EXHIBIT 4.1
$50,000,000
FLOATING RATE CONVERTIBLE DEBENTURES
Due 2003
DEBENTURE PURCHASE AGREEMENT
dated
May 26, 1999
between
CHS ELECTRONICS, INC.
and
COMPUTER ASSOCIATES INTERNATIONAL, INC.
TABLE OF CONTENTS
SECTION PAGE
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1. Issuance of Securities and Reservation of Reserved Shares.....................................................1
2. Purchase, Sale and Delivery...................................................................................1
3. Representations and Warranties of the Corporation.............................................................1
(a) Organization........................................................................................2
(b) Capital Stock; Indebtedness; Liens..................................................................2
(c) Authorization of Agreement..........................................................................2
(d) Authorization of Debentures.........................................................................2
(e) Authorization of Shares.............................................................................3
(f) Non-Contravention; No Required Consents.............................................................3
(g) Litigation..........................................................................................3
(h) Compliance; Governmental Authorizations.............................................................4
(i) Financial Statements................................................................................4
(j) Absence of Changes..................................................................................4
(k) Taxes...............................................................................................4
(l) Intellectual Property...............................................................................5
(m) Compliance with ERISA...............................................................................5
(n) No Defaults.........................................................................................6
(o) SEC Reports.........................................................................................6
(p) Offering Exemption..................................................................................6
(q) Use of Proceeds.....................................................................................6
(r) Investment Company..................................................................................7
(s) Disclosure..........................................................................................7
(t) No Finders'Fees.....................................................................................7
(u) Delaware Law; Rights Agreement......................................................................7
4. Representations and Warranties of the Purchaser...............................................................8
(a) Investment Purpose..................................................................................8
(b) Restricted Securities...............................................................................8
(c) Accredited Investor.................................................................................8
5. Conditions of Obligations of the Purchaser....................................................................8
(a) Debenture...........................................................................................8
(b) Actions Authorized..................................................................................8
(c) Legal Opinion.......................................................................................9
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(d) Representations and Warranties; Compliance; No Default..............................................9
6. Transfer of Securities........................................................................................9
(a) Restriction on Transfer.............................................................................9
(b) Restrictive Legend..................................................................................9
(c) Notice of Transfer..................................................................................9
7. Registration of Registrable Stock............................................................................10
(a) Shelf Registration.................................................................................10
(b) Preparation and Filing.............................................................................11
(c) Designation of Underwriter.........................................................................11
(d) Cooperation by Prospective Sellers.................................................................12
(e) Expenses...........................................................................................12
(f) Indemnification....................................................................................12
8. Covenants....................................................................................................14
(a) Information........................................................................................14
(b) Payment of Obligations.............................................................................15
(c) Conduct of Business and Maintenance of Existence...................................................15
(d) Compliance with Laws...............................................................................15
(e) Inspection of Property, Books and Records..........................................................16
(f) Prohibited Transactions............................................................................16
9. Survival of Representations, Warranties and Agreements Etc...................................................16
10. Miscellaneous...............................................................................................16
(a) Entire Agreement...................................................................................16
(b) Headings...........................................................................................16
(c) Notices............................................................................................16
(d) Counterparts.......................................................................................17
(e) Amendments.........................................................................................17
(f) Assignment.........................................................................................17
(g) Expenses; Documentary Taxes; Indemnification.......................................................17
(H) CHOICE OF LAW......................................................................................18
(I) CONSENT TO JURISDICTION............................................................................18
(J) WAIVER OF JURY TRIAL...............................................................................19
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EXHIBITS
Exhibit A - Form of Floating Rate Convertible Debenture Due 2003
Exhibit B -
Exhibit C - (Reserved)
Exhibit D - Form of Opinion of Counsel to the Company
iii
DEBENTURE PURCHASE AGREEMENT dated as of May 26, 1999 between CHS
ELECTRONICS, INC., a Florida corporation (the "Company" or "CHS"), and
COMPUTER ASSOCIATES INTERNATIONAL, INC., a Delaware corporation (the
"PURCHASER").
The parties hereto agree as follows:
1. ISSUANCE OF SECURITIES AND RESERVATION OF RESERVED SHARES. Subject
to the terms and conditions of this Agreement, the Company has authorized the
issuance of its Floating Rate Convertible Debentures due 2003 (the "Debentures")
in substantially the form of Exhibit A hereto in the aggregate principal amount
of $50,000,000, and the Company has authorized the reservation of a sufficient
number of shares of Common Stock, par value $.001 per share (the "Common
Stock"), including the associated Rights (as defined below in Section 3(b)) of
the Company to provide for conversion of the Debentures (such reserved shares
being referred to herein as the "Reserved Shares").
2. PURCHASE, SALE AND DELIVERY. On the basis of the representations,
warranties, covenants and agreements, but subject to the terms and conditions,
set forth in this Agreement, at the Closing (as defined below), the Company
agrees to sell and deliver to the Purchaser, and the Purchaser agrees to
purchase from the Company, one or more Debentures in the aggregate principal
amount of $50,000,000 at 100% of the principal amount (the "Purchase Price").
The Purchaser will designate to the Company the number and denominations of
Debentures at least one business day prior to the Closing. The closings (the
"Closings") for the consummation of the transactions contemplated by this
Agreement shall take place at the offices of Purchasers, as follows: (a) the
first closing ("First Closing"), which shall occur simultaneously with the
execution of this Agreement, subject to satisfaction of the conditions set forth
in Section 5, the Company shall issue and deliver, and Purchaser shall purchase
and pay for, $14,900,000 in principal amount of Debentures; and (b) at the
second closing ("Second Closing"), the Company shall issue and deliver, and
Purchaser shall purchase and pay for, $35,100,000 in principal amount of the
Debentures. The Second Closing shall take place within five (5) business days
after the date the parties receive the necessary clearances under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), subject to
satisfaction of the conditions set forth in Section 5. Promptly after the date
hereof, the parties shall make the necessary filings under the HSR Act, and
shall use their best efforts to obtain such clearances as promptly as
possible.(such dates of the Closing being herein referred to as the "Closing
Dates"). The applicable portions of the Purchase Price shall be delivered to the
Company at each Closing by wire transfer of immediately available Federal funds
(instructions for which will be provided by the Company to the Purchaser),
against receipt of the Debentures.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except in the case of
any representation and warranty below, to the extent described under the caption
identifying such representation and warranty in the Company Disclosure Letter
dated the date of this Agreement and furnished by the Company to the Purchaser
on the date of this Agreement (the "Company Disclosure Letter"), the Company
represents and warrants, and agrees, as follows:
(a) ORGANIZATION. The Company and each of the subsidiaries of the
Company, a list of which are set forth on Schedule 3(a) of the Company
Disclosure Letter (each a "Subsidiary" and, collectively, the "Subsidiaries"),
are corporations duly organized, validly existing and in good standing under the
laws of their respective jurisdictions of incorporation, and are duly qualified
and in good standing to do business in each jurisdiction in which such
qualification is necessary because of the property owned or leased or because of
the nature of business conducted by it, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise), assets,
liabilities, operations, earnings or business of the Company and its
Subsidiaries, taken as a whole (a "Material Adverse Effect"). The Company does
not own, directly or indirectly, any equity interest in any corporation,
partnership, joint venture or other entity other than the Subsidiaries.
(b) CAPITAL STOCK; INDEBTEDNESS; LIENS.
(i) The authorized capital stock of the Company as of the date
hereof consists of 100,000,000 shares of Common Stock, par value $.001 per
share, and 5,000,000 shares of Preferred Stock, of which 58,049,580 shares of
Common Stock, including associated Rights (the "Rights") issued pursuant to the
Rights Agreement, as amended, dated as of March 18, 1998, between the Company
and American Stock Transfer and Trust Company, as Rights Agent (the "Rights
Agreement"), are validly issued and outstanding, fully paid and non-assessable,
with no personal liability attaching to the ownership thereof, and no shares of
Preferred Stock are issued or outstanding. All outstanding shares of capital
stock of the Company are duly authorized and not subject to any pre-emptive
rights. Except for such 58,049,580 shares of Common Stock and the Rights, there
are no other shares of capital stock or other equity securities of the Company
issued or outstanding.
(ii) Except as set forth in the Reports and in Schedule
3(b)(ii): (A) there are no options, warrants, contracts, commitments or
agreements to which the Company is a party or is bound relating to any shares of
capital stock or other securities of the Company, whether or not outstanding,
and (B) other than the Purchaser pursuant to this Agreement, no person has any
right to cause the Company to effect the registration under the Securities Act
of 1933, as amended (the "Securities Act"), of Common Stock or any other
securities of the Company, and (C) there are no voting trusts, voting
agreements, proxies or other agreements or instruments with respect to the
voting of the Company's capital stock to which the Company is a party or, to the
best of the Company's knowledge, among or between any persons other than the
Company.
(c) AUTHORIZATION OF AGREEMENT. The execution, delivery and performance
by the Company of this Agreement are within the Company's corporate powers and
have been duly authorized by all requisite corporate action by the Company; and
this Agreement has been duly executed and delivered by the Company and
constitutes the valid and binding obligation of the Company.
(d) AUTHORIZATION OF DEBENTURES. The issuance, sale and delivery of the
Debentures are within the Company's corporate powers and have been duly
authorized by all requisite corporate action of the Company, and when issued,
sold and delivered in accordance with
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the provisions of this Agreement, the Debentures will constitute the valid and
binding obligations of the Company, enforceable in accordance with their terms.
(e) AUTHORIZATION OF SHARES. The Debentures are convertible into Common
Stock in accordance with the terms of this Agreement and of the Debentures. The
reservation, issuance and delivery of the Reserved Shares are within the
Company's corporate powers and have been duly authorized by all requisite
corporate action of the Company, and when issued and delivered in accordance
with the terms of this Agreement and the terms of the Debentures, and accepted
for listing on The New York Stock Exchange ("NYSE"), the Reserved Shares will be
validly issued and outstanding, fully paid and non-assessable with no personal
liability attaching to the ownership thereof, and not subject to preemptive or
any other similar rights of the shareholders of the Company or others. The
stockholders of the Company have no preemptive rights with respect to
Debentures, the Reserved Shares or the Common Stock.
(f) NON-CONTRAVENTION; NO REQUIRED CONSENTS. The execution, delivery
and performance of this Agreement, the issuance, sale and delivery of the
Debentures and the reservation, issuance and delivery of the Reserved Shares,
and compliance with the provisions hereof and thereof by the Company will not
(i) violate any provision of law, statute, rule or regulation, or any ruling,
writ, injunction, order, judgment, or decree of any court, administrative agency
or other governmental body applicable to the Company, any of the Subsidiaries or
any of their properties or assets or (ii) conflict with or result in any breach
of any of the terms, conditions or provisions of, or constitute (with due notice
or lapse of time, or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
the Company under, (A) the Company's or any Subsidiary's articles of
incorporation or bylaws, or (B) any note, indenture, mortgage, lease, contract,
agreement or instrument (1) to which the Company is a party or by which it or
any of its properties or assets are bound or affected and (2) relating to any
debt owed by, or any capital stock issued by, the Company, (C) any other
material lease, contract, agreement or other instrument to which the Company is
a party or by which any of its properties or assets are bound or affected or (D)
any material note, indenture, mortgage, lease, agreement or other contract,
agreement or instrument to which any Subsidiary is a party or by which it or any
of its properties or assets are bound or affected. Except for the filing of any
notice subsequent to the Closing that may be required under applicable Federal
or state securities laws (which, if required, shall be filed on a timely basis
as may be so required), obtaining the necessary clearances under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, and listing the Reserved
Shares on the NYSE, no consent, approval or authorization of, or declaration to,
or filing with, any Person is required for the valid authorization, execution,
delivery, and performance by the Company of this Agreement or for the valid
authorization, issuance, sale and delivery of the Debentures or for the valid
authorization, reservation, issuance and delivery of the Reserved Shares. The
term "Person", as used herein, means an individual, a corporation, a
partnership, a limited liability company, a trust, an unincorporated association
or any other entity or organization, including, without limitation, a government
or political subdivision or an agency, instrumentality or official thereof.
