UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: May 22, 1997
Anicom, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-25364 36-3885212
____________________________ _____________ ___________________
(State or Other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6133 North River Road, Suite 1000, Rosemont, Illinois 60018
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (847) 518-8700
<PAGE>
Item 5. Other Events.
On May 21, 1997, the Registrant issued the press release attached as Exhibit
99.1. The information contained in this press release is incorporated herein by
reference.
In the press release, the Company announced an agreement in principle to issue
shares of preferred stock in a private placement of $27 million.
These shares will convert into common stock at a conversion price of $8.625 per
share of common stock and will bear a dividend at 5% per annum, which is payable
quarterly, in arrears, in cash or in registered shares of the Company's Common
Stock.
A copy of the Certificate of Designations, Preferences and Rights of the
convertible preferred stock is attached hereto as Exhibit 99.2.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 News Release of Registrant dated May 21, 1997
99.2 Certificate of Designations, Prefrences and
Rights of the Series A Convertible Preferred
Stock.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Anicom, Inc.
Dated: May 22, 1997 By:/S/ DONALD C. WELCHKO
_________________________
Donald C. Welchko
Chief Financial Officer
EXHIBIT 99.1
ANICOM ANNOUNCES PRIVATE PLACEMENT OF PREFERRED STOCK
ROSEMONT, ILL., MAY 21, 1997 -- Anicom, Inc. (Nasdaq: ANIC), a national leader
in the sale and distribution of multimedia wiring products, today announced that
it has agreed in principle to sell approximately three million shares of
convertible preferred stock in a private placement of approximately $27,000,000
to a group of institutional investors including Cahill, Warnock Strategic
Partners Fund and Huizenga Capital Management. Anicom expects to close this
private placement in the next two weeks.
Commenting on the private placement, David Warnock, Managing Member of Cahill,
Warnock & Company, L.L.C., said, "We have followed Anicom's recent acquisitions
and growth and we are excited about their opportunities for continued growth in
this highly fragmented industry." Peter Huizenga, President of Huizenga Capital
Management, added, "We believe the experienced management team at Anicom is well
poised to take advantage of the growth opportunities in this market."
Alan Anixter, Anicom's Chairman of the Board, said, "We expect that this
investment will enhance our ability to grow a strong and profitable company."
Proceeds from the private placement will be used for ongoing acquisition
opportunities as they arise and for general corporate purposes.
Since its initial public offering in February, 1995, Anicom has acquired nine
companies and opened more than 20 locations. Revenues for the fiscal year ended
12/31/96 were $116 million, compared to $29 million for the fiscal year ended
12/31/95. Revenues for the first quarter ended March 31, 1997 were $45 million
and net earnings were $888,000, or $.06 per common share.
Coopers & Lybrand Securities L.L.C. served as financial advisor to Anicom in
this transaction. These securities have not been registered under the Securities
Act of 1933 and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements.
Anicom is a national leader in the sale and distribution of multimedia
technology products, with over 40 locations nationwide. The company provides
products that "interconnect the Internet" and are used in the growing global
communications industry.
In compliance with the Safe Harbor Provision of the Private Securities
Litigation Reform Act of 1995, the company notes the statements contained in
this press release that are not historical facts may be forward-looking
statements that are subject to a variety of risks and uncertainties more fully
described in Anicom's filings with the Securities and Exchange Commission
including, without limitation, those described under "Risk Factors" in Anicom's
Resale Prospectus dated November 15, 1996 and in Anicom's Annual Report on Form
10-KSB for the year ended December 31, 1996. Anicom wishes to caution readers of
this press release that these risks and uncertainties could cause Anicom's
actual results in 1997 and beyond to differ materially from those expressed in
any forward-looking statements made by, or on behalf of, Anicom. These risks and
uncertainties include, without limitation, general economic and business
conditions affecting the industries of Anicom's customers in existing and new
geographical markets, competition from national and regional distributors, the
availability of sufficient capital, Anicom's ability to identify the right
product mix and to maintain sufficient inventory to meet customer demand,
Anicom's ability to successfully acquire and integrate the operations of
additional businesses and Anicom's ability to operate effectively in
geographical areas in which it has no prior experience.
