As filed with the Securities and Exchange Commission on November 26, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ANICOM, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3885212
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6133 River Road, Suite 1000, Rosemont, Illinois 60018-5171, (847) 518-8700
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
Scott C. Anixter
Chairman and Chief Executive Officer
Anicom, Inc.
6133 River Road, Suite 1000, Rosemont, Illinois 60018-5171, (847) 518-8700
(Name, address, including zip code, and telephone number, including area code
of agent for service)
With Copies to:
Jeffrey R. Patt, Esq.
Katten Muchin & Zavis
525 West Monroe Street
Chicago, Illinois 60661
(312) 902-5200
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: ____
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: : X
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering: _____
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: ____
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. ____
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Aggregate Amount of
Securities to be Registered Registered Offering Price Offering Price(1) Registration Fee
Per Share(1)
<S> <C> <C> <C> <C>
Common Stock, $.001 par value 3,773,580 shares $16.5625 $62,499,919 $18,940
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933, as amended, on the basis of the
average of the high and low sales prices of the Common Stock as reported on the
Nasdaq National Market on November 19, 1997.
<PAGE>
Subject to completion, dated November 26, 1997
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
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PROSPECTUS
- --------------------------------------------------------------------------------
LOGO
Anicom, Inc.
[GRAPHIC OMITTED] Multimedia Wiring Systems
3,773,580 Shares of Common Stock
This Prospectus relates to the offer and sale by certain persons listed herein
under "Selling Stockholders", their pledgees, donees, transferees or
distributees, or their respective successors-in-interest (collectively, the
"Selling Stockholders") of 3,773,580 shares (collectively, the "Shares") of
common stock, $.001 par value ("Common Stock"), of Anicom, Inc. (the "Company").
The Company will not receive any of the proceeds from the sale of the Shares by
the Selling Stockholders.
The Common Stock is traded on the Nasdaq National Market (the "NNM") under the
symbol "ANIC." On November 21, 1997, the closing price of the Common Stock as
reported on the NNM was $17.00 per share. The Selling Stockholders may, from
time to time, sell the Shares on the NNM, in privately negotiated transactions
or otherwise, at fixed prices that may be changed, at market prices prevailing
at the time of sale, at prices related to such market prices or at negotiated
prices. See "Plan of Distribution."
See "Risk Factors" beginning on page 4 for information that should be considered
by prospective investors.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMIS-
SION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is November __, 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information concerning the Company may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices at Seven World Trade Center, 13th Floor, New York, New York
10048 and at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can also be obtained upon written
request addressed to the Commission, Public Reference Section, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. In addition, the Commission
maintains an Internet Web site at http://www.sec.gov containing reports, proxy
and information statements and other information regarding registrants,
including the Company, that file electronically with the Commission. The Common
Stock is traded on the NNM, and reports, proxy statements and other information
concerning the Company can be inspected at the offices of The Nasdaq Stock
Market, 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act, with respect to the
securities offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is hereby made to the Registration Statement which may be inspected and copied
in the manner and at the sources described above. Any statements contained
herein concerning the provisions of any document filed as an Exhibit to the
Registration Statement or otherwise filed with the Commission are not
necessarily complete and, in each instance, reference is made to the copy of
such document so filed. Each such statement is qualified in its entirety by such
reference.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by reference:
1.The Company's Annual Report on Form 10-KSB, for the fiscal year ended December
31, 1996;
2.The Company's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997;
3.The Company's Current Reports on Form 8-K/A dated May 23, 1996, November 5,
1996 and September 25, 1997 and the Company's Current Reports on Form 8-K, dated
March 3, 1997, May 22, 1997, May 30, 1997, June 5, 1997 and July 25, 1997; and
4.The description of the Common Stock, contained in the Company's registration
statement on Form 8-A filed pursuant to Section 12 of the Exchange Act and all
amendments thereto and reports filed for the purpose of updating such
description.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering made hereby shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in any subsequently filed document which is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide, without charge, to each person to whom a copy of this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents incorporated herein by reference (other than
exhibits thereto, unless such exhibits are specifically incorporated by
reference into the information that this Prospectus incorporates). Written or
telephone requests for such copies should be directed to the Company's principal
executive office: Anicom, Inc., 6133 River Road, Suite 1000, Rosemont, Illinois
60018-5171, Attention: Donald C. Welchko (telephone: 847-518-8700).
<PAGE>
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RISK FACTORS
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An investment in the Shares offered hereby entails a high degree of risk. In
addition to other information contained in this Prospectus or incorporated by
reference herein, potential purchasers should consider carefully the following
factors in evaluating the Company, its business and the Shares offered hereby.
Statements contained in this Prospectus that are not historical facts are
forward looking statements that are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. A number of important
factors could cause the Company's actual results for 1997 and beyond to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, the Company. These factors include, without limitation, those listed
below.
Risks Associated with Integrated Growth Strategy
The Company's integrated growth strategy involves the identification and pursuit
of acquisition opportunities and internal growth. As of November 21, 1997, the
Company operated in over 50 locations. The success and the rate of the Company's
expansion into new geographical markets will depend on a number of factors,
including general economic and business conditions affecting the industries of
the Company's customers in such markets, competition, the availability of
sufficient capital, the availability of sufficient inventory to meet customer
demand, the identification and acquisition or leasing of suitable sales offices
and/or warehouse facilities on acceptable terms, and the ability to attract and
retain qualified personnel and operate effectively in geographic areas in which
the Company has no prior experience. As a result, there can be no assurance that
the Company will be able to achieve its planned growth on a timely or profitable
basis.
With respect to the Company's identification and pursuit of acquisition
opportunities, viable acquisition candidates may not be available or available
on terms acceptable to the Company. Additionally, if the Company continues to
grow, it may be required to make further investments in personnel and
information technology systems. Failure to successfully hire or retain such
personnel or implement such systems could have a material adverse effect on the
Company's results of operations and financial condition. There can be no
assurance that the Company will be able to manage its expanding operations
effectively or that it will be able to maintain or accelerate its recent growth
or that the Company will be able to operate profitably.
Capital Needs for Expansion
If the Company continues to grow, it may require further capital through public
or private equity offerings or financings. No assurance can be given that
additional capital will be available to the Company or that, if available, it
would be on terms acceptable to the Company. If additional funds are raised by
issuing equity securities, further dilution to the Company's stockholders may
result.
Shares Eligible for Future Sale
All of the Shares being registered in the Registration Statement, of which this
Prospectus is a part, are being registered by the Selling Stockholders for
resale. The increase in the number of outstanding shares of Common Stock that
are available for sale without restriction due to the registration of the Shares
and the perception that a substantial number of the Shares may be sold by
Selling Stockholders, or the actual sale of a substantial number of the Shares
by Selling Stockholders, could adversely affect the market price of the Common
Stock.
Pursuant to its Amended and Restated Certificate of Incorporation, the Company
has the authority to issue additional shares of Common Stock and shares of one
or more series of preferred stock (the "Preferred Stock"). Such shares may be
issued by the Company on the authority of the Board of Directors without
stockholder action. The issuance of any such additional Common Stock or
Preferred Stock could result in the dilution of the voting power and rights of
the outstanding shares of Common Stock. The possible issuance of additional
shares of Preferred Stock may be considered a deterrence to a change of control.
The Company has a registration statement on Form S-3 in effect covering the
shares of Common Stock issued upon the mandatory conversion of all of the
outstanding Series A Cumulative Convertible Preferred Stock and the payment of
dividends thereon. See "Recent Developments Conversion of Series A Preferred
Stock."
<PAGE>
As of November 21, 1997, the Company had outstanding options to purchase
2,264,291 shares of Common Stock at a weighted average exercise price of
approximately $8.45 per share (the majority of which have not yet vested) issued
to employees, former employees, directors and consultants pursuant to the
Company's stock incentive plans and Warrants to purchase 81,364 shares of the
Company's Common Stock at a weighted average exercise price of $4.45 per share.
The Company has registration statements on Form S-8 in effect covering an
aggregate of 3,300,000 of the shares issuable under the stock incentive plans.
The Company may issue additional capital stock or other forms of convertible or
exchangeable securities to raise capital in the future. In order to attract and
retain key personnel, the Company may also issue additional securities,
including stock options, in connection with its employee benefit plans. During
the terms of such options and warrants, the holders thereof are given the
opportunity to benefit from a rise in the market price of the Common Stock. The
exercise of such options and warrants may have an adverse effect on the market
value of the Common Stock. Also, the existence of such options and warrants may
adversely affect the terms on which the Company can obtain additional equity
financing.
Competition
The market for the distribution of multimedia wiring products is highly
competitive and fragmented. To compete successfully, management believes that
the Company will need to continue to offer a broad range of technologically
advanced products, provide competitive pricing while maintaining its margins,
provide prompt delivery of products, deliver responsive customer service,
establish and maintain strong relationships with suppliers and customers, and
attract and retain highly qualified personnel. The Company faces substantial
competition from several national and regional distributors and from
manufacturers who sell directly to end-users for certain large-scale projects.
To maintain or increase market share in light of competitive pressures from
current or future competitors, the Company may be required to lower its prices.
Such measures could adversely affect the Company's financial condition and
results of operations.
Inventory
The Company is dependent upon identifying the right product mix and maintaining
sufficient inventory on hand to meet customer orders. There can be no assurance
that the Company will be able to identify and offer products necessary to remain
competitive or not suffer losses related to product obsolescence. Further, there
is no assurance that the Company will achieve and maintain sufficient inventory
levels to meet its customers' needs or that the Company will not have to take
inventory write-offs in the future.
Dependence on Management and Key Personnel
The Company is highly dependent upon the services of certain members of senior
management, including Alan B. Anixter, Scott C. Anixter and Carl E. Putnam. Loss
of the services of any of these individuals could have a material adverse impact
on the Company. The Company has entered into employment agreements with a number
of executive officers, including Scott C. Anixter, Donald C. Welchko, Carl
E. Putnam and Robert L. Swanson. The Company maintains key man life insurance
with respect to Carl E. Putnam. The Company's success is also dependent upon its
ability to attract and retain highly qualified management, marketing and sales
personnel.
<PAGE>
Possible Volatility of Stock Price
The market price of the Common Stock could be subject to significant
fluctuations in response to variations in quarterly operating results, changes
in earnings, estimates by analysts, general conditions in the industries in
which the Company's customers compete and other events or factors. In addition,
the stock market, from time to time, has experienced extreme price and volume
fluctuations which particularly have affected the market price for companies
which have completed recent initial public offerings, and which often have been
unrelated to the operating performance of such companies. These broad
fluctuations may adversely affect the market price of the Common Stock.
<PAGE>
RECENT DEVELOPMENTS
Acquisitions
The Company has entered into an Agreement and Plan of Reorganization dated
November 24, 1997 ("Merger Agreement"), pursuant to which it has agreed to
acquire TW Communication Corporation ("TWC"), a company engaged in the sale and
distribution of multimedia wiring products, for consideration consisting of
$3,000,000 in cash and 873,580 shares of Common Stock. The shares of Common
Stock included in the consideration are being issued in reliance upon the
exemption from the registration requirements under Section 4(2) of the
Securities Act. This transaction is scheduled to close upon the effectiveness of
the registration statement of which this prospectus is a part.
Private Placement of Common Stock
Pursuant to a Stock Purchase Agreement dated November 24, 1997 ("Stock
Purchase Agreement") the Company agreed to issue and sell 2,900,000 shares of
Common Stock at a purchase price of $13.00 per share in a private placement
exempt from the registration requirements under Section 4(2) of the Securities
Act. The Company plans to use the net proceeds of this private placement of
approximately $36,400,000 to repay outstanding indebtedness on its unsecured
revolving credit facility (which equaled approximately $18,845,000 at November
24, 1997) and to repay in full TWC's current line of credit (which equaled
approximately $14,500,000 at November 24, 1997). Anicoms' facility provides
various interest rate options, determined from time to time, based upon the
Company's leverage ratio, at either the lender's domestic rate less .50% to .25%
or LIBOR plus .50% to 1.00%. TWC's credit facility provides for interest at an
annual rate equal to the lender's Prime Rate plus .50% or, at TWC's option, the
lender's Adjusted LIBOR rate plus 2%. The remaining proceeds will be used for
working capital and general corporate purposes. Pending such uses, the proceeds
will be invested in short-term, interest-bearing, investment grade securities.
This transaction is scheduled to close upon the effectiveness of the
registration statement of which this prospectus is a part.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares by the
Selling Stockholders.
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the outstanding shares of Common Stock by each Selling Stockholder
both before the offering and as adjusted to reflect the sale of the Shares. The
information set forth below gives effect to the issuance of the shares of Common
Stock that will be issued upon the effectiveness of the registration statement
of which this prospectus is a part pursuant to the Stock Purchase Agreement and
the Merger Agreement. See "Recent Developments." The Shares offered hereby may
be offered from time to time in whole or in part by the Selling Stockholders,
their pledgees, donees, transferees or distributees, or their respective
successors-in-interest. Except where otherwise noted, each person named in the
following table has, to the knowledge of the Company, sole voting and investment
power with respect to the shares beneficially owned.
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Before Offering Number of After Offering
Shares
Being
Offered (1)
-------------------------- ---------------------
Number of Percent Number of Percent
Shares Shares
<S> <C> <C> <C> <C> <C>
FIDELITY SELECT PORTFOLIOS:
Developing Communications Portfolio 1,500,000(2) 6.4% 1,500,000 -- --
Edward Goodstein (3) 857,500(4) 3.7% 857,200 300 *
The Peter H. Huizenga Testamentary Trust. 550,537(5) 2.4% 200,320 350,217 1.5%
The Lincoln Fund, L.P. 369,903(6) 1.6% 300,000 69,903 *
RDV Capital Management, L.P. 150,000(2) * 150,000 -- --
Peter H. Huizenga(7). 154,160(8) * 24,424 129,736 *
Heidi A. Huizenga 138,494(9) * 80,128 58,366 *
The Gordon Fund, L.P. 92,508(10) * 75,000 17,508 *
Prince Family Limited Partnership 72,000(2) * 72,000 -- --
Elsa A. Prince Living Trust 72,000(2) * 72,000 -- --
Peter C. Cook Trust 45,000(2) * 45,000 -- --
Robert Haveman 36,000(2) * 36,000 -- --
Providence Energy, Inc. 36,000(2) * 36,000 -- --
The Lincoln Fund Tax Advantage, L.P. 36,671(11) * 25,000 11,671 *
The Betsy Huizenga Trust 34,622(12) * 20,032 14,590 *
The Greta Huizenga Trust 34,622(12) * 20,032 14,590 *
The Peter H. Huizenga, Jr. Trust 34,622(12) * 20,032 14,590 *
The Timothy Dean Huizenga Trust 34,622(12) * 20,032 14,590 *
Beeken Petty O'Keefe Kneen & Moerschel, L.L.C. 30,000(2) * 30,000 -- --
RDV Corp. Supplemental Executive Retirement Plan
FBO Jerry Tubergen 30,000(2) * 30,000 -- --
Matlins Financial Consulting, Inc. Pension Plan 25,000(2) * 25,000 -- --
Carl G. Palazzolo (13) 16,530(14) * 16,380 150 *
Terry L. Van Der Aa 20,000(2) * 20,000 -- --
Jack L. DeWitt 18,000(2) * 18,000 -- --
Merle DeWitt 18,000(2) * 18,000 -- --
Inquest, L.L.C. 18,000(2) * 18,000 -- --
Ronald G. Kenny 15,000(2) * 15,000 -- --
John Rose 15,000(2) * 15,000 -- --
IRA FBO John Eggemeyer 10,000(2) * 10,000 -- --
William J. Ruh & Lisa A. Ruh, Joint Tenants 5,000(2) * 5,000 -- --
</TABLE>
<PAGE>
__________________
* Less than 1%
(1) Assumes all of the shares being registered will be sold by the Selling
Stockholders.
(2) Represents shares of Common Stock to be issued pursuant to the Stock
Purchase Agreement.
(3) Mr. Goodstein will become a Vice President of the Company upon consummation
of the transactions contemplated by the Merger Agreement.
(4) Includes 857,200 shares of Common Stock to be issued pursuant to the Merger
Agreement.
(5) Includes 200,320 shares of Common Stock to be issued pursuant to the Stock
Purchase Agreement.
(6) Includes 300,000 shares of Common Stock to be issued pursuant to the Stock
Purchase Agreement.
(7) Peter H. Huizenga has been a Director of the Company since June 5, 1997.
(8) Includes (a) 24,424 shares of Common Stock to be issued pursuant to the
Stock Purchase Agreement and (b) 13,000 shares issuable upon exercise of options
granted pursuant to the Anicom, Inc. Directors Stock Option Plan. Excludes
550,537 shares held by the Peter H. Huizenga Testamentary Trust and 34,622
shares held by each of the Betsy Huizenga Trust, the Greta Huizenga Trust, and
the Peter Huizenga Jr. Trust, for which trusts Mr. Huizenga serves as the sole
trustee. Excludes 138,493 shares held by Heidi A. Huizenga with respect to which
Mr. Huizenga shares voting and investment power.
(9) Includes 80,128 shares of Common Stock to be issued pursuant to the Stock
Purchase Agreement. Excludes 154,160 shares beneficially owned by Peter H.
Huizenga with respect to which Heidi A. Huizenga shares voting and investment
power. Excludes 34,622 shares held by the Timothy Dean Huizenga Trust, for which
Heidi A. Huizenga serves as co-trustee.
(10) Includes 75,000 shares to be issued pursuant to the Stock Purchase
Agreement.
(11) Includes 25,000 shares to be issued pursuant to the Stock Purchase
Agreement.
(12) Includes 20,032 shares to be issued pursuant to the Stock Purchase
Agreement.
(13) Mr. Palazzolo will become a Vice President of the Company upon consummation
of the transactions contemplated by the Merger Agreement.
(14) Includes 16,380 shares to be issued pursuant to the Stock Purchase
Agreement.
<PAGE>
PLAN OF DISTRIBUTION
Any or all of the Shares covered by this Prospectus may be sold from time to
time by the Selling Stockholders, their pledgees, donees, transferees or
distributees, or their respective successors-in-interest. The Selling
Stockholders may sell all or a portion of the Shares, in privately negotiated
transactions or otherwise, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such market prices or at
negotiated prices. A Selling Stockholder may elect to engage a broker or dealer
to effect sales in one or more of the following transactions: (a) block trades
in which the broker or dealer so engaged will attempt to sell the Shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction, (b) purchases by a broker or dealer as principal and
resale by such broker or dealer for its account pursuant to this Prospectus, and
(c) ordinary brokerage transactions and transactions in which the broker
solicits purchasers. In effecting sales, brokers and dealers engaged by Selling
Stockholders may arrange for other brokers or dealers to participate. Brokers or
dealers may receive commissions or discounts from Selling Stockholders (or, if
any such broker-dealer acts as agent for the purchaser of such shares, from such
purchaser) in amounts to be negotiated which are not expected to exceed those
customary in the types of transactions involved. Broker-dealers may agree with
the Selling Stockholders to sell a specified number of such Shares at a
stipulated price per share, and, to the extent such broker-dealer is unable to
do so acting as agent for a Selling Stockholder, to purchase as principal any
unsold Shares at the price required to fulfill the broker-dealer commitment to
such Selling Stockholder. Broker-dealers who acquire Shares as principal may
thereafter resell such Shares from time to time in transactions (which may
involve block transactions and sales to and through other broker-dealers,
including transactions of the nature described above) in the over-the-counter
market or otherwise at prices and on terms then prevailing at the time of sale,
at prices then related to the then-current market price or in negotiated
transactions and, in connection with such resales, may pay to or receive from
the purchasers of such shares commissions as described above.
The Selling Stockholders and any broker-dealers or agents that participate with
the Selling Stockholders in sales of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales. In such event, any commissions received by such broker-dealers or agents
and any profit on the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
The Company is required to pay all of the expenses incident to the offering and
sale of the Shares, other than fees and expenses to the extent the Company is
prohibited by applicable Blue Sky laws from paying for or on behalf of
Purchasers. The Company has agreed to indemnify the Selling Stockholders against
certain losses, claims, damages and liabilities, including liabilities under the
Securities Act.
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 60,000,000 shares of
Common Stock, par value $.001 per share, and 1,000,000 shares of preferred
stock, par value $.01 per share ("Preferred Stock").
Common Stock
Of the 60,000,000 shares of Common Stock authorized, 19,483,485 shares were
outstanding as of November 20, 1997. Subject to the rights of holders of
Preferred Stock, the holders of outstanding shares of Common Stock are entitled
to share ratably in dividends declared out of assets legally available therefor
at such time and in such amount as the Board of Directors may from time to time
lawfully determine. Each holder of Common Stock is entitled to one vote for each
share held, and the holders of Common Stock are not entitled to cumulative
voting rights. Subject to the rights of holders of any outstanding Preferred
Stock, upon liquidation, dissolution or winding up of the Company, any assets
legally available for distribution to shareholders as such are to be distributed
ratably among the holders of the then outstanding Common Stock. All shares of
Common Stock currently outstanding are and all shares of Common Stock offered
hereby, when duly issued and paid for will be, fully paid and nonassessable, not
subject to redemption and assessment and without conversion, preemptive or other
rights to subscribe for or purchase any proportionate part of any new or
additional issues of any class or series of securities convertible into stock of
any class or series. The Common Stock is listed on the Nasdaq National Market.
Preferred Stock
The Company's Amended and Restated Certificate of Incorporation provides for an
authorized class of undesignated Preferred Stock consisting of 1,000,000 shares.
This Preferred Stock may be issued at the direction of the Board of Directors,
without shareholder approval, in series from time to time with such
designations, relative rights, priorities, preferences, qualifications,
limitations and restrictions thereon, to the extent that such are not fixed in
the Company's Amended and Restated Certificate of Incorporation, as the Board of
Directors determines. The rights, preferences, limitations and restrictions of
different series of Preferred Stock may differ with respect to dividend rates,
amounts payable on liquidation, voting rights, conversion rights, redemption
provisions, sinking fund provisions and other matters. The Board of Directors
may authorize the issuance of Preferred Stock which ranks senior to the Common
Stock with respect to the payment of dividends and the distribution of assets on
liquidation. In addition, the Board of Directors is authorized to fix the
limitations and restrictions, if any, upon the payment of dividends on Common
Stock to be effective while any shares of Preferred Stock are outstanding. The
Board of Directors, without shareholder approval, can issue Preferred Stock with
voting and conversion rights which could adversely affect the voting power of
the holders of Common Stock. The issuance of Preferred Stock to certain holders
under certain circumstances may have the effect of delaying, deferring or
preventing a change in control of the Company. Of the 1,000,000 shares of
Preferred Stock authorized for issuance by the Company, 27,000 shares have been
designated as Series A Cumulative Convertible Preferred Stock, none of which are
issued and outstanding.
Delaware Law and Certain Corporate Provisions
The Company is subject to the provisions of Section 203 of the Delaware General
Corporation Law. In general, this statute prohibits a publicly held Delaware
corporation from engaging, under certain circumstances, in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person becomes an interested
stockholder, unless either (i) prior to the date at which the stockholder became
an interested stockholder the Board of Directors approved either the business
combination or the transaction in which the person becomes an interested
stockholder, (ii) the stockholder acquires more than 85% of the outstanding
voting stock of the corporation (excluding shares held by directors who are
officers or held in certain employee stock plans) upon consummation of the
transaction in which the stockholder becomes an interested stockholder or
(iii) the business combination is approved by the Board of Directors and by
two-thirds of the outstanding voting stock of the corporation (excluding shares
held by the interested stockholder) at a meeting of the stockholders (and not by
written consent) held on or subsequent to the date of the business combination.
An "interested stockholder" is a person who, together with affiliates and
associates, owns (or at any time within the prior three years did own) 15% or
more of the corporation's voting stock. Section 203 defines a "business
combination" to include, without limitation, mergers, consolidations, stock
sales and asset based transactions and other transactions resulting in a
financial benefit to the interested stockholder.
<PAGE>
The Company's Amended and Restated Certificate of Incorporation and Bylaws
contain a number of provisions relating to corporate governance and to the
rights of stockholders. Certain of these provisions may be deemed to have a
potential "anti-takeover" effect in that such provisions may delay, defer or
prevent a change of control of the Company. These provisions include (a) the
classification of the Board of Directors into three classes, each class serving
for staggered three year terms; (b) elimination of stockholder action by written
consent; (c) the authority of the Board to issue series of Preferred Stock with
such voting rights and other powers as the Board of Directors may determine;
(d) the requirement that the Bylaws may only be amended (other than by the Board
of Directors) by the vote of greater than 66 2/3% of the votes entitled to be
cast generally by the outstanding Common Stock; (e) the requirement that the
provision in the Amended and Restated Certificate of Incorporation creating the
classified board may only be amended by the vote of at least 66 2/3% of the
votes entitled to be cast generally in the election of directors; and (f) notice
requirements in the Bylaws relating to nominations to the Board of Directors and
to the raising of business matters at stockholder meetings.
Transfer Agent and Registrar
The transfer agent and registrar for the Common Stock is Harris Trust and
Savings Bank, located in Chicago, Illinois.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Shares will be passed
upon for the Company by Katten Muchin & Zavis, a partnership including
professional corporations, located in Chicago, Illinois.
EXPERTS
The consolidated financial statements of the Company appearing in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1996, the financial
statements of Northern Wire & Cable, Inc. appearing in the Company's Current
Report on Form 8-K/A (Amendment No. 2), dated May 23, 1996, the financial
statements of Norfolk Wire & Cable, Inc. appearing in the Company's Current
Report on Form 8-K/A (Amendment No. 2), dated November 5, 1996, and the
financial statements of Energy Electric Cable, a division of Connectivity
Products Incorporated, appearing in the Company's Current Report on Form 8-K/A
(Amendment No. 1), dated September 25, 1997 have been audited by Coopers &
Lybrand L.L.P., independent accountants, as set forth in their reports thereon
included therein and incorporated herein by reference. Such financial statements
are incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
<PAGE>
=========================================== =============================
No dealer, salesperson or other person
has been authorized to give any information
or to make any representations other than
those contained in this Prospectus, and if
given or made, such information and
representations must not be relied upon as
having been authorized by the Company or
the Selling Stockholders. This Prospectus LOGO
does not constitute an offer to sell, or a [GRAPHIC Anicom, Inc.
solicitation of an offer to buy the shares EXCLUDED] Multimedia Wiring
by anyone in any jurisdiction in which such Systems
offer or solicitation is not authorized, or
in which the person making the offer or
solicitation is not qualified to do so, or
to any person to whom it is unlawful to
make such offer or solicitation. Under no
circumstances shall the delivery of this
Prospectus or any sale made pursuant to
this Prospectus, create any implication
that the information contained in this
Prospectus is correct as of any time
subsequent to the date of this Prospectus.