(g) LITIGATION. Except as disclosed in Schedule 3(g) or in the Reports
(as defined below), (i) there are no actions, suits, claims, investigations or
legal or administrative or arbitration proceedings pending or, to the knowledge
of the Company or any Subsidiary, threatened
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against or affecting the Company or any Subsidiary, whether at law or in equity,
or before or by any Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality which individually or in
the aggregate would, if adversely determined, have a Material Adverse Effect, or
which in any manner draws into question the validity of this Agreement, the
Debentures or the Reserved Shares or the transactions contemplated hereby or
thereby; and (ii) there are no judgments, decrees, injunctions or orders of any
court, governmental department, commission, agency, instrumentality or
arbitrator against or affecting the Company or any Subsidiary, which
individually or in the aggregate, would have a Material Adverse Effect.
(h) COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS. Each of the Company and
each Subsidiary has complied, and is in compliance with, in all respects with
the Federal, state, local or foreign laws, ordinances, regulations and orders
(including environmental laws, ordinances, regulations and orders) necessary for
the conduct of its business, except where the failure to comply with any of the
foregoing would not have a Material Adverse Effect. Each of the Company and each
Subsidiary has all Federal, state and foreign governmental licenses and permits
necessary for the conduct of its business as presently being conducted
(including all those required by the United States Environmental Protection
Agency and similar state agencies), such licenses and permits are in full force
and effect, no violations are or have been recorded in respect of any thereof
and no proceeding is pending or, to the knowledge of the Company or any
Subsidiary, threatened to revoke or limit any thereof, except where the failure
to comply with any of the foregoing would not have a Material Adverse Effect.
(i) FINANCIAL STATEMENTS. The consolidated financial statements of the
Company and the Subsidiaries set forth in the (i) Company's Annual Report on
Form 10-K for the year ended December 31, 1998, reported on by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP, and (ii) Company's Quarterly Report on Form 10-Q for the three months ended
March 31, 1999, in each case fairly present the consolidated financial position
of the Company and the Subsidiaries as of such date and the consolidated results
of operation and cash flows for such period then ended in conformity with
generally accepted accounting principles. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ is the Company's
independent accountant as defined under the Securities Act and the rules and
regulations promulgated thereunder.
(j) ABSENCE OF CHANGES. Since March 31, 1999, and except as disclosed
in Schedule 3(j), the Company and each Subsidiary has been operated in the
ordinary course of business consistent with past practice and there has not been
(i) any material adverse change in the condition (financial or otherwise),
assets, liabilities, operations, earnings or business of the Company and its
Subsidiaries, taken as a whole; or (ii) any declaration, setting aside or
payment of any dividend or other distribution with respect to any shares of
Common Stock, or any direct or indirect redemption, purchase or other
acquisition of any such shares of Common Stock.
(k) TAXES. Except as disclosed in Schedule 3.2(k), the federal income
tax returns of the Company or its predecessors have never been examined by the
Internal Revenue Service. Neither the Company nor its predecessors has taken any
reporting positions for which they do not have a reasonable basis and the
Company does not anticipate any further material tax liability with respect to
the years for which returns have been filed prior to the date of this Agreement.
For purposes of this paragraph, the term "Company" shall include each other
corporation with which the Company files consolidated or combined income tax
returns or reports. The Company and each
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Subsidiary have timely filed (or received extensions for filing) all United
States federal income tax returns and all other material tax returns (federal,
state, local and foreign) required to be filed by it, which returns are true and
correct in all material respects, and all taxes, assessments, fees and other
governmental charges thereupon and upon its properties, assets, income and
franchises which are due and payable prior to the date of this Agreement, the
failure of which to pay when due and payable has or is likely to have a Material
Adverse Effect, have been paid when due and payable, or reserves have been
provided for payment thereof to the extent required under generally accepted
accounting standards. The Company does not know of any actual or proposed
additional tax assessments for any fiscal period against it or any of the
Subsidiaries which, singly or in the aggregate, would have a Material Adverse
Effect and the Company has established adequate reserves for such additional tax
assessments, if any.
(l) INTELLECTUAL PROPERTY. The Company or a Subsidiary exclusively or
jointly owns, or is licensed to use, all patents, licenses, copyrights,
trademarks or trade names or other intellectual property rights ("Intellectual
Property") which the Company believes are necessary, required or desirable for
the conduct of the business of the Company and the Subsidiaries as presently
conducted or as presently proposed to be conducted. There are no pending or
threatened claims against the Company or any Subsidiary alleging that the
conduct of the Company's or such Subsidiary's business (as now conducted or
presently proposed to be conducted) infringes or conflicts with or will infringe
or will conflict with the rights of others in any Intellectual Property. To the
knowledge of the Company, no third party is infringing any of the Intellectual
Property of the Company or any Subsidiary. To the Company's knowledge, neither
the Company nor any Subsidiary is making unauthorized use of any confidential
information or trade secrets of any person, including without limitation, any
former or present employees of the Company or any Subsidiary.
(m) COMPLIANCE WITH ERISA. Each member of the ERISA Group has fulfilled
its obligations under the minimum funding standards of ERISA and the Internal
Revenue Code with respect to each Plan and is in compliance in all material
respects with the presently applicable provisions of ERISA and the Internal
Revenue Code with respect to each Plan. No member of the ERISA Group has (i)
sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA. "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended, or any successor statute.
"ERISA Group" means the Company and all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Company, are treated as a single
employer under Section 414 of the Internal Revenue Code. "PBGC" means the
Pension Benefit Guaranty Company or any entity succeeding to any or all of its
functions under ERISA. "Benefit Arrangement" means at any time an employee
benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or
a Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group. "Multiemployer Plan" means at any time an employee
pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which
any
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member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five Plan years made contributions,
including for these purposes any Person which ceased to be a member of the ERISA
Group during such five year period. "Plan" means at any time an employee pension
benefit plan (other than a Multiemployer Plan) which is covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the
Internal Revenue Code and either (i) is maintained, or contributed to, by any
member of the ERISA Group for employees of any member of the ERISA Group or (ii)
has at any time within the preceding five years been maintained, or contributed
to, by any Person which was at such time a member of the ERISA Group for
employees of any Person which was at such time a member of the ERISA Group.
