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RECAPITALIZATION AND STOCK PURCHASE AGREEMENT
BY AND AMONG
XXXXXX HOLDING CO. (PA), INC.,
THE SHAREHOLDERS OF XXXXXX HOLDING CO. (PA), INC.
LISTED ON THE SIGNATURE PAGES HERETO
AND
GREEN EQUITY INVESTORS III, L.P.
MAY 7, 2003
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS ................................................................................... 1
ARTICLE II RECAPITALIZATION, PURCHASE AND REDEMPTION OF SHARES............................................ 7
2.1 Amendment and Restatement of the Company's Articles of Incorporation........................... 7
2.2 Reclassification of Shares..................................................................... 8
2.3 Purchase and Sale of the Investor Shares....................................................... 8
2.4 Redemption of Shares........................................................................... 8
2.5 Exchange of Certificates....................................................................... 8
2.6 Closing........................................................................................ 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................. 9
3.1 Corporate Organization......................................................................... 10
3.2 Capital Stock.................................................................................. 10
3.3 Subsidiaries................................................................................... 11
3.4 Investments.................................................................................... 11
3.5 Corporate Authority; Noncontravention.......................................................... 11
3.6 SEC Reports and Financial Statements........................................................... 12
3.7 No Undisclosed Material Liabilities............................................................ 13
3.8 Absence of Certain Changes..................................................................... 13
3.9 Insurance...................................................................................... 14
3.10 Customers...................................................................................... 14
3.11 Taxes.......................................................................................... 15
3.12 Governmental Permits........................................................................... 16
3.13 Real Property.................................................................................. 16
3.15 Leases......................................................................................... 17
3.15 Plant and Equipment............................................................................ 17
3.16 Intellectual Property.......................................................................... 17
3.17 Labor Relations................................................................................ 17
3.18 Employee Benefit Plans......................................................................... 18
3.19 Certain Contracts.............................................................................. 21
3.20 Compliance with Law............................................................................ 22
3.21 Environmental Matters.......................................................................... 22
3.22 Litigation..................................................................................... 22
3.23 International Trade Laws and Regulations....................................................... 22
3.24 Transaction with Affiliates.................................................................... 23
3.26 Finders........................................................................................ 23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS............................................. 23
4.1 Authority and Related Matters.................................................................. 23
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4.2 No Finder...................................................................................... 24
ARTICLE V REPRESENTATIONS AND WARRANTIES OF INVESTOR..................................................... 24
5.1 Organization of Investor....................................................................... 24
5.2 Authority and Related Matters.................................................................. 25
5.3 No Finder...................................................................................... 25
5.4 Absence of Proceedings......................................................................... 25
5.5 Investment Intent.............................................................................. 25
5.6 Status as Accredited Investor.................................................................. 25
5.7 Financial Capability........................................................................... 26
5.8 No Outside Reliance............................................................................ 26
5.9 Governmental Consents.......................................................................... 26
ARTICLE VI ADDITIONAL COVENANTS........................................................................... 26
6.1 Operations Prior to the Closing Date........................................................... 26
6.2 Access by Investor............................................................................. 28
6.3 Confidentiality................................................................................ 28
6.4 Certain Agreements............................................................................. 29
6.5 No Public Announcement......................................................................... 29
6.6 Governmental Filings; Consents................................................................. 29
6.7 Non-Solicitation of Employees.................................................................. 30
6.8 Shareholders' Meeting.......................................................................... 30
6.9 Bondholders' Consent........................................................................... 30
6.10 Shareholders' Agreement; Registration Rights Agreement......................................... 30
6.11 Approval of Transactions....................................................................... 31
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATION OF INVESTOR................................................. 31
7.1 No Misrepresentation or Breach................................................................. 31
7.2 Litigation..................................................................................... 31
7.3 HSR Act........................................................................................ 31
7.4 Governmental Approvals......................................................................... 31
7.5 Financing...................................................................................... 31
7.6 Bondholders' Consent........................................................................... 32
7.7 Shareholder Approval........................................................................... 32
7.8 Management Services Agreement.................................................................. 32
7.9 Amended and Restated Shareholders' Agreement................................................... 32
7.10 Amended and Restated Registration Rights Agreement............................................. 32
7.11 Solvency Opinion............................................................................... 32
7.12 Opinion of Counsel............................................................................. 32
7.13 Organizational Documents....................................................................... 32
7.14 Minimum EBITDA................................................................................. 32
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ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE SHAREHOLDERS........................ 33
8.1 No Misrepresentation or Breach................................................................. 33
8.2 Litigation..................................................................................... 33
8.3 HSR Act........................................................................................ 33
8.4 Financing...................................................................................... 33
8.5 Bondholders' Consent........................................................................... 33
8.6 Solvency Opinion............................................................................... 33
8.7 Shareholder Approval........................................................................... 33
ARTICLE IX TERMINATION.................................................................................... 34
9.1 Termination.................................................................................... 34
9.2 Effect of Termination.......................................................................... 34
ARTICLE X GENERAL PROVISIONS............................................................................. 34
10.1 Survival of Representations and Warranties..................................................... 34
10.2 Notices........................................................................................ 35
10.3 Partial Invalidity............................................................................. 36
10.4 Execution in Counterparts; Facsimile Signatures................................................ 36
10.5 Governing Law.................................................................................. 36
10.6 Expenses....................................................................................... 36
10.7 Assignment; Successors and Assigns; No Third Party Beneficiaries............................... 36
10.8 No Implied Representation...................................................................... 37
10.9 Titles and Headings............................................................................ 37
10.10 Schedules and Exhibits......................................................................... 37
10.11 Knowledge...................................................................................... 37
10.12 Entire Agreement; Amendments................................................................... 37
10.13 Waivers........................................................................................ 37
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EXHIBITS AND SCHEDULES
Exhibit A Shareholders and their Shareholdings
Exhibit B Form of Amended Charter
Exhibit C Form of Statement with Respect to Shares
Exhibit D Form of Amended and Restated Shareholders' Agreement
Exhibit E Form of Amended and Restated Registration Rights Agreement
Exhibit F Form of Management Services Agreement
Exhibit G Form of Opinion of Company Counsel
Schedule 3.2(b) Company Options
Schedule 3.2(c) Agreements with Respect to Capital Stock
Schedule 3.2(e) Post-Recapitalization Equity Capitalization
Schedule 3.3 Subsidiaries
Schedule 3.4 Investments
Schedule 3.5 Corporate Authority; Noncontravention
Schedule 3.8 Absence of Certain Changes
Schedule 3.9 Insurance
Schedule 3.10 Customers
Schedule 3.11 Tax Matters
Schedule 3.13 Real Property
Schedule 3.14 Leases
Schedule 3.16 Intellectual Property
Schedule 3.17 Labor Relations
Schedule 3.18 Employee Benefit Plans
Schedule 3.19 Certain Contracts
Schedule 3.20 Compliance with Law
Schedule 3.21 Environmental Matters
Schedule 3.22 Litigation
Schedule 3.24 Transactions with Affiliates
Schedule 3.25 Finders
Schedule 4.1 Shareholder Authority and Related Matters
Schedule 6.1 Operations Prior to the Closing Date
Schedule 7.14 EBITDA Adjustments
Schedule 10.11 Persons Having Knowledge
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RECAPITALIZATION AND STOCK PURCHASE AGREEMENT
This RECAPITALIZATION AND STOCK PURCHASE AGREEMENT is dated as
of May 7, 2003, by and among those Persons listed on Exhibit A hereto, Xxxxxx
Holding Co. (PA), Inc., a Pennsylvania corporation (the "Company"), and Green
Equity Investors III, L.P., a Delaware limited partnership ("Investor").
BACKGROUND
A. The outstanding equity securities of the Company consist of
shares of Class A Common Stock, Class B Common Stock, Class C Common Stock,
Class D Common Stock and Class E Common Stock, each having a par value of $0.01
per share.
B. The Shareholders are, in the aggregate, the owners of 100%
of the outstanding shares of Class D and Class E Common Stock of the Company, as
well as a majority of the outstanding shares of Class A, Class B and Class C
Common Stock of the Company.
C. The board of directors of the Company (the "Board") has
decided to effect a recapitalization of the Company as described herein, which
includes the reclassification and redemption of certain shares of capital stock
and certain transactions between the Company and Investor.
D. The Board has determined that the transactions contemplated
by this Agreement are fair to, and in the best interests of, the Company and its
shareholders.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements set forth herein, the parties agree
as follows:
ARTICLE I
DEFINITIONS
In addition to the other words and terms defined elsewhere in
this Agreement, as used in this Agreement, the following words and terms have
the meanings specified or referred to below:
"Affiliate" means, with respect to any Person that is not an
individual, any other Person directly or indirectly controlling, controlled by,
or under direct or indirect common control with, such Person. A Person will be
deemed to control a corporation if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise. A Person will be deemed to control a
partnership if (a) such Person or a subsidiary of such Person, directly or
indirectly, is the sole general partner or sole managing general partner of such
partnership or (b) the only general partners of such partnership are such Person
and/or subsidiaries of such Person. A Person will be deemed to control a limited
liability company if
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(a) such person or a subsidiary of such Person is the manager or managing member
of such limited liability company, or (b) all of the members of such limited
liability company are such Person and/or subsidiaries of such Person.
"Agreement" means this Recapitalization and Stock Purchase
Agreement dated as of May 7, 2003.
"Amended Charter" has the meaning specified in Section 2.1.
"Board" has the meaning specified in the recitals.
"Certificates" has the meaning specified in Section 2.5(a).
"Class A Stock" has the meaning specified in Section 3.2.
"Class B Stock" has the meaning specified in Section 3.2.
"Class C Stock" has the meaning specified in Section 3.2.
"Class D Stock" has the meaning specified in Section 3.2.
"Class E Stock" has the meaning specified in Section 3.2.
"Class F Stock" has the meaning specified in Section 2.1(a).
"Class R Stock" has the meaning specified in Section 2.1(a).
"Closing" has the meaning specified in Section 2.6.
"Closing Date" has the meaning specified in Section 2.6.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" has the meaning specified in Section 3.2.
"Company" has the meaning specified in the first paragraph of
this Agreement.
"Company Intellectual Property" shall mean all Intellectual
Property that is currently used in the business of the Company or any of its
Subsidiaries or that is necessary to conduct the business of the Company or its
Subsidiaries as presently conducted.
"Company Option" has the meaning specified in Section 3.2(b).
"Company Option Plan" has the meaning specified in Section
3.2(b).
"Copyrights" shall mean U.S. and foreign registered and
unregistered copyrights (including those in computer software and databases),
rights of publicity and all registrations and applications to register the same.
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"Critical Customers" means The Home Depot and Lowe's.
"EBITDA" means earnings before interest, income taxes,
depreciation and amortization of the Company and its Subsidiaries, on a
consolidated basis, in each case calculated in a manner consistent with the
calculations of "EBITDA" in the Company's Annual Report of Form 10-K for the
year ended December 31, 2002; provided, however, that no non-recurring expenses
or charges shall be added to the earnings of the Company and its Subsidiaries,
except to the extent set forth on Schedule 7.14.
"Encumbrance" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest, encumbrance, option claim, proxy,
voting trust or agreement, obligation, understanding or arrangement which
restricts title or transfer of any kind whatsoever in respect of such asset or
has the practical effect of any of the foregoing.
"Environmental Claim" means any claim, action, cause of
action, investigation or notice (written or oral) by any person or entity
alleging potential liability (including, without limitation, potential liability
for investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (a) the presence, or release into the
environment, of any Material of Environmental Concern at any location, whether
or not owned or operated by the Company or (b) circumstances forming the basis
of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all federal, state, local and
foreign laws and regulations and common laws relating to pollution or protection
of human health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata, and natural
resources), including, without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"GAAP" has the meaning specified in Section 3.6.
"Governmental Body" means any federal, state, local or foreign
court, government, department, commission, board, bureau, agency, official or
other regulatory, administrative or governmental authority.
"Governmental Permits" has the meaning specified in Section
3.12.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indenture" means the indenture, dated as of November 24,
1997, governing the Notes.
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"Improvements" has the meaning specified in Section 3.15.
"Intellectual Property" shall mean all of the following:
Trademarks, Patents, Copyrights and Licenses.
"International Trade Laws" has the meaning specified in
Section 3.23.
"Investor" has the meaning specified in the first paragraph of
this Agreement.
"IRS" means the Internal Revenue Service.
"Laws" means any federal, state, local or foreign law, code,
regulation, rule, judgment, ruling or decree.
"Lease" shall mean each lease pursuant to which the Company or
any Subsidiary of the Company leases any real property.
"LGP" means Xxxxxxx Xxxxx & Partners, L.P.
"Licenses" shall mean all licenses and agreements pursuant to
which the Company has acquired rights in or to any Trademarks, Patents or
Copyrights, or licenses and agreements pursuant to which the Company has
licensed or transferred the right to use any of the foregoing.
"Management Services Agreement" means that certain Management
Services Agreement to be entered into by Xxxxxx Delaware and LGP, on or before
the Closing, substantially in the form attached as Exhibit F hereto.
"Material Adverse Effect" means any event, circumstance,
change, condition, development or occurrence either individually or in the
aggregate with all other events, circumstances, changes, conditions,
developments or occurrences, resulting in or reasonably likely to result in a
material adverse effect on (i) the business, results of operations, condition
(financial or otherwise), or assets or liabilities (contingent or otherwise) of
the Company and its Subsidiaries, taken as a whole, (ii) the legality or
enforceability of this Agreement, or (iii) the ability of the Company to perform
its obligations and to consummate the transactions contemplated by this
Agreement, except, in the case of (i) above, for any event, circumstance,
change, condition, development or occurrence resulting from any deterioration
after the date of this Agreement of any national, international or regional
economic or financial conditions, including any such effects or changes
resulting from acts of war (whether or not declared) that occur after the date
of this Agreement or acts of terrorism that occur after the date of this
Agreement.
"Materials of Environmental Concern" means pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum and
petroleum products, asbestos or asbestos-containing materials or products,
polychlorinated biphenyls, lead or lead-based paints or materials, radon or
mold.
"New Bank Facility" has the meaning specified in Section 3.3.
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"Notes" means the 10% Senior Subordinated Notes due 2007
issued by Xxxxxx Holding Co. (DE), Inc., a Delaware corporation and wholly owned
subsidiary of the Company.
"Patents" shall mean issued U.S. and foreign patents and
pending patent applications, patent disclosures, and any and all divisions,
continuations, continuations-in-part, reissues, reexaminations, and extension
thereof.
"Paying Agent" means the Person, which may include the
Company, designated by the Company to exchange Certificates for New Certificates
and deliver payment of the Series R Redemption Amount.
"PBCL" means the Pennsylvania Business Corporation Law.
"Permitted Encumbrances" means (i) easements, covenants,
restrictions and other matters that do not prohibit or impair in any material
respect the use and enjoyment of the real property, (ii) liens for taxes not yet
due and payable or being contested in good faith by appropriate proceedings,
(iii) liens of carriers, warehousemen, mechanics, materialmen and other similar
liens for amounts not yet due and payable incurred in the ordinary course of
business that have not had and would not reasonably be expected to have a
Material Adverse Effect, (iv) title defects and other Encumbrances that would
not reasonably be expected to materially and adversely interfere with the
Company's or its Subsidiaries' use of material Real Property, (v) any
Encumbrance set forth on Schedule 3.13 hereto and (vi) any Encumbrances arising
from the Senior Credit Agreement, the New Bank Facility or the Receivables
Purchase Agreement.
"Person" means and includes an individual, a partnership, a
corporation, a limited liability company, a trust, a joint venture or an
unincorporated organization.
"Post-Recapitalization Class A Stock" has the meaning
specified in Section 2.1(a).
"Post-Recapitalization Class B Stock" has the meaning
specified in Section 2.1(a).
"Post-Recapitalization Class C Stock" has the meaning
specified in Section 2.1(a).
"Post-Recapitalization Class D Stock" has the meaning
specified in Section 2.1(a).
"Post-Recapitalization Class E Stock" has the meaning
specified in Section 2.1(a).
"Post-Recapitalization Shares" means the shares of
Post-Recapitalization Class A Stock, Post-Recapitalization Class B Stock,
Post-Recapitalization Class C Stock, Post-Recapitalization Class D Stock or
Post-Recapitalization Class E Stock to be outstanding upon consummation of the
transactions contemplated by this Agreement.
"Preferred Shares" has the meaning specified in Section 2.3.
"Preferred Statement" has the meaning specified in Section
2.1.
