STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of April 11, 1997
(the "Agreement"), between Strategic Distribution, Inc., a Delaware
corporation (the "Company"), and Xxxx X. Xxxxxx (the "Purchaser").
WHEREAS, pursuant to the Executive Employment Agreement
(the "Employment Agreement"), dated as of the date hereof, between the
Company and the Purchaser, the Company has agreed to employ the Purchaser,
and the Purchaser has agreed to be employed by the Company upon and subject
to the terms therein;
WHEREAS, in connection with the Purchaser's employment by
the Company pursuant to the Employment Agreement, the Company desires to sell
400,000 shares (the "Shares") of the common stock, par value $0.10 per share,
of the Company (the "Common Stock") to the Purchaser; and
WHEREAS, the Purchaser desires to purchase the Shares
upon the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual terms,
conditions and other agreements set forth herein, the parties hereto hereby
agree as follows:
Section 1. SALE AND PURCHASE OF SECURITIES. (a) Subject to the
terms and conditions set forth herein, on the Closing Date (as defined
herein), the Company shall sell to the Purchaser and the Purchaser shall
purchase from the Company the Shares for an aggregate amount of $2,050,000
(the "Purchase Price"). The Purchaser shall pay $700,000 of the Purchase
Price in cash on the Closing Date and the remainder of the Purchase Price
shall be evidenced by a promissory note issued by the Purchaser to the
Company pursuant to the Loan and Pledge Agreement, dated the date hereof,
between the Purchaser and the Company, in the form of Exhibit A attached
hereto.
(b) The sale and purchase of the Shares shall be effected by
the Company's execution and delivery to the Purchaser of a duly executed
stock certificate evidencing the Shares registered in his name, and by the
delivery by the Purchaser to the Company of the Purchaser's check in the
amount of the purchase price of the Shares.
(c) The closing of the transactions hereunder (the "Closing")
shall take place on such day on or prior to the forty-fifth (45) day (or if
not a business day the next succeeding business day) after the date hereof as
shall be mutually agreed upon by the Company and the Purchaser (the "Closing
Date").
Section 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to the Purchaser as follows:
(a) 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 has all requisite power and authority to
execute, deliver and perform this Agreement and to issue, sell and deliver
the Shares hereunder.
(b) AUTHORIZATION, ENFORCEABILITY. All corporate action on
the part of the Company necessary for the authorization, execution and
delivery of this Agreement and the issuance, sale and delivery of the Shares
hereunder has been taken. This Agreement has been duly authorized, executed
and delivered by the Company and constitutes the valid and legally binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity.
(c) FINANCIAL STATEMENTS. The audited consolidated balance
sheet of the Company as at December 31, 1996 fairly presents the consolidated
financial position of the Company as at the date thereof, and the related
consolidated statement of operations, stockholders' equity and cash flows for
the fiscal period ended on such date fairly presents the results of
operations of the Company and its subsidiaries for the period indicated. All
such financial statements, including the schedules and notes thereto, were
prepared in accordance with generally accepted accounting principles applied
consistently throughout the periods involved.
(d) NO CONSENTS. The execution, delivery and performance by
the Company of this Agreement does not require any consent or approval of any
person or entity, except as may be required under applicable state securities
or blue sky laws or by the National Association of Securities Dealers, Inc.
in connection with the issuance and listing of the Shares.
Section 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
Purchaser hereby represents and warrants as follows:
(a) VALIDITY OF AGREEMENT. This Agreement has been duly
executed by the Purchaser and constitutes the valid and legally binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
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the enforcement of creditors' rights generally and general principles of
equity.
(b) NO CONSENTS. The execution, delivery and performance by
the Purchaser of this Agreement does not require any consent or approval of
any person or entity.
(c) INVESTMENT REPRESENTATIONS.