(n) NO DEFAULTS. Except as disclosed in Schedule 3(n), (A) neither the
Company nor any Subsidiary is in default (i) under its articles of incorporation
or bylaws, or any indenture, mortgage, lease, purchase or sales order, or any
other contract, agreement or instrument to which the Company or any Subsidiary
is a party or by which they or any of their properties are bound or affected or
(ii) with respect to any order, writ, injunction or decree of any court or any
Federal, state, municipal or other domestic or foreign governmental department,
commission, board, bureau, agency or instrumentality, which defaults
individually or in the aggregate would have a Material Adverse Effect; and (B)
there exists no condition, event or act which constitutes, or which after
notice, lapse of time, or both, would constitute, a default under any of the
foregoing, which defaults individually or in the aggregate would have a Material
Adverse Effect.
(o) SEC REPORTS. The Company has delivered to the Purchaser its (i)
Annual Report on Form 10-K for the year ended December 31, 1998 and (ii)
Quarterly Report on Form 10-Q for the three months ended March 31, 1999
(together, the "Reports"). The description of the business, operations,
properties and assets of the Company contained in the Reports, as well as all
other factual statements concerning the Company contained therein, are true,
correct and complete in all material respects and do not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(p) OFFERING EXEMPTION. Neither the Company nor any of its agents has
offered or sold any Debentures or Common Stock, or any similar security or
securities to, or solicited any offers to buy any of the foregoing from, or
otherwise approached or negotiated in respect thereof with, any person or
persons so as to require registration of the Debentures or the Reserved Shares
under the Securities Act or qualification under the Trust Indenture Act of 1939.
The offering and sale of the Debentures and the issuance of the Reserved Shares
upon conversion of the Debentures are each exempt from registration under the
Securities Act pursuant to Section 4(2) of such Act.
(q) USE OF PROCEEDS. The proceeds received by the Company from the sale
of the Debentures shall be used by the Company for general corporate purposes.
None of such proceeds will be used, directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of buying or carrying any "margin
stock" within the meaning of Regulation T, U or X of the Board of Governors of
the Federal Reserve System.
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(r) INVESTMENT COMPANY. The Company is not an "investment company" or
an entity "controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended.
(s) DISCLOSURE. No document, certificate, instrument or written
statement or information furnished or made available to the Purchaser by or on
behalf of the Company in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein not misleading.
There is no fact peculiar to the Company which materially adversely affects
(without regard to general market and economic conditions), or in the future may
(so far as the Company can now foresee), to the best knowledge of the Company,
materially adversely affect the business, operations, prospects, condition,
properties or assets of the Company which has not been set forth in this
Agreement or in the other documents, certificates, instruments or written
statements furnished to the Purchaser by or on behalf of the Company pursuant
hereto.
(t) NO FINDERS' FEES. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of the Company or any Subsidiary who might be entitled to any fee or commission
from the Company, any Subsidiary, the Purchaser or any of Purchaser's affiliates
upon consummation of the transactions contemplated by this Agreement or
thereafter.
(u) FLORIDA LAW; RIGHTS AGREEMENT. The Company has delivered to the
Purchaser a complete and correct copy of the Rights Agreement, including all
amendments and exhibits thereto. The Company has taken, and as soon as possible
after the date hereof (but in no event later than five business days after the
date hereof), the Rights Agent will take, all actions necessary or appropriate
to amend the Rights Agreement to ensure that the execution of this Agreement and
the issuance and delivery of the Reserved Shares in accordance with the terms of
this Agreement and the terms of the Debentures and the other transactions
contemplated by this Agreement and the Debentures will not cause (i) the
Purchaser or any of its affiliates to be considered an Acquiring Person (as such
term is defined in the Rights Agreement), (ii) the occurrence of a Distribution
Date or Stock Acquisition Date (as such terms are defined in the Rights
Agreement) or (iii) the separation of the Rights from the underlying Shares, and
will not give the holders thereof the right to acquire securities of any party
hereto; provided that: (A) the amendments described in subsections (i) through
(iii) above shall be effective only so long as Purchaser does not acquire, upon
conversion of the Debenture, exercise of the Warrants, or otherwise, 20% or more
of the outstanding CHS Common Stock; and (B) if Purchaser acquires CHS Common
Stock in excess of the limitations set forth in subsection (A), such acquisition
will be considered a "Triggering Event," and Purchaser will be deemed an
"Acquiring Person," all as defined in the Rights Agreement. If the Shareholders
of the Company approve the Holder's purchase of Excess Shares upon conversion of
the Debentures (all as defined in, and in accordance with, Section 3 ___ of the
Debentures), then the Company and its Board of Directors shall take such further
actions as may be necessary to exempt such Excess Shares (and the Holder's
acquisition thereof) from the provisions of Florida Statutes ss.607.0902 and the
Rights Agreement. If due to the Company's issuance(s) of Common Stock after the
date hereof, the total number of shares of CHS Common Stock which may be
acquired by Purchaser pursuant to the Debentures and the Warrants is less than
19.95% of the total shares of CHS Common Stock then outstanding, Purchaser may,
at its option, elect to purchase
-7-
additional shares of CHS Common Stock other than pursuant to the Debenture or
the Warrants (the "Outside Purchases"). Such Outside Purchases shall be exempt
from the Rights Agreement, so long as the total shares acquired through Outside
Purchases, plus the maximum amount of CHS shares which have been or may be
acquired by Purchaser pursuant to the Debentures and the Warrants, does not
exceed 19.95% of the total shares of CHS Common Stock then outstanding.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to the Company as follows:
(a) INVESTMENT PURPOSE. The Purchaser is acquiring the
Debentures and the Warrants for the Purchaser's own account, not as a nominee or
agent, and the Purchaser is acquiring the Debentures and the Warrants for
investment and not with a view to the distribution thereof within the meaning of
the Securities Act.
(b) RESTRICTED SECURITIES.
(i) The Purchaser understands that the Debentures and the
Warrants have not been registered under the Securities Act; and that the
Debentures and the Warrants are restricted securities within the meaning of Rule
144 under the Securities Act.
(ii) The Purchaser understands that the Reserved Shares
issuable upon conversion and the shares issuable upon exercise of the Warrants
will not be registered under the Securities Act (except as otherwise provided in
Section 6) and may only be sold or transferred in compliance with the Securities
Act.
(c) ACCREDITED INVESTOR. Purchaser is an Accredited Investor
(as that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act of 1933, as amended).
5. CONDITIONS OF OBLIGATIONS OF THE PURCHASER. The obligations of the
Purchaser to perform under this Agreement are subject to the satisfaction of the
following conditions unless waived by the Purchaser:
(a) DEBENTURE. The Purchaser shall have received a duly
executed Debenture or Debentures evidencing the principal amount of
Debentures purchased.
(b) ACTIONS AUTHORIZED. All action necessary to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby shall have been duly and validly taken by
the Company, and the Company shall have full power and right to consummate the
transactions contemplated hereby. The Company shall have furnished to the
Purchaser such documents relating to its corporate existence and authority
(including, without limitation, certified copies of the Company's Articles of
Incorporation, Bylaws, resolutions and minutes of meetings of the Board of
Directors authorizing the Agreement and good standing certificates from the
Secretary of State of the states of Florida and such other matters as the
Purchaser or its counsel may reasonably request.
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(c) LEGAL OPINION. The Purchaser shall have received an
opinion dated the Closing Date of ▇▇▇▇▇▇ and ▇▇▇▇▇ LLP, and/or ▇▇▇▇▇▇▇▇▇ Traurig
LLP, counsel to the Company in the form of Exhibit D.
(d) REPRESENTATIONS AND WARRANTIES; COMPLIANCE; NO DEFAULT.
The representations and warranties of the Company in Section 3 shall be true and
correct in all respects on and as of the Closing Date; the Company shall have
complied in all material respects with all obligations, covenants and conditions
required to be complied with by it pursuant to this Agreement on or prior to the
Closing; and the Purchaser shall have received a certificate signed by the
Company's President and Chief Executive Officer to the foregoing effect. No
Event of Default under the Debentures and no event or condition which, with the
giving of notice or the lapse of time or both, would, unless cured or waived,
become such an Event of Default, shall have occurred and be continuing.
(e) Prior to the Second Closing the parties shall have
received clearance under the HSR Act to proceed with the Second Closing.
6. TRANSFER OF DEBENTURES.
(a) RESTRICTION ON TRANSFER. The Debentures shall not be
transferable except upon the conditions specified in this Section 6, which
conditions are intended to ensure compliance with the provisions of the
Securities Act in respect of the transfer of the Debentures. In addition, in no
event shall the Debentures be transferred to any person listed on Schedule 6(a).
(b) RESTRICTIVE LEGEND. Each Debenture shall (unless otherwise
permitted by the provisions of Section 6(d)) be stamped or otherwise imprinted
with legends in substantially the following form:
THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR QUALIFIED UNDER THE TRUST
INDENTURE ACT OF 1939. THIS DEBENTURE MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN EXEMPTION THEREFROM UNDER SAID ACT. ADDITIONALLY,
THE TRANSFER OF THIS DEBENTURE IS SUBJECT TO THE
CONDITIONS SPECIFIED IN SECTION 6 OF THE DEBENTURE
PURCHASE AGREEMENT PURSUANT TO WHICH THIS DEBENTURE WAS
PURCHASED, AND NO TRANSFER OF THIS DEBENTURE SHALL BE
VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED.
(c) NOTICE OF TRANSFER. Each holder of a Debenture (a
"Holder"), by acceptance thereof agrees, prior to any transfer of any
Debentures, to give written notice to the Company of such Holder's intention to
effect such transfer and to comply in all other respects with the provisions of
this Section 6(c). Each such notice shall describe the manner and circumstances
of the proposed transfer and shall be accompanied by the written opinion of
counsel for such Holder, as to whether in the opinion of such counsel such
proposed transfer involves a transaction requiring
-9-
registration of such Debentures under the Securities Act. If in the opinion of
such counsel the proposed transfer of the Debentures may be effected without
registration under the Securities Act, the Holder shall thereupon be entitled to
transfer the Debentures in accordance with the terms of the notice delivered by
it to the Company. Each certificate or other instrument evidencing the
securities issued upon the transfer of any Debentures (and each certificate or
other instrument evidencing any untransferred balance of such Debentures) shall
bear the legend set forth in Section 6(b) unless in the opinion of such counsel
registration of future transfer is not required by the applicable provisions of
the Securities Act.
7. REGISTRATION OF REGISTRABLE STOCK.
(a) SHELF REGISTRATION.
(i) The Company shall (x) within 30 business days of (A)
the Second Closing; and (B) delivery of a written request to register
Registrable Stock (as defined below) by any holder or holders owning, in the
aggregate, at least 51% of the Registrable Stock, file with the Securities and
Exchange Commission (the "SEC") a Shelf Registration Statement (as defined
below) relating to the offer and sale of the shares of Common Stock or other
securities issued or issuable upon conversion of the Debentures or exercise the
Warrants (the "Registrable Stock") by the holders of Registrable Stock from time
to time in accordance with the methods of distribution elected by such holders
and set forth in such Shelf Registration Statement, and (y) use its best efforts
to cause such Shelf Registration Statement to be declared effective under the
Securities Act as promptly as practicable; provided that the holders of
Registrable Stock may not request the Company to file a Shelf Registration
Statement unless and until (x) such holders have the right at such time to
convert the Debentures into Common Stock pursuant to Section 3(a) of the
Debentures. "Register," "registered" and "registration" each refer to a
registration of Registrable Stock effected by filing with the SEC a registration
statement in compliance with the Securities Act and the declaration or ordering
by the SEC of effectiveness of such registration statement. "Shelf Registration"
means a registration effected pursuant to this Section 7. "Shelf Registration
Statement" means a shelf registration statement of the Company filed with the
SEC pursuant to the provisions of this Section 7 which covers some or all of the
Registrable Stock, as applicable, on an appropriate form under Rule 415 under
the Securities Act, or any similar rule that may be adopted by the SEC,
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
(ii) The Company shall use its best efforts (x) to keep
the Shelf Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be usable by the holders of Registrable Stock
for a period ending at such time as any holder could sell, in any three month
period, all of the Registrable Stock then held by it, without any such Shelf
Registration Statement being effective, and (y) after the effectiveness of the
Shelf Registration Statement, promptly upon the request of any holder of
Registrable Stock, to take any action necessary to register the sale of any
Registrable Stock of such holder and to identify such holder as a selling
securityholder.