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"Pre-Recapitalization Shares" means the shares of Class A
Stock, Class B Stock, Class C Stock, Class D Stock or Class E Stock outstanding
immediately prior to the consummation of the transactions contemplated by this
Agreement.
"Purchase Price" has the meaning specified in Section 2.3.
"Real Property" shall mean all real property that is owned or
used by the Company or any Subsidiary of the Company or that is reflected as an
asset of the Company or any Subsidiary of the Company on the consolidated
balance sheet of the Company and its Subsidiaries.
"Receivables Purchase Agreement" means the Receivables
Purchase Agreement dated as of May 29, 1998 among Xxxxxx Funding Corporation,
Xxxxxx Co., Market Street Funding Corporation and PNC Bank, National
Association, as amended from time to time.
"Returns" has the meaning specified in Section 3.11(a).
"SEC" has the meaning specified in Section 3.6.
"SEC Filings" has the meaning specified in Section 3.6.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Agreement" means the Credit Agreement dated as
of November 24, 1997 among the Company, certain lenders and Bankers Trust
Company as Administrative Agent, as amended from time to time.
"Series A Preferred Stock" has the meaning specified in
Section 2.1(c).
"Series R Redemption Amount" has the meaning specified in
Section 2.4(c).
"Shareholders" means the holders listed on Exhibit A hereto.
"Subsidiary" means, with respect to any party, any
corporation, partnership or other entity or organization, whether incorporated
or unincorporated, of which (i) such party or any other Subsidiary of such party
is a general partner (excluding such partnerships where such party or any
Subsidiary of such party does not have a majority of the voting interest in such
partnership) or (ii) at least a majority of the securities or other interests
having by their terms ordinary voting power to elect a majority of the board of
directors or others performing similar functions with respect to such
corporation or other entity or organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries.
"Tax" or "Taxes" has the meaning specified in Section 3.11(a).
"Trademarks" shall mean U.S. and foreign registered and
unregistered trademarks, trade dress, service marks, logos, trade names,
corporate names and all registrations and applications to register the same.
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"Transaction Expenses" means the legal, accounting, financial
advisory and consulting expenses incurred in connection with the transactions
contemplated hereby by any of the Company, the Subsidiaries, the Shareholders
and, in the event and only in the event of Closing upon the terms and subject to
the satisfaction or waiver of the conditions contained in this Agreement,
Investor.
"Xxxxxx Delaware" means Xxxxxx Holding Co. (DE), Inc., a
Delaware corporation.
ARTICLE II
RECAPITALIZATION, PURCHASE AND REDEMPTION OF SHARES
2.1 Amendment and Restatement of the Company's Articles of
Incorporation; Statement with Respect to Shares. In accordance with the PBCL,
and upon the terms and subject to the satisfaction or waiver of the conditions
contained in this Agreement, at or prior to the Closing, the Company shall file
with the Secretary of State of the Commonwealth of Pennsylvania Articles of
Amendment to amend and restate the Company's Articles of Incorporation
substantially in the form attached hereto as Exhibit B (the "Amended Articles"),
which shall include a Statement with Respect to Shares substantially in the form
attached hereto as Exhibit C (the "Preferred Statement" and together with the
Amended Articles, the "Amended Charter"). The Amended Charter shall, among other
things, provide as follows:
(a) The Company shall have eight classes of common stock, par
value $0.01 per share, (i) the first class of common stock shall be designated
as Class A Common Stock (the "Post-Recapitalization Class A Stock,") (ii) the
second class of common stock shall be designated as Class B Common Stock (the
"Post-Recapitalization Class B Stock"), (iii) the third class of common stock
shall be designated as Class C Common Stock (the "Post-Recapitalization Class C
Stock"), (iv) the fourth class of common stock shall be designated as Class D
Common Stock (the "Post-Recapitalization Class D Stock"), (v) the fifth class of
common stock shall be designated as Class E Common Stock (the
"Post-Recapitalization Class E Stock"), (vi) the sixth class of common stock
shall be designated as Class R Common Stock (the "Class R Stock"), (vii) the
seventh class of common stock shall be designated as Class F Common Stock (the
"Class F Stock") and (viii) the eighth class of common stock shall be designated
as Common Stock (the "Post Recapitalization Common Stock");
(b) Each share of Class R Stock shall be subject to redemption
by the Company at the Series R Redemption Amount (as defined below); and
(c) The Company will have a class of preferred stock having
the powers, preferences and relative, participating, optional and other special
rights of convertible pay-in-kind preferred stock, as set forth in the Preferred
Statement (the "Series A Preferred Stock.")
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2.2 Reclassification of Shares. Upon the effectiveness of the
Amended Charter (the "Effectiveness Time"), each issued and outstanding
Pre-Recapitalization Share shall be reclassified and converted into the right to
receive 0.396646 shares of fully paid and nonassessable Class R Stock and:
(a) for each share of Class A Stock, the right to retain
0.603354 shares of Post-Recapitalization Class A Stock;
(b) for each share of Class B Stock, the right to retain
0.603354 shares of Post-Recapitalization Class B Stock;
(c) for each share of Class C Stock, the right to retain
0.603354 shares of Post-Recapitalization Class C Stock;
(d) for each share of Class D Stock, the right to retain
0.603354 shares of Post-Recapitalization Class D Stock; and
(e) for each share of Class E Stock, the right to retain
0.603354 shares of Post-Recapitalization Class E Stock.
2.3 Purchase and Sale of the Series A Preferred Stock. Upon
the terms and subject to the satisfaction or waiver of the conditions contained
in this Agreement, at the Closing and following the Effectiveness Time, Investor
agrees to purchase and the Company agrees to issue and sell to Investor 65,000
shares of Series A Preferred Stock (the "Preferred Shares") for an aggregate
consideration of $65,000,000 (the "Purchase Price"). At the Closing, Investor
shall deliver the Purchase Price to the Company by wire transfer of immediately
available funds.
2.4 Redemption of Shares. Upon the terms and subject to the
satisfaction or waiver of the conditions contained in this Agreement and the
Amended Charter, at the Closing and following the Effectiveness Time, upon
receipt by the Company of the Purchase Price and the proceeds of the New Bank
Facility, the Company shall redeem (the "Redemption") all of the issued and
outstanding shares of Class R Stock. The redemption price to be paid for each
share of Class R Stock shall be $4,929.66 (the "Series R Redemption Amount.")
2.5 Exchange of Certificates.
(a) As soon as practicable following the Closing and upon
surrender to the Paying Agent for cancellation of certificates which immediately
prior to the Closing Date represent issued and outstanding Pre-Recapitalization
Shares (the "Certificates") and proper delivery of a duly executed letter of
transmittal and such other customary documents as may be required pursuant to
the letter of transmittal, the holder of such Certificate shall receive in
exchange therefor: (i) certificates evidencing that number of
Post-Recapitalization Shares which such holder is entitled to receive pursuant
to Section 2.2, and (ii) the Series R Redemption Amount such holder is entitled
to receive pursuant to Section 2.4. The Series R Redemption Amount will be paid,
in the case of holders of Class D and E Stock, and holders of more than 1,000
shares of Class C Stock immediately prior to the recapitalization, via wire
transfer of immediately available funds. No interest will be paid or accrued
with respect to any Series R Redemption Amount payable upon the surrender of the
Certificates. Following the effectiveness
8
of the Amended Charter and until surrendered in accordance with the provisions
of this Section 2.5, each Certificate shall represent for all purposes only the
right to receive, upon such surrender, Post-Recapitalization Shares in
accordance with Section 2.2 and the Series R Redemption Amount in accordance
with Section 2.4, without any interest thereon, subject to any required
withholding taxes.
(b) Beginning at 5:00 p.m., Eastern Daylight Time, on the last
business day before the Closing Date, there shall be no transfers of
Pre-Recapitalization Shares on the stock transfer books of the Company which
were outstanding immediately prior to the Closing. If, after the Closing Date,
Certificates are presented to the Company, they shall be cancelled and exchanged
for Post-Recapitalization Shares in accordance with Section 2.2, the Series R
Redemption Amount in accordance with Section 2.4, without any interest thereon,
subject to any required withholding taxes, in accordance with the procedures set
forth in this Section 2.5.
(c) No dividends or other distributions with respect to
Post-Recapitalization Shares with a record date after the Closing Date shall be
paid to the holder of any unsurrendered Certificate with respect to
Post-Recapitalization Shares represented thereby until the surrender of such
Certificate in accordance with this Section 2.5.
(d) The Company shall not be liable to any Person in respect
of any Post-Recapitalization Shares (or dividends or distributions with respect
thereto) or Series R Redemption Amount delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
2.6 Closing. Upon the terms and subject to the satisfaction or
waiver of the conditions contained in this Agreement, the consummation of the
transactions provided for in this Article II (the "Closing") shall take place on
the second business day after the date on which each of the conditions set forth
in Articles VII and VIII have been satisfied or waived by the party or parties
entitled to the benefit of such conditions (it being understood that, in the
case of waiver of any conditions for the benefit of the Company and the
Shareholders, such waiver may be made by the Company on behalf of itself and
each of the Shareholders), or on such other date as Investor and the Company (on
behalf of itself and the Shareholders) mutually agree. The date on which the
Closing actually occurs is hereinafter referred to as the "Closing Date." The
Closing shall take place at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other place as Investor and the
Company (on behalf of itself and the Shareholders) mutually agree. For purposes
of this Section 2.6 and Section 9.1 hereof, any determination made or action
taken by the Company on behalf of itself and the Shareholders shall be deemed to
be the determination or act of each Shareholder. The effectiveness of the
Amended Charter, the sale of the Preferred Shares and the Redemption shall be
deemed to occur sequentially in that order but the Closing will be conducted in
such a manner that none of such events will occur unless all three of such
events occur at the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Investor as follows:
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3.1 Corporate Organization. The Company and each of its
Subsidiaries is a corporation or other entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization. The Company and each of its Subsidiaries is duly qualified to
transact business as a foreign corporation and is in good standing in each other
jurisdiction in which the ownership or leasing of its properties or assets or
the conduct of its business requires such qualification, except where the
failure to so qualify or to be in good standing has not had and would not have a
Material Adverse Effect. The Company and each of its Subsidiaries have all
requisite power (corporate and other) to own or lease and to operate and use its
properties and assets and to carry on its business as now conducted. The Company
has delivered or made available to Investor complete and correct copies of the
articles of incorporation and bylaws (or comparable governing documents) of the
Company and each of its Subsidiaries, each as in effect on the date hereof.
3.2 Capital Stock.
(a) The authorized capital stock of the Company consists of
(i) 5,000 shares of Class A stock, par value $.01 per
share (the "Class A Stock") of which 1,879.5454 shares are issued and
outstanding;
(ii) 25,000 shares of Class B stock, par value $.01
per share (the "Class B Stock") of which 21,774.9346 shares are issued
and outstanding;
(iii) 45,000 shares of Class C stock, par value $.01
per share (the "Class C Stock") of which 5,515.7790 shares are issued
and outstanding;
(iv) 1,000 shares of Class D stock, par value $.01
per share (the "Class D Stock") of which 1,000 shares are issued and
outstanding;
(v) 50,000 shares of Class E stock, par value $.01
per share (the "Class E Stock") of which 45,000 shares are issued and
outstanding; and
(vi) 131,000 shares of common stock, par value $.01
per share (the "Common Stock") of which no shares are issued and
outstanding.
(b) As of the date hereof, options to purchase 6,120 shares of
Class C Stock (each a "Company Option") are outstanding pursuant to stock option
agreements entered into between the Company and certain management and key
employees pursuant to the Xxxxxx Holding Co. (PA), Inc. Stock Incentive Plan
(the "Company Option Plan"). Schedule 3.2(b) includes an accurate and complete
list of the Company Options setting forth the name of the optionee, the exercise
price and the number of shares of Class C Stock subject to each outstanding
Company Option.
(c) Except as disclosed in Schedule 3.2(c), there are no
agreements, warrants, puts, calls, rights, options, convertible or exchangeable
securities or other commitments of any character to which the Company is a party
or by which it is bound which obligates the Company to issue, deliver or sell
any additional shares of its capital stock or any securities or instruments
convertible into or exchangeable for any such additional shares of capital
stock. All outstanding
10
Pre-Recapitalization Shares are duly authorized, validly issued and fully paid
and nonassessable and were not issued in violation of any preemptive rights
contained in the Company's charter documents or any shareholder agreement.
(d) The Preferred Shares that are being purchased by Investor
hereunder, when issued, sold and delivered in accordance with the terms of this
Agreement, and the shares of Class F Stock, when issued upon the conversion in
accordance with its terms of the Series A Preferred Stock, will be duly
authorized, validly issued, fully-paid, and nonassessable.
(e) After giving effect to the transactions contemplated by
this Agreement, the authorized, issued and outstanding equity capitalization of
the Company will be as set forth on Schedule 3.2(e).
(f) Other than as contained in the Company's charter, or
shareholder, employment or option agreements to which the Company is a party
from time to time, there are no obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire or make any payment in
respect of any capital stock (or equivalent equity interests of entities other
than corporations) of the Company or any of its Subsidiaries.
3.3 Subsidiaries. Schedule 3.3 lists each Subsidiary of the
Company. There are no agreements, warrants, puts, calls, rights, options or
other commitments of any character to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary is bound which obligates the
Company or any Subsidiary to issue, deliver or sell any outstanding or
additional shares of capital stock of any Subsidiary or any securities or
instruments convertible into or exchangeable for any such outstanding or
additional shares of capital stock. Each outstanding share of capital stock of
each Subsidiary that is a corporation is duly authorized, validly issued, fully
paid and nonassessable and free of preemptive rights, and each such share is
owned by the Company or another Subsidiary, free and clear of Encumbrances,
except any Encumbrance arising from the Senior Credit Agreement or from the new
senior bank facility to be entered into in connection with the transactions
contemplated hereby (the "New Bank Facility").
3.4 Investments. Except for interests in its Subsidiaries or
as identified on Schedule 3.4, the Company does not own directly or indirectly
an interest or investment (whether debt or equity) in any corporation,
partnership, joint venture, trust or other entity having a value in excess of
$1,000,000.
3.5 Corporate Authority; Noncontravention.
(a) The Company has all requisite corporate power to execute
and deliver this Agreement, to consummate the transactions contemplated hereby
and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement by the Company have been duly authorized by all
requisite corporate action. This Agreement has been duly executed and delivered
by the Company and constitutes the valid and binding obligation of the Company
enforceable in accordance with its terms (except to the extent that
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to creditors'
rights generally or by general principles of equity and public policy).
11
(b) Except as set forth in Schedule 3.5 and, in the case of
clauses (iii) and (iv) except as would not have a Material Adverse Effect, the
execution and delivery of this Agreement by the Company and each Shareholder,
the consummation by the Company and each Shareholder of any of the transactions
contemplated hereby, and the performance by the Company and each Shareholder of
its obligations hereunder will not:
(i) violate any provision of the articles of
incorporation or bylaws (or comparable governing documents) of the
Company or any Subsidiary;
(ii) contravene any Law;
(iii) violate or conflict with, constitute (with or
without due notice or lapse of time or both) a default of or breach
under, entitle any party to accelerate, terminate or rescind any
obligation or right under, or result in the creation or imposition of
any Encumbrance upon any of the assets of the Company or any Subsidiary
pursuant to any provision of, any note, bond, mortgage, lease,
agreement, indenture, license, contract or instrument to which either
the Company or any Subsidiary is a party or by which any of them or any
of their assets is bound; or
(iv) other than compliance with the HSR Act and
filing the Amended Charter and the Preferred Statement with the
Secretary of State of the Commonwealth of Pennsylvania, require the
approval, consent, authorization or act of, or the making by the
Company or any Subsidiary of any declaration, filing or registration
with, any Governmental Body.
3.6 SEC Reports and Financial Statements. Since December 31,
1999, the Company has filed all material forms, reports and documents with the
Securities and Exchange Commission (the "SEC") required to be filed by it
pursuant to the federal securities laws and the rules and regulations
promulgated thereunder, and all such forms, reports and documents filed with the
SEC have complied in all material respects with all applicable requirements of
the federal securities laws and the rules and regulations promulgated thereunder
(such forms, reports and documents, together with any exhibits and any
amendments thereto including any related financial statements and any
information incorporated by reference therein are referred to as the "SEC
Filings"). As of their respective dates, the SEC Filings did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the balance
sheets, statements of operations and statements of cash flow included in the SEC
Filings were prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis and fairly present, in all
material respects, the consolidated financial position of the Company and its
Subsidiaries as of the dates thereof and the consolidated results of operations
and changes in cash flows of the Company and its Subsidiaries for the periods
then ended (subject, in the case of unaudited quarterly financial statements, to
normal year-end adjustments and the absence of notes to such statements).
12
3.7 No Undisclosed Material Liabilities. There are no material
liabilities of the Company and its Subsidiaries, taken as a whole, of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, other than:
(a) liabilities disclosed on the Company's
consolidated balance sheet as of December 31, 2002;
(b) actual trade payables incurred in the ordinary
course of business consistent with the past practices of the Company
and its Subsidiaries;
(c) liabilities incurred to perform this Agreement
(including under the New Bank Facility) and, on the Closing Date,
liabilities permitted to be incurred pursuant to Section 6.1(b) hereof;
and
(d) liabilities incurred in the ordinary course of
business consistent with the past practices of the Company and its
Subsidiaries.
3.8 Absence of Certain Changes. Since December 31, 2002, other
than as set forth on Schedule 3.8, (i) there has not been a Material Adverse
Effect, (ii) the business of the Company and its Subsidiaries has been
conducted, in all material respects, in the ordinary course of business
consistent with past practice and (iii) neither the Company nor any Subsidiary
has taken any of the following actions:
(a) amended its articles of incorporation or bylaws
or other organizational documents;
(b) split, combined or reclassified any shares of its
capital stock or declared, set aside or paid any dividends or made any
other distributions (whether in cash, stock or other property) in
respect of such shares, except for dividends and distributions payable
by a Subsidiary to another Subsidiary or to the Company;
(c) redeemed, purchased or otherwise acquired for any
consideration any outstanding shares of its capital stock or securities
carrying the right to acquire or which are convertible into or
exchangeable or exercisable for, with or without additional
consideration, such capital stock, except the redemption or repurchase
of shares of Class C Stock from employees in connection with the
termination of such employee's employment;
(d) incurred any indebtedness, except (A) borrowings
in the ordinary course of business and consistent with the Company's
past practices under the Senior Credit Agreement or the New Bank
Facility, (B) sales under the Receivables Purchase Agreement in the
ordinary course of business and consistent with the Company's past
practices, it being understood that (i) on the date of this Agreement,
the Company has outstanding $20.0 million of receivables that have been
sold pursuant to the Receivables Purchase Agreement and (ii) the
Company will sell receivables under the Receivables Purchase Agreement
in connection with consummating the transactions contemplated hereby in
an amount sufficient to provide the Company with up to $20.0 million of
proceeds, (C) trade payables in the ordinary course of business and
consistent with the
13
Company's past practices and (D) other indebtedness not in excess of
$1,000,000 in the aggregate;
(e) made any acquisition or disposition of stock or
other securities or assets of any Person except (A) acquisitions or
dispositions of inventory and equipment in the ordinary course of
business and (B) other dispositions of assets not in excess of
$1,000,000 in the aggregate;
(f) entered into any employment or similar contract
with, or materially increased the compensation payable to, any officer
or employee except in the ordinary course of business;
(g) altered in any material respect its practices and
policies relating to the payment and collection of accounts payable and
accounts receivable;
(h) adopted, amended in any material respect or
terminated any Plan, severance plan or collective bargaining agreement
or made awards or distributions under any Plan, except awards or
distributions to any participant or employee in the ordinary course of
business and amendments that have been made in order to comply with
changes in applicable Laws;
(i) created, assumed or suffered to be incurred any
Encumbrance of any kind on any of its properties or assets other than
Permitted Encumbrances;
(j) amended, supplemented or modified any agreement
material to the Company and its Subsidiaries taken as a whole, except
in the ordinary course of business; or
(k) committed to do any of the foregoing.
3.9 Insurance. Schedule 3.9 contains a schedule of all
material insurance policies or binders of insurance which relate to the business
of the Company and its Subsidiaries as of the date hereof (the "Insurance
Policies"). Each Insurance Policy is in full force and effect and, to the
Company's knowledge, is valid and enforceable, and all premiums due thereon have
been paid in full. To the Company's knowledge, none of the Insurance Policies
will terminate or lapse (or be affected in any other materially adverse manner)
by reason of the transactions contemplated by this Agreement.
3.10 Customers.
(a) Except as set forth on Schedule 3.10, there exists no
actual or, to the Company's knowledge, threatened, nor as a result of the
transactions contemplated by this Agreement, does the Company anticipate there
to be a material cancellation of, or materially adverse modification to or
material change in, the business relationship of the Company and its
Subsidiaries with any Critical Customer since December 31, 2002, including any
materially negative change in sales volume of products sold to such customers or
the profit margins of such sales.
14
(b) Schedule 3.10 identifies the eight largest customers of
the Company and its Subsidiaries based on the dollar value of products sold by
the Company for the fiscal year ended December 31, 2002, other than the Critical
Customers. There exists no actual or, to the Company's knowledge, threatened,
nor as a result of the transactions contemplated by this Agreement, does the
Company anticipate there to be a cancellation of, or adverse modification to or
change in, the business relationship of the Company and its Subsidiaries with
any such customers since December 31, 2002, including any materially negative
change in sales volume of products sold to such customers or the profit margins
of such sales, except as would not reasonably be expected to result in a
Material Adverse Effect.
3.11 Taxes.
(a) The Company and its Subsidiaries have filed or caused to
be filed (or will have filed or caused to be filed) all material federal, state,
foreign and local tax returns, tax information returns, reports, and estimates
("Returns"), for all taxable or reporting periods ending on or before the
Closing Date (taking into account applicable extension periods) to the extent
required to be filed by the Company and its Subsidiaries under applicable
federal, foreign, state or local law on or before the Closing Date; all Taxes
due have been paid in full when due, and adequate provision has been made on the
financial statements of the Company and its Subsidiaries for all Taxes not yet
due and payable; all Returns are true, complete and accurate in all material
respects; and there are no liens on any of the assets of the Company or any
Subsidiary that arose in connection with any failure (or alleged failure) to pay
any Tax. As used in this Agreement, "Taxes" or "Tax" means all foreign, federal,
state and local taxes of any kind, including, without limitation, income,
capital gains, gross receipts, franchise, employment, sales, use, license,
property or withholding taxes and any interest or penalties related thereto.
(b) Except as set forth in Schedule 3.11, as of the date
hereof: (i) all deficiencies or assessments relating to Taxes have been paid in
full; (ii) no waivers of statutes of limitation and no extensions of time have
been given or requested with respect to any payments of Taxes by the Company and
its Subsidiaries; and (iii) no closing agreements, private letter rulings,
technical advice memoranda or similar agreements or rulings have been entered
into or issued by any taxing authority with respect to the Company or any of its
Subsidiaries.
(c) Neither the Company nor any of its Subsidiaries has been
notified in writing by the Internal Revenue Service or any other Governmental
Body of any issue relating to Taxes in connection with any Return filed by or on
behalf of the Company or any of its Subsidiaries for taxable years of the
Company as to which the respective statutes of limitations on the assessment of
Taxes have not expired or for which examinations by the taxing authorities have
not been completed.
(d) Other than as set forth on Schedule 3.11, there are not
pending Tax audits relating to the Company or any of its Subsidiaries.
(e) Neither the Company nor any of its Subsidiaries has
received notice within the last three years from any Governmental Body in a
jurisdiction in which the Company or any of its Subsidiaries does not file
Returns that the Company or any of its Subsidiaries is or may be subject to
taxation by that jurisdiction.
15
3.12 Governmental Permits. The Company and each Subsidiary
own, hold or possess all governmental licenses, permits, privileges, immunities,
approvals and other authorizations which are necessary for the ownership,
leasing, operation and use of its assets or which are required for the conduct
of its business as currently conducted ("Governmental Permits"), except where
the failure to own, hold or possess the same has not had and would not
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries has received any written notice, or, to the
Company's knowledge, any oral notice, from any authority or person that the
conduct of its business, as currently conducted, has been or is being conducted
in violation of any law, ordinance or regulation, except in each case as has not
had and would not reasonably be expected to have a Material Adverse Effect. Each
Governmental Permit is valid and in full force and effect and, to the knowledge
of the Company, no suspension or cancellation of any Governmental Permit is
threatened, except in each case as has not had and would not reasonably be
expected to have a Material Adverse Effect.
3.13 Real Property.
(a) Schedule 3.13 sets forth a complete list and the location
of all material Real Property. The Real Property is owned by the Company or one
of its Subsidiaries free and clear of all Encumbrances other than Permitted
Encumbrances. There are no proceedings, written claims or investigations
affecting any Real Property that might curtail or interfere with the use of such
property, except where such proceedings, claims, disputes or conditions would
not reasonably be expected to have a Material Adverse Effect. To the Company's
knowledge, neither the whole nor any material portion of any material Real
Property is subject to any governmental decree or order to be sold or is being
condemned, expropriated or otherwise taken by any public authority with or
without payment of compensation therefor, nor has any such condemnation,
expropriation or taking been proposed in writing to the Company. Other than as
set forth on Schedule 3.13, neither the Company nor any of its Subsidiaries is a
party to any lease, assignment or similar arrangement under which the Company or
any of its Subsidiaries is a lessor, assignor or otherwise makes available for
use by any third party any portion of the Real Property.
(b) Each of the Company and each Subsidiary of the Company has
obtained all appropriate certificates of occupancy, licenses, easements and
rights of way, including proofs of dedication, required to use and operate the
Real Property in the manner in which the Real Property is currently being used
and operated, except where the failure to have such certificates of occupancy,
licenses, easements and rights of way would not reasonably be expected to have a
Material Adverse Effect. Each of the Company and each Subsidiary of the Company
has all approvals, permits and licenses (including any and all environmental
permits) necessary to own or operate the Real Property as currently owned and
operated, other than any such approvals, permits or licenses, the failure to
have would not reasonably be expected to have a Material Adverse Effect; and no
such approvals, permits or licenses will be required, as a result of the
transactions contemplated by this Agreement, to be issued after the date hereof
in order to permit the Company and its Subsidiaries, following the Closing, to
continue to own or operate the Real Property in the same manner as heretofore,
other than any such approvals, permits or licenses that are ministerial in
nature and are normally issued in due course upon application therefore without
further action by the applicant.
16
3.14 Leases. Schedule 3.14 contains an accurate and complete
list of the material Leases. Each Lease is valid, binding and enforceable
obligation of the Company or its Subsidiary party thereto in accordance with its
terms and is in full force and effect, except where the enforceability of any
terms of the Leases would not reasonably be expected to have a Material Adverse
Effect. The leasehold estate created by each Lease is free and clear of all
Encumbrances other than Permitted Encumbrances. Neither the Company nor any of
its Subsidiaries has received written notice of existing events of default by
the Company or any Subsidiary of the Company under any of the Leases, other than
any such events of default that would not reasonably be expected to have a
Material Adverse Effect. To the Company's knowledge, no event has occurred that
with the giving of notice and the passage of time would constitute an event of
default on the part of the Company under any Lease, the termination of which
Lease as a result of any such event of default would reasonably be expected to
have a Material Adverse Effect.
3.15 Plant and Equipment. All buildings and other material
improvements included within the Real Property (the "Improvements") are, in all
material respects, in good condition and repair and adequate to operate such
facilities as currently used. To the Company's knowledge, there are no facts or
conditions affecting the structures of any such Improvements that would
reasonably be expected to have a Material Adverse Effect. Since December 31,
2002, neither the Company nor any Subsidiary of the Company has received written
notification that it is in violation of any applicable building, zoning, health
or other law, ordinance or regulation in respect of their operations on the Real
Property, other than with respect to any such violations as would not reasonably
be expected to have a Material Adverse Effect.
3.16 Intellectual Property. Schedule 3.16 contains a complete
and correct list of the material Company Intellectual Property. Either the
Company or one of its Subsidiary's owns, or is licensed or otherwise possesses
legally enforceable rights to use the material Company Intellectual Property,
and the consummation of the transactions contemplated by this Agreement will not
alter or impair such ability in any material respect. To the Company's
knowledge, there are no oppositions, cancellations, invalidity proceedings,
interferences or re-examination proceedings presently pending with respect to
the registration or application for registration of any Company Intellectual
Property that are reasonably likely to have a Material Adverse Effect. To the
Company's knowledge, the conduct of the business of the Company and its
Subsidiaries, including the utilization of their respective trade secrets, and
the Company Intellectual Property does not infringe any intellectual property
rights or any other proprietary right of any Person in any material respect, and
neither the Company nor any of its Subsidiaries has received any written notice
from any other Person pertaining to or challenging the right of the Company or
any of its Subsidiaries to use any of the material Company Intellectual
Property. Neither the Company nor any of its Subsidiaries has made any material
claim of a violation or infringement by others of its rights to or in connection
with the Company Intellectual Property which is still pending.
3.17 Labor Relations.
(a) There is no labor strike, dispute, slowdown, stoppage or
lockout actually pending, or to the knowledge of the Company, threatened against
the Company or any Subsidiary and during the past ten years there has not been
any such action. Other than as set
17
forth in Schedule 3.17, to the Company's knowledge, the Company and the
Subsidiaries are, and have at all times since January 1, 1999 have been, in
material compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment, wages, hours of work
and occupational safety and health, and, to the Company's knowledge, are not
engaged in any material respect in any unfair labor practices as defined in the
National Labor Relations Act or other applicable law, ordinance or regulation.
There is no material unfair labor practice charge or complaint against the
Company or any Subsidiary pending or, to the knowledge of the Company,
threatened before the National Labor Relations Board or any similar state or
foreign agency. There is no grievance or arbitration proceeding arising out of
any collective bargaining agreement or other grievance procedure relating to the
Company or any Subsidiary that would reasonably be expected to have a Material
Adverse Effect. Other than as set forth on Schedule 3.17, as of the date hereof,
no charges with respect to or relating to the Company or the Subsidiaries are
pending, or, to the Company's knowledge, threatened, before the Equal Employment
Opportunity Commission or any corresponding state agency. To the knowledge of
the Company, no federal, state, local or foreign agency responsible for the
enforcement of labor or employment laws intends to conduct any material
investigation with respect to or relating to the Company and the Subsidiaries
and no such investigation is in progress. There are no material lawsuits,
complaints or other proceedings pending or, to the knowledge of the Company,
threatened alleging breach of any express or implied contract of employment, any
law or regulation governing employment or the termination thereof or other
discriminatory, wrongful or tortious conduct in connection with the employment
relationship. The execution of this Agreement and the consummation of the
transactions contemplated hereby shall not result in a breach or other violation
of any collective bargaining agreement to which the Company or any Subsidiary is
a party.
(b) Since the enactment of Worker Adjustment and Retraining
Notification Act of 1988 (the "WARN Act"), the Company and the Subsidiaries have
not effectuated (i) a "plant closing" (as defined in the WARN Act) affecting any
site of employment or one or more facilities or operating units within any site
of employment or facility of the Company or any Subsidiary, or (ii) a "mass
layoff" (as defined in the WARN Act) affecting any site of employment or
facility of the Company or any Subsidiary, without, in either such case,
complying in all material respects with the WARN Act. Other than in connection
with matters subject to the WARN Act in which the Company has complied with the
WARN Act in all material respects, no employee of the Company or any of its
Subsidiaries has suffered an "employment loss," as defined in the WARN Act.
Since January 1, 1997, neither the Company nor any of its Subsidiaries has
engaged in layoffs or employment terminations sufficient in number to trigger
application of any similar state or local law without, in any such case,
complying in all material respects with applicable state or local law.
3.18 Employee Benefit Plans.
(a) Schedule 3.18 contains a true and complete list of each
employment, bonus, deferred compensation, incentive compensation, stock
purchase, stock option, stock appreciation right or other stock-based incentive,
severance, change-in-control, or termination pay, hospitalization or other
medical, disability, life or other insurance, supplemental unemployment
benefits, profit-sharing, pension or retirement plan, program, agreement or
arrangement and each other employee benefit plan, program, agreement or
arrangement,
18
sponsored, maintained or contributed to or required to be contributed to by the
Company or any of its Subsidiaries, or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with the Company or any of
its Subsidiaries would be deemed a "single employer" within the meaning of
Section 4001(b)(1) of ERISA, for the benefit of any current or former employee
or director of the Company, or any of its Subsidiaries or any ERISA Affiliate
(the "Plans"). Schedule 3.18 identifies each of the Plans that is an "employee
welfare benefit plan" or "employee pension benefit plan" as such terms are
defined in Sections 3(1) and 3(2) of ERISA (such plans being hereinafter
referred to collectively as the "ERISA Plans"). None of the Company, any of its
Subsidiaries nor any ERISA Affiliate has any formal plan or commitment, whether
legally binding or not, to create any additional Plan or materially modify or
change any existing Plan that would affect any current or former employee or
director of the Company, any of its Subsidiaries or any ERISA Affiliate.