(i) The Purchaser is acquiring the Shares solely
for his own account as principal, for investment purposes only, and
not with a view to, or for, subdivision, resale, distribution or
fractionalization thereof, in whole or in part, or for the account,
in whole or in part, of others, and no other person or entity has a
direct or indirect beneficial interest in the Shares; further, the
Purchaser intends to hold the Shares as an investment and does not
presently anticipate any change in circumstances or other
particular occasion or event that would cause him to attempt to
sell any of the Shares;
(ii) the Purchaser understands that no federal or
state agency has made any finding or determination as to the
fairness of this investment and that the sale of the Shares is
intended to be exempt from registration both under the Securities
Act of 1933, as amended (the "Securities Act"), and any applicable
state securities law, and, in furtherance thereof, the Purchaser
represents and warrants to, and agrees with, the Company that he
has the financial ability to bear the economic risk of his
investment, and has adequate means for providing for his current
needs and personal contingencies and has no need for liquidity with
respect to his investment in the Shares;
(iii) the Purchaser has been given the opportunity to
ask questions of, and receive information and answers from, the
Company concerning matters pertaining to the Company and its
business and affairs and this investment, and all such questions
have been answered, and all such information has been provided, to
his satisfaction and he has determined that the Shares are a
suitable investment for him and that at this time he could bear the
complete loss of his investment;
(iv) the Purchaser is not relying on the Company in
regard to the tax and other personal financial considerations
related to this investment, and the Purchaser has, to the extent he
deems it necessary, relied on the advice of, or has consulted with,
only his own advisors;
(v) the Purchaser will not sell or otherwise transfer
the Shares without registration under the Securities Act, and
applicable state securities laws, unless the Company has received
an appropriate opinion of counsel
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reasonably acceptable to it that registration thereunder is not
required, and fully understands and agrees that he must bear the
economic risk of his purchase for an indefinite period of time
because, among other reasons, the Shares have not been registered
under the Securities Act or under any applicable state securities
laws and, therefore, cannot be resold, pledged, assigned or
otherwise disposed of unless they are subsequently registered under
the Securities Act and any applicable state securities laws or an
exemption from such registration is available. Subject to Section 5
hereof, the Purchaser understands that the Company is under no
obligation to register the Shares on his behalf or to assist him in
complying with any exemption from registration under the Securities
Act or any state securities laws; and
(vi) the Purchaser is a resident of the state specified for the
Purchaser in Section 7 hereof.
Section 4. LEGEND. Until such time as the Shares shall become
freely tradable pursuant to the provisions of Rule 144(k) under the
Securities Act, certificates evidencing the Shares shall bear the following
legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
and may not be transferred or sold except pursuant to an effective
registration statement under the Act or in a transaction which, in the
opinion of counsel reasonably satisfactory to Strategic Distribution,
Inc., qualifies as an exempt transaction under the Act and the rules
and regulations promulgated thereunder."
Section 5. REQUESTED REGISTRATION.
(a) REQUEST FOR REGISTRATION. If the Company shall receive from the
Purchaser a written request that the Company effect any registration with
respect to all or a part of the Shares, the Company will, as soon as
practicable, use its diligent best efforts to effect such registration
(including, without limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualification under applicable blue
sky or other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act) as may be so requested and as
would permit or facilitate the sale and distribution of all or such portion
of such Shares as are specified in such request; PROVIDED that the Company
shall not be obligated to effect, or take any action to effect, any such
registration pursuant to this Section 5(a):
(i) In any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting
such registration, qualification or compliance, unless the Company is
already
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subject to service in such jurisdiction and except as may be
required by the Securities Act or applicable rules or regulations
thereunder;
(ii) After the Company has effected one (1) such registrations
pursuant to this Section 5(a) and such registration has been declared
or ordered effective and the sales of such Shares pursuant to such
registrations shall have closed; or
(iii) Within 180 days of the effective date of any registration
statement filed by the Company provided that the Purchaser had an
opportunity to include Shares in such registration.
The registration statement filed pursuant to the request of the
Purchaser may include other securities of the Company which are held by
persons who, by virtue of agreements with the Company, are entitled to
include their securities in any such registration ("Other Holders").
(b) EXPENSES OF REGISTRATION. All expenses incurred by the
Company pursuant to this Section 5, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses and the expense of any
special audits incident to or required by any such registration
("Registration Expenses") shall be borne by the Company, and all selling
commissions applicable to the sale of the Shares and all fees and
disbursements of counsel for the Purchaser shall be borne by the Purchaser;
PROVIDED, HOWEVER, that the Company shall not be required to pay any
Registration Expenses if the Purchaser withdraws its request for
registration, in which case the Purchaser shall bear such Registration
Expenses, and PROVIDED FURTHER that such registration shall not be counted as
a registration pursuant to Section 5(a).
(c) REGISTRATION PROCEDURES. In the case of any registration
effected by the Company pursuant to this Section 5, the Company will keep the
Purchaser advised in writing as to the initiation of the registration and as
to the completion thereof. At its expense, the Company will:
(i) keep such registration effective for a period of one hundred
twenty (120) days or until the Purchaser has completed the distribution
described in the registration statement relating thereto, whichever first
occurs; and
(ii) furnish such number of prospectuses and other documents
incident thereto as the Purchaser from time to time may reasonably
request.
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(d) INDEMNIFICATION.
(i) The Company will indemnify the Purchaser with respect to the
registration which has been effected pursuant to this Section 5, and each
underwriter, if any, and each person who controls any underwriter, against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification
or compliance, or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the Company of
the Securities Act or any rule or regulation thereunder applicable to the
Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and
will reimburse the Purchaser, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating and defending any such
claim, loss, damage, liability or action, PROVIDED that the Company will
not be liable in any such case to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue
statement or omission based upon written information furnished to the
Company by the Purchaser or the underwriter and stated to be specifically
for use therein.
(ii) The Purchaser will (a) indemnify the Company, each of its
directors and officers and each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who
controls the Company or such underwriter, each Other Holder and each of
their officers, directors, and partners, and each person controlling such
Other Holder against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document
made by the Purchaser relating to the Purchaser or the Purchaser's
ownership of stock, or any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to make the
statements by the Purchaser relating to the Purchaser or the Purchaser's
ownership of stock therein not misleading, and (b) will reimburse the
Company and such Other Holders, directors, officers, partners, persons,
underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, in the
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case of (a) or (b) above, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document
in reliance upon and in conformity with written information furnished
to the Company by the Purchaser and stated to be specifically for use
therein; PROVIDED, HOWEVER, that the obligations of the Purchaser
hereunder shall be limited to an amount equal to the net proceeds to
the Purchaser of securities sold as contemplated herein.
(iii) Each party entitled to indemnification under this Section 5
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom; PROVIDED that counsel
for the Indemnifying Party, who shall conduct the defense of such claim or
any litigation resulting therefrom, shall be approved by the Indemnified
Party (whose approval shall not unreasonably be withheld) and the
Indemnified Party may participate in such defense at such party's expense
(unless the Indemnified Party shall have reasonably concluded that there
may be a conflict of interest between the Indemnifying Party and the
Indemnified Party in such action, in which case the fees and expenses of
counsel shall be at the expense of the Indemnifying Party), and PROVIDED
FURTHER that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 5 unless the Indemnifying Party is materially prejudiced
thereby. No Indemnifying Party, in the defense of any such claim or
litigation shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in
respect to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be
reasonably required in connection with the defense of such claim and
litigation resulting therefrom.
(iv) If the indemnification provided for in this Section 5 is held
by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense
referred to herein, then the Indemnifying Party, in lieu of indemnifying
such Indemnified Party hereunder, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such loss, liability,
claim, damage or expense in such proportion as is appropriate to reflect
the relative fault
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of the Indemnifying Party on the one hand and of the Indemnified Party
on the other in connection with the statements or omissions which
resulted in such loss, liability, claim, damage or expense, as well as
any other relevant equitable considerations. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be determined by
reference to, among other things, whether the untrue (or alleged
untrue) statement of a material fact or the omission (or alleged
omission) to state a material fact relates to information supplied by
the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(v) The foregoing indemnity agreement of the Company and the
Purchaser is subject to the condition that, insofar as they relate to any
loss, claim, liability or damage made in a preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the
Securities and Exchange Commission at the time the registration statement
in question becomes effective or the amended prospectus filed with the
Securities and Exchange Commission pursuant to Securities and Exchange
Commission Rule 424(b) (the "Final Prospectus"), such indemnity agreement
shall not inure to the benefit of the Purchaser or any underwriter if a
copy of the Final Prospectus was furnished to the Purchaser or such
underwriter, as the case may be, and was not furnished to the person
asserting the loss, liability, claim or damage at or prior to the time such
action is required by the Securities Act.
(e) INFORMATION BY THE PURCHASER. The Purchaser shall
furnish to the Company such information regarding the Purchaser and the
distribution proposed by the Purchaser as the Company may reasonably
request in writing and as shall be reasonably required in connection with
any registration, qualification or compliance referred to in this Section 5.
Section 6. CONDITION TO OBLIGATIONS OF THE PARTIES. The
obligations of the Company and the Purchaser to consummate the transactions
contemplated by this Agreement are subject to the continued effectiveness
of the transactions contemplated by the Employment Agreement as of the
Closing Date.
Section 7. NOTICES. All communications under this Agreement
shall be in writing and shall be delivered by hand, by facsimile or by
overnight courier or by registered or certified mail, postage prepaid: (i)
if to the Company, at 000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000,
Attention: Xxxxxxx X. Xxxxxx, facsimile number 000-000-0000; and (ii) if
to the Purchaser at 000 Xxxxx Xxxx Xxxx, Xxxxxxxx Xxxxx, Xxx Xxxxxx 00000.
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Section 8. FEES AND EXPENSES. All costs, fees and expenses
incurred in connection with this Agreement ("Costs") shall be paid by the
party incurring such Costs.
Section 9. ENTIRE AGREEMENT. Except for the Employment
Agreement and the Loan and Pledge Agreement, this Agreement represents the
entire agreement and understanding of the parties with reference to the
transactions set forth herein and no representations or warranties have
been made in connection with this Agreement other than those expressly set
forth herein. This Agreement supersedes all prior negotiations,
discussions, correspondence, communications, understandings and agreements
between the parties relating to the subject matter of this Agreement, all
of which are merged into this Agreement.
Section 10. AMENDMENTS. This Agreement may be amended,
modified or supplemented only by a written instrument executed by the
parties hereto.
Section 11. COUNTERPARTS. This Agreement may be executed in
two counterparts, each of which shall be deemed an original and all of
which together shall be considered one and the same agreement.
Section 12. SUCCESSORS AND ASSIGNS; NO THIRD-PARTY
BENEFICIARIES. This Agreement shall inure to the benefit of, and be binding
upon, the parties hereto and their respective successors and assigns,
including, but not limited to, the heirs and personal representatives of
the Purchaser's estate, PROVIDED, HOWEVER, that neither party shall assign
or delegate any of the obligations created under this Agreement without the
prior written consent of the other party. In the event the Purchaser
commences an action to enforce his rights under this Agreement, the Company
shall pay all of the Purchaser's reasonable fees and expenses (including,
without limitation, reasonable attorneys' fees) should the Purchaser
prevail in such action.
Section 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE WITHOUT GIVING EFFECT TO THE CHOICE-OF-LAW PROVISIONS THEREOF.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
STRATEGIC DISTRIBUTION, INC.
By: /s/ XXXXXX X. XXXXXX
-----------------------------
Name:
Title:
/s/ XXXX X. XXXXXX
--------------------------------
Xxxx X. Xxxxxx
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