result in the Stockholders and their Affiliates owning no more
than the highest percentage of voting securities of the Company
held by the Stockholders and their Affiliates immediately
following the Closing or any purchase permitted by clauses (A) or
(B) above. Nothing contained in Section 5.6(a) or the preceding
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sentence of this Section 5.6(b) shall limit the ability under the
1997 Stock Purchase Agreement of any member of the Advisory Board
of Chilmark who acquired shares of Common Stock from the
Purchaser on September 18, 1997 in accordance with the 1997 Stock
Purchase Agreement to acquire, from time to time, in the open
market or privately negotiated transactions, up to an aggregate
number of shares of Common Stock equal to 50% of the number of
shares so acquired from the Purchaser or otherwise prohibit the
acquisition of Shares by any such member in accordance with
Section 9.3(d) hereof. Each of the Stockholders agrees that none
of the Stockholders or their Affiliates will, without the prior
written consent of the Board specifically expressed in a vote
adopted by the Board, directly or indirectly, transfer any shares
of Stock now owned or hereafter acquired by them, except for
transfers made: (i) pursuant to the provisions of Section 5.6(c)
below, (ii) pursuant to a publicly announced tender offer for any
shares of Stock by any corporation, entity, person or group
(other than any of the Stockholders or their Affiliates) which
the Board has voted to recommend to holders of any shares of
Stock, (iii) pursuant to the exercise of the registration rights
provided in Article VI hereof, (iv) pursuant to open market sales
made in accordance with Rule 144 under the Securities Act,
including, if applicable, paragraph (k) thereof or (v) to the
members or investors of the Purchaser, and to their members or
investors, by distribution, dissolution or otherwise; provided,
however, that in no event shall any such member or investor
referred to in clause (v) above who is an Affiliate of either of
the Stockholders be permitted to, directly or indirectly,
transfer any shares of Stock now owned or hereafter acquired,
except in accordance with this Section 5.6(b). For purposes of
this Agreement, "transfer" shall mean and include any sale,
assignment, gift, pledge, the imposition
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of any other encumbrance or any other disposition or any
agreement or obligation to do any of the foregoing.
(c) If any Stockholder or any Affiliate thereof
desires to sell any shares of Stock (a "Selling Stockholder")
(other than pursuant to clause (ii), (iii), (iv) or (v) of
Section 5.6(b) hereof), the following requirements shall be
satisfied:
(i) The Selling Stockholder shall notify the
Company in writing of the proposed sale (the "Notice of Proposed
Transfer"). The Notice of Proposed Transfer shall identify and
provide reasonable information concerning the background,
business experience and business affiliations of the proposed
transferee (the "Transferee"), the purchase price or other
consideration, if any, the number of shares and type of Stock to
be transferred and the complete terms of the proposed
transaction.
(ii) For a period of ten (10) business days
following the receipt of the Notice of Proposed Transfer, the
Company and/or any substitute purchaser(s) as designated by the
Company (the Company and/or such substituted purchaser is
hereinafter sometimes called the "Buyer") shall have the option
to purchase all, but not less than all, the Stock specified in
the Notice of Proposed Transfer at the price and upon the terms
set forth in the Notice of Proposed Transfer; provided, however,
that if the type of consideration that was to be paid was
non-cash consideration, then the amount payable by the Buyer for
such Stock shall be determined in good faith by the Board, after
consultation with the Company's investment banker. In the event
that Buyer elects to purchase all, but not less than all, of the
Stock specified in the Notice of Proposed Transfer, it shall give
written notice to the Selling Stockholder of its election, in
which case settlement for said Stock shall be made and the Buyer
shall purchase such Stock for such price, in cash within ten (10)
business days after the date the Company receives the Notice of
Proposed
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Transfer. In the event that Buyer elects not to purchase all of
the Stock specified in the Notice of Proposed Transfer, the
Selling Stockholder may consummate the proposed transfer of said
Stock with the Transferee, provided, however, that such transfer
shall not be consummated unless and until such Transferee agrees
in writing to be bound by all of the terms of and to perform all
of the obligations of the Stockholders contained in Section
5.6(b), this Section 5.6(c) and in Section 5.6(d) of this
Agreement in the same manner as if such Transferee were a party
to this Agreement.
(d) Each of the Stockholders hereby agrees that, prior
to the date on which the Stockholders beneficially own
collectively less than 0.5% of the total issued and outstanding
shares of Common Stock, none of the Stockholders or their
Affiliates will, directly or indirectly, or will solicit,
request, advise, assist or encourage others, directly or
indirectly, to:
(i) form, join in or in any other way participate
in a "partnership, limited partnership, syndicate or other group"
within the meaning of Section 13(d)(3) of the Exchange Act with
respect to shares of Stock or deposit any Stock in a voting trust
or similar arrangement or subject any Stock to any voting
agreement or pooling arrangement, other than solely with one or
more other Stockholders or Affiliates with respect to shares of
Common Stock permitted to be owned hereunder;
(ii) solicit proxies or written consents of
shareholders with respect to Stock under any circumstances, or
make, or in any way participate in, any "solicitation" of any
"proxy" to vote any shares of Stock, or become a "participant" in
any election contest with respect to the Company (as such terms
are defined or used in Rules 14a-1 and 14a-11 under the Exchange
Act);
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(iii) seek to call, or to request the call of, a
special meeting of the shareholders of the Company or seek to
make, or make, a shareholder proposal, or seek to make or make,
any nomination of any candidate as a director of the Company
other than a designee of the Purchaser pursuant to Section 4.5
hereof or any candidate nominated by the Board, at any meeting of
the shareholders of the Company;
(iv) commence or announce any intention to
commence any tender offer for any shares of Stock;
(v) make a proposal or bid with respect to,
announce any intention or desire to make, or discuss with any
person, or publicly make or disclose, cause to be made or
disclosed publicly, facilitate the making public or public
disclosure of, any proposal or bid with respect to, the
acquisition of any substantial portion of the assets of the
Company or of the assets or stock of any of its Subsidiaries or
of all or any portion of the outstanding Stock, or any merger,
consolidation, other business combination, restructuring,
recapitalization, liquidation or other extraordinary transaction
involving the Company or any of its Subsidiaries;
(vi) otherwise act alone or in concert with
others to seek to control or influence in any manner the
management or the Board (including the composition thereof) or
the business, operations or affairs of the Company; provided,
however, that this provision shall not prevent the Purchaser's
designee on the Board from participating in, or otherwise seeking
to affect the outcome of, discussions and votes of the Board with
respect to matters coming before it;
(vii) arrange, or in any way participate in, any
financing for any transaction referred to in clauses (i) through
(vi) above inclusive;
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(viii) make public, or cause or facilitate the
making public (including by disclosure to any journalist or other
representative of the media) of, any request, or otherwise seek,
to obtain any waiver or amendment of any provision of this
Agreement, or to take any action restricted hereby.