EXHIBIT 99.2
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES A CONVERTIBLE PREFERRED STOCK
OF
ANICOM, INC.
Anicom, Inc. (the "Company" or "Issuer"), a corporation organized and existing
under the General Corporation Law of the State of Delaware, does hereby certify
that, pursuant to authority conferred upon the Board of Directors of the Company
by the Certificate of Incorporation, as amended, of the Company, and pursuant to
Section 151 of the General Corporation Law of the State of Delaware, the Board
of Directors of the Company at a meeting duly held, adopted resolutions
providing for the designations, preferences and relative, participating,
optional or other rights, and the qualifications, limitations or restrictions
thereof, of Twenty-Seven Thousand (27,000) shares of Series A Convertible
Preferred Stock, of the Company, as follows:
RESOLVED, that the Company is authorized to issue 27,000 shares of Series A
Convertible Preferred Stock, $.01 par value (the "Series A Preferred Shares"),
which shall have the following powers, designations, preferences and other
special rights:
(1) Dividends and Liquidation Preference.
(a) Generally. The holders of the Series A Preferred Shares shall be entitled to
receive on each share issued and outstanding, out of assets legally available
for such purpose, cumulative preferential dividends which shall accrue and
compound annually, commencing to accrue on the date of issuance of such Series A
Preferred Share and receipt by the Company of all the full purchase price due
therefor (the "Issuance Date") at the rate of:
(i) 5% per annum during the first five (5) years commencing on the Issuance
Date; and
(ii) 15% per annum during the years commencing on the fifth anniversary of the
Issuance Date, of the Liquidation Preference (as defined below); such dividends
shall be cumulative, and accrue daily, whether or not earned, declared, or
legally available for payment, from and after the Issuance Date up to and
including the date the Series A Preferred Shares shall no longer be outstanding.
Accrued dividends shall be payable, quarterly, in arrears, in cash or in shares
of the Company's common stock, par value $.001 per share (the "Common Stock") at
the Company's option, valued at the then applicable Average Trading Price (as
defined below) ending on the day prior to the date of issuance of such shares;
provided that such shares have been registered under the Securities Act of 1933,
as amended, and listed for trading on the principal securities exchange or
trading market where the Company's Common Stock is then listed or traded (the
"Dividend Shares"). The liquidation preference of the Series A Preferred Shares
shall be $1,000.00 per share plus any accrued and unpaid dividends (the
"Liquidation Preference").
<PAGE>
(b) Special Dividend Adjustment. Notwithstanding Section 1(a)(i) above, the
dividend payable by the Company shall be subject to adjustment pursuant to
Section 8.3(a) of that certain Series A Convertible Preferred Stock Purchase
Agreement dated May 21, 1997 by and among the Company and certain investors set
forth therein.
(2) Voting Rights. On matters subject to voting by holders of the Common Stock,
holders of Series A Preferred Shares shall vote together with the holders of
Common Stock, on an as converted basis at the then applicable Conversion Ratio
(as defined below) (as if such shares of Series A Preferred Shares had been
fully converted immediately prior to the date on which a date of record is taken
for such vote, or, if no record is taken, the date as of which the record
holders of the Common Stock entitled to vote are to be determined) as one class.
The Series A Preferred Shares will not be entitled to any voting rights as a
separate class other than with respect to any proposed amendments to the terms
and conditions of the Series A Preferred Shares that would be adverse to the
holders of the Series A Preferred Shares.
(3) Redemption. At any time after the fifth (5th) anniversary of the Issuance
Date, Issuer, at its option, may redeem all, but not less than all, of the then
outstanding Series A Preferred Shares for an amount (the "Redemption Price")
equal to the Liquidation Preference as of the effective date of such redemption
by giving notice (a "Redemption Notice") to each holder of Series A Preferred
Shares and the Company's transfer agent not less than thirty (30) days nor more
than sixty (60) days prior to the date on which such shares are to be redeemed.
Such Notice of Redemption at the Company's election shall indicate (A) the date
that such redemption is to become effective, (B) the applicable Redemption
Price, (C) where and how payment of the Redemption Price will be made, and (D)
the then current Conversion Price. The Redemption Price may be paid, at Issuer's
option, either in cash or shares of Common Stock valued at ninety percent (90%)
of the Average Trading Price (defined below) as of the effective date of such
redemption; provided, that (i) such shares have been registered under the
Securities Act of 1933, as amended and listed for trading on the principal
securities exchange or trading market where the Company's Common Stock is then
listed or traded, and (ii) prior to giving such a Redemption Notice, if Issuer
elects to redeem with Common Stock, Issuer will first obtain stockholder
approval of the issuance to the extent then required by the rules and
regulations of the NASD or of such other national exchange upon which Issuer's
Common Stock is then traded. Notice of redemption having been given as
aforesaid, dividends on the Series A Preferred Shares shall cease to accrue as
of the effective date of such redemption unless the Issuer defaults in the
payment of the Redemption Price.
<PAGE>
(4) Conversion of Series A Preferred Shares. The Series A Preferred Shares shall
be convertible into shares of Common Stock on the following terms and
conditions:
(a) Conversion by Holder. Upon written notice to the Company by the holder
thereof, each Series A Preferred Share shall be convertible at any time into a
number of fully paid and nonassessable shares (calculated to the nearest whole
share) of Common Stock to be determined by dividing the Liquidation Preference
by the then current Conversion Price (the "Conversion Ratio").
(b) Mandatory Conversion. The outstanding Series A Preferred Shares will be
deemed to have been converted into shares of Common Stock at the Conversion
Ratio automatically without further action required of the Issuer or holders
thereof, upon the following terms and conditions:
(i) If, at any time during the first twelve (12) months following the Issuance
Date, the Average Trading Price of the Common Stock is at least 130% of the
Conversion Price, then 33-_% of the then outstanding Series A Preferred Shares
will convert into Common Stock, such conversion to be allocated among the
holders thereof, on a pro rata basis based upon their respective holdings.
(ii) If, at any time during the first twenty-four (24) months following the
Issuance Date, the Average Trading Price of the Common Stock is equal to or
exceeds the percentage of the Conversion Price set forth below, then the
corresponding percentage of the then outstanding Series A Preferred Shares will
convert into Common Stock, such conversion to be allocated among the holders
thereof, on a pro rata basis based upon their respective holdings:
Average Trading Price Percentage of Series A
as a Percentage of Preferred Shares to be
Conversion Price Converted
--------------------- ----------------------
160% 66 2/3%
190% 100%
<PAGE>
(iii) If, at any time after the second anniversary of the Issuance Date, the
Average Trading Price of the Common Stock is equal to or exceeds the percentage
of the Conversion Price set forth below for each corresponding year following
the Issuance Date, then 100% of the then outstanding Series A Preferred Shares
will convert into Common Stock:
Year Average Trading Price as a
Percentage of Conversion Price
--------------------------------- ------------------------------
3 140%
4 150%
5 175%
Notwithstanding the foregoing, no mandatory conversion shall occur unless and
until the shares of Common Stock to be issued have been registered under the
Securities Act of 1933, as amended, and listed for trading on the principal
securities exchange or trading market where the Company's Common Stock is then
listed or traded. Immediately upon the occurrence of a mandatory conversion, the
Company will notify all holders of Series A Preferred Shares of the mandatory
conversion.
(c) Certain Definitions.
(i) "Conversion Price" means eight dollars and sixty-two and one-half cents
($8.625); provided that, if the Average Trading Price as of the second
anniversary of the Issuance Date is less than eight dollars and sixty-two and
one-half cents ($8.625), then the Conversion Price shall thereafter be adjusted
downward but never upward to equal the greater of the Average Trading Price or
six dollars ($6.00), subject to the terms and conditions of Section 4(d).
(ii) "Average Trading Price" means, as of a given date, an amount equal to the
arithmetic average of the last closing sale price of the Common Stock on the
Nasdaq National Market (the "Nasdaq-NM") for the ten (10) day period ending one
day prior to the date of determination as reported by Bloomberg Financial
Markets ("Bloomberg"), or, if the Nasdaq-NM is not the principal trading market
for such security, the last closing sale price of such security on the principal
securities exchange or trading market where such security is listed or traded
for the ten (10) day period ending one day prior to the date of determination as
reported by Bloomberg, or if the foregoing do not apply, the last closing bid
price of such security in the over-the-counter market on the electronic bulletin
board for such security for the ten (10) day period ending one day prior to the
date of determination as reported by Bloomberg, or, if no closing bid price is
reported for such security by Bloomberg, the last closing trade price of such
security as reported by Bloomberg or, if no last closing trade price is reported
for such security by Bloomberg, the average of the bid prices for the ten (10)
day period ending one day prior to the date of determination of any market
makers for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc.
<PAGE>
(5) Adjustment to Conversion Price. In order to prevent dilution of the
conversion rights granted to holders of Series A Preferred Shares hereunder, the
Conversion Price will be subject to adjustment from time to time pursuant to
this Section 4(d).
(i) Adjustment for Dilutive Events. If and whenever on or after the original
date of issuance of the Series A Preferred Shares the Company issues or sells,
or in accordance with Section 4(d)(ii) below is deemed to have issued or sold,
in one transaction or a series of related transactions, any shares of Common
Stock for consideration per share less than the Conversion Price in effect
immediately prior to the time of such issue or sale (a "Dilutive Event"), then
forthwith upon the occurrence of any such Dilutive Event the Conversion Price
will be reduced so that the Conversion Price in effect immediately following the
Dilutive Event will equal the quotient derived by dividing (i) the sum of (x)
the product derived by multiplying the Conversion Price in effect immediately
prior to such Dilutive Event times 27,000,000, plus (y) the product of (A) the
Price Per Share in the Dilutive Event, times (B) three times the consideration
received by the Company in such Dilutive Event, by (ii) the sum of (x)
27,000,000, plus (y) three times the consideration received by the Company in
the Dilutive Event; provided that the Conversion Price will not be reduced
pursuant to this sentence if the foregoing calculation results in a Conversion
Price in excess of $8.15 (the "Threshold Price"). Notwithstanding the foregoing,
the issuance by the Company of any equity securities to management, directors or
employees of the Company pursuant to plans and options to purchase equity
securities issued in accordance with such plans approved by the Board and in
effect as of the date of the first issuance of the Series A Preferred Shares
shall not constitute a Dilutive Event.
(ii) Common Stock Deemed Outstanding. For purposes of determining the adjusted
Conversion Price pursuant to Section 4(d)(i) above the following events shall be
deemed to be an issuance and sale of Common Stock by the Company:
(A) Issuance of Rights or Options. If (i) the Company in any manner grants any
rights or options to subscribe for or to purchase shares of Common Stock or any
securities convertible into or exchangeable for shares of Common Stock (such
rights or options referred to herein as "Options" and such convertible or
exchangeable stock or securities referred to herein as "Convertible Securities")
and (ii) the Price Per Share of shares of Common Stock issuable upon the
exercise of such Options or upon conversion or exchange of such Convertible
Securities is less than the Conversion Price in effect immediately prior to the
time of the granting of such Options, then (x) the total maximum amount of such
Common Stock issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum number of Convertible Securities issuable upon the
exercise of such Options will be deemed to be Common Stock issued and sold by
the Company, and (y) the consideration received pursuant to the Dilutive Event
will equal the Price Per Share times the number of shares of Common Stock so
deemed issued and sold by the Company. For purposes of this Section 4(d)(ii)(A),
the "Price Per Share" will be determined by dividing (i) the total amount, if
any, received or receivable by the Company as consideration for the granting of
such Options, plus the minimum aggregate amount of additional consideration
payable to the Company upon exercise of all such Options, plus in the case of
such Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
issuance or sale of such Convertible Securities and the conversion or exchange
thereof, by (ii) the total maximum number of shares of Common Stock issuable
upon the exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options. No further
adjustment of the Conversion Price will be made when Convertible Securities are
actually issued upon the exercise of such Options or when Common Stock is
actually issued upon the exercise of such Options or the conversion or exchange
of such Convertible Securities.
<PAGE>
(B) Issuance of Convertible Securities. If (i) the Company in any manner issues
or sells any Convertible Securities and (ii) the Price Per Share of shares of
Common Stock issuable upon such conversion or exchange is less than the
Conversion Price in effect immediately prior to the time of such issue or sale,
then (x) the maximum number of shares of Common Stock issuable upon conversion
or exchange of such Convertible Securities will be deemed to be Common Stock
issued and sold by the Company, and (y) the consideration received pursuant to
the Dilutive Event will equal the Price Per Share times the number of shares of
Common Stock so deemed issued and sold by the Company. For the purposes of this
Section 4(d)(ii)(B), the "Price Per Share" will be determined by dividing (i)
the total amount received or receivable by the Company as consideration for the
issue or sale of such Convertible Securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the conversion
or exchange thereof, by (ii) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities. No
further adjustment of the Conversion Price will be made when Common Stock is
actually issued upon the conversion or exchange of such Convertible Securities,
and if any such issue or sale of such Convertible Securities is made upon
exercise of any Options for which adjustments to the Conversion Price had been
or are to be made pursuant to Section 4(d)(ii)(A) above, no further adjustment
of the Conversion Price will be made by reason of such issue or sale.
(C) Change in Option Price or Conversion Rate. If at any time there is a change
in (i) the purchase price provided for in any Options, (ii) the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities, or (iii) the rate at which any Convertible Securities
are convertible into or exchangeable for Common Stock, then the Conversion Price
in effect at the time of such change will be readjusted to the Conversion Price
which would have been in effect had those Options or Convertible Securities
still outstanding at the time of such change provided for such changed purchase
price, additional consideration or changed conversion rate, as the case may be,
at the time such Options or Convertible Securities were initially granted,
issued or sold.
<PAGE>
(D) Calculation of Consideration Received. If any shares of Common Stock, Option
or Convertible Security are issued or sold or deemed to have been issued or sold
for cash, the consideration received therefor or the Price Per Share, as the
case may be, will be deemed to be the net amount received or to be received,
respectively, by the Company therefor. In case any shares of Common Stock,
Options or Convertible Securities are issued or sold for a consideration other
than cash, the amount of the consideration other than cash received by the
Company or the non-cash portion of the Price Per Share, as the case may be, will
be the fair value of such consideration received or to be received,
respectively, by the Company; except where such consideration consists of
securities, in which case the amount of consideration received or to be
received, respectively, by the Company will be the Average Trading Price thereof
as of the date of receipt. If any shares of Common Stock, Options or Convertible
Securities are issued in connection with any merger in which the Company is the
surviving corporation, the amount of consideration therefor will be deemed to be
the fair value of such portion of the net assets and business of the
non-surviving corporation as is attributable to such shares of Common Stock,
Options or Convertible Securities, as the case may be. The fair value of any
consideration other than cash and securities will be determined jointly by the
Company and the holders of a majority of the outstanding Series A Preferred
Shares. If such parties are unable to reach agreement within a reasonable period
of time, the fair value of such consideration will be determined by an
independent appraiser jointly selected by the Company and the holders of a
majority of the outstanding Series A Preferred Shares.
(E) Integrated Transactions. In case any Option is issued in connection with the
issuance or sale of other securities of the Company, together comprising one
integrated transaction in which no specific consideration is allocated to such
Option by the parties thereto, the Option will be deemed to have been issued for
a consideration of $.01.
(F) Record Date. If the Company takes a record of the holders of Common Stock
for the purpose of entitling them (i) to receive a dividend or other
distribution payable in shares of Common Stock, Options or in Convertible
Securities or (ii) to subscribe for or purchase shares of Common Stock, Options
or Convertible Securities, then such record date will be deemed to be the date
of the issuance or sale of the shares of Common Stock deemed to have been issued
or sold upon the declaration of such dividend or upon the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(iii) Adjustment of Conversion Price upon Subdivision or Combination of Common
Stock. If the Company at any time subdivides (by any stock split, stock
dividend, recapitalization or otherwise) one or more classes of its outstanding
shares of Common Stock into a greater number of shares, the Conversion Price,
the Threshold Price and the amounts set forth in Section 4(c)(i) in effect
immediately prior to such subdivision will be proportionately reduced, and if
the Company at any time combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Conversion Price, the Threshold Price and the
amounts set forth in Section 4(c)(i) in effect immediately prior to such
combination will be proportionately increased.
<PAGE>
(iv) Reorganization, Reclassification, Consolidation, Merger or Sale. Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Company's assets to another Person (as
defined below) or other transaction which is effected in such a way that holders
of Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock is referred to herein as "Organic Change." Prior to the
consummation of any Organic Change, the Company will make appropriate provision
to ensure that (I) each of the holders of the Series A Preferred Shares will
thereafter have the right to acquire and receive in lieu of or addition to (as
the case may be) the shares of Common Stock immediately theretofore acquirable
and receivable upon the conversion of such holder's Series A Preferred Shares,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon the conversion of such holder's
Series A Preferred Shares had such Organic Change not taken place and (II) each
of the holders of Series A Preferred Shares will continue to have the same
rights and preferences, in any surviving entity, as those which apply to the
Series A Preferred Shares pursuant to this Certificate. In any such case, the
Company will make appropriate provision with respect to such holders' rights and
interests to ensure that the provisions of this Section 4(d) will thereafter be
applicable to the Series A Preferred Shares. The Company will not effect any
such consolidation, merger or sale, unless prior to the consummation thereof,
the successor entity (if other than the Company) resulting from consolidation or
merger or the entity purchasing such assets assumes, by written instrument, the
obligation to deliver to each holder of Series A Preferred Shares such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to acquire. "Person" shall mean an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.
(v) Notices.
(A) Immediately upon any adjustment of the Conversion Price, the Company will
give written notice thereof to each holder of Series A Preferred Shares, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(B) The Company will give written notice to each holder of Series A Preferred
Shares at least twenty (20) days prior to the date on which the Company closes
its books or takes a record (I) with respect to any dividend or distribution
upon the Common Stock, (II) with respect to any pro rata subscription offer to
holders of Common Stock or (III) for determining rights to vote with respect to
any Organic Change, dissolution or liquidation; provided that in no event shall
such notice be provided to such holder prior to such information being made
known to the public.
<PAGE>
(C) The Company will also give written notice to each holder of Series A
Preferred Shares at least twenty (20) days prior to the date on which any
Organic Change, dissolution or liquidation will take place.
(D) The Company shall give written notice to the holders of the Series A
Preferred Shares promptly after the occurrence of the automatic conversion of
the Series A Preferred Shares into Common Stock as set forth in Section 4(b)
hereof.
(a) Mechanics of Conversion. Subject to and in compliance with all federal and
state securities laws, the conversion of Series A Preferred Shares pursuant to
this Section 4 will be deemed to have been effected (and the holder thereof will
be deemed to be the registered holder of the Conversion Shares), automatically
if conversion is pursuant to Section 4(b), or, if converted at the option of the
holder of Series A Preferred Shares pursuant to Section 4(a), by and on the date
of surrender of certificates representing the Series A Preferred Shares being
converted to the Company at its principal place of business, together with the
Notice of Conversion attached hereto as Exhibit I. As soon as practicable, but
in no event later than five (5) business days after such conversion, the Company
shall cause the transfer agent to deliver to the registered holder thereof (a) a
certificate representing the shares of Common Stock to which the holder is
entitled as a result of such conversion, and (b) a new certificate for Series A
Preferred Shares for the unconverted shares of Series A Preferred Shares, if
any, represented by the surrendered certificate. The Company shall at all times
reserve for issuance a sufficient number of shares of Common Stock to be issued
as Conversion Shares, and upon issuance thereof, the Conversion Shares shall be
fully paid and nonassessable.
(b) Record Holder. The person or persons entitled to receive the shares of
Common Stock issuable upon a conversion of Series A Preferred Shares shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on the Conversion Date.
(6) Change of Control. If at any time there is a Change of Control (as defined
below) of the Company, the Company shall, immediately following the occurrence
of any such event, send a notice to each holder offering to repurchase the
Series A Preferred Shares (or at each holder's option, any portion thereof) for
an amount equal to the Liquidation Preference on the date of such repurchase. If
any holder desires to accept such offer in whole or in part, such holder must
advise the Company of such acceptance within thirty (30) days of the date of
receiving such notice.
<PAGE>
The Company shall then repurchase the Series A Preferred Shares or portion
thereof so tendered for repurchase by such holder by paying the purchase price
to the holder (or any person or persons designated by such holder in such
acceptance notice), in immediately available funds, within ten (10) business
days of the Company's receipt of such holder's acceptance notice. If a holder
tenders only a portion of such holder's Series A Preferred Shares, the holder
shall deliver such certificate of Series A Preferred Shares to the Company and
the Company then shall issue to the holder a new certificate of Series A
Preferred Shares, representing the portion of the Series A Preferred Shares not
repurchased by the Company. For purposes of this Section, "Change of Control"
means any event or series of events by which (i) any person or group (as defined
in Rule 13d-1 of the Exchange Act) obtains a majority (by voting or otherwise)
of the securities of the Company ordinarily having the right to vote in the
election of directors; (ii) during any two year period commencing at any time on
or after the Closing Date, individuals who at the beginning of such period
constituting the Board of Directors cease for any reason to constitute a
majority of the Board of Directors; (iii) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, the assets of the Company; (iv) the merger or consolidation
of the Company with or into another corporation or the merger of another
corporation into the Company with the effect that immediately after such
transaction any beneficial owner shall have become the beneficial owner of
securities of the surviving corporation of such merger or consolidation
representing a majority of the combined voting power of the outstanding
securities of the surviving corporation ordinarily having the right to vote in
the election of directors; or (v) the adoption of a plan leading to the
liquidation or dissolution of the Company. Notwithstanding the foregoing, the
Company shall not be obligated to repurchase the Series A Preferred Shares
pursuant to the terms of this Section 5 if such repurchase in the opinion of the
Company's then current auditors, would jeopardize the "pooling" accounting
treatment of the transaction giving rise to such Change of Control.
(7) Taxes. The Company shall pay any and all taxes which may be imposed upon it
with respect to the issuance and delivery of Common Stock upon the conversion of
the Series A Preferred Shares as herein provided. The Company shall not be
required in any event to pay any transfer or other taxes by reason of the
issuance of such Common Stock in names other than those in which the Series A
Preferred Shares surrendered for conversion are registered on the Company's
records, and no such conversion or issuance of Common Stock shall be made unless
and until the person requesting such issuance has paid to the Company the amount
of any such tax, or has established to the satisfaction of the Company and its
transfer agent, if any, that such tax has been paid.
(8) Liquidation, Dissolution, Winding-Up. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company, the holders
of the Series A Preferred Shares shall be entitled to receive in cash out of the
assets of the Company, whether from capital or from earnings available for
distribution to its stockholders (the "Preferred Funds"), before any amount
shall be paid to the holders of any of the capital stock of the Company of any
class junior in rank to the Series A Preferred Shares in respect of the
preferences as to the distributions and payments on the liquidation, dissolution
and winding up of the Company, an amount per Series A Preferred Share equal to
the Liquidation Preference; provided that, if the Preferred Funds are
insufficient to pay the full amount due to the holders of Series A Preferred
Shares, then each holder of Series A Preferred Shares shall receive a percentage
of the Preferred Funds equal to the full amount of Preferred Funds payable to
such holder as a percentage of the full amount of Preferred Funds payable to all
holders of Series A Preferred Shares. The purchase or redemption by the Company
of stock of any class, in any manner permitted by law, shall not, for the
purposes hereof, be regarded as a liquidation, dissolution or winding up of the
Company. Neither the consolidation or merger of the Company with or into any
other Person, nor the sale or transfer by the Company of less than substantially
all of its assets, shall, for the purposes hereof, be deemed to be a
liquidation, dissolution or winding up of the Company. No holder of Series A
Preferred Shares shall be entitled to receive any amounts with respect thereto
upon any liquidation, dissolution or winding up of the Company other than the
amounts provided for herein.
<PAGE>
(9) Repurchases of Series A Preferred Stock by the Issuer. Neither the Issuer
nor any of its subsidiaries shall repurchase any outstanding shares of Series A
Preferred Stock unless the Issuer on the same terms either (i) offers to
purchase all of the then outstanding shares of Series A Preferred Stock or (ii)
offers to purchase shares of Series A Preferred Stock from the holders in
proportion to the respective number of shares of Series A Preferred Stock held
by each holder. In any such repurchase by the Issuer or any of its subsidiaries,
if all shares of Series A Preferred Stock are not being repurchased, then the
number of shares of Series A Preferred Stock to be repurchased shall be
allocated among all shares of Series A Preferred Stock held by holders which
accept the Issuer's repurchase offer so that the shares of Series A Preferred
Stock are repurchased from such holders in proportion to the respective number
of shares of Series A Preferred Stock held by each such holder which accepts the
Issuer's offer (or in such other proportion as agreed by all such holders who
accept the Issuer's offer).
(10) Shares to be Retired. Any share of Series A Preferred Stock converted,
redeemed, repurchased or otherwise acquired by the Corporation shall be retired
and canceled and may not be reissued.
(11) No Fractional Shares. In connection with any conversion, liquidation,
redemption, or otherwise, the Company shall only issue Common Stock in
denominations equal to the nearest, lower whole number; fractional shares due
holders will be allocated their cash value and paid by the Company to the holder
by check.
(12) Preferred Rank. All shares of Common Stock and all additional shares of
preferred stock of the Company shall be of junior rank to all Series A Preferred
Shares in respect to the preferences as to dividends and distributions and
payments upon the liquidation, dissolution and winding up of the Company and the
rights of the shares of Common Stock and of any shares of preferred stock, other
than the Series A Preferred Stock shall be subject to the preferences and
relative rights of the Series A Preferred Shares.
<PAGE>
(13) Vote to Change the Terms of Series A Preferred Shares. The affirmative vote
at a meeting duly called for such purpose or the written consent without a
meeting of the holders of not less than two-thirds (2/3) of the then outstanding
Series A Preferred Shares (excluding any Series A Preferred Shares held by the
Company or affiliates of the Company) shall be required for the Company to
amend, alter, change or repeal any of the powers, designations, preferences and
rights of the Series A Preferred Shares.
(14) Lost or Stolen Certificates. Upon receipt by the Company of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of any
preferred stock certificates representing the Series A Preferred Shares, and (in
the case of loss, theft or destruction) of any indemnification undertaking by
the holder to the Company that is reasonably satisfactory to the Company, and
upon surrender and cancellation of the preferred stock certificate(s), if
mutilated, the Company shall execute and deliver new preferred stock
certificate(s) of like tenor and date. However, the Company shall not be
obligated to re-issue such lost or stolen preferred stock certificates if holder
contemporaneously requests the Company to convert such Series A Preferred Shares
into Common Stock.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this certificate to be signed by
__________________________________, its ___________________________ as of the
_____ day of May 1997.
ANICOM, INC.
By:/s/ Donald C. Welchko
Title:Chief Financial Officer
<PAGE>
EXHIBIT I
ANICOM, INC.
NOTICE OF CONVERSION
Reference is made to the Certificate of Designations, Preferences and Rights of
Convertible Preferred Stock, Series A, of Anicom, Inc. (the "Designation"). In
accordance with and pursuant to the Designation, the undersigned hereby elects
to convert the number of shares of Convertible Preferred Stock, Series A, par
value $.001 (the "Series A Preferred"), of Anicom, Inc., a Delaware corporation
(the "Company"), indicated below into shares of Common Stock, par value $.001
(the "Common Stock"), of the Company, by tendering the stock certificate(s)
representing the share(s) of Series A Preferred specified below as of the date
specified below:
Date of Conversion
Number of shares of Series A
Preferred to be converted:
Stock certificates no(s). of Series A
Preferred to be converted:
Please confirm the following information:
Conversion Price:
Number of shares of Common Stock
to be issued:
Please issue the Common Stock into which the Series A Preferred shares are being
converted in the following name and to the following address:
Issue to:
Phone No. of converting holder:
Duly executed: By
Name & Title:
Dated:
