Exhibit 4.1
PETsMART INC.
SERIES H PREFERRED STOCK PURCHASE AGREEMENT
SEPTEMBER 8, 1991
TABLE OF CONTENTS
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1. Authorization of the Series H Preferred Stock........................ 1
2. Purchase and Sale of the Series H Preferred.......................... 1
3. The Closing.......................................................... 1
4. Conditions of each Purchaser's Obligation at the Closing............. 1
4.1 Representations and Warranties.............................. 1
4.2 Amendment and Restatement of Certificate of Incorporation... 1
4.3 Qualifications; Legal Investment............................ 1
4.4 Opinion of the Company's Counsel............................ 2
4.5 Closing Documents........................................... 2
4.6 Proceedings................................................. 2
5. Conditions of the Company's Obligations at the Closing............... 2
5.1 Representations and Warranties.............................. 2
5.2 Performance of Obligations.................................. 2
5.3 Amendment and Restatement of Certificate of Incorporation... 2
5.4 Waiver of Right of First Refusal............................ 2
5.5 Consent to Grant of Registration Rights..................... 3
5.6 Registration Rights Agreement............................... 3
5.7 Qualifications, Legal Investment............................ 3
6. Covenants of the Company............................................. 3
6.1 Financial Statements and Other Information.................. 3
6.2 Inspection of Property...................................... 5
6.3 Participation in Initial Public Offering.................... 5
6.4 Current Public Information.................................. 5
7. Transfer of Restricted Securities.................................... 5
8. Representations and Warranties of the Company........................ 6
8.1 Organization and Corporate Power............................ 6
8.2 Capital Stock and Related Matters........................... 6
8.3 Subsidiaries................................................ 7
8.4 Authorization; No Breach.................................... 7
8.5 Financial Statements........................................ 8
8.6 Absence of Undisclosed Liabilities.......................... 8
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TABLE OF CONTENTS
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8.7 No Material Adverse Change.................................. 8
8.8 Absence of Certain Developments............................. 8
8.9 Assets...................................................... 9
8.10 Tax Matters................................................. 10
8.11 Contracts and Commitments................................... 10
8.12 Trademarks and Trade Secrets................................ 10
8.13 Litigation, etc............................................. 10
8.14 Brokerage................................................... 10
8.15 Governmental Consent, etc................................... 11
8.16 Insurance................................................... 11
8.17 Employees and ERISA......................................... 11
8.18 Compliance with Laws........................................ 11
8.19 Disclosure.................................................. 11
8.20 Closing Date................................................ 12
9. Covenants of the Purchasers.......................................... 12
9.1 Standstill Agreement........................................ 12
9.2 U.S. Commerce Department Filings............................ 12
9.3 Xxxx-Xxxxx-Xxxxxx Act....................................... 12
10. Series H Demand Registrations........................................ 12
10.1 Requests for Registration................................... 12
10.2 Registrations............................................... 12
10.3 Priority on Series H Demand Registrations................... 13
10.4 Restrictions on Series H Demand Registrations............... 13
10.5 Selection of Underwriters................................... 13
10.6 Other Registration Rights................................... 13
11. Piggyback Registrations.............................................. 13
11.1 Right to Piggyback.......................................... 13
11.2 Piggyback Expenses.......................................... 14
11.3 Priority on Primary Registrations........................... 14
11.4 Priority on Secondary Registrations......................... 14
11.5 Selection of Underwriters................................... 14
11.6 Other Registrations......................................... 14
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TABLE OF CONTENTS
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12. Holdback Agreement................................................... 15
12.1 Holder Standstill........................................... 15
12.2 Company Standstill.......................................... 15
13. Registration Procedures.............................................. 15
14. Registration Expenses................................................ 16
14.1 Company Expenses............................................ 16
14.2 Expenses Reimbursed to Selling Shareholders................. 17
14.3 Expenses Borne by Selling Shareholders...................... 17
15. Indemnification...................................................... 17
15.1 Company's Indemnification................................... 17
15.2 Stockholder's Indemnification............................... 17
15.3 Notice and Defense.......................................... 18
15.4 Full Force and Effect....................................... 18
16. Participation in Underwritten Registrations.......................... 18
17. Definitions.......................................................... 18
18. Miscellaneous........................................................ 20
18.1 Expenses.................................................... 20
18.2 Remedies.................................................... 20
18.3 Purchaser Representations................................... 20
18.4 Consent to Amendments....................................... 21
18.5 Survival of Representations and Warranties.................. 22
18.6 Successors and Assigns...................................... 22
18.7 Severability................................................ 22
18.8 Counterparts................................................ 22
18.9 Descriptive Headings........................................ 22
18.10 Governing Law............................................... 22
18.11 Notices..................................................... 22
Schedule of Exceptions
Schedule of Purchasers
Exhibit A - Restated Certificate of Incorporation
Exhibit B - Opinion Letter of Xxxxxx Godward Xxxxxx Xxxxxxxxx & Xxxxx
Exhibit C - Restated Registration and First Refusal Rights Agreement
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PETsMART, INC.
SERIES H PREFERRED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of September 8th, 1991 between PETsMART Inc.,
a Delaware corporation (the "Company"), and the persons and entities listed on
the Schedule of Purchasers attached hereto (each individually a "Purchaser" and
collectively the "Purchasers"). Except as otherwise indicated, capitalized terms
used herein are defined in paragraph 17 hereof.
The parties hereto agree as follows:
1. Authorization of the Series H Preferred Stock. The Company will
authorize the issuance and sale to the Purchasers of up to 5,000,000 shares of
its Series H Preferred Stock (the "Series H Preferred") having the rights and
preferences set forth in Exhibit A attached hereto. The Series H Preferred is
convertible into shares of the Company's Common Stock, par value $.00001 per
share (the "Common Stock").
2. Purchase and Sale of the Series H Preferred. Subject to the terms
and conditions set forth herein, the Company will sell to each Purchaser and
each Purchaser will purchase from the Company the number of shares of the Series
H Preferred specified opposite such Purchaser's name on the Schedule of
Purchasers, at a price of $3.00 per share.
3. The Closing.
The closing of the purchase and sale of the Series H Preferred (the
"Closing") will take place at the offices of Xxxxxx Godward Xxxxxx Xxxxxxxxx &
Xxxxx, Five Palo Alto Square, Fourth Floor, Palo Alto, California, at 1:30 p.m.
California time on September 19, 1991, or at such other place, date and time as
may be mutually agreeable to the Company and a majority in interest of the
Purchasers. At the Closing, the Company will deliver to each Purchaser
certificates evidencing the number of shares of Series H Preferred to be
purchased by such Purchaser, as set forth on the Schedule of Purchasers,
registered in such Purchaser's or its nominee's name, upon payment of the
purchase price thereof by check payable to the Company in immediately available
funds, or by wire transfer of immediately available funds to the account of the
Company, in the amount set forth opposite such Purchaser's name on the Schedule
of Purchasers.
4. Conditions of each Purchaser's Obligation at the Closing. The
obligation of each Purchaser to purchase and pay for the Series H Preferred at
the Closing is subject to the satisfaction as of the Closing of the following
conditions:
4.1 Representations and Warranties. The representations and
warranties contained in paragraph 8 hereof, as qualified by the Schedule of
Exceptions, will be true as though then made, except to the extent of changes
caused by the transactions expressly contemplated herein.
4.2 Amendment and Restatement of Certificate of Incorporation.
The Company's Restated Certificate of Incorporation (the "Certificate of
Incorporation") will have been amended and
restated to read substantially as set forth in Exhibit A hereto, will be in full
force and effect at the Closing as so amended and restated and will not have
been further amended or modified.
4.3 Qualifications; Legal Investment. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in connection with the
lawful sale and issuance of the Series H Preferred to such Purchaser pursuant to
this Agreement shall have been duly obtained and shall be in effect on and as of
the Closing. At the time of the Closing, the sale and issuance of the Series H
Preferred and the proposed issuance of the underlying Common Stock to such
Purchaser shall be legally permitted by all laws and regulations to which such
sale and issuances are subject.
4.4 Opinion of the Company's Counsel. Such Purchaser will have
received from Xxxxxx Godward Xxxxxx Xxxxxxxxx & Xxxxx, counsel for the Company,
an opinion in the form of Exhibit B attached hereto, which will be dated the
date of the Closing.
4.5 Closing Documents. The Company will have delivered to such
Purchaser all of the following documents:
(i) a Compliance Certificate, signed by an officer of
the Company and dated the date of the Closing, stating that the conditions
specified in paragraph 1 and paragraphs 4.1 through 4.3, inclusive, have been
fully satisfied; and
(ii) copies of (a) the resolutions duly adopted by
the Company's Board of Directors (the "Board") authorizing the execution,
delivery and performance of this Agreement, the filing of the amendment and
restatement of the Certificate of Incorporation referred to in paragraph 4.2,
the issuance and sale of the Series H Preferred, the reservation for issuance
upon conversion of the Series H Preferred of an aggregate of 5,000,000 shares of
Common Stock, and the consummation of all other transactions contemplated by
this Agreement, (b) the resolutions duly adopted by the Company's stockholders
adopting the amendment and restatement of the Certificate of Incorporation
referred to in paragraph 4.2, and (c) copies of the Certificate of Incorporation
and the Company's By-laws, each as in effect at the Closing, all as certified by
the Secretary or Assistant Secretary of the Company.
4.6 Proceedings. All corporate and other proceedings taken or
required to be taken in connection with the transactions contemplated hereby to
be consummated at or prior to the Closing and all documents incident thereto
will be reasonably satisfactory in form and substance to such Purchaser and its
special counsel.
5. Conditions of the Company's Obligations at the Closing. The
Company's obligation to sell and deliver the Series H Preferred to each
Purchaser at the Closing is subject to the satisfaction as of the Closing of the
following conditions:
5.1 Representations and Warranties. The representations and
warranties made by such Purchaser in paragraph 18.3 hereof shall be true and
correct at and as of the Closing as though then made, except to the extent of
changes caused by the transactions expressly contemplated herein.
5.2 Performance of Obligations. Such Purchaser shall have
performed and complied with all agreements and conditions herein required to be
performed or complied with by it on or before the Closing.
5.3 Amendment and Restatement of Certificate of Incorporation.
The Certificate of Incorporation will have been amended and restated to read
substantially as set forth in Exhibit A hereto,
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will be in full force and effect at the Closing as so amended and restated and
will not have been further amended or modified.
5.4 Waiver of Right of First Refusal. The holders of at least
66-2/3% of the Registrable Securities (as defined in that certain Registration
and First Refusal Rights Agreement dated November 30, 1990 among the Company and
certain of its stockholders designated therein (the "Prior Registration
Agreement") will have waived their right of first refusal with respect to the
sale and issuance of up to 5,000,000 shares of Series H Preferred pursuant to
the terms of this Agreement.
5.5 Consent to Grant of Registration Rights. The holders of a
majority of the Registrable Securities, as defined in the Prior Registration
Agreement, will have consented to the granting of certain registration rights to
the Purchasers pursuant to the terms of this Agreement.
5.6 Registration Rights Agreement. The Company and the holders
of at least 66-2/3% of the Registrable Securities (as defined in the Prior
Registration Agreement) will have consented to an amendment and restatement of
the Prior Registration Agreement in substantially the form of Exhibit C hereto
(the "Registration Rights Agreement") and the Registration Rights Agreement will
be in full force and effect as of the Closing.
5.7 Qualifications, Legal Investment. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in connection with the
lawful sale and issuance of the Series H Preferred to such Purchaser pursuant to
this Agreement shall have been duly obtained and shall be in effect on and as of
the Closing. At the time of the Closing, the sale or issuance of the Series H
Preferred and the proposed issuance of the underlying Common Stock to the
Purchaser upon the conversion of the Series H Preferred pursuant to the terms of
the Certificate of Incorporation shall be legally permitted by all laws and
regulations to which such sale and issuances are subject.
6. Covenants of the Company.
6.1 Financial Statements and Other Information.
(i) The Company will deliver to each Purchaser (so
long as such Purchaser holds any Series H Preferred or any Underlying Common
Stock), within 90 days after the end of each fiscal year, consolidating and
consolidated statements of income and changes in financial accounts of the
Company and its Subsidiaries for such fiscal year, consolidating and
consolidated balance sheets of the Company and its Subsidiaries as of the end of
such fiscal year, and comparisons of each such statement and balance sheet to
the annual budget and to the preceding fiscal year, all prepared in accordance
with generally accepted accounting principles, consistently applied, and
accompanied by (A) with respect to the consolidated portions of such statements,
an opinion of an independent accounting firm of recognized national standing
(unqualified as to scope), and (B) a copy of such firm's annual management
letter to the Board.
(ii) So long as a Purchaser holds at least 500,000
shares of either the Series H Preferred (as such number is proportionately
adjusted for stock dividends, stock splits and recapitalization or other
reorganizations) or Underlying Common Stock, the Company will deliver to such
Purchaser:
(a) as soon as available but in any event
within 30 days after the end of each monthly accounting period in each fiscal
year, unaudited consolidating and consolidated statements of income and changes
in consolidated financial accounts of the Company and its Subsidiaries
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for such monthly period and for the period from the beginning of the fiscal year
to the end of such month, and consolidating and consolidated balance sheets of
the Company and its Subsidiaries as of the end of such monthly period, setting
forth in each case comparison to the annual budget and to the corresponding
period in the preceding fiscal year, and all such statements will be prepared in
accordance with generally accepted accounting principles, consistently applied
(except for normal year-end audit adjustments and footnotes);
(b) as soon as available but in any event
within 45 days after the end of each quarterly accounting period in each fiscal
year, unaudited consolidating and consolidated statements of income and changes
in consolidated financial accounts of the Company and its Subsidiaries for such
quarterly period and for the period from the beginning of the fiscal year to the
end of such quarter, and consolidating and consolidated balance sheets of the
Company and its Subsidiaries as of the end of such quarterly period, setting
forth in each case comparisons to the annual budget and to the corresponding
period in the preceding fiscal year, and all such statements will be prepared in
accordance with generally accepted accounting principles, consistently applied
(except for normal year-end audit adjustments and footnotes);
(c) at least 30 days prior to the end of
each fiscal year, an annual budget prepared on a monthly basis for the Company
and its Subsidiaries for the succeeding fiscal year (displaying anticipated
statements of income, changes in financial position and balance sheets), and
promptly upon preparation thereof any other significant budgets which the
Company prepares and any revisions of such annual or other budgets upon approval
by the Company's board of directors;
(d) within ten days after transmission
thereof, copies of all financial statements, proxy statements, reports and any
other general written communications which the Company sends to its stockholders
and copies of all registration statements and all regular, special or periodic
reports which it files, or any of its officers or directors file with respect to
the Company, with the Securities and Exchange Commission or with any securities
exchange on which any of its securities are then listed, and copies of all press
releases and other statements made available generally by the Company to the
public concerning material developments in the Company's business.
(iii) Each of the financial statements referred to in
paragraphs (i) and (ii) will present fairly the financial condition of the
Company as of the dates and for the periods stated therein, subject in the case
of the unaudited financial statements to changes resulting from normal year-end
audit adjustments.
(iv) Notwithstanding the foregoing, the provisions of
this paragraph 6.1 will cease to be effective so long as the Company (a) is
subject to the periodic reporting requirements of the Securities Exchange Act
and continues to comply with such requirements and (b) promptly provides to a
Purchaser (so long as such Purchaser holds any Series H Preferred or any
Underlying Common Stock) all reports and other materials filed by the Company
with the Securities and Exchange Commission pursuant to the periodic reporting
requirements of the Securities Exchange Act.
(v) Except as otherwise required by law or judicial
order or decree or by any governmental agency or authority, each Purchaser
agrees that it will not disclose the nonpublic information obtained by it
hereunder without the prior consent of the Company, except that a Purchaser may
disclose such information to its own counsel or accountants for the purpose of
receiving professional advice, or in connection with the sale or transfer of any
Series H Preferred or Underlying Common Stock to a proposed transferee who is
not a competitor of the Company (as determined by the Company) if such proposed
transferee agrees in writing to be bound by the provisions hereof.
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(vi) The rights granted pursuant to this paragraph
6.1 and paragraph 6.2 below may not be assigned or otherwise conveyed by any
Purchaser or by a subsequent transferee without the written consent of the
Company, unless the proposed transferee meets the minimum Series H Preferred or
Underlying Common Stock holdings specified in the respective paragraph or
subparagraph granting such rights and is not a competitor or potential
competitor of the Company (as determined by the Company).
6.2 Inspection of Property. The Company will permit any
representatives designated by a Purchaser who are reasonably acceptable to the
Company, so long as such Purchaser holds at least 500,000 shares of the
outstanding Series H Preferred (as such number of shares is proportionately
adjusted for stock dividends, stock splits and recapitalization or other
reorganization) or Underlying Common Stock, upon reasonable notice and during
normal business hours, to (i) visit and inspect any of the properties of the
Company and its Subsidiaries, (ii) examine the corporate and financial records
of the Company and its Subsidiaries and (iii) discuss the affairs, finances and
accounts of any such corporations with the directors, officers, key employees
and independent accountants of the Company and its Subsidiaries.
6.3 Participation in Initial Public Offering. The Company will
work with its underwriters to allow the Purchasers and any Affiliates of the
Purchasers then holding Series H Preferred or Underlying Common Stock to
purchase shares of the Company's Common Stock in the initial underwritten public
offering of the Company's securities pursuant to a registration statement filed
with the Securities and Exchange Commission under the Securities Act ("IPO") to
the extent necessary to allow the Purchasers and any Affiliates of the
Purchasers to maintain in the aggregate the same percentage ownership interest
in the Company as they owned in the aggregate immediately prior to the IPO.
6.4 Current Public Information. At all times after the Company
has filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements of either the Securities Act or the Securities
Exchange Act, the Company will file all reports required to be filed by it under
the Securities Act and the Securities Exchange Act and the rules and regulations
adopted by the Securities and Exchange Commission thereunder, and will take such
further action as any holder or holders of Registrable Series H Securities may
reasonably request, all to the extent required to enable such holders to sell
Registrable Series H Securities pursuant to (i) Rule 144 adopted by the
Securities and Exchange Commission under the Securities Act (as such rule may be
amended from time to time), or any similar rule or regulation hereafter adopted
by the Securities and Exchange Commission or (ii) Form X-0, Xxxx X-0 or similar
registration form hereafter adopted by the Securities Exchange Commission. Upon
written request, the Company will deliver to such holders a written statement as
to whether it has complied with such requirements.
7. Transfer of Restricted Securities.
(i) Restricted Securities are transferable pursuant
to (a) public offerings registered under the Securities Act, (b) Rule 144 of the
Securities and Exchange Commission (or any similar rule then in force) if such
rule is available, (c) nonpublic sales to Persons who are "accredited investors"
as defined in Regulation D under the Securities Act, provided that such
regulation is effective at such time and the proposed transferee agrees in
writing to be bound by the provisions of this paragraph and paragraph 18.3(i)
and (d) subject to the conditions specified in subparagraph (ii) below, any
other legally available means of transfer.
(ii) In connection with the transfer of any
Restricted Securities (other than a transfer described in subparagraph 7(i)(a)
or (b) above), the holder thereof will deliver written notice to
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the Company describing in reasonable detail the transfer or proposed transfer
and, except in connection with a transfer to Carrefour, an opinion (reasonably
satisfactory to the Company's counsel) of counsel which (to the Company's
reasonable satisfaction) is knowledgeable in securities law matters, to the
effect that such transfer of Restricted Securities may be effected without
registration of such Restricted Securities under the Securities Act. In
addition, if the holder of the Restricted Securities delivers to the Company an
opinion (reasonably satisfactory to the Company's counsel) of such counsel that
no subsequent transfer of such Restricted Securities will require registration
under the Securities Act, the Company will promptly upon such contemplated
transfer deliver new certificates for such Restricted Securities which do not
bear the Securities Act legend set forth in subparagraph (iii) below. If the
Company is not required to deliver new certificates for such Restricted
Securities not bearing such legend, the holder thereof will not transfer the
same until the prospective transferee has confirmed to the Company in writing
its agreement to be bound by the conditions contained in this paragraph and
paragraph 18.3(i).
(iii) Each certificate for Restricted Securities will
be imprinted with a legend in substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") and
are "Restricted Securities" as defined in Rule 144 promulgated
under the Act. The securities may not be sold or offered for
sale or otherwise distributed except (i) in conjunction with
an effective registration statement for the shares under the
Act, (ii) in compliance with Rule 144, or (iii) pursuant to an
opinion of counsel satisfactory to the corporation that such
registration or compliance is not required as to said sale,
offer or distribution."
(iv) In connection with this paragraph 7, the Company
agrees that it will cooperate with the Purchasers to effect any desired
transfers of Purchasers' Restricted Securities to Carrefour so long as it has
reasonable assurances under this paragraph that such transfers are in compliance
with applicable securities laws.
8. Representations and Warranties of the Company. As a material
inducement to the Purchasers to enter into this Agreement and purchase the
Series H Preferred, the Company hereby represents and warrants that, except as
disclosed in the Schedule of Exceptions attached hereto:
8.1 Organization and Corporate Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and is qualified to do business in every jurisdiction
in which the failure to so qualify might reasonably be expected to have a
material adverse effect on the financial condition, operating results or
business prospects of the Company. The Company has all requisite corporate power
and authority and all material licenses, permits and authorizations necessary to
own and operate its properties, to carry on its businesses as now conducted and
presently proposed to be conducted and to carry out the transactions
contemplated by this Agreement. The copies of the Company's charter documents
and By-laws which have been furnished to the Purchasers' counsel reflect all
amendments made thereto at any time prior to the date of this Agreement and are
correct and complete.
8.2 Capital Stock and Related Matters.
(i) Immediately prior to the Closing, the authorized
capital stock of the Company will consist of (a) 38,183,850 shares of Preferred
Stock, of which 2,630,000 shares will be
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designated as Series A Preferred Stock (all of which will be issued and
outstanding), 4,600,000 shares will be designated as Series B Preferred Stock
(all of which will be issued and outstanding), 241,000 shares will be designated
as Series C Preferred Stock (all of which will be issued and outstanding),
10,475,420 shares will be designated as Series D Preferred Stock (10,200,420 of
which will be issued and outstanding), 3,558,096 shares will be designated as
Series E Preferred Stock (all of which will be issued and outstanding),
6,679,334 shares will be designated as Series F Preferred Stock (all of which
will be issued and outstanding), 5,000,000 shares will be designated as Series G
Preferred (4,969,844 of which will be issued and outstanding) and 5,000,000
shares of Series H Preferred Stock (none of which will be issued and
outstanding); and (b) 70,000,000 shares of Common Stock, of which 6,534,623
shares will be issued and outstanding, 2,630,000 shares will be reserved for
issuance upon conversion of the Series A Preferred Stock, 5,366,309 shares will
be reserved for issuance upon conversion of the outstanding Series B Preferred
Stock, 10,475,420 shares will be reserved for issuance upon conversion of the
outstanding or reserved Series D Preferred Stock, 3,558,096 shares will be
reserved for issuance upon conversion of the outstanding Series E Preferred
Stock, 6,679,334 shares will be reserved for issuance upon conversion of the
outstanding Series F Preferred Stock, 4,959,844 shares will be reserved for
issuance upon conversion of the outstanding Series G Preferred, 5,000,000 shares
will be reserved for issuance upon conversion of the outstanding Series H
Preferred and 5,504,624 shares will be reserved for future issuance to
employees, directors or consultants pursuant to Executive Stock Agreements. As
of the Closing, the Company will not have outstanding any stock or securities
convertible or exchangeable for any shares of its capital stock, or any rights
or options to subscribe for or to purchase its capital stock or any stock or
securities convertible into or exchangeable for its capital stock, except for
the Series A Preferred Stock, Series B Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock, Series F Preferred Stock, Series G Preferred
Stock and Series H Preferred Stock, a warrant to purchase 275,000 shares of
Series D Preferred Stock, and options to purchase an aggregate of approximately
4,077,809 shares of Common Stock held by employees and directors of, or
consultants to, the Company. As of the Closing, the Company will not be subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of its capital stock, except pursuant to the Certificate of
Incorporation and the Executive Stock Agreements. As of the Closing, all of the
outstanding shares of the Company's capital stock will be validly issued, fully
paid and nonassessable.
(ii) There are no statutory or contractual
stockholders preemptive rights with respect to the issuance of the Series H
Preferred hereunder or the issuance of the Common Stock upon conversion of the
Series H Preferred, except the rights of Xxxxx, Xxxxxxxxx and the holders of at
least 150,000 shares of the Series A Preferred Stock, Series B Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock or
Series G Preferred Stock, which rights will have been effectively waived prior
to the Closing. The Company has not violated any applicable federal or state
securities laws in connection with the offer, sale or issuance of any of its
capital stock, and the offer, sale and issuance of the Series H Preferred
hereunder does not require registration under the Securities Act or any
applicable state securities laws. To the best of the Company's knowledge, except
for a certain voting agreement by and among Oak Investment Partners, Catalina
Venture Partners, the Company, and certain entities managed by Chancellor
Capital Management, Inc. dated as of April 14, 1989, there are no agreements
between the Company's stockholders with respect to the voting or transfer of the
Company's capital stock.
8.3 Subsidiaries. Except for Pacific Coast Distributing, Inc.,
a wholly-owned subsidiary of the Company incorporated in Delaware, the Company
does not own or hold any rights to acquire any shares of stock or any other
security or interest in any other Person.
8.4 Authorization; No Breach. The execution, delivery and
performance of this Agreement has been duly authorized by the Company. This
Agreement constitutes a valid and binding obligation of the Company, enforceable
in accordance with its terms, except as enforceability thereof may
10
be limited by (i) bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights generally, and (ii) the availability
and remedies under general equitable principles. The execution and delivery by
the Company of this Agreement, the offering, sale and issuance of the Series H
Preferred hereunder, the issuance of the Common Stock upon conversion of the
Series H Preferred and the fulfillment of and compliance with the respective
terms hereof by the Company, do not and will not (i) conflict with or result in
a breach of the terms, conditions or provisions of, (ii) constitute a default
under, (iii) result in the creation of any material lien, security interest,
charge or encumbrance upon the Company's capital stock or assets pursuant to,
(iv) give any third party the right to accelerate any obligation under, (v)
result in a violation of, or (vi) require any authorization, consent, approval,
exemption or other action by or notice to any court or administrative or
governmental body pursuant to, the Certificate of Incorporation or By-laws of
the Company, or any law, statute, rule or regulation to which the Company is
subject, or any agreement, instrument, order, judgment or decree to which the
Company is subject.
8.5 Financial Statements. The following financial statements
will have been delivered to the Purchasers prior to the Closings:
(i) the audited balance sheet of the Company as of
February 3, 1991 and the related statements of Operations, Shareholders' Equity
and Cash Flows for the fifty-three week period then ended; and
(ii) the unaudited balance sheet of the Company as of
August 4, 1991 (the "Latest Balance Sheet") and the related statements of Income
and Cash Flows for the twenty-six week period then ended.
Each of the foregoing financial statements (including in all cases the
notes thereto, if any) presents fairly the financial condition of the Company at
the date and for the period therein specified, is consistent with the books and
records of the Company (which, in turn, are accurate and complete in all
material respects) and has been prepared in accordance with generally accepted
accounting principles, consistently applied, subject in the case of the
unaudited financial statements to footnotes and to changes resulting from normal
year-end audit adjustments.
8.6 Absence of Undisclosed Liabilities. The Company does not
have any material obligation or liability (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due) arising out
of transactions entered into at or prior to the Closing, or any action or
inaction at or prior to the Closing, or any state of facts existing at or prior
to the Closing, other than: (i) liabilities set forth on the Latest Balance
Sheet, (ii) liabilities and obligations which have arisen after the date of the
Latest Balance Sheet in the ordinary course of business (none of which is a
liability resulting from breach of contract, breach of warranty, tort,
infringement, claim or lawsuit) and (iii) other liabilities and obligations
expressly disclosed in the Schedule of Exceptions to this Agreement.
8.7 No Material Adverse Change. Since the date of the Latest
Balance Sheet, there has been no material adverse change in the Company's
financial condition, operating results, business prospects, employee relations,
customer relations or otherwise.
8.8 Absence of Certain Developments.
(i) Since the date of the Latest Balance Sheet, the
Company has not:
11
(a) issued any notes, bonds or other debt
securities or any equity securities, except shares of its Common Stock issued in
connection with stock option exercises by its employees, directors or
consultants;
(b) borrowed any amount or incurred or
become subject to any liabilities, except under credit arrangements in place at
the time of the Latest Balance Sheet and except for current liabilities incurred
in the ordinary course of business and liabilities under contracts entered into
in the ordinary course of business;
(c) discharged or satisfied any lien or
encumbrance or paid any obligation or liability, other than current liabilities
paid in the ordinary course of business;
(d) declared or made any payment or
distribution of cash or other property to its stockholders with respect to its
stock or purchased or redeemed any shares of its capital stock, except for
repurchases of Common Stock from employees in connection with the termination of
their employment;
(e) except in the ordinary course of
business, mortgaged or pledged any of its properties or assets or subjected them
to any lien, security interest, charge or other encumbrance, except liens for
current property taxes not yet due and payable;
(f) sold, assigned or transferred any
patents, trademarks, service marks, trade names, copyrights, trade secrets or
other intangible assets, or disclosed any proprietary confidential information
to any Person other than an employee or director of the Company absent an
express obligation of nondisclosure;
(g) suffered any extraordinary losses or
waived any rights of material value;
(h) made any capital expenditure or
commitment therefor in excess of $500,000, except for expenditures in connection
with the opening of new stores approved by the Board;
(i) entered into any other transaction other
than in the ordinary course of business or entered into any other material
transaction, whether or not in the ordinary course of business;
(j) made any loans or advances to,
guarantees for the benefit of, or any Investments in, any Persons in excess of
$100,000;
(k) made any charitable contributions or
pledges, except for contributions made in the ordinary course of business for
the purpose of promoting the Company; or
(l) suffered any damage, destruction or
casualty loss exceeding in the aggregate $100,000, whether or not covered by
insurance;
(ii) The Company has not at any time made any
payments for political contributions or made any bribes, kickback payments or
other illegal payments.
8.9 Assets. The Company has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by it, located on
its premises or shown on the Latest Balance
12
Sheet or acquired thereafter, free and clear of all liens, security interests,
charges and encumbrances, except as disclosed on the Latest Balance Sheet, liens
for current property taxes not yet due and payable and non-material liens
incidental to the conduct of the Company's business which were not incurred in
connection with the borrowing of money and which do not in the aggregate detract
from the value of the property or materially impair the use thereof in the
operation of its business. The Company's buildings, equipment and other tangible
assets are in good operating condition in all material respects and are fit for
use in the ordinary course of business. The Company owns, or has a valid
leasehold interest in, all assets necessary for the conduct of its business as
presently conducted and as presently proposed to be conducted.
8.10 Tax Matters. The Company has filed all tax returns which
it is required to file; all such returns are true and correct in all material
respects; the Company has in all material respects paid or withheld all taxes
which it is obligated to pay or withhold from amounts owing to any employee,
creditor or third party; the Company has not waived any statute of limitations
with respect to taxes or agreed to any extension of time with respect to a tax
assessment or deficiency; the assessment of any additional taxes for periods for
which returns have been filed is not expected to exceed the recorded liability
therefor; and there are no material unresolved questions or claims concerning
the Company's tax liability. The Company has not made an election under Section
341(f) of the Internal Revenue Code of 1986, as amended.
8.11 Contracts and Commitments. The Company has performed all
material obligations required to be performed by it and is not in default under
or in breach of or in receipt of any claim of default or breach under any
material agreement or instrument to which the Company is subject; no event has
occurred which with the passage of time or the giving of notice or both would
result in a material default, breach or event of noncompliance under any
material agreement or instrument to which the Company is subject. The Company
has no present expectation or intention of not fully performing all such
obligations. The Company has no knowledge of any material breach or anticipated
breach by the other parties to any material contract or commitment to which it
is a party, and the Company is not a party to any materially adverse contract or
commitment.
8.12 Trademarks and Trade Secrets. The Company owns or has
sufficient rights to all the copyrights, trademarks, trade names and service
marks necessary for the operation of its business as now conducted and as
proposed to be conducted. There are no pending or threatened claims against the
Company alleging that the conduct of the Company's business infringes or
conflicts with the rights of others under trade names, service marks,
trademarks, copyrights and trade secrets. To the best of the Company's
knowledge, the Company's business as now conducted and as proposed to be
conducted will not infringe or conflict with the rights of others, including
rights under trade names, service marks, trademarks, copyrights and trade
secrets. The Company has not disclosed any of its trade secrets to any person
except pursuant to a license or other agreement obligating the recipient to
maintain the confidentiality thereof. To the best of the Company's knowledge, no
party is infringing on any copyright, trademark, service xxxx or trade name or
is undertaking to misappropriate any confidential information or trade secret of
the Company.
8.13 Litigation, etc. There are no actions, suits,
proceedings, orders, investigations or claims pending or, to the best of the
Company's knowledge, threatened against or affecting the Company at law or in
equity, or before or by any governmental department, commission, board, bureau,
agency or instrumentality the outcome of which would materially adversely affect
the Company. The Company is not subject to any arbitration proceedings under
collective bargaining agreements or otherwise or to the best of the Company's
knowledge, any governmental investigations or inquiries and, to the best of the
Company's knowledge, there is no basis for any of the foregoing. The Company has
not received any
13
opinion or memorandum or legal advice from legal counsel to the effect that it
is exposed, from a legal standpoint, to any liability or disadvantage which may
be material to its business.
8.14 Brokerage. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement binding
upon the Company except for amounts owed to Xxxxxxxxx Lufkin & Xxxxxxxx
Securities Corporation, the cost of which will be borne by the Company. The
Company will pay, and hold the Purchasers harmless against, any liability, loss
or expense (including, without limitation, reasonable attorneys' fees and
out-of-pocket expenses) arising in connection with any such claim.
8.15 Governmental Consent, etc. No permit, consent, approval
or authorization of, or declaration to or filing with, any governmental
authority is required in connection with the execution, delivery and performance
by the Company of this Agreement or the other agreements contemplated hereby, or
the consummation by the Company of any other transactions contemplated hereby or
thereby, except as expressly contemplated herein or in the exhibits hereto.
8.16 Insurance. The Company maintains adequate insurance
coverage with respect to each of its properties, assets and businesses, and all
of the Company's insurance policies are in full force and effect as of the
Closing. The Company is not in default with respect to its obligations under any
insurance policy maintained by it. The insurance coverage of the Company is
customary for corporations of similar size engaged in similar lines of business.
8.17 Employees and ERISA.
(i) The Company is not aware that any executive or
key employee of the Company or any group of employees of the Company has any
plans to terminate employment with the Company. The Company has complied in all
material respects with all laws relating to the employment of labor, including
provisions thereof relating to wages, hours, equal opportunity, collective
bargaining and the payment of social security and other taxes, and the Company
is not aware that it has any material labor relations problems.
(ii) Neither the Company, nor, to the best of the
Company's knowledge, any of its employees is subject to any non-compete,
nondisclosure, confidentiality, employment, consulting or similar agreements
relating to the present or proposed business activities of the Company, except
for agreements between the Company and its present and former employees and for
confidentiality agreements which the Company requires prospective business
partners to enter into as a condition of any exchange of proprietary
information.
(iii) The Company does not presently maintain or
contribute to, and has never maintained or contributed to, any "employee benefit
plan," as such term is defined in Section 3 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the Company presently does not
contribute to or ever has contributed to any "multi-employer plan," as such term
is defined in Section 3 of ERISA.
8.18 Compliance with Laws. The Company is not in violation of
any law or any regulation or requirement which violation might reasonably be
expected to have a material adverse effect upon the financial condition,
operating results or business prospects of the Company, and the Company has not
received notice of any such violation.
8.19 Disclosure. The Company has previously delivered to the
Purchasers or their representative its Confidential Private Placement
Memorandum, dated July 1991 (the "Private Placement
14
Memorandum"). Neither the Private Placement Memorandum nor any representation or
warranty by the Company contained in this Agreement, nor any other written
statement or certificate furnished or to be furnished to the Purchasers pursuant
hereto or in connection with the transactions contemplated hereby by the Company
(when read together) contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained therein or herein not misleading in light of the
circumstances under which they were made, provided that while the projections in
the Private Placement Memorandum were made by management in good faith based on
factual assumptions believed to be true, no representations or warranties are
made with respect to the accuracy or reliability of such projections.
8.20 Closing Date. The representations and warranties of the
Company contained in this paragraph 8 and elsewhere in this Agreement and all
information contained in any exhibit, schedule or attachment hereto will be true
and correct in all material respects on the date of the Closing as though then
made, except as expressly contemplated by this Agreement.
9. Covenants of the Purchasers.
9.1 Standstill Agreement. Each Purchaser hereby covenants and
agrees that it will not, nor will it permit any of its Affiliates to, purchase
or otherwise acquire, directly or indirectly, any additional equity securities
of the Company (or rights or options to purchase such securities) after the
Closing under this Agreement which will result in the Purchasers and its
Affiliates owning in the aggregate, directly or indirectly, more than 20% of the
Company's outstanding voting securities (treating all convertible securities on
an as-converted basis), without the prior approval of the Board. The Purchasers'
obligations under this paragraph 9.1 shall terminate the earliest of seven (7)
years from the date of this Agreement or five (5) years following the closing of
the first underwritten public offering of the Company's securities under the
Securities Act.
9.2 U.S. Commerce Department Filings. Each Purchaser agrees
that it will provide the Company with such information about itself and its
Affiliates as is necessary to allow the Company to complete and file, in a
timely manner after the Closing, a Form BE-13 and Form BE-607 with the Bureau of
Economic Analysis of the U.S. Department of Commerce.
9.3 Xxxx-Xxxxx-Xxxxxx Act. Each Purchaser agrees that it will
notify the Company of any proposed transfer of shares of the Company's
securities by it to its Affiliates or to another Purchaser or another
Purchaser's Affiliates or blood relatives, and will comply with the requirements
of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 and the rules
promulgated thereunder (the "Xxxx-Xxxxx-Xxxxxx Act") in connection with any such
transfer, including making a filing with the U.S. Federal Trade Commission prior
to the consummation of any such transfer if required by the Xxxx-Xxxxx-Xxxxxx
Act. Each Purchaser further agrees not to enter into any voting agreement or
voting trust with any other Purchaser or another Purchaser's Affiliate or blood
relative with respect to the Company's securities or any other agreement to vote
or have its shares of Company's securities voted together with any shares held
by any other Purchaser or another Purchaser's Affiliate or blood relative
without first notifying the Company and complying with the requirements of the
Xxxx-Xxxxx-Xxxxxx Act.
10. Series H Demand Registrations.
10.1 Requests for Registration. At any time after March 31,
1994, or such earlier time as the Company has effected the initial underwritten
public offering of its securities under the Securities Act, the holders of a
majority of the Registrable Series H Securities may request registration under
the Securities Act of all or part of their Registrable Series H Securities on
Form X-0, X-0 or any similar long-form registration ("Series H Demand
Registrations"). Within ten days after receipt of any
15
such request, the Company will give written notice of such request to all other
holders of Registrable Series H Securities and will include in such registration
all Registrable Series H Securities with respect to which the Company has
received written requests for inclusion therein within 15 days after the date of
the Company's notice.
10.2 Registrations. The holders of Registrable Series H
Securities will be entitled to request three Series H Demand Registrations in
which the Company will pay all Registration Expenses as set forth in Section 14
hereof; provided that either (a) registration is requested for at least 30% of
the Registrable Series H Securities, or (b) the aggregate offering value of the
Registrable Series H Securities requested to be registered in any Registration
equals at least $10,000,000. A registration will not count as one of the
permitted Series H Demand Registrations until it has become effective and unless
the holders of Registrable Series H Securities are able to register and sell at
least 50% of the Registrable Series H Securities requested to be included in
such registration; provided that in any event the Company will pay all
Registration Expenses in connection with any Series H Demand Registration. All
Series H Demand Registrations shall be underwritten offerings.
10.3 Priority on Series H Demand Registrations. The Company
will not include in any Series H Demand Registration any securities which are
not Registrable Series H Securities or Registrable Securities without the
written consent of the holders of a majority of the Registrable Series H
Securities requesting such registration. If other securities are permitted to be
included in a Series H Demand Registration which is an underwritten offering and
the managing underwriters advise the Company in writing that in their opinion
the number of Registrable Series H Securities and other securities requested to
be included exceeds the number of Registrable Series H Securities and other
securities which can be sold in such offering, the Company will include in such
registration (i) first, the Registrable Series H Securities requested to be
included in such registration, provided that at least 25% of the shares to be
included in such registration shall be Registrable Securities, (ii) second, any
Registrable Securities, pro rata among the holders thereof on the basis of the
number of such shares requested to be included by such holder and (iii) other
securities requested to be included in such registration.
10.4 Restrictions on Series H Demand Registrations. The
Company will not be obligated to effect any Series H Demand Registration within
six months after the effective date of a registration of Common Stock filed by
the Company under the Securities Act, or such a registration which the Company
intends to file within 30 days after its receipt of the request to effect the
Series H Demand Registration and the Company so notifies the holders of
Registrable Series H Securities of its intent within such 30-day period,
provided that the Company has not previously delayed any Series H Demand
Registration by such a notice. In addition, no more than once during any fiscal
year, the Company may postpone for up to 90 days the filing or the effectiveness
of a registration statement for a Series H Demand Registration provided that in
such event, the holders of Registrable Series H Securities requesting such
Series H Demand Registration will be entitled to withdraw such request and, if
such request is withdrawn, such Series H Demand Registration will not count as a
Series H Demand Registration. Furthermore, if the holders of Registrable
Securities request the Company to register any Registrable Securities prior to a
request from the holders of Registrable Series H Securities for a Series H
Demand Registration and the Company is effecting or has elected to postpone the
registration of such Registrable Securities, the Company shall not be obligated
to effect such Series H Demand Registration.
10.5 Selection of Underwriters. The Company will have the
right to select the investment banker(s) and manager(s) to administer the
offering, subject to the approval of the holders of a majority of the
Registrable Series H Securities included in any Series H Demand Registration,
which will not unreasonably be withheld.
16
10.6 Other Registration Rights. Except as provided in this
Agreement and the Registration Rights Agreement, the Company will not grant to
any Persons the right to request the Company to register any equity securities
of the Company, or any securities convertible or exchangeable into or
exercisable for such securities, if such right are senior to or on a parity with
the rights granted hereunder, without the written consent of the holders of a
majority of the Registrable Series H Securities.
11. Piggyback Registrations.
11.1 Right to Piggyback. After the Company has effected the
initial underwritten public offering of its securities under the Securities Act,
whenever the Company subsequently proposes to register any of its securities
under the Securities Act (other than pursuant to a Series H Demand Registration)
and the registration form to be used may be used for the registration of
Registrable Series H Securities (a "Series H Piggyback Registration"), the
Company will give prompt written notice (in any event within five business days
after its receipt of notice of any exercise of other demand registration rights)
to all holders of Registrable Series H Securities of its intention to effect
such a registration and will include in such registration all Registrable Series
H Securities with respect to which the Company has received written requests for
inclusion therein within 15 days after the receipt of the Company's notice. The
holders of Registrable Series H Securities shall not have any piggyback rights
under this Section 11 with respect to the initial underwritten public offering
of the Company's Securities.
11.2 Piggyback Expenses. The Registration Expenses of the
holders of Registrable Series H Securities will be paid by the Company in all
Series H Piggyback Registrations.
11.3 Priority on Primary Registrations. If a Series H
Piggyback Registration is an underwritten primary registration on behalf of the
Company, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering, the Company
will include in such registration (i) first, the securities the Company proposes
to sell, provided that at least 25% of the shares to be included in such
registration shall be Registrable Series H Securities and Registrable Securities
with Priority Securities included before any other Registrable Series H
Securities or Registrable Securities, in each case pro rata among the holders of
such securities on the basis of the number of such shares requested to be
included by such holders, (ii) second, the Registrable Series H Securities and
Registrable Securities requested to be included in such registration and not
included under (i) above with Priority Securities included before any other
Registrable Series H Securities or Registrable Securities, in each case pro rata
among the holders of such Registrable Series H Securities and Registrable
Securities on the basis of the number of such shares requested to be included by
such holders, (iii) third, other securities requested to be included in such
registration.
11.4 Priority on Secondary Registrations. If a Series H
Piggyback Registration is an underwritten secondary registration on behalf of
holders of the Company's securities, and the managing underwriters advise the
Company in writing that in their opinion the number of securities requested to
be included in such registration exceeds the number which can be sold in such
offering, the Company will include in such registration (i) first, the
securities requested to be included therein by the holders requesting such
registration, provided that at least 25% of the shares to be included in such
registration shall be Registrable Series H Securities and, in the case where
such registration is not a Demand Registration, Registrable Securities with
Priority Securities included before any other Registrable Series H Securities or
Registrable Securities, in each case pro rata among the holders of such
securities on the basis of the number of such shares requested to be included by
such holders, (ii) second, the Registrable Series H Securities and, in the case
where such registration is not a Demand Registration, Registrable Securities
requested to be included in such registration and not included under (i) above
with Priority Securities included before any other Registrable Series H
Securities or Registrable Securities, in each case
17
pro rata among the holders of securities on the basis of the number of such
shares requested to be included by such holders, (iii) third, other securities
requested to be included in such registration.
11.5 Selection of Underwriters. If any Series H Piggyback
Registration is an underwritten offering, the investment banker(s) and
manager(s) selected for the offering must be nationally recognized firm(s).
11.6 Other Registrations. If the Company has previously filed
a registration statement with respect to Registrable Series H Securities
pursuant to paragraph 10 or pursuant to this paragraph 11, or a Demand
Registration or a Piggyback Registration, and if such previous registration has
not been withdrawn or abandoned, the Company will not file or cause to be
effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (except on Form S-8 or any successor form), whether on its
own behalf or at the request of any holder or holders of such securities, until
a period of at least six months has elapsed from the effective date of such
previous registration.
12. Holdback Agreement.
12.1 Holder Standstill. Each holder of Registrable Series H
Securities agrees not to effect any public sale or distribution of equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and the 180-day
period beginning on the effective date of any registration by the Company of
Common Stock (except as part of such registration and except registrations on
Form S-8 or any successor form), unless the underwriters managing the registered
public offering otherwise agree.
12.2 Company Standstill. The Company agrees (i) not to effect
any public sale or distribution of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, during the
seven days prior to and during the 90-day period beginning on the effective date
of any underwritten Series H Demand Registration or any underwritten Series H
Piggyback Registration (except as part of such underwritten registration or
pursuant to registrations on Form S-8 or any successor form or in connection
solely with the exercise of outstanding stock options held by employees or
consultants of the Company), unless the underwriters managing the registered
public offering otherwise agree, and (ii) to cause each officer, director and
holder of at least 1% of its equity securities (on a fully diluted basis), or
any securities convertible into or exchangeable or exercisable for such
securities, purchased from the Company at any time (other than in a registered
public offering) to agree not to effect any public sale or distribution of any
such securities during such period (except as part of such underwritten
registration, if otherwise permitted), unless the underwriters managing the
registered public offering otherwise agree.
13. Registration Procedures. Whenever the holders of Registrable Series
H Securities have requested that any Registrable Series H Securities be
registered pursuant to this Agreement, the Company will use its best efforts to
effect the registration and the sale of such Registrable Series H Securities in
accordance with the intended method of disposition thereof (including the
registration of the Company's Series H Preferred Stock held by a holder of
Registrable Series H Securities requesting registration as to which the Company
has received reasonable assurances that only Registrable Series H Securities
will be distributed to the public), and pursuant thereto the Company will as
expeditiously as possible:
(i) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable Series H
Securities and use its best efforts to cause such registration statement to
become effective (provided that before filing a registration statement or
prospectus or any amendments or supplements thereto, the Company will furnish to
the counsel selected
18
by the holders of a majority of the Registrable Series H Securities covered by
such registration statement copies of all such documents proposed to be filed,
which documents will be subject to the review of such counsel);
(ii) prepare and file with the Securities and
Exchange Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to
keep such registration statement effective for a period of not less than six
months or, if earlier, the completion of the distribution of the registered
securities, and comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement during
such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement;
(iii) furnish to each seller of Registrable Series H
Securities such number of copies of such registration statement, each amendment
and supplement thereto, the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as such seller
may reasonably request in order to facilitate the disposition of the Registrable
Series H Securities owned by such seller;
(iv) use its best efforts to register or qualify such
Registrable Series H Securities under such other securities or blue sky laws of
such jurisdictions as any seller reasonably requests and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the Registrable
Series H Securities owned by such seller (provided that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise qualify but for this subparagraph, (ii) subject itself to
taxation in any such jurisdiction or (iii) consent to general service of process
in any such jurisdiction);
(v) notify each seller of such Registrable Series H
Securities, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the statements
therein not misleading, and, at the request of any such seller, the Company will
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Series H Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
(vi) cause all such Registrable Series H Securities
to be listed on each securities exchange, if any, on which similar securities
issued by the Company are then listed;
(vii) provide a transfer agent and registrar for all
such Registrable Series H Securities not later than the effective date of such
registration statement;
(viii) enter into such customary agreements
(including underwriting agreements in customary form) and take all such other
actions as the holders of a majority of the Registrable Series H Securities
being sold or the underwriters, if any, reasonably request in order to expedite
or facilitate the disposition of such Registrable Series H Securities
(including, without limitation, effecting a stock split or a combination of
shares); and
(ix) make available for inspection by any seller of
Registrable Series H Securities, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such seller or underwriter, all
financial and other
19
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors, employees and independent accountants to
supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration statement.
14. Registration Expenses.
14.1 Company Expenses. All expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation,
all registration and filing fees, of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for the Company and all independent certified public
accountants, underwriters (excluding discounts and commissions) and other
Persons retained by the Company (all such expenses being herein called
"Registration Expenses"), will be borne as provided in this Agreement, except
that the Company will, in any event, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit or
quarterly review, the expense of any liability insurance and the expenses and
fees for listing the securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed.
14.2 Expenses Reimbursed to Selling Shareholders. In
connection with the three Series H Demand Registrations and each Series H
Piggyback Registration, the Company will reimburse the holders of Registrable
Series H Securities covered by such registration for the reasonable fees (not to
exceed $25,000 in the case of any such Series H Demand Registration or $7,500 in
the case of any such Series H Piggyback Registration) and disbursements of one
counsel chosen by the holders of a majority of such Registrable Series H
Securities.
14.3 Expenses Borne by Selling Shareholders. To the extent
Registration Expenses are not required to be paid by the Company, each holder of
securities included in any registration hereunder will pay those Registration
Expenses allocable to the registration of such holder's securities so included,
and any Registration Expenses not so allocable will be borne by all sellers of
securities included in such registration in proportion to the aggregate selling
price of the securities to be so registered. The Company shall not be obligated
to pay the Registration Expenses for any registration that is subsequently
withdrawn at the request of the holders of Registrable Series H Securities,
unless such withdrawal is pursuant to paragraph 10.4 hereof or due to a material
adverse change in the business of the Company that was not known to the holders
at the time of the request.
15. Indemnification.
15.1 Company's Indemnification. The Company agrees to
indemnify, to the extent permitted by law, each holder of Registrable Series H
Securities, its officers and directors and each Person who controls such holder
(within the meaning of the Securities Act) against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue statement of
material fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as the same are
caused by or contained in any information furnished in writing to the Company by
such holder expressly for use therein or by such holder's failure to deliver a
copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such holder with a
sufficient number of copies of the same. In connection with an underwritten
offering, the Company will indemnify such underwriters, their officers and
directors and each Person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of the holders of Registrable Series H Securities.
20
15.2 Stockholder's Indemnification. In connection with any
registration statement in which a holder of Registrable Series H Securities is
participating, each such holder will furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to the extent
permitted by law, will indemnify the Company, its directors and officers and
each Person who controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting from any
untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by such
holder; provided that the obligation to indemnify will be several, not joint and
several, among such holders of Registrable Series H Securities and the liability
of each such holder of Registrable Series H Securities will be in proportion to
and limited to the net amount received by such holder from the sale of
Registrable Series H Securities pursuant to such registration statement.
15.3 Notice and Defense. Any Person entitled to
indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party will not be subject to any
liability for any consent to the entry of any judgment or any settlement made by
the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
15.4 Full Force and Effect. The indemnification provided for
under this Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling Person of such indemnified party and will survive the
transfer of securities. The Company also agrees to make such provisions, as are
reasonably requested by any indemnified party, for contribution to such party in
the event the Company's indemnification is unavailable for any reason.
16. Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
17. Definitions. For the purposes of this Agreement, the following
terms have the meanings set forth below:
"Affiliate" means any person, corporation or other entity which
controls, is controlled by, or is under common control with another person,
corporation or entity. A person, corporation or other entity shall be regarded
as in control of another corporation or entity if it owns or directly or
indirectly controls at least 50% of the voting stock or other ownership interest
of the other corporation or entity, or if it
21
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of the corporation or other entity.
"Carrefour" means Carrefour, a societe anonyme organized under the laws
of France with its principal place of business at 0 Xxxxxx xx Xxxx Xxxxxx,
Xxxxxx, 00000 Evry Cedex, France.
"Investment" as applied to any Person means (i) any direct or indirect
purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interest of any other Person and
(ii) any capital contribution by such Person to any other Person.
"Compliance Certificate" means a certificate signed by the Company's
president or its chief financial officer, stating that (i) the officer signing
such certificate has made or has caused to be made such investigations as are
necessary in order to permit him to verify the accuracy of the information set
forth in such certificate and (ii) to the best of such officer's knowledge, such
certificate does not misstate any material fact and does not omit to state any
fact necessary to make the certificate not misleading.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
"Preferred Stock" means the Company's Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and Series H
Preferred Stock.
"Proprietary Rights" means any patents, registered and common law
trademarks, service marks, trade names, copyrights, licenses and other similar
rights (including, without limitation, know-how, trade secrets and other
confidential information) and applications for each of the foregoing, if any.
"Registrable Series H Securities" means (i) any Common Stock issued or
issuable upon the conversion of any Series H Preferred Stock and (ii) any
securities issued or issuable with respect to the Common Stock referred to in
clause (i) by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Registrable Series H Securities, such
securities will cease to be Registrable Series H Securities when they have been
sold or otherwise transferred to a Person who is not a Permitted Transferee. For
purposes of this Agreement, a Person will be deemed to be a holder of
Registrable Series H Securities whenever such Person has the right to acquire
such Registrable Series H Securities (by conversion or otherwise, but
disregarding any legal restrictions upon the exercise of such right), whether or
not such acquisition has actually been effected.
"Restricted Securities" means (i) the Series H Preferred issued
hereunder, (ii) the Common Stock issued upon conversion of the Series H
Preferred and (iii) any securities issued with respect to the securities
referred to in clauses (i) and (ii) above by way of a stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular Restricted
Securities, such securities will cease to be Restricted Securities when they
have (a) been effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them, (b) become eligible
for sale pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act or (c) been otherwise transferred and new certificates for them
not bearing the Securities Act legend set forth in paragraph 10.3 have been
delivered by the Company in accordance with paragraph 7(ii). Whenever any
particular securities cease to be Restricted Securities, the holder thereof will
be entitled to receive from the Company, without expense, new securities of like
tenor not bearing a Securities Act legend of the character set forth in
paragraph 7(iii).
22
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal law then in force.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor federal law then in force.
"Securities and Exchange Commission" includes any governmental body or
agency succeeding to the functions thereof.
"Subsidiary" means any corporation of which the securities having a
majority of the ordinary voting power in electing the board of directors are, at
the time as of which any determination is being made, owned by the Company
either directly or through one or more Subsidiaries.
"Underlying Common Stock" means (i) the Common Stock issued or issuable
upon conversion of the Series H Preferred and (ii) any Common Stock issued or
issuable with respect to the Common Stock referred to in clause (i) above by way
of stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. Any Person who
holds Series H Preferred will be deemed to be the holder of the Underlying
Common Stock obtainable upon conversion of the Series H Preferred regardless of
any restriction on the conversion of the Series H Preferred. As to any
particular shares of Underlying Common Stock, such shares will cease to be
Underlying Common Stock when they have been (a) effectively registered under the
Securities Act and disposed of in accordance with the registration statement
covering them or (b) distributed to the public pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act.
The terms "Registrable Securities", "Demand Registrations", "Piggyback
Registrations" and "Priority Securities" have the meanings set forth in the
Registration Rights Agreement.
18. Miscellaneous.
18.1 Expenses. The Company agrees to pay, and hold the
Purchasers and all holders of Series H Preferred and Common Stock issued upon
conversion of the Series H Preferred harmless against liability for the payment
of stamp and other taxes which may be payable in respect of the execution and
delivery of this Agreement or the issuance, delivery or acquisition of any
shares of the Series H Preferred or any shares of Common Stock issuable upon
conversion of the Series H Preferred.
18.2 Remedies. Each holder of Series H Preferred will have all
rights and remedies set forth in this Agreement, the Certificate of
Incorporation and all rights and remedies which such holders have been granted
at any time under any other agreement or contract and all of the rights which
such holders have under any law. Such rights are cumulative and may be exercised
in any order and no partial or successive exercise of any rights shall
constitute an election of remedies. Any Person having any rights under any
provision of this Agreement will be entitled to enforce such rights
specifically, to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law.
18.3 Purchaser Representations. Each Purchaser for itself and
for no other Purchasers hereby represents as follows:
(i) The Purchaser is acquiring the shares of Series H
Preferred Stock purchased hereunder and will acquire the other Restricted
Securities issued or issuable upon conversion of or as a distribution upon such
shares for its own account, and not as nominee or agent, with the present
intention of holding such securities for purposes of investment, and it has no
intention of selling such
23
securities in a public distribution in violation of the federal securities laws
or any applicable state securities laws; provided that nothing contained herein
will prevent any Purchaser and subsequent holders of Restricted Securities from
transferring such securities in compliance with the provisions of paragraph 7
hereof.
(ii) There are no claims for brokerage commissions,
finders fees or similar compensation in connection with the transactions
contemplated by this Agreement based upon any arrangement or agreement binding
upon the Purchaser for which the Company may be liable, and the Purchaser will
pay, and hold the Company and the other Purchasers harmless against, any
liability, loss or expense (including, without limitation reasonable attorneys'
fees and out-of-pocket expenses) for such claims arising out of the actions of
the Purchaser or its employees.
(iii) To the best of its knowledge, the Purchaser has
been furnished with such materials and has been given access to such information
relating to the Company, together with such additional information as is
necessary to verify the accuracy of the information supplied, as it or its
qualified representative has requested. The Purchaser has been afforded the
opportunity to ask such questions regarding the Company as it has found
necessary to make an informed investment decision with respect to the Series H
Preferred. The foregoing, however, does not limit or modify the representations
and warranties of the Company set forth in paragraph 8 of this Agreement.
(iv) By reason of the Purchaser's business or
financial experience, or the business or financial experience of its
professional adviser, it has the capacity to protect its own interests in
connection with the transactions contemplated in this Agreement and is capable
of evaluating the merits and risks of its prospective investment in the Company.
The Purchaser has the ability to bear the economic risks of the investment,
including a complete loss of its investment in the Series H Preferred.
(v) If the Purchaser is a corporation, partnership,
trust or other entity, it was not formed for the specific purpose of acquiring
the Series H Preferred offered hereunder.
(vi) The Purchaser hereby acknowledges that any
future transfer of the Company's securities among the Purchasers or their
Affiliates or blood relatives or any future acquisition by any Purchasers, their
Affiliates or blood relatives of any voting securities of the Company may
require the filing of a Notification and Report Form for Certain Mergers and
Acquisitions under the Xxxx-Xxxxx-Xxxxxx Act prior to consummating any such
transfer or acquisition.
(vii) If the Purchaser is an individual, the
Purchaser does not own or control more than 50% of the outstanding voting
securities of any Purchaser which is a corporation.
(viii) The Purchaser has not entered into any voting
agreement or voting trust with any other Purchaser or Affiliate or blood
relative of a Purchaser with respect to any of the Company's securities or any
other agreement to vote or have its shares of the Company's securities voted
together with any shares of the Company's securities held by any other Purchaser
or any Affiliate or blood relative of a Purchaser.
(ix) FOURCAR B.V. represents that it is not an
Affiliate of S.A. De NOYANGE, and S.A. De NOYANGE represents that it is not an
Affiliate of FOURCAR B.V.
(x) The Purchaser has full power and authority to
execute, deliver and perform this Agreement and to own the Series H Preferred
Stock. This Agreement has been duly authorized, executed and delivered by the
Purchaser, and, upon due execution and delivery by the Company, this Agreement
will be a valid and binding agreement of the Purchaser enforceable in
24
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies.
18.4 Consent to Amendments. Except as otherwise expressly
provided herein, the provisions of this Agreement may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained the written
consent of the holders of a majority of the outstanding Series H Preferred;
provided that if there is no Series H Preferred outstanding, the provisions of
this Agreement may be amended and the Company may take any action herein
prohibited with the written consent of the holders of a majority of the
Underlying Common Stock. No other course of dealing between the Company and the
holder of any Series H Preferred or Underlying Common Stock or any delay in
exercising any rights hereunder or under the Certificate of Incorporation will
operate as a waiver of any rights of any such holders. For purposes of this
Agreement, shares of Series H Preferred or Underlying Common Stock held by the
Company will not be deemed to be outstanding. If the Company pays any
consideration to any holder of Series H Preferred or Underlying Common Stock for
such holder's consent to any amendment, modification or waiver hereunder, the
Company shall also pay each other holder granting its consent hereunder
equivalent consideration computed on a pro rata basis.
18.5 Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by any party
in connection herewith will survive the execution and delivery of this
Agreement, regardless of any investigation made by any Purchasers or on its
behalf.
18.6 Successors and Assigns. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement, except for the provisions of paragraphs 10 and 11
hereof, which are for any Purchaser's benefit as a purchaser or holder of Series
H Preferred or Underlying Common Stock are also for the benefit of, and
enforceable by, any subsequent holder of such Series H Preferred or such
Underlying Common Stock. Whether or not any express assignment has been made,
the provisions of this Agreement with respect to paragraphs 10 and 11 hereof
which are for the benefit of purchasers or holders of Registrable Series H
Securities are also for the benefit of, and enforceable by, a subsequent
transferee (a "Permitted Transferee") of such securities if (i) the Company
consents to an assignment of such benefits, (ii) the transferee is Carrefour or
a Purchaser under this Agreement, or (iii) the transferee is acquiring other
than in a Public Sale (whether in one transaction or a series of transactions)
an aggregate of at least 1,500,000 shares of Registrable Series H Securities (as
adjusted for stock dividends, stock splits or a recapitalization or other
reorganization).
18.7 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
18.8 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
will constitute one and the same Agreement.
18.9 Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
25
18.10 Governing Law. The corporate law of Delaware will govern
all issues concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity and interpretation of
this Agreement and the exhibits and schedules hereto will be governed by the
internal law, and not the law of conflicts, of California.
18.11 Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when delivered
personally or mailed by certified or registered mail, return receipt requested
and postage prepaid, to the recipient. Such notices, demands and other
communications will be sent to the Purchasers at the respective addresses
indicated on the Schedule of Purchasers hereto and to the Company at the address
indicated below:
PETsMART, Inc.
00000 X. 00xx Xxxxxx
Xxxxx X-000
Xxxxxxx, XX 00000
Attn: Chief Financial Officer
with a copy to:
Xxxxxx Godward Xxxxxx Xxxxxxxxx & Xxxxx
Five Palo Alto Square - 4th Floor
Palo Alto, CA 94306
Attn: Xxxx X. Xxxxxxxxx, Esq.
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
26
IN WITNESS WHEREOF, the parties have executed this Series H Preferred
Stock Purchase Agreement as of the date first written above.
PETsMART, INC PURCHASERS:
By: /s/ Xxxxxx X. Xxxxxx Yves Sisteron
-------------------------------- -------------------------------------
Xxxxxx X. Xxxxxx (Print Name of Purchaser)
President
/s/ Yves Sisteron
-------------------------------------
(Signature)
Attorney for the Purchasers
-------------------------------------
(Title of Signatory, if applicable)
PURCHASE AGREEMENT
27
SCHEDULE OF PURCHASERS
PURCHASER SHARES AMOUNT
--------- ------ ------
S.A. De NOYANGE 2,023,500 $ 6,070,500
00 Xxxxxxx Xxxxxxxx
00000 Xxxxx, Xxxxxx
FOURCAR B.V. 1,428,500 4,285,500
Subsidiary at 100%
of Carrefour Nederland,
Netherlands
Fondation Breugeien 666,000 1,998,000
Vaduz
x/x Xxxxxx 00 Xx.
Xxxxxxxxxx, Xxxxxx,
Xxxxxxxxxxx
Fondation Appomatox 120,000 360,000
0, xxx x'Xxxxxx
Xxxxxx, Xxxxxxxxxxx
Francois Charleix 476,000 1,428,000
La Brillanne
Aix en Provence
Xxxxxxx xx Xxxxx,
Xxxxxx
Xxxxx-Xxxxxx Xxxxxxxx 143,000 429,000
00, xxx Xxxxxxx
Xxxxxxx
Xxxxxxx xxx Xxxxx,
Xxxxxx
Xxxxxxx Xxxxxxxx 143,000 429,000
0 Xx. Xxx Xxxxxxxx
00000 Xxxxx, Xxxxxx
TOTAL
--------- -----------
5,000,000 $15,000,000
PURCHASE AGREEMENT