Notwithstanding the foregoing, (i) the Stockholders
may make such filings with the Commission pursuant to Sections
13(d) and 16(a) of the Exchange Act to reflect changes in
the beneficial ownership of any shares of Stock of any
Stockholder (to the extent such changes reflect action taken by
such Stockholder which is permitted by this Agreement) and (ii)
the Purchaser may exercise its rights with respect to the
election of a director to the Board pursuant to Section 4.5 of
this Agreement.
(e) So long as the Stockholders beneficially own
collectively 5.0% or more of the total issued and outstanding
shares of Common Stock or an individual designated by the
Purchaser pursuant to Section 4.5 is a member of the Board,
whenever there shall be submitted to the stockholders of the
Company nominees for election to the Board, each of the
Stockholders and any Affiliate of such Stockholder controlled
directly or indirectly by such Stockholder hereby agrees to vote,
or to cause to be voted, all Stock then held by such Stockholder,
whether beneficially or of record, and entitled to vote on such
matter, in favor of such nominees designated or nominated by the
Board, and, unless otherwise requested by the Company, not in
favor of any other nominee or nominees other than a designee of
the Purchaser pursuant to Section 4.5.
(f) Each of the Stockholders hereby covenants and
agrees that each Stockholder will promptly notify the Company
when and if such Stockholder receives or learns of (A) any oral
or written request to any of the Stockholders or any of their
Affiliates to
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participate in any of the transactions or actions referred to in
paragraphs (i) through (viii) of subsection (d) above inclusive
or (B) any oral or written communication from or by any person or
entity (other than the Company) with respect to any of the
transactions or actions referred to in paragraphs (i) through
(viii) of subsection (d) above inclusive, if such person or
entity could reasonably be deemed to be capable of effecting,
participating in or materially assisting in such an action or
transaction (through one or more Affiliates or otherwise) and
such oral or written communication was of a nature that could
reasonably be deemed to indicate a serious interest in effecting,
participating in or materially assisting in such an action or
transaction.
5.7. Proxy Statement; Stockholder Approval. (a) The
Company shall, as promptly as practicable following the date of
this Agreement, prepare and file with the Commission, and will
use its best efforts to have cleared by the Commission and
thereafter shall mail to its stockholders as promptly as
practicable a proxy statement and a form of proxy in connection
with, among other things, the vote of the Company's stockholders
to approve the issuance and sale of Common Stock contemplated by
this Agreement. The proxy statement, and any amendments thereof
or supplements thereto, will not, at the time of the mailing of
the proxy statement or any amendments thereof or supplements
thereto and at the time of the Stockholders Meeting (as
hereinafter defined), contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not
misleading, except that no representation is made by the Company
with respect to information supplied in writing by the Purchaser
or any affiliate of the Purchaser specifically for inclusion in
the proxy statement. The proxy statement will comply as to form
in all material respects with the provisions of the Exchange Act
and the rules and regulations promulgated thereunder.
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(b) The Company shall duly call, give notice of,
convene and hold its annual, or a special, meeting of its
stockholders (the "Stockholders Meeting") and shall use its best
efforts to obtain the requisite affirmative approval of its
stockholders at the Stockholders Meeting of the issuance and sale
of the Common Stock contemplated by this Agreement. The Purchaser
and Chilmark shall be present, in person or by proxy, at the
Stockholders Meeting and shall vote or cause to be voted all
shares of Common Stock held of record or beneficially owned (with
the power to vote or direct the vote) by it and eligible to vote
as of the record date for such meeting in favor of the proposal
seeking such approval.