TABLE OF CONTENTS 3,773,580 Shares
of Common Stock
Page
AVAILABLE INFORMATION............. 2
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE.......... 3
RISK FACTORS...................... 4
RECENT DEVELOPMENTS............... 7
USE OF PROCEEDS................... 7 ________________________
SELLING STOCKHOLDERS.............. 8 PROSPECTUS
PLAN OF DISTRIBUTION.............. 10 ________________________
DESCRIPTION OF CAPITAL STOCK...... 10
LEGAL MATTERS..................... 12 November ___, 1997
EXPERTS........................... 12
=========================================== =============================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Set forth below is an estimate of the approximate amount of fees and expenses
(other than underwriting commissions and discounts) payable by the Company in
connection with the issuance and distribution of the Common Stock pursuant to
the Prospectus contained in this Registration Statement. The Company will pay
all of these expenses.
Approximate
Amount
-----------------
Securities and Exchange Commission registration fee $18,940
Nasdaq Stock Market, Inc. listing fee 17,500
Accountants fees and expenses 5,000
Blue Sky fees and expenses 5,000
Legal fees and expenses 10,000
Miscellaneous expenses 3,560
-----------------
Total $ 60,000
=================
Item 15. Indemnification of Directors and Officers
Article 12 of the Company's Amended and Restated Certificate of Incorporation
provides that the Company shall indemnify its directors to the full extent
permitted by the General Corporation Law of the State of Delaware and may
indemnify its officers and employees to such extent, except that the Company
shall not be obligated to indemnify any such person (i) with respect to
proceedings, claims or actions initiated or brought voluntarily by any such
person and not by way of defense, or (ii) for any amounts paid in settlement of
an action indemnified against by the Company without the prior written consent
of the Company. The Company has entered into indemnity agreements with each of
its directors. These agreements may require the Company, among other things, to
indemnify such directors against certain liabilities that may arise by reason of
their status or service as directors, to advance expenses to them as they are
incurred, provided that they undertake to repay the amount advanced if it is
ultimately determined by a court that they are not entitled to indemnification
and to obtain directors' liability insurance if available on reasonable terms.
In addition, Article 12 of the Company's Amended and Restated Certificate of
Incorporation provides that a director of the Company shall not be personally
liable to the Company or its stockholders for monetary damages for breach of his
or her fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Company or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for willful or negligent conduct in paying
dividends or repurchasing stock out of other than lawfully available funds or
(iv) for any transaction from which the director derives an improper personal
benefit.
Reference is made to Section 145 of the General Corporation Law of the State of
Delaware which provides for indemnification of directors and officers in certain
circumstances.
The Company has obtained a directors' and officers' liability insurance policy
which entitles the Company to be reimbursed for certain indemnity payments it is
required or permitted to make to its directors and officers.
The Company has agreed to indemnify the Selling Stockholders and the Selling
Stockholders have agreed to indemnify the Company and its directors, its
officers, and certain control persons against certain liabilities and expenses
incurred in connection with the Registration Statement, including with respect
to their respective obligations under the Securities Act.
<PAGE>
Item 16. Exhibits and Financial Statement Schedules
2.1 Agreement and Plan of Merger dated as of November 24, 1997 between
Anicom, Inc., TWC Acquisition Corporation, TW Communications
Corporation, Edward Goodstein and Carl G. Palazzolo.
2.2 Stock Purchase Agreement dated as of November 24, 1997 between Anicom,
Inc. and the Purchasers named therein.
3.1* Restated Certificate of Incorporation of the Company.
3.2* Restated Bylaws of the Company.
3.3** Certificate of Amendment of Restated Certificate of Incorporation of the
Company dated September 25, 1996.
3.4*** Certificate of Amendment of Restated Certificate of Incorporation of the
Company dated June 2, 1997.
4.1* Specimen Common Stock Certificate.
5 Opinion of Katten Muchin & Zavis as to the legality of the securities
being registered (including consent).
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Katten Muchin & Zavis (contained in its opinion filed as
Exhibit 5 hereto).
24 Power of Attorney (included on the signature page of this Registration
Statement).
__________________
* Incorporated by reference to the same Exhibit number of the Company's
Registration Statement on Form SB-2, as amended (Registration Statement
No. 33-87736C).
** Incorporated by reference to the same Exhibit number of the Company's
Quarterly Report on Form 10-QSB for the quarter ended September 30,
1996.
*** Incorporated by reference to the same Exhibit number of the Company's
Registration Statement on Form S-3 (Registration Statement No.
333-30791).
<PAGE>
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material
change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933 (the "Securities Act"), each
filing of the Company's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall be deemed
to be a new registration statement relating to the securities offer
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the Company in thee successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the Company will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements of filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, and State of Illinois on the 24th day of
November 1997.
ANICOM, INC.
By: /s/ SCOTT C. ANIXTER
Scott C. Anixter
Chairman and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints Scott
C. Anixter and Donald C. Welchko, and both of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution, to sign on his
behalf, individually and in each capacity stated below, all amendments and
post-effective amendments to this Registration Statement on Form S-3 and to file
the same, with all exhibits thereto and any other documents in connection
therewith, with the Securities and Exchange Commission under the Securities Act
of 1933, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully and to all intents and purposes
as each might or could do in person, hereby ratifying and confirming each act
that said attorneys-in-fact and agents may lawfully do or cause to be done by
virtue thereof.
In accordance with the requirements of the Securities Act of 1933, as amended,
this Registration Statement was signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ----------------------------------------------- ------------------------------------------- ----------------------
<S> <C> <C>
/s/ SCOTT C. ANIXTER Chairman and Chief Executive Officer November 24, 1997
(Principal Executive Officer)
- -----------------------------------------------
Scott C. Anixter
/s/ ALAN B. ANIXTER Chairman of the Board November 24, 1997
- -----------------------------------------------
Alan B. Anixter
/s/ CARL E. PUTNAM President, Chief Operating Officer and a
Director November 24, 1997
- -----------------------------------------------
Carl E. Putnam
/s/ DONALD C. WELCHKO Vice President, Chief Financial Officer November 24, 1997
and a Director (Principal Financial and
Accounting Officer)
- -----------------------------------------------
Donald C. Welchko
/s/ ROBERT BRZUSTEWICZ, SR. Senior Executive Vice President and a November 24, 1997
Director
- -----------------------------------------------
Robert Brzustewicz, Sr.
/s/ WILLIAM R. ANIXTER Director
November 24, 1997
- -----------------------------------------------
William R. Anixter
/s/ PETER HUIZENGA Director November 24, 1997
- -----------------------------------------------
Peter Huizenga
/s/ IRA J. KAUFMAN Director
November 24, 1997
- -----------------------------------------------
Ira J. Kaufman
/s/ THOMAS J. REIMAN Director November 24, 1997
- -----------------------------------------------
Thomas J. Reiman
/s/ MICHAEL SEGAL Director
November 24, 1997
- -----------------------------------------------
Michael Segal
/s/ LEE B. STERN Director November 24, 1997
- -----------------------------------------------
Lee B. Stern
</TABLE>
- --------------------------------------------------------------------------------
EXHIBIT 2.1
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
TABLE OF CONTENTS
Page
1. THE MERGER 1
1.1 The Merger 1
1.2 Merger Consideration 1
1.3 Effective Time 2
1.4 Effects of the Merger 2
1.5 Name; Articles of Incorporation; Bylaws 2
1.6 Directors and Officers 2
1.7 Supplementary Action 2
1.8 Tax Consequences 3
1.9 Closing 3
1.10 Closing Deliveries 3
1.11 Purchase Price Adjustment 5
1.12 Registration Rights Agreement 7
2. REPRESENTATIONS AND WARRANTIES OF TWC SHAREHOLDERS 8
2.1 Organization and Good Standing 8
2.2 Authority; No Conflict 8
2.3 Capitalization 9
2.4 Financial Statements 10
2.5 Books and Records 10
2.6 Title to Properties; Encumbrances 10
2.7 Condition and Sufficiency of Assets 11
2.8 Accounts Receivable 11
2.9 Inventory 11
2.10 No Undisclosed Liabilities 12
2.11 Taxes 12
2.12 No Material Adverse Change 13
2.13 Employee Benefits 13
2.14 Compliance with Legal Requirements; Governmental
Authorizations 15
2.15 Legal Proceedings; Orders 16
2.16 Absence of Certain Changes and Events. 17
2.17 Contracts; No Defaults 18
2.18 Insurance. 18
2.19 Environmental Matters 19
2.20 Employees 19
2.21 Labor Disputes; Compliance 19
2.22 Intellectual Property 20
2.26 Relationships with Related Persons 21
2.27 Bank Accounts. 21
2.28 Additional Tax Matters 21
2.29 Brokers or Finders 22
2.31 Disclosure 24
<PAGE>
3. REPRESENTATIONS AND WARRANTIES OF ANICOM AND MERGER SUB 24
3.1 Organization and Good Standing. 24
3.2 Authority; No Conflict 24
3.3 Capitalization 25
3.4 SEC Filings 25
3.5 Financial Statements 25
3.6 No Undisclosed Liabilities 26
3.8 Certain Proceedings 26
3.9 No Material Adverse Change 26
3.10 Brokers or Finders 27
3.11 Contracts; No Defaults 27
3.12 Environmental Matters 27
3.13 Customers 27
3.14 Suppliers 27
3.15 Merger 27
3.16 Disclosure 28
3.17 Additional Tax Matters 28
4. TWC SHAREHOLDERS' COVENANTS 29
4.1 Access and Investigation 29
4.2 Operation of the Businesses of TWC 29
4.3 Negative Covenant 30
4.4 Required Approvals 30
4.5 Notification 30
4.6 Best Efforts. 30
4.7 TWC Guaranties 30
4.8 Officer's Certificate 31
4.9 ERISA Matters 31
5. COVENANTS OF ANICOM AND MERGER SUB 31
5.1 Access and Investigation 31
5.2 Operation of the Businesses of Anicom 31
5.3 Notification 31
5.4 Approvals of Governmental Bodies 32
5.5 Best Efforts 32
5.6 Goodstein Guaranties 32
5.7 Listing of Purchase Shares 32
5.8 TWC Employees 32
6. CONDITIONS PRECEDENT TO ANICOM'S AND MERGER SUB'S OBLIGATION TO CLOSE 32
6.1 Accuracy of Representations 32
6.2 TWC Shareholders' Performance 33
6.3 Consents 33
6.4 No Proceedings 33
6.5 No Claim Regarding Stock Ownership or Sale Proceeds 33
6.6 No Prohibition 33
6.7 Tax Opinion 33
6.8 No Material Adverse Change 34
6.9 HSR Act 34
<PAGE>
7. CONDITIONS PRECEDENT TO TWC SHAREHOLDERS' OBLIGATION TO CLOSE 34
7.1 Accuracy of Representations. 34
7.2 Merger Sub's Performance 34
7.3 No Proceedings 34
7.4 Tax Opinion 34
7.5 No Material Adverse Change 34
7.6 HSR Act 35
7.7 Registration Statement 35
7.8 Release Under The Goodstein Guaranties 35
7.9 Purchase of Vertex Technologies, Inc. Inventory 35
8. TERMINATION 35
8.1 Termination Events 35
8.2 Effect of Termination 36
9. POST-CLOSING COVENANTS 36
9.1 Tax Compliance 36
9.2 Waiver of Pre-Existing Condition Limitations 36
9.3 VTX/Vertex Inventory 36
9.4 Transfer of Insurance Coverage 36
10. INDEMNIFICATION; REMEDIES 37
10.1 Survival 37
10.2 Indemnification and Reimbursement by TWC Shareholders 37
10.3 Indemnification and Reimbursement by Anicom and Merger Sub 37
10.4 Procedure for Indemnification -- Third Party Claims 37
10.5 Procedure for Indemnification -- Other Claims. 39
10.6 Escrow. 39
10.7 Minimum Threshold. 39
10.8 Cap on Indemnity. 39
10.9 Other Limitations. 39
10.10 Applicability to Palazzolo 39
<PAGE>
11. DEFINITIONS 40
"Best Efforts" 40
"Breach" 40
"Code" 40
"Consent" 40
"Contemplated Transactions" 40
"Contract" 40
"Debt" 40
"Encumbrance" 41
"ERISA" 41
"Escrow Agent" 41
"Facilities" 41
"Fair Market Value" 41
"Governmental Authorization" 41
"Governmental Body" 41
"Hazardous Substance" 41
"IRS" 42
"Legal Requirement" 42
"Material Adverse Effect" 42
"Order" 42
"Ordinary Course of Business" 42
"Organizational Documents" 42
"Person" 43
"Proceeding" 43
"Proprietary Rights" 43
"Related Person" 43
"Representative" 44
"Securities Act" 44
"Tax" 44
"Tax Return" 44
"Threatened" 44
"VTX/Vertex Bankruptcy Proceedings" 44
"VTX/Vertex Transactions" 44
12. GENERAL PROVISIONS 44
12.1 Expenses 44
12.2 Notices 45
12.3 Further Assurances 45
12.4 Waiver 46
12.5 Entire Agreement and Modification 46
12.6 Assignments, Successors, and No Third-Party Rights 46
12.7 Severability 46
12.9 Section Headings, Construction 46
12.10 Confidentiality of Agreements 46
12.11 Governing Law 46
12.12 Counterparts 47
12.13 No Strict Construction 47
<PAGE>
Page
1996 Financial Statements 10
Accounts Receivable 11
Act 23
Agreement 1
Anicom 1
Anicom SEC Reports 25
Approved Transactions 6
Arbitration Notice 7
Average Trading Price 1
Basket 39
Best Efforts 40
Breach 40
C&L Letter 5
Cap 39
Cash Payment 1
CERCLA 19
Claim 37
Closing 3
Closing Balance Sheet 6
Closing Date 3
Closing Deliveries 3
Code 40
Competing Business 21
Consent 40
Contemplated Transactions 40
Contract 40
Damages 37
Debt 40
Delaware Law 1
Effective Time 2
Employment Agreements 4
Encumbrance 41
Environmental Laws 19
ERISA 41
Escrow Agent 41
Escrow Agreement 3
Facilities 41
Fair Market Value 41
Financial Statements 10
First Person 15
Four Goodys 4
GAAP 10
Goodstein 1
Goodstein Guaranties 32
Goodstein's Closing Documents 3
Governmental Authorization 41
Governmental Body 41
Hazardous Substance 41
HSR Act 9
<PAGE>
Indemnified Persons 37
Independent Accounting Firm 7
Information 22
Insurance Policies 18
Interim Financial Statements 10
IRS 42
Knowledge 42
Leases 4
Legal Requirement 42
Material Adverse Effect 42
Material Contracts 18
Merger 1
Merger Consideration 1
Merger Documents 2
Merger Sub 1
Merger Sub's Closing Documents 4
New York Law 1
Order 42
Ordinary Course of Business 42
Organizational Documents 42
Outstanding Shares 25
Palazzolo 1
Permitted Termination 35
Person 43
Proceeding 43
Proprietary Rights 43
Purchase Shares 1
RCRA 19
Registration Rights Agreement 7
Related Person 43
Representative 44
Scheduled Plans 13
Securities Act 44
September Balance Sheet 10
Submitting Party 7
Surviving Corporation 1
Tax 44
Tax Return 44
Termination Fees 6
Threatened 44
TW Cable 30
TWC 1
TWC Guaranties 30
TWC Shareholders 1
TWC Shareholders' Closing Documents 3
TWC Shares 1
Vertex Asset Purchase Agreement 35
VTX Inventory 36
VTX/Vertex 5
VTX/Vertex Bankruptcy Proceedings 44
VTX/Vertex Transactions 44
<PAGE>
Index of Exhibits
Exhibit A: Escrow Agreement
Exhibit B: Opinion of Counsel to TWC and TWC Shareholders
Exhibit C-1: Goodstein Employment Agreement
Exhibit C-2: Palazzolo Employment Agreement
Exhibit C-3: Craig Goodstein Employment Agreement
Exhibit D: Form of Lease Term Sheet
Exhibit E: Opinion of Counsel to Anicom and Merger Sub
Exhibit F: Registration Rights Agreement
Exhibit G: Ron Martyn Employment Agreement
Index of Schedules
Schedule 2.1(a) TWC Organization and Good Standing
Schedule 2.1(c) TWC Directors and Officers
Schedule 2.2 Required Consents
Schedule 2.3 Capitalization
Schedule 2.6 Title to Properties; Encumbrances
Schedule 2.8 Accounts Receivable
Schedule 2.10 Undisclosed Liabilities
Schedule 2.11 Taxes
Schedule 2.13 Employee Benefits
Schedule 2.14(a) Compliance with Legal Requirements
Schedule 2.14(b) Governmental Authorizations
Schedule 2.15 Legal Proceedings
Schedule 2.16 Absence of Certain Changes and Events
Schedule 2.17 Material Contents
Schedule 2.18 Insurance
Schedule 2.19 Environmental Matters
Schedule 2.20 Employees
Schedule 2.21 Labor Disputes
Schedule 2.22 Intellectual Property
Schedule 2.23 Customers
Schedule 2.26 Related Party Transactions
Schedule 2.27 Bank Accounts
Schedule 2.30 Investor Representation Information
Schedule 3.3 Anicom Capitalization
Schedule 3.12 Environmental Matters
Schedule 4.7 TWC Guaranties
Schedule 5.6 Goodstein Guaranties
Schedule 6.3 Non-Required Consents
Anicom, Inc. agrees to furnish supplementally to the Securities Exchange
Commission, upon request, a copy of any omitted exhibit or schedule to this
Agreement.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this " Agreement") is made and
entered into as of November 24, 1997 by and among ANICOM, INC., a Delaware
corporation (" Anicom"), TWC ACQUISITION CORP., a Delaware corporation and a
wholly owned subsidiary of Anicom (" Merger Sub"), TW COMMUNICATION CORPORATION,
a New York corporation (" TWC"), Edward Goodstein, a shareholder holding 23
shares of common stock of TWC (" Goodstein"), and Carl G. Palazzolo, the Chief
Financial Officer of TWC to whom it is anticipated that .4395 shares of common
stock of TWC will be issued by TWC immediately prior to the Closing ("
Palazzolo" and, together with Goodstein, " TWC Shareholders"). Capitalized terms
that are not otherwise defined in this Agreement are defined in Section 11 of
this Agreement.
The Boards of Directors of each of Anicom, Merger Sub and TWC, and TWC
Shareholders, as the sole shareholders of TWC, believe that it is in the best
interests of each corporation and their respective stockholders that TWC and
Merger Sub combine into a single company through the merger of Merger Sub with
and into TWC (the " Merger") and, in furtherance thereof, have approved the
Merger.
For Federal income tax purposes, it is intended that the Merger shall qualify as
a reorganization under the provisions of Section 368(a)(2)(E) of the Code.
The parties, intending to be legally bound, agree as follows:
1. THE MERGER
1.1 The Merger . At the Effective Time (as defined in Section 1.3) and subject
to the terms and conditions of this Agreement and the applicable provisions of
the Delaware General Corporate Law (" Delaware Law") and the Business
Corporation Law of the State of New York (" New York Law"), Merger Sub shall be
merged with and into TWC, the separate corporate existence of Merger Sub shall
cease and TWC shall continue as the surviving corporation. TWC, as the surviving
corporation after the merger, is hereinafter sometimes referred to as the "
Surviving Corporation".
1.2 Merger Consideration . At the Effective Time, by virtue of the Merger and
without any action on the part of Anicom, Merger Sub, TWC or TWC Shareholders,
each share of the common stock, no par value, of TWC (" TWC Shares") will be
cancelled and extinguished and will be converted automatically into the right to
receive a pro rata portion of the aggregate merger consideration (the " Merger
Consideration") of $16,000,000, payable as follows: (a) $3,000,000 in cash (the
" Cash Payment") at the Closing; and (b) $13,000,000 in the form of shares of
Anicom's common stock (the " Purchase Shares") to be determined based upon the
average closing price of Anicom's common stock on the Nasdaq National Market for
the ten trading days ending on the second trading day prior to the date of this
Agreement (" Average Trading Price").
1.3 Effective Time . Subject to the provisions of this Agreement, the parties
hereto shall cause the Merger to be consummated by filing on the Closing Date
the certificates of merger and any other documents required to be filed with the
Secretary of State of either Delaware or New York (the " Merger Documents") in
order to cause the Merger to become effective under Delaware and New York Law as
of 5:00 p.m., Delaware time, on December 4, 1997 or as soon thereafter as is
practicable (the " Effective Time").
<PAGE>
1.4 Effects of the Merger . At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of Delaware
Law and New York Law. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the property, rights, privileges,
powers and franchises of TWC and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of TWC and Merger Sub shall
become the debts, liabilities and duties of the Surviving Corporation. Each
share of common stock, par value $.01 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
exchanged for one validly issued, fully paid and nonassessable share of common
stock, par value $.01 per share, of the Surviving Corporation.
1.5 Name; Articles of Incorporation; Bylaws .
(a) The name of the Surviving Corporation will be TW Communication Corporation.
(b) The Certificate of Incorporation of TWC, as in effect immediately prior to
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation as of and following the Effective Time, until thereafter amended.
(c) The Bylaws of TWC, as in effect immediately prior to the Effective Time,
shall be the Bylaws of the Surviving Corporation as of and following the
Effective Time, until thereafter amended.
1.6 Directors and Officers . The directors of Merger Sub shall remain the
directors of the Surviving Corporation, until their respective successors are
duly elected or appointed and qualified. The officers of Merger Sub shall remain
the officers of the Surviving Corporation, until their respective successors are
duly elected or appointed and qualified.
1.7 Supplementary Action . If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further assignments
or assurances are necessary or desirable to vest or to perfect or confirm of
record in the Surviving Corporation the title to any property or rights of TWC,
or otherwise to carry out the provisions of this Agreement, the officers and
directors of the Surviving Corporation are hereby authorized and empowered on
behalf of TWC, in the name of and on behalf of TWC, to execute and deliver any
and all things reasonably necessary or proper to vest or to perfect or confirm
title to such property or rights in the Surviving Corporation, and otherwise to
carry out the purposes and provisions of this Agreement.
1.8 Tax Consequences . It is intended by the parties hereto that the Merger
shall constitute a reorganization under Section 368(a)(2)(E) of the Code.
1.9 Closing . The closing of the Merger (" Closing") provided for in this
Agreement will take place at the offices of Bryan Cave LLP, counsel to TWC and
TWC Shareholders, at 245 Park Avenue, New York, New York 10167, at 10:00 a.m.
(local time) on December 4, 1997 or as soon thereafter as is practicable (the "
Closing Date"). Subject to the provisions of Section 8, failure to consummate
the transactions provided for in this Agreement on the Closing Date will not
result in the termination of this Agreement and will not relieve any party of
any obligation under this Agreement.
<PAGE>
1.10 Closing Deliveries . At the Closing, each of the parties shall deliver the
items described below (the " Closing Deliveries").
(a) TWC Shareholders shall deliver, or cause to be delivered, the following
items (" TWC Shareholders ' Closing Documents");
(i) certificates representing the TWC Shares, duly endorsed (or accompanied by
duly executed stock powers) for transfer to Anicom;
(ii) an escrow agreement, substantially in the form of Exhibit A, executed by
TWC Shareholders (the " Escrow Agreement");
(iii) a certificate executed by TWC Shareholders to the effect that (A) their
representations and warranties in this Agreement were accurate in all material
respects as of the date of this Agreement and are accurate in all material
respects as of the Closing Date as if made on the Closing Date (giving full
effect to any supplements to the Schedules hereto that were delivered by TWC
Shareholders to Anicom prior to the Closing Date in accordance with Section 4.5)
and (B) TWC Shareholders have performed and complied in all material respects
with all covenants and conditions required to be performed or complied with by
them prior to or at the Closing;
(iv) a certified copy of resolutions adopted by TWC Shareholders, as the sole
shareholders of TWC, and TWC's Board of Directors authorizing execution of this
Agreement and consummation of the Contemplated Transactions;
(v) a Good Standing Certificate for TWC from each state in which TWC is
authorized to do business (except Puerto Rico, which will be delivered as soon
after the Closing as is reasonably practicable;
(vi) a copy of TWC's Articles of Incorporation and all amendments thereto,
certified by the Secretary of State of New York, and a copy of TWC's Bylaws, and
all amendments thereto, certified by the Secretary of TWC;
(vii) an opinion of Bryan Cave, legal counsel to TWC and TWC Shareholders,
substantially in the form of Exhibit B;
(viii) executed copies of the Merger Documents;
(ix) an employment agreement, substantially in the form of Exhibit C-1, between
Anicom and Goodstein, executed by Goodstein; an employment agreement,
substantially in the form of Exhibit C-2, between Anicom and Palazzolo, executed
by Palazzolo; and an employment agreement, substantially in the form of Exhibit
C-3, between Anicom and Craig Goodstein, executed by Craig Goodstein
(collectively, the " Employment Agreements"); and
(x) a lease agreement between Four Goodys Associates, L.P. (" Four Goodys") and
Anicom with respect to the Facility located at 81 Executive Boulevard,
Farmingdale, New York, executed by Four Goodys, and a lease agreement between a
Missouri limited liability company controlled by Phyllis Goodstein and Anicom
with respect to the Facility located in O'Fallon, Missouri, executed by such
Missouri limited liability company, in each case in such form as may be mutually
agreeable to the parties thereto and on substantially the same terms and
conditions set forth on Exhibit D (together, the " Leases").