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(b) REGISTRATION PROCEDURES. In connection with any Shelf
Registration Statement, the Company shall:
(i) prepare and file with the SEC a Shelf
Registration Statement with respect to the Registrable Stock and use its best
efforts to cause such Shelf Registration Statement to become and remain
effective as provided in this Agreement;
(ii) prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such Shelf Registration
Statement effective and current and to comply with the provisions of the
Securities Act with respect to the disposition of all shares covered by such
Shelf Registration Statement, including such amendments and supplements as may
be necessary to reflect the intended method of disposition from time to time of
the prospective seller or sellers of such Registrable Stock;
(iii) furnish to each selling holder of Registrable
Stock such number of copies of a prospectus in conformity with the requirements
of the Securities Act, and such other documents, as such holder may reasonably
request in order to facilitate the public sale or other disposition of the
Registrable Stock owned by such holder;
(iv) use its best efforts to register or qualify the
shares of Registrable Stock covered by such Shelf Registration Statement under
such other securities or blue sky or other applicable laws of such jurisdiction
within the United States as each prospective seller shall reasonably request, to
enable such seller to consummate the public sale or other disposition in such
jurisdictions of the shares of Registrable Stock owned by such seller; and
(v) furnish to each prospective seller a signed
counterpart, addressed to the prospective sellers, of (i) an opinion of counsel
for the Company, dated the effective date of the Shelf Registration Statement,
and (ii) a "comfort" letter (or, in the case of any such Person which does not
satisfy the conditions for receipt of a "comfort" letter specified in Statement
on Auditing Standards No. 72, an "agreed upon procedures" letter) signed by the
independent auditors who have certified the Company's financial statements
included in the Shelf Registration Statement, covering substantially the same
matters with respect to the Shelf Registration Statement (and the prospectus
included therein) and (in the case of the "comfort" or "agreed upon procedures"
letter) with respect to events subsequent to the date of the financial
statements, as are customarily covered (at the time of such registration) in
opinions of issuer's counsel and in "comfort" letters delivered to the
underwriters in underwritten public offerings of securities (with, in the case
of an "agreed upon procedures" letter, such modifications or deletions as may be
required under Statement on Auditing Standards No. 35).
(c) DESIGNATION OF UNDERWRITER. In the case of any
registration effected pursuant to this Section 7, a majority in interest of the
holders of Registrable Stock shall have the right to designate the managing
underwriter in any underwritten offering.
-11-
(d) COOPERATION BY PROSPECTIVE SELLERS.
(i) Each prospective seller of Registrable Stock, and each
underwriter designated by each such seller, will furnish to the Company such
information as the Company may reasonably require from such seller or
underwriter in connection with the Shelf Registration Statement (and the
prospectus included therein). No holder of Registrable Stock may participate in
any offering unless such Holder completes and executes all questionnaires,
indemnities, underwriting agreements and other documents required in connection
with the offering.
(ii) Failure of a prospective seller of Registrable Stock
to furnish the information and agreements described in this Agreement shall not
affect the obligations of the Company under this Agreement to remaining sellers
to furnish such information and agreements unless, in the reasonable opinion of
counsel to the Company or the underwriters, such failure impairs or may impair
the viability of the offering or the legality of the registration or the
underlying offering.
(iii) The holders of shares of Registrable Stock included
in the registration will not (until further notice by the Company) effect sales
thereof (or deliver a prospectus to any purchaser) after receipt of telegraphic
or written notice from the Company to suspend sales to permit the Company to
correct or update a registration statement or prospectus. In connection with any
offering each Holder who is a prospective seller, will not use any offering
document, offering circular or other offering materials with respect to the
offer or sale of Registrable Stock, other than the prospectuses provided by the
Company and any documents incorporated by reference therein.
(e) EXPENSES. All expenses incurred in complying with this
Section 7, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the National Association of
Securities Dealers, Inc.), fees and expenses of complying with securities and
"blue sky" laws, printing expenses and fees and disbursements of counsel for the
Company, and one counsel for the holders of Registrable Stock and of the
independent certified public accountants shall be paid by the Company; PROVIDED,
HOWEVER, that all underwriting discounts and selling commissions applicable to
the Registrable Stock covered by registrations effected pursuant to this Section
7 shall not be borne by the Company but shall be borne by the seller or sellers.
(f) INDEMNIFICATION.
(i) In the event of any registration of any Registrable
Stock under the Securities Act pursuant to this Section 7 or registration or
qualification of any Registrable Stock pursuant to this Section 7, the Company
shall indemnify and hold harmless the seller of such shares, each underwriter of
such shares, if any, each broker or any other person acting on behalf of such
seller and each other person, if any, who controls any of the foregoing persons,
within the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which any of the foregoing persons may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
-12-
contained in any registration statement under which such Registrable Stock as
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or any
document prepared or furnished by the Company incident to the registration or
qualification of any Registrable Stock pursuant to this Section 7, 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, with respect to any prospectus, necessary to make the
statements therein in light of the circumstances under which they were made, not
misleading, or any violation by the Company of the Securities Act or state
securities or "blue sky" laws applicable to the Company and relating to action
or inaction required of the Company in connection with such registration or
qualification under such state securities or blue sky laws; and shall reimburse
such seller, such underwriter, broker or other person acting on behalf of such
seller and each such controlling person for any legal or any 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 shall not be liable (i) 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 alleged untrue statement or omission or alleged omission made in
the registration statement, the preliminary prospectus or prospectus or in any
amendment or supplement thereof pursuant to this Section 7 in reliance upon and
in conformity with written information furnished to the Company through an
instrument duly executed by such seller or such underwriter specifically for use
in the preparation thereof and (ii) to any broker or other person acting on
behalf of such seller to the extent that any such loss, claim, damage or
liability arises out of or is based upon any representation or other statement
of such broker or other person that is not in conformity with the preliminary
prospectus or prospectus.
(ii) Before Registrable Stock held by a prospective
seller shall be included in any registration pursuant to this Section 7, such
prospective seller and any underwriter acting on its behalf shall have agreed to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in (i) above) the Company, each director of the Company, each officer of
the Company who shall sign such registration statement and any person who
controls the Company within the meaning of the Securities Act, with respect to
any untrue statement or omission from such registration statement, any
preliminary prospectus or prospectus contained therein, or any amendment or
supplement thereof, if such untrue statement or omission was made in reliance
upon and in conformity with written information furnished to the Company through
an instrument duly executed by such seller or such underwriter, as the case may
be, specifically for use in the preparation of such registration statement,
preliminary prospectus, prospectus or amendment or supplement; PROVIDED that the
maximum amount of liability in respect of such indemnification shall be limited,
in the case of each prospective seller of Registrable Stock, to an amount equal
to the net proceeds actually received by such prospective seller from the sale
of Registrable Stock effected pursuant to such registration.
(iii) Notwithstanding the foregoing provisions of
this Section 7(4), if pursuant to an underwritten public offering of Common
Stock, the Company, the selling shareholders and the underwriters enter into an
underwriting or purchase agreement relating to such offering which contains
provisions covering indemnification among the parties thereto in connection with
such offering, the indemnification provisions of Section 7(f) shall be deemed
inoperative for purposes of such offering.
-13-
(iv) Each party entitled to indemnification under
this Section 7(f) (the "indemnified party") shall give notice to the party
required to provide indemnification (the "indemnifying party") promptly after
such indemnified party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the indemnifying party (at its expense) to
assume the defense of any claim or any litigation resulting therefrom, PROVIDED
that counsel for the indemnifying party, who shall conduct the defense of such
claim or litigation, shall be reasonably satisfactory to the indemnified party,
and the indemnified party may participate in such defense, but only at such
indemnified party's expense, and PROVIDED, FURTHER, that the omission by any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under this Section 7(f) except to the
extent that the omission results in a failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a result of
the failure to give notice. No indemnifying party, in the defense of any such
claim or litigation, shall, except with the consent of each indemnified party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect to such
claim or litigation.
8. COVENANTS. The Company agrees that:
(a) INFORMATION. The Company shall deliver to each Holder:
(i) (A) as soon as available and in any event within 5 days
after filing of each of the Company's Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K with the Commission, copies of each of such reports; and (B)
as soon as available and in any event within 10 days after filing of each of the
Company's Annual Reports on Form 10-K including copies of the Company's Annual
Report to Shareholders and Schedule 14A with the Commission, copies of each of
such reports;
(ii) promptly upon the mailing thereof to the shareholders of
the Company generally, copies of all information (other than as described in
clause (i)) so mailed;
(iii) simultaneously with the delivery of each set of
financial statements referred to above, a certificate of the chief financial
officer or the chief accounting officer of the Company stating whether any Event
of Default, as defined in the Debentures, or any condition or event which, with
the giving of notice or lapse of time or both would, unless cured or waived,
become an Event of Default, exists on the date of such certificate and, if any
Event of Default or any such condition or event then exists, setting forth the
details thereof and the action which the Company is taking or proposes to take
with respect thereto;
(iv) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is
-14-
insolvent or has been terminated, a copy of such notice; (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate, impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies
for a waiver of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gives notice of withdrawal from any
Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to
make any payment or contribution to any Plan or Multiemployer Plan or in respect
of any Benefit Arrangement or makes any amendment to any Plan or Benefit
Arrangement which has resulted or could result in the imposition of a lien or
the posting of a bond or other security, a certificate of the chief financial
officer or the chief accounting officer of the Company setting forth details as
to such occurrence and action, if any, which the Company or applicable member of
the ERISA Group is required or proposes to take; and
(v) from time to time such additional information regarding
the financial position or business of the Company and its Subsidiaries as any
Holder may reasonably request (it being understood and agreed that no Holder
shall be entitled to request any confidential or proprietary information of the
Company and its Subsidiaries pursuant to this clause (v)).
(b) PAYMENT OF OBLIGATIONS. The Company will pay and discharge, and
will cause each Subsidiary to pay and discharge, at or before maturity, all
their respective material obligations and liabilities, including, without
limitation, tax liabilities, except where the same may be contested in good
faith by appropriate proceedings, and will maintain, and will cause each
Subsidiary to maintain, in accordance with generally accepted accounting
principles, appropriate reserves for the accrual of any of the same.
(c) CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The Company
will continue, and will cause each Subsidiary to continue, to engage in business
of the same general type as now conducted by the Company and its Subsidiaries,
and will preserve, renew and keep in full force and effect, and will cause each
Subsidiary to preserve, renew and keep in full force and effect their respective
corporate existence and their respective rights, privileges and franchises
necessary or desirable in the normal conduct of business, PROVIDED that nothing
in this Section 8(c) shall prohibit (i) the merger of a Subsidiary into the
Company or the merger or consolidation of the Company or a Subsidiary with or
into another Person as permitted by Section 6(d) of the Debenture, or (ii) the
termination of the corporate existence of any Subsidiary if the Company in good
faith determines that such termination is in the best interest of the Company
and is not materially disadvantageous to the Holders of the Debentures.
(d) COMPLIANCE WITH LAWS. The Company will comply, and cause each
Subsidiary to comply, in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitation, environmental laws and ERISA and the rules and
regulations thereunder) except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings.