VI. REGISTRATION RIGHTS
The Company covenants and agrees to provide the
following registration rights:
6.1. "Piggyback" Registration. If, at any time while
the Purchaser shall hold shares of Common Stock or Warrants, the
Company proposes to file a registration statement relating to the
offering of any of its capital stock under the Securities Act
(other than (i) a registration statement required to be filed in
respect of employee benefit plans of the Company on Form S-8 or
any similar form from time to time in effect, (ii) any
registration statement on Form S-4 or similar successor form, or
(iii) a registration statement relating to a transaction pursuant
to Rule 145 of the Securities Act), whether or not for sale for
its own account, the Company shall, at least twenty-one days (or
if such twenty-one day period is not practicable, then a
reasonable shorter period which shall not be less than seven
days) prior to such filing, give written notice of such proposed
filing to the Purchaser. Upon receipt by the Company not more
than seven days (unless the notice given to the Purchaser
pursuant to the previous sentence is less than ten days, in which
case such seven-day period shall be shortened to five days) after
such notice of a written request from the Purchaser for
registration of Purchaser's Stock (as hereinafter
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defined), (i) the Company shall, subject to Section 6.3, include
such Purchaser's Stock in such registration statement, and shall
use all reasonable efforts to cause such registration statement
to become effective with respect to such Purchaser's Stock,
unless the managing underwriter therefor concludes in its
reasonable judgment that the number of securities requested to be
included in such registration exceeds the number which can
reasonably be sold in (or during the time of) such offering, in
which case the Company may (i) include all securities initially
proposed by the Company to be sold for its own account and (ii)
decrease the number of shares of Purchaser's Stock and any other
securities (other than securities included by virtue of clause
(i) above) proposed to be sold to the extent necessary to reduce
the number of securities to be included in the registration to
the level recommended by the managing underwriter; provided,
however, that there shall be no such decrease in the number of
shares of Purchaser's Stock unless the number of shares of
Purchaser's Stock and such other securities (other than the
securities included by virtue of clause (i) above) proposed to be
sold has been decreased on a pro rata basis, calculated according
to the number of shares of Purchaser's Stock and other securities
requested to be included by the respective holders of each.
"Purchaser's Stock" means any Warrants or shares of Common Stock
acquired by the Purchaser pursuant to this Agreement or the 1997
Stock Purchase Agreement, or by a Stockholder in accordance with
Section 5.6(b) hereof or Section 5.6(b) of the 1997 Stock
Purchase Agreement, for which any Stockholder requests
registration pursuant to Section 6.1 or 6.2.
6.2. Demand Registration. If the Company shall receive
at any time or from time to time a written request from the
Purchaser requesting the Company to register any shares of
Purchaser's Stock under the Securities Act on Form S-3 (or if the
Company is not eligible to use Form S-3, then on Form S-1 or
S-2), or any other similar form then in effect, the Company
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agrees that it will use all reasonable efforts to cause the
prompt registration of all shares of Purchaser's Stock as to
which such request is made (or will amend or supplement an
effective registration statement to include Purchaser's Stock).
The Company may postpone for a limited time, which in no event
shall be longer than 90 days, compliance with a request for
registration pursuant to this Section 6.2 if (i) the Company
shall have given notice to the Purchaser of the occurrence of a
Suspension Event (as hereinafter defined) or (ii) the Company is
conducting a public offering of capital stock and the managing
underwriter concludes in its reasonable judgment that such
compliance would materially adversely affect such offering.
Notwithstanding anything in this Section 6.2 to the contrary, the
Company shall not be required to: (a) comply with more than three
(3) requests of the Purchaser pursuant to this Section 6.2 or (b)
prepare or cause to be prepared audited financial statements of
the Company other than those prepared in the normal course of the
Company's business at its fiscal year end. Any underwriter
selected by the Purchaser to act as such in connection with a
registration pursuant to this Section 6.2 shall be reasonably
acceptable to the Company. The Company shall not be required to
file and effect a new registration pursuant to this Section
6.2(b) until a period of nine (9) months has elapsed from the
termination of the registration statement with respect to
Purchaser's Stock covered by a prior registration request. The
Company agrees that in the event the Purchaser makes a request
under this Section 6.2 to cause the Company to effect a demand
registration and the Company is precluded from effecting such
registration with respect to 25% or more of the shares of
Purchaser's Stock subject to such request as a consequence of the
terms of registration rights previously granted by the Company to
any of the Other Holders, then, under such
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circumstances, such request shall not be counted against the
number of demand requests granted to Purchaser under this Section
6.2.
6.3. General Provisions. (a) The Company will use all
reasonable efforts to cause any registration statement referred
to in Sections 6.1 and 6.2 to become effective and to remain
effective (with a prospectus at all times meeting the requirement
of the 1933 Act) until the earlier of 180 days from the effective
date of the registration statement and the date the Purchaser
completes its distribution of Purchaser's Stock, subject,
however, to the Company's suspension rights set forth in Section
6.7(b). The Company will use all reasonable efforts to effect
such qualifications under applicable Blue Sky or other state
securities laws as may be reasonably requested by the Purchaser
(provided that the Company shall not be obligated to file a
general consent to service of process or qualify to do business
as a foreign corporation or otherwise subject itself to taxation
in any jurisdiction solely for the purpose of any such
qualification) to permit or facilitate such sale or other
distribution. The Company will cause the Purchaser's Stock to be
listed on the principal stock exchange on which the shares of
Common Stock are listed.
(b) The Purchaser acknowledges that the Company has
previously granted registration rights to other holders of Common
Stock and/or other securities issued by the
Company that are convertible into or exercisable for shares of
Common Stock (collectively, the "Other Holders"). The Purchaser
further acknowledges that, notwithstanding anything to the
contrary provided in this Agreement, the registration rights
granted to the Purchaser under this Agreement shall, in every
case, be subject to the rights of the Other Holders and, to the
extent, if any, that any of the provisions of this Article VI
conflict or are inconsistent with any of such
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rights of the Other Holders, such rights of the Other Holders
shall govern with respect to the subject matter of such conflict
or inconsistency.
(c) The Purchaser agrees, if requested by the managing
underwriter or underwriters in an underwritten offering (an
"Offering"), not to effect any public sale or distribution of any
of the securities of the Company of any class included in such
Offering, including a sale pursuant to Rule 144 or Rule 144A
under the Securities Act (except as part of such Offering),
during the 15-day period prior to, and during the 90-day period
beginning on, the date of pricing of each Offering, to the extent
timely notified in writing by the Company or the managing
underwriters. Furthermore, notwithstanding anything to the
contrary set forth in the Agreement, the Company's obligation
under this Agreement to cause a registration statement and any
filings with any state securities commission to be made or to
become effective or to amend or supplement such registration
statement shall be suspended in the event and during such period
as the Company is proceeding with an Offering if the Company is
advised by the underwriters that the sale of shares of
Purchaser's Stock under such registration statement would have a
material adverse effect on the Offering.