(b) No liability under Title IV of ERISA has been incurred by
the Company, any of its Subsidiaries or any ERISA Affiliate since the Effective
Date of ERISA that has not been satisfied in full, and, to the Company's
knowledge, no condition exists that presents a material risk to the Company, or
any of its Subsidiaries or any ERISA Affiliate of incurring any liability under
such Title, other than liability for premiums due the Pension Benefit Guaranty
Corporation ("PBGC"), which payments have been or will be made when due. To the
extent this representation applies to Sections 4064, 4069 or 4204 of Title IV of
ERISA, it is made not only with respect to the ERISA Plans but also with respect
to any employee benefit plan, program, agreement or arrangement subject to Title
IV of ERISA to which the Company, any of its Subsidiaries or any ERISA Affiliate
made, or was required to make, contributions during the past six years.
(c) The PBGC has not instituted proceedings pursuant to
Section 4042 of ERISA to terminate any of the ERISA Plans subject to Title IV of
ERISA, and to the Company's knowledge no condition exists, or as a result of the
transactions contemplated by this Agreement is reasonably expected to exist,
that presents, or is expected to present, as applicable, a material risk that
such proceedings will be instituted by the PBGC.
(d) Except as set forth on Schedule 3.18, with respect to each
of the ERISA Plans that is subject to Title IV of ERISA, the present value of
accumulated benefit obligations under such Plan, as determined by the Plan's
actuary based upon the actuarial assumptions used for funding purposes in the
most recent actuarial report prepared by such Plan's actuary with respect to
such Plan, did not, as of its latest valuation date, exceed the then current
value of the assets of such Plan allocable to such accumulated benefit
obligations.
(e) None of the Company, any of its Subsidiaries, any ERISA
Affiliate, any of the ERISA Plans, any trust created thereunder, nor, to the
Company's knowledge, any trustee or administrator thereof has engaged in a
transaction or has taken or failed to take any action in connection with which
the Company, any of its Subsidiaries or any ERISA Affiliate could be subject to
any material liability for either a civil penalty assessed pursuant to Section
409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975(a) or (b), 4976
or 4980B of the Code.
19
(f) All contributions and premiums which the Company, any of
its Subsidiaries or any ERISA Affiliate is required to pay under the terms of
each of the ERISA Plans and Section 412 of the Code, have, to the extent due,
been paid in full or properly recorded on the financial statements or records of
the Company or its Subsidiaries, and, except as set forth on Schedule 3.18, none
of the ERISA Plans or any trust established thereunder has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, as of the last day of the most recent
fiscal year of each of the ERISA Plans ended prior to the date of this
Agreement. No lien has been imposed under Section 412(n) of the Code or Section
302(f) of ERISA on the assets of the Company, any of its Subsidiaries or any
ERISA Affiliate, and to the Company's knowledge no event or circumstance has
occurred that is reasonably likely to result in the imposition of any such lien
on any such assets on account of any ERISA Plan.
(g) With respect to any ERISA Plan that is a "multiemployer
plan," as such term is defined in Section 3(37) of ERISA, (i) neither the
Company, any of its Subsidiaries nor any ERISA Affiliate has, since September
26, 1980, made or suffered a "complete withdrawal" or a "partial withdrawal," as
such terms are respectively defined in Sections 4203 and 4205 of ERISA, (ii) to
the Company's knowledge, no event has occurred, or as a result of the
transactions contemplated by this Agreement is reasonably expected to occur,
that presents, or is expected to present, as applicable, a material risk of a
complete or partial withdrawal, (iii) neither the Company, each of its
Subsidiaries nor any ERISA Affiliate has any contingent liability under Section
4204 of ERISA and (iv) to the Company's knowledge, no circumstances exist that
present a material risk that any such multi-employer plan will go into
reorganization.
(h) To the Company's knowledge, each of the Plans has been
operated and administered in all material respects in accordance with applicable
laws, including but not limited to ERISA and the Code.
(i) With respect each of the ERISA Plans that is intended to
be "qualified" within the meaning of Section 401(a) of the Code, the Company has
applied for or has received a determination letter or opinion letter from the
IRS stating that it is so qualified, and to the Company's knowledge no event has
occurred that could reasonably be expected to adversely affect such
qualification.
(j) Any fund established under an ERISA Plan that is intended
to satisfy the requirements of Section 501(c)(9) of the Code has so satisfied
such requirements.
(k) Except as set forth on Schedule 3.18 no Plan provides
benefits, including without limitation death or medical benefits (whether or not
insured), with respect to current or former employees of the Company, its
Subsidiaries or any ERISA Affiliate after retirement or other termination of
service (other than (i) coverage mandated by applicable laws, (ii) death
benefits or retirement benefits under any "employee pension plan," as that term
is defined in Section 3(2) of ERISA, (iii) deferred compensation benefits
accrued as liabilities on the books of the Company, any of its Subsidiaries or
an ERISA Affiliate, or (iv) benefits, the full direct cost of which is borne by
the current or former employee (or beneficiary thereof)).
20
(l) Other than as set forth on Schedule 3.18, the consummation
of the transactions contemplated by this Agreement will not, either alone or in
combination with any other event, (i) entitle any current or former employee,
officer or director of the Company, any of its Subsidiaries or any ERISA
Affiliate to severance pay, unemployment compensation or any other similar
termination payment, or (ii) accelerate the time of payment or vesting, or
increase the amount of or otherwise enhance any benefit due any such employee,
officer or director.
(m) There are no pending or, to the Company's knowledge,
threatened or anticipated claims by or on behalf of any Plan, by any employee or
beneficiary under any such Plan or otherwise involving any such Plan (other than
routine claims for benefits), other than any such claims that would not
reasonably be expected to have a Material Adverse Effect.
3.19 Certain Contracts.
(a) Except as set forth in Schedule 3.19, as of the date
hereof, neither the Company nor any Subsidiary is a party to, or is bound by:
(i) any agreement, contract or other commitment
outside the ordinary course of business involving payments by or to the
Company or any Subsidiary of more than $1,000,000 in any 12-month
period;
(ii) any contract for the employment of any officer
or employee (other than any contract which is terminable without
liability upon notice of 180 days or less), or any contract of
employment with a former officer or employee, pursuant to which, in any
case, payments in excess of $100,000 in any 12-month period are
required to be made by the Company or any Subsidiary after the date
hereof;
(iii) any contract or obligation relating to any
outstanding indebtedness for borrowed money by the Company or any
Subsidiary, other than the Notes, borrowings under the Senior Credit
Agreement and other borrowings totaling less than $1,000,000 in the
aggregate;
(iv) except for guarantees of obligations between or
among the Company and any of its Subsidiaries, any guarantee or other
contingent liability in respect of any indebtedness or obligation of
any Person outside of the ordinary course of business;
(v) any collective bargaining agreement; or
(vi) any agreement which obligates the Company or any
Subsidiary not to compete with any business or which otherwise
restrains or prevents the Company or any of the Subsidiaries from
carrying on any lawful business.
(b) Except as disclosed in Schedule 3.19, all contracts,
agreements and other instruments referred to in Schedule 3.19 are in full force
and effect, and neither the Company nor any Subsidiary is in breach of or
default under any such contract, agreement or instrument, except for breaches
and defaults which have not had and would not have a Material Adverse Effect.
21
3.20 Compliance with Law. Except as set forth in Schedule
3.20, the Company and its Subsidiaries have complied in the conduct of their
businesses with all Laws, except failures to comply which have not had and would
not reasonably be expected to have a Material Adverse Effect. This Section does
not relate to matters with respect to Taxes or Environmental Laws which are
exclusively the subject of Sections 3.11 and 3.21, respectively.
3.21 Environmental Matters. Except as set forth in Schedule
3.21:
(a) the Company and its Subsidiaries are and have been in
compliance with Environmental Laws, and including, but not limited to,
compliance with any permits or other governmental authorizations or the
terms and conditions thereof, except failures to comply that have not
had and would not reasonably be expected to have a Material Adverse
Effect;
(b) the Company has not received any written, or, to its
knowledge, oral, communication that remains outstanding, whether from a
governmental authority, citizens group, employee or otherwise, that
alleges that the Company or any of its Subsidiaries is not in material
compliance with any Environmental Laws, and, to the Company's
knowledge, there are no current circumstances that may prevent or
interfere with such material compliance in the future;
(c) neither the Company nor any of its Subsidiaries has
received any written, or, to its knowledge, oral notice of any
Environmental Claim that remains outstanding and that if not addressed
would reasonably be expected to (i) have a Material Adverse Effect or
(ii) otherwise require disclosure under the federal securities laws;
and
(d) to the Company's knowledge, there are no past or present
facts or circumstances that would reasonably be expected to form the
basis of any Environmental Claim against the Company or its
Subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or its Subsidiaries have retained or
assumed either contractually or by operation of law, other than for any
such Environmental Claims that would not reasonably be expected to (i)
have a Material Adverse Effect or (ii) otherwise require disclosure
under the federal securities laws.
3.22 Litigation. Except as set forth in Schedule 3.22, there
is no material action, suit, proceeding or investigation pending or, to the
Company's knowledge, threatened against or affecting the Company or any
Subsidiary or affecting any of their respective properties. To the knowledge of
the Company, neither the Company nor any Subsidiary is in default in respect of
any material judgment, order, writ, injunction or decree of any court or any
Governmental Body.
3.23 International Trade Laws and Regulations.
(a) The Company and each of its Subsidiaries has complied and
is in compliance with all Laws respecting international trade ("International
Trade Laws") applicable in connection with the conduct of their respective
businesses (including as the same relates to record keeping requirements),
except for possible violations which do not, individually or in the aggregate,
constitute a Material Adverse Effect.
22
(b) Neither the Company nor any of its Subsidiaries is or has
been the subject of any civil or criminal investigation, litigation, audit,
penalty, proceeding or assessment, liquidated damages proceeding or claim,
forfeiture or forfeiture action, claim for additional customs duties or fees,
denial orders, suspension of export privileges, governmental sanctions, or any
other action, proceeding or claim by any foreign, federal, state, local or other
Governmental Authority involving or otherwise relating to any alleged or actual
violation of International Trade Laws or relating to any alleged or actual
underpayment of customs duties, fees, taxes or other amounts owed pursuant to
any International Trade Laws and, to the knowledge of the Company, there is no
basis for any of the foregoing, except for possible proceedings, claims or
actions which do not, individually or in the aggregate, constitute a Material
Adverse Effect.
(c) To the Company's knowledge, neither the Company nor any of
its Subsidiaries has engaged in or otherwise participated in, assisted or
facilitated any transaction that is prohibited by any applicable embargo or
related trade restriction imposed by the United States Office of Foreign Assets
Control or any other agency of the United States government.
3.24 Transaction with Affiliates. As of the date hereof,
except as set forth in Schedule 3.24, no shareholder, director or officer, or
any Affiliate or (in the case of individuals) family member of any of the
foregoing, is currently directly or indirectly a party to any transaction with
the Company or any Subsidiary involving $100,000 or more in any 12-month period,
including any agreement providing for the employment of, furnishing of services
by, rental of real or personal property from or otherwise requiring payment to
or the provision of direct or indirect credit support to any such shareholder,
director or officer or any Affiliate or (in the case of individuals) family
member of any of the foregoing.
3.25 Finders. Neither the Company nor any Subsidiary is
obligated to pay any fee or commission to any broker, finder or similar
intermediary for or on account of the transactions contemplated by this
Agreement, except that the Company is obligated to pay, upon consummation of the
transactions contemplated hereby, (a) fees to Citigroup Global Markets Inc. and
X.X. Xxxxxx Securities Inc. who have been retained by the Company to serve as
financial advisors and (b) a transaction fee to LGP pursuant to the Management
Services Agreement. Schedule 3.25 sets forth the full amount of any fees payable
pursuant to clause (a) of this Section 3.25, other than any fees payable in
connection with the consent solicitation pursuant to Section 6.9 or the New Bank
Facility.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder severally (as to such Shareholder and not as
to any other Shareholder), and not jointly, represents and warrants to Investor
as follows:
4.1 Authority and Related Matters.
(a) Such Shareholder has full legal right, power, capacity and
authority to execute and deliver this Agreement and to perform such
Shareholder's obligations hereunder. This Agreement is the valid and binding
obligation of such Shareholder in accordance with its terms (except to the
extent that enforceability may be limited by bankruptcy, insolvency,
23
reorganization, moratorium, fraudulent conveyance or other similar laws relating
to creditors' rights generally or by general principles of equity and public
policy).
(b) Such Shareholder is the owner of the number of
Pre-Recapitalization Shares listed beside such Shareholder's name on Exhibit A,
free and clear of all Encumbrances.
(c) Except as set forth in Schedule 4.1, the execution and
delivery by such Shareholder of this Agreement and the consummation by such
Shareholder of any of the transactions contemplated hereby will not:
(i) violate, conflict with or result in a breach of
the terms, conditions or provisions of, or constitute a default, an
event of default or an event creating rights of acceleration,
termination or cancellation or a loss of rights under any charter,
bylaws, trust agreement, partnership agreement or certificate of
partnership or other organizational documents of the Shareholder, or,
except as would not prevent or delay the consummation of the
transactions contemplated hereby, any note, instrument, agreement,
mortgage, lease, license, franchise, Governmental Permit or judgment,
order, award or decree to which such Shareholder is a party or by which
the Shareholder is bound, or any Law affecting such Shareholder; or
(ii) require the approval, consent, authorization or
act of, or the making by such Shareholder of any declaration, filing or
registration with, any Governmental Body.
(d) There is no action, suit, proceeding or investigation
pending or, to the knowledge of such Shareholder, threatened, against such
Shareholder which might affect, restrict or delay such Shareholder's ability to
consummate the transactions contemplated by this Agreement.
4.2 No Finder. Except for the engagements referred to in
Section 3.25, such Shareholder has not made any arrangement which would obligate
Company or any of its Subsidiaries to pay any fee or commission to any broker,
finder or similar intermediary for or on account of the transactions
contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF INVESTOR
Investor represents and warrants to the Company and each
Shareholder as follows:
5.1 Organization of Investor. Investor is a limited
partnership duly organized, legally existing and in good standing under the laws
of the jurisdiction of its formation and has all requisite corporate power and
authority to own or lease and to operate and use its properties and assets and
to carry on its business as now conducted.
24
5.2 Authority and Related Matters.
(a) Investor has all requisite corporate power to execute and
deliver this Agreement, to consummate the transactions contemplated hereby and
to perform its obligations hereunder. The execution, delivery and performance of
this Agreement by Investor have been duly authorized and approved by all
requisite organizational action on behalf of Investor and do not require any
further authorization or consent of Investor or its partners. This Agreement has
been duly executed and delivered by Investor and constitutes the valid and
binding obligation of Investor enforceable against Investor in accordance with
its terms (except to the extent that enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
similar laws relating to creditors' rights generally or by general principles of
equity and public policy).
(b) The execution and delivery of this Agreement by Investor,
the consummation by Investor of the transactions contemplated hereby and the
performance by Investor of its obligations hereunder will not violate, conflict
with or result in a breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights under any
partnership agreement or certificate of partnership or other organizational
documents of Investor, or, except as would not prevent or delay the consummation
of the transactions contemplated hereby, any note, instrument, agreement,
mortgage, lease, license, franchise, Governmental Permit or judgment, order,
award or decree to which Investor is a party or by which Investor is bound, or
any Law affecting Investor.
5.3 No Finder. Neither Investor nor any party acting on its
behalf has paid or become obligated to pay any fee or commission to any broker,
finder or other intermediary for or on account of the transactions contemplated
by this Agreement who might be entitled to a fee or commission from any
Shareholder or the Company in connection with such transactions.
5.4 Absence of Proceedings. There is no action, suit,
proceeding or investigation pending or, to the knowledge of Investor,
threatened, against Investor which might affect, restrict or delay Investor's
ability to consummate the transactions contemplated by this Agreement.
5.5 Investment Intent. Investor is purchasing the Preferred
Shares being sold hereunder solely for its own account and with no intention of
distributing or reselling such Preferred Shares or any part thereof, or interest
therein, in any transaction that would be in violation of the Securities Act or
any other securities laws of the United States of America or any state thereof.