<PAGE>
(b) Merger Sub shall deliver the following items (" Merger Sub's Closing
Documents"):
(i) the Cash Payment by wire transfer of funds to accounts designated by TWC
Shareholders;
(ii) stock certificates representing the Purchase Shares;
(iii) a certificate executed by Anicom to the effect that (A) except as
otherwise stated in such certificate, each of Anicom's and Merger Sub's
representations and warranties in this Agreement was accurate in all material
respects as of the date of this Agreement and is accurate in all material
respects as of the Closing Date as if made on the Closing Date and (B) each of
Anicom and Merger Sub has performed and complied in all material respects with
all covenants and conditions required to be performed or complied with by it
prior to or at the Closing;
(iv) the Escrow Agreement executed by Anicom and the Escrow Agent;
(v) a certified copy of resolutions adopted by each of Anicom's and Merger Sub's
Board of Directors authorizing execution of this Agreement and consummation of
the Contemplated Transactions;
(vi) an opinion of Katten Muchin & Zavis, legal counsel to Anicom, substantially
in the form of Exhibit E;
(vii) executed copies of the Merger Documents;
(viii) the Employment Agreements, executed by Anicom;
(ix) the Leases, executed by Anicom; and
(x) a comfort letter from Coopers & Lybrand L.L.P., dated the effective date of
the Registration Statement under the Securities Act and exclusive of any agreed
upon procedures regarding any specific financial or statistical information,
with respect to Anicom's unaudited consolidated financial statements for the
nine (9) month period ended September 30, 1997 incorporated by reference in the
Registration Statement and in form and substance otherwise customary for
registration statements of a similar nature .
(c) Anicom, Merger Sub, TWC Shareholders and TWC shall also deliver to the other
parties such other documents, instruments, certificates, and opinions as may be
required by this Agreement or as otherwise necessary to consummate the
Contemplated Transactions.
<PAGE>
1.11 Purchase Price Adjustment .
(a) Balance Sheet Assumptions. The calculation of the Merger Consideration was
based upon the assumption that, as calculated in good faith and on a basis
consistent with the 1996 Financial Statements:
(1) TWC will have a ratio of total Debt to stockholders' equity as of
December 1, 1997 (calculated without giving effect to any of the following
transactions which may occur during the period between the date hereof and the
Effective Time: (a) the payment of related party accounts receivable by
Goodstein and his Affiliates relating to VTX Electronics Corp., a Delaware
corporation, or Vertex Technologies, Inc., a New York corporation (collectively,
" VTX/Vertex"), (b) any distribution of retained "S corporation" earnings by TWC
to Goodstein to offset the payments described in clause (a) above, (c) accruing
for, and paying a reasonable estimate toward, any required tax distributions by
TWC to Goodstein for the tax periods ended February 28, 1997 and immediately
prior to the Effective Time, (d) any borrowings by TWC to fund the payments
referenced in clause (c) above, and (e) any payments by TWC of transactional
costs pursuant to this Agreement (subject to Section 12.1 of this Agreement) and
any amounts that may become due and payable after December 1, 1997 to Fleet
Bank, National Association ("Fleet Bank"), as a prepayment or termination fee
(the " Termination Fees") pursuant to that certain Loan and Security Agreement,
dated as of November 15, 1995 (the "Fleet Credit Agreement"), with TWC, as
amended (collectively, the " Approved Transactions")) of no greater than 3.6-1;
and
(2) TWC's total stockholders' equity as of December 1, 1997 will not be less
than $2,000,000 (calculated (A) after giving effect to any of the transactions
described in clauses 1.11(a)(1)(a), (b), (c) or (d) above, regardless of when
such transactions occur), but (B) without giving effect to (i) any payments by
TWC of transactional costs pursuant to this Agreement (subject to Section 12.1
of this Agreement) and (ii) any Termination Fees that may become due and payable
after December 1, 1997 to Fleet Bank pursuant to the Fleet Credit Agreement.
If, and to the extent that as of December 1, 1997, the requirement set forth in
clause (2) of the preceding sentence is not satisfied, then Merger Sub shall be
entitled to a corresponding dollar for dollar reduction in the Merger
Consideration and to the extent that, as of December 1, 1997, the foregoing
requirement set forth in clause (1) above is not satisfied, then Merger Sub
shall be entitled to a reduction in the Merger Consideration in an amount equal
to that amount by which TWC's total Debt as of December 1, 1997 exceeded the
amount of Debt at which it would have been in compliance with such requirement.
<PAGE>
(b) Closing Balance Sheet. Within ninety (90) days after the Closing Date, TWC
Shareholders shall prepare or cause to be prepared and delivered, at TWC's sole
cost and expense, to Anicom an audited balance sheet of TWC as of December 1,
1997 prepared on a basis consistent with the 1996 Financial Statements (the "
Closing Balance Sheet") and shall include a calculation of the amount of the
post-closing adjustment, if any, required pursuant to the provisions of Section
1.11(a) above. During the preparation of the Closing Balance Sheet, and the
period of any dispute within the contemplation of this Section 1.11(b), Anicom
shall: (i) provide TWC Shareholders and their authorized representatives with
full access during normal business hours to the books, records (including work
papers, schedules, memoranda and other documents), facilities and employees of
TWC, (ii) provide TWC Shareholders as promptly as practicable after the Closing
Date (but in no event later than twenty (20) business days after the Closing
Date, provided that each of the TWC Shareholders uses his commercially
reasonable efforts to assist with the preparation of such information) with
normal month-end closing financial information for TWC for the period ending on
the day prior to December 1, 1997 and (iii) cooperate with TWC Shareholders and
their authorized representatives, including the provision on a timely basis of
all information necessary or useful in preparing the Closing Balance Sheet and
cause TWC to submit any required audit schedules reasonably requested by TWC
Shareholders within forty-five (45) days after the Closing Date. The Closing
Balance Sheet and calculation of the amount of the post-closing adjustment, if
any, shall be deemed to be acceptable to and shall become final and binding on
the parties, except to the extent that Anicom shall have made a specific written
objection thereto as provided below. If Anicom disagrees with the Closing
Balance Sheet, Anicom shall notify TWC Shareholders in writing of such
disagreement within thirty (30) days after the date on which Anicom received the
Closing Balance Sheet, which written notice shall specify the nature of the
dispute and shall provide in reasonable detail the facts or accounting
principles upon which such dispute is based. Thereafter, TWC Shareholders and
Anicom shall use their Best Efforts to resolve such disagreement with respect to
the Closing Balance Sheet.
(c) Dispute Resolution. If TWC Shareholders and Anicom are unable to resolve any
disagreement within twenty (20) days after TWC Shareholders' receipt of such
notice of disagreement, then either TWC Shareholders or Anicom (the " Submitting
Party") may submit such disagreement to a certified independent public
accounting firm that is nationally recognized (the " Independent Accounting
Firm") and mutually agreeable to TWC Shareholders and Anicom upon notice thereof
(an " Arbitration Notice") to the other party. If TWC Shareholders and Anicom
cannot agree upon such election within ten (10) business days after the
Submitting Party's Arbitration Notice is received by the other party, the
Independent Accounting Firm shall be selected by lot from among the other
national public accounting firms in the United States, excluding Coopers &
Lybrand L.L.P., Grant Thornton, L.L.P. and their respective Affiliates. The
Independent Accounting Firm will be instructed to use its best efforts to render
its decision as to all items in dispute within thirty (30) days of submission.
At the time of the submission of such dispute to the Independent Accounting Firm
for resolution, Anicom shall file with the Independent Accounting Firm a written
statement of its position with regard to any matters in dispute, at which time
TWC Shareholders shall have ten (10) days to respond in writing to Anicom's
position. The decision of the Independent Accounting Firm shall be final and
binding upon all parties hereto. Each party shall bear its or their own
expenses, including expenses of its or their accountants and attorneys in
connection with the resolution of any such dispute, and the fees and expenses of
the Independent Accounting Firm shall be paid by the party(s) as determined by
the Independent Accounting Firm.
(d) Reduction of Merger Consideration. In order to ensure that no payment made
under this Section 1.11(d) will cause the Merger to be disqualified as a
reorganization under Section 368 of the Code, if and to the extent that any
adjustment is made under this Section 1.11, such sums shall be payable by TWC
Shareholders within ten (10) business days of the final determination of such
adjustment, in a combination of Purchase Shares and cash pursuant to the
following formula: (i) a number of Purchase Shares equal to 80% of the amount
owed divided by the Fair Market Value of any Purchase Share (subject to
equitable adjustment for any intervening stock splits, stock dividends or
recapitalization) as of either the date of this Agreement or the date of
transfer, whichever is higher, and (ii) cash equal to the amount owed minus the
Fair Market Value of the Purchase Shares to be tendered pursuant to the
foregoing clause (i) as of either the date of this Agreement or the date of
transfer, whichever is higher.
<PAGE>
1.12 Registration Rights Agreement . On the date hereof, concurrent with the
execution of this Agreement, Anicom and TWC Shareholders shall execute and
deliver a registration rights agreement, substantially in the form of Exhibit F
(the " Registration Rights Agreement").
2. REPRESENTATIONS AND WARRANTIES OF TWC SHAREHOLDERS
TWC Shareholders jointly and severally represent and warrant to Anicom and
Merger Sub as follows:
2.1 Organization and Good Standing .
(a) TWC is a corporation duly organized, validly existing, and in good standing
under the laws of the State of New York, with full corporate power and authority
to conduct its business as it is now being conducted, to own, hold under lease,
or otherwise possess or use the properties and assets that it purports to own,
hold under lease, or otherwise possess or use, and to perform all its
obligations under the contracts to which it is a party or by which it is bound.
Schedule 2.1(a) sets forth all other jurisdictions in which TWC is authorized to
do business. TWC is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each state or other jurisdiction in which
such qualification is required by virtue of the nature of the activities
conducted by it except to the extent such failure to qualify would not have a
TWC Material Adverse Effect.
(b) TWC Shareholders have delivered to Merger Sub correct and complete copies of
the Organizational Documents of TWC, as currently in effect.
(c) Schedule 2.1(c) contains a complete and accurate list of the current
directors and officers of TWC.
(d) TWC does not have any subsidiaries.
2.2 Authority; No Conflict .
(a) This Agreement and TWC Shareholders' Closing Documents constitute or will
constitute when, as and if executed at Closing the legal, valid, and binding
obligation of TWC Shareholders and TWC to the extent each of them is a party
thereto, enforceable against each such party in accordance with their respective
terms. Subject to standard exceptions, TWC Shareholders and TWC, as the case may
be, have the absolute and unrestricted right, power, authority, and capacity to
execute and deliver this Agreement and TWC Shareholders' Closing Documents and
to perform their obligations under this Agreement and TWC Shareholders' Closing
Documents to the extent each of them is a party thereto.
<PAGE>
(b) Except as set forth in Schedule 2.2, neither the execution and delivery of
this Agreement or TWC Shareholders' Closing Documents nor the consummation or
performance of any of the Contemplated Transactions will, directly or
indirectly, except as would not individually or in the aggregate have a TWC
Material Adverse Effect:
(i) contravene, conflict with, or result in (with or without notice or lapse of
time) a violation or breach of (A) any provision of the Organizational Documents
of TWC; (B) any resolution adopted by TWC's Board of Directors or TWC
Shareholders, as the sole shareholders of TWC; (C) any Legal Requirement or any
Order to which TWC or TWC Shareholders, or any of the assets owned or used by
TWC, may be subject, or give any Governmental Body or other Person the right
(with or without notice or lapse of time) to challenge any of the Contemplated
Transactions or to exercise any remedy or obtain any relief under any such Legal
Requirement or Order; (D) any of the terms or requirements of, or give any
Governmental Body the right (with or without notice or lapse of time) to revoke,
withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization
that is held by TWC or that otherwise relates to the business of, or any of the
assets owned or used by, TWC; or (E) any provision of, or give any Person the
right (with or without notice or lapse of time) to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Contract;
(ii) cause Anicom or Merger Sub to become subject to, or to become liable for
the payment of, any Tax or cause any of the assets owned by TWC to be reassessed
or revalued by any taxing authority or other Governmental Body; or
(iii) result in (with or without notice or lapse of time) the imposition or
creation of any Encumbrance upon or with respect to any of the assets owned or
used by TWC.
Except as set forth in Schedule 2.2 and except for filings and other applicable
requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the " HSR Act"), TWC is not and will not be required to give any notice
to or obtain any Consent from, and TWC Shareholders are not and will not be
required to give any notice to or obtain any Consent from, any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
2.3 Capitalization . The authorized equity securities of TWC consist of 200
shares of common stock, no par value, of which 23 shares are issued and
outstanding on the date hereof, and 23.4395 shares will be issued and
outstanding on the Closing Date, and constitute the TWC Shares as of each such
date. Goodstein is on the date hereof, and TWC Shareholders will on the Closing
Date be, the sole record and beneficial owner(s) and holder(s) of all of the
outstanding TWC Shares as of each such date, with good and valid title to such
TWC Shares, free and clear of all Encumbrances. All of the outstanding equity
securities of TWC have been duly authorized and validly issued and are fully
paid and nonassessable. There are no Contracts relating to the issuance, sale,
or transfer of any equity securities or other securities (whether or not
convertible) of TWC, including options, rights, warrants, puts, or calls. None
of the outstanding equity securities or other securities of TWC was issued, or
has been redeemed or repurchased, in violation of the Securities Act or any
securities or "blue sky" Legal Requirements. TWC has not owned, does not own,
and has no Contract to acquire, any equity securities or other securities of any
Person or any direct or indirect equity or ownership interest in any other
business. TWC Shareholders have provided Merger Sub with complete copies of any
shareholder agreements, voting agreements, and other agreements relating to the
TWC Shares, all of which are listed on Schedule 2.3.
<PAGE>
2.4 Financial Statements . TWC Shareholders have caused TWC to deliver to
Anicom: (a) TWC's audited balance sheet, statement of income and statement of
stockholders' equity as of and for the fiscal year ended February 28, 1997 (the
" 1996 Financial Statements"), and (b) TWC's unaudited balance sheet and
statement of income as of and for the seven months ended September 30, 1997 (the
" Interim Financial Statements" and, together with the 1996 Financial
Statements, the " Financial Statements") including in each case the notes
thereto. The Financial Statements and notes thereto are consistent with TWC's
books and records and fairly present the financial condition and results of
operations of TWC as at the respective dates thereof and for the periods therein
referred to, all in accordance with generally accepted accounting principles,
consistently applied (" GAAP") (subject to normal, recurring year-end
adjustments with respect to the Interim Financial Statements) and except as
follows: (i) transactions reflected in the Financial Statements between TWC, on
the one hand, and Goodstein or any of his Affiliates, on the other hand have not
necessarily been negotiated on an arm's-length basis and accordingly charges
relating to such transactions may vary from fair market terms; (ii) the Interim
Financial Statements do not contain the footnotes that may be required by GAAP;
and (iii) the Interim Financial Statements include only balance sheets and
statements of income for TWC and do not include any other financial statements
that may be required by GAAP. No financial statements of any Person are required
by GAAP to be consolidated with the financial statements of TWC.
2.5 Books and Records . The books of account, minute books, stock record books,
and other records of TWC, all of which have been made available to Merger Sub,
are complete and correct in all material respects. Without limiting the
generality of the foregoing, the minute books of TWC contain complete and
accurate records of all material meetings held of, and material corporate action
taken by, the shareholders, the boards of directors, and committees of the
boards of directors of TWC, and no meeting of any such shareholders, board of
directors, or committee has been held for which minutes have not been prepared
and are not contained in such minute books. At the Closing, all of those books
and records will be in the possession of the Surviving Corporation.
2.6 Title to Properties; Encumbrances . Schedule 2.6 contains a complete and
accurate list of all leaseholds (including, with respect thereto, the
"commencement date" of each related lease agreement) or other interests in real
property currently owned by TWC. TWC has good and valid title to all the
properties and assets (whether real, personal, or mixed and whether tangible or
intangible) reflected as owned in TWC's balance sheet as of September 30, 1997
(the " September Balance Sheet"), and upon consummation of the Contemplated
Transactions, the Surviving Corporation will be vested with good and valid title
to all such properties and assets (except for personal property sold since the
date of the September Balance Sheet in the Ordinary Course of Business and
except that the contracts governing certain leasehold interests held by TWC
require the consent of the applicable landlords for the consummation of the
Contemplated Transactions which consents Anicom has specifically requested that
TWC neither seek nor obtain) and all of the material properties and assets
purchased or otherwise acquired by TWC since the date of the September Balance
Sheet (except for supplies, inventory, and personal property acquired and/or
sold since the date of the September Balance Sheet in the Ordinary Course of
Business) are listed in Schedule 2.6. Except as set forth on Schedule 2.6
attached hereto, TWC does not use any furniture, fixtures or equipment which it
does not own. Except as set forth on Schedule 2.6, all properties and assets
reflected in the September Balance Sheet are free and clear of all Encumbrances,
except (i) Encumbrances disclosed in the Financial Statements, (ii) Encumbrances
for Taxes, assessments and other governmental charges not yet due and payable or
due but not delinquent or being contested in good faith by appropriate
proceedings, (iii) mechanics', workmen's, repairmen's, warehousemen's, carriers'
or other like Encumbrances arising or incurred in the Ordinary Course of
Business, (iv) equipment leases listed on Schedule 2.6 with third parties
entered into in the Ordinary Course of Business, (v) with respect to real
property, easements, quasi-easements, licenses, covenants, rights of way, and
other similar restrictions and zoning, building and other similar restrictions
of record and (vi) Encumbrances which, individually or in the aggregate, will
not have a TWC Material Adverse Effect. To TWC Shareholders' Knowledge, TWC has
no material liabilities or obligations of any nature with respect to real
property previously owned or operated by TWC which would, individually or in the
aggregate, have a TWC Material Adverse Effect.
<PAGE>
2.7 Condition and Sufficiency of Assets . To TWC Shareholders' Knowledge, the
equipment and other tangible personal property used by TWC in the conduct of its
business, and the heating, ventilation, and air-conditioning systems at the
Facilities, are in good operating condition and repair, are adequate for the
uses to which they are being put, are not in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
nature or cost, and are sufficient for the continued conduct of TWC's business
after the Closing in substantially the same manner as conducted prior to the
Closing, except to the extent that any of the foregoing would not have a TWC
Material Adverse Effect.
2.8 Accounts Receivable . All accounts receivable of TWC that are reflected on
the September Balance Sheet or on the accounting records of TWC as of the
Closing Date, (collectively, the " Accounts Receivable"), represent or will
represent valid obligations arising from sales actually made or services
actually performed in the Ordinary Course of Business. The reserves shown on the
September Balance Sheet or on the accounting records of TWC as of the Closing
Date with respect to the Accounts Receivable are adequate consistent with past
practice. Except as set forth on Schedule 2.8, there is no contest, claim, or
right of set-off, other than returns in the Ordinary Course of Business, in any
agreement with any maker of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable. Prior to the date of this Agreement, TWC
Shareholders have delivered to Anicom a complete and accurate list of all
Accounts Receivable as of November 19, 1997, which list sets forth the aging of
such Accounts Receivable.
2.9 Inventory . Except as set forth in Schedule 2.10, all inventory of TWC,
whether or not reflected in the September Balance Sheet, consists of a quality
and quantity usable and salable in the Ordinary Course of Business, except for
obsolete items and items of below-standard quality (including scraps and lengths
that are not saleable in the Ordinary Course of Business), all of which have
been either reserved for or written off or written down to net realizable value
in the September Balance Sheet or on the accounting records of TWC as of the
Closing Date, as the case may be. All inventories not written off or reserved
for have been priced on a lower of cost or weighted average, moving average cost
basis. The quantities of each item of inventory are reasonable in the present
circumstances of TWC.
2.10 No Undisclosed Liabilities . Except as set forth in Schedule 2.10, TWC has
no liabilities or obligations of any nature (whether known or unknown and
whether absolute, accrued, contingent, or otherwise) other than liabilities or
obligations reflected or reserved against in the September Balance Sheet,
current liabilities incurred in the Ordinary Course of Business since the date
of the September Balance Sheet and Taxes incurred since the date of the
September Balance Sheet and which do not or would not individually or in the
aggregate have a TWC Material Adverse Effect.
<PAGE>
2.11 Taxes .
(a) Since 1986, TWC has been eligible to file, and has properly filed, all
elections and other instruments and documents necessary to qualify as, and shall
at the Closing (immediately prior to the Closing) be, an "S corporation" within
the meaning of Section 1361 of the Code.
(b) TWC has never been and is not a member of an "affiliated group" as defined
in Section 1504 of the Code and TWC has never been a party to a tax sharing, tax
indemnity or tax allocation agreement. TWC has timely filed or caused to be
timely filed (on a timely basis since its incorporation) all Tax Returns that
are or were required to be filed by or with respect to it pursuant to the Legal
Requirements of each Governmental Body with taxing power over it or its assets.
TWC has disclosed on its Federal Tax Returns all positions taken therein that
could give rise to a substantial understatement of Federal income tax within the
meaning of Section 6662 of the Code. No claim has ever been made by an authority
in a jurisdiction where TWC does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. TWC Shareholders have caused TWC to
deliver or make available to Merger Sub copies of all such Tax Returns filed by
TWC, examinations, reports and statements of deficiencies assessed against or
agreed to by TWC since January 1, 1995. TWC has paid, or made provision for the
payment of, all Taxes that have or may have become due pursuant to those Tax
Returns or otherwise, or pursuant to any assessment received by TWC Shareholders
or TWC. The United States federal and state income Tax Returns of TWC subject to
such Taxes have not been audited by the IRS or relevant state tax authorities
and, except as set forth on Schedule 2.11, TWC is not a party to any action or
proceeding by any Governmental Body for the collection or assessment of Taxes.
Except as set forth on Schedule 2.11, neither TWC nor TWC Shareholders has given
or been requested to give waivers or extensions (or is or would be subject to a
waiver or extension given by any other Person) of any statute of limitations
relating to the payment of Taxes of TWC or for which TWC may be liable. There
exists no proposed tax assessment against TWC except as disclosed in the
September Balance Sheet or in Schedule 2.11. Except as set forth in Schedule
2.11, neither TWC nor TWC Shareholders expect any authority to assess any
additional Taxes for any period for which Tax Returns have been filed. No
consent to the application of Section 341(f) of the Code has been filed with
respect to any property or assets held, acquired, or to be acquired by TWC. All
Taxes that TWC is or was required by Legal Requirements to withhold or collect
have been duly withheld or collected and, to the extent required, have been paid
to the proper Governmental Body or other Person. All Tax Returns filed by TWC
are true, correct, and complete in all material respects. TWC is not a party to
any Contract that has resulted or would result, separately or in the aggregate,
in the payment of any "excess parachute payments" within the meaning of Section
280G of the Code. TWC has never had a permanent establishment in any foreign
country, as defined in any applicable tax treaty or convention between the
United States and such foreign country, other than a sales office in Puerto
Rico.
2.12 No Material Adverse Change . Except as set forth on Schedule 2.12, since
the date of the September Balance Sheet, there has not been any material adverse
change in the business, operations, properties, assets, or condition of TWC.
2.13 Employee Benefits .
(a) Except as is described in Schedule 2.13, none of TWC or any current or
former Plan Affiliate of TWC has at any time maintained, adopted, made
contributions to or had any other liability with respect to: any "employee
pension benefit plan" (as such term is defined in Section 3(2) of ERISA); any
"employee welfare benefit plan" (as such term is defined in Section 3(1) of
ERISA); any collective bargaining agreement, personnel policy (including
vacation time, holiday pay, bonus programs and sick leave) or material fringe
benefit; any severance agreement or plan or any other medical, life or
disability benefit; any excess benefit plan, bonus or incentive plan, top hat
plan or deferred compensation plan, change-of-control agreement, employment
agreement; or any other benefit plan, policy, program, arrangement, agreement or
contract, whether or not written or terminated (all such plans, policies,
programs, arrangements, agreements and contracts, including those that are set
forth in Schedule 2.13, are referred to in this Agreement as " Scheduled
Plans").
<PAGE>
(b) Except as described in Schedule 2.13, TWC Shareholders have delivered to
Merger Sub a complete and accurate copy, as of the Closing, of each written
Scheduled Plan, together with, if applicable, a copy of Form 5500 Annual Reports
(including required schedules and attachments), if any, for the three (3) most
recent plan years; the most recent IRS determination letter and each other
material letter, ruling or notice issued by a Governmental Body with respect to
each such plan and any materials submitted to a Governmental Body in connection
therewith; a copy of each funding vehicle, if any, with respect to each such
plan; the current summary plan description and summary of material modifications
with respect to each such plan; and a copy or description of each other general
explanation or communication which describes a material term of a Scheduled Plan
that has not previously been disclosed to Merger Sub pursuant to this Section.
To the extent any Scheduled Plan has not been delivered as of the date hereof,
TWC Shareholders shall deliver such Scheduled Plan as soon as practicable prior
to Closing, and TWC Shareholders represent that any such Scheduled Plans are
consistent with the description thereof set forth in the corresponding summary
plan description thereof.
(c) Each Scheduled Plan (i) has been and currently complies in form and in
operation in all material respects with all applicable requirements of ERISA and
the Code, and any other Legal Requirements, and so as not to give rise to a
nonexempt prohibited transaction (as such term is defined under ERISA and the
Code) or liability for any other excise taxes, penalties or fines; (ii) has been
and is operated and administered in compliance with its terms (except as
otherwise required by law) and with applicable Legal Requirements in such a
manner as to qualify, where appropriate, for both Federal and state purposes,
for income tax exclusions to its participants, tax-exempt income for its funding
vehicle, and the allowance of deductions and credits with respect to
contributions thereto; and (iii) where appropriate, has received a favorable
determination letter or recognition of exemption from the Internal Revenue
Service upon which the sponsor of such Scheduled Plan is entitled to rely. The
Contemplated Transactions will not cause any additional benefits or liabilities
to accrue or become payable under any Scheduled Plan.