(d) Following the effectiveness of a registration
statement and the filings with any state securities commissions,
the Purchaser agrees that it will not effect any sales of the
Purchaser's Stock pursuant to such registration statement or any
such filings at any time after it has received notice from the
Company to suspend sales (i) as a result of the occurrence or
existence of any Suspension Event, or (ii) so that the Company
may amend or supplement such registration statement or such
filing. The Purchaser may recommence effecting sales of the
Purchaser's Stock pursuant to the registration statement or such
filings following further notice to such effect from the Company,
which notice shall be given by the Company not later than
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three (3) business days after the conclusion of any such
Suspension Event or amendment or supplement.
6.4. Information, Documents, Etc. Upon making a
request for registration pursuant to Sections 6.1 or 6.2, the
Purchaser shall furnish to the Company such information regarding
its holdings and the proposed manner of distribution thereof as
the Company may reasonably request and as shall be required in
connection with any registration, qualification or compliance
referred to in this Article VI. The Company agrees that it will
furnish to the Purchaser the number of prospectuses, offering
circulars or other documents, or any amendments or supplements
thereto, incident to any registration, qualification or
compliance referred to in this Article VI as the Purchaser from
time to time may reasonably request.
6.5. Expenses. The Company will bear all expenses of
registrations pursuant to Section 6.1 and one-half of all
expenses of the first two registrations (and amendments and
supplements related thereto) pursuant to Section 6.2 (in each
case, other than underwriting discounts and commissions and
brokerage commissions and fees, if any, payable with respect to
shares of Purchaser's Stock sold by the Purchaser, and fees and
expenses of any accountants, counsel or other parties retained or
employed by holders of Purchaser's Stock) including, without
limitation, registration fees, printing expenses, expenses of
compliance with Blue Sky or other state securities laws, and
legal and audit fees incurred by the Company in connection with
such registration and amendments or supplements in connection
therewith. The Purchaser will bear one-half of all expenses of
the first two registrations (and amendments and supplements
related thereto) and all expenses of the third registration (and
amendments and supplements related thereto) pursuant to Section
6.2, including, without limitation, registration fees, printing
expenses, expenses of compliance with Blue Sky or other state
securities laws, and legal and
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audit fees incurred by the Company and the Purchaser and the
holders of Purchaser's Stock. Notwithstanding the foregoing, the
Company agrees that in the event that subsequent to the date
hereof the Company shall grant demand registration rights to a
third party and shall agree in connection therewith to bear all
or a greater portion of the expenses of such demand registrations
than as set out above, then this Section 6.5 shall be deemed to
have been amended to provide for the Company to bear, and the
Company shall bear, the same portion of the expenses of any
subsequent registration pursuant to Section 6.2 of this Agreement
as the Company shall have agreed to bear for such third party.
6.6. Cooperation. In connection with any registration
of Purchaser's Stock pursuant to this Article VI, the Company
agrees to:
(a) enter into such customary agreement (including an
underwriting agreement containing such representations and
warranties by the Company and such other terms and provisions,
including indemnification provisions, as are customarily
contained in underwriting agreements for comparable offerings
and, if no underwriting agreement is entered into, an
indemnification agreement on such terms as is customary in
transactions of such nature) and take all such other actions as
the Purchaser or the underwriters, if any, participating in such
offering and sale may reasonably request in order to expedite or
facilitate such offering and sale;
(b) furnish, at the request of the Purchaser or any
underwriters participating in such offering and sale, (i) a
comfort letter or letters, dated the date of the final prospectus
with respect to the Purchaser's Stock and/or the date of the
closing for the sale of the Purchaser's Stock from the
independent certified public accountants of the Company and
addressed to the Purchaser and any underwriters participating in
such offering and sale, which letter or letters shall state that
such accountants are independent with respect to the Company
within the
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meaning of Rule 1.01 of the Code of Professional Ethics of the
American Institute of Certified Public Accountants and shall be
in form reasonably satisfactory to the managing underwriter (or,
if none, to the Purchaser) and shall cover matters of the type
customarily covered in "cold comfort" letters in connection with
transactions of a similar nature for similar entities and (ii) an
opinion, dated the date of the closing for the sale of the
Purchaser's Stock, of the counsel representing the Company with
respect to such offering and sale (which counsel may be the
General Counsel of the Company or other counsel reasonably
satisfactory to the Purchaser), addressed to the Purchaser and
any such underwriters, which opinion shall be in form reasonably
satisfactory to the managing underwriter (or, if none, to the
Purchaser) and shall address such matters as are customary in
transactions of a similar nature for similar entities;
(c) make available for inspection by the Purchaser,
the underwriters, if any, participating in such offering and sale
(which inspecting underwriters shall, if reasonably possible, be
limited to any manager or managers for such participating
underwriters), the counsel for the Purchaser, one accountant or
accounting firm retained by the Purchaser and any such
underwriters, or any other agent retained by the Purchaser or
such underwriters, all financial and other records, corporate
documents and properties of the Company, and supply such
additional information, as they shall reasonably request;
provided that any such party shall keep the contents thereof
confidential in the manner prescribed by Section 5.1.
6.7. Action to Suspend Effectiveness; Supplement to
Registration Statement. (a) The Company will notify the Purchaser
and its counsel promptly of (i) any action by the Commission to
suspend the effectiveness of the registration statement covering
the Purchaser's Stock or the institution or threatening of any
proceeding for such purpose (a "Stop Order") or (ii) the receipt
by the Company of any notification with respect to the suspension
of the qualification
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of the Purchaser's Stock for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
Immediately upon receipt of any such notice, the Purchaser shall
cease to offer or sell any Purchaser's Stock pursuant to the
registration statement in the jurisdiction to which such Stop
Order or suspension relates. The Company will use all reasonable
efforts to prevent the issuance of any such Stop Order or the
suspension of any such qualification and, if any such Stop Order
is issued or any such qualification is suspended, to obtain as
soon as possible the withdrawal or revocation thereof, and will
notify the Purchaser and its counsel at the earliest practicable
date of the date on which the Purchaser may offer and sell
Purchaser's Stock pursuant to the registration statement.
(b) Notwithstanding anything to the contrary set forth
in this Agreement, the Company's obligation under this Agreement
to cause the registration of Purchaser's Stock and any filings
with any state securities commission to be made or to become
effective or to amend or supplement a registration statement
shall be suspended in the event and during such period that there
are pending negotiations relating to, or consummation of, a
transaction or the occurrence of an event that would require
additional disclosure of material information by the Company in
such registration statement or such filing (such circumstances
being hereinafter referred to as a "Suspension Event") that would
make it impractical or inadvisable to cause such registration
statement or such filings to be made or to become effective or to
amend or supplement such registration statement, but such
suspension shall continue only for so long as such event or its
effect is continuing but in no event will that suspension exceed
ninety (90) days. Immediately upon receipt by the Purchaser of
notice of a Suspension Event, the Purchaser shall cease to offer
or sell any Purchaser's Stock pursuant to such registration
statement, cease to deliver or use such registration statement
and, if so requested by the Company, return to the
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Company, at its expense, all copies (other than permanent file
copies) of such registration statement.
(c) In the event the Company shall determine that it
is necessary to amend or supplement any registration statement
relating to Purchaser's Stock, the Company will furnish copies of
such proposed amendment or supplement to the Purchaser and its
counsel and will not file or distribute such amendment or
supplement without the prior consent of the Purchaser, which
consent shall not be unreasonably withheld.
6.8. Indemnification . In the event any Purchaser's
Stock is included in a registration statement under this Article
VI:
(a) To the full extent permitted by law, the Company
will indemnify and hold harmless the Purchaser and each
subsequent holder of Purchaser's Stock as set forth in Section
9.3(d) hereof (each, a "Holder") and the affiliates of such
Holder, and their respective directors, officers, employees,
general and limited partners, members, agents and representatives
(and the directors, officers, affiliates and controlling persons
thereof), and each other person, if any, who controls such Holder
within the meaning of the Securities Act or the Exchange Act,
from and against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any of
the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration
statement, including any preliminary prospectus, any final
prospectus contained therein or any amendments or supplements
thereto, (ii) any omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make
the statements therein not
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misleading, or (iii) any violation or alleged violation by the
Company in connection with the registration of Purchaser's Stock
under the Securities Act, the Exchange Act, any state securities
law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law; and the
Company will pay to each such Holder, affiliate or controlling
person, as incurred, any legal or other expenses reasonably
incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, that
the indemnity agreement contained in this Section 6.8(a) shall
not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected
without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable hereunder
in any such case for any such loss, claim, damage, liability or
action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection
with such registration by the Purchaser or controlling person;
and provided, further, that the Company shall not be liable
hereunder in any such case to the extent it is determined that
any such loss, claim, damage, liability or expense arises out of
or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made:
(A) in any such preliminary prospectus, if (I) it was
the responsibility of such Holder to provide the person
asserting such loss, claim, damage, liability or expense
with a current copy of the prospectus and such Holder
failed to deliver or cause to be delivered a current copy
of the prospectus to such person after the Company had
furnished such Holder with a sufficient number of copies of
the same and (II) the current prospectus corrected such
untrue statement or omission; or
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(B) in such prospectus, if such untrue statement or
omission is corrected in an amendment or supplement to such
prospectus and the Holder thereafter fails to deliver the
prospectus as so amended or supplemented prior to or
concurrently with the sale of Purchaser's Stock to the
person asserting such loss, claim, damage, liability or
expense after the Company had furnished such Holder with a
sufficient number copies of the same.
Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such
Holder or any such director, officer, employee, general or
limited partner, member, agent, representative or controlling
person and shall survive the transfer of such securities by such
Holder. Each Holder shall furnish such information regarding
itself or the claim in question as the Company may reasonably
request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting
therefrom.
(b) To the full extent permitted by law, each selling
Holder will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within
the meaning of the Securities Act, any underwriter, any other
Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder,
against any losses, claims, damages or liabilities (joint or
several) to which any of the foregoing persons may become
subject, under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are
based upon (i) any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such
Holder expressly for
40
<PAGE>
use in connection with such registration or (ii) an untrue
statement or alleged untrue statement or omission or alleged
omission made in the circumstances described in clauses (A) or
(B) of Section 6.8(a); and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any
person intended to be indemnified pursuant to this Section
6.8(b), in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, that the
indemnity agreement contained in this Section 6.8(b) shall not
apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be
unreasonably withheld; provided, that, in no event shall any
indemnity under this Section 6.8(b) exceed the gross proceeds
from the offering received by such Holder; and provided, further,
that the obligation to provide indemnification pursuant to this
Section 6.8(b) shall be several, and not joint and several, among
such indemnifying parties. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on
behalf of the Company or any such director, officer,
representative or controlling person and shall survive the
transfer of such securities by such prospective seller.
(c) Promptly after receipt by an indemnified party
under this Section 6.8 of notice of the commencement of any
action (including any governmental action), such indemnified
party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 6.8, deliver to the
indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate
in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel selected by the indemnifying
party or parties. The failure to deliver written notice to the
indemnifying party within a reasonable time after the
41
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commencement of any such action, if materially prejudicial to its
ability to defend such action, shall relieve such indemnifying
party of any liability to the indemnified party under this
Section 6.8 to the extent of such prejudice, but the omission so
to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 6.8. The indemnified
party shall have the right, but not the obligation, to
participate in the defense of any action referred to above
through counsel of its own choosing and shall have the right, but
not the obligation, to assert any and all separate defenses,
cross claims or counterclaims which it may have, and the fees and
expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of such counsel has
been specifically authorized in advance by the indemnifying
party, (ii) there is a conflict of interest that prevents counsel
for the indemnifying party from adequately representing the
interests of the indemnified party or there are defenses
available to the indemnified party that are different from, or
additional to, the defenses that are available to the
indemnifying party, or (iii) the indemnifying party fails to
assume the defense or does not reasonably contest such action in
good faith, in which case, if the indemnified party notifies the
indemnifying party that it elects to employ separate counsel, the
indemnifying party shall not have the right to assume the defense
of such action on behalf of the indemnified party and the
reasonable fees and expenses of such separate counsel shall be
borne by the indemnifying party; provided, however, that, the
indemnifying party shall not, in connection with any proceeding
or related proceedings, be liable for the reasonable fees and
expenses of more than one separate firm (in addition to one firm
acting as local counsel) for all indemnified parties.
(d) Contribution. If for any reason (other than the
reasons expressly specified in this Section 6.8) the foregoing
indemnity and payment obligation is unavailable or is
42
<PAGE>
insufficient to hold harmless an indemnified party under
paragraphs (a) or (b) of this Section 6.8, then each indemnifying
party shall contribute to the amount paid or payable by such
indemnified party as a result of any loss, claim, damage or
liability (or actions or proceedings in respect thereof),
including, without limitation, any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, action or
proceeding, in such proportion as is appropriate to reflect the
relative fault of the indemnifying
party on the one hand and the indemnified party on the other. The
relative fault shall be determined by reference to, among other
things, whether the action in question, including any untrue or
alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact has been taken or made
by, or relates to information supplied by, the indemnifying party
or the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such action, untrue statement or omission. If, however,
the allocation provided in the second preceding sentence is not
permitted by applicable law, or if the allocation provided in the
second preceding sentence provides a lesser sum to the
indemnified party than the amount hereinafter calculated, then
each indemnifying party shall contribute to the amount paid or
payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative fault but also the
relative benefits to the indemnifying party and the indemnified
party as well as any other relevant equitable considerations. The
parties agree that it would not be just and equitable if
contributions pursuant to this Section 6.8(d) were to be
determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to in the preceding sentences of this
Section 6.8(d). Notwithstanding anything in this Section 6.8(d)
to the contrary, no indemnifying party
43
<PAGE>
(other than the Company) shall be required pursuant to this
Section 6.8(d) to contribute any amount in excess of the gross
proceeds received by such indemnifying party from the sale of
Purchaser's Stock in the offering to which the losses, claims,
damages or liabilities of the indemnified parties relate. No
person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The obligations of the Company and the Holders
under this Section 6.8 shall survive the completion of any
offering of Purchaser's Stock in a registration statement under
this Article VI.
(f) Notwithstanding the foregoing, to the extent that
the provisions on indemnification and contribution contained in
the underwriting agreement (if any) entered into in connection
with any underwritten public offering of the Purchaser's Stock
are in conflict with the foregoing provisions, the provisions in
such underwriting agreement shall control.
VII. INDEMNIFICATION
7.1. Indemnification by the Company. The Company shall
indemnify and hold the Purchaser and each of its members,
employees, officers and agents harmless from and against any and
all losses, claims, damages or liabilities whatsoever (including
legal fees and expenses) incurred by any of them based upon,
resulting from or arising out of (i) any material breach of any
representation, warranty, covenant or agreement of the Company
contained in this Agreement or (ii) except as provided in Section
7.2, any claim brought, directly or indirectly, by a third party
relating to the transactions contemplated by this Agreement.
7.2. Indemnification by the Purchaser. The Purchaser
(and with respect to Sections 5.1, 5.2, 5.6 and 5.7, Chilmark)
shall indemnify and hold the Company and each of its
44
<PAGE>
employees, directors, officers and agents harmless from and
against any and all losses, claims, damages or liabilities
whatsoever (including legal fees and expenses) incurred by any of
them (i) in the case of the Purchaser, resulting from or arising
out of any material breach of any representation, warranty,
covenant or agreement of the Purchaser contained in this
Agreement and (ii) in the case of Chilmark, resulting from or
arising out of any material breach of any covenant or agreement
of Chilmark contained in Sections 5.1, 5.2, 5.6 or 5.7 of this
Agreement.
VIII. TERMINATION
8.1 Termination. (a) This Agreement may be terminated
and the transactions contemplated herein may be abandoned at any
time prior to the Closing:
(i) by the Company or the Purchaser, if the Closing
has not occurred by January 31, 1999;
(ii) by mutual written consent of the Company and the
Purchaser;
(iii) by the Company, if there has been a material
misrepresentation or breach of warranty on the part of the
Purchaser in the representations and warranties contained herein
or a material breach of covenants on the part of the Purchaser
and the same has not been cured within 30 days after notice
thereof;
(iv) by the Purchaser, if there has been a material
misrepresentation or breach of warranty on the part of the
Company in the representations and warranties contained herein or
a material breach of covenants on the part of the Company and the
same has not been cured within 30 days after notice thereof;
(v) by the Purchaser, if the terms of the Credit
Facility Amendments are not reasonably satisfactory to the
Purchaser; or
45
<PAGE>
(vi) by either the Purchaser or the Company, if any
Governmental Entity shall have issued a final order, decree or
ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and nonappealable, provided
that the party seeking to terminate shall have used its best
efforts to appeal such order, decree, ruling or other action.