5.6 Status as Accredited Investor. Investor is an "accredited
investor" (as that term is defined in Rule 501 of Regulation D under the
Securities Act). Investor has such knowledge and experience in business and
financial matters so that Investor is capable of evaluating the merits and risks
of an investment in the Preferred Shares. Investor understands the full nature
and risk of an investment in the Shares. Investor further acknowledges that it
has had access to the books and records of the Company and its Subsidiaries, is
generally familiar
25
with the business being conducted by the Company and its Subsidiaries and has
had an opportunity to ask questions concerning the Company and its Subsidiaries.
5.7 Financial Capability. Investor has, or has entered into
binding commitments to have and will have immediately prior to the Closing,
funds sufficient to consummate the transactions contemplated hereby. To the
extent such financing is to be provided by third parties, complete and correct
copies of all documents relating to the provision of such financing have been
provided to the Company. Investor acknowledges and agrees that its obligation to
consummate the transactions contemplated hereby is not contingent upon its
ability to obtain any financing.
5.8 No Outside Reliance. Investor has not relied and is not
relying upon any statement or representation not made in this Agreement or any
Schedule hereto or any certificate or document required to be provided by the
Company or any of the Shareholders pursuant to this Agreement.
5.9 Governmental Consents. No consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Body (other than such as are required pursuant to the HSR Act) is required to be
made or obtained by Investor in connection with the execution, delivery and
performance of this Agreement.
ARTICLE VI
ADDITIONAL COVENANTS
6.1 Operations Prior to the Closing Date.
(a) Subject to Section 6.1(b) hereof or except as expressly
contemplated by this Agreement, from the date hereof through the Closing Date,
the Company and its Subsidiaries shall operate and carry on their businesses in
all material respects only in the ordinary course of business and in a manner
consistent with its past practices in all material respects. In furtherance and
not in limitation of the foregoing, the Company shall use commercially
reasonable efforts consistent with sound business practices to (i) keep and
maintain the assets and properties of the Company and its Subsidiaries in normal
operating condition and repair, (ii) maintain the business organization of the
Company and its Subsidiaries, as a whole, intact and (iii) preserve the goodwill
of the suppliers, employees, customers and others having business relations with
the Company and its Subsidiaries.
(b) Except as expressly contemplated by this Agreement or as
set forth in Schedule 6.1, neither the Company nor any Subsidiary shall without
the express prior written approval of Investor:
(i) amend its articles of incorporation or bylaws or
other organizational documents (other than an amendment to its bylaws
to permit shareholder action by partial written consent);
(ii) issue, transfer, sell or deliver any shares of
its capital stock (or options, rights, warrants or other securities
convertible into or exchangeable or
26
exercisable for, with or without additional consideration, such capital
stock) or any other interest therein, except (A) in connection with the
exercise of Company Options granted prior to the date hereof pursuant
to the Company Option Plan or (B) in connection with the issuance of
any Company Options surrendered or any Shares repurchased after the
date hereof and prior to the Closing as determined by the Board
(provided that no such issuances shall result in an increase in the
aggregate consideration payable pursuant to Article II);
(iii) split, combine or reclassify any shares of its
capital stock or declare, set aside or pay any dividends or make any
other distributions (whether in cash, stock or other property) in
respect of such shares, except for dividends and distributions payable
by a Subsidiary to another wholly owned Subsidiary or to the Company;
(iv) redeem, purchase or otherwise acquire for any
consideration any outstanding shares of its capital stock, rights,
warrants or securities carrying the right to acquire or which are
convertible into or exchangeable or exercisable for, with or without
additional consideration, such capital stock, except as contemplated by
this Agreement and the redemption or repurchase of shares of Class C
Stock from employees in connection with the termination of such
employee's employment in a manner consistent with the Company's past
practices;
(v) incur any indebtedness, including, without
limitation, in form of any guarantee or any direct or indirect credit
support, except (A) borrowings in the ordinary course of business under
the Senior Credit Agreement or the New Bank Facility in a manner
consistent with the Company's past practices, (B) sales under the
Receivables Purchase Agreement in the ordinary course of business and
consistent with the Company's past practices, it being understood that
(i) on the date of this Agreement, the Company has outstanding $20.0
million of receivables that have been sold pursuant to the Receivables
Purchase Agreement and (ii) the Company will sell receivables under the
Receivables Purchase Agreement in connection with consummating the
transactions contemplated hereby in an amount sufficient to provide the
Company with up to $20.0 million of proceeds, (C) trade payables in the
ordinary course of business and consistent with the Company's past
practices and (D) other indebtedness not in excess of $1,000,000 in the
aggregate;
(vi) make any acquisition or disposition of stock or
other securities or assets of any Person except acquisitions or
dispositions of inventory and equipment in the ordinary course of
business in a manner consistent with the Company's past practices;
(vii) incur capital expenditures materially in excess
of those contemplated by the capital expenditures referenced in
Schedule 6.1;
(viii) merge or consolidate with any corporation or
other entity or transfer all or substantially all of the Company's
assets to another Person;
27
(ix) enter into any employment or similar contract
with, or materially increase the compensation payable to, any officer
or employee except in the ordinary course of business in a manner
consistent with the Company's past practices;
(x) alter in any material respect its practices and
policies relating to the payment and collection of accounts payable and
accounts receivable;
(xi) adopt, amend in any material respect or
terminate any Plan, severance plan or collective bargaining agreement
or make awards or distributions under any Plan, except awards or
distributions to any participant or employee in the ordinary course of
business in a manner consistent with the Company's past practices and
amendments required to be made in order to comply with changes in
applicable Laws;
(xii) create, assume or suffer to be incurred any
Encumbrance of any kind on any of its properties or assets other than
Permitted Encumbrances;
(xiii) amend, supplement or modify any agreement
material to the Company and its Subsidiaries taken as a whole, except in the
ordinary course of business in a manner consistent with the Company's past
practices;
(xiv) make any change in accounting principles
materially and adversely affecting the reported consolidated assets, liabilities
or results of operations of the Company; or
(xv) commit to do any of the foregoing.
6.2 Access by Investor. From the date hereof until Closing or
termination of this Agreement pursuant to Article IX hereof, upon reasonable
advance notice, the Company shall afford to the officers and authorized
representatives of Investor (including, without limitation, independent public
accountants and attorneys) and to the employees and authorized representatives
of Investor's financing sources, reasonable access during normal business hours
to the offices, properties, senior management and business and financial records
of the Company and its Subsidiaries as reasonably requested by Investor, and
shall furnish to Investor or its authorized representatives such additional
information concerning the Company and its Subsidiaries and their respective
properties, assets, businesses and operations as shall be reasonably requested;
provided, however, that the Company and its Subsidiaries shall not be required
to provide such access or information to the extent that they have been advised
by outside counsel that the provision of such access or information would
violate antitrust laws, including, without limitation, the provision of
competitively sensitive pricing and marketing information. Investor covenants
that such investigation shall be conducted in such a manner as not to (a)
interfere unreasonably with the operations of the Company and its Subsidiaries
or (b) delay the Closing. Nothing in this Section 6.2 shall be interpreted so as
to grant Investor the right to perform invasive or subsurface investigations of
the properties or locations of the Company or any of its Subsidiaries.
6.3 Confidentiality. The provisions of that certain
confidentiality agreement between the Company and LGP, dated October 7, 2002, to
the extent not inconsistent with the express terms of this Agreement, are hereby
ratified, confirmed and agreed to as though fully set
28
forth herein; and Investor hereby agrees to be bound by the terms thereof as if
it were a signatory thereto; provided, however, that Investor can disclose the
existence of this Agreement and the transactions contemplated by this Agreement
to its partners. Notwithstanding the foregoing, the parties (and each employee,
representative, or other agent of the parties) may disclose to any and all
persons, without limitation of any kind, the tax treatment and any facts that
may be relevant to the tax structure of the transaction, provided, however, that
no party (and no employee, representative, or other agent thereof) shall
disclose any other information that is not relevant to understanding the tax
treatment and tax structure of the transaction (including the identity of any
party and any information that could lead another to determine the identity of
any party), or any other information to the extent that such disclosure could
result in a violation of any federal or state securities law.
6.4 Certain Agreements. Each of the parties hereto shall use
such party's reasonable best efforts to consummate the transactions contemplated
by this Agreement. Each party shall promptly notify the others of any action,
suit or proceeding that shall be instituted or threatened against such party to
restrain, prohibit, otherwise challenge the legality of or delay the
transactions contemplated by this Agreement.
6.5 No Public Announcement. Prior to the Closing Date, none of
Investor, the Company or any Shareholder shall, without the approval of the
Company (which shall not be unreasonably withheld), make any press release or
other public announcement concerning the transactions contemplated by this
Agreement, except as and to the extent that any such party shall be obligated to
do so by law, in which case Investor and the Company shall use their reasonable
efforts to cause mutually acceptable releases or announcements to be issued.
Investor and the Company hereto agree to issue a joint press release in the form
which has previously been agreed to by both parties, to announce the execution
of this Agreement. Investor and the Company hereto agree to issue a joint press
release, reasonably acceptable to both parties, to announce the Closing and not
to issue any press release or make any other public statement inconsistent with
such press release.
6.6 Governmental Filings; Consents.
(a) The Shareholders, the Company and Investor shall use their
respective reasonable best efforts to take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper or
advisable under applicable Law by them or otherwise to consummate and make
effective the transactions contemplated by this Agreement as promptly as
practicable, including to (i) obtain from Governmental Bodies any consents,
licenses, permits, waivers, approvals, authorizations or orders required to be
obtained or made by the Shareholders, the Company or Investor to consummate the
transactions contemplated by this Agreement and (ii) promptly make all necessary
filings, and thereafter make any other required submissions, with respect to
this Agreement required under (A) the HSR Act and antitrust and competition Laws
of any other applicable jurisdiction, in each case, to the extent required by
applicable Law or (B) any other applicable Law. Each Shareholder and Investor
shall cooperate with each other in connection with the making of all filings
referenced in the preceding sentence, including providing copies of all such
documents to the non-filing party and its advisors prior to filing and, if
requested, to accept all reasonable additions, deletions or changes suggested in
connection therewith.
29
Exhibit 99.1
(b) Without limiting Section 6.6(a), the Company and Investor shall
(i) promptly make or cause to be made the filings required of such party under
the HSR Act with respect to the transactions contemplated by this Agreement,
(ii) comply promptly with any request under the HSR Act for additional
information, documents or other material received by such party or any of its
affiliates or subsidiaries from the Federal Trade Commission ("FTC") or the
Department of Justice ("DOJ") in respect of such filings, and (iii) cooperate
with the other parties hereto in connection with any such filing and in
connection with resolving any investigation or other inquiry of the FTC or DOJ
under the HSR Act with respect to any such filing and the transactions
contemplated by this Agreement. Each party shall promptly inform the other
parties of any material communication with the FTC or DOJ regarding any such
filing. Each party hereto shall use reasonable best efforts to take such action
as may be required to cause the expiration of the notice period under the HSR
Act with respect to the transactions contemplated hereby as promptly as possible
after the execution of this Agreement.
6.7 Non-Solicitation of Employees. If this Agreement is
terminated prior to Closing, Investor will not, for a period of three years
thereafter, without the prior written consent of the Company, solicit (other
than a solicitation by general advertisement) any person who is an employee of
the Company or any of its Subsidiaries, at the date hereof or at any time
hereafter that precedes such termination, to terminate his or her employment
with the Company or any of its Subsidiaries. Investor agrees that any remedy at
law for any breach by Investor of this Section 6.7 would be inadequate, and the
Company would be entitled to injunctive relief in such a case. If any provision
of this Section 6.7, or the application thereof, is determined to be
unenforceable because of its scope, duration or other factor, then the court
making such determination shall have the power to reduce or limit such scope,
duration or other factor, and such provision shall then be enforceable in its
reduced or limited form.
6.8 Shareholders' Meeting. If necessary to obtain
shareholder approval of this Agreement and the Amended Charter, the Board shall,
in accordance with applicable Laws, call, give notice of, convene and hold a
special meeting of shareholders for the purpose of considering and taking action
upon this Agreement and the Amended Charter.
6.9 Bondholders' Consent. The Company shall seek the
consent, in a form and on commercially reasonable terms satisfactory to the
Board in its sole discretion, of at least a majority in principal amount of the
outstanding Notes (a) to waive or amend the provisions of Section 4.04 --
Restricted Payments of the Indenture, in each case to permit payment by the
Company for the shares of Class R Stock pursuant to Article II hereof, and (b)
to waive or amend the provisions of Section 4.07 -- Transactions with Affiliates
of the Indenture, in each case to permit payment by the Company of any fees
payable in connection with the transactions contemplated hereby.
6.10 Shareholders' Agreement; Registration Rights Agreement.
At the Closing, the Company, Investor and such Shareholders as are named therein
shall execute and deliver, or cause their duly authorized representatives to
execute and deliver, an Amended and Restated Shareholders' Agreement,
substantially in the form attached hereto as Exhibit D, and the Company shall
execute and deliver an Amended and Restated Registration Rights Agreement,
substantially in the form attached hereto as Exhibit E.
30
6.11 Approval of Transactions. Each Shareholder party hereto
agrees to use its reasonable best efforts, including through the voting of all
shares of the Company's capital stock owned or controlled by such Shareholder at
any meeting of the Company's shareholders or any consent of the Company's
shareholders given without a meeting, to cause the transactions contemplated by
this Agreement, including the issuance of the Preferred Shares to Investor, to
occur pursuant to the terms of this Agreement.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATION OF INVESTOR
The obligation of Investor to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, on or prior
to the Closing Date, of the following conditions:
7.1 No Misrepresentation or Breach.
(a) There shall have been no material breach by the Company
or any Shareholder in the performance of any of their respective covenants,
agreements or obligations herein.
(b) The representations and warranties contained in Article
III hereof which are qualified as to materiality shall be true and correct in
all respects and all representations and warranties contained in Article III
hereof not so qualified shall be true and correct in all material respects, in
each case on the date hereof and as of the Closing Date as though made on the
Closing Date (except for representations and warranties that speak as of a
specific date prior to the Closing Date which need only be true and correct as
of such date); the Investor shall have received a certificate signed by the
Chief Executive Officer and the Chief Financial Officer of the Company to the
foregoing effect.
(c) The representations and warranties contained in Article
IV shall be true and correct on the date hereof and on the Closing Date as
though made on the Closing Date.
7.2 Litigation. As of the Closing Date, there shall be no
Law, injunction, restraining order or decree of any nature of any court or other
Governmental Body of competent jurisdiction that is in effect that prohibits or
materially restrains the consummation of the transactions contemplated hereby.
7.3 HSR Act. The waiting period under the HSR Act shall have
expired or been earlier terminated.
7.4 Government Approvals. All authorizations, consents and
approvals of (or filings with) any Governmental Body shall have been obtained
(or made), as applicable, except for those authorizations, consents and
approvals that have not had and would not have a Material Adverse Effect.
7.5 Financing. All documentation with respect to the New
Bank Facility and the amendment of the Receivables Purchase Agreement shall have
been completed on terms
31
reasonably satisfactory to Investor and the New Bank Facility shall have been
entered into by the Company.
7.6 Bondholders' Consent. The Company shall have obtained
the consent of at least a majority in principal amount of the Notes in
accordance with Section 6.9 hereof on terms reasonably satisfactory to the
Investor.
7.7 Shareholder Approval. The shareholders of the Company
shall have approved this Agreement and the Amended Charter in accordance with
the PBCL.
7.8 Management Services Agreement. On or prior to the
Closing, Xxxxxx Delaware shall have executed and delivered the Management
Services Agreement.
7.9 Amended and Restated Shareholders' Agreement. On or
prior to the Closing Date, the Company and the Shareholders named therein shall
have executed and delivered, or caused their duly authorized representatives to
execute and deliver, an Amended and Restated Shareholders' Agreement,
substantially in the form attached hereto as Exhibit D.
7.10 Amended and Restated Registration Rights Agreement. On
or prior to the Closing Date, the Company shall have executed and delivered the
Amended and Restated Registration Rights Agreement, substantially in the form
attached hereto as Exhibit E, for the benefit of the Shareholders (as defined
therein).
7.11 Solvency Opinion. The Board shall have obtained an
opinion, reasonably acceptable to the Investor, from a valuation firm that the
consummation of the transactions contemplated hereby shall not violate Section
1551 of the Pennsylvania Business Corporation Law or otherwise constitute a
fraudulent conveyance under applicable law. Such opinion shall be in customary
form and subject to customary assumptions and qualifications, and shall be
addressed to the Company, the Investor and to such other Persons as determined
by the Company and Investor.