(d) Except as set forth on Schedule 2.13, none of TWC or any current or former
Company Plan Affiliate has at any time participated in, made contributions to or
had any other liability with respect to any Scheduled Plan (i) which is a
"multi-employer plan" as defined in Section 4001 of ERISA, a "multi-employer
plan" within the meaning of Section 3(37) of ERISA, a "multiple employer plan"
within the meaning of Section 413(c) of the Code or a "multiple employer welfare
arrangement" within the meaning of Section 3(40) of ERISA, (ii) which provides
post-retirement or post-employment medical, health, life insurance or other
welfare-type benefits, their spouses or dependents (except for limited continued
medical benefit coverage, if any, required to be provided under state
continuation coverage laws), or (iii) which is subject to Title IV of ERISA or
the minimum funding standards of the Code. With respect to each "multiemployer
plan" (within the meaning of Section 4001(a)(3) of ERISA), TWC would have
incurred no "withdrawal liability" (within the meaning of Section 4201 of ERISA)
in the event of "complete withdrawal" (within the meaning of Section 4203 of
ERISA) from such plan on May 31, 1997, and, to TWC Shareholders' Knowledge, TWC
will not incur $50,000 or more of "withdrawal liability" (within the meaning of
Section 4001(a)(3) of ERISA) in the event of "complete withdrawal" (within the
meaning of Section 4203 of ERISA) from such plan at the Effective Time.
<PAGE>
(e) All contributions, payments, premiums, expenses, reimbursements or accruals
for each Scheduled Plan as of the Closing (including periods from the first day
of the then current plan year to the Closing) shall have been made or accrued on
TWC Financial Statements and each such plan otherwise does not have any unfunded
liability as of the end of the last fiscal year of such Scheduled Plan which is
not reflected on TWC Financial Statements or set forth on Schedule 2.13.
(f) As used in this Agreement, with respect to any person (" First Person") the
term "Plan Affiliate" shall mean each other person or entity with whom the First
Person constitutes or has constituted all or part of a controlled group, or
which would be treated or has been treated with the First Person as under common
control or whose employees would be treated or have been treated as employed by
the First Person, under Section 414 of the Code or Section 4001(b) of ERISA and
any regulations, administrative rulings and case law interpreting the foregoing.
2.14 Compliance with Legal Requirements; Governmental Authorizations .
(a) Except as set forth in Schedule 2.14(a):
(i) TWC is, and at all times has been, in full compliance with each Legal
Requirement that is or was applicable to it or to the conduct or operation of
its business or the ownership or use of any of its assets, except for
noncompliance that has not and will not have a TWC Material Adverse Effect;
(ii) no event has occurred or circumstance exists that may constitute or result
in (with or without notice or lapse of time) a violation by TWC of, or a failure
on the part of TWC to comply with, any Legal Requirement, except for violations
that have not and will not have a TWC Material Adverse Effect; and
(iii) TWC has not received any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding, and to TWC
Shareholders' Knowledge, there is no actual, alleged, possible, or potential
violation of, or failure to comply with, any Legal Requirement, or any
obligation on the part of TWC to undertake (except for violations that would
not, individually or in the aggregate, have a TWC Material Adverse Effect), or
to bear all or any portion of the cost of, any remedial action of any material
nature.
<PAGE>
(b) Schedule 2.14(b) contains a complete and accurate list of each Governmental
Authorization that is held by TWC or that otherwise relates to the business of,
or to any of the assets owned or used by, TWC and that is material to the
conduct of its business as presently conducted. Each Governmental Authorization
listed or required to be listed in Schedule 2.14(b) is valid and in full force
and effect. Except as set forth in Schedule 2.14(b):
(i) TWC is, and at all times has been, in full compliance with all of the terms
and requirements of each Governmental Authorization identified or required to be
identified in Schedule 2.14(b), except for noncompliance that has not and will
not have a TWC Material Adverse Effect;
(ii) no event has occurred or circumstance exists that may (with or without
notice or lapse of time) (A) constitute or result directly or indirectly in a
violation of or a failure to comply with any term or requirement of any
Governmental Authorization listed or required to be listed in Schedule 2.14(b),
except for violations that have not and will not have a TWC Material Adverse
Effect or (B) result directly or indirectly in the revocation, withdrawal,
suspension, cancellation, or termination of, or any modification to, any
Governmental Authorization listed or required to be listed in Schedule 2.14(b).
(iii) TWC has not received any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible, or potential violation of or failure to comply with
any term or requirement of any Governmental Authorization, except for violations
that have not and will not have a TWC Material Adverse Effect or (B) any actual,
proposed, possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any Governmental Authorization
listed or required to be listed on Schedule 2.14(b); and
(iv) all applications required to have been filed for the renewal of the
Governmental Authorizations listed or required to be listed in Schedule 2.14(b)
have been duly filed on a timely basis with the appropriate Governmental Bodies,
and all other filings required to have been made with respect to such
Governmental Authorizations have been duly made on a timely basis with the
appropriate Governmental Bodies.
The Governmental Authorizations listed in Schedule 2.14(b) collectively
constitute, in all material respects, all of the Governmental Authorizations
necessary to permit TWC to lawfully conduct and operate its business in the
manner it currently conducts and operates such businesses and to permit TWC to
own and use its assets in the manner in which it currently owns and uses such
assets.
2.15 Legal Proceedings; Orders .
(a) Except as set forth in Schedule 2.15, there is no pending Proceeding:
(i) that has been commenced by or against TWC or any Scheduled Plan that may be
reasonably likely to have a TWC Material Adverse Effect; or
(ii) that challenges, or that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any of the Contemplated
Transactions.
To TWC Shareholders' Knowledge, no such Proceeding has been Threatened. TWC
Shareholders have delivered to Merger Sub copies of all pleadings,
correspondence, and other documents relating to each Proceeding listed in
Schedule 2.15. Also listed in Schedule 2.15 are all Proceedings commenced or, to
TWC Shareholders' Knowledge, Threatened by or against TWC within the last three
years, and a description of the outcome thereof (other than collection actions
commenced by TWC in the Ordinary Course of Business).
<PAGE>
(b) There is no Order to which TWC, or any of the assets owned or used by TWC,
is subject. TWC Shareholders are not subject to any Order that relates to the
business of, or any of the assets owned or used by, TWC. To TWC Shareholders'
Knowledge, no officer, director, agent, or employee of TWC is subject to any
Order that prohibits such officer, director, agent, or employee from engaging in
or continuing any conduct, activity, or practice relating to the business of
TWC.
2.16 Absence of Certain Changes and Events. Except as set forth in Schedule 2.16
and Schedule 2.26 and for the Approved Transactions, since the date of the
September Balance Sheet, TWC has conducted its business only in the Ordinary
Course of Business and there has not been any:
(i) change in TWC's authorized or issued capital stock; grant of any stock
option or right to purchase shares of capital stock of TWC; issuance of any
security convertible into such capital stock; grant of any registration rights;
purchase, redemption, retirement, or other acquisition by TWC of any shares of
any such capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of capital stock;
(ii) amendment to the Organizational Documents of TWC;
(iii) payment by TWC of any bonuses or compensation other than regular salary
payments, or increase in the salaries, or payment on any debt of TWC, to any
stockholder, director, officer, or employee, or entry into any employment,
severance, or similar Contract with any director, officer, or employee;
(iv) adoption of, or increase in the payments to or benefits under, any profit
sharing, bonus, deferred compensation, savings, insurance, pension, retirement,
or other Scheduled Plan for or with any employees of TWC;
(v) damage to or destruction or loss of any asset or property of TWC, whether or
not covered by insurance, materially and adversely affecting the properties,
assets, business, financial condition, or prospects of TWC;
(vi) entry into, termination of, or receipt of notice of termination of (A) any
license, maintenance, distributorship, supply, dealer, sales representative,
joint venture, credit, or similar agreement, or (B) any Contract or transaction
involving a total remaining commitment by TWC of at least $50,000 (other than
purchase orders in the Ordinary Course of Business);
(vii) loan or advance by TWC to any Person other than sales to customers on
credit in the Ordinary Course of Business, or discharge or satisfaction of any
material liability except in the Ordinary Course of Business;
(viii) sale (other than sales of inventory in the Ordinary Course of Business),
lease, or other disposition of any asset or property of TWC or mortgage, pledge,
or imposition of any lien or other encumbrance on any material asset or property
of TWC;
(ix) cancellation or waiver of any claims or rights with a value to TWC in
excess of $50,000;
(x) material change in the accounting methods used by TWC; or
(xi) agreement, whether oral or written, by TWC to do any of the foregoing.
<PAGE>
2.17 Contracts; No Defaults .
(a) Schedule 2.17 contains a complete and accurate list, and TWC Shareholders
have delivered to Merger Sub true and complete copies (or forms thereof, where
form agreements are used; provided that any and all material deviations or
changes to the forms in any individual case are described in Schedule 2.17), of
every material Contract to which TWC is a party or by which it is bound (the "
Material Contracts").
(b) Except as set forth in Schedule 2.17, all of the Contracts listed or
required to be listed in Schedule 2.17 are in full force and effect and are
valid and enforceable against TWC in accordance with their terms, and, to TWC
Shareholders' Knowledge, no event has occurred or circumstance exists that would
give any Person (including TWC) the right (with or without notice or lapse of
time) to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any such
Material Contract except that the contracts governing certain leasehold
interests held by TWC require the consent of the applicable landlords for the
consummation of the Contemplated Transactions which consents Anicom has
specifically requested that TWC neither seek nor obtain.
(c) Except as set forth on Schedule 2.8, there are no renegotiations of,
attempts to renegotiate, or outstanding rights to renegotiate any material
amounts paid or payable to TWC under current or completed Material Contracts
with any Person having the contractual or statutory right to demand or require
such renegotiation and no such Person has made written demand for such
renegotiation.
2.18 Insurance. Schedule 2.18 contains a complete and accurate list of all
insurance policies (including "self-insurance" programs) now maintained by TWC
(the " Insurance Policies") and maintained by TWC at any time during the past
three years. Except as set forth on Schedule 2.18, no claims have been made
under any such Insurance Policies. The Insurance Policies are in full force and
effect, TWC is not in default under any Insurance Policy, and no claim for
coverage under any Insurance Policy has been denied. TWC covenants and agrees
that all of the Insurance Policies will remain in full force and effect as of
the Closing Date.
2.19 Environmental Matters .
(a) Except as disclosed on Schedule 2.19, TWC has never generated, transported,
treated, stored, or disposed, or, in any manner, arranged for disposal or
treatment (within the meaning of the Resource Conservation and Recovery Act, 42
U.S.C. $ 6901 et seq. (" RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. $ 9601 et seq. (" CERCLA"), or any
applicable federal, state, or local law, regulation, ordinance or requirement,
as amended or hereafter amended relating to the environment (the " Environmental
Laws"), of any Hazardous Substances, the liability for which could be reasonably
expected to have a TWC Material Adverse Effect, except for (i) certain
inventories purchased by TWC for resale and stored by TWC in substantial
compliance with the Environmental Laws and (ii) that TWC sells scrap cable in
the Ordinary Course of Business to industrial scrap dealers in substantial
compliance with the Environmental Laws. To TWC Shareholders' Knowledge, there
are no Hazardous Substances on, in, or under the Facilities (including those
that may be contained in underground storage tanks) except for certain
inventories purchased by TWC for resale and stored by TWC in substantial
compliance with Environmental Laws.
<PAGE>
(b) Neither TWC Shareholders nor TWC has received, or has Knowledge of, any
notice of any Proceeding relating to the presence or alleged presence of
Hazardous Substances in, under, or upon the Facilities or upon the properties of
any sites to which any of TWC's waste has been transported, whether for disposal
or for any other purpose, and whether against TWC or any other Person; and there
are no pending, or, to TWC Shareholders' Knowledge, Threatened Proceedings (or
notice of potential Proceedings) from any Governmental Body or any other entity
regarding any matter relating to health, safety, or protection of the
environment relating to the Facilities, except as described in reasonable detail
in Schedule 2.19.
2.20 Employees . TWC has previously delivered to Anicom a complete and accurate
list of the following information for each employee of TWC, including each
employee on leave of absence or layoff status: name; job title; current
compensation paid or payable and any change in compensation since TWC's date of
incorporation; vacation accrued; and service credited for purposes of vesting
and eligibility to participate under each of TWC's Scheduled Plans. To TWC
Shareholders' Knowledge, no former or current employee or current or former
officer or director of TWC is a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality, non-competition, or
proprietary rights agreement, between such employee or officer or director and
any other Person that in any way materially adversely affected, affects, or will
affect (i) the performance of his duties as an employee or officer or director
of TWC, or (ii) the ability of TWC to conduct its business. To TWC Shareholders'
Knowledge, no director, officer or other key employee of TWC intends to
terminate his employment with TWC.
2.21 Labor Disputes; Compliance . Except as set forth on Schedule 2.21, TWC has
never been a party to any collective bargaining or other labor Contract. During
the past three (3) years, there has not been, there is not presently pending or
existing, and to TWC Shareholders' Knowledge there is not Threatened, any
strike, slowdown, picketing, work stoppage, labor arbitration, or proceeding in
respect of the grievance of any employee, application or complaint filed by an
employee or union with the National Labor Relations Board or any comparable
Governmental Body, organizational activity, or other labor dispute against or
affecting TWC or any Facility, and no application for certification of a
collective bargaining agent is pending or, to TWC Shareholders' Knowledge, is
Threatened. There is no lockout of any employees by TWC, and no such action is
contemplated by TWC. Except as set forth on Schedule 2.14(a), TWC has complied
in all material respects with all Legal Requirements, and there is no
allegation, charge or complaint or Proceeding pending or, to TWC Shareholders'
Knowledge, Threatened against TWC or any of its officers, directors or
employees, relating to employment, equal employment opportunity, discrimination,
harassment, immigration, wages, hours, benefits, collective bargaining, the
payment of social security and similar taxes, occupational safety and health,
and plant closing.
<PAGE>
2.22 Intellectual Property . Schedule 2.22 contains a complete and correct list
of all patented and registered Proprietary Rights owned by TWC and all pending
patent applications and applications for the registration of other Proprietary
Rights owned or filed by TWC. Schedule 2.22 also contains a complete and correct
list of all trade or corporate names used by TWC and a complete and correct list
of all licenses and other rights granted by TWC to any third party with respect
to Proprietary Rights and licenses and other rights granted by any third party
to TWC. Except as set forth in Schedule 2.22, (a) TWC owns and possesses all
right, title and interest in and to, or has a valid license to use, all of the
Proprietary Rights necessary for the operation of TWC's business as presently
conducted and none of such Proprietary Rights have been abandoned; (b) no claim
by any third party contesting the validity, enforceability, use or ownership of
any such Proprietary Rights has been made, is currently outstanding or, to TWC
Shareholders' Knowledge, is Threatened; (c) neither TWC nor, to TWC
Shareholders' Knowledge, any registered agent of TWC has received any notices
of, an allegation of, any infringement or misappropriation by, or conflict with,
any third party with respect to such Proprietary Rights, nor has TWC or, to TWC
Shareholders' Knowledge, any registered agent of TWC received any claims of
infringement or misappropriation of or other conflict with any Proprietary
Rights of any third party; and (d) to TWC Shareholder's Knowledge, TWC has not
infringed, misappropriated or otherwise violated any Proprietary Rights of any
third parties, and TWC Shareholders are not aware of any infringement,
misappropriation or conflict which will occur as a result of the continued
operation of TWC's business.
2.23 Customers. An accurate and complete list of TWC's customers and the amount
of gross revenue of TWC attributable to each such customer during 1996 has been
provided to Anicom. Except as set forth on Schedule 2.23 and Schedule 2.8, TWC
has not received any written or, to TWC Shareholders' Knowledge, oral notice,
and TWC Shareholders have no Knowledge, that any material customer of TWC
intends to discontinue or substantially diminish or change its relationship with
TWC on account of the transaction contemplated hereby or otherwise.
2.24 Suppliers. An accurate and complete list of TWC's suppliers (by dollar
volume of sales during 1996) has been provided to Anicom. No material supplier
has cancelled or otherwise terminated, modified or, to TWC Shareholders'
Knowledge, threatened to cancel or otherwise terminate, or to modify, its
relationship with TWC on account of the transaction contemplated hereby or
otherwise.
2.25 Sales Representatives. An accurate and complete list of TWC's sales
representatives (by dollar volume of sales during 1996) has been provided to
Anicom. During the last twelve months, none of such material sales
representatives has canceled or otherwise terminated, modified or, to TWC
Shareholders' Knowledge, threatened to cancel or otherwise terminate, or to
modify, its relationship with TWC.
2.26 Relationships with Related Persons . Except as set forth in Schedule 2.26,
neither TWC Shareholders nor any Related Person of TWC Shareholders or of TWC
has any interest in any property (whether real, personal, or mixed and whether
tangible or intangible) used in or pertaining to TWC's business. Except as set
forth in Schedule 2.26, neither TWC Shareholders nor any Related Person of TWC
Shareholders or of TWC owns, of record or as a beneficial owner, an equity
interest or any other financial or profit interest in any Person that has (i)
had business dealings or a material financial interest in any transaction with
TWC, or (ii) engaged in competition with TWC with respect to any line of
products or services of TWC (a " Competing Business") in any market presently
served by such TWC except for less than one percent of the outstanding capital
stock of any Competing Business that is publicly traded on any recognized
exchange or in the over-the-counter market. Except as set forth in Schedule
2.26, neither TWC Shareholders nor any Related Person of TWC Shareholders or of
TWC is a party to any Contract with, or has any claim or right against, TWC. All
money owed by TWC to Related Persons (other than for salary) are for bona fide
debts.
<PAGE>
2.27 Bank Accounts. Schedule 2.27 contains a complete and accurate list of each
bank at which TWC has an account or safe deposit box, the number of each such
account or box, and the names of all persons authorized to draw on such accounts
or to have access to such boxes.
2.28 Additional Tax Matters .
(a)ab The Merger Consideration received by TWC Shareholders will be
approximately equal to the fair market value of the TWC Shares surrendered in
the exchange.
(b)ab Subject to Section 12.1, TWC and TWC Shareholders will pay their
respective expenses, if any, incurred in connection with the transaction.
(c)ab Except for the Approved Transactions, there has been no significant sale,
distribution, dividend or other disposition of TWC's assets other than in the
ordinary course of business within the twelve (12) months preceding the Closing
Date.
(d)ab TWC is not an investment company as defined in Section 368(a)(2)(F)(iii)
and (iv) of the Code.
(e)ab TWC is not under the jurisdiction of a court in a Title 11 or similar
case.
(f)ab The fair market value of the assets of TWC transferred to Merger Sub will
equal or exceed the sum of the liabilities assumed by Merger Sub, plus the
amount of liabilities, if any, to which TWC's assets are subject.
2.29 Brokers or Finders . TWC Shareholders, TWC and their agents have incurred
no obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with this
Agreement.
2.30 Investor Representations.
(a) Each of Goodstein and Palazzolo has received a copy of all of the documents
set forth on Schedule 2.30 (the " Information").
(b) The Purchase Shares were not offered to either Goodstein or Palazzolo by any
means of general solicitation or general advertising.
(c) Neither Goodstein nor Palazzolo has received any representations, warranties
or written communications with respect to the offering of the Purchase Shares
other than those contained in this Agreement and Merger Sub's Closing Documents,
and, in entering into the Contemplated Transactions, neither Goodstein nor
Palazzolo is relying upon any information other than that (i) contained in the
Information, this Agreement or Merger Sub's Closing Documents, or (ii) resulting
from Goodstein's or Palazzolo's, as the case may be, own investigation of the
Purchase Shares and Anicom.
(d) Other than that the Information is true, correct and complete, with respect
to tax, legal and other economic considerations involved in the Contemplated
Transactions and an investment in the Purchase Shares, neither Goodstein nor
Palazzolo is relying on Anicom. In making his investment in the Purchase Shares,
each of Goodstein and Palazzolo has relied upon the Information and the
representations and warranties of Anicom and Merger Sub contained in this
Agreement and Merger Sub's Closing Documents. Each of Goodstein and Palazzolo
has carefully considered and has, to the extent each individually believes is
necessary, reviewed with his respective professional legal, tax, accounting and
financial advisers the suitability of an investment in the Purchase Shares for
each of Goodstein's and Palazzolo's, as the case may be, particular tax and
financial situation and has determined that the Purchase Shares are a suitable
investment for him.
<PAGE>
(e) Each of Goodstein and Palazzolo has had an opportunity to ask questions of
and receive answers from Anicom or its representatives concerning the terms of
its investment in the Purchase Shares, all such questions have been answered to
the full satisfaction of each of Goodstein and Palazzolo, and each of Goodstein
and Palazzolo has had the opportunity to request and obtain any additional
information either Goodstein or Palazzolo, as the case may be, deemed necessary
to verify the information contained in the Information, this Agreement and
Merger Sub's Closing Documents. Anicom acknowledges that the TWC Shareholders do
not, and will not, hereby waive any rights they may have under this Agreement as
a result of their due diligence investigation of Anicom.
(f) Each of Goodstein and Palazzolo has knowledge and experience in financial
and business matters generally, and specifically as to the wire and cable
distribution business, and is fully capable of evaluating the merits and risks
of an investment in the Purchase Shares. Each of Goodstein and Palazzolo
recognizes that an investment in the Purchase Shares involves substantial risks,
and is fully aware of and understands all of the risks related to the purchase
of Purchase Shares, to the extent that such risks are identified in the
Information, this Agreement and Merger Sub's Closing Documents. Each of
Goodstein and Palazzolo has determined that the purchase of the Purchase Shares
is consistent with his individual investment objectives. Each of Goodstein and
Palazzolo is able to bear the economic risks of an investment in the Purchase
Shares, and at the present time could afford a complete loss of his investment.
(g) Each of Goodstein and Palazzolo is acquiring the Purchase Shares for his own
account, for investment purposes only, and not with a view towards the sale or
other distribution thereof, in whole or in part. No person other than Goodstein
or Palazzolo, as the case may be, or his permitted assigns has or will have a
direct or indirect beneficial interest in the Purchase Shares.
(h) Each of Goodstein and Palazzolo understands that the Purchase Shares have
not been registered for sale to him under the Securities Act of 1933, as amended
(the " Act"), nor under the securities laws of any state or other jurisdiction.
The offering and sale of the Purchase Shares is intended to be exempt from
registration under the Act by virtue of Section 4(2) of the Act and applicable
state securities laws. The Purchase Shares have not been approved or disapproved
by the Securities and Exchange Commission or by any other federal or state
agency, and no such agency has passed on the accuracy or adequacy of the
Information, nor made any finding or determination as to the fairness or
suitability of an investment in the Purchase Shares.
(i) Each of Goodstein and Palazzolo understands that there are restrictions on
the transferability of the Purchase Shares and the ability to liquidate his
investment in any of the Purchase Shares.
(j) Each of Goodstein and Palazzolo understands and acknowledges that Anicom is
relying upon the representations and warranties contained in this Section 2.30
in determining whether the offering and sale of the Purchase Shares is eligible
for exemption from the registration requirements contained in the Act and in any
applicable state securities law.
<PAGE>
(k) Goodstein has no present intention to sell, transfer or otherwise dispose of
such number of Purchase Shares as may reduce his interest in Anicom to a number
of Purchase Shares having a value, as of the Effective Time, of less than 50% of
the Merger Consideration received thereby.
2.31 Disclosure .
(a) No representation or warranty of TWC Shareholders in this Agreement omits to
state a material fact necessary to make the statements herein, in light of the
circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 4.5 will contain any untrue statement or
omit to state a material fact necessary to make the statements therein or in
this Agreement, in light of the circumstances in which they were made, not
misleading.
3. REPRESENTATIONS AND WARRANTIES OF ANICOM AND MERGER SUB
Anicom and Merger Sub jointly and severally represent and warrant to TWC
Shareholders and TWC as follows:
3.1 Organization and Good Standing. Each of Anicom and Merger Sub is a
corporation duly incorporated, validly existing, and in good standing under the
laws of the State of Delaware, its state of incorporation.
3.2 Authority; No Conflict .
(a) This Agreement and Merger Sub's Closing Documents constitute the legal,
valid, and binding obligation of Anicom or Merger Sub, as the case may be,
enforceable against Anicom or Merger Sub, as the case may be, in accordance with
its terms. Anicom and Merger Sub, as the case may be, have the absolute and
unrestricted right, power, and authority to execute and deliver this Agreement
and Merger Sub's Closing Documents and to perform its obligations under this
Agreement and Merger Sub's Closing Documents.
(b) Neither the execution and delivery of this Agreement and Merger Sub's
Closing Documents by Anicom or Merger Sub, as the case may be, nor the
consummation or performance of any of the Contemplated Transactions by Anicom or
Merger Sub, as the case may be, will give any Person the right to prevent,
delay, or otherwise interfere with any of the Contemplated Transactions pursuant
to: (i) any provision of Anicom's or Merger Sub's, as the case may be,
Organizational Documents; (ii) any resolution adopted by the board of directors
or the stockholders of Merger Sub; (iii) any Legal Requirement or Order to which
Anicom or Merger Sub, as the case may be, may be subject; or (iv) any Contract
to which Anicom or Merger Sub, as the case may be, is a party or may be bound.
Anicom or Merger Sub, as the case may be, is not required to give any notice to
or obtain any Consent from any Person in connection with the execution and
delivery of this Agreement by Anicom or Merger Sub, as the case may be, or the
consummation or performance of any of the Contemplated Transactions by Anicom or
Merger Sub, as the case may be.
<PAGE>
3.3 Capitalization .
(a) The authorized capital stock of Anicom consists of 60,000,000 shares of
common stock, par value $.001 per share, and 1,000,000 shares of preferred
stock, par value $.01 per share. As of the date hereof (but before giving effect
to the Contemplated Transactions), there are issued and outstanding 19,483,485
shares of such common stock, all of which are of one class (the " Outstanding
Shares"). Additionally, there are outstanding warrants to purchase 81,364 shares
of Anicom's common stock. As of the date hereof, 2,264,291 shares of Anicom's
common stock are issuable upon exercise of options to purchase such stock, which
options were issued pursuant to Anicom's stock option plan. Except as described
above and as otherwise provided on Schedule 3.3, other than obligations arising
under any Employee Benefit Plan for which Anicom has or will have liability
(whether actual, contingent, direct or indirect) as of the Closing Date, there
are no outstanding securities of Anicom convertible into or evidencing the right
to purchase or subscribe for any shares of capital stock of Anicom, there are no
outstanding or authorized options, warrants, calls, subscriptions, rights,
commitments or any other agreements of any character obligating Anicom to issue
any shares of its capital stock or any securities convertible into or evidencing
the right to purchase or subscribe for any shares of such stock. No outstanding
options, warrants or other securities exercisable for or convertible into shares
of capital stock of Anicom require anti-dilution adjustments by reason of the
consummation of the Contemplated Transactions.