(b) Notwithstanding anything herein to the contrary,
the right to terminate this Agreement under this Section 8.1
shall not be available to any party to the extent the failure of
such party to fulfill any of its obligations under this Agreement
has been the cause of, or resulted in, the failure of the Closing
to occur on or before such date (as a result, for example, of an
action or failure to act causing a failure of a condition
precedent).
(c) A party terminating this Agreement pursuant to
this Section 8.1 shall give written notice thereof the other
party hereto, whereupon this Agreement shall terminate and be of
no further force and effect, the transactions contemplated hereby
shall be abandoned without further action by any party and there
shall be no liability on the part of the Company or the
Purchaser, except as provided in Section 9.7 hereof and except
for any liability for any willful breach hereof; provided however
that the provisions of Sections 5.1, 7.1 and 7.2 shall survive
any such termination.
IX. GENERAL PROVISIONS
9.1. Survival of Representations, Warranties and
Agreements. Notwithstanding any investigation conducted or notice
or knowledge obtained by or on behalf of any party hereto, each
representation and warranty in this Agreement and each agreement
or
46
<PAGE>
covenant in this Agreement which does not by its own terms expire
on or prior to the Closing shall survive the Closing without
limitation as to time, except as specifically referred to herein.
9.2. Notices. Any notice, request, instruction or
other document to be given hereunder by a party hereto shall be
in writing and shall be deemed to have been given, (i) when
received if given in person, or (ii) on the date of transmission
if sent by nationally recognized overnight courier, certified or
registered mail, return receipt requested or (iii) three days
after being deposited in the U.S. mail, postage prepaid:
(a) if to the Purchaser, addressed as follows:
Cape Ann Investors, L.L.C.
c/o Chilmark Fund II, L.P.
875 North Michigan Avenue
Suite 2100
Chicago, Illinois 60611
Attention: Mr. David M. Schulte
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attention: William A. Groll, Esq.
(b) if to the Company, addressed as follows:
NutraMax Products, Inc.
51 Blackburn Drive
Gloucester, Massachusetts 01930
Attention: Robert F. Burns, Vice President and
Chief Financial Officer
47
<PAGE>
with a copy to:
Eugene M. Schloss, Jr., Esq.
1700 Cary Road
Huntingdon Valley, Pennsylvania 19006-5002
and
Goodwin, Procter & Hoar, LLP
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Joseph L. Johnson III, Esq.
or to such other individual or address as a party hereto my
designate for itself by notice given as herein provided.
9.3. General. (a) This Agreement (including the
documents and instruments referred to or incorporated herein,
including the Warrants) constitutes the entire agreement, and
supersedes all of the prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect
to the subject matter hereof; provided, however, if this
Agreement is terminated, it will not be deemed to supersede prior
agreements between the parties, including the 1997 Stock Purchase
Agreement and the October Agreement, and such agreements will
continue in full force and effect.
(b) This Agreement is not intended to confer upon any
person other than the parties hereto any rights or remedies
hereunder other than as contemplated in Article VI, Article VII
and Section 9.3(d) and shall not be assigned by any party by
operation of law or otherwise.
(c) This Agreement may be executed in two or more
counterparts which together shall constitute a single agreement.
(d) This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors, heirs
and permitted assigns. This Agreement is not
48
<PAGE>
assignable except by consent of each of the parties hereto or
operation of law; provided that in the event Purchaser shall
distribute the Shares to its investors (whether as a result of
dissolution or otherwise), (i) the holders of such Shares shall
succeed to the rights and obligations of the Purchaser contained
in Article VI hereof and (ii) Chilmark Fund II, L.P. shall
succeed to the rights and obligations of the Purchaser contained
in Section 4.5 hereof so long as it shall hold any Shares; and
provided further that the members of the Advisory Board of
Chilmark to whom the Purchaser transferred shares of Common Stock
in accordance with the 1997 Stock Purchase Agreement shall have
the rights and obligations of the Purchaser with respect to such
shares contained in Section 5.6 and Article VI hereof, other than
Section 6.2 hereof; and provided further that, prior to the
Closing, the Purchaser may, without the prior written consent of
the Company and without relieving the Purchaser of its
obligations hereunder, assign to such members of the Advisory
Board of Chilmark the right and obligation to purchase up to
75,060 Shares as long as such member agrees in writing to be
bound by all of the terms of and to perform all of the
obligations of the Purchaser with respect to such Shares
contained in Section 5.6 and Article VI hereof, other than
Section 6.2 hereof, and makes a representation as to such member
to the same effects set forth for the Purchaser in Section 3.6
hereof or otherwise provides written evidence, reasonably
satisfactory to the Company, that such transfer may be effected
in compliance with the federal securities laws and applicable
state securities laws, in which case, upon consummation of the
purchase of Shares by any such member, such member shall have the
rights and obligations of the Purchaser with respect to such
Shares contained in Section 5.6 and Article VI hereof, other than
Section 6.2 hereof. Any purported assignment of this Agreement in
violation of this Section 9.3 shall be null and void.
49
<PAGE>
9.4. Governing Law. (a) THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES CREATED HEREBY SHALL BE GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO
THE CONFLICT OF LAW RULES THEREOF.
(b) Each party agrees that any proceeding relating to
this Agreement shall be brought in a state court of Delaware.
Each party hereby consents to personal jurisdiction in any such
action brought in any such Delaware court, consents to service of
process by mail made upon such party and such party's agent and
waives any objection to venue in any such Delaware court or to
any claim that any such Delaware court is an inconvenient forum.