7.12 Opinion of Counsel. On or prior to the Closing Date,
Investor shall received an opinion from Xxxxx & Xxxxxxx, P.C., special counsel
to the Company, substantially in the form attached as Exhibit G hereto (although
certain opinions contained in such form may be rendered, at the request of Xxxxx
& Xxxxxxx, P.C., by Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel to the Company).
7.13 Organizational Documents. The Company shall have
delivered to Investor copies of the Company's and Xxxxxx Delaware's
organizational documents and excerpts of any relevant board resolutions adopted
in connection with the transactions contemplated hereby.
7.14 Minimum EBITDA. EBITDA for the four months ended April
30, 2003 shall be no less than $19,000,000. The Company will provide a
certificate to Investor at Closing detailing the relevant EBITDA calculation.
32
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE COMPANY AND THE SHAREHOLDERS
The obligations of the Company and the Shareholders to consummate
the transactions contemplated by this Agreement shall be subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
8.1 No Misrepresentation or Breach.
(a) There shall have been no material breach by Investor in
the performance of any of its covenants, agreements or obligations herein.
(b) The representations and warranties contained in Article
V hereof shall be true and correct as of the Closing Date as though made on the
Closing Date (except for representations and warranties that speak as of a
specific date other than the Closing Date which need only be true and correct as
of such date), except where the failure of such representations and warranties
to be true and correct would not, individually or in the aggregate, have a
material adverse effect on the ability of Investor to perform its obligations
hereunder.
8.2 Litigation. The condition set forth in Section 7.2 shall
have been satisfied.
8.3 HSR Act. The condition set forth in Section 7.3 shall
have been satisfied.
8.4 Financing. All documentation with respect to the New
Bank Facility and the amendment of the Receivables Purchase Agreement shall have
been completed on terms reasonably satisfactory to Company and the New Bank
Facility shall have been entered into by the Company.
8.5 Bondholders' Consent. The Company shall have obtained
the consent of at least a majority in principal amount of the Notes accordance
with Section 6.9 hereof on terms reasonably satisfactory to the Company.
8.6 Solvency Opinion. The Board shall have obtained an
opinion, reasonably acceptable to the Company and the Shareholders, from a
valuation firm that the consummation of the transactions contemplated hereby
shall not violate Section 1552 of the Pennsylvania Business Corporation Law or
otherwise constitute a fraudulent conveyance under applicable law. Such opinion
shall be in customary form and subject to customary assumptions and
qualifications, and shall be addressed to the Company, the Investor and to such
other Persons as determined by the Company and Investor.
8.7 Shareholder Approval. The shareholders of the Company
shall have approved this Agreement and the Amended Charter in accordance with
the PBCL.
33
ARTICLE IX
TERMINATION
9.1 Termination. Notwithstanding anything contained in this
Agreement to the contrary, this Agreement may be terminated at any time prior to
the Closing Date: (a) by the mutual consent of Investor and the Company (on
behalf of itself and the Shareholders); (b) by Investor in the event that any
condition set forth in Article VII shall not be satisfied and shall not be
reasonably capable of being satisfied within 30 days following Investor's
written notice to the Company of such breach; (c) by the Company (on behalf of
itself and the Shareholders) in the event that any condition set forth in
Article VIII shall not be satisfied and shall not be reasonably capable of being
satisfied within 30 days following the Company's written notice to the Investor
of such breach; and (d) by the Company (on behalf of itself and the
Shareholders) or by Investor if the Closing shall not have occurred on or before
July 15, 2003; provided, however, that no party may terminate this Agreement
pursuant to clause (b), (c) or (d) if the failure of any condition in Article
VII or Article VIII to be satisfied or the failure of the Closing to occur on or
before July 15, 2003 results from the breach by such party of this Agreement.
9.2 Effect of Termination. If this Agreement is terminated
pursuant to this Article IX, all obligations of the parties under this Agreement
(other than under this Section 9.2, or under Section 6.3, Section 6.5, Section
10.5 and Section 10.6) shall be terminated without liability or penalty on the
part of any party or its officers, directors or shareholders to any other party;
provided, however that no such termination shall relieve any party from
liability for damages resulting from any breach by such party of this Agreement
or otherwise limit any remedy available to a party or parties on account of any
such breach.
ARTICLE X
GENERAL PROVISIONS
10.1 Survival of Representations and Warranties. Other than
as set forth in the following sentence, the representations and warranties set
forth in Article III, IV and V of this Agreement shall survive the Closing for a
period of six months from the Closing Date. The representations and warranties
set forth in Sections 3.21 of Article III shall survive the Closing until the
later of (a) the first anniversary of the Closing Date and (b) the date on which
the Company's Annual Report on Form 10-K for the fiscal year ending December 31,
2003 is filed with the United States Securities and Exchange Commission, or if
not obligated, contractually or otherwise, to file a Form 10-K for the year then
ending, such date as the Company shall have delivered audited financial
statements for the year then ending to Investor, and the representations and
warranties set forth in Sections 3.1, 3.2, 3.5(a) and 3.5(b)(i) of Article III
shall survive the Closing until the later of (i) the second anniversary of the
Closing Date and (ii) the date on which the Company's Annual Report on Form 10-K
for the fiscal year ending December 31, 2004 is filed with the United States
Securities and Exchange Commission, or if not obligated, contractually or
otherwise, to file a Form 10-K for the year then ending, such date as the
Company shall have delivered audited financial statements for the year then
ending to Investor.
34
10.2 Notices. All notices and other communications given or
made pursuant to this Agreement shall be in writing and shall be deemed to have
been duly given or made (a) three business days after being sent by registered
or certified mail, return receipt requested, (b) upon delivery, if hand
delivered, (c) one business day after being sent by prepaid overnight carrier
with guaranteed delivery, with a record of receipt, or (d) upon transmission
with confirmed delivery if sent by facsimile or telecopy, to the parties at the
following addresses (or at such other addresses as shall be specified by the
parties by like notice):
(a) if to Investor:
Green Equity Investors III, L.P.
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Fax: 000-000-0000
(b) if to the Company:
Xxxxxx Holding Co. (PA), Inc.
00 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: E. Xxxxxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
(c) if to Shareholders:
c/x Xxxxxx Holding Co. (PA), Inc.
00 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
35
with a copy (which shall not constitute notice) to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: E. Xxxxxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
10.3 Partial Invalidity. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the maximum
extent possible.
10.4 Execution in Counterparts; Facsimile Signatures. This
Agreement may be executed in two or more counterparts, each of which shall be
considered an original instrument, but all of which shall be considered one and
the same agreement. Facsimile signatures shall be treated as originals to the
extent the sender can show that such facsimile was actually transmitted.
10.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of laws. The parties hereby irrevocably submit to the
jurisdiction of the courts of the State of New York and the Federal courts of
the United States of America located in the Borough of Manhattan, the City of
New York solely in respect of the interpretation and enforcement of the
provisions of this Agreement and the transactions contemplated hereby and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof, that it is not subject thereto or
that such action, suit or proceeding may not be brought or is not maintainable
in said courts or that the venue thereof may not be appropriate or that this
Agreement may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such courts. The parties consent to and grant
any such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
10.2 or in such other manner as may be permitted by law shall be valid and
sufficient service thereof.
10.6 Expenses. Except as otherwise provided herein, each
party hereto will bear all expenses incurred by it in connection with this
Agreement and the transactions contemplated hereby; provided, however, that the
Company shall pay the Transaction Expenses.
10.7 Assignment; Successors and Assigns; No Third Party
Beneficiaries. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned
36
by any of the parties hereto without the prior written consent of the other
parties; provided, however, that Investor shall be permitted to assign any of
its rights and interests hereunder to any Affiliate of Investor controlled by
LGP without the consent of any other parties hereto, but such assignment shall
not release Investor of its obligations hereunder. Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors or assigns, heirs, legatees,
distributees, executors, administrators and guardians. Nothing in this
Agreement, expressed or implied, is intended or shall be construed to confer a
benefit upon any Person other than the parties hereto (and their successors and
assigns, heirs, legatees, distributees, executors, administrators and guardians
permitted by this Section 10.7.)
10.8 No Implied Representation. Notwithstanding anything
contained in this Agreement to the contrary, it is the explicit intent of each
party hereto that the Company, the Subsidiaries and the Shareholders are making
no representation or warranty whatsoever, express or implied, beyond those
expressly given in this Agreement.
10.9 Titles and Headings. Titles and headings to sections
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
10.10 Schedules and Exhibits. The schedules and exhibits
referred to in this Agreement shall be construed as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.
10.11 Knowledge. In each provision of this Agreement in which
a representation or warranty is qualified to the "knowledge" of a Person or to
the "best of the knowledge" of a person, unless otherwise stated in such
provision, each such phrase means that the Person does not have knowledge of any
state of facts which is different from the facts described in the warranty or
representation after due inquiry with respect to the facts described in the
warranty or representation. With respect to the Company, such knowledge shall
refer solely to the "knowledge" of one or more of those individuals identified
in Schedule 10.11.
10.12 Entire Agreement; Amendments. This Agreement, including
the schedules and exhibits, contains the entire understanding of the parties
hereto with regard to the subject matter contained herein. The parties hereto,
by mutual agreement in writing, may amend, modify and supplement this Agreement.
Any purported amendment that does not comply with the foregoing shall be null
and void.
10.13 Waivers. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. The failure of any party hereto to enforce at
any time any provision of this Agreement shall not be construed to be a waiver
of such provision, nor in any way to affect the validity of this Agreement or
any part hereof or the right of any party thereafter to enforce each and every
such provision. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach.
[the remainder of this page is intentionally left blank]
37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
GREEN EQUITY INVESTORS III, X.X. XXXXXX HOLDING CO. (PA), INC.,
By: GEI Capital III, LLC, its a Pennsylvania corporation
General Partner
By:/s/ Xxxxx Xxxxx By:/s/ Xxxx X. Xxxxxx
------------------ ----------------------
Name: Xxxxx Xxxxx Name: Xxxx X. Xxxxxx
Title: Manager Title: Vice President, Secretary &
General Counsel
[signature pages of the individual shareholders are omitted from this filing]
00
XXXXXXX X
XXXXXX XXXXXXX XX. (XX), INC.
STATEMENT WITH RESPECT TO THE POWERS,
PREFERENCES AND RELATIVE, OPTIONAL
AND OTHER SPECIAL RIGHTS OF
SERIES A PARTICIPATING
CONVERTIBLE PREFERRED STOCK
AND QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
-----------------------------------
PURSUANT TO SECTION 1522 OF THE
BUSINESS CORPORATION LAW OF THE COMMONWEALTH OF PENNSYLVANIA
-----------------------------------
C-1
Xxxxxx Holding Co. (PA), Inc. (the "Company"), a corporation
organized and existing under the Business Corporation Law of the Commonwealth of
Pennsylvania, does hereby certify that, pursuant to authority conferred upon the
Board of Directors of the Company or any committee of the Board of Directors by
its Second Amended and Restated Articles of Incorporation (as amended, the
"Articles of Incorporation"), and pursuant to the provisions of Section 1522 of
the Business Corporation Law of the Commonwealth of Pennsylvania, the Board of
Directors, by unanimous written consent dated as of ________ __, 2003, duly
approved and adopted the following resolution:
RESOLVED, that, pursuant to the authority vested in the Board of
Directors by its Articles of Incorporation, the Board of Directors does hereby
create, authorize and provide for the issue of Series A Participating
Convertible Preferred Stock, par value $0.01 per share, with an initial
liquidation preference of $1,000.00 per share (the "Initial Liquidation
Preference"), consisting of ______________ shares, having the designation,
preferences and relative, participating, optional and other special rights and
the qualifications, limitations and restrictions thereof that are set forth in
the Articles of Incorporation and in this resolution as follows:
The Statement With Respect to Shares setting forth this resolution
(this "Certificate of Designation") shall be effective on ______ __, 2003.
ARTICLE 1
DESIGNATION
There is hereby created out of the authorized and unissued shares of
Preferred Stock of the Company a series of Preferred Stock designated as the
"Series A Participating Convertible Preferred Stock" (the "Series A Preferred
Stock"), consisting of __________ shares.
ARTICLE 2
RANK
The Series A Preferred Stock shall, with respect to dividends and as
to distributions upon the liquidation, winding-up and dissolution of the Company
(as set forth in Article 3 and Article 4 hereof), rank (a) senior to all classes
or series of Common Stock, and of Capital Stock of the Company established after
the Issue Date by the Board of Directors of the Company the terms of which do
not expressly provide that it ranks senior to or on a parity with the Series A
Preferred Stock as to dividends and as to distributions upon the liquidation,
winding-up and dissolution of the Company (collectively referred to with the
Common Stock of the Company as "Junior Securities"); (b) on a parity with each
class or series of Preferred Stock established after the Issue Date by the Board
of Directors of the Company, the creation of which was approved by Holders of a
majority of the then outstanding shares of Series A Preferred Stock in
accordance with Section 5.2(b), if applicable, and the terms of which expressly
provide that such class or series will rank on a parity with the Series A
Preferred Stock as to dividends and as to distributions upon the liquidation,
winding-up and dissolution of the Company (collectively referred to as "Parity
Securities"), and (c) junior to all classes or series of Capital Stock of the
Company established after the Issue Date by the Board of Directors of the
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Company, the creation of which was approved by Holders of a majority of the then
outstanding shares of Series A Preferred Stock in accordance with Section
5.2(b), if applicable, and the terms of which expressly provide that it ranks
senior to the Series A Preferred Stock as to dividends and as to distributions
upon the liquidation, winding-up and dissolution of the Company (collectively
referred to as "Senior Securities").
ARTICLE 3
DIVIDENDS
SECTION 3.1 Dividends.
(a) Preferred Dividends. Beginning on the Issue Date,
Holders of outstanding Series A Preferred Stock will be entitled to receive, out
of funds legally available therefor, cash dividends on each share of Series A
Preferred Stock, at a rate per annum equal to 14% of the Liquidation Preference
(with such Liquidation Preference being determined as of the first day of the
applicable quarter) payable quarterly (the "Preferred Dividends") until December
31, 2008. All Preferred Dividends shall be cumulative, whether or not earned or
declared, on a quarterly basis from the Issue Date and shall be payable
quarterly in arrears on each Preferred Dividend Payment Date, commencing on
__________, 2003, provided, that if any Preferred Dividend payable on any
Preferred Dividend Payment Date is not declared and paid in full in cash on such
Preferred Dividend Payment Date, the amount payable as such Preferred Dividend
on such Preferred Dividend Payment Date that is not paid in cash on such
Preferred Dividend Payment Date shall be added to the Liquidation Preference on
the relevant Preferred Dividend Payment Date and may no longer be declared or
paid as dividends in cash except for special dividends paid pursuant to Section
3.1(d).
(b) Participating Dividends. Beginning on the Issue Date,
Holders of outstanding Series A Preferred Stock will be entitled to receive,
when, as and if declared by the Board of Directors of the Company, out of funds
legally available therefor (in whatever form), dividends on the outstanding
Series A Preferred Stock in an amount equal to the amount by which the aggregate
amount of dividends paid and payable on outstanding shares of Common Stock from
the Issue Date through the date such dividends are declared on the outstanding
shares of Common Stock exceeds the sum of all Preferred Dividends since the
Issue Date (whether or not declared or paid, including, with respect to any
share of Series A Preferred Stock, the excess, if any, of the Liquidation
Preference for such share of Series A Preferred Stock over $1,000)) (a
"Participating Dividend"). Participating Dividends shall be calculated on an
as-converted basis in accordance with Article 6 and paid in the same form as
such dividends are payable on the outstanding shares of Common Stock.