-15-
(e) INSPECTION OF PROPERTY, BOOKS AND RECORDS. The Company will
keep, and will use its best efforts to cause each Subsidiary to keep, proper
books of record and account in which full, true and correct entries shall be
made of all dealings and transactions in relation to its business and
activities; and will permit, and will cause each Subsidiary to permit,
representatives of any Holder at such Holder's expense to visit and inspect any
of their respective properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective affairs, finances
and accounts with their respective officers, employees and independent public
accountants, all at such reasonable times, upon reasonable notice and as often
as may reasonably be desired (it being understood and agreed that no Holder
shall be entitled to request any confidential or proprietary information of the
Company and its Subsidiaries pursuant to this subsection (e)).
(f) PROHIBITED TRANSACTIONS. Neither the Company nor any agent
acting on its behalf will, directly or indirectly, sell or offer for sale or
dispose of, or attempt or offer to dispose of, any of the Debentures, Common
Stock or any similar security of the Company to, or solicit any offers to buy
any thereof from, or otherwise approach or negotiate in respect thereof with,
any person or persons, so as to require registration of the Debentures or the
Reserved Shares under the Securities Act.
9. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS ETC. All
representations and warranties hereunder shall survive the Closing. All
statements contained in any certificate or other instrument delivered by the
Company or pursuant to this Agreement or in connection with the transactions
contemplated by this Agreement shall constitute representations and warranties
by the Company under this Agreement.
10. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement and the Schedules and Exhibits
hereto contain the entire agreement between the Company and the Purchaser with
respect to the transactions contemplated hereby and supersede all prior
agreements or understandings among the parties with respect thereto.
(b) HEADINGS. Descriptive headings are for convenience only and
shall not control or affect the meaning or construction of any provision of this
Agreement.
(c) NOTICES. All notices or other communications provided for in
this Agreement shall be in writing and shall be sent by confirmed telecopy (with
an undertaking to provide a hard copy) or delivered by hand or sent by overnight
courier service prepaid to the address specified below.
If to the Company:
CHS Electronics, Inc.
▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Purchaser:
Computer Associates International, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Computer Associates International, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith.
(d) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(e) AMENDMENTS. This Agreement shall not be altered or otherwise
amended except pursuant to an instrument in writing signed by each of (i) the
Company, and (ii) the holders of 51% of the aggregate principal amount of the
Debentures (or, if the Debentures have been converted, the holders of 51% of the
number of the Reserved Shares issued upon such conversion).
(f) ASSIGNMENT. This Agreement shall not be assignable by either
party without the consent of the other party, except that it, or the rights
under this Agreement, in whole or in part, may be assigned by the Purchaser to
any party or parties who purchase the Debenture or Debentures owned by the
Purchaser (or, if the Debentures have been converted, to any party or parties
who purchase the Reserved Shares issued upon such conversion).
(g) EXPENSES; DOCUMENTARY TAXES; INDEMNIFICATION. (i) The Company
shall pay (A) all out-of-pocket expenses of each Holder, including fees and
disbursements of counsel for
-17-
such Holder, in connection with the preparation of this Agreement, (B) all
out-of-pocket expenses of each Holder, including fees and disbursements of
counsel for such Holder, in connection with any waiver or consent under this
Agreement or under the Debentures or any amendment of this Agreement or the
Debentures or any default or alleged default under this Agreement or under the
Debentures and (C) if an Event of Default, as defined in the Debentures, occurs,
all out-of-pocket expenses incurred by each Holder, including fees and
disbursements of counsel, in connection with such Event of Default and
collection, bankruptcy, insolvency and other enforcement proceedings resulting
therefrom. The Company shall indemnify each Holder against any transfer taxes,
documentary taxes, assessments or charges made by any governmental authority by
reason of the execution and delivery of this Agreement or the Debentures.
(ii) The Company hereby indemnifies and holds each Holder and its
affiliates, shareholders, officers, directors, employees and agents
(collectively, the "Indemnified Parties") harmless from and against any and all
actions, causes of action, suits, losses, costs, claims, liabilities and
damages, and expenses incurred in connection therewith (irrespective of whether
any such Indemnified Party is a party to the action for which indemnification
hereunder is sought), including attorneys' and other experts' fees and
disbursements (collectively, the "Indemnified Liabilities"), incurred by the
Indemnified Parties or any of them as a result of, or arising out of, or
relating to (A) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds from the sale of the Debentures; or
(B) the breach of this Agreement and any other document delivered in connection
herewith by the Company.
An Indemnified Party shall be entitled to be represented by the counsel of such
Indemnified Party's choice in connection with the defense (including any
investigation) of any third party claim against or involving such Indemnified
Party for which indemnification is sought under this Agreement and, on demand
(and as incurred), the Company shall pay, or reimburse such Indemnified Party
for, the fees and expenses of such counsel and all other expenses relating to
such defense. This indemnity shall survive repayment or transfer of the
Debentures, the conversion of any Debenture into Reserved Shares or the transfer
of any Reserved Shares. If and to the extent that the foregoing undertaking is
determined to be unenforceable for any reason, the Company hereby agrees to make
the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
(h) CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(i) CONSENT TO JURISDICTION. EACH OF THE HOLDERS AND THE COMPANY HEREBY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE HOLDERS AND
THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING
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BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE HOLDERS AND THE
COMPANY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH PROCEEDING BY THE
DELIVERY (BY OVERNIGHT COURIER) TO IT AT ITS ADDRESS SPECIFIED IN SECTION 10(C)
OF THIS AGREEMENT (OR IN THE CASE OF A HOLDER OTHER THAN THE PURCHASER, TO ITS
ADDRESS AS IT APPEARS IN THE REGISTER MAINTAINED BY THE COMPANY). EACH OF THE
HOLDERS AND THE COMPANY FURTHER AGREES THAT A FINAL JUDGMENT IN ANY SUCH
PROCEEDING SHALL BE CONCLUSIVE AND BINDING AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
(j) WAIVER OF JURY TRIAL. THE COMPANY AND EACH OF THE HOLDERS HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
IN WITNESS WHEREOF, this Debenture Purchase Agreement has been
duly executed by an officer of each of the parties hereto thereunto duly
authorized all on the date first above written.
CHS Electronics, Inc.
By: ________________________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Chief Officer - Mergers and Acquisitions
COMPUTER ASSOCIATES INTERNATIONAL, INC.
By: ________________________________________________
Name:
Title: _________________________________________
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