9.5. Severability of Provisions. If any provision or
any portion of any provision of this Agreement or the application
of any such provision or any portion thereof to any person or
circumstance, shall be held invalid or unenforceable, to the
extent permitted by law, the remaining portion of such provision
and the remaining provisions of this Agreement, or the
application of such provision or portion of such provision as is
held invalid or unenforceable to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall
not be affected thereby.
9.6. Captions. All section titles or captions
contained in this Agreement are for convenience only, shall not
be deemed a part of this Agreement and shall not affect the
meaning or interpretation of this Agreement. All references
herein to Sections shall be deemed references to such parts of
this Agreement, unless the context shall otherwise require.
9.7. Expenses. Except as otherwise expressly provided
in this Agreement, the Company shall pay the expenses incidental
to the preparation of this Agreement, the carrying out of the
provisions hereof and the consummation of the transactions
contemplated hereby.
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<PAGE>
9.8. Equitable Relief. Each party acknowledges that,
in the event of any breach of this Agreement by a party, the
other party would be irreparably and immediately harmed and could
not be made whole by monetary damages. It is accordingly agreed
that such other party, in addition to any other remedy to which
it may be entitled, shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this
Agreement and to compel specific performance of this Agreement.
Any requirements for the securing or posting of any bond with
respect to such remedy are hereby waived by each of the parties
hereto.
9.9. Definitions. The following terms shall have the
respective meanings specified in the indicated Sections of this
Agreement:
Term Agreement Section
- ---- -----------------
1997 Stock Purchase Agreement Recitals
Affiliate 5.6(a)
Agreement Recitals
Authority 1.3(b)
Board 1.3(d)(ii)
Buyer 5.6(c)(ii)
Chilmark 5.1(b)
Closing 1.3(a)
Commission 2.6
Common Stock Recitals
Company Recitals
Credit Facilities 1.3(b)
Credit Facility Amendments 1.3(b)
Encumbrances 1.1
Exchange Act 2.4
Financial Statements 2.7(a)
FNBB 1.3(b)
Governmental Entity 1.3(b)
Hart-Scott-Rodino Act 1.3(b)
Holder 6.8(a)
Korman Purchase Recitals
Korman Purchase Agreement Recitals
Legal Requirements 1.3(b)
Lenders Recitals
Lepone Purchase Recitals
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<PAGE>
Lepone Purchase Agreement Recitals
Loan Agreement 1.3(b)
Material Adverse Effect 1.3(b)
NASD 2.3(a)
Notice of Proposed Transfer 5.6(c)(i)
October Agreement Recitals
Offering 6.3(c)
Other Holders 6.3(b)
Person 4.1
Purchase Agreements Recitals
Purchaser Recitals
Purchaser Material Adverse Effect 1.3(c)
Purchaser's Stock 6.1
Rule 13d-3 5.6(a)
SEC Reports 2.6
Securities Act 3.6(a)
Selling Stockholder 5.6(c)
Shares Recitals
Stock 5.6(a)
Stockholders 5.6(a)
Stockholders Meeting 5.7(b)
Stop Order 6.7(a)
Subsidiary 2.1
Suspension Event 6.7(b)
Transferee 5.6(c)(i)
Violation 6.8(a)
Warrants Recitals
52
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto have
duly executed and delivered this Agreement as of the date first
above written.
NUTRAMAX PRODUCTS, INC.
By: /s/ Robert F. Burns
-----------------------
Name: Robert F. Burns
Title: Vice President,
Chief Financial
Officer and Treasurer
CAPE ANN INVESTORS, L.L.C.
By: Chilmark Fund II, L.P.,
its Managing Member
By: Chilmark II, L.L.C.,
its General Partner
By: /s/ David Schulte
-----------------------
Name: David Schulte
Title: President
SOLELY FOR PURPOSES OF
SECTIONS 5.1, 5.2, 5.6,
5.7 AND 7.2:
CHILMARK FUND II, L.P.
By: Chilmark II, L.L.C.,
its General Partner
By: /s/ David Schulte
-----------------------
Name: David Schulte
Title: President
Exhibit 10
NutraMax Products, Inc.
51 Blackburn Drive
Gloucester, MA 01930
November 6, 1998
Cape Ann Investors, L.L.C.
c/o Chilmark Fund II, L.P.
875 North Michigan Avenue
Suite 2100
Chicago, Illinois 60611
Attention: Mr. David M. Schulte
Dear David:
Reference is made to that certain Warrant Certificate,
dated as of October 14, 1997 (the "Warrant Certificate"),
pursuant to which NutraMax Products, Inc. (the "Company") granted
to Cape Ann Investors, L.L.C. ("Cape Ann") 215,425 warrants to
purchase shares of the Company's common stock, par value $.001
per share. Pursuant to this letter, the Company and Cape Ann
hereby acknowledge and agree that the Exercise Price (as defined
in the Warrant Certificate) shall be $3.60. Please acknowledge
Cape Ann's agreement with the foregoing by signing in the space
provided below and returning one copy to the undersigned,
whereupon a notice of such Exercise Price shall be sent to all
other holders of warrant certificates of like kind.
Sincerely,
NUTRAMAX PRODUCTS, INC.
By: /s/ Robert F. Burns
------------------------------
Name: Robert F. Burns
Title: Chief Financial Officer
Acknowledged on November 6, 1998, by:
CAPE ANN INVESTORS, L.L.C.
By: Chilmark Fund II, L.P.,
its Managing Member
By: Chilmark II, L.L.C.,
its Managing Member
By: /s/ David M. Schulte
------------------------------
Name: David M. Schulte
Title: President
cc: Joseph L. Johnson III, P.C.
William A. Groll, Esq.