(c) Dividend Priority. (i) Except as permitted pursuant to
the next sentence, no dividends shall be declared by the Board of Directors or
paid or funds set apart (in cash) for payment of dividends by the Company on any
Parity Securities for any period unless cumulative dividends (including, with
respect to any share of Series A Preferred Stock, the excess, if any, of the
Liquidation Preference for such share of Series A Preferred Stock over $1,000)
shall have been or contemporaneously are declared and paid in full, or declared
(to the extent not paid but set apart for all such Parity Securities) and a sum
set apart sufficient for such payment, on the
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Series A Preferred Stock for all completed quarterly periods since the Issue
Date on or prior to the date of payment of such dividends on such Parity
Securities. If any dividends are not paid in full, as aforesaid, upon the shares
of the Series A Preferred Stock and any other Parity Securities, all dividends
declared upon shares of the Series A Preferred Stock and any other Parity
Securities shall be declared and paid pro rata based on the relative amounts of
the liquidation preference of the Series A Preferred Stock and such Parity
Securities. So long as any shares of the Series A Preferred Stock are
outstanding, the Company shall not make any payment on account of, or set apart
for payment money for a sinking or other similar fund for, the purchase,
redemption or other retirement of, any of the Parity Securities or any warrants,
rights, calls or options exercisable for, convertible into or exchangeable for
any of the Parity Securities, and shall not permit any corporation or other
entity directly or indirectly controlled by the Corporation to purchase, redeem
or retire any of the Parity Securities or any such warrants, rights, calls or
options, unless cumulative dividends determined in accordance herewith
(including, with respect to any share of Series A Preferred Stock, the excess,
if any, of the Liquidation Preference for such share of Series A Preferred Stock
over $1,000) shall have been paid or contemporaneously are declared and paid in
full on the Series A Preferred Stock and all other redemption or repayment
obligations due in respect of the Series A Preferred Stock have been paid in
full in cash.
(ii) So long as any shares of Series A Preferred Stock are
outstanding, the Company shall not (A) declare, pay or set apart for payment any
dividend on any of the Junior Securities or make any payment on account of, or
set apart for payment money for a sinking or other similar fund for, the
purchase, redemption or other retirement of, any of the Junior Securities or any
warrants, rights, calls or options exercisable for, convertible into or
exchangeable for any of the Junior Securities (other than the repurchase,
redemption or other acquisition or retirement for value of Junior Securities
(and any warrants, rights, calls or options exercisable for, convertible into or
exchangeable for such Junior Securities) held by current or former directors,
officers, employees of or consultants or advisors to the Company or any of its
Subsidiaries, which repurchase, redemption or other acquisition or retirement
shall have been approved by the Board of Directors or (B) make any distribution
in respect of Junior Securities, either directly or indirectly, and whether in
cash, obligations or shares of the Company or other property (other than
distributions or dividends in Junior Securities to the holders of Junior
Securities), or (C) permit any corporation or other entity directly or
indirectly controlled by the Company to purchase or redeem any of the Junior
Securities or any such warrants, rights, calls or options, unless in each such
case cumulative dividends determined in accordance herewith (including, with
respect to any share of Series A Preferred Stock, the excess, if any, of the
Liquidation Preference for such share of Series A Preferred Stock over $1,000)
have been paid in full on the Series A Preferred Stock.
(d) At any time and from time to time when the Liquidation
Preference per share of Series A Preferred Stock exceeds $1,000, the Company may
declare and pay, to the holders of record of the Series A Preferred Stock on the
record date chosen by the Company (which record date shall be not less than 30
and not more than 60 days prior to the payment date for such special dividend)
for such dividend, a special dividend per share of Series A Preferred Stock
equal to all or a portion of the excess, if any, of the Liquidation Preference
per share of Series A Preferred Stock over $1,000 (the amount of such special
dividend, the "Base Amount"), plus accrued and unpaid dividends on the Base
Amount to the date of payment (including an
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amount equal to a prorated dividend for the period from the last Preferred
Dividend Payment Date to the date of payment). Upon payment of such a dividend,
the Liquidation Preference shall be reduced by the amount of the Base Amount.
SECTION 3.2 Board Discretion. Nothing herein contained shall in any
way or under any circumstances be construed or deemed to require the Board of
Directors to declare, or the Company to pay, or set apart for payment, any
dividends at any time other than the Preferred Dividends.
ARTICLE 4
LIQUIDATION PREFERENCE
SECTION 4.1 Liquidation Preference. Upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Company, each Holder
of the Series A Preferred Stock will be entitled to be paid, out of the assets
of the Company available for distribution, and before any distribution is made
on any Junior Security, a liquidation preference per share equal to the greater
of (a) the Liquidation Preference and (b) the aggregate amount per share which
such Holder would have been paid if such Holder had held the maximum number of
Conversion Shares acquirable upon the complete conversion of such Holder's
Series A Preferred Stock pursuant to Section 6.1 immediately before the time and
date of the determination of shareholders entitled to receive distributions for
such liquidation, dissolution or winding-up. Holders of the Series A Preferred
Stock will have no rights to participate with any Junior Securities in any such
distribution made on any Junior Securities of the Company, other than
participation based upon the number of Conversion Shares acquirable upon the
complete conversion of such Holder's Series A Preferred Stock pursuant to clause
(b) of the immediately preceding sentence. In addition, each Holder of the
Series A Preferred Stock will be entitled, together and on parity with the
holders of the Common Stock, to an amount per share in cash equal to all
declared but unpaid Participating Dividends thereon to the date fixed for
liquidation, dissolution or winding-up. If, upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, the amounts payable with
respect to the Series A Preferred Stock and any Parity Securities are not paid
in full, the Holders of the Series A Preferred Stock and the Parity Securities
will share equally and ratably in any distribution of assets of the Company in
proportion to the full liquidation preference to which each is entitled. After
payment of accumulated and unpaid Participating Dividends to which they are
entitled in accordance with Section 3.1 and payment of the full amount of the
liquidation preferences, the Holders will not be entitled to any further
participation in any distribution of assets of the Company.
SECTION 4.2 Events Not Deemed a Liquidation. For purposes of Section
4.1, neither the sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of the
property or assets of the Company nor the consolidation or merger of the Company
with or into one or more corporations will be deemed to be a liquidation,
dissolution or winding-up of the Company.
C-5
ARTICLE 5
VOTING RIGHTS
SECTION 5.1 Voting. (a) The Holders shall be entitled to vote,
together with all the outstanding shares of Common Stock as a single class, and
not as a separate class except as otherwise required under Pennsylvania law or
as set forth in this Article 5, on all matters on which holders of Common Stock
shall be entitled or permitted to vote.
(b) Upon (i) the failure of the Company to make a Put Offer
as required under Section 7.2 upon the occurrence of a Put Event, or (ii) the
failure of the Company to redeem any shares of Series A Preferred Stock in
accordance with a Put Offer as required under Section 7.2 (either of the
foregoing events described in clause (i) or (ii) being referred to as a "Put
Non-Compliance Event"), notwithstanding any provision of the Articles of
Incorporation of the Company to the contrary, the number of members of the
Company's Board of Directors shall immediately and automatically increase by a
number of Preferred Directors (as defined below) such that the Preferred
Directors, together with any additional members of the Board of Directors that
any Holder (or an Affiliate of a Holder) is then entitled to appoint or elect
under any shareholder or similar agreement, shall thereafter constitute a
majority of the members of the Board of Directors. Upon the occurrence of a Put
Non-Compliance Event, the Holders of the Series A Preferred Stock, voting as a
separate class (with each share of Series A Preferred Stock being entitled to
one vote) and to the exclusion of all other classes or series of the Company's
capital stock, shall vote to elect individuals to fill such newly created
Preferred directorships, to remove any individuals elected to such Preferred
directorships and to fill any subsequent vacancies in such Preferred
directorships (the foregoing collectively referred to as the "Preferred
Directors").
(c) The right of the Holders of the Series A Preferred Stock
to elect Preferred Directors as set forth in Section 5.1(b) above shall continue
until such time as the failure giving rise to such Put Non-Compliance Event is
remedied, cured or waived by the Holders of a majority of the shares of Series A
Preferred Stock then outstanding, at which time, (i) the special right of the
Holders of Series A Preferred Stock to so elect Preferred Directors shall cease,
(ii) the term of office of all Preferred Directors shall terminate and (iii) the
number of members of the Company's Board of Directors shall immediately and
automatically be decreased by the number of Preferred directorships created
pursuant to Section 5.1(b) above and the directors elected by the Holders of
Common Stock or Capital Stock prior to the Put Non-Compliance Event shall
constitute the entire Board of Directors.
SECTION 5.2 No Impairment. So long as any shares of Series A
Preferred Stock, in the case of Section 5.2(a), or at least 10% of the number of
shares of Series A Preferred Stock issued on the Issue Date, in the case of
Sections 5.2(b) or (c), are outstanding, without the affirmative vote or consent
of the Holders of a majority of the then outstanding shares of Series A
Preferred Stock, voting or consenting, as the case may be, as a separate class,
given in person or by proxy, either in writing or by resolution adopted at an
annual or special meeting, the Company shall not:
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(a) amend this Certificate of Designation or the Articles of
Incorporation so as to affect adversely the special rights, powers, preferences,
privileges or voting rights of Holders of the Series A Preferred Stock; provided
that (i) the creation, authorization or issuance of any shares of any class or
series of Capital Stock of the Company the terms of which do not expressly
provide that it ranks senior to or on a parity with the Series A Preferred Stock
as to dividends or as to distributions upon the liquidation, winding-up and
dissolution of the Company, (ii) the decrease in the amount of authorized
Capital Stock of any class or series (but not below the amount of outstanding
Capital Stock of such class or series nor below such amount of Conversion Shares
as would be required to effect the conversion provided for in Section 6.1),
including the Series A Preferred Stock or (iii) the increase in the amount of
authorized Capital Stock of any class or series of Capital Stock of the Company
the terms of which do not expressly provide that it ranks senior to or on a
parity with the Series A Preferred Stock as to dividends or as to distributions
upon the liquidation, winding-up and dissolution of the Company shall not
require the consent of the Holders and shall not be deemed to affect adversely
the special rights, powers, preferences, privileges or voting rights of Holders.
(b) authorize, create or issue any shares of any class or
series of Capital Stock the terms of which expressly provide that such class or
series will rank on a parity with, or senior to, the Series A Preferred Stock as
to dividends or as to distributions upon the liquidation, winding-up and
dissolution of the Company.
(c) engage in any merger, consolidation, reorganization,
recapitalization or sale of all or substantially all of the assets of the
Company, provided, however, that the Company may engage in such a transaction if
(A) a majority of the directors, excluding any directors designated by GREEN
EQUITY INVESTORS III, L.P., a Delaware limited partnership, or its Affiliates,
approves such transaction and (B) the Company offers to redeem all of the
outstanding Series A Preferred Stock as if such transaction constituted a Change
of Control and (C) the Company redeems the Series A Preferred Stock if such
offer is accepted by the Holders in accordance with Article 7;
SECTION 5.3 Votes Per Share. In any case in which the Holders shall
be entitled to vote pursuant to this Article 5 or pursuant to Pennsylvania law,
unless otherwise provided herein, each Holder shall be entitled to the number of
votes per share equal to the number of shares of Common Stock issuable upon
conversion of such share of Series A Preferred Stock in accordance with Article
6, as of the date fixed for the determination of holders entitled to vote on
such proposal. Any action that may be taken hereunder by the Holders of the
Series A Preferred Stock voting as a separate class at a meeting may be taken by
written consent of the Holders of a majority of the then outstanding shares of
Series A Preferred Stock.
SECTION 5.4 Amendment without a Vote. Subject to Section 5.2 and any
requirements of Pennsylvania law, unless otherwise provided herein, without the
vote of the Holders voting as a separate class, the Company may amend or
supplement this Certificate of Designation or the Articles of Incorporation to
cure any ambiguity, defect or inconsistency in this Certificate of Designation.
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ARTICLE 6
CONVERSION
SECTION 6.1 Conversion.
(a) Right to Convert. The Holder of any shares of Series A
Preferred Stock at its option may at any time (except that if any such share
shall have been redeemed in accordance with Article 7, then, as to such share,
such right shall terminate at the close of business on the date fixed for such
redemption) convert all or any of such Holder's shares of Series A Preferred
Stock into fully paid and non-assessable Conversion Shares at the rate at which
Conversion Shares shall be delivered upon conversion (the "Conversion Rate") in
effect at the time such shares of Series A Preferred Stock are surrendered to
the Company in accordance with Section 6.1(c).
(b) Conversion Rate. The Conversion Rate shall initially be
[$1000/deal price per fully-diluted common equivalent share] Conversion Shares
for each share of Series A Preferred Stock and shall be subject to adjustment as
provided in Section 6.2. The number of Conversion Shares deliverable upon
conversion shall be the number obtained by multiplying the (A) number of shares
of Series A Preferred Stock surrendered to the Company in accordance with
Section 6.1(c) or subject to conversion pursuant to Section 6.1(d) by (B) the
Conversion Rate, as adjusted in accordance with Section 6.2. No Conversion
Shares shall be issued on account of accrued but unpaid Preferred Dividends or
Participating Dividends.
(c) Conversion Election. A Holder shall elect to convert
shares of Series A Preferred Stock by delivering to the Company at any time
during normal business hours: (i) written notice of such Holder's election to
convert, (ii) the certificate or certificates, duly endorsed, representing the
shares to be so converted, (iii) such instruments of transfer as the Company
reasonably may require, in form satisfactory to the Company and duly executed by
such Holder, and (iv) transfer tax stamps or funds therefor, if required
pursuant to Section 6.1(h).
(d) Mandatory Conversion. Upon the effectiveness of a
registration statement under the Securities Act on any of Forms X-0, X-0, X-0 or
any similar successor form covering any of the Common Stock, and the completion
of a sale of such Common Stock thereunder, (i) for which aggregate gross
proceeds exceed $125 million, (ii) pursuant to which the offering price to the
public per share of the Common Stock so offered is equal to or greater than (A)
the aggregate Liquidation Preference of the Series A Preferred Stock then
outstanding, divided by (B) the total number of Conversion Shares issuable upon
conversion of all Series A Preferred Stock then outstanding, (iii) following
which the Company is, or becomes, a reporting company under Section 12(b) or
12(g) of the Securities Exchange Act of 1934, as amended, and (iv) as a result
of which the Common Shares are traded on the New York Stock Exchange or the
American Stock Exchange, or quoted on the NASDAQ Stock Market or are traded or
quoted on any other national stock exchange (a "Qualified IPO"), all shares of
Series A Preferred Stock shall be converted into fully paid and non-assessable
Conversion Shares at the Conversion Rate in effect on the date of such offering,
except to the extent any such shares of Series A Preferred Stock are being
redeemed upon such Qualified IPO pursuant to Section 7.1
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(e) Issuance of Conversion Shares.
(i) As promptly as practicable after a Holder has validly
elected to convert shares of Series A Preferred Stock in accordance with Section
6.1(c) or upon a Qualified IPO, the Company will deliver to the Holder a
certificate or certificates representing the number of Conversion Shares
issuable upon such conversion, including any fractional shares, issued in such
name or names as such Holder may direct. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of such
surrender of the certificate(s) in accordance with Section 6.1(c) or, in the
case of a mandatory conversion in connection with a Qualified IPO, upon the
opening of business on the date of such Qualified IPO. Upon such conversion all
rights of such Holder as a Holder shall cease with respect to such shares and
the person in whose name the certificates for Conversion Shares are to be issued
shall be treated for all purposes as the record holder thereof at such time. All
certificates representing the converted Series A Preferred Stock shall be, or
shall be deemed to be, canceled by the Company as of the date the election to
convert is made or the date of the Qualified IPO, as the case may be, and shall
thereafter no longer be of any force or effect.
(ii) The Company covenants that (A) it will at all times
reserve and keep available, solely for the purpose of issue upon conversion of
the shares of Series A Preferred Stock, such number of Conversion Shares as
shall be issuable upon the conversion of all outstanding shares of the Series A
Preferred Stock, (B) if any Conversion Shares required to be reserved for
purposes of conversion of the shares hereunder require registration with or
approval of any governmental authority under any Federal or state law or
regulation before such shares may be issued upon conversion, it will cause such
shares to be duly registered or approved, as the case may be, (C) it will use
its reasonable best efforts to list the Conversion Shares required to be
delivered upon conversion of shares prior to such delivery upon each national
securities exchange, if any, upon which the outstanding Conversion Shares are
listed at the time of such delivery, and, if such outstanding Conversion Shares
are not listed on any exchange but are traded in the over-the-counter market, to
qualify such shares for trading and quotation privileges such as are then
available for the outstanding Conversion Shares and (D) all Conversion Shares
which shall be issued upon conversion of the shares will upon issue have been
duly authorized and validly issued and be fully paid and non-assessable and not
subject to any preemptive rights.
(f) Dividends. If shares of Series A Preferred Stock shall
be converted subsequent to the record date preceding a Participating Dividend
payment date (the "Participating Dividend Payment Date") for the Series A
Preferred Stock, but prior to such Participating Dividend Payment Date, the
registered holder of such shares at the close of business on such record date
shall be entitled to receive the Participating Dividend payable on such shares
on such Participating Dividend Payment Date in the form which such Holder is
entitled to notwithstanding the conversion thereof, subject to the Company's
payment of the Participating Dividend on such Participating Dividend Payment
Date.
(g) Certain Transactions.
(i) Upon the consummation of any (A) consolidation,
reorganization, share exchange, division or merger to which the Company is a
party, other than a consolidation, reorganization, share exchange, division or a
merger in which the Company is a continuing
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corporation and which does not result in any reclassification, change or
exchange (other than changes in par value or from par value to no par value or
from no par value to par value or changes as a result of a subdivision or
combination) in outstanding Conversion Shares, or (B) sale of all or
substantially all of the assets of the Company, each share of Series A Preferred
Stock shall be convertible only into the kind and amount of securities and other
property, if any, received in exchange for Conversion Shares in such
transaction, subject to adjustment as nearly equivalent as practicable to the
adjustments provided for in Section 6.2. The provisions of this Section 6.1(g)
shall similarly apply to successive consolidations, reorganizations, mergers,
share exchanges, divisions, sales or conveyances.
(ii) The Company shall cause to be given to the Holders as
promptly as possible, but in any event at least 15 days prior to the applicable
date of the occurrence of an event described in clause (i) above, a notice
stating the date on which such event is expected to become effective or occur,
and the date as of which it is expected that holders of record of Common Stock
shall be entitled to exchange their shares of Common Stock for securities, cash
or other property deliverable upon such consolidation, reorganization, merger,
share exchange, division, sale or conveyance.
(h) Stamp Tax or Duty. The issuance of certificates for
Conversion Shares upon conversion shall be made without charge for any stamp or
other similar tax in respect of such issuance. However, if any such certificate
is to be issued in a name other than that of the Holder of the share or shares
converted, the person or persons requesting the issuance thereof shall pay to
the Company the amount of any tax that may be payable in respect of any transfer
involved in such issuance or shall establish to the satisfaction of the Company
that such tax has been paid.
(i) Legends and Transfer Restrictions of Conversion Shares.
The Conversion Shares issued upon conversion of the Series A Preferred Stock
shall bear such legends and shall have such transfer restrictions as provided
for in Section 9.2, the Articles of Incorporation and by the laws of any state
or other jurisdiction.
SECTION 6.2 Adjustments of Conversion Rate. The Conversion Rate
shall be subject to adjustment as follows:
(a) Adjustment for Accretion. The Conversion Rate shall be
increased by 14% per annum, compounded quarterly in arrears from the Issue Date
through [anniversary of issue date,] 2006. This adjustment shall be in addition
to any adjustments under Sections 6.2(b), (c) and (d).
(b) Adjustment for Changes in Common Stock.
(i) If, after the Issue Date, the Company (A) subdivides or
splits any of its outstanding shares of any class or series of Common Stock into
a greater number of shares; (B) combines any of its outstanding shares of any
class or series of Common Stock into a smaller number of shares; or (C) issues
by reclassification of any class or series of its Common Stock any shares of any
of its Common Stock; then the Conversion Rate in effect immediately prior to
such action for each share of Series A Preferred Stock then outstanding shall be
adjusted by
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multiplying the Conversion Rate in effect immediately prior to such action by a
fraction (x) the numerator of which shall be the number of shares of all classes
or series of Common Stock outstanding immediately after such action giving pro
forma effect to the exercise of all then outstanding Convertible Securities
(other than the Series A Preferred Stock) and (y) the denominator of which shall
be the number of shares of all classes or series of Common Stock outstanding
immediately prior to such action or the record date applicable to such action,
if any (giving pro forma effect to the exercise of all then outstanding
Convertible Securities (other than the Series A Preferred Stock)). The
adjustment shall become effective immediately after the effective date of a
subdivision, combination or reclassification. In the event that such
subdivision, combination or reclassification is not effected, the Conversion
Rate shall again be adjusted to be the Conversion Rate which would then be in
effect if such effective date had not been so fixed.
(ii) If, as a result of an adjustment made pursuant to this
Section 6.2(b) a holder of shares Series A Preferred Stock upon conversion of
such shares of Series A Preferred Stock may receive shares of two or more
classes or series of Capital Stock of the Company, the Conversion Rate shall
thereafter be subject to adjustment upon the occurrence of an action taken with
respect to any such class or series of Capital Stock as is contemplated by this
Section 6.2 with respect to the Common Stock, on terms comparable to those
applicable to Common Stock in this Section 6.2.
(c) Adjustment for Certain Sales of Common Stock Below
Current Market Value.
(i) If, at any time after the Issue Date, the Company issues
or sells any shares of any class or series of Common Stock or any Convertible
Security (other than (A) pursuant to the conversion of any Series A Preferred
Stock, (B) pursuant to the conversion, exchange or exercise of any Convertible
Security outstanding as of the Issue Date (to the extent in accordance with the
terms of such Convertible Security as in effect on such date) and/or (C)
pursuant to the conversion, exchange or exercise of any Convertible Security as
to which upon the issuance thereof an adjustment pursuant to this Section 6.2
has been made (or was not required under the foregoing clause (A) or (B)) at a
price per share (in the case of any Convertible Security, based on the
consideration received for such Convertible Security plus any consideration
receivable upon conversion, exchange or exercise, as applicable, each on an
as-converted, per share basis) below the then Current Market Value receivable
upon conversion, exchange or exercise, as applicable), the Conversion Rate for
each share of Series A Preferred Stock then outstanding shall be adjusted in
accordance with the formula:
CR(1) = CR x (O+N)
------------------
(O + (N x P/M))
where:
CR(1) = the adjusted Conversion Rate immediately after the Time of
Determination;
CR = the pre-adjusted current Conversion Rate immediately prior
to the Time of Determination;
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O = the aggregate number of shares of Common Stock of all classes
outstanding immediately prior to such issuance or sale of such
Common Stock or Convertible Securities, as the case may be;
N = the number of shares of Common Stock of any class so issued
or sold or the maximum stated number of shares of Common Stock
of any class issuable upon the conversion, exchange or exercise
of any such Convertible Securities, as the case may be;
P = the proceeds per share of Common Stock of the relevant class
received by the Company, which (i) in the case of shares of
Common Stock of any class is the amount received by the
Company in consideration for the sale and issuance of such
shares; and (ii) in the case of Convertible Securities is
the amount received by the Company in consideration for the
sale and issuance of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, other
than the surrender of such Convertible Securities, payable
to the Company upon exercise, conversion or exchange
thereof; and
M = the Current Market Value per share of Common Stock of the
relevant class.
(ii) The adjustment shall become effective immediately after
the Time of Determination with respect to the issuance or sale to which this
Section 6.1(c) applies. To the extent that shares of Common Stock are not
delivered after the expiration of such Convertible Securities (or any
Convertible Securities underlying such Convertible Securities), the Conversion
Rate for each Share of Series A Preferred Stock then outstanding shall be
readjusted to the Conversion Rate which would otherwise be in effect had the
adjustment made upon the issuance or sale of such Convertible Securities been
made on the basis of delivery of only the number of shares of Common Stock
actually delivered.
(iii) Notwithstanding the foregoing, no adjustment shall be
made under this Section 6.2(c) (A) if the application of the formula stated
above would result in a value of CR1 that is lower than the value of CR or (B)
for any adjustment which is the subject of Section 6.2(b) or 6.2(d).
(iv) Notwithstanding the foregoing, no adjustment in the
Conversion Rate will be required in respect of: (A) the grant of any stock
option or stock incentive award at an exercise price at least equal to the then
Current Market Value, (B) the grant of any other stock option or stock incentive
award to any officer or employee of the Company or any of its subsidiaries
pursuant to any compensatory plan or arrangement that has been approved by the
Company's Board of Directors, or (C) the exercise of any such option or award
referred to in clause (A).
(d) Adjustment upon Certain Distributions.
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(i) If at any time after the Issue Date the Company grants
or issues any Convertible Security or Capital Stock (other than Common Stock),
evidence of its indebtedness or assets, or rights to purchase or subscribe for
the same pro rata to all record holders of any class of Common Stock
("Distribution Rights"), then the Conversion Rate for each share of Series A
Preferred Stock then outstanding shall be adjusted in accordance with the
formula:
CR(1) = CR x (M/(M-F))
where:
CR(1) = the adjusted Conversion Rate immediately after the Time of
Determination;
CR = the pre-adjusted Conversion Rate immediately prior to the Time of
Determination;
M = the Current Market Value per Share of Common Stock of the
relevant class;
F = the fair market value at the Time of Determination of such portion
of the Convertible Securities, Capital Stock or the evidence of
indebtedness or assets or of such rights to purchase or subscribe
for the same, distributable pursuant to such Distribution Rights per
share of outstanding Common Stock less the amount per share of
outstanding Common Stock paid by the shareholders in consideration
therefor.
The adjustment shall become effective immediately after the Time of
Determination with respect to the shareholders entitled to receive the
Convertible Securities, Capital Stock or rights to purchase or subscribe for the
same to which this Section 6.2(d)(i) applies. Notwithstanding the foregoing, no
adjustment shall be made under this Section 6.2(d) if the application of the
formula stated above in this Section 6.2(d)(i) would result in a value of CR(1)
that is lower than the value of CR. Notwithstanding the foregoing, this Section
6.2(d)(i) does not apply to any transaction which results in an adjustment
pursuant to Section 6.2(b).
(ii) Notwithstanding the provisions of Section 6.2(d)(i), an
event that would otherwise give rise to an adjustment pursuant to Section
6.2(d)(i) shall not give rise to such adjustment if the Company grants, issues
or sells Distribution Rights to the Holders or includes the Holders in such
Distribution, in each case on a pro rata basis, assuming for the purpose of this
Section 6.2(d)(ii) that (A) all outstanding shares of Common Stock are of one
class and (B) the Series A Preferred Stock had been converted.
(e) Notice of Adjustment. Whenever the Conversion Rate is
adjusted, the Company shall promptly mail to Holders at the addresses appearing
on the stock register a notice of the adjustment. The Company shall keep with
its records such notice and a certificate from the Company's Chief Financial
Officer briefly stating the facts requiring the adjustment and the manner of
computing it. The certificate shall be conclusive evidence that the adjustment
is correct, absent manifest error.
(f) Other Events. If any event occurs as to which the
provisions of this Section 6.2 are not strictly applicable and as a result of
which the provisions of this Section 6.2,
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in the good faith judgment of the Board of Directors of the Company, do not
fairly and adequately comply with the essential intent and principles of such
provisions, then such Board of Directors shall make such adjustments in the
application of such provisions, in accordance with such essential intent and
principles, as shall be reasonably necessary, in the good faith opinion of such
Board of Directors, to so comply.
(g) Voluntary Adjustments. The Company from time to time may
increase the Conversion Rate by any number and for any period of time; provided
that such period is not less than 20 Business Days. Whenever the Conversion Rate
is so increased, the Company shall mail to Holders a notice of the increase. The
Company shall give the notice at least 15 days before the date the increased
Conversion Rate takes effect. The notice shall state the increased Conversion
Rate and the period it will be in effect. A voluntary increase in the Conversion
Rate for a period of time in accordance with this Section 6.2(g) shall not
change or adjust the Conversion Rate otherwise in effect as determined by this
Section 6.2 after such period of time.
(h) Multiple Adjustments. After an adjustment to the
Conversion Rate for outstanding Series A Preferred Stock under this Section 6.2,
any subsequent event requiring an adjustment under this Section 6.2 shall cause
an adjustment to the Conversion Rate for outstanding Series A Preferred Stock as
previously so adjusted under this Section 6.2. For the purposes of adjustments
with respect to Convertible Securities, the maximum number of shares of Capital
Stock issuable upon exercise, exchange or conversion of such Convertible
Securities shall be deemed to be outstanding, provided that no further
adjustment shall be made upon the actual issuance of Capital Stock upon
exercise, exchange or conversion of such Convertible Securities.
(i) When De Minimis Adjustment May Be Deferred. No
adjustment in the Conversion Rate shall be required unless such adjustment would
require an increase or decrease of at least 1% in such rate; provided, however,
that any adjustments which by reason of the foregoing are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations shall be made by the Company and shall be rounded
to the sixth decimal place. No adjustment need be made for a change in the par
value or no par value of the Common Stock and no adjustment shall be deferred
beyond the date on which a share of Series A Preferred Stock is converted.
ARTICLE 7
REDEMPTION
SECTION 7.1 Offers to Redeem.
(a) (i) Upon (A) the occurrence of a Change of Control, (B)
the occurrence of a Qualified IPO, or (C) the receipt of the written request of
any or all of the Holders at any time on or after January 1, 2007 and on or
prior to December 31, 2008 (the "Put Notice") (any of the foregoing
transactions, the occurrence of a Change of Control or a Qualified IPO, or
receipt of a Put Notice being referred to as a "Put Event"), each of the Holders
will have the right, but not the obligation, to require the Company to redeem in
whole or in part such Holder's shares of Series
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A Preferred Stock (subject to any prohibitions or limitations imposed by
Pennsylvania law), pursuant to an offer (the "Put Offer") at the following offer
prices in cash (the "Offer Price"):
(1) if such Put Event occurs prior to [anniversary of issue
date], 2004, at an Offer Price equal to 130.8% of the Initial Liquidation
Preference;
(2) if such Put Event occurs on or after [anniversary of
issue date], 2004, at an Offer Price set forth below (expressed below as a
percentage of the Liquidation Preference as of the date of redemption) across
from the 12-month period beginning [issue date] of the year set forth below,
during which period the Put Event occurs, in each case together with an amount
in cash equal to all accumulated and unpaid Participating Dividends through the
date of redemption:
PERCENTAGE OF
YEAR LIQUIDATION PREFERENCE
---- ----------------------
2004 112%
2005 110%
2006 108%
2007 and
thereafter 106%
(b) The Company shall not be required to make a Put Offer
with respect to any Put Event if a third party makes and consummates a Put Offer
with respect to such Put Event substantially in accordance with this Article 7.
SECTION 7.2 Procedures for Redemption. In the event that the Company
shall be required to commence a Put Offer, the Company shall follow the
procedures specified in this Section 7.2.
(a) At least 30 days prior to a Qualified IPO, and within 30
days after any other Put Event, the Company shall commence a Put Offer by
sending, via first class mail, a notice (the "Redemption Notice") to each of the
Holders. The Put Offer shall remain open for a period of at least 20 Business
Days from the date the Redemption Notice is mailed to Holders (the "Offer
Period"). The Redemption Notice shall govern the terms of the Put Offer and
shall contain all instructions and materials necessary to enable the Holders to
tender their shares of Series A Preferred Stock pursuant to the Put Offer. The
Redemption Notice shall state:
(i) whether the Put Offer is pursuant to (A) a Change of
Control, in which case the Put Notice shall describe the transaction or
transactions that constitute a Change or Control, (B) a Qualified IPO, in
which case the Redemption Notice shall describe the Qualified IPO, or (B)
a Put Notice;
(ii) the Offer Price;
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(iii) that on the date specified in such notice, which, (A) in
the case of a Qualified IPO, shall be the date of consummation of such
Qualified IPO and (B) in the case of any other Put Event, shall be a date
no later than 60 days after such Put Event (the "Redemption Date"), the
Company shall redeem all shares of Series A Preferred Stock validly
tendered and not properly withdrawn pursuant to this Article 7 and the Put
Offer;
(iv) that any Holder electing to have shares of Series A
Preferred Stock redeemed pursuant to the Put Offer may so elect with
respect to any or all of such Holder's shares;
(v) that any Holder electing to have shares of Series A
Preferred Stock redeemed pursuant to the Put Offer shall be required prior
to the expiration of the Offer Period to surrender the certificates
representing such Holder's shares of Series A Preferred Stock to be
redeemed with such customary documents of surrender and transfer as the
Company may reasonably request, duly completed, to the Company at the
address and by the means specified in the Redemption Notice;
(vi) that each Holder shall be entitled to withdraw its
election if the Company receives, not later than the expiration of the
Offer Period, a facsimile transmission or letter setting forth the name of
the Holder and a statement that such Holder is withdrawing its election to
have shares of Series A Preferred Stock redeemed;
(vii) that Participating Dividends on shares of the Series A
Preferred Stock to be redeemed shall cease to accrue after the Redemption
Date unless the Company defaults in the payment of the redemption price;
and
(viii) that, in the case of a Put Offer in connection with a
Qualified IPO, the Put Offer shall terminate automatically and immediately
as to all shares of Series A Preferred Stock (regardless of any acceptance
of the Put Offer by the Holders thereof) in the event that the Qualified
IPO is not completed.
(b) Each Holder shall surrender the certificate or
certificates representing such shares of Series A Preferred