Exhibit A
RECAPITALIZATION AGREEMENT
THIS RECAPITALIZATION AGREEMENT is made and entered into this 15th day
of March, 2002 by and among Darling International Inc., a Delaware corporation
(the "Company"), each of the banks or other lending institutions which is a
signatory hereto or any successor or assignee thereof (individually, a "Bank"
and, collectively, the "Banks"), and Credit Lyonnais New York Branch,
individually as a Bank and as agent for itself, the other Banks and other
secured parties (in its capacity as agent, together with successors, the
"Agent").
RECITALS
A. The Company, the Agent and the Banks are parties to the Amended and
Restated Credit Agreement dated effective as of January 22, 1999 (as amended and
otherwise modified, including, without limitation, pursuant to the hereinafter
defined Forbearance Agreement being herein referred to as the "Original
Agreement").
B. Events of Default (as defined in the Original Agreement) occurred
under the Original Agreement as described in that certain Agreement dated as of
June 29, 2001, among the Company, the Banks and the Agent (as modified and
amended, the "Forbearance Agreement").
C. The Company and the Obligated Parties (as defined below) have
requested, among other things, that the Banks (i) waive the Existing Defaults
(as defined below), (ii) exchange a portion of the obligations and indebtedness
owed by the Company to the Banks under the Original Agreement for certain
capital stock of the Company; and (iii) amend and restate the Original Agreement
with respect to the remaining obligations and indebtedness of the Company to the
Banks under the Original Agreement and add certain new commitments from certain
of the Banks to provide additional revolving credit to the Company.
D. The Banks are willing to so waive the Existing Defaults, exchange
such obligations and indebtedness for capital stock of the Company, and amend
and restate the Original Agreement upon the terms and conditions hereinafter set
forth.
E. This Agreement has been negotiated among the parties hereto in good
faith and at arm's length and, as executed, reflects the conclusions of the
parties and their counsel and advisors that this Agreement, and the transactions
contemplated by this Agreement, are fair, equitable, and in the best interests
of the parties hereto.
AGREEMENT
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
subject to the conditions hereof, and intending to be legally bound, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise defined, the following words and phrases shall have
the following meanings when used in this Agreement, the exhibits to this
Agreement and all ancillary documents and other agreements contemplated by this
Agreement.
"1993 Agreement" is defined in Section 3.4 of this Agreement.
"Agent" is defined in the Preamble of this Agreement.
"Agreement" or "Recapitalization Agreement" means this Recapitalization
Agreement among the Company, the Banks and the Agent as the same may be
modified, amended or supplemented from time to time.
"Amended and Restated Bylaws" means the Amended and Restated Bylaws of
the Company dated March 31, 1995.
"Amendment to the Certificate" has the meaning set forth in Section
2.2A. "AMEX" means the American Stock Exchange.
"Bank" and "Banks" are defined in the Preamble of this Agreement.
"Benefit Plan" means any Plan established by the Company or any Company
Subsidiary, or any predecessor or ERISA Affiliate of any of the foregoing,
existing on the Consummation Date or at any time within the five (5) year period
prior thereto, to which the Company or any Company Subsidiary contributes, has
contributed, is obligated to contribute or otherwise has any liability, or under
which any employee, former employee or director of the Company or any Company
Subsidiary or any beneficiary thereof is covered, is eligible for coverage or
has benefit rights.
"Blackstone Amendment Letter" is defined in Section 2.8 of this
Agreement.
"Business Day" means a day on which the AMEX and banking institutions
in the City of New York are open for trading or banking, as the case may be, in
the ordinary course of business.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended (42 U.S.C.ss.9601).
"Certificate of Designation" means the form of Certificate of
Designation attached hereto as Exhibit A.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Colorado Insurance Letter of Credit" shall mean that certain letter of
credit in the face amount of $750,000 issued under the Original Agreement in
favor of the Commissioner of Insurance for the State of Colorado, as the same
may be modified, amended or extended.
"Commission" means the United States Securities and Exchange
Commission.
"Common Shares" means the shares of Common Stock to be issued to the
Banks in accordance with Section 2.2 of this Agreement.
"Common Stock" is the common stock of the Company, par value $0.01 per
share.
"Company" is defined in the Preamble of this Agreement.
"Company Contract" is defined in Section 3.11 of this Agreement.
"Company SEC Reports" is defined in Section 3.10 of this Agreement.
"Company Stockholders Meeting" is defined in Section 2.2A of this
Agreement.
"Company Subsidiaries" is defined in Section 3.1 of this Agreement.
"Consulting Agreement" is defined in Section 2.6 of this Agreement.
"Consummation Date" means the first Business Day on which all of the
conditions set forth in Article VIII of this Agreement are satisfied or waived.
"Designated Directors" means Xxxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx and O.
Xxxxxx Xxxxxxxx or any substitute designee for and in lieu of any of such
individuals or additional designee, in each case, as the Holders may elect in
accordance with Section 2.2A herein.
"Disclosure Schedule" means the Disclosure Schedule attached to this
Agreement delivered by the Company to the Agent and the Banks prior to execution
and delivery of this Agreement.
"Environmental Laws" means any and all federal, state, and local laws,
regulations, and requirements pertaining to health, safety, or the environment,
as such laws, regulations, and requirements may be amended or supplemented from
time to time.
"Environmental Liabilities" means, as to any person or entity, all
liabilities, obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs, and expenses
(including, without limitation, all fees, disbursements, and expenses of
counsel, expert and consulting fees, and costs of investigation and feasibility
studies), fines, penalties, sanctions, and interest incurred as a result of any
claim or demand, by any person or entity, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute,
including, without limitation, any Environmental Law, permit, order, or
agreement with any Governmental Entity or other person or entity, arising from
environmental, health, or safety conditions or the Release or threatened Release
of a Hazardous Material into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statute.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which is or at any time within the six (6)-year period preceding
the date of this Agreement would have been treated as a "single employer" with
the Company under section 414(b), (c), (m), or (o) of the Code.
"Events of Default" has the meaning as defined in the Original
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Debt" means the aggregate of (i) all of the outstanding
principal amount of the Loans (as defined in the Original Agreement) in excess
of an amount equal to the aggregate Term Loans (as defined in the New Credit
Agreement and after giving to any revisions required pursuant to Section 2.1 of
this Agreement) as of the Consummation Date, (ii) all accrued and unpaid
interest and commitment fees in respect of the indebtedness under the Original
Agreement as of the Consummation Date, other than that amount of interest
determined to be "Adjusted Existing Accrued Interest" under the terms of the New
Credit Agreement, and (iii) the Forbearance Fee.
"Executive Officers" means Xxxxx Xxxxx, Xxxxx X. Xxxxxxxxxx,
Xxxx X. Xxxx, Xxxx Xxxxxxx, Xxxxxxxx Xxxxxxxxxx, Xxxx Xxxxxxxx, Xxxxxx X.
Xxxxxx, Xx., Xxxxxx Xxxxx, and Xxxxxxx X. Xxxxxxxxx.
"Existing Defaults" has the meaning as defined in the Forbearance
Agreement.
"Forbearance Agreement" is defined in the Recitals to this Agreement.
"Forbearance Fee" means the $3,855,000 amount owed by the Company to
the Banks under Section 4.6 of the Forbearance Agreement.
"GAAP" means generally accepted accounting principles as in effect in
the United States, as set forth in the opinions and pronouncements of the
Accounting Principles Board of American Institute of Certified Public
Accountants and the statements and pronouncements of the Financial Accounting
Standards Board, and in such other statements and pronouncements as have been
approved by a significant segment of the accounting profession.
"Governmental Entity" means any domestic or foreign governmental
entity, including but not limited to the United States of America, any state of
the United States of America, any municipality or other local governmental
entity, and any subdivision of any of the foregoing, including any agency,
department, commission, board, authority or instrumentality, bureau or court
having jurisdiction over the Company or any of the Company Subsidiaries or any
of their respective businesses, operations, assets or properties.
"Hazardous Material" means any substance, product, waste, pollutant,
material, chemical, contaminant, constituent, or other material which is
regulated by, or forms the basis of liability under, any Environmental Law.
"Historical Financial Statements" means, collectively, the audited
consolidated balance sheets of the Company and its consolidated Subsidiaries as
of January 1, 2000 and December 30, 2000 and the related audited statements of
operations, stockholders' equity and cash flows for each of the years in the
three fiscal years ended December 30, 2000, together with all related notes and
schedules thereto as reported in the Company's Annual Report on Form 10-K for
the fiscal year ended December 30, 2000, filed with the Commission under the
Exchange Act.
"Holders" is defined in Section 9.1 of this Agreement.
"Indemnitee" is defined in Section 6.1 of this Agreement.
"Interim Financial Statements" means the Reference Balance Sheet of the
Company and its consolidated Subsidiaries and the related statements of
operations and cash flows for the three and nine months ended September 29,
2001, as reported in the Company's Quarterly Report on Form 10-Q for the
quarterly period ended September 29, 2001, filed with the Commission under the
Exchange Act.
"Liabilities" is defined in Section 3.6 of this Agreement.
"Liens" is defined in Section 3.4 of this Agreement.
"Material Adverse Effect" means (i) a material adverse effect on the
business, condition (financial or otherwise), operations, prospects, or
properties of the Company and Company Subsidiaries taken as a whole, or (ii) a
material adverse effect on the validity or enforcement of a material provision
of this Agreement or any Transaction Document. In determining whether any
individual event could reasonably be expected to result in a Material Adverse
Effect, notwithstanding that such event does not itself have such effect, a
Material Adverse Effect shall be deemed to have occurred if the cumulative
effect of such event and all other then existing events could reasonably be
expected to result in a Material Adverse Effect.
"Multiemployer Plan" is defined in Section 3.13 of this Agreement.
"New Credit Agreement" is defined in Section 2.1 of this Agreement.
"New Securities" means, collectively, the Common Shares and the
Preferred Shares to be issued to the Banks in accordance with Section 2.2 of
this Agreement.
"Obligated Parties" has the meaning as defined in the Original
Agreement.
"Option Plans" is defined in Section 3.4 of this Agreement.
"Options" is defined in Section 3.4 of this Agreement.
"Original Agreement" is defined in the Recitals to this Agreement.
"PBGC" is defined in Section 3.13 of this Agreement.
"Plan" is defined in Section 3.13 of this Agreement.
"Preferred Shares" means the number of shares of Preferred Stock
designated as Series A Preferred Stock, having the rights and preferences
substantially as set forth in the Certificate of Designation, to be issued to
the Banks pursuant to Section 2.2.B of this Agreement.
"Preferred Stock" means the preferred stock of the Company, par value
$0.01 per share.
"Proxy Statement" is defined in Section 3.3 of this Agreement.
"Qualified Plan" means any "employee benefit plan" (as defined in
section 3(3) of ERISA) intended to be "qualified" within the meaning of section
401(a) of the Code.
"Reference Balance Sheet" means the unaudited consolidated balance
sheet of the Company and its consolidated Subsidiaries as of September 29, 2001.
"Registration Rights Agreement" is defined in Section 2.3 of this
Agreement.
"Regulations" means the applicable published rules and regulations of
the Commission under the Securities Act and the Exchange Act, as the case may
be.
"Release" means, as to any person or entity, any release, spill,
emission, leaking, pumping, injection, deposit, disposal, disbursement,
leaching, or migration of Hazardous Materials into the indoor or outdoor
environment or into or out of property owned by such person or entity,
including, without limitation, the movement of Hazardous Materials through or in
the air, soil, surface water, ground water, or property in violation of
Environmental Laws.
"Release Agreement" and "Release Agreements" are defined in Section
2.4 of this Agreement.
"Releasing Parties" means and includes (i) the Company; (ii) each
person who is a director or Executive Officer of the Company as of the date of
this Agreement; (iii) each person and entity included in the "Morgens,
Waterfall Group" as shown in the Proxy Statement; and (iv) and each other
beneficial owner of five percent (5%) or more of the outstanding Common Stock as
shown in the Proxy Statement.
"Remedial Action" means all actions required to (a) cleanup, remove,
treat, or otherwise address Hazardous Materials in the indoor or outdoor
environment, (b) prevent the Release or threat of Release or minimize the
further Release of Hazardous Materials so that they do not migrate or endanger
or threaten to endanger public health or welfare or the indoor or outdoor
environment, or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
"Restated Certificate of Incorporation" means the Restated Certificate
of Incorporation, as amended, of the Company on file with the Secretary of State
of the State of Delaware as of the date of this Agreement.
"Revolving Commitments" has the meaning defined in the Original
Agreement.
"Revolving Loans" has the meaning defined in the Original Agreement.
"S-1" is defined in Section 3.3 of this Agreement.
"SEC Transaction Filings" is defined in Section 4.5 of this Agreement.
"Section" means a numbered section of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that
the taxpayer is contesting in good faith through appropriate proceedings, and
(c) purchase money liens and liens securing rental payments under capital lease
arrangements.
"Stockholders' Approval" shall mean the following actions by the
stockholders of the Company at the Company Stockholders Meeting: (i) approval of
the Amendment to the Certificate by the holders of a majority of the outstanding
Common Stock as provided in the Delaware General Corporate Law, (ii) election of
the nominees to the Board of Directors as contemplated by this Agreement and the
Delaware General Corporate Law and (iii) if required by the AMEX, approval of
the issuance of the Common Stock to the Banks pursuant to this Agreement by
holders of a majority of the shares of Common Stock present and voting at the
Company Stockholders Meeting.
"Share Issuance" is defined in Section 2.2A.
"St. Xxxx Letter of Credit" means the letter of credit contemplated to
be issued under the Original Agreement in the approximate face amount of
$8,000,000 in favor of St. Xxxx Fire and Marine Insurance Company (or an
affiliate thereof) upon receipt by the Company from the beneficiary thereof of
an equivalent amount of cash,
such cash to be contemporaneously paid to Agent, for the ratable benefit of the
Banks and applied to reduce the outstanding Revolving Loans under the Original
Agreement without any permanent reduction in the Revolving Commitment.
"Subsidiary" means any corporation (or other entity) of which at least
a majority of the outstanding shares of stock (or other ownership interests)
having by the terms thereof ordinary voting power to elect a majority of the
board of directors (or similar governing body) of such corporation (or other
entity) (irrespective of whether or not at the time stock (or other ownership
interests) of any other class or classes of such corporation (or other entity)
shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by the
Company or one or more of the Subsidiaries or by the Company and one or more of
the Subsidiaries.
"Taura Non-Plan Option Agreement" is defined in Section 3.4 of this
Agreement.
"Taura Plan Option Agreement" is defined in Section 3.4 of this
Agreement.
"Xxxxx Xxxxxxxxx Agreement Amendment" is defined in Section 2.5 of
this Agreement.
"Tax" "Taxes" and "Taxable" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Transaction Documents" means the Registration Rights Agreement, the
New Credit Agreement, the Release Agreements, the Xxxxx Xxxxxxxxx Agreement
Amendment, the Blackstone Amendment Letter, the Consulting Agreement and all
other agreements, instruments, documents and certificates executed and delivered
by or on behalf of the Company, the Agent, or the Banks at or before the
Consummation Date pursuant to this Agreement or the New Credit Agreement.
"Treasury Regulations" means the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as those regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
"Withdrawal Liability" is defined in Section 3.13 of this Agreement.
ARTICLE II
TERMS AND CONDITIONS OF THE RECAPITALIZATION
Section 2.1. The New Credit Agreement.
A. On and subject to the occurrence of the Consummation Date, the
Company, the Agent and the Banks shall, enter into an Amended and Restated
Credit Agreement in connection with the amendment and restatement of the
Original Agreement in the form attached as Exhibit L hereto with all blanks
contained therein appropriately completed (the "New Credit Agreement") and all
conditions to the effectiveness thereof shall be fully satisfied.
B. Notwithstanding the foregoing, in the event that on the Consummation
Date, the St. Xxxx Letter of Credit has been issued and the Loans under the
Original Agreement are contemporaneously repaid by an amount equal to the
maximum face amount of the St. Xxxx Letter of Credit in accordance with the
terms of the Forbearance Agreement and remains undrawn upon by the beneficiary
thereof the New Credit Agreement shall be appropriately revised to reflect (a)
an increase in the aggregate Revolving Commitments (as defined in the New Credit
Agreement) by the face amount of the St. Xxxx Letter of Credit, (b) a
corresponding decrease in the aggregate, initial amount of the Term Loans (as
defined in the New Credit Agreement), and (c) a corresponding decrease in the
principal amount of Loans under the Original Agreement used for the calculation
of Adjusted Existing Accrued Interest (as defined in the New Credit Agreement)
pursuant to the definition thereof for the period of time from the date such St.
Xxxx Letter of Credit is issued until the Consummation Date.
C. In addition, in the event that on the Consummation Date the Colorado
Insurance Letter of Credit (i) remains undrawn and outstanding, and the Agent
(for the ratable benefit of the Banks) continues to hold cash collateral in the
amount of the face amount thereof, the Company hereby agrees that (x) such cash
collateral shall be paid to the Banks (pro-rata in accordance with the
percentages set forth on Schedule 2.2B hereto) and applied as a prepayment of
the Revolving Loans (as defined in the Original Agreement) outstanding
immediately prior to giving effect to the transactions contemplated to occur on
the Consummation Date under this Agreement, and (y) such Colorado Insurance
Letter of Credit shall be and be deemed to be an "Existing Letter of Credit"
under the New Credit Agreement, or (ii) has been fully or partially drawn and
all or a portion of such cash collateral has been paid to the Banks and applied
to the reimbursement obligations of the Company arising from such draw, (x) the
New Credit Agreement shall be appropriately revised to reflect a reduction in
the aggregate Revolving Commitments by
the amount drawn thereunder with a corresponding increase in the aggregate,
initial amount of the Term Loans (as defined in the New Credit Agreement), (y)
any remaining cash collateral held by the Agent therefor shall be paid to the
Banks and applied in accordance with the immediately preceding clause (i), and
(z) the remaining available face amount, if any, of such Colorado Insurance
Letter of Credit shall be and be deemed to be an "Existing Letter of Credit"
under the New Credit Agreement.
Section 2.2. Exchange and Cancellation of Exchange Debt for Common Shares
and Preferred Shares.
A. The Company shall (i) on or prior to and subject to the occurrence
of the Consummation Date decrease the size of the Board of Directors of the
Company to five (5) members; provided, however, if the Banks add one additional
Designated Director pursuant to the penultimate sentence of this Section 2.2A,
the Company shall maintain the size of the board of Directors of the Company at
six (6) members, and if the Banks add two additional Designated Directors
pursuant to the penultimate sentence of this Section 2.2A, the Company shall
increase the size of the Board of Directors to seven (7) members, (ii) cause the
Designated Directors and Messrs. Xxxxx X. Xxxxx and Xxxxxxx X. Xxxxx to be
nominated for election by the stockholders of the Company to the board of
directors at the Company Stockholders Meeting and recommend to the stockholders
of the Company that the Designated Directors and Messrs. Taura and Xxxxx be
elected to serve for a term commencing on the Consummation Date and until the
2003 annual meeting and until their successors shall be elected and qualified,
(iii) on or prior to the Consummation Date, call and hold the annual meeting of
the Company's stockholders (the "Company Stockholders Meeting") to consider
approval and adoption by stockholders of (x) an amendment to the Restated
Certificate of Incorporation to increase the number of authorized shares of
Common Stock to 100 million shares and to provide the preemptive rights to the
Banks ("Amendment to the Certificate"), (y) if required by the AMEX, the
issuance of the common stock to the Banks as contemplated by this Agreement
("Share Issuance") and (z) the election of the Designated Directors. Subject to
receipt of the Stockholder Approval, on or immediately prior to and subject to
the occurrence of the Consummation Date, the Company shall file with the
Delaware Secretary of State an amendment to the Restated Certificate of
Incorporation in substantially the form set forth as Exhibit D hereto with all
blanks therein appropriately completed. The Holders may, at any time on or prior
to the filing with the SEC of a preliminary proxy statement in accordance with
Section 4.5 of this Agreement, substitute for any one or all of the Designated
Directors named in this Agreement and/or add one or two additional Designated
Directors, and such substitute Designated Directors and additional Designated
Directors if any, shall be included in the Designated Directors to be nominated
by the Company pursuant to this Section 2.2A. The Company may rely upon written
notice of the Agent of any such substitution or addition election of the Holders
as conclusive evidence of such election by the Holders.
B. Prior to the Consummation Date, the Board of Directors shall have
adopted resolutions approving the Certificate of Designation, and, subject to
the occurrence of the Consummation Date, the Company shall have executed and
filed same with the Delaware Secretary of State with all blanks contained
therein appropriately completed. The total number of Preferred Shares to be
issued to the Banks shall be 100,000 shares plus that number of additional
Preferred Shares as shall equal the number obtained by dividing $100 into the
positive difference, if any, of (i) the Outstanding Revolving Credit as of the
Consummation Date (as defined in the Original Agreement) less any Letter of
Credit Liability as of the Consummation Date (as defined in the Original
Agreement) related to the Colorado Insurance Letter of Credit, minus (ii)
$126,500,000. If the calculation of such additional Preferred Shares shall
result in a fractional share, the number of such additional Preferred Shares to
be issued shall be rounded to the next whole number. On and subject to the
occurrence of the Consummation Date, the Company shall issue and deliver to the
Banks in compliance with federal and state securities laws (i) an aggregate
number of Common Shares such that, upon such issuance, the Banks shall
collectively own in the aggregate seventy-five percent (75%) of the issued and
outstanding Common Stock as of the Consummation Date and (ii) the Preferred
Shares, in each case allocated to each Bank in accordance with the percentage of
Exchange Debt owned and held by such Bank as set forth on Schedule 2.2B to this
Agreement (the resulting number of shares for each Bank to be rounded upwards to
the nearest whole share), and represented by the definitive stock certificates
for the Common Stock and Preferred Shares, registered in the names of the
particular Bank or its designee. The Common Shares and Preferred Shares shall
be, upon issuance, duly authorized and validly issued, fully paid and
nonassessable shares of the capital stock of the Company. Subject to the
satisfaction and fulfillment of the terms and conditions of this Agreement, each
Bank agrees that effective on and as of the Consummation Date that percentage of
the Exchange Debt owned and held by such Bank as specified on Schedule 2.2B,
shall, in exchange for and in consideration of the issuance and delivery of the
Common Shares and Preferred Shares to such Bank, be deemed cancelled, released,
acquitted and discharged in full.
Section 2.3. Registration Rights.
The Banks and the Company shall on and subject to the occurrence of the
Consummation Date enter into the Registration Rights Agreement (the
"Registration Rights Agreement"), in the form attached to this Agreement as
Exhibit E with all blanks therein appropriately completed, providing
registration rights to the Banks.
Section 2.4. Release Agreements.
On and subject to the occurrence of the Consummation Date, (a) the
Company shall execute and deliver a release in the form of Exhibit F-1 attached
hereto, with all blanks therein appropriately completed, (b) each Executive
Officer and director of the Company as of the date of this Agreement, the
Company and the Banks shall execute and deliver a release, in the form of
Exhibit F-2 attached hereto, with all blanks therein appropriately completed,
and (c) each person, entity and beneficial owner included within the description
set forth in clause (iii) or clause (iv) of the definition of "Releasing
Parties" herein and the Company and the Banks shall execute and deliver a
release in the form of Exhibit F-3 attached hereto, with all blanks therein
appropriately completed (as to each form of release, individually, a "Release
Agreement" and collectively, the "Release Agreements").
Section 2.5. Amendment of Taura Termination Agreement.
On and subject to the occurrence of the Consummation Date, Xxxxx Xxxxx
shall execute and deliver to the Company with copies to the Banks an amendment
to the Taura Termination Agreement dated as of May 1, 2001 by and between the
Company and Xxxxx Xxxxx, in the form of Exhibit H attached hereto with all
blanks therein appropriately completed (the "First Amendment to Taura
Termination Agreement").
Section 2.6. Consulting Agreement.
On and subject to the occurrence of the Consummation Date, Xxxxx Xxxxx
and the Company shall execute and deliver, with copies to the Banks, a
Consulting Agreement in the form attached as Exhibit I attached hereto with all
blanks therein appropriately completed (the "Consulting Agreement").
Section 2.7. Intentionally Omitted.
Section 2.8. Amendment of Blackstone Agreement.
On and subject to the occurrence of the Consummation Date, The
Blackstone Group L.P. shall execute and deliver to the Company with copies
thereof to the Banks an amendment to the understanding and agreement dated April
23, 2001, and effective as of March 23, 2001 between the Company and The
Blackstone Group, L.P. in the form of Exhibit J attached hereto (the "Blackstone
Amendment Letter").
Section 2.9. Designated Directors Options.
On and subject to the occurrence of the Consummation Date, the Company
agrees to grant to each of the Designated Directors an option for 4,000 shares
of Common Stock, in accordance with the terms and conditions of the Non-Employee
Director Stock Option Plan of the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the Banks that the
following representations and warranties are true and correct on and as of the
date of this Agreement and will be true and correct as of the Consummation Date
as if made on and as of that date (except to the extent that such
representations relate to an earlier date).
Section 3.1. Corporate Organization and Qualification.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is qualified and in
good standing as a foreign corporation in each jurisdiction where the properties
owned, leased or operated, or the business conducted by it, require such
qualification, except where failure to so qualify or be in good standing would
not reasonably be expected to have a Material Adverse Effect. The Company has
the corporate power and authority to own, lease and operate its properties and
assets and to carry on its business as it is now being conducted. The Company
has no Subsidiaries other than those listed on the Disclosure Schedule (the
"Company Subsidiaries"). The Disclosure Schedule sets forth the type of each
Company Subsidiary listed thereon, the jurisdiction of incorporation or
organization of each such Company Subsidiary, the percentage of the Company's
ownership of the outstanding voting stock (or other ownership interests) of each
such Company Subsidiary, and with respect to each such Company Subsidiary that
is a corporation, the authorized, issued and outstanding capital stock of each
such Company Subsidiary. The Company does not own, directly or indirectly, and
has not agreed to make any investment in, any voting stock or equity securities
of any corporation, partnership, limited liability company, or other
organization, whether incorporated or unincorporated, other than the Company
Subsidiaries. Each Company Subsidiary (i) is duly organized or formed and
validly existing under the laws of its jurisdiction of organization or
formation, (ii) is duly qualified to do business and in good standing in all
jurisdictions (whether federal, state, local or foreign) where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and in which the failure to be so qualified would reasonably be
expected to have a Material Adverse Effect on the Company, and (iii) has all
requisite corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted. The Company has delivered
to the Agent true and complete copies of the Restated Certificate of
Incorporation and the Amended and Restated Bylaws. Except as set forth in the
Disclosure Schedule, the minute books of the Company and of each of the Company
Subsidiaries accurately reflect in all material respects all corporate meetings
held or actions taken since July 28, 1994 by the
stockholders and Board of Directors of the Company and each Company Subsidiary,
respectively (including committees of the Board of Directors of the Company and
the Company Subsidiaries).
Section 3.2. Authority.
The Company has full corporate power and authority to approve,
authorize, execute, deliver and perform its obligations under this
Recapitalization Agreement and the Transaction Documents and to consummate the
transactions contemplated hereby and thereby. This Recapitalization Agreement
and the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by the
board of directors of the Company, and, except for the Stockholders Approval and
the filing of the amendment to the Restated Certificate of Incorporation and the
Certificate of Designation, no other corporate proceedings on the part of the
Company is necessary to authorize this Recapitalization Agreement or the
Registration Rights Agreement or to consummate the transactions contemplated
hereby and thereby. This Recapitalization Agreement has been duly and validly
executed and delivered by the Company and constitutes the valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, and similar laws affecting creditors' rights and
remedies generally and general equitable principles. The Registration Rights
Agreement, upon execution and delivery, will constitute the valid and binding
agreement of the Company enforceable against the Company in accordance with the
respective terms thereof, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, and similar laws affecting
creditors' rights and remedies generally and general equitable principles.
Section 3.3. Consents and Approvals; No Violation.
Neither the execution and delivery of this Recapitalization Agreement
nor the consummation by the Company of the transactions contemplated hereby, nor
compliance by the Company with any term or provisions hereof, will (i) violate
any provision of the Restated Certificate of Incorporation, as to be amended in
accordance with the terms and conditions hereof, or the Amended and Restated
Bylaws of the Company; (ii) require any consent, approval, authorization or
permit of, or registration, declaration or filing with or notification to, any
Governmental Entity, except for (a) (i) the filing by the Company with the
Commission of a proxy statement in definitive form relating to the Company
Stockholders Meeting (the "Proxy Statement") and (ii) the filing by the Company
with the Commission of a registration statement on Form S-1 (the "S-1") in
accordance with the terms and conditions of the Registration Rights Agreement
and the order by the Commission declaring the effectiveness of the
S-1, (b) the filing with the Secretary of State of the State of Delaware of the
amendment to the Restated Certificate of Incorporation and the Certificate of
Designation, (c) such filings and approvals as are required to be made or
obtained under the securities or "blue sky" laws of various states in connection
with the issuance of the Common Shares and Preferred Shares pursuant to this
Agreement, (d) the Stockholders Approval, (e) the filing by the Company of an
application with the AMEX for the listing on the AMEX of the Common Shares, (f)
the notification from AMEX that the Common Shares have been approved for
listing, and (g) such consents, approvals, authorizations, permits, filings or
notifications where the failure to obtain such consent, approval, authorization
or permit, or to make such filing or notification, could not in the aggregate
reasonably be expected to have a Material Adverse Effect or adversely affect the
ability of the Company to consummate the transactions contemplated hereby or
which are otherwise obtained on or prior to the Consummation Date; (iii) result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to either a right of termination,
cancellation or acceleration of a Lien) under any of the terms, conditions or
provisions of any material note, license, agreement or other instrument or
obligation to which the Company or any Company Subsidiary may be bound, which
would in the aggregate reasonably be expected to have a Material Adverse Effect,
except for such violations, breaches and defaults (or rights of termination,
cancellation or acceleration or Lien) as to which requisite waivers or consents
have been or will be obtained on or prior to the Consummation Date; or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, except for violations which would not in the
aggregate reasonably be expected to have a Material Adverse Effect or adversely
affect the ability of the Company to consummate the transactions contemplated
hereby.
Section 3.4. Capitalization and Voting Rights.
The authorized capital of the Company consists of 1,000,000 shares of
the Preferred Stock, none of which is outstanding; and 25,000,000 shares of
Common Stock, of which, as of the date of this Agreement, 15,568,362 shares were
issued and outstanding and 21,000 shares were held in treasury. All issued and
outstanding shares of Common Stock have been duly and validly authorized and
issued, are fully paid, nonassessable, and free of preemptive rights, and were
issued in compliance with all applicable state and federal laws concerning the
issuance of securities. Except for (i) the rights granted to the Banks pursuant
to the Amendment to the Certificate, (ii) currently outstanding options to
purchase an aggregate of 2,139,065 shares of the Common Stock granted to
employees or directors pursuant to the Company's Amended and Restated 1994
Employee Flexible Stock Option Plan (including, without limitation, pursuant to
that Stock Option Agreement dated as of December 13, 2000
between the Company and Xxxxx Xxxxx (the "Xxxxx Plan Option Agreement"), the
1993 Flexible Stock Option Plan and the Non-Employee Director Stock Option Plan
(the "Option Plans"), (iii) the options to purchase 540,000 shares of Common
Stock granted to Xxxxx Xxxxx pursuant to that Stock Option Agreement dated as of
March 15, 2000 (the "Taura Non-Plan Option Agreement"), (iv) options to purchase
333,000 shares of Common Stock relating to options from the 1993 restructuring
which were originally referred to as Class A options and were later converted to
Common Stock options (collectively with the options set forth in clauses (ii)
and (iii), the "Options"), and (v) as contemplated by this Agreement, the
Company does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, rights, commitments, obligations (contingent or
otherwise) or agreements of any character relating to or providing or calling
for the purchase or issuance of any shares of capital stock or any other equity
securities of the Company or any Company Subsidiaries or any securities
representing the right to purchase or otherwise receive any shares of the
capital stock of the Company or any Company Subsidiaries. Except as contemplated
by this Recapitalization Agreement, neither the Company nor any of the Company
Subsidiaries has any obligation (contingent or otherwise) to purchase, redeem,
retire, cancel or otherwise acquire any shares of its capital stock or any
interest therein, or to pay any dividend or make any other distribution in
respect thereof. Except in connection with the plans and agreements disclosed in
clauses (i), (ii), (iii) and (iv) of this Section 3.4, no shares of Common Stock
or Preferred Stock, other than the Common Shares and Preferred Shares, have been
reserved for issuance. Except for the issuance pursuant to any exercise of
Options, since September 29, 2001, the Company has not issued any shares of its
capital stock or any securities convertible into or exchangeable or exercisable
for any shares of its capital stock. The Company has no fractional shares
outstanding. The Company owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of the Company Subsidiaries, free
and clear of any liens, pledges, charges, encumbrances and security interests
whatsoever ("Liens") other than Liens granted in connection with the Original
Agreement. All of the issued and outstanding shares of capital stock of the
Company Subsidiaries are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No Company Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, rights, commitments,
obligations (contingent or otherwise) or agreements of any character relating to
or providing or calling for the purchase or issuance of any shares of capital
stock or any other equity security of such Company Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Company Subsidiary. The Company is
not a party or subject to any agreement or understanding, and, to the best
knowledge of
the Company, there is no agreement or understanding between any persons and/or
entities, which affects or relates to the voting or giving of written consents
with respect to any security or by a director of the Company, except this
Agreement. The Company has not granted registration rights to any person with
respect to any of the Company's securities that currently remains in force and
effect except (i) that certain Registration Rights Agreement entered into by the
Company and certain other persons identified on the signature pages thereto,
dated as of December 29, 1993, as amended by the First Amendment dated as of
April 6, 1994 by and among the Company and the other parties thereto (the "1993
Agreement"), (ii) the Taura Plan Option Agreement, and (iii) the Taura Non-Plan
Option Agreement . The Company has delivered to the Agent a true and complete
copy of the 1993 Agreement, the Taura Plan Option Agreement and the Taura
Non-Plan Option Agreement.
Section 3.5. Litigation.
There are no civil, criminal or administrative actions, suits, demands,
claims, hearings, notices of violation, investigations, demand letters,
proceedings, injunctions, orders, judgments, decrees or regulatory restrictions
imposed upon, pending or, to the Company's knowledge, threatened against the
Company except as set forth in the Disclosure Schedule (i) that would reasonably
be expected to have a Material Adverse Effect or (ii) that question the validity
of this Recapitalization Agreement or any action to be taken by the Company in
connection with the consummation of the transactions contemplated hereby.
Section 3.6. Financial Statements.
A. The Historical Financial Statements and the Interim Financial
Statements (including, in each case, any notes thereto) were prepared in
accordance with GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by GAAP) and each present fairly, in all
material respects, the consolidated financial position of the Company as of the
respective dates thereof and for the respective periods indicated therein,
except as otherwise noted therein (subject, in the case of unaudited statements,
to normal and recurring year-end adjustments which are not expected,
individually or in the aggregate, to be material); each of such statements
(including, in each case, any notes thereto) complies in all material respects
with applicable Regulations.
B. There are no debts, liabilities or obligations, whether accrued or
fixed, absolute or contingent, matured or unmatured or determined or
determinable, including any liability for Taxes ("Liabilities") of the Company,
other than Liabilities (i) reflected or reserved against on the Reference
Balance Sheet to the extent
required in accordance with GAAP and (ii) incurred since September 29, 2001 in
the ordinary course of the business, consistent with the past practice of the
Company.
Section 3.7. Absence of Certain Changes or Events.
Except as publicly disclosed in the Company SEC Reports filed with the
Commission prior to the date hereof, since September 29, 2001, no event has
occurred and no fact or set of circumstances has arisen which has resulted in or
would reasonably be expected to result in a Material Adverse Effect.
Section 3.8. Brokers and Finders.
In connection with the transactions contemplated by this
Recapitalization Agreement, except for The Blackstone Group L.P., the Company
has not employed, nor, to the Company's knowledge, has any other person
affiliated with the Company employed, any investment banker, broker, finder,
consultant or intermediary which would be entitled to any investment banking,
brokerage, finder's or similar fee or commission in connection with this
Recapitalization Agreement or the transactions contemplated hereby.
Section 3.9. Taxes.
Except as set forth in the Disclosure Schedule, (i) the Company has
timely filed and caused each of the Company Subsidiaries to timely file all Tax
Returns that any such entity was required to file pursuant to applicable law,
except for Tax Returns the failure of which to file would not cause a Material
Adverse Effect, (ii) all such Tax Returns were correct and complete in all
material respects, (iii) all material Taxes due and owing by the Company and any
of the Company Subsidiaries (whether or not shown on any Tax Return) have been
paid, (iv) the Historical Financial Statements and the Interim Financial
Statements reflect an adequate reserve (other than a reserve for deferred income
taxes established to reflect differences between book basis and tax basis of
assets and liabilities) for all Taxes payable by the Company and the Company
Subsidiaries for all taxable periods and portions thereof through the dates of
the reference, (v) neither the Company nor any of the Company Subsidiaries has
waived any statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency or the collection of
Taxes, (vi) to the Company's knowledge, no deficiencies, adjustments or claims
for any Taxes have been proposed, asserted or assessed against the Company or
any of the Company Subsidiaries, (vii) there are no Security Interests for Taxes
other than for current Taxes not yet due upon any assets of the Company or any
of the Company Subsidiaries, (viii) none of the Tax Returns of the Company or
any of the Company Subsidiaries have been selected for or are now under audit or
examination by any tax authority or other Governmental Entity, and there are no
suits, actions, proceedings or investigations pending or, to the knowledge of
the Company or any of the Company Subsidiaries, threatened against the Company
or any of the Company Subsidiaries with respect to any Taxes, (ix) all material
Taxes that are required by law to be withheld or collected by the Company or any
of the Company Subsidiaries have been duly withheld and collected and, to the
extent required by applicable law, have been paid to the proper tax authority or
other Governmental Entity or properly segregated or deposited, (x) neither the
Company nor any of the Company Subsidiaries has been a member of an affiliated
group filing a consolidated federal income Tax Return or has liability for the
Taxes of any person or entity (other than the Company or any of the Company
Subsidiaries) under Section 1.1502-6 of the Treasury Regulations or any similar
provision of state, local or foreign law, as transferee or successor, by
contract or otherwise, and (xi) neither the Company nor any of the Company
Subsidiaries is party to any Tax sharing or other agreement or arrangement that
will require any payment with respect to Taxes.
Section 3.10. SEC Reports.
The only reports, schedules and, definitive proxy statements, filed
since December 30, 2000 by the Company with the Commission under Sections 13(a),
14(a), 14(c) or 15(d) of the Exchange Act through the date of this Agreement and
the only registration statements or prospectuses filed by the Company with the
Commission and in effect as of the date of this Agreement, are the following:
Annual Report on Form 10-K for the fiscal year ended December 30, 2001;
Quarterly Reports on Form 10-Q for the fiscal quarterly periods ended March 31,
2001, June 30, 2001 and September 29 , 2001; Current Reports on Form 8-K dated
March 28, 2001, April 24, 2001 and July 11, 2001; Revised Definitive Proxy
Statement for Annual Meeting of Stockholders held May 16, 2001, filed on April
20, 2001; and Registration Statements on Form S-8 (Registration Nos. 33-99868
and 33-99866) both filed November 29, 1995 (collectively, the "Company SEC
Reports"). The Company has previously made available to the Agent an accurate
and complete copy of communications, if any, not included in any of the Company
SEC Reports, mailed by the Company to its stockholders since December 30, 2000.
None of the Company SEC Reports or such communications to stockholders contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading,
except that information as of a later date shall be deemed to modify information
as of an earlier date. Since December 30, 2000, the Company has timely filed all
Company SEC Reports and other documents required to be filed by it under the
Securities Act and the Exchange Act, and, as of their respective dates, all
Company SEC Reports complied in all material respects with the published
Regulations with respect thereto. The Company has no registration statements or
prospectuses currently in effect, except for the
Company's Registration Statements on Form S-8 (Registration Nos. 33-99868 and
33-99866), both filed on November 29, 1995 in connection with the Company's 1994
Amended and Restated Employee Flexible Stock Option Plan and the Non-Employee
Director Stock Option Plan, respectively.
Section 3.11. Certain Contracts.
A. Except as set forth in the Disclosure Schedule and excluding the
Original Agreement (there being no agreement that the Original Agreement would
otherwise be included), neither the Company nor the Company Subsidiaries is a
party to or bound by:
(i) any contract, arrangements, commitment or understanding
(whether written or oral) which, upon the consummation of the
transactions contemplated by this Recapitalization Agreement will
(either alone or upon the occurrence of any additional acts or events)
result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) becoming due
from the Company to any officer, director or employee thereof;
(ii) any contract, arrangement, commitment or understanding
(whether written or oral), which would materially and adversely
restrict the conduct by the Company of any line of business;
(iii) any contract, arrangement, commitment or understanding
(whether written or oral), including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan,
any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Recapitalization Agreement, or the
value of any of the benefits of which will be calculated on the basis
of any of the transactions contemplated by this Recapitalization
Agreement;
(iv) any contract, agreement, commitment or understanding
(whether written or oral) among stockholders of the Company; or
(v) any employment agreement or understanding (written or
oral) with officers of the Company or the Company Subsidiaries or any
other employment agreement or understanding (written or oral) not
terminable at will.
B. Each contract, arrangement, commitment or understanding of the type
described in this Section 3.11, whether or not set forth in the Disclosure
Schedule, is referred to herein as a "Company Contract," and, except as
disclosed on the Disclosure Schedule, the Company does not know of, or has not
received notice of, any violation
of the above by any of the other parties thereto, which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
Section 3.12. Environmental Liability.
Except as disclosed in the Company SEC Reports or in the Disclosure
Schedule and except for those matters which would not reasonably be expected to
have a Material Adverse Effect:
A. The Company, each of the Company Subsidiaries, and all of their
respective properties, assets, and operations are in full compliance with all
Environmental Laws. The Company is not aware of, nor has the Company received
notice of, any past, present, or future conditions, events, activities,
practices, or incidents which may interfere with or prevent the compliance or
continued compliance of the Company and the Company Subsidiaries with all
Environmental Laws;
B. The Company and each of the Company Subsidiaries have obtained all
permits, licenses, and authorizations that are required under applicable
Environmental Laws, and all such permits are in good standing and the Company
and the Company Subsidiaries are in compliance with all of the terms and
conditions of such permits;
C. No Hazardous Materials exist on, about, or within or have been used,
generated, stored, transported, disposed of on, or Released from any of the
properties or assets of the Company or any Company Subsidiary except in
compliance with Environmental Laws. The use which the Company and the Company
Subsidiaries make and intend to make of their respective properties and assets
will not result in the use, generation, storage, transportation, accumulation,
disposal, or Release of any Hazardous Material on, in, or from any of their
properties or assets except in compliance with Environmental Laws;
D. Neither the Company nor any of the Company Subsidiaries nor any of
their respective currently or previously owned or leased properties or
operations is subject to any outstanding or, to the best of its knowledge,
threatened order from or agreement with any Governmental Entity or other person
or entity or subject to any judicial or administrative proceeding with respect
to (i) failure to comply with Environmental Laws, (ii) Remedial Action, or (iii)
any Environmental Liabilities arising from a Release or threatened Release;
E. There are no conditions or circumstances associated with the
currently or previously owned or leased properties or operations of the Company
or any of the Company Subsidiaries that could reasonably be expected to give
rise to any Environmental Liabilities;
F. Neither the Company nor any of the Company Subsidiaries is a
treatment, storage, or disposal facility requiring a permit under the Resource
Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq., regulations
thereunder or any comparable provision of state law. The Company and the Company
Subsidiaries are compliance with all applicable financial responsibility
requirements of all Environmental Laws;
G. Neither the Company nor any of the Company Subsidiaries has filed or
failed to file any notice required under applicable Environmental Law reporting
a Release; and
H. No Lien arising under any Environmental Law has attached to any
property or revenues of the Company or the Company Subsidiaries.
Section 3.13 ERISA
A. The Disclosure Schedule contains a true and complete list of each of
the Benefit Plans.
B. Except for those Multiemployer Plans disclosed on the Disclosure
Schedule, neither the Company nor any ERISA Affiliate has at any time
contributed to, has had any obligation to contribute to, or has any liability,
contingent or otherwise, to any Multiemployer Plan. With respect to each
Multiemployer Plan to which the Company or any ERISA Affiliate has at any time
contributed to, has had any obligation to contribute to, or has any liability,
contingent or otherwise, (i) neither the Company nor any ERISA Affiliate has
withdrawn, partially withdrawn, or, except as provided in the Disclosure
Schedule, received any notice of any claim or demand for Withdrawal Liability or
partial Withdrawal Liability, (ii) to the knowledge of the Company, neither the
Company nor any ERISA Affiliate has any potential Withdrawal Liability or
potential partial Withdrawal Liability with respect to each such Multiemployer
Plan that would arise upon a complete or partial withdrawal as described in
ERISA Section 4203 or 4205, other than such a Withdrawal Liability or partial
Withdrawal Liability that would not reasonably be expected to result in a
Material Adverse Effect, (iii) neither the Company nor any ERISA Affiliate has
received any notice that any such Multiemployer Plan is in reorganization, that
increased contributions may be required to avoid a reduction in Multiemployer
Plan benefits or the imposition of any excise tax, or that any such
Multiemployer Plan is or may become insolvent, (iv) to the knowledge of the
Company, no such Multiemployer Plan is a party to any pending merger or asset or
liability transfer, (v) to the knowledge of the Company, there are no PBGC
proceedings against or affecting any such Multiemployer Plan, and (vi) neither
the Company nor any ERISA Affiliate has any Withdrawal Liability by reason of a
sale of assets pursuant to Section 4204 of ERISA. Nothing has occurred or is
expected to occur that would materially increase the Company's or any ERISA
Affiliate's total potential Withdrawal Liability to any such Multiemployer Plan
other than an increase that would not reasonably be expected to result in a
Material Adverse Effect.
C. Except as disclosed on the Disclosure Schedule, neither the Company
nor any Company Subsidiary maintains or is obligated to provide benefits under
any life, medical or health plan (other than as an incidental benefit under a
Qualified Plan) which provides benefits to retirees or other terminated
employees, other than benefit continuation rights under the Consolidated Omnibus
Budget Reconciliation of 1985, as amended, or any plan subject to Section 505 of
the Code.
D. Each of the Benefit Plans and its administration is currently in
compliance with ERISA, the Code and all other applicable laws and with any
applicable collective bargaining agreement, except for those instances of
noncompliance that would not reasonably be expected to result in a Material
Adverse Effect. To the knowledge of the Company, no transaction contemplated by
this Agreement will result in liability to the PBGC under Section 302(c)(ii),
4062, 4063, 4064 or 4069 of ERISA, or otherwise, with respect to the Company,
any Company Subsidiary, any ERISA Affiliate or any other corporation or
organization controlled by or under common control with any of the foregoing
within the meaning of Section 4001 of ERISA, other than a liability that would
not reasonably be expected to result in a Material Adverse Effect. There are no
pending, or to the knowledge of the Company, threatened claims by or on behalf
of any Benefit Plan, or by any person covered thereby, other than ordinary
claims for benefits submitted by participants or beneficiaries, which,
individually or in the aggregate, would reasonably be expected to result in a
Material Adverse Effect. No employer securities, employer real property or other
employer property is included in the assets of any Benefit Plan. Neither the
Company nor any Company Subsidiary is subject to, and the transactions
contemplated by this Agreement will not cause the Company or any Company
Subsidiary to be subject to, any liability under any Benefit Plan which,
individually or in the aggregate, would reasonably be expected to result in a
Material Adverse Effect.
E. No accumulated funding deficiency (as defined in Section 302 of
ERISA and Section 412 of the Code and the regulations promulgated or rulings
issued thereunder) has been incurred with respect to any Benefit Plan, whether
or not waived; and to the knowledge of the Company, no event has occurred or
circumstance exists that may result in an accumulated funding deficiency as of
the last day of the current plan year of any Benefit Plan. Neither the Company
nor any Company Subsidiary is required to provide security to a Benefit Plan
under Section 401(a)(29) of the Code, the regulations promulgated or rulings
issued thereunder or Section 307 of ERISA. The Company and its Subsidiaries have
performed, in all material respects, all of their obligations under all Benefit
Plans, and substantially all contributions and other payments accrued under, or
required to be made by the Company or any Company Subsidiary to, any Benefit
Plan with respect to any period ending before or on the Consummation
Date have been made or any such contributions that have not been made have been
accurately reflected in the Company's financial statements in accordance with
GAAP.
F. Except for any formal written qualification requirement with respect to
which the remedial amendment period set forth in Section 401(b) of the Code, and
any regulations, rulings or other Internal Revenue Service releases thereunder,
has not expired, (i) each Benefit Plan that is intended to be a Qualified Plan
has received a favorable determination letter from the Internal Revenue Service
and is qualified in form and operation under Section 401(a) of the Code, and
each trust for each such Plan is exempt from federal income tax under Section
501(a) of the Code, and (ii) no event has occurred or circumstance exists that
gives rise to disqualification or loss of tax-exempt status of any such Plan or
trust, except for those events or circumstances that would not reasonably be
expected to result in a Material Adverse Effect. No event has occurred or
circumstance exists that could result in an increase in premium costs of Benefit
Plans that are insured, or an increase in benefit costs of such Plans that are
self-insured, except to the extent that such event or circumstance would not
reasonably be expected to result in a Material Adverse Effect.
G. The terms "Plan," "PBGC" and "Multiemployer Plan" shall have the
meanings defined in ERISA. "Withdrawal Liability" shall be given the same
meaning as that term is described in ERISA Section 4201 et. seq.
Section 3.14. Employees.
To the Company's knowledge, no executive, key employee, or group of
employees has any plans to terminate employment with any of the Company or the
Company Subsidiaries. Except as disclosed on the Disclosure Schedule, none of
the Company and the Company Subsidiaries is a party to or bound by any
collective bargaining agreement, nor has any of them experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes that would reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of the Company Subsidiaries has committed any unfair
labor practice that would reasonably be expected to have a Material Adverse
Effect. To the Company's knowledge, there is no organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of any of the Company and the Company Subsidiaries.
Section 3.15. Compliance with Law; Authorizations.
The Company is not in violation in any material respect of any law,
ordinance, rule or regulation of any Governmental Entity, except such violations
which would not reasonably be expected to have a Material Adverse Effect.
Section 3.16. Disclosure.
Neither this Recapitalization Agreement nor the financial statements
referred to in Section 3.6 above (including the footnotes thereto), or any
Schedule (including the Disclosure Schedule), Exhibit or certificate delivered
in accordance with the terms hereof or any document or statement in writing
which has been supplied by or on behalf of the Company, in connection with the
transactions contemplated hereby, contains any untrue statement of a material
fact or omits any statement of a material fact necessary in order to make the
statements contained herein or therein not misleading; provided, however, that
notwithstanding any provision to the contrary herein, the Agent and the Banks
shall be entitled only to rely on the latest version of information furnished to
them prior to the date of this Agreement by the Company which supersedes
previous information furnished to them prior to the date of this Agreement. All
estimates or projections made by or on behalf of the Company and delivered to
the Agent or the Banks have been reasonably made, in good faith, based upon
assumptions believed by the Company to be reasonable under the circumstances at
the time made. The disclosures in the Disclosure Schedule shall relate only to
the representations and warranties in the Section of this Agreement to which
they expressly relate or are expressly referenced and to no other representation
or warranty in this Agreement. In the event of any inconsistency between the
statements in the body of this Agreement and those in the Disclosure Schedule
(other than an exception expressly set forth as such in the Disclosure Schedule
in relation to a specifically identified representation or warranty), those in
this Agreement shall control.
Section 3.17. Board Approval.
The board of directors of the Company, by resolutions duly adopted at a
meeting duly called and held and not subsequently rescinded or modified in any
way, has, prior to the date of this Agreement and the execution and delivery of
this Agreement, duly (a) approved this Recapitalization Agreement and the
consummation of all transactions contemplated hereby, pursuant to the applicable
provisions of Delaware General Corporation Law, and (b) recommended that the
stockholders of the Company approve the matters described in Section 2.2A of
this Agreement.
Section 3.18. Takeover Laws.
The Board of Directors, having considered the Amendment to the Certificate,
the Certificate of Designation, the New Credit Agreement and the Registration
Rights Agreement, has approved this Agreement and the transactions contemplated
hereby and thereby and such approval constitutes approval of the
Recapitalization Agreement and the other transactions contemplated hereby by the
Board of Directors under the provisions of Section
203 of the Delaware General Corporate Law, such that the restrictions and
limitations of Section 203 of the Delaware General Corporate Law are not
applicable to this Agreement and the transactions contemplated hereby. To the
knowledge of the Company, no other state takeover statute is applicable to the
Recapitalization Agreement or the other transactions contemplated hereby.
ARTICLE IV
COVENANTS
Section 4.1. Consents/Authorizations/AMEX Listing.
A. The Company (a) will make, or cause to be made, all such filings and
submissions, and take or cause to be taken all such action, under laws, rules
and relations as may be applicable and required for it to consummate the
transactions contemplated hereby in accordance with the terms of this Agreement,
and (b) will use its reasonable best efforts to obtain, or cause to be obtained,
all authorizations, approvals, consents, permits and waivers of or from all
Governmental Entities necessary to be obtained by it in order for it to
consummate such transactions; provided, however, that the Company shall not be
required to (i) register or qualify the New Securities for offer or sale in any
jurisdiction in which an applicable exemption from such registration or
qualification is available, (ii) qualify as a dealer in securities under the
laws of any jurisdiction, or (iii) provide its general consent to service of
process in any jurisdiction. The Company shall use its reasonable best efforts
to obtain any consents, approvals or waivers of any third party required in
order for the Company to consummate the transactions contemplated hereby in
accordance with the terms of this Agreement.
B. The Company shall file an application with the AMEX for approval to list
the Common Shares on the AMEX, subject to official notice of issuance, and the
Company shall use its reasonable best efforts to have such application approved.
Section 4.2. Payment of Expenses.
The Company shall pay, on the Consummation Date (or, if this Agreement is
terminated as provided in Section 9.1, on the date of termination) (A) any
transfer taxes payable on the issuance of the New Securities, (B) the reasonable
fees and expenses of Xxxxxx and Xxxxx, LLP, counsel for the Agent; (C) the
reasonable fees and expenses of Xxxxxxxx & Xxxxx; (D) any fees and expenses owed
to the Blackstone Group L.P. with half of the transaction fee to be paid after
the Consummation Date pursuant to the terms of the Blackstone Amendment Letter;
(E) the reasonable fees and expenses of the Agent incurred in connection with
its due diligence review of the Company pursuant to Section 4.7 and background
investigations concerning the Designated Directors; and (F) the
reasonable fees and expenses of any other attorneys, accountants, consultants
and financial advisors of the Company other than the Blackstone Group, L.P.; it
being understood that the amounts described in the foregoing clauses (A) through
(F) shall be paid immediately prior to the Consummation Date or the date of
termination, as the case may be, and may be paid from drawings under the
Original Agreement (to the extent available thereunder and upon satisfaction of
all other conditions to making advances thereunder) and that the bills presented
to the Company in respect of such amounts shall have been updated prior to
delivery to the Company to include all amounts incurred (and posted to the
billing system of the respective professional service provider) as of the
Consummation Date, or the date of termination, as the case may be. Following the
Consummation Date, the Company shall also promptly pay the reasonable fees and
expenses of counsel incurred on or prior to sixty days after the Consummation
Date.
Section 4.3. Availability of Financial Information.
From the date hereof to the Consummation Date, the Company shall upon
reasonable notice and only as frequently as the Agent or the Banks may
reasonably request, make its books and records reasonably available for
inspection to the Agent or the Banks and their respective counsel and advisors
at reasonable times during normal business hours, subject to the execution of
appropriate confidentiality agreements and will cooperate with and provide to
the Agent, the Banks, and their respective counsel and advisors any financial
information reasonably necessary to determine compliance by the Company with the
terms and conditions of this Agreement; provided that the Company or its
representatives may be present at or participate in any such inspection.
Section 4.4. Conduct of Business.
A. From the date hereof to the Consummation Date, except as contemplated by
this Agreement, the Company shall not and shall not permit any Company
Subsidiary to: (i) issue any shares of its capital stock (nor any other
securities convertible into or exchangeable or exercisable for its capital
stock) other than pursuant to exercises of options under the Option Plans; (ii)
in the case of the Company, pay dividends on its capital stock; (iii) register
any shares of its capital stock or any such convertible security or other
security exchangeable or exercisable therefor under the Securities Act, in
connection with any distribution of such stock or securities; other than
pursuant to the Company's Registration Statements on Form S-8 (Registration Nos.
33-99868 and 33-99866); (iv) other than in the ordinary course of business
consistent with past practice, (a) incur any indebtedness for borrowed money
(other than pursuant to existing lines of credit or short-term indebtedness
incurred in the ordinary course of business consistent with past practice,
indebtedness of the Company to any of the Company Subsidiaries or of any of the
Company
Subsidiaries to the Company), (b) assume, guarantee, endorse or otherwise as an
accommodation become responsible for the obligations of any other individual,
corporation, or other entity, or (c) make any loan or advance; (v) (a) adjust,
split, combine or reclassify any capital stock, (b) directly or indirectly
redeem, purchase or otherwise acquire, any shares of its capital stock or any
securities or obligations convertible into or exchangeable or exercisable for
any shares of its capital stock, (c) grant any stock appreciation rights or
grant any individual, corporation or other entity any right to acquire any
shares of its capital stock; (vi) sell, transfer, mortgage, encumber or
otherwise dispose of any of its properties or assets to any individual,
corporation or other entity other than a Subsidiary, or cancel, release, or
assign any indebtedness to any such person or any claims held by any such
person, except in the ordinary course of business consistent with past practice
or pursuant to contracts or agreements in force at the date of this Agreement;
(vii) except for transactions in the ordinary course of business consistent with
past practice or pursuant to contracts or agreements in force at the date of
this Agreement, make any material investment either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of any
property or assets of any other individual, corporation or other entity other
than a Company Subsidiary thereof or any existing joint venture; (viii) except
for transactions in the ordinary course of business consistent with past
practice, enter into or terminate any material contract or agreement, or make
any change in any of its material leases or contracts, other than renewals of
contracts and leases without material adverse changes of terms; (ix) other than
in the ordinary course of business consistent with past practice or with the
written consent of the Agent, increase the compensation or fringe benefits of
any of its employees, pay any pension or retirement allowance not required by
any existing Benefit Plan or agreement to any such employees, or establish,
become a party to, amend, or commit itself to any Benefit Plan, or any other
arrangement of remuneration for services, in a manner that would reasonably be
expected to result in a Material Adverse Effect; without by implication limiting
the foregoing, no payments other than (x) for salaries in effect as of the date
of this Agreement, (y) payments, if any, in accordance with the Company's Annual
Incentive Plan or (z) normal and routine reimbursement of out-of-pocket business
expenses shall be made with respect to officers of the Company; (x) accelerate
the vesting of any stock options or other stock-based compensation or any other
compensation related benefits; (xi) settle any claim, action or proceeding
involving money damages, except in the ordinary course of business consistent
with past practice; (xii) take any action that would prevent or impede the
transactions contemplated by this Agreement or the Transaction Documents; (xiii)
amend its Restated Certificate of Incorporation or the Amended and Restated
Bylaws; (xiv) except as required by
law, amend or modify any Benefit Plan; or (xv) agree to, or make any commitment
to, take any of the actions prohibited by this Section.
B. From the date hereof to the Consummation Date, the Company shall, and
shall cause the Company Subsidiaries to: (i) conduct its business in the
ordinary course consistent with past practice; (ii) use reasonable efforts to
maintain and preserve intact its business organization, employees and
advantageous business relationships and, except as otherwise contemplated by the
agreements listed on the Disclosure Schedule, retain the services of its key
officers and key employees, it being understood that so long as the Company uses
such reasonable efforts, the failure of any officer or employee of the Company
to remain an officer or employee of the Company shall not constitute a breach of
this covenant; (iii) take no action which would reasonably be expected to
materially and adversely affect or delay the ability of the Company to obtain
any necessary approvals of any Governmental Entity required for the transactions
contemplated hereby or to perform its covenants and agreements under this
Agreement, (iv) take no action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this
Recapitalization Agreement being or becoming untrue in any material respect at
any time prior to the Consummation Date, or in any of the conditions set forth
in Article VIII not being satisfied or in a violation of any provision of this
Recapitalization Agreement, except, in every case, as may be required by
applicable law.
C. Notwithstanding the foregoing, it is expressly understood and agreed
that none of the provisions of this Section 4.4 shall constitute a modification
or waiver of the terms and conditions of the Original Agreement and the Company
shall continue to comply with the terms and conditions of the Original
Agreement.
Section 4.5. Regulatory Matters; Cooperation With Respect to Filing.
A. The Company shall prepare and file with the Commission (i) a preliminary
proxy statement relating to the Company Stockholders Meeting as soon as
practicable following the date of this Agreement, and (ii) the S-1, in
accordance with the terms and conditions of the Registration Rights Agreement.
The Company shall use its reasonable best efforts to respond to comments, if
any, of the Commission regarding such preliminary filing and to cause the Proxy
Statement to be mailed to stockholders at the earliest practicable time.
B. The Company and the Banks shall cooperate with each other and provide to
each other all information reasonably necessary in order to prepare the S-1 in
accordance with the terms and conditions of the Registration Rights Agreement
and the Proxy Statement (including the preliminary filing thereof)
(collectively, the "SEC Transaction Filings") and shall provide reasonably
promptly to the other party any information that such party
may obtain that could necessitate amending or supplementing any such document.
The Company will notify the Banks promptly of the receipt of any comments from
the Commission or its staff or any other appropriate government official and of
any requests by the Commission or its staff or any other appropriate government
official for amendments or supplements to any of the SEC Transaction Filings or
for additional information and will supply the Banks with copies of all
correspondence between the Company or any of its representatives on the one
hand, and the Commission or its staff or any other appropriate government
official, on the other hand, with respect thereto. If at any time any event
shall occur that should be set forth in an amendment of, or a supplement to, any
of the SEC Transaction Filings, the Company agrees as promptly as practicable to
prepare and file such amendment or supplement and to distribute such amendment
or supplement as required by applicable law, including, in the case of an
amendment or supplement to the Proxy Statement by mailing such supplement or
amendment to the Company's stockholders. The SEC Transaction Filings, when filed
with the Commission or any appropriate government official, shall comply in all
material respects with all applicable requirements of law. The Company
represents and agrees that none of the information which is included in the S-1
or the Proxy Statement will, at the time of filing and, in the case of the S-1,
when it becomes effective and, with respect to the Proxy Statement, when mailed
or at the time of the Company Stockholders Meeting, be false or misleading with
respect to any material fact or shall omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances in which
they were made, not materially misleading. Notwithstanding the foregoing, the
Company shall have no responsibility for the truth or accuracy of any factual
information as to the Banks or the Designated Directors included in the S-1 or
the Proxy Statement that is furnished in writing to the Company by the Banks or
the Designated Directors specifically for inclusion in the S-1 or the Proxy
Statement. Each Bank represents and agrees severally and not jointly that none
of the factual information as to the Bank which is included in the S-1 or the
Proxy Statement that is furnished in writing to the Company by the Bank
specifically for use in connection with the S-1 or the Proxy Statement will, at
the time of filing and, in the case of the S-1, when it becomes effective and,
with respect to the Proxy Statement, when mailed or at the time of the Company
Stockholders Meeting, be false or misleading with respect to any material fact
or shall omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
Section 4.6. Meeting of Stockholders.
As promptly as practicable after the date hereof, the Company shall take
all action necessary in accordance with Delaware General Corporation Law and its
Restated Certificate of Incorporation and Amended and Restated Bylaws to convene
the Company Stockholders Meeting at the earliest practicable time.
Section 4.7. Access to Information and Properties.
During the period from the date of this Agreement through the Consummation
Date, the Company shall give the Agent and its authorized representatives
(including, without limitation, legal counsel), reasonable access during regular
business hours to all plants, offices, warehouses, facilities, personnel,
assets, books, records, and documents (including tax returns) and cause the
officers, employees, and accountants of the Company to obtain and furnish such
financial and operating data and other information with respect to the Company
and its Benefit Plans as the Agent or its representatives may request; provided,
however, (i) that the Agent and its representatives shall take such actions as
are deemed necessary in the reasonable judgment of the Company to schedule such
access and visits through designated officers of the Company and in such a way
as to avoid disrupting the normal business of the Company, (ii) the Company
shall not be required to take any action which would constitute a waiver of the
attorney-client or other privilege and (iii) the Company need not supply the
Agent or its representatives with any information which, in the reasonable
judgment of the Company, it is under a contractual or legal obligation not to
supply, provided, should the Company withhold any information pursuant to such a
contractual or legal obligation, the Company shall give prompt written notice to
the Agent that the Company is withholding information pursuant to such a
contractual or legal obligation. No investigation, review, study or examination
by the Agent or the Banks or their respective representatives shall offset,
limit or diminish the scope of the representations and warranties of the Company
in this Agreement or the Transaction Documents.
Section 4.8. Further Actions.
From time to time, as and when reasonably requested by the Agent or the
Banks, the Company shall execute and deliver, or cause to be executed and
delivered, such documents and instruments and shall take, or cause to be taken,
such further or other actions as may be reasonably necessary to effectuate the
transactions contemplated by this Agreement and the Transaction Documents.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BANKS
Each of the Banks, severally and not jointly, represents and warrants to
the Company that the following representations and warranties are true and
correct on and as of the date of this Agreement with respect to such Bank and
will be true and correct through the Consummation Date as if made on and as of
that date.
Section 5.1. Authority.
Each Bank has the requisite power and authority to approve, authorize,
execute and deliver this Recapitalization Agreement and to consummate the
transactions contemplated hereby. This Recapitalization Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by such Bank. This Recapitalization Agreement has been duly and
validly executed and delivered by each Bank and constitutes the valid and
binding agreement of each Bank enforceable against such Bank in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, and similar laws affecting creditors' rights and
remedies generally and general equitable principles.
Section 5.2. Ownership of Exchange Debt.
Each Bank is the owner and holder of all right, title and interest, free
and clear of any and all Liens (other than Liens evidencing securitization of
its portfolio and pledges or assignments to the Federal Reserve Bank for
security purposes) of such Bank's percentage of the Exchange Debt, as set forth
opposite such Bank's name on Schedule 2.2B hereto.
Section 5.3. Exemption of Transaction.
Each of the Banks understands and acknowledges that the transactions
contemplated in this Agreement are not being registered under the Securities Act
or any state securities laws, on the grounds that the such transactions are
exempt under the Securities Act and applicable state securities laws. Each of
the Banks is acquiring the New Securities for investment, solely for such Bank's
own account and not with a view to, or for resale in connection with, the
distribution or other disposition thereof in violation of the Securities Act.
Each of the Banks is an "Accredited Investor" as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act and has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of an investment in the New Securities and the Company.
Section 5.4. Compliance with Laws and Other Instruments.
The execution and delivery of this Agreement by or on behalf of each of the
Banks and the consummation of the transactions respectively contemplated herein
do not and will not conflict with or result in any violation of or default under
any provision of any charter, bylaws, trust agreement, partnership agreement, or
other organizational document, as the case may be, of such Bank or any material
agreement, certificate, or other instrument to which such Bank is a party or by
which such Bank or any of its properties is bound, or any permit, franchise,
judgment, decree, statute, rule, regulation, or other law applicable to such
Bank or the business or properties of such Bank that would reasonably be
expected to materially or adversely affect the consummation of the transactions
contemplated hereby.
Section 5.5. Business Address.
The address set forth on each Bank's signature page to this Agreement is
the Bank's correct business address.
Section 5.6 Legends.
Each Bank understands that the certificates evidencing the New Securities
will bear a legend indicating that the securities have not been registered under
any federal or state securities laws and are restricted securities.
ARTICLE VI
INDEMNIFICATION
Section 6.1. Indemnification.
The Company agrees to promptly indemnify and hold harmless the Agent, each
of the Banks and each affiliate thereof and their respective officers,
directors, employees, affiliates, consultants, advisors, and other
representatives, including, legal counsel (each, an "Indemnitee") against any
and all loss, liability, claim, damage, expense, fines and penalties whatsoever,
and whether or not involving a third party claim (including (i) reasonable
attorneys' fees and other reasonable costs of investigation and defense, (ii)
judgments and (iii) amounts paid or to be paid in settlement of such claims,
judgments, losses or liabilities) arising, directly or indirectly, from or
relating to the execution, delivery and performance of this Agreement or the
Transaction Documents, the transactions contemplated hereby and thereby, any
breach by the Company under this Agreement or the Transaction Documents, or the
negotiations relating hereto and, statutory and common law negligence and strict
liability claims; provided that such Indemnitee shall not be
indemnified from or held harmless against any losses, liabilities, claims,
damages, fines, penalties, judgments, disbursements, costs, or expenses arising
out of or resulting from its own gross negligence or willful misconduct or
breach of this Agreement or any of the other Transaction Documents. Without
limiting any provision of this Agreement or any Transaction Document, it is the
express intention of the parties hereto that each Indemnitee shall be
indemnified from and held harmless against any and all losses, liabilities,
claims, damages fines, penalties, judgments, disbursements, costs, and expenses
(including without limitation, reasonable attorneys' fees) arising out of or
resulting from the sole or contributory negligence of such Indemnitee.
Section 6.2. Notice; Assumption of Defense.
An Indemnitee shall give prompt written notice to the Company of any action
commenced against him or it in respect of which indemnity may be sought under
this Agreement, but the failure to notify the Company shall not relieve the
Company of any liability that it may have to the Indemnitee, except to the
extent that the Company demonstrates that the defense of such action is
prejudiced by the Indemnitee's failure to give such notice. If it so elects
within ten (10) days after receipt of such notice, the Company may assume the
defense of such action, with counsel chosen by it and reasonably approved by the
Indemnitee, unless, in an action where the Company is a co-defendant, the
Indemnitee reasonably objects to such assumption upon the written advice of
counsel on the ground that there may be legal defenses available to him or it
which are different from or in addition to those available to the Company. If
more than one Indemnitee is joined in such action and two or more elect to
assume their own defense, the Company shall be liable for the fees and expenses
of only a single law firm that shall represent all of the Indemnitees in
connection with such action. Should an Indemnitee prefer to retain separate and
additional counsel he or it must do so at his own expense. If the Company
assumes the defense of the action, (i) no compromise or settlement of claims
thereunder may be effected by the Company without the Indemnitee's consent
unless (A) there is no finding or admission of any violation of applicable law
or regulation or any violation of the rights of any person and no effect on any
other claims that may be made against the Indemnitee, and (B) the sole relief
provided is monetary damages that are paid in full by the Company; and (ii) the
Indemnitee will have no liability with respect to any compromise or settlement
of such claims effected without its consent (which may not be unreasonably
withheld). If notice is given to the Company by the Indemnitee, and the Company
does not, within ten (10) days thereafter, give written notice to the Indemnitee
of its election to assume the defense of such action, or if an Indemnitee
determines in good faith and upon written advice of counsel that there is a
reasonable probability that an
action may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, then, notwithstanding anything in the second sentence hereof to the
contrary, the Indemnitee may, by notice to the Company, assume the right to
defend, compromise, or settle such action provided that the Company shall be
entitled to participate in but not control such action, at its sole cost and
expense and the Company will not be bound by any compromise or settlement
effected without its consent (which shall not be unreasonably withheld).
ARTICLE VII
FORBEARANCE
The Company, the Agent and each of the Banks hereby acknowledges and agrees
that the Forbearance Agreement is hereby further modified and amended in
accordance with the terms and provisions of Exhibit B hereto, all of such terms
and provisions being incorporated by reference herein.
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1. Conditions to Obligation of Each Party to Effect the Transactions
Contemplated by this Agreement.
The obligation of each party to effect the transactions contemplated by
this Recapitalization Agreement shall be subject to the fulfillment on or prior
to the Consummation Date of the following conditions:
A. The Stockholder Approval shall have been obtained.
B. All consents, approvals, authorizations, waivers or permits of, or
registrations, declarations or filings with or notifications to, any
Governmental Entity, if any, necessary to permit the consummation of the
transactions contemplated by this Agreement shall have been obtained on terms
and conditions reasonably satisfactory to each party and shall remain in full
force and effect.
C. No preliminary or permanent injunction or other order, decree or ruling
of any Governmental Entity nor any applicable law shall be in effect that would
prohibit, restrain, or make illegal the consummation of the transactions
contemplated by this Agreement.
Section 8.2. Conditions to Obligation of the Company.
The obligation of the Company to effect the transactions contemplated by
this Agreement is subject to the fulfillment on or prior to the Consummation
Date of the following conditions:
A. The Agent and the Banks shall have performed in all material respects
each obligation and agreement and complied in all material respects with each
covenant to be performed and complied with by them hereunder at or prior to the
Consummation Date.
B. The representations and warranties of the Banks in this Agreement shall
be true and correct, as of the date of this Agreement and as of the Consummation
Date with the same force and effect as though made on and as of the Consummation
Date.
Section 8.3. Conditions to Obligation of the Agent and the Banks.
The obligation of the Agent and each of the Banks to effect the
transactions contemplated by this Agreement is subject to the fulfillment on or
prior to the Consummation Date of the following conditions:
A. The Company shall have furnished to the Agent resolutions of the Board
of Directors of the Company certified by its Secretary or an Assistant Secretary
which authorize the execution, delivery, and performance by the Company of this
Recapitalization Agreement and the other Transaction Documents.
B. The Company shall have furnished to the Agent a certificate of
incumbency certified by the Secretary or an Assistant Secretary of the Company
certifying the name of each of its officers (i) who is authorized to sign this
Agreement and the Transaction Documents to which it is or is to be a party
(including, without limitation, the certificates contemplated herein) together
with specimen signatures of each such officer and (ii) who will, until replaced
by other officers duly authorized for that purpose, act as its representative
for the purposes of signing documentation and giving notices and other
communications in connection with this Agreement and the transactions
contemplated hereby.
C. The Company shall have furnished to the Agent certificates of the
appropriate government officials of the State of Delaware of the Company and of
its respective jurisdiction of organization or formation with respect to each
Company Subsidiary as to its existence and good standing, all dated a current
date.
D. The Company shall have performed in all material respects each
obligation and agreement and complied in all material respects with each
covenant to be performed and complied with by it hereunder and under the
Transaction Documents on or prior to the Consummation Date.
E. The representations and warranties of the Company in this Agreement
shall be true and correct as of the date of this Agreement and as of the
Consummation Date (except to the extent such representations and warranties
speak as of an earlier date or to the extent changes to the underlying facts are
expressly authorized by this Agreement) with the same force and effect as though
made on and as of the Consummation Date.
F. Other than the Existing Defaults (as such term is defined in the
Forbearance Agreement), since September 29, 2001, there shall not have occurred
an Agreement Default (as defined in the Forbearance Agreement) or any event that
the Holders could reasonably expect to have a Material Adverse Effect.
G. The Company shall have furnished to the Agent and the Banks (a) a
certificate, dated as of the Consummation Date, signed by the President, Vice
President or Treasurer of the Company, certifying as to the matters specified in
paragraphs D, E and F of this Section 8.3, and (b) a certificate from the
Secretary of the Company, dated as of the Consummation Date, certifying as to
(i) the continuing effectiveness as of the Consummation Date of the resolutions
of the board of directors of the Company approving this Agreement and the
transactions contemplated hereby, (ii) the number of shares of the Company's
capital stock issued and outstanding after giving effect to the issuance of the
New Securities in accordance with the terms and conditions of this Agreement,
(iii) the percentage of such issued and outstanding Common Stock and Preferred
Stock, as applicable, represented by the New Securities, and (iv) the fact that
the Stockholder Approval has been obtained in accordance with the Restated
Certificate of Incorporation, the rules and regulations of the AMEX and the
Delaware General Corporation Law and that such Stockholder Approval is in full
force and effect.
H. The Common Shares shall have been approved for listing on the AMEX,
subject to official notice of issuance.
I. Each of the Releasing Parties shall have executed and delivered to the
Banks their respective Release Agreements. The Blackstone Group L.P. shall have
executed and delivered the Blackstone Amendment Letter to the Company. Xxxxx
Xxxxx shall have executed and delivered to the Company the Xxxxx Xxxxxxxxx
Agreement Amendment. Xxxxx Xxxxx and the Company shall have executed and
delivered the Consulting Agreement.
J. The Company shall have furnished to the Banks the legal opinion of
Dechert, dated as of the Consummation Date, substantially in the form of Exhibit
K.
K. The investigations by the Agent and its representatives pursuant to
Section 4.7 shall not have caused the Agent, the Banks or their respective
representatives to become aware of any facts or circumstances relating to the
business, operations, assets, properties, liabilities, financial condition,
results of operations or affairs of the Company, that, in the reasonable
judgment of the Holders, make it inadvisable to proceed with the transactions
contemplated by this Agreement.
L. All authorizations, consents, approvals and waivers of, or notices to,
any third party which if not obtained or made would reasonably be expected to
have a Material Adverse Effect or materially and adversely interfere with the
transactions contemplated by this Agreement shall have been obtained and shall
be in full force and effect.
M. The Company and each other Bank shall have executed and delivered the
New Credit Agreement and all other documents, instruments, and other agreements
contemplated thereby and all conditions to the effectiveness thereof shall have
been fully satisfied.
N. All corporate and other proceedings taken or required to be taken by the
Company in connection with this Agreement, the New Credit Agreement and the
transactions contemplated hereby and thereby, shall have been consummated at or
prior to the Consummation Date, and all certificates, opinions, instruments,
consents and other documents required to be delivered by the Company to effect
this Agreement, the New Credit Agreement and the transactions contemplated
hereby and thereby, shall be reasonably satisfactory in form and substance to
the Banks.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Termination.
This Agreement shall terminate automatically and without notice (i) at
11:50 p.m. (New York, New York time) on April 30, 2002 if the Consummation Date
has not sooner occurred or (ii) upon the occurrence of either of the events of
default set forth in Section 12.1(e) or (f) in the Original Credit Agreement.
This Agreement shall be terminable at any time prior to the Consummation Date:
A. By the mutual written consent of the Company and the holders of more
than 50% of the Revolving Commitments) or, if the Revolving Commitments have
been terminated, then by the holders of more than 50% of the outstanding
Revolving Loans (the "Holders");
B. By the Holders (or in the case of paragraph (iii) below, any Bank), if
(i) any of the Company's representations or warranties herein shall be false,
incorrect or misleading in any material respect when made or deemed made, or the
Company shall breach or fail to perform, observe or comply with any of its
covenants or obligations hereunder and such breach or failure shall continue
unremedied for a period of twenty (20) Business Days after receipt by the
Company of written notice of such breach or failure, (ii) the investigations by
the Agent and its representatives pursuant to Section 4.7 cause the Agent, the
Banks, or their respective representatives to
become aware of any facts or circumstances relating to the business, operations,
assets, properties, liabilities, financial condition, results of operations or
affairs of the Company, that, in the sole and absolute judgment of the Holders,
make it inadvisable to proceed with the transactions contemplated by this
Agreement , (iii) any of the Banks shall not be satisfied, in its sole and
absolute discretion, with the results of any aspect of their due diligence
investigation of the Benefit Plans, (iv) any Agreement Default (as defined in
the Forbearance Agreement) exists, or (v) the Board of Directors of the Company
shall have withdrawn or modified its recommendation of this Agreement or the
transactions contemplated hereby in a manner adverse to the Banks;
C. By the Company, if any of the Bank's representations or warranties
herein shall be false, incorrect or misleading in any material respect when made
or deemed made, or any of the Banks shall breach or fail to perform, observe or
comply with any of their covenants or obligations hereunder and such breach or
failure shall continue unremedied for a period of twenty (20) Business Days
after receipt by such Bank of written notice of such breach or failure; or
D. By either the Company or the Holders, if (i) any permanent injunction,
decree, ruling, order or other action of a Governmental Entity, in each case,
having the effect of preventing the consummation of the transactions
contemplated by this Agreement shall have become final and non-appealable; or
(ii) the Stockholder Approval shall not have been obtained by reason of the
failure to obtain the required vote upon a vote taken at the Company
Stockholders Meeting or at any adjournment or postponement thereof.
Section 9.2. Effect of Termination.
In the event of termination of this Agreement as provided in Section 9.1,
this Agreement shall forthwith become void and there shall be no liability or
obligation on the part of the Agent, the Banks or the Company or their
respective officers, directors, members, partners, stockholders or affiliates,
except to the extent that such termination results from the breach by a party
hereto of any of its representations, warranties, covenants or obligations set
forth in this Agreement; provided that, the provisions of Section 4.2, Article
VI and this Section 9.2 shall remain in full force and effect and survive any
termination of this Agreement. Notwithstanding the foregoing, nothing in this
Section 9.2 shall relieve any party to this Agreement of liability for a
material breach of any provision of this Agreement occurring prior to
termination.
Section 9.3. Execution in Counterparts; Effectiveness.
This Agreement may be executed in any number of counterparts, each and all
of which shall be deemed for all purposes to be one agreement. This Agreement
shall not be effective until the receipt by the Agent of duly executed
counterparts and the receipt by the Agent of the items listed on Schedule 9.3 of
this Agreement.
Section 9.4. Entire Agreement; Amendment.
This Agreement, the Exhibits and Schedules hereto, and the Transaction
Documents contain all the terms and conditions agreed upon by the parties to
this Agreement regarding the subject matter hereof, and no other agreement, oral
or otherwise, regarding the subject matter hereof shall be deemed to exist or
bind any of the parties to this Agreement. This Agreement may not be amended,
modified, or supplemented nor may any term or condition be waived except by an
instrument in writing executed by the Company and the Holders; provided,
however, notwithstanding the foregoing, the terms and provisions of Section 9.2,
this Section 9.4, Article V, Article VI and the terms and conditions of exchange
and cancellation of Exchange Debt set forth in Section 2.2 (including the
definition of Exchange Debt), may not be amended, modified or supplemented
except by an instrument in writing executed by the Company and each of the
Banks.
Section 9.5. Applicable Law.
This Agreement shall be interpreted in accordance with and be governed by
the internal laws of the State of Delaware.
Section 9.6. Headings.
Article and Section headings in this Agreement are for convenience of
reference only and are not to be taken to be a part of the provisions of this
Agreement, nor to control or affect meanings, constructions or the effect of the
same.
Section 9.7. Benefit of This Agreement.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors and assigns; provided however, the Company
may not assign any of its rights under this Agreement but a Bank may assign its
rights hereunder by an assignment pursuant to Section 14.8 of the Original
Agreement provided that the assignee of such rights acknowledges in writing its
assumption of the obligations of the assigning Bank hereunder. Other than as
contemplated in Section 2.4 and Article VI under this Agreement, nothing in this
Agreement is intended or shall be construed to give any other person or
corporation any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained. Nothing in this Agreement is
intended or
shall be construed to create any personal liability for any of the officers,
directors, stockholders or affiliates of the Company for the obligations,
representations and warranties undertaken or made by the Company herein.
Section 9.8. Survival.
All representations and warranties contained in this Agreement, or
contained in certificates of the Company submitted pursuant to this Agreement,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Agent or the Banks, or by or on behalf
of the Company, until consummation of the transactions contemplated hereby on
the Consummation Date, at which time they shall expire. The covenants and
agreements of the parties set forth in Sections 4.1, 4.2, 4.5B, 4.8, 9.4, 9.5,
9.7, 9.8, 9.9, 9.11 and in Article VI shall survive the consummation of the
transactions contemplated hereby on the Consummation Date.
Section 9.9. Notices.
Unless otherwise specified in this Agreement, all notices, demands,
requests, consents and communications required by this Agreement shall be in
writing and shall be delivered personally, by certified or registered mail
postage prepaid, by overnight courier service, or by confirmed facsimile, to the
parties at their addresses or facsimile numbers set forth below their signatures
hereto, and to their respective counsel, if any. The parties may designate in
writing from time to time other and additional places to which notices may be
sent. All demands, requests, consents, notices and communications shall be
deemed to have been given either (A) at the time of actual delivery thereof, (B)
if given by certified or registered mail, five (5) Business Days after being
deposited in the United States mail, postage prepaid and properly addressed, (C)
if given by overnight courier, the next business day after being sent, charges
prepaid and properly addressed, or (D) if given by facsimile, upon confirmation
of receipt of the facsimile communication.
Section 9.10. Public Statements.
A. None of the parties hereto, nor any of their representatives shall,
without the prior written consent of the other parties, which shall not be
unreasonably withheld, make any statement, public announcement or release to the
press or any other third party with respect to this Agreement and any related
discussions of the parties or permit any of its employees or agents to make any
such statement, announcement or release; provided, however, that such consent
shall not be required where such statement, release or announcement is required
by applicable law or made to such party's counsel or certified public
accountants or the information disclosed in such statement, announcement or
release is legally available to the public other than as a result of such
statement, announcement or
release; and provided further, that as to any such statements, public
announcements or releases by or on behalf of the Company, only the consent of
the Agent shall be required.
B. The parties hereto also agree to notify each other promptly of any
disclosure with respect to this Agreement and any related discussions of the
parties which is required by applicable law and to coordinate the disclosure of
any information so required it being understood that any disclosure required
under the Exchange Act, Securities Act or regulation of AMEX shall be made in
compliance with the requirements thereof. If any party to this Agreement becomes
legally compelled by deposition, subpoena, or other court or governmental action
to disclose any of the information described in this Section 9.10, then such
party will give the other parties prompt notice to that effect, and will
cooperate with the other parties if the other parties seek to obtain a
protective order concerning the information described in this Section 9.10. The
legally compelled party will disclose only such information as its counsel shall
advise is legally required.
Section 9.11. Severability.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
date and year first above written.
COMPANY:
-------
DARLING INTERNATIONAL INC.
By: /s/ Xxxx Xxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxx
-----------------------------------
Title: Treasurer
----------------------------------
Address for Notices:
-------------------
000 X'Xxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Fax No.: 000-000-0000
Telephone No.: 000-000-0000
Attention: Treasurer
AGENT:
-----
CREDIT LYONNAIS NEW YORK BRANCH
individually as a Bank and as the Agent
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------------
Title: Vice President
----------------------------------
Address for Notices:
-------------------
Credit Lyonnais New York Branch
1301 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
Attention: Xx. Xxxxx Xxxxxxx
With a copy to:
--------------
Credit Lyonnais Dallas Branch
0000 Xxxx Xxxxxx, Xxxxx 0000 Xxxx
Xxxxxx, Xxxxx 00000
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
Attention: Xxxxx Xxxxx
BANKS:
-----
ARK CLO 2000-1, LIMITED
By: Patriarch Partners, LLC,
its Collateral Manager
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Name: Xxxxxx Xxxxx
-----------------------------------
Title: Manager
----------------------------------
Address for Notices:
-------------------
Ark CLO 2000-1, Limited
c/o Patriarch Partners, LLC
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx Xxxxx/Xxxx Xxxxxx
And
Woodside Capital Management, LLC
00 Xxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
BANK ONE N.A.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
-----------------------------------
Title: Senior Vice President
---------------------------------
Address for Notices:
-------------------
Bank One N.A.
Mail Code IL1-0631
0 Xxxx Xxx Xxxxx
Xxxxxxx, XX 00000
CERBERUS PARTNERS, L.P.
By: Cerberus Associates, L.L.C., its general partner
By: /s/ Xxxxx Xxxxx
-----------------------
Name: Xxxxx Xxxxx
-----------------------
Title: Attorney in Fact
-----------------------
Address for Notices:
-------------------
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxx
AVENUE SPECIAL SITUATIONS FUND II L.P.
By: Avenue Capital Management II, LLC
Its General Partner
By: GLS Partners II, LLC, Managing Member
Of General Partner
By: /s/ Xxxx Xxxxx
-----------------------
Name: Xxxx Xxxxx
-----------------------
Title: Managing Member
-----------------------
Address for Notices:
-------------------
Avenue Special Situations Fund II
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
CREDIT AGRICOLE INDOSUEZ
By: /s/ Xxxxxxxx X. Xxxxxxx
-----------------------
Name: Xxxxxxxx X. Xxxxxxx
-----------------------
Title: Vice President
-----------------------
By: /s/ Xxxxxxxx X. Xxxx
-----------------------
Name: Xxxxxxxx X. Xxxx
-----------------------
Title: Vice President
-----------------------
Address for Notices:
-------------------
Credit Agricole Indosuez, New York Branch
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Telephone No.: 000-000-0000
Facsimile No.: 000-000-0000
Attention: Xxxxxxxx Xxxxxxx
PPM AMERICA SPECIAL INVESTMENTS
FUND, LP
By: PPM America, Inc., as its attorney-in-fact
By: /s/ Xxxxx X. Xxxxxxxxxx
----------------------------
Name: Xxxxx X. Xxxxxxxxxx
----------------------------
Title: Senior Managing Director
----------------------------
Address for Notices:
-------------------
PPM America, Inc.
000 Xxxx Xxxxxx Xxxxx, 0/xx/ Xxxxx
Xxxxxxx, XX 00000
Tel No.: 000-000-0000
Fax No.: 000-000-0000
Attention: Xxxxx Xxxxxxxxxx
Senior Managing Director
XXXXX FARGO BANK (TEXAS) NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxxx
---------------------------
Name: Xxxxx X. Xxxxx
---------------------------
Title: Vice President
---------------------------
Address for Notices:
-------------------
Xxxxx Fargo Bank (Texas) National Association
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
LIST OF EXHIBITS (omitted)
-------------------------
Exhibit A - Form of Certificate of Designation
Exhibit B - Fourth Amendment to Forbearance Agreement
Exhibit C - Omitted
Exhibit D - Form of Amendment to the Certificate
Exhibit E - Form of Registration Rights Agreement
Exhibit F-1 - Form of Release Agreement pursuant to Section 2.4(a)
Exhibit F-2 - Form of Release Agreement pursuant to Section 2.4(b)
Exhibit F-3 - Form of Release Agreement pursuant to Section 2.4(c)
Exhibit G - Omitted
Exhibit H - Form of First Amendment to Taura Termination Agreement
Exhibit I - Form of Consulting Agreement
Exhibit J - Blackstone Amendment Letter
Exhibit K - Form of Dechert Opinion as Counsel to the Company
Exhibit L - Form of Amended and Restated Credit Agreement