(b) The Outstanding Shares are duly authorized, validly issued, fully paid and
nonassessable, and are listed for trading on the Nasdaq Stock Market. The
Purchase Shares to be issued pursuant to this Agreement, in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable.
3.4 SEC Filings . Since February 22, 1995, Anicom has filed all forms, reports
and documents required to be filed with the SEC pursuant to the federal
securities laws and the SEC rules and regulations thereunder (the " Anicom SEC
Reports"). As of their respective dates, the Anicom SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Anicom SEC Reports and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3.5 Financial Statements . Each of the audited consolidated financial statements
of Anicom (including any related notes and schedules thereto) included (or
incorporated by reference) in its Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1996, is accurate and complete and fairly presents, in
conformity with GAAP applied on a consistent basis through the periods involved
(except as may be noted therein), and in conformity with the SEC's Regulation
S-B, the consolidated financial position of the Anicom and its consolidated
subsidiaries as of its date and the consolidated results of operations and
changes in financial position for the period then ended.
<PAGE>
3.6 No Undisclosed Liabilities . Except as and to the extent set forth (or
incorporated by reference) in the Anicom's Annual Report on Form 10-KSB for the
calendar year ended December 31, 1996, Anicom has not incurred any liability or
obligation of any nature whatsoever (whether due or to become due, accrued,
fixed, contingent, liquidated, unliquidated or otherwise) that would be required
by GAAP to be accrued on, reflected on, or reserved against it, in a
consolidated balance sheet (or in the applicable notes thereto) of Anicom
prepared in accordance with GAAP consistently applied, other than liabilities or
obligations which arose in the ordinary course of business and consistent with
past practices since such date and which do not or would not individually or in
the aggregate have an Anicom Material Adverse Effect.
3.7 Taxes. Anicom has filed or caused to be filed all Tax Returns that are or
were required to be filed by or with respect to it pursuant to the Legal
Requirements of each Governmental Body with taxing power over it or its assets.
Anicom has paid, or made provision for the payment of all Taxes that have or may
have come due pursuant to those initial Tax Returns or otherwise, or pursuant to
any assessment received by Anicom. The United States Federal and State income
Tax Returns of Anicom subject to such Taxes have not been audited by the IRS or
relevant state tax authorities and Anicom is not a party to any action or
proceeding by Governmental Body for the collection or assessment of Taxes.
Except for routine filing extensions granted as a matter of right under any
applicable law, Anicom has not been given or been requested to give waivers or
extensions (or is or would be subject to a waiver or extension given by any
other Person) of any statute of limitations relating to the payment of Taxes of
Anicom or for which Anicom may be liable. All Taxes that Anicom is or was
required by Legal Requirements to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper Governmental
Body or other Person. All Tax Returns filed by Anicom are true, correct and
complete in all material respects.
3.8 Certain Proceedings . There is no pending Proceeding:
(i) that has been commenced by or against Anicom or Merger Sub or that otherwise
relates to or may be reasonably likely to have an Anicom Material Adverse Effect
or a Merger Sub Material Adverse Effect, as the case may be; or
(ii) that challenges, or that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any of the Contemplated
Transactions.
To Anicom's Knowledge, no such Proceeding has been Threatened.
3.9 No Material Adverse Change . Since December 31, 1996, there has not been any
Anicom Material Adverse Effect.
3.10 Brokers or Finders . Anicom or Merger Sub, as the case may be, and its
agents have incurred no obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement.
3.11 Contracts; No Defaults . All of the material Contracts to which Anicom is a
party or by which it is bound are in full force and effect and are valid and
enforceable against Anicom in accordance with their terms, and no event has
occurred or circumstance exists that would give any Person (including Anicom)
the right (with or without notice or lapse of time) to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any such material Contract.
<PAGE>
3.12 Environmental Matters .
(a) Anicom has never generated, transported, treated, stored, or disposed, or,
in any manner, arranged for disposal or treatment (within the meaning of the
Environmental Laws of any Hazardous Substances, the liability for which could be
reasonably expected to have an Anicom Material Adverse Effect.
(b) Anicom has not received, or have Knowledge of, any notice of any Proceeding
relating to the presence or alleged presence of Hazardous Substances in, under,
or upon any of Anicom's plants or facilities or upon the properties of any sites
to which any of Anicom's waste has been transported, whether for disposal or for
any other purpose, and whether against Anicom or any other Person; and there are
no pending, or, to Anicom's Knowledge, Threatened Proceedings (or notice of
potential Proceedings) from any Governmental Body or any other entity regarding
any matter relating to health, safety, or protection of the environment relating
to any of Anicom's plants or facilities.
3.13 Customers . Since September 30, 1997, Anicom has not received any written
or, to Anicom's Knowledge, oral notice, and Anicom has no Knowledge, that any of
Anicom's ten largest customers during the nine months ended September 30, 1997
intend to discontinue or substantially diminish or change their relationship
with Anicom on account of the transaction contemplated hereby or otherwise.
3.14 Suppliers . Since September 30, 1997, none of Anicom's ten largest
suppliers during the nine months ended September 30, 1997 have cancelled or
otherwise terminated, modified or, to Anicom's Knowledge, Threatened to cancel
or otherwise terminate, or to modify, its relationship with Anicom on account of
the transaction contemplated hereby or otherwise.
3.15 Merger . Each of Anicom and Merger Sub acknowledges and agrees that it has
not relied on, or been induced to enter into this Agreement on account of, any
representation or warranty of any kind, whether oral or written, express or
implied, except for such representations and warranties of TWC Shareholders and
TWC as are set forth in this Agreement. Without limiting the generality of the
foregoing, and notwithstanding any otherwise express representations and
warranties made by TWC Shareholders or TWC, neither TWC Shareholders nor TWC
makes any representation or warranty to the other parties hereto with respect
to:
(a) any projections, estimates or budgets heretofore delivered to or made
available to Anicom or Merger Sub of future revenues, expenses or expenditures
or future results of operations of TWC; or
(b) except as expressly covered by a representation and warranty contained in
this Agreement, any other information or documents (financial or otherwise) made
available to the Anicom or Merger Sub, or their counsel, accountants or advisers
with respect to TWC.
Each of Anicom and Merger Sub agrees and consents that its sole and exclusive
remedy for any and all claims that may arise on account of the Contemplated
Transactions is an action for breach of representation, warranty or covenant of
TWC Shareholders or TWC contained in this Agreement, and hereby unconditionally
and irrevocably waives, and covenants not to sue on the basis of or otherwise
assert, any other claims or rights which may accrue to its benefit arising from
or in connection with the Contemplated Transactions; provided, however, that
notwithstanding the foregoing, the parties hereto expressly acknowledge and
agree that nothing contained herein shall limit, or be deemed to limit, in any
way or otherwise affect Anicom's or Merger Sub's rights with respect to claims
relating to fraud or intentional misrepresentation by TWC Shareholders or TWC.
<PAGE>
3.16 Disclosure .
(a) No representation or warranty of Anicom or Merger Sub, as the case may be,
in this Agreement omits to state a material fact necessary to make the
statements herein, in light of the circumstances in which they were made, not
misleading.
(b) There is no fact known to Anicom or Merger Sub, as the case may be, that has
specific application to Anicom or Merger Sub, as the case may be (other than
general economic or industry conditions), and that would have an Anicom Material
Adverse Effect or Merger Sub Material Adverse Effect, as the case may be, that
has not been set forth in this Agreement.
3.17 Additional Tax Matters .
(a) Merger Sub was formed solely to facilitate the Merger and has no assets or
liabilities.
(b) Anicom owns 100% of all the outstanding stock or Merger Sub.
(c) Anicom has no plan to reacquire any of the Purchase Shares, provided that
the foregoing representation shall not preclude Anicom from exercising any of
its rights or remedies under the Escrow Agreement.
4. TWC SHAREHOLDERS' COVENANTS
4.1 Access and Investigation . During the period from the date of this Agreement
through the Effective Time, TWC Shareholders will, and will cause TWC and its
Representatives to, (i) afford Anicom, Merger Sub and their Representatives full
and free access, during normal business hours and at such other reasonable times
as otherwise may be required under the circumstances, upon reasonable notice,
and under reasonable circumstances so as to minimize the adverse effect on TWC's
business, to TWC's personnel, properties, contracts, books, and records, and
other documents and data, subject to legal privilege, (ii) furnish Anicom,
Merger Sub and their Representatives with copies of all such contracts, books
and records, and other existing documents and data as Anicom or Merger Sub may
reasonably request, and (iii) furnish Anicom, Merger Sub and their
Representatives with such additional financial, operating, and other data and
information as Anicom or Merger Sub may reasonably request.
4.2 Operation of the Businesses of TWC . During the period from the date of this
Agreement through the Effective Time, except as set forth in Schedule 2.16, TWC
Shareholders will, and will cause TWC to:
(a) conduct the business of TWC only in the Ordinary Course of Business,
including: (i) maintaining TWC's assets in good repair, order, and condition,
(ii) maintaining in full force existing insurance, (iii) maintaining the books
and records in the usual, regular and ordinary manner on a basis consistent with
past practices, (iv) performing and complying with all of their material
obligations under all Material Contracts and (v) not sell or otherwise dispose
of TWC's assets outside of the Ordinary Course of Business;
<PAGE>
(b) without the prior written approval of Anicom, refrain from declaring, making
or paying any dividend or distribution (including, but not limited to,
distributions of retained earnings or amounts with respect to the payment of
taxes) to TWC's shareholders, provided, however, that notwithstanding the
foregoing, TWC may, without Anicom's prior written approval, distribute to its
shareholders (i) "S corporation" retained earnings of up to $1,750,000 in the
aggregate and (ii) required tax distributions for the tax periods ended on
February 28, 1997 and immediately prior to the Closing of up to $650,000 in the
aggregate;
(c) without the prior written approval of Anicom, refrain from incurring, or
otherwise causing, TWC's outstanding bank indebtedness at the Effective Time to
exceed $14,500,000 in the aggregate;
(d) use their Best Efforts to preserve intact the current business organization
of TWC, keep available the services of the current officers, employees, and
agents of TWC, and maintain the relations and goodwill with suppliers,
customers, landlords, creditors, employees, agents, and others having business
relationships with TWC;
(e) confer with Anicom and Merger Sub concerning operational matters of a
material nature; and
(f) otherwise report periodically to Anicom and Merger Sub concerning the status
of the business, operations, finances and prospects of TWC.
4.3 Negative Covenant . During the period from the date of this Agreement
through the Effective Time, except as set forth in Schedule 2.16, TWC
Shareholders will not, and will cause TWC not to, take any affirmative action,
or fail to take any reasonable action within their or its control, as a result
of which any of the changes or events listed in Section 2.16 is likely to occur.
4.4 Required Approvals . As promptly as practicable after the date of this
Agreement, TWC Shareholders will, and will cause TWC to, make all filings
required by Legal Requirements to be made by them in order to consummate the
Contemplated Transactions. Between the date of this Agreement and the Effective
Time, TWC Shareholders will, and will cause TWC to, cooperate with Anicom or
Merger Sub, as the case may be, in connection with any filings required by Legal
Requirements to be made by Anicom or Merger Sub, as the case may be, to
consummate the Contemplated Transactions.
4.5 Notification . Between the date of this Agreement and the Closing Date, TWC
Shareholders will, and will cause TWC to, promptly notify Anicom and Merger Sub
in writing if TWC Shareholders or TWC becomes aware of any fact or condition
that causes or constitutes a Breach of any of TWC Shareholders' representations
and warranties as of the date of this Agreement, or if TWC Shareholders or TWC
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would cause or constitute a Breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. During the same period, TWC
Shareholders will, and will cause TWC to, promptly notify Anicom and Merger Sub
of the occurrence of any Breach of any covenant of TWC Shareholders or TWC in
this Section 4 or of the occurrence of any event that may make the satisfaction
of the conditions in Section 6 impossible or unlikely.
<PAGE>
4.6 Best Efforts. Between the date of this Agreement and the Effective Time, TWC
Shareholders will, and will cause TWC to, use their or its Best Efforts to cause
the conditions in Section 6 to be satisfied.
4.7 TWC Guaranties . Goodstein shall use his Best Efforts to release TWC from
all guaranties and other support obligations of TWC in respect of obligations of
Goodstein, TW Cable, L.L.C., a New York limited liability company (" TW Cable")
and Four Goodys, immediately prior to the Closing Date, including, without
limitation, the guaranties and other credit support and other obligations set
forth in Schedule 4.7 (collectively, the " TWC Guaranties") (including, without
limitation, to the extent necessary, the assumption by Goodstein and Four Goodys
of the obligation of TWC under the TWC Guaranties).
4.8 Officer's Certificate . Between the date of this Agreement and the Effective
Time, TWC Shareholder's will cause TWC to deliver to Anicom and Merger Sub on a
daily basis a certificate, executed by the President or Chief Financial Officer
of TWC, with respect to TWC's total Debt, outstanding accounts payable and
outstanding checks as of each such date.
4.9 ERISA Matters . Between the date of this Agreement and the Effective Time,
TWC shall file, and promptly deliver evidence to Anicom with respect to the
filing, of all required documents, certificates and other materials required in
connection with the filing of Form 5500 Annual Reports with respect to TWC's
Scheduled Plans for the plan year ended February 28, 1997.
5. COVENANTS OF ANICOM AND MERGER SUB
5.1 Access and Investigation . During the period from the date of this Agreement
through the Effective Time, Anicom will, and will cause its Representatives to,
(i) afford TWC, TWC Shareholders and their Representatives full and free access,
during normal business hours and at such other reasonable times as otherwise may
be required under the circumstances, upon reasonable notice, and under
reasonable circumstances so as to minimize the adverse effect on Anicom's
business, to Anicom's personnel, properties, contracts, books, and records, and
other documents and data, subject to legal privilege, (ii) furnish TWC, TWC
Shareholders and their Representatives with copies of all such contracts, books
and records, and other existing documents and data as TWC or TWC Shareholders
may reasonably request, and (iii) furnish TWC, TWC Shareholders and their
Representatives with such additional financial, operating, and other data and
information as Anicom or Merger Sub may reasonably request.
5.2 Operation of the Businesses of Anicom . During the period from the date of
this Agreement through the Effective Time, Anicom will:
(a) use its Best Efforts to preserve intact the current business organization of
Anicom, keep available the services of the current officers, employees, and
agents of Anicom, and maintain the relations and good will with suppliers,
customers, landlords, creditors, employees, agents, and others having business
relationships with Anicom; and
(b) otherwise report to TWC and TWC Shareholders any material adverse change in
the status of the business, operations, finances and prospects of Anicom.
<PAGE>
5.3 Notification . Between the date of this Agreement and the Closing Date,
Anicom will promptly notify TWC and TWC Shareholders in writing if Anicom
becomes aware of any fact or condition that causes or constitutes a Breach of
any representations and warranties as of the date of this Agreement, or if
Anicom becomes aware of the occurrence after the date of this Agreement of any
fact or condition that would cause or constitute a Breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. During the same
period, Anicom will promptly notify TWC and TWC Shareholders of the occurrence
of any Breach of any covenant of Anicom in this Section 5 or of the occurrence
of any event that may make the satisfaction of the conditions in Section 7
impossible or unlikely.
5.4 Approvals of Governmental Bodies . As promptly as practicable after the date
of this Agreement, Anicom or Merger Sub, as the case may be, will make any
filings required by Legal Requirements to be made by it in order to consummate
the Contemplated Transactions. Between the date of this Agreement and the
Effective Time, Anicom or Merger Sub, as the case may be, will cooperate with
TWC Shareholders and TWC in connection with any filings required by Legal
Requirements to be made by TWC Shareholders or TWC to consummate the
Contemplated Transactions.
5.5 Best Efforts . Between the date of this Agreement and the Effective Time,
Anicom and Merger Sub, as the case may be, will use their Best Efforts to cause
the conditions in Section 7 to be satisfied.
5.6 Goodstein Guaranties . Anicom shall use its Best Efforts to release
Goodstein, Four Goodys, TW Cable and their Affiliates from all guaranties and
other support obligations of Goodstein, Four Goodys and TW Cable, in respect of
obligations of TWC immediately prior to the Closing Date, including, without
limitation, the guaranties and other credit support obligations set forth in
Schedule 5.6 (collectively, the " Goodstein Guaranties") (including, without
limitation, to the extent necessary, the assumption by Anicom of the obligation
of Goodstein, Four Goodys and TW Cable under the Goodstein Guaranties).
5.7 Listing of Purchase Shares . On or before the Effective Time, Anicom shall
list the Purchase Shares on the Nasdaq National Market.
5.8 TWC Employees . As soon after the Closing as reasonably practicable, each
employee of TWC (other than the TWC Shareholders) who remains an employee of TWC
after the Closing shall receive ten (10) shares of Anicom's common stock, and
Anicom shall make appropriate provision for any federal or state income tax
obligations of such employees resulting therefrom.
5.9 Employment Agreement . Between the date of this Agreement and the Effective
Time, Anicom shall offer employment to Ron Martyn on substantially the terms set
forth in Exhibit G.
6. CONDITIONS PRECEDENT TO ANICOM'S AND MERGER SUB'S OBLIGATION TO CLOSE
Anicom's and Merger Sub's obligations to consummate the Merger and to take the
other actions required to be taken by Anicom or Merger Sub, as the case may be,
at the Closing is subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Anicom or Merger
Sub, as the case may be, in whole or in part):
<PAGE>
6.1 Accuracy of Representations . Each of TWC Shareholders' representations and
warranties in this Agreement must have been accurate in all material respects as
of the date of this Agreement, and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date without giving effect to any
Supplement to any of the Schedules hereto, or any certificate or document
delivered by TWC Shareholders or TWC pursuant to this Agreement.
6.2 TWC Shareholders' Performance .
(a) Each of the covenants and obligations that TWC Shareholders or TWC are
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing must have been duly performed and complied with in all material
respects.
(b) TWC Shareholders and TWC must have delivered each of TWC Shareholders'
Closing Documents required to be delivered by TWC Shareholders pursuant to
Section 1.10(a).
6.3 Consents . Each of the Consents identified in Schedule 2.2 must have been
obtained and must be in full force and effect (and, with respect to item 3 on
Schedule 2.2, must be in form and substance reasonably acceptable to Anicom),
except that Anicom expressly waives satisfaction of this condition with respect
to the consents listed as items 1 and 2 on Schedule 2.2.
6.4 No Proceedings . There shall not be pending or threatened any material
Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may be likely
have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions.
6.5 No Claim Regarding Stock Ownership or Sale Proceeds . There must not have
been made or Threatened by any Person any claim asserting that such Person
(a) is the holder or the beneficial owner of, or has the right to acquire or to
obtain beneficial ownership of, any stock of, or any other voting, equity, or
ownership interest in, TWC, or (b) is entitled to all or any portion of the
Merger Consideration payable to TWC Shareholders.
6.6 No Prohibition . Neither the consummation nor the performance of any of the
Contemplated Transactions by TWC Shareholders will, directly or indirectly (with
or without notice or lapse of time), materially contravene, or conflict with, or
result in a material violation of, or cause Merger Sub or Anicom or any Person
affiliated with Merger Sub or Anicom to suffer any material adverse consequence
under, (i) any applicable Legal Requirement or Order, or (ii) any Legal
Requirement or Order that has been published, introduced, or otherwise formally
proposed by or before any Governmental Body.
6.7 Tax Opinion . Anicom shall have received an opinion from Katten Muchin &
Zavis, dated the Closing Date, based upon certain factual representations of TWC
Shareholders, TWC and Anicom, to the effect that the Merger will constitute a
reorganization for federal income tax purposes within the meaning of Section
368(a) of the Code and no gain or loss will be recognized by TWC, Anicom or
Merger Sub as a result of the Merger.
6.8 No Material Adverse Change . From the date of this Agreement to the
Effective Time, there shall not have been any event or development which results
in a TWC Material Adverse Effect, nor shall there have occurred any event or
development which could reasonably be likely to result in a TWC Material Adverse
Effect in the future.
<PAGE>
6.9 HSR Act . The waiting period specified in the HSR Act, including any
accelerations or extensions thereof, shall have expired or been terminated.
7. CONDITIONS PRECEDENT TO TWC SHAREHOLDERS' OBLIGATION TO CLOSE
TWC Shareholders' obligation to consummate the Merger and to take the other
actions required to be taken by TWC Shareholders at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by TWC Shareholders, in whole or in
part):
7.1 Accuracy of Representations. Each of Anicom and Merger Sub's representations
and warranties in this Agreement must have been accurate in all material
respects as of the date of this Agreement and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date.
7.2 Merger Sub's Performance .
(a) Each of the covenants and obligations that Anicom or Merger Sub, as the case
may be, is required to perform or to comply with pursuant to this Agreement at
or prior to the Closing must have been performed and complied with in all
material respects.
(b) Merger Sub must have delivered each of the documents required to be
delivered by Merger Sub pursuant to Section 1.10(b).
7.3 No Proceedings . There shall not be pending or threatened any material
Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the Contemplated Transactions.
7.4 Tax Opinion . TWC shall have received a written opinion from Bryan Cave LLP
the Company, dated the Closing Date, based upon certain factual representations
of TWC Shareholders, TWC and Anicom, to the effect that the Merger will
constitute a reorganization for federal income tax purposes within the meaning
of Section 368(a)(2)(E) of the Code and that no gain or loss will be recognized
by TWC Shareholders as a result of the Merger.
7.5 No Material Adverse Change . From the date of this Agreement to the
Effective Time, there shall not have been any event or development which results
in an Anicom Material Adverse Effect, nor shall there have occurred any event or
development which could reasonably be likely to result in an Anicom Material
Adverse Effect in the future.
7.6 HSR Act . The waiting period specified in the HSR Act, including any
accelerations or extensions thereof, shall have expired or been terminated.
7.7 Registration Statement . The registration statement pursuant to Section 2.1
of the Registration Rights Agreement shall have been declared effective by the
SEC and the Purchase Shares shall have been listed on the NASDAQ National
Market.
<PAGE>
7.8 Release Under The Goodstein Guaranties . Goodstein and his Affiliates shall
have been released from (or Anicom shall have otherwise indemnified them from
and against any and all liability with respect to) any and all of their
obligations under the Goodstein Guaranties and Goodstein shall have received
written instruments reasonably satisfactory to Goodstein executed by the
creditor under or with respect to each Guarantee effectuating the foregoing.
7.9 Purchase of Vertex Technologies, Inc. Inventory . At the Closing, Anicom
shall have purchased the Distribution Inventory (as defined in that certain
Asset Purchase Agreement, dated as of May, 1997, by and between TW Cable, L.L.C.
and Vertex Technologies, Inc., as assigned to TWC (the " Vertex Asset Purchase
Agreement") for the Purchase Price (as defined therein).
8. TERMINATION
8.1 Termination Events . This Agreement may, by notice given prior to or at the
Closing, be terminated only under the following circumstances (each, a "
Permitted Termination"):
(a) by either Anicom or TWC Shareholders if a material Breach of any provision
of this Agreement has been committed by the other party and such Breach has not
been waived;
(b)(i) by Anicom if any of the conditions in Section 6 have not been satisfied
as of the Closing Date or if satisfaction of any such condition is or becomes
impossible (other than through the failure of Anicom or Merger Sub to comply
with its obligations under this Agreement) and Anicom has not waived such
condition on or before the Closing Date;
(ii) by TWC Shareholders, if any of the conditions in Section 7 have not been
satisfied as of the Closing Date or if satisfaction of any such condition is or
becomes impossible (other than through the failure of TWC Shareholders to comply
with his obligations under this Agreement) and TWC Shareholders have not waived
such condition on or before the Closing Date;
(c) by mutual consent of Anicom and TWC Shareholders;
(d) by TWC Shareholders if the Closing has not occurred on or before December 5,
1997; or
(e) by Anicom if the Closing has not occurred on or before December 31, 1997.
8.2 Effect of Termination . Each party's right of termination under Section 8.1
is in addition to any other rights it may have under this Agreement or
otherwise, and the exercise of a right of termination will not be an election of
remedies. If this Agreement is terminated pursuant to Section 8.1, all further
obligations of the parties under this Agreement will terminate, except that the
obligations in Section 12.1 will survive; provided, however, that if this
Agreement is terminated by a party because of the Breach of the Agreement by the
other party or because one or more of the conditions to the terminating party's
obligations under this Agreement is not satisfied as a result of the other
party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
<PAGE>
9. POST-CLOSING COVENANTS
9.1 Tax Compliance . After Closing, the Parties agree to take or refrain from
taking such further action as may be reasonably necessary to qualify the Merger
as a reorganization under the provisions of Section 368(a) of the Code
including, but not limited to, reporting the Merger as a reorganization on their
respective Tax Returns.
9.2 Waiver of Pre-Existing Condition Limitations . After Closing, in the event
Anicom transfers insurance coverage of TWC's post-closing employees into
Anicom's insurance programs, Anicom shall use its Best Efforts to have any
applicable pre-existing condition limitations waived with respect to such
employees and will not effect any such transfer if any such condition is unable
to be waived.
9.3 VTX/Vertex Inventory . The parties acknowledge that, in addition to the
inventory described in Section 7.9 of this Agreement, VTX/Vertex currently owns
certain inventory of wire and cable and related products (the " VTX Inventory").
Following the Effective Time, Goodstein, as the controlling shareholder of
VTX/Vertex shall cause VTX/Vertex to offer to Anicom a right of first refusal to
purchase the VTX Inventory in the Ordinary Course of Business during the twelve
months following the Effective Time at a 17 1/2% discount to the book value
thereof, and Anicom will use its commercially reasonable efforts to assist
VTX/Vertex in selling the VTX Inventory.
9.4 Transfer of Insurance Coverage . As soon as reasonably practicable after the
Closing, Goodstein shall use his Best Efforts to cause the transfer of insurance
coverage of Howard Griffith from TWC's insurance policies to those of VTX/Vertex
and the waiver of any applicable pre-existing condition limitations with respect
thereto.
10. INDEMNIFICATION; REMEDIES
10.1 Survival . All representations and warranties in this Agreement, any
supplements to the Schedules hereto, and any certificate or document delivered
pursuant to this Agreement will survive the Merger until the first anniversary
of the Effective Time, except that (a) the representations and warranties in
Sections 2.3 and 2.11 will survive until all applicable statutes of limitation
with respect to the Tax Returns or other matters set forth in such
representation and warranty have elapsed, and (b) all representations and
warranties in Sections 2.13, 2.21 and 2.22 shall survive until the second
anniversary of the Effective Time.
The right to indemnification, reimbursement, or other remedy based on such
representations and warranties will not be affected or limited by any
investigation conducted by Anicom or Merger Sub, as the case may be.
10.2 Indemnification and Reimbursement by TWC Shareholders . TWC Shareholders
shall jointly and severally indemnify and hold harmless Merger Sub and Anicom
and their employees, officers, directors, controlling persons, and Affiliates
(collectively, the " Indemnified Persons"), and shall reimburse the Indemnified
Persons, for any loss, liability, claim, damage, expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, " Damages"),
arising from or in connection with (a) any Breach of any representation or
warranty made by TWC Shareholders or TWC in this Agreement without giving effect
to any Supplement to any of the Schedules hereto, or any TWC Shareholders'
Closing Document, (b) any Breach by TWC Shareholders or TWC of any covenant or
obligation of TWC Shareholders or TWC in this Agreement or (c) the TWC
Guaranties and any other liabilities or obligations arising from, in connection
with or relating to VTX/Vertex, the VTX/Vertex Transactions or the VTX/Vertex
Bankruptcy Proceedings.
<PAGE>
10.3 Indemnification and Reimbursement by Anicom and Merger Sub . Anicom or
Merger Sub, as the case may be, shall indemnify and hold harmless TWC
Shareholders, and shall reimburse TWC Shareholders, for any Damages arising from
or in connection with (a) any Breach of any representation or warranty made by
Anicom or Merger Sub in this Agreement or in any certificate delivered by Merger
Sub pursuant to this Agreement, (b) any Breach by Anicom or Merger Sub of any of
their respective covenants or obligations in this Agreement, (c) Section 630 of
the New York Business Corporation Law or (d) the Goodstein Guaranties.
10.4 Procedure for Indemnification -- Third Party Claims .
(a) Promptly after receipt by an indemnified party under Section 10.2 or 10.3 of
notice of a claim against it (" Claim"), such indemnified party shall, if a
claim is to be made against an indemnifying party under such Section, give
notice to the indemnifying party of such Claim, but the failure to notify the
indemnifying party will not relieve the indemnifying party of any liability that
it may have to any indemnified party, except to the extent that the indemnifying
party demonstrates that the defense of such action is prejudiced by the
indemnified party's failure to give such notice.
(b) If any Claim referred to in Section 10.4(a) is made against an indemnified
party and it gives notice to the indemnifying party of such Claim, the
indemnifying party will, unless the Claim involves Taxes, be entitled to
participate in the defense of such Claim and, to the extent that it wishes
(unless (i) the indemnifying party is also a party to such Claim and the
indemnified party determines in good faith that joint representation would be
inappropriate, or (ii) the indemnifying party fails to provide reasonable
assurance to the indemnified party of its financial capacity to defend such
Claim and provide indemnification with respect to such Claim), to assume the
defense of such Claim with counsel satisfactory to the indemnified party and,
after notice from the indemnifying party to the indemnified party of its
election to assume the defense of such Claim, the indemnifying party will not,
as long as it diligently conducts such defense, be liable to the indemnified
party under such Section for any fees of other counsel or any other expenses
with respect to the defense of such Claim in each case subsequently incurred by
the indemnified party in connection with the defense of such Claim, other than
reasonable costs of investigation. If the indemnifying party assumes the defense
of a Claim, (a) it will be conclusively established for purposes of this
Agreement that the claims made in that Claim are within the scope of and subject
to indemnification; (b) no compromise or settlement of such claims may be
effected by the indemnifying party without the indemnified party's consent
unless (i) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect on any
other Claims that may be made against the indemnified party, and (ii) the sole
relief provided is monetary damages that are paid in full by the indemnifying
party; and (c) the indemnifying party will have no liability with respect to any
compromise or settlement of such claims effected without its consent. If notice
is given to an indemnifying party of a Claim and the indemnifying party does
not, within ten days after the indemnified party's notice is given, give notice
to the indemnified party of its election to assume the defense of such Claim,
the indemnifying party will be bound by any determination with respect to said
Claim or any compromise or settlement effected by the indemnified party unless
it objects in good faith as to whether such claim is properly within the scope
of such indemnification.
<PAGE>
(c) Notwithstanding the foregoing, if an indemnified party determines in good
faith that there is a reasonable probability that a Claim may adversely affect
it or its Related Persons other than as a result of monetary damages for which
it would be entitled to indemnification under this Agreement, the indemnified
party may, by notice to the indemnifying party, assume the exclusive right to
defend, compromise, or settle such Claim, but the indemnifying party will not be
bound by any determination of a Claim so defended or any compromise or
settlement effected without its consent (which may not be unreasonably
withheld). In the event that TWC Shareholders assume the defense of a Claim
under this Section 10.4, Anicom hereby agrees and endeavors to cooperate, and to
cause TWC to cooperate, in all reasonable respects with TWC Shareholders as they
may reasonably request, which cooperation shall include, without limitation,
making available business records, tax filings, documents or other information
of TWC pertaining to, and employees (including employee time) of TWC having
personal knowledge of, the circumstances relating to such Claim.
10.5 Procedure for Indemnification -- Other Claims. A claim for indemnification
for any matter not involving a third-party claim may be asserted by notice to
the party from whom indemnification is sought.
10.6 Escrow. Any amounts owed by TWC Shareholders to Anicom or Merger Sub shall
be, on a non-exclusive basis, first paid from escrow pursuant to the terms of
the Escrow Agreement.
10.7 Minimum Threshold. Neither party shall be required to indemnify and hold
harmless the other party pursuant to this Agreement for any Claim(s) until such
Claim(s) have a value, in the aggregate, of $400,000 (the " Basket"), at which
time $200,000 of the first $400,000 of any such Claim(s) and one hundred percent
(100%) of amounts in excess of $400,000 with respect to such Claim(s) shall then
be owed.
10.8 Cap on Indemnity. Neither party's obligation(s) to indemnify and hold
harmless the other party pursuant to this Agreement shall exceed $4,000,000 in
the aggregate (the " Cap"); provided, however, that the obligations of Anicom or
Merger Sub, as the case may be, under and with respect to Sections 10.3(c) and
(d) and Section 10.3(b) relating to any breach by Anicom of the covenants
contained in the first sentence of Section 12.1, and the obligations of TWC
Shareholders with respect to Section 10.2(a) relating to the representations and
warranties in Section 2.3 and with respect to Section 10.2(c), shall not be
subject to the Basket or the Cap. Each TWC Shareholder's respective liability to
provide indemnification under this Agreement shall not exceed his pro rata
portion of the Cap which shall be determined based upon the percentage interest
such TWC Shareholder has in the Merger Consideration, and each TWC Shareholder's
respective liability to provide indemnification with respect to any particular
Claim shall not exceed his pro rata portion of such Claim determined based upon
the percentage interest such TWC Shareholder has in the Merger Consideration.
10.9 Other Limitations. The amount of any Damages suffered by an Indemnified
Person under this Agreement (and the amount for which such party may seek
indemnification pursuant to this Article 10 on account of such Damages) shall be
reduced by the amount, if any, of any insurance recovery received by such party
from any insurance policy maintained by such party or its Affiliates, net of (i)
reasonable expenses incurred by such party in obtaining such recovery and (ii)
the present value of any insurance premium increase attributable to the claim
underlying such recover, including retrospective premium adjustments.
<PAGE>
10.10 Applicability to Palazzolo . For purposes of this Section 10 only, the
term "TWC Shareholders" as used herein shall be deemed to include Palazzolo if
and only if the Closing actually occurs.
11. DEFINITIONS
For purposes of this Agreement, the following terms have the meaning set forth
below:
"Best Efforts"-- the good faith efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible.
"Breach"-- a "Breach" of a representation, warranty, covenant, obligation, or
other provision of this Agreement will be deemed to have occurred if there is or
has been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision,
or (b) any claim (by any Person) or other occurrence or circumstance that is or
was inconsistent with such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
"Code" -- the Internal Revenue Code of 1986, as amended, or any successor law,
and rules and regulations issued by the IRS pursuant to, or promulgated under,
the Internal Revenue Code or any successor law.
"Consent" -- any approval, consent, ratification, waiver, or other authorization
(including any Governmental Authorization).
"Contemplated Transactions" -- all of the transactions contemplated by this
Agreement, including:
(i) the merger of Merger Sub with and into TWC;
(ii) the execution, delivery, and performance of TWC Shareholders' Closing
Documents and Merger Sub's Closing Documents; and
(iii) the performance by Merger Sub and TWC Shareholders of their respective
covenants and obligations under this Agreement.
"Contract" -- any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"Debt" -- means without duplication, the sum of (a) all indebtedness of TWC for
borrowed money, (b) the principal portion of all obligations of TWC under
capital leases, and (c) all commercial letters of credit and the maximum or face
amount of all performance and standby letters of credit issued or bankers'
acceptance facilities created for the account of TWC including, without
duplication, all unreimbursed draws thereunder.
"Encumbrance" -- any claim, lien, pledge, charge, security interest, equitable
interest, option, right of first refusal or preemptive right, condition, or
other restriction of any kind, including any restriction on use, voting (in the
case of any security), transfer, receipt of income, or exercise of any other
attribute of ownership.
<PAGE>
"ERISA" -- the Employee Retirement Income Security Act of 1974, as amended, or
any successor law.
"Escrow Agent" -- Harris Trust and Savings Bank, or such other financial
institution as the parties shall mutually agree.
"Facilities" -- any real property, leaseholds, or other interests currently
owned or operated by TWC (or any predecessor Person) and any buildings, plants,
or structures currently or formerly owned, leased, or operated by TWC (or any
predecessor Person).
"Fair Market Value" -- with respect to each Purchase Share, the average closing
(last sale) price per share of Anicom's common stock for the ten trading days
ending on the second trading day prior to the date upon which any such
determination is being made (as quoted on the Nasdaq National Market or such
other national exchange or quotation system upon which Anicom's common stock is
then listed or quoted).
"Governmental Authorization" -- any approval, consent, license, permit, waiver,
or other authorization issued, granted, given, or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement.
"Governmental Body" -- any:
(i) nation, state, county, city, town, village, district, or other jurisdiction
of any nature;
(ii) federal, state, local, municipal, foreign, or other government;
(iii) governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, department, official, or other entity and any court
or other tribunal);
(iv) multi-national organization or body; or
(v) body exercising, or entitled or purporting to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"Hazardous Substance" -- any substance that is now or will foreseeably be
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Legal Requirement, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"IRS" -- the United States Internal Revenue Service.
<PAGE>
" Knowledge" -- an individual will be deemed to have "Knowledge" of a particular
fact or other matter if such individual is actually aware of such fact or other
matter after due inquiry with the person or persons having supervisory
responsibility over the matter in question. A Person (other than an individual)
will be deemed to have "Knowledge" of a particular fact or other matter if any
individual who is serving, or who has at any time served, as a director,
officer, partner, executor, or trustee of such Person (or in any similar
capacity) has, or at any time had, Knowledge of such fact or other matter;
provided, however, that, with respect to TWC, the term "officer" as used in the
foregoing clause shall only include the TWC Shareholders.
"Legal Requirirement" -- any federal, state, local, municipal, foreign, or other
constitution, ordinance, regulation, statute, treaty, or other law adopted,
enacted, implemented, or promulgated by or under the authority of any
Governmental Body or by the eligible voters of any jurisdiction, and any
agreement, approval, consent, injunction, judgment, license, order, or permit by
or with any Governmental Body or to which Goodstein, Palazzolo or TWC is a party
or by which Goodstein, Palazzolo or TWC is bound.
"Material Adverse Effect" -- with respect to a Person means any event, change or
effect that is materially adverse to the condition (financial or otherwise),
properties, assets, liabilities, businesses, operations, results of operations
of such Person.
"Order" -- any award, injunction, judgment, order, ruling, subpoena, or verdict
or other decision entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" -- an action taken by a Person will be deemed to
have been taken in the "Ordinary Course of Business" only if:
(i) such action is consistent with the past practices of such Person and is
taken in the ordinary course of the normal day-to-day operations of such Person;
and
(ii) such action is not required to be authorized by the board of directors of
such Person (or by any Person or group of Persons exercising similar authority)
and does not require any other separate or special authorization of any nature.
"Organizational Documents"-- (i) the articles or certificate of incorporation
and the bylaws of a corporation; (ii) any charter or similar document adopted or
filed in connection with the creation, formation, or organization of a Person;
and (iii) any amendment to any of the foregoing.
"Person" -- any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, or other entity or Governmental Body.
"Proceeding" -- any suit, litigation, arbitration, hearing, audit,
investigation, or other action (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"Proprietary Rights" -- all proprietary information of TWC, including all
patents, patent applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice); all trademarks, service
marks, trade dress, trade names and corporate names; all registered and
unregistered statutory and common law copyrights; all registrations,
applications and renewals for any of the foregoing; all trade secrets,
confidential information, ideas, formulae, compositions, know-how, manufacturing
and production processes and techniques, research and development information,
drawings, specifications, designs, plans, improvements, proposals, technical and
computer data, documentation and software, financial, business and marketing
plans, and customer and supplier lists/accounts and related information and all
other proprietary rights relating to the production, sale or service of products
and the conduct of TWC's business.
<PAGE>
"Related Person" -- with respect to a particular individual:
(i) each other member of such individual's Family; and
(ii) any Person that is directly or indirectly controlled by any one or more
members of such individual's Family.
With respect to a specified Person other than an individual:
(i) any Person that, directly or indirectly, controls, is controlled by, or is
under common control with such specified Person; and
(ii) each Person that serves as a director, executive officer, general partner,
executor, or trustee of such specified Person (or in a similar capacity).
For purposes of this definition, the "Family" of an individual includes (i) such
individual, (ii) the individual's spouse and former spouses, (iii) any lineal
ancestor or lineal descendant of the individual, or (iv) a trust for the benefit
of the foregoing. A Person will be deemed to control another Person, for
purposes of this definition, if the first Person possesses, directly or
indirectly, the power to direct, or cause the direction of, the management
policies of the second Person, (x) through the ownership of voting securities,
(y) through common directors, trustees or officers, or (z) by contract or
otherwise.
"Representative" -- with respect to a particular Person, any director, officer,
employee, agent, consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial advisors.
"Securities Act" -- the Securities Act of 1933, as amended, or any successor law
including the rules and regulations promulgated thereunder.
"Tax" -- any tax (including any income tax, capital gains tax, value-added tax,
sales tax, property tax, gift tax, or estate tax), levy, assessment, tariff,
duty (including any customs duty), deficiency, or other fee, and any related
charge or amount (including any fine, penalty, or interest), imposed, assessed,
or collected by or under the authority of any Governmental Body.
"Tax Return" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
<PAGE>
"Threatened" -- a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing).
"VTX/Vertex Bankruptcy Proceedings" -- those proceedings involving VTX/Vertex in
the U.S. Bankruptcy Court, Eastern District of New York at Westbury for relief
under Chapter 11 of the U.S. Bankruptcy Code referred to as In Re: Vertex
Technology, Inc. and VTX Electronics Corp., Case No. 897-80197-478 and
897-80197-479.
"VTX/Vertex Transactions" -- the transactions contemplated by the Vertex Asset
Purchase Agreement and that certain Securities Purchase Agreement, dated January
10, 1997, by and among TW Cable and the persons identified therein.
12. GENERAL PROVISIONS
12.1 Expenses . Anicom agrees that it will reimburse TWC, or otherwise assume as
a result of the Merger, up to $200,000 in reasonably documented fees and
expenses of their legal counsel, accountants and investment advisors in
connection with the Merger, regardless of whether a Merger is consummated, so
long as TWC and TWC Shareholders have complied with the terms and conditions set
forth in Sections 10 and 12 of that certain Letter of Intent dated November 4,
1997 between Anicom and TWC. Except as set forth in the preceding sentence,
Anicom, on the one hand, and TWC Shareholders (to the extent the costs and
expenses incurred by TWC exceed $200,000), on the other hand, will each be
solely responsible for and bear all of its or their respective expenses,
including, without limitation, expenses of legal counsel, accountants, and other
advisors, incurred at any time in connection with pursuing or consummating the
Merger and the Contemplated Transactions.
<PAGE>
12.2 Notices . All notices, consents, waivers, and other communications under
this Agreement must be in writing and will be deemed to have been duly given (a)
when delivered by hand; (b) when sent by telecopier, provided that a copy is
mailed by U.S. certified mail, return receipt requested; (c) three days after
sent by Certified U.S. Mail, return receipt requested; or (d) one day after
deposit with a nationally recognized overnight delivery service, in each case to
the appropriate addresses and telecopier numbers set forth below (or to such
other addresses and telecopier numbers as a party may designate by notice to the
other parties):
Goodstein: with a copy to:
Edward Goodstein Bryan Cave L.L.P.
606 Michelle Place 245 Park Avenue
North Woodmere, New York 11581-3040 New York, New York 10167-0034
Attention: Conrad Everhard, Esq.
Telecopy No.: (212) 692-1900
Palazzolo: with a copy to:
Carl G. Palazzolo Bryan Cave L.L.P.
18 Jefferson Avenue 245 Park Avenue
East Islip, New York 11730 New York, New York 10167-0034
Attention: Conrad Everhard, Esq.
Telecopy No.: (212) 692-1900
Anicom and Merger Sub: with a copy to:
Anicom, Inc. Katten Muchin & Zavis
6133 North River Road 525 West Monroe Street
10th Floor Suite 1600
Rosemont, Illinois 60018 Chicago, Illinois 60661-3693
Attention: Scott C. Anixter Attention: Jeffrey R. Patt, Esq.
Telecopy No.: (847)518-8791 Telecopy No.: (312) 902-1061
12.3 Further Assurances . The parties agree (a) to furnish upon request to each
other such further information, (b) to execute and deliver to each other such
other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of the
Contemplated Transactions.
12.4 Waiver . The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege.
12.5 Entire Agreement and Modification . This Agreement supersedes all prior
oral or written agreements between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement executed
by all parties hereto.
12.6 Assignments, Successors, and No Third-Party Rights . Neither party may
assign any of its rights under this Agreement without the prior consent of the
other parties except that Anicom may assign any of its rights under this
Agreement to any Subsidiary of Anicom. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement.
<PAGE>
12.7 Severability . If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
12.9 Section Headings, Construction . The headings of Sections in this Agreement
are provided for convenience only and will not affect its construction or
interpretation. All references to "Sections" refer to the corresponding Sections
of this Agreement. All words used in this Agreement will be construed to be of
such gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
12.10 Confidentiality of Agreements . The parties hereto will keep the terms of
this Agreement and the other agreements contemplated by this Agreement
confidential and will not, without the prior written consent of the other
parties hereto, disclose such terms to any person or entity other than their
accountants and attorneys who agree to be bound by this confidentiality
provision, provided that this confidentiality obligation will terminate with
respect to any information that becomes generally available to the public
through no fault of the parties hereto or their accountants or attorneys.
12.11 Governing Law . This Agreement will be governed by and construed under the
laws of the State of Illinois without regard to conflicts of laws principles.
The parties hereto irrevocably consent to the personal jurisdiction of any state
or Federal court of competent subject matter jurisdiction located (i) in Cook
County, Illinois if Anicom or Merger Sub is the initial plaintiff in any action
between the parties hereto or (ii) in Suffolk or New York County, New York, if
TWC or TWC Shareholders are the initial plaintiffs in any action between the
parties hereto.
12.12 Counterparts . This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
12.13 No Strict Construction . The language used in this Agreement will be the
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction will be applied against any party hereto.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Merger Agreement as of the
date first written above.
ANICOM, INC. TWC ACQUISITION CORP.
By:/s/ Scott C. Anixter By: /s/ Scott C. Anixter
Scott C. Anixter Scott C. Anixter
Chief Executive Officer Chairman
TW COMMUNICATION CORPORATION,
a New York corporation
By: /s/ Edward Goodstein
/s/ Edward Goodstein
Edward Goodstein, President Edward Goodstein, Individually
By: /s/ Carl Palazzolo
Carl Palazzolo, Individually
EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
DATED AS OF NOVEMBER 24, 1997
BY AND AMONG
ANICOM, INC.
AND
EACH OF THE PURCHASERS LISTED ON EXHIBIT A
<PAGE>
TABLE OF CONTENTS
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SECTION 1
Definitions 1
1.1 Defined Terms 1
SECTION 2
Sale and Purchase of Common Stock 4
SECTION 3
Closing Date; Delivery 4
3.1 Closing Date 4
3.2 Delivery 4
SECTION 4
Representations and Warranties of the Company 5
4.1 Organization, Good Standing and Qualification 5
4.2 Capitalization 5
4.3 Subsidiaries 6
4.4 Authorization 6
4.5 Consents 6
4.6 Absence of Litigation 6
4.7 Insurance 7
4.8 Patents and Trademarks 7
4.9 Compliance with Other Instruments and Legal
Requirements 7
4.10 Material Agreements 7
4.11 Registration Rights 8
4.12 Environmental Matters 8
4.13 Company SEC Reports and Financial Statements 8
4.14 Changes 9
4.15 Employee Benefit Plans 10
4.16 Taxes 11
4.17 Disclosure 11
4.18 Brokers' Fees 11
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SECTION 5
Representations, Warranties and Covenants of the Purchasers 12
5.1 Accredited Investor; Experience; Risk 12
5.2 Investment 12
5.3 Authorization 12
5.4 Consents 12
5.5 Brokers' Fees 12
5.6 Plan Assets 12
5.7 Restrictive Legends 13
SECTION 6
Conditions to Closing of Purchasers 13
6.1 Representations and Warranties Correct 13
6.2 Covenants 13
6.3 Registration Statement 14
6.4 Opinion of Company's Counsel 14
6.5 No Material Adverse Change 14
6.6 State Securities Laws 14
6.7 Certificates 14
6.8 Organizational Documents 14
SECTION 7
Conditions to Closing of the Company 14
7.1 Representations 14
7.2 Covenants 14
7.3 Purchase Price 14
7.4 Certificate 15
SECTION 8
Covenants of the Company 15
8.1 Shelf Registration 15
8.2 Delay and Holdback of Registration 19
SECTION 9
Miscellaneous 20
9.1 Amendment; Waiver 20
9.2 Notices 20
9.3 Survival of Representations, Warranties and
Covenants 21
9.4 Severability 21
9.5 Successors and Assigns 21
9.6 Entire Agreement 22
9.7 Choice of Law 22
9.8 Counterparts 22
9.9 Indemnification 22
9.10 No Third-Party Beneficiaries 23
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Index of Exhibits
Exhibit A: List of Purchasers, Addresses and Number of Shares Purchased
Exhibit B: Form of Opinion of Counsel for Anicom to be delivered to
Purchasers
Index of Schedules
Schedule 4.2(a) Capitalization
Schedule 4.3 Subsidiaries
Schedule 4.6 Consents
Schedule 4.11 Unexercised Registration Rights
Schedule 4.18 Brokerage and Finder's Fees
Anicom, Inc. agrees to furnish supplementally to the Securities Exchange
Commission, upon request, a copy of any omitted exhibit or schedule to this
Agreement.
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of November 24, 1997 (this "Agreement"), by
and between ANICOM, INC., a Delaware corporation (the "Company") and each
purchaser set forth on Exhibit A hereto (each a "Purchaser" and collectively,
the "Purchasers").
WHEREAS, the Company has issued and outstanding the shares of capital stock
described in Section 4.2 hereof; and
WHEREAS, the Company proposes to issue and sell, and the Purchasers wish to
purchase, shares of the Company's common stock, par value $.001 per share (the
"Common Stock"), on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:
SECTION 1
Definitions
1.1 Defined Terms . The following terms are defined as follows:
"Affiliate" means, with respect to any Person, (i) any Person in which such
Person holds direct or indirect beneficial ownership (as defined in Rule 13d-3
under the Securities Exchange Act of 1934) of voting securities or other voting
interests representing at least 10% of the outstanding voting power of a Person
or equity securities or other equity interests representing at least 10% of the
outstanding equity securities or equity interests in a Person and (ii) any
brother, sister, parent, child or spouse of such Person or any Person described
in clause (i).
"Benefit Arrangement" means any benefit arrangement, obligation, custom, or
practice, to provide benefits, other than salary, as compensation for services
rendered, other than any obligation, arrangement, custom or practice that is an
Employee Benefit Plan, including, without limitation, employment or change of
control agreements, severance agreements, executive compensation arrangements,
incentive programs or arrangements, sick leave, vacation pay, severance pay
policies, plant closing benefits, salary continuation for disability,
consulting, or other compensation arrangements, workers' compensation,
retirement, deferred compensation, bonus, stock option or purchase,
hospitalization, medical insurance, life insurance, tuition reimbursement or
scholarship programs and employee discounts, in each case with respect to any
present or former employees, directors, or agents.
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"Code" means the Internal Revenue Code of 1986 (or any successor thereto), as
amended from time to time.
"Company Benefit Arrangement" means any Benefit Arrangement sponsored or
maintained by the Company or its Subsidiaries or with respect to which the
Company or a Subsidiary has or will have any liability (whether actual,
contingent, direct or indirect) as of the Closing Date, in each case with
respect to any present or former directors, employees, or agents of the Company
or the Subsidiaries.
"Company Plan" means, as of the Closing Date, any Employee Benefit Plan for
which the Company or any Subsidiary has or will have any liability (whether
actual, contingent, direct or indirect).
"Effectiveness Period" means the period commencing on the date the Registration
Statement referred to in Section 8 is declared effective by the Securities and
Exchange Commission and ending on the date that the Purchasers who are not
Affiliates of the Company are able to sell the Common Stock pursuant to Rule
144(k) under the Securities Act of 1933, as amended.
"Employee Benefit Plan" means any Employee Benefit Plan within the meaning of
Section 3(3) of ERISA.
"Environmental Law" means any foreign, federal, state or local statute,
regulation, ordinance or rule of common law as now or hereafter in effect in any
way relating to the protection of the environment including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. $$ 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C.
App. $$ 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. $$
6901 et seq.), the Clean Water Act (33 U.S.C. $$ 1251 et seq.), the Clean Air
Act (42 U.S.C. $$ 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. $$
2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
$$ 136 et seq.), and the Occupational Safety and Health Act (29 U.S.C. $$ 651 et
seq.) and the regulations promulgated pursuant thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
"ERISA Affiliate" means any Person that is or was at any time treated as a
single employer with the Company under Section 414 of the Code or Section 4001
of ERISA.
"Hazardous Material" means any substance, material or waste that is regulated by
the United States, the foreign jurisdictions in which the Company or its
Subsidiaries conducts business, or any state or local governmental authority
including, without limitation, petroleum and its by-products, asbestos, and any
material or substance that is defined as a "hazardous waste," "hazardous
substance," "hazardous material," "restricted hazardous waste," "industrial
waste," "solid waste," "contaminant," "pollutant," "toxic waste" or "toxic
substance" under any provision of Environmental Law.
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"Lien" means any lien, pledge, mortgage, deed of trust, security interest,
claim, lease, charge, option, right of first refusal, easement, servitude,
transfer restriction under any shareholder or similar agreement, encumbrance or
any other restriction or limitation whatsoever.
"Multiemployer Plan" means any Employee Benefit Plan described in Section 3(37)
of ERISA.
"Permits" means any approvals, authorizations, consents, licenses, permits or
certificates.
"Permitted Exceptions" means (i) all defects, exceptions, restrictions,
easements, rights of way and encumbrances disclosed in policies of title
insurance that have been made available to the Purchasers; (ii) statutory Liens
for current taxes, assessments or other governmental charges not yet delinquent
or the amount or validity of which is being contested in good faith by
appropriate proceedings, provided an appropriate reserve is established
therefor; (iii) mechanics', carriers', workers', repairers' and similar Liens
arising or incurred in the ordinary course of business that are not material to
the business, operations and financial condition of the property so encumbered
or the Company or its Subsidiaries; (iv) zoning, entitlement and other land use
and environmental regulations by any governmental body, provided that such
regulations have not been violated; and (v) such other imperfections in title,
charges, easements, restrictions and encumbrances that do not materially detract
from the value of or materially interfere with the present use of any Company
Property (as hereinafter defined) subject thereto or affected thereby.
"Person" means an individual, partnership, limited liability company,
corporation, joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Qualified Plan" means any Employee Benefit Plan that meets or is intended to
meet the requirements of Section 401(a) of the Code.
"Registrable Securities" means, (i) shares of Common Stock; and (ii) any other
shares of Common Stock or securities issued in respect of such shares (because
of stock splits, stock dividends, reclassifications, recapitalization, mergers,
consolidation, share exchange or similar events).
"Release" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal or leaching into the indoor or outdoor
environment, or into or out of any property;
"Remedial Action" means all actions to (x) clean up, remove, treat or in any
other way address any Hazardous Material; (y) prevent the Release of any
Hazardous Material so it does not endanger or threaten to endanger public health
or welfare or the indoor or outdoor environment; or (z) perform pre-remedial
studies and investigations or post-remedial monitoring and care.
<PAGE>
"Subsidiaries" means each corporation in which the Company owns or controls,
directly or indirectly, capital stock or other equity interests representing at
least 50% of the outstanding voting stock or other equity interests.
"Welfare Plan" means any Employee Benefit Plan described in Section 3(1) of
ERISA.
SECTION 2
Sale and Purchase of Common Stock
In reliance on the representations and warranties of the Company and each
Purchaser contained herein and subject to the terms and conditions hereof, each
Purchaser agrees to purchase from the Company, severally, and the Company agrees
to sell to each Purchaser that number of shares of Common Stock set forth next
to its name on Exhibit A hereto, for the purchase price of $13.00 per share.
SECTION 3
Closing Date; Delivery
3.1 Closing Date. The closing of the purchase and sale of the Common Stock
hereunder (the "Closing") shall be held at the offices of Katten Muchin & Zavis,
525 W. Monroe, Suite 1600, Chicago, Illinois 60661 on December 4, 1997, or on
such other date or at such other place as Purchasers and the Company shall
mutually agree (the date of the Closing being referred to herein as the "Closing
Date").
3.2 Delivery. At the Closing, the Company shall deliver to each Purchaser a
certificate or certificates evidencing the shares of Common Stock being
purchased by it registered in such Purchaser's name against delivery to the
Company of payment in an amount equal to the full purchase price of the shares
of Common Stock being purchased by such Purchaser in the form of a certified
check or wire transfer to an account designated by the Company.
<PAGE>
SECTION 4
Representations and Warranties of the Company
The Company hereby represents and warrants to, and agrees with, Purchasers as
follows:
4.1 Organization, Good Standing and Qualification . Each of the Company and its
Subsidiaries (i) is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (ii) has all
requisite power and authority to carry on its business, (iii) is duly qualified
to transact business and is in good standing in all jurisdictions where its
ownership, lease or operation of property or the conduct of its business
requires such qualification, except where the failure to be so qualified would
not, and reasonably could not be expected to, have a material adverse effect on
the business, operations, assets, financial condition, results of operations or
business prospects of the Company and its Subsidiaries taken as a whole (a
"Material Adverse Effect"). The Company is in possession of all material
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders to own, lease and operate its properties and
to carry on its business as now being conducted.
4.2 Capitalization.
(a) The authorized capital stock of the Company consists of 60,000,000 shares of
common stock, par value $.001 per share ("Common Stock") of which 19,483,485
shares are issued and outstanding as of the date hereof, and 1,000,000 shares of
preferred stock, par value $.01 per share ("Preferred Stock"). There are no
shares of Preferred Stock outstanding. Except as set forth on Schedule 4.2(a),
there are no outstanding securities of the Company convertible into or
evidencing the right to purchase or subscribe for any shares of capital stock of
the Company, there are no outstanding or authorized options, warrants, calls,
subscriptions, rights, commitments or any other agreements of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible into or evidencing the right to purchase or subscribe for
any shares of such stock, and there are no agreements or understandings with
respect to the voting, sale, transfer or registration of any shares of capital
stock of the Company. No outstanding options, warrants or other securities
exercisable for or convertible into shares of capital stock of the Company
require anti-dilution adjustments by reason of the consummation of the
transactions contemplated hereby. There are no preemptive rights with respect to
any securities of the Company other than those which have been waived.
(b) The issued and outstanding shares of Common Stock of the Company are duly
authorized, validly issued, fully paid and nonassessable. The shares of Common
Stock to be issued pursuant to this Agreement, upon delivery to Purchaser of
certificates therefor against payment in accordance with the terms of this
Agreement, (i) will be validly issued, fully paid and nonassessable and (ii)
assuming that the representations of Purchasers in Section 5 hereof are true and
correct, will be issued in compliance with all applicable federal and state
securities laws.
(c) The issued and outstanding shares of Common Stock are, and as of the Closing
Date, the shares of Common Stock being issued and sold to the Purchasers
pursuant to this Agreement will be (subject to official notice of issuance),
authorized for trading on the Nasdaq Stock Market.
<PAGE>
4.3 Subsidiaries. Schedule 4.3 sets forth a complete and accurate list of all
Subsidiaries of the Company, showing (as to each such Subsidiary) the date of
its incorporation and the jurisdiction of its incorporation. The Company is the
sole stockholder of each Subsidiary. The outstanding shares of capital stock of
each Subsidiary are validly issued, fully paid and nonassessable and all such
shares represented as being owned by the Company are owned by it, free and clear
of all Liens. There are no outstanding securities of any Subsidiary convertible
into or evidencing the right to purchase or subscribe for any shares of capital
stock of any Subsidiary, there are no outstanding or authorized options,
warrants, calls, subscriptions, rights, commitments or any other agreements of
any character obligating any Subsidiary to issue any shares of its capital stock
or any securities convertible into or evidencing the right to purchase or
subscribe for any shares of such stock, and there are no agreements or
understandings with respect to the voting, sale, transfer or registration of any
shares of capital stock of any Subsidiary.
4.4 Authorization. The Company has all requisite corporate power and authority
to execute and deliver this Agreement and each agreement, document or instrument
adopted, entered into or delivered in connection herewith (the "Transaction
Documents") and to perform its obligations hereunder and thereunder. The
execution, delivery and performance of the Agreement and the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of the Company. Each Transaction Document has been
duly and validly executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity) and except to the extent that rights to
indemnification and contribution under this Agreement and may be limited by
federal or state securities laws or public policy relating thereto.
4.5 Consents. Except as set forth on Schedule 4.6, no material consent,
approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state, or local
governmental authority or other Person on the part of the Company (collectively
referred to herein as "Consents") is required in connection with the valid
execution and delivery by the Company of the Transaction Documents to which it
is a party, or the consummation by the Company of the transactions contemplated
by the Transaction Documents to which it is a party.
4.6 Absence of Litigation. There are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries, or any properties or rights of the
Company or its Subsidiaries, before any court, arbitrator or administrative,
governmental or regulatory authority or body, domestic or foreign, that could
reasonably be expected to have a Material Adverse Effect.
<PAGE>
4.7 Insurance. The Company and it Subsidiaries maintain adequate insurance with
respect to their respective businesses and are in compliance with all material
requirements and provisions thereof.
4.8 Patents and Trademarks . The Company and its Subsidiaries have sufficient
title and ownership of (or rights under license agreements to use) all patents,
trademarks, service marks, trade names, copyrights, trade secrets, proprietary
rights and processes ("Intellectual Property") necessary for the conduct of
their businesses in the ordinary course. There are no outstanding options,
licenses or agreements of any kind relating to the foregoing, nor is the Company
or any of its Subsidiaries bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, proprietary rights and processes of any
other Person.
4.9 Compliance with Other Instruments and Legal Requirements .
(a) None of the Company or any of its Subsidiaries is in violation or default of
any provisions of its certificate of incorporation, by-laws, or comparable
organizational documents. None of the Company or any of its Subsidiaries is in
violation or default in any material respect under any provision, instrument,
judgment, order, writ, decree, contract or agreement to which it is a party or
by which it is bound or of any provision of any federal, state or local statute,
rule or regulation applicable to the Company or any of its Subsidiaries
(including, without limitation, any law, rule or regulation relating to
protection of the environment and the maintenance of safe and sanitary
premises). The execution, delivery and performance of each Transaction Document
and the consummation of the transactions contemplated hereby and thereby will
not result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a default under any
such provision, instrument, judgment, order, writ, decree, contract or
agreement, or require any consent, waiver or approval thereunder, or constitute
an event that results in the creation of any Lien upon any assets of the Company
or any of its Subsidiaries.
(b) The Company and its Subsidiaries have all Permits of all governmental
entities required to conduct their respective businesses as proposed to be
conducted, except to the extent that the failure to have such Permits would not
have a Material Adverse Effect.
4.10 Material Agreements . Except as disclosed in the Company SEC Reports (as
defined in Section 4.18), there are no material contracts, agreements,
commitments, understandings or proposed transactions, whether written or oral,
to which the Company or any of its Subsidiaries is a party or by which it is
bound which requires disclosure in the Company SEC Reports.
4.11 Registration Rights . Except as set forth in Schedule 4.11, the Company has
not granted or agreed to grant any registration rights, including piggyback
registration rights, to any Person.
<PAGE>
4.12 Environmental Matters .
(a) The operations of each of the Company and its Subsidiaries are in compliance
in all material respects with all applicable Environmental Laws and all Permits
issued pursuant to Environmental Laws or otherwise;
(b) Neither the Company nor any of its Subsidiaries is the subject of any
outstanding written order, agreement or arrangement with any governmental
authority or Person respecting (i) Environmental Laws, (ii) Remedial Action or
(iii) any Release or threatened Release of a Hazardous Material;
(c) None of the Company or any of its Subsidiaries has received any written
communication alleging either or both that the Company or any of its
Subsidiaries may be in violation of any Environmental Law, or any Permit issued
pursuant to Environmental Law, or may have any liability under any Environmental
Law;
4.13 Company SEC Reports and Financial Statements .
(a) The Company has filed all periodic reports, statements and other documents
required to be filed by the Company with the Securities and Exchange Commission
(the "SEC") under the Securities Exchange Act of 1934 (the "Exchange Act") since
December 31, 1995 (collectively, the "Company SEC Reports"), each in the form
(including exhibits and any amendments thereto) required to be filed with the
SEC. As of their respective dates, each of the Company's SEC Reports (i)
complied in all material respects with all applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act") and the Exchange Act,
and the rules and regulations promulgated thereunder, respectively, (ii) were
filed in a timely manner, and (iii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of the Subsidiaries is required
to file any forms, reports or other documents with the SEC. As of the date
hereof, the Company is eligible to file the Initial Shelf Registration (as
defined herein) on SEC Form S-3 and the Company has no knowledge of any fact or
event that would cause the Company to lose such eligibility.
(b) Each of the audited consolidated financial statements of the Company
(including any related notes and schedules thereto) included (or incorporated by
reference) in its Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1996, is accurate and complete and fairly presents, in conformity
with generally accepted accounting principles ("GAAP") applied on a consistent
basis through the periods involved (except as may be noted therein), and in
conformity with the SEC's Regulation S-B, the consolidated financial position of
the Company and its consolidated subsidiaries as of its date and the
consolidated results of operations and changes in financial position for the
period then ended.
<PAGE>
(c) Except as and to the extent set forth (or incorporated by reference) in the
Company's Annual Report on Form 10-KSB for the calendar year ended December 31,
1996, neither the Company nor any of its Subsidiaries has incurred any liability
or obligation of any nature whatsoever (whether due or to become due, accrued,
fixed, contingent, liquidated, unliquidated or otherwise) that would be required
by GAAP to be accrued on, reflected on, or reserved against in, a consolidated
balance sheet (or in the applicable notes thereto) of the Company or any of its
Subsidiaries prepared in accordance with GAAP consistently applied, other than
liabilities or obligations which arose in the ordinary course of business and
consistent with past practices since such date and which do not or would not
individually or in the aggregate have a Material Adverse Effect.
4.14 Changes. Except as disclosed in the Company SEC Reports, since September
30, 1997, there has not been:
(a) any change in the assets, liabilities, financial condition or operating
results of the Company or any of its Subsidiaries, except changes in the
ordinary course of business that have not had, in the aggregate, a Material
Adverse Effect;
(b) any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting the assets, properties, financial condition,
operating results or business of the Company or any of its Subsidiaries;
(c) any waiver by the Company or any of its Subsidiaries of a valuable right or
of a material debt owed to it outside of the ordinary course of business or that
otherwise could reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect;
(d) any satisfaction or discharge of any Lien or payment of any obligation by
the Company or any of its Subsidiaries that could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect;
(e) any change or amendment to a contract or arrangement by which the Company or
any of its Subsidiaries or any of their respective assets or properties is bound
or subject that could reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect; or
(f) any events or circumstances that otherwise could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
<PAGE>
4.15 Employee Benefit Plans .
With respect, as applicable, to Employee Benefit Plans and Benefit Arrangements
and except as would not result in liability in excess of $50,000 (for purposes
of this Section 4.15, a Material Adverse Effect):
(a) each Qualified Plan that is a Company Plan qualifies under Section 401(a) of
the Code, and any trusts maintained pursuant thereto are exempt from federal
income taxation under Section 501 of the Code;
(b) the Company and the Subsidiaries have no liability (whether actual or
contingent, direct or indirect) with respect to any Employee Benefit Plan
subject to Section 302 of ERISA or Section 412 of the Code or Title IV of ERISA
(including any Multiemployer Plan);
(c) each Company Plan and each Company Benefit Arrangement has been maintained
in accordance with its constituent documents and with all applicable provisions
of the Code, ERISA and other laws, including federal and state securities laws;
(d) there are no pending claims or lawsuits by, against, or relating to any
Employee Benefit Plans or Benefit Arrangements that are not Company Plans or
Company Benefit Arrangements that would, if successful, result in liability of
the Company, and no such claim or lawsuit (other than routine claims for
benefits) has been asserted, instituted or, to the knowledge of the Company and
the Subsidiaries, threatened by, against, or relating to any Company Plan or
Company Benefit Arrangement, or the Company or the Subsidiaries. To the
knowledge of the Company and the Subsidiaries, the Company Plans and Company
Benefit Arrangements are not presently under audit or examination (nor has
notice been received of a potential audit or examination) by the IRS, the
Department of Labor, or any other governmental agency or entity, and no matters
are pending with respect to a Qualified Plan under the IRS's Voluntary
Compliance Resolution program, its Closing Agreement Program, or other similar
programs;
(e) with respect to each Company Plan, there has occurred no non-exempt
"prohibited transaction" (within the meaning of Section 4975 of the Code) or
transaction prohibited by Section 406 of ERISA or breach of any fiduciary duty
described in Section 404 of ERISA that would, if successful, result in any
liability for the Company or any Stockholder, officer, director, or employee of
the Company;
(f) all material reporting, disclosure, and notice requirements of ERISA and the
Code have been satisfied with respect to each Company Plan and each Company
Benefit Arrangement;
(g) payment has been made of all amounts that the Company and each Subsidiary is
required to pay as contributions to the Company Benefit Plans as of the last day
of the most recent fiscal year of each of the plans ended before the date of
this Agreement and all benefits accrued under any unfunded Company Plan or
Company Benefit Arrangement will have been paid, accrued, or otherwise
adequately reserved in accordance with GAAP as of the Balance Sheet Date;
<PAGE>
(h) all group health plans of the Company and its ERISA Affiliates have been
operated in material compliance with the requirements of Sections 4980B (and its
predecessor) and 5000 of the Code;
4.16 Taxes. All federal, state, local and foreign tax returns, reports and
statements required to be filed by the Company and its Subsidiaries have been
filed with the appropriate governmental agencies in all jurisdictions in which
such returns, reports and statements are required to be filed. All taxes,
charges and other impositions due and payable by the Company and its
Subsidiaries have been paid in full on a timely basis except where contested in
good faith and by appropriate proceedings if adequate reserves therefor have
been established on the books and records of the Company or Subsidiary in
accordance with GAAP consistently applied. The provision for taxes of each of
the Company and its Subsidiaries as shown in the Company SEC Reports is
sufficient for all unpaid taxes, charges and other impositions of any nature due
or accrued as of the date hereof, whether or not assessed or disputed. Proper
and accurate amounts have been withheld by the Company and its Subsidiaries from
their respective employees for all periods in full and complete compliance with
the tax, social security and unemployment withholding provisions of applicable
federal, state, local and foreign law and such withholdings have been timely
paid to the respective governmental agencies. The Company has not received
notice of any audit or of any proposed deficiencies from any governmental
authority, and no controversy with respect to taxes of any type is pending or
threatened. Except for routine filing extensions granted as a matter of right
under applicable law, none of the Company or any of its Subsidiaries has
executed or filed with the Internal Revenue Service or any other governmental
authority any agreement or other document extending, or having the effect of
extending, the period of assessment or collection of any taxes, charges or other
impositions. None of the Company or any of its Subsidiaries has agreed or is
required to make any adjustment under Section 481(a) of the Code by reason of a
change in accounting method or otherwise. Further, none of the Company or any of
its Subsidiaries has any obligation under any tax-sharing agreement.
4.17 Disclosure. Neither this Agreement nor any of the Transaction Documents nor
any exhibit hereto, nor any report, certificate, or instrument furnished to
Purchaser or its counsel in connection with the transactions contemplated by
this Agreement, when read together, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein or therein, in light
of the circumstances under which they were made, not misleading.
4.18 Brokers' Fees . Except for persons set forth on Schedule 4.18, whose fees
will be paid solely by the Company, no broker, finder, investment banker or
other Person is entitled to any brokerage fee, finder's fee or other commission
in connection with the transactions contemplated by this Agreement.
<PAGE>
SECTION 5
Representations, Warranties and Covenants of the Purchasers
Each Purchaser severally hereby represents and warrants to and agrees with the
Company, as to itself only, as follows:
5.1 Accredited Investor; Experience; Risk . Purchaser is an accredited investor
within the definition of Regulation D promulgated under the Securities Act.
Purchaser has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of the purchase of the
Common Stock pursuant to this Agreement.
5.2 Investment. Purchaser is acquiring the Common Stock for investment purposes
only, for its own account and not with a view to, or for resale in connection
with, any distribution thereof in violation of applicable law.
5.3 Authorization. Purchaser represents that it has all requisite power and
authority to enter into and perform its obligations under the Transaction
Documents to which it is a party. Assuming the due authorization, execution and
delivery of the Transaction Documents by each other party thereto, each
Transaction Document to which Purchaser is a party constitutes a valid and
binding obligation of Purchaser, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity) and except to the extent that rights to indemnification and
contribution under this Agreement may be limited by federal or state securities
laws or public policy relating thereto.
5.4 Consents. No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state, or
local governmental authority or other Person on the part of Purchaser is
required in connection with the valid execution and delivery by Purchaser of the
Transaction Documents to which it is a party, or the consummation by Purchaser
of the transactions contemplated by the Transaction Documents to which it is a
party, except for such filings as have been made prior to the Closing.
5.5 Brokers' Fees . Except as set forth on Schedule 4.18, no broker, finder,
investment banker or other Person is entitled to any brokerage fee, finder's fee
or other commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by the Purchaser.
5.6 Plan Assets. Purchaser is not, and no source of the funds to be used by
Purchaser to acquire the Common Stock are, a "Plan Asset" as such phrase is
defined within the U.S. Department of Labor regulations 2510.3-101.
5.7 Restrictive Legends . Purchaser understands that each of the stock
certificates representing shares of Common Stock issued pursuant to this
Agreement shall bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of such stock
certificates) until the shares of Common stock evidenced by such certificate (i)
have been sold pursuant to a prospectus constituting part of the Shelf
Registration or pursuant to Rule 144 under the Securities Act; or (ii) are
eligible for sale pursuant to Rule 144(k) under the Securities Act.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
If such Purchaser desires to sell or otherwise dispose of all or any part of the
Common Stock owned by it under an exemption from registration under the
Securities Act, and if requested by the Company, such Purchaser shall deliver to
the Company an opinion of counsel, which may be counsel for the Company, that
such exemption is available.
SECTION 6
Conditions to Closing of Purchasers
Each Purchaser's obligation to purchase the Common Stock at the Closing is, at
the option of that Purchaser, subject to the fulfillment on or prior to the
Closing Date of the following conditions:
6.1 Representations and Warranties Correct . The representations and warranties
made by the Company in Section 4 hereof shall be true and correct when made, and
shall be true and correct on the Closing Date with the same force and effect as
if they had been made on and as of such date.
6.2 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all material respects.
<PAGE>
6.3 Registration Statement . The registration statement for the Initial Shelf
Registration (as defined in Section 8.1) has been declared effective by the
Securities and Exchange Commission.
6.4 Opinion of Company's Counsel . Purchasers shall have received from Katten
Muchin & Zavis, counsel to the Company, an opinion addressed to Purchasers,
dated the Closing Date, in substantially the form of Exhibit B hereto.
6.5 No Material Adverse Change . Since September 30, 1997, there shall not have
occurred any events or circumstances that could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
6.6 State Securities Laws . All registrations, qualifications and Permits
required under applicable state securities laws, if any, shall have been
obtained for the lawful execution, delivery and performance of this Agreement.
6.7 Certificates. Purchasers shall have received a certificate of the President
or the Chief Financial Officer of the Company to the effect set forth in
Sections 6.1, 6.2 and 6.4.
6.8 Organizational Documents . The Company shall have delivered to each
Purchaser certified copies of the charter and bylaws of the Company in effect at
the Closing.
6.9 Consents. The Company shall have received the consents, or waivers thereto,
set forth on Schedule 4.6.
SECTION 7
Conditions to Closing of the Company
The Company's obligation to issue and sell the Common Stock at the Closing is,
at the option of the Company, subject to the fulfillment of the following
conditions:
7.1 Representations. The representations and warranties made by each Purchaser
in Section 5 hereof shall be true and correct when made, and shall be true and
correct on the Closing Date with the same force and effect as if they had been
made on and as of such date.
7.2 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by each Purchaser on or prior to the Closing Date
shall have been performed or complied with in all respects.
7.3 Purchase Price . Each Purchaser shall have tendered the purchase price for
the Common Stock as set forth in Section 2.
7.4 Certificate. The Company shall have received a certificate from each
Purchaser to the effect set forth in Sections 7.1 and 7.2.
<PAGE>
SECTION 8
Covenants of the Company
8.1 Shelf Registration .
(a) Within 10 business days after the execution of this Agreement, the Company
shall prepare and file with the SEC a Registration Statement for an offering to
be made on a delayed or continuous basis pursuant to Rule 415 of the Securities
Act (a "Shelf Registration") registering the resale from time to time by
Purchasers of all of the Purchasers' Registrable Securities (the "Initial Shelf
Registration"). The Registration Statement for any Shelf Registration shall be
on Form S-3 or another appropriate form permitting registration of such
Registrable Securities for resale by Purchasers in the manner or manners
designated by them. The Company shall provide to each Purchaser a copy of the
Initial Shelf Registration, any Subsequent Shelf Registration (as defined
below), and all amendments thereto sufficiently in advance of the filing with
the SEC of such Registration Statement or amendment thereto so as to provide
Purchasers with adequate time to review and comment on such Registration
Statement. The Company shall use its best efforts to cause the Initial Shelf
Registration to become effective under the Securities Act as promptly as is
practicable and to keep the Initial Shelf Registration continuously effective
under the Securities Act until the end of the Effectiveness Period.
(b) If the Initial Shelf Registration or any Subsequent Shelf Registration (as
defined below) ceases to be effective for any reason at any time during the
Effectiveness Period (other than because all Registrable Securities shall have
been sold or shall have ceased to be Registrable Securities), the Company shall
use its best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within thirty days of such
cessation of effectiveness amend the Shelf Registration in a manner reasonably
expected to obtain the withdrawal of the order suspending the effectiveness
thereof, or file an additional Shelf Registration covering all of the
Registrable Securities (a "Subsequent Shelf Registration"). If a Subsequent
Shelf Registration is filed, the Company shall use all reasonable efforts to
cause the Subsequent Shelf Registration to become effective as promptly as is
practicable after such filing and to keep such Registration Statement
continuously effective until the end of the Effectiveness Period.
(c) The Company shall supplement and amend the Shelf Registration if required by
the rules, regulations or instructions applicable to the registration form used
by the Company for such Shelf Registration, if required by the Securities Act or
the SEC, or if reasonably requested by Purchasers.
<PAGE>
(d) From time to time, the Company shall prepare and file with the SEC a
post-effective amendment to the Shelf Registration or a supplement to the
related Prospectus or a supplement or amendment to any document incorporated
therein by reference or any other required document, so that such Registration
Statement will 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 not misleading, and so that, as thereafter delivered to
purchasers of the Registrable Securities being sold thereunder, such Prospectus
will 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; provide Purchasers copies of any documents so filed in such numbers
as Purchasers shall reasonably request; and inform Purchasers that the Company
has complied with its obligations and that the Registration Statement and
related Prospectus may be used for the purpose of selling all or any of such
Registrable Securities (or that, if the Company has filed a post-effective
amendment to the Shelf Registration which has not yet been declared effective,
the Company will notify Purchasers to that effect, will use its best efforts to
secure promptly the effectiveness of such post-effective amendment and will
immediately so notify Purchasers when the amendment has become effective).
(e) Registration Expenses. All fees and expenses incident to the Company's
performance of or compliance with a Shelf Registration pursuant to this
Agreement, except for any fees and expenses of counsel for the Purchasers, shall
be borne by the Company whether or not any Registration Statement becomes
effective. Such fees and expenses shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees and expenses
(x) with respect to filings required to be made with the National Association of
Securities Dealers, Inc. and (y) of compliance with federal securities or Blue
Sky laws (including, without limitation, fees and disbursements of counsel to
Purchasers in connection with Blue Sky qualifications of the Registrable
Securities under the laws of such jurisdictions as Purchaser may designate)),
(ii) printing expenses, (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of the Company's independent certified public accountants
(including the expenses of any special audit and "comfort" letters required by
or incident to such performance) and (v) Securities Act liability insurance
obtained by the Company in its sole discretion. In addition, the Company shall
pay its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit, the fees and expenses incurred in connection
with the listing of the Registrable Securities on any securities exchange or the
Nasdaq Stock Market, as the case may be, on which similar securities issued by
the Company are then listed and the fees and expenses of any Person, including
special experts, retained by the Company. Notwithstanding the provisions of this
subsection, Purchasers shall pay all registration expenses to the extent the
Company is prohibited by applicable Blue Sky laws from paying for or on behalf
of Purchasers.
<PAGE>
(f) Indemnity.
(i) In the event of the registration or qualification of any Registrable
Securities pursuant to a Shelf Registration, the Company agrees to indemnify and
hold harmless each Purchaser, each officer, director, employee, agent and
representative of each Purchaser, each underwriter, broker or dealer, if any, of
such Registrable Securities, and each other Person, if any, who controls such
Purchaser, underwriter, broker or dealer within the meaning of the Securities
Act, Exchange Act or any other applicable securities laws, from and against any
and all losses, claims, damages or liabilities (or actions in respect thereof),
joint or several, to which any of them may become subject under the Securities
Act or any other applicable securities laws or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement (including all documents
incorporated therein by reference) under which such Registrable Securities were
registered or qualified under the Securities Act or any other applicable
securities laws, any preliminary prospectus or final prospectus relating to such
Registrable Securities, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or any violation by the Company of any rule or regulation under
the Securities Act or any other applicable securities laws applicable to the
Company or relating to any action or inaction required by the Company in
connection with any such registration or qualification and will reimburse each
Purchaser, each officer, director, employee, agent and representative of each
Purchaser, each such underwriter, broker or dealer and each such controlling
Person for any legal or other expenses reasonably incurred by any of them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable to a
Purchaser in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or omission made in
such Registration Statement, such preliminary prospectus, such final prospectus
or such amendment or supplement thereto or violation in reliance upon and in
conformity with written information furnished to the Company by such Purchaser,
or any officer, director, employee, agent or representative of such Purchaser
specifically and expressly for use in the preparation thereof; and provided,
further, that the Company shall not be liable to any Person who participates as
an underwriter in the offering or sale of Registrable Securities or any other
Person, if any, who controls such underwriter within the meaning of the
Securities Act, in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of such Person's failure to send or give a copy of the Prospectus, as the
same may be then supplemented or amended, to the Person asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to such
Person if such statement or omission was corrected in such Prospectus so long as
such Prospectus, and any amendments or supplements thereto, have been furnished
to such underwriter in sufficient numbers and in a timely-manner to permit
distribution thereof.
(ii) In the event of the registration or qualification of any Registrable
Securities pursuant to a Shelf Registration, each Purchaser severally agrees to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 8.1(f)(i) above) the Company, its officers and directors and
each other Person, if any, who controls the Company within the meaning of the
Securities Act with respect to any untrue statement or alleged untrue statement
in, or omission or alleged omission from, such registration statement, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, if such statement or omission (i) arises from written
information provided by that Purchaser to the Company specifically and expressly
for use in the preparation thereof and (ii) was made in reliance upon and in
conformity with such information. 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 or controlling Person and shall survive the transfer
of such securities by that Purchaser. Notwithstanding the foregoing, no
Purchaser shall be liable under this Section 8.1(f)(ii) for an amount in excess
of that Purchaser's purchase price as set forth on Exhibit A.
<PAGE>
(iii) Promptly after receipt by a Person entitled to indemnification under this
Section 8.1(f) (an "Indemnified Party") of notice of the commencement of any
action or claim relating to any Registration Statement filed pursuant to a Shelf
Registration or as to which indemnity may be sought hereunder, such Indemnified
Party will, if a claim for indemnification hereunder in respect thereof is to be
made against any other party hereto (an "Indemnifying Party"), give written
notice to such Indemnifying Party of the commencement of such action or claim,
but the omission to so notify the Indemnifying Party will not relieve the
Indemnifying Party from any liability that it may have to any Indemnified Party
except to the extent that the Indemnifying Party is actually prejudiced thereby.
In case any such action is brought against an Indemnified Party, and it notifies
an Indemnifying Party of the commencement thereof, the Indemnifying Party will
be entitled (at its own expense) to participate in and, to the extent that it
may wish, jointly with any other indemnifying party similarly notified, to
assume the defense, with counsel reasonably satisfactory to such Indemnified
Party, of such action provided that the Indemnifying Party shall not settle or
compromise such action, except upon the prior written consent of the Indemnified
Party and, after notice from the Indemnifying Party to such Indemnified Party of
its election so to assume the defense thereof, the Indemnifying Party will not
be liable to such Indemnified Party for any legal or other expenses subsequently
incurred by such Indemnified Party in connection with the defense thereof, other
than the reasonable cost of investigation; provided, however, that the
assumption of such defense shall not give rise in the reasonable opinion of the
Indemnified Party or its counsel to any conflict. Notwithstanding the foregoing,
the Indemnified Party shall have the right to employ its own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party unless (A) the employment of such counsel shall have been
authorized in writing by the Indemnifying Party in connection with the defense
of such suit, action, claim or proceeding, (B) the Indemnifying Party shall not
have employed counsel (reasonably satisfactory to the Indemnified Party) to take
charge of the defense of such action, suit, claim or proceeding, or (C) such
Indemnified Party shall have reasonably concluded, based upon the advice of
counsel, that there may be defenses available to it that are different from or
additional to those available to the Indemnifying Party which, if the
Indemnifying Party and the Indemnified Party were to be represented by the same
counsel, could result in a conflict of interest for such counsel or materially
prejudice the prosecution of the defenses available to such Indemnified Party.
If any of the events specified in clauses (A), (B) or (C) of the preceding
sentence shall have occurred or shall otherwise be applicable, then the fees and
expenses of one counsel or firm of counsel selected by the Indemnified Party
(and reasonably acceptable to the Indemnifying Party) shall be borne by the
Indemnifying Party. If, in any such case, the Indemnified Party employs separate
counsel, the Indemnifying Party shall not have the right to direct the defense
of such action, suit, claim or proceeding on behalf of the Indemnified Party and
the Indemnified Party shall assume such defense and/or settle or compromise such
action; provided, however, that an Indemnifying Party shall not be liable for
the settlement or compromise of any action, suit, claim or proceeding effected
without its prior written consent, which consent shall not be unreasonably
withheld.
<PAGE>
(iv) If the indemnification provided for in this Section 8.1(f) shall for any
reason be held by a court to be unavailable to an Indemnified Party in respect
of any indemnified damages, then, in lieu of the amount paid or payable under
subparagraph (i) or (ii) hereof, the Indemnified Party and the Indemnifying
Party shall contribute to the aggregate indemnified damages, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and
the Indemnified Party with respect to the statements or omissions which resulted
in such indemnified damages, as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the Purchasers on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Purchasers agree that it would not be just and equitable if contributions
pursuant to this Section 8.1(f) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this Section 8.1(f). No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation and no Purchaser shall be required
to contribute any amount in excess of that Purchaser's aggregate purchase price
for the shares of Common Stock purchased hereunder. In addition, no Person shall
be obligated to contribute hereunder any amounts in payment for any settlement
of any action or claim effected without such Person's consent, which consent
shall not be unreasonably withheld.
(g) Mergers, Etc. The Company shall not, directly or indirectly, enter into any
merger, consolidation, or reorganization in which the Company shall not be the
surviving corporation unless the proposed surviving corporation shall, prior to
such merger, consolidation, or reorganization, agree in writing to assume the
obligations of the Company under this Section, and for that purpose references
hereunder to "Registrable Securities" shall be deemed to be references to the
securities that Purchasers would be entitled to receive in exchange for
Registrable Securities under any such merger, consolidation, or reorganization.
<PAGE>
8.2 Delay and Holdback of Registration .
(a) With regard to and notwithstanding Section 8.1, in connection with any
proposed sale of Registrable Securities by a Purchaser pursuant to the Shelf
Registration, the Company may require the Purchasers not to make such sale if
(i) in the opinion of the Board of Directors of the Company or a duly authorized
committee thereof, expressed in a resolution adopted by the Board or such
committee delivered to the Purchaser proposing to make such sale, (w) securities
laws applicable to such sale would require the Company to disclose material
non-public information ("Non-Public Information") and (x) the disclosure of such
Non-Public Information would adversely affect the Company or (ii) such sale
would occur (y) during the measurement period (a "Measurement Period") for
determining the amount of Common Stock, or the amount of any other consideration
the amount of which will be based on the price of the Common Stock, in
connection with the acquisition of a business or assets by the Company or (z)
during the five (5) day period immediately preceding the execution of any
underwriting agreement for a firm-commitment underwritten offering of Common
Stock (a "Pricing Period" and, together with a Measurement Period, a "Restricted
Period"). In the event the sale by a Purchaser of Registrable Securities is
deferred because of the existence of Non-Public Information, the Company will
notify such Purchaser promptly upon such Non-Public Information being included
by the Company in a filing with the Commission, being otherwise disclosed to the
public (other than through the actions of a Purchaser) or ceasing to be material
to the Company, and upon such notice being given by the Company, such Purchaser
shall again be entitled to sell Registrable Securities as provided herein. In
the event the sale by a Purchaser of Registrable Securities is deferred because
it is proposed to be made during a Restricted Period, the Company shall specify,
in notifying the Purchasers of the deferral of its sale, when the Restricted
Period will end, at which time the Purchasers shall again be entitled to sell
Registrable Securities as provided herein. If the Restricted Period is
thereafter changed, the Company will promptly notify the Purchasers of such
change and upon the end of the Restricted Period as so changed, the Purchasers
will again be entitled to sell Registrable Securities as provided herein. If the
acquisition agreement to which a Measurement Period relates is terminated prior
to the end of the Measurement Period, the deferral period hereunder shall end
immediately and the Company will notify the Purchaser of the end of the deferral
period. The Company may defer proposed sales of Registrable Securities pursuant
to this Section 8.2(a) for not more than a total of 90 days in any 365-day
period.
(b) If, after a registration statement becomes effective, the Company advises
Purchasers that the Company considers it appropriate for the registration
statement to be amended, the Company shall use its best reasonable efforts to
amend such registration statement as soon as practicable (which shall in no
event be more than 30 days) and the holders of such shares shall suspend any
further sales of their registered shares until the Company advises them that the
registration statement has been so amended.
SECTION 9
Miscellaneous
9.1 Amendment; Waiver . Neither this Agreement nor any provision hereof may be
amended, modified, supplemented or waived, except by a written instrument
executed by (i) the Company and (ii) Purchasers holding a majority in interest
of the Common Stock issued and sold pursuant to this Agreement and the shares of
Common Stock issuable upon conversion thereof.
<PAGE>
9.2 Notices. Any notices or other communications required or permitted hereunder
shall be sufficiently given if in writing and delivered in Person, transmitted
by facsimile transmission (fax) or sent by registered or certified mail (return
receipt requested) or recognized overnight delivery service, postage pre-paid,
addressed as follows, or to such other address has such party may notify to the
other parties in writing:
(a) if to the Company:
Anicom, Inc.
6133 North River Road, Suite 1000
Rosemont, Illinois 60018-5171
Attn: Chief Financial Officer
Facsimile No.: (847) 518-8777
with a copy to:
Katten Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661-3693
Attn: Jeffrey R. Patt
Facsimile No.: (312) 902-1061
(b) if to a Purchaser:
To the address listed next to each such Purchaser
on Exhibit A hereto.
A notice or communication will be effective (i) if delivered in Person or by
overnight courier, on the business day it is delivered, (ii) if transmitted by
telecopier, on the business day of actual confirmed receipt by the addressee
thereof, and (iii) if sent by registered or certified mail, three (3) business
days after dispatch.
9.3 Survival of Representations, Warranties and Covenants . All representations
and warranties made in, pursuant to or in connection with this Agreement shall
survive the execution and delivery of this Agreement, any investigation at any
time made by or on behalf of any Purchaser, and the sale and purchase of the
Common Stock and payment therefor for a period of one (1) year.
9.4 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
9.5 Successors and Assigns . Except as otherwise provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors and
assigns of the parties hereto, including, without limitation, each transferee of
all or any portion of the Common Stock. No party hereto may assign its rights or
delegate its obligations under this Agreement without the prior written consent
of the other parties hereto; provided, however, a Purchaser may assign its
rights and delegate its obligations under this Agreement upon the Company's
prior written consent which consent will not be unreasonably withheld; provided,
further, that Purchaser may assign its rights and remedies with respect to
registration rights as set forth in Section 8.1 to an Affiliate of such
Purchaser without the consent of the Company. The Parties agree that, among
other reasons, it will be reasonable for the Company to withhold such consent if
the proposed assignee is a competitor to the Company or an Affiliate thereof.
<PAGE>
9.6 Entire Agreement . This Agreement and the other documents delivered pursuant
hereto constitute the full and entire understanding and agreement between the
parties with regard to the subject matter hereof and thereof and supersede and
cancel all prior representations, alleged warranties, statements, negotiations,
undertakings, letters, acceptances, understandings, contracts and
communications, whether verbal or written, among the parties hereto and thereto
or their respective agents with respect to or in connection with the subject
matter hereof.
9.7 Choice of Law . This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to principles
of conflict of laws.
9.8 Counterparts. This Agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, with the same effect
as if all parties had signed the same document. All such counterparts shall be
deemed an original, shall be construed together and shall constitute one and the
same instrument.
9.9 Indemnification.
(a) The Company agrees to indemnify and hold harmless each Purchaser and its
Affiliates, and its respective partners, co-investors, officers, directors,
employees, agents, consultants, attorneys and advisers (each, a "Purchaser
Indemnified Party"), from and against any and all actual losses, claims,
damages, liabilities, costs and expenses (including, without limitation,
environmental liabilities, costs and expenses and all reasonable fees, expenses
and disbursements of counsel), joint or several (hereinafter collectively
referred to as a "Loss" or "Losses"), which may be incurred by or asserted or
awarded against any Purchaser Indemnified Party in connection with or in any
manner arising out of or relating to, including pursuant to any investigation,
litigation or proceeding or the preparation of any defense with respect thereto
arising out of or in connection with or relating to, any breach of any
representation, warranty or covenant made by the Company in this Agreement.
(b) Each Purchaser severally agrees to indemnify and hold harmless the Company
and its Affiliates, and its respective officers, directors, employees, agents,
consultants, attorneys and advisers (each, a "Company Indemnified Party"), from
and against any and all Losses, which may be incurred by or asserted or awarded
against any Company Indemnified Party in connection with or in any manner
arising out of or relating to any investigation, litigation or proceeding or the
preparation of any defense with respect thereto, arising out of or in connection
with or relating to any breach of any representation, warranty or covenant made
by such Purchaser in this Agreement. Notwithstanding the foregoing, no Purchaser
shall be liable under this Section 9.9(b) for an amount in excess of that
Purchaser's purchase price as set forth on Exhibit A.
<PAGE>
(c) An indemnified party shall give written notice to the indemnifying party of
any claim with respect to which it seeks indemnification within ten (10) days
after the discovery by such parties of any matters giving arise to a claim for
indemnification pursuant to this Section 9.9; provided that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under this Section 9.9, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action or claim is brought against any indemnified
party, the indemnifying party shall be entitled to participate in and, unless in
the reasonable good faith judgment of the indemnified party a conflict of
interest between such indemnified party and the indemnifying party may exist in
respect of such action or claim, to assume the defense thereof, with counsel
satisfactory to the indemnified party and after notice from the indemnifying
party to the indemnified party of its election so to assume the defense thereof,
the indemnifying party shall not be liable to such indemnified party for any
legal or other expenses subsequently incurred by the latter in connection with
the defense thereof other than reasonable costs of investigation. In any event,
unless and until the indemnifying party elects in writing to assume and does so
assume the defense of any such action or claim the indemnified party's costs and
expenses arising out of the defense, settlement or compromise of any such action
or claim shall be Losses subject to indemnification hereunder. If the
indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense. The indemnifying party shall not be
liable for any settlement of any action or claim effected without its written
consent. Anything in this Section 9.9 to the contrary notwithstanding, the
indemnifying party shall not, without the indemnified party's prior written
consent, settle or compromise any claim or consent to entry of any judgment in
respect thereof that imposes any future obligation on the indemnified party or
that does not include, as an unconditional term thereof, the giving by the
claimant or the plaintiff to the indemnified party a release from all liability
in respect of such claim.
9.10 No Third-Party Beneficiaries . Nothing in this Agreement will confer any
third party beneficiary or other rights upon any Person (specifically including
any employees of the Company and its Subsidiaries) or entity that is not a party
to this Agreement.
[Remainder of page intentionally left blank]
<PAGE>
STOCK PURCHASE AGREEMENT SIGNATURE PAGE
IN WITNESS WHEREOF, the Company and the Purchasers have caused this
Agreement to be executed effective as of the date first above written.
ANICOM, INC.
By: /S/ DONALD C. WELCHKO
Donald C. Welchko,
Chief Financial Officer
PURCHASERS:
Representative Capacity.
FIDELITY SELECT PORTFOLIOS: Developing Communications Portfolio, as Purchaser,
hereby gives notice to the Company that the Purchaser is a portfolio of the
Fidelity Select Portfolios (the "Trust"), which is a Massachusetts business
trust, and that a copy of the Trust's Declaration of Trust is on file with the
Secretary of the Commonwealth of Massachusetts. The Company acknowledges and
agrees that this Agreement is not executed on behalf of the trustees of the
Trust as individuals, and the obligations of the Purchaser under this Agreement
are not binding upon any of the trustees, officers or shareholders of the Trust
individually or upon any portfolio or assets of the Trust except the assets and
property of the Purchaser.
FIDELITY SELECT PORTFOLIOS:
Developing Communications Portfolio
By: /S/ LEONARD M. RUSH
Leonard M. Rush, Assistant Treasurer
<PAGE>
THE LINCOLN FUND, L.P.
By: MATLINS FINANCIAL CONSULTING, INC., its general partner
By: /S/ NEIL MATLINS
Neil Matlins, President
THE LINCOLN FUND TAX ADVANTAGE, L.P.
By: MATLINS FINANCIAL CONSULTING, INC., its general partner
By: /S/ NEIL MATLINS
Neil Matlins, President
THE GORDON FUND, L.P.
By: LIGHTHOUSE CAPITAL MANAGEMENT, L.L.C.
By: /S/ NEIL MATLINS
Neil Matlins, President
MATLINS FINANCIAL CONSULTING, INC. PENSION PLAN
By: MATLINS FINANCIAL CONSULTING, INC., its trustee
By: /S/ NEIL MATLINS
Neil Matlins, President
THE PETER H. HUIZENGA TESTAMENTARY TRUST
By: /S/ PETER H. HUIZENGA
Peter H. Huizenga
Its: Trustee
/S/ PETER H. HUIZENGA
PETER H. HUIZENGA
/S/ HEIDI A. HUIZENGA
HEIDI A. HUIZENGA
<PAGE>
THE BETSY HUIZENGA TRUST
By: /S/ PETER H. HUIZENGA
Peter H. Huizenga, Trustee
THE GRETA HUIZENGA TRUST
By: /S/ PETER H. HUIZENGA
Peter H. Huizenga, Trustee
THE PETER H. HUIZENGA, JR. TRUST
By: /S/ PETER H. HUIZENGA
Peter H. Huizenga, Trustee
THE TIMOTHY DEAN HUIZENGA TRUST
By: /S/ HEIDI A. HUIZENGA
Heidi A. Huizenga, Trustee
/S/ RONALD G. KENNY
RONALD G. KENNY
BEECKEN PETTY O'KEEFE KNEEN & MOERSCHEL LLC
By: /S/ JOHN W. KNEEN
John W. Kneen, Managing Director
PETER C. COOK TRUST
By: /S/ PETER C. COOK
Peter C. Cook, Trustee
/S/ JACK L. DEWITT
JACK L. DEWITT
/S/ MERLE DEWITT
MERLE DEWITT
<PAGE>
INQUEST LLC
By: /S/ JAMES DEWITT
James DeWitt, President
IRA FBO JOHN EGGEMEYER
By:/S/ JOHN EGGEMEYER
John Eggemeyer, Custodian
/S/ ROBERT HAVEMAN
ROBERT HAVEMAN
PROVIDENCE ENERGY, INC.
By: /S/ MICHAEL J. MILLER
Michael J. Miller, President
ELSA A. PRINCE LIVING TRUST
By: /S/ ELSA A. PRINCE
Elsa A. Prince, Trustee
PRINCE FAMILY LIMITED PARTNERSHIP
By /S/ ELSA A. PRINCE
Elsa A. Prince, General Partner
<PAGE>
RDV CAPITAL MANAGEMENT, L.P.
By: RDV Corporation, Its General Partner
By: /S/ JERRY TUBERGEN
Jerry Tubergen, President
RDV CORP SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN FBO JERRY TUBERGEN
By: Grand Bank, Trustee
By: /S/ RICHARD DIERDORF
Richard Dierdorf, Vice President
/S/ JOHN ROSE
JOHN ROSE
/S/ WILLIAM J. RUH and LISA A. RUH
WILLIAM J. RUH and LISA A. RUH, JOINT TENANTS
/S/ TERRY VAN DER Aa
TERRY VAN DER Aa
EXHIBIT 5
KATTEN MUCHIN & ZAVIS
525 West Monroe, Suite 1600
Chicago, Illinois 60661-3693
November 24, 1997
Anicom, Inc.
6133 River Road
Suite 1000
Rosemont, Illinois 60018-51711
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel for Anicom, Inc., a Delaware corporation (the
"Company"), in connection with the preparation and filing of a registration
statement on Form S-3 (the "Registration Statement") with the Securities and
Exchange Commission under the Securities Act of 1933, as amended. The
Registration Statement relates to 3,773,580 shares of the Company's Common
Stock, $.001 par value per share.
In connection with this opinion, we have relied as to matters of fact, without
investigation, upon certificates of public officials and others and upon
affidavits, certificates and written statements of directors, officers and
employees of, and the accountants and transfer agent for, the Company. We have
also examined originals or copies, certified or otherwise identified to our
satisfaction, of such instruments, documents and records as we have deemed
relevant and necessary to examine for the purpose of this opinion, including (a)
the Registration Statement, (b) the Restated Certificate of Incorporation of the
Company, as amended, (c) the Restated By-Laws of the Company, and (d)
resolutions adopted by the Board of Directors of the Company.
In connection with this opinion, we have assumed the accuracy and completeness
of all documents and records that we have reviewed, the genuineness of all
signatures, the authenticity of the documents submitted to us as originals and
the conformity to authentic original documents of all documents submitted to us
as certified, conformed or reproduced copies. We have further assumed that all
natural persons involved in the transactions contemplated by the Registration
Statement (the "Offering") have sufficient legal capacity to enter into and
perform their respective obligations and to carry out their roles in the
Offering.
<PAGE>
Anicom, Inc.
November 24, 1997
Page 2
Based upon and subject to the foregoing, it is our opinion that the 3,773,580
shares are validly issued, fully paid and non-assessable;
We hereby consent to use of our name under the heading "Legal Matters" in the
Prospectus forming a part of the Registration Statement and to use of this
opinion for filing as Exhibit 5 to the Registration Statement.
Very truly yours,
/s/ Katten Muchin & Zavis
KATTEN MUCHIN & ZAVIS
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion by reference in this registration statement on
Form S-3 (Registration No. 333-_____) of our report dated January 31, 1997, on
our audits of the financial statements of Anicom, Inc., our report dated April
25, 1996 on the financial statements of Northern Wire & Cable, Inc. appearing in
the Company's Current Report on Form 8-K/A (Amendment No. 2), dated May 23,
1996, our report dated October 1, 1996 on the financial statements of Norfolk
Wire & Cable, Inc. appearing in the Company's Current Report on Form 8-K/A
(Amendment No. 2), dated November 5, 1996 and our report dated September 9, 1997
on the financial statements of Energy Electric Cable, a division of Connectivity
Products Incorporated appearing in the Company's Current Report on Form 8-K/A
(Amendment No. 1), dated September 25, 1997. We also consent to the reference to
our firm under the caption "Experts".
/s/COOPERS & LYBRAND L.L.P.
Chicago, Illinois
November 25, 1997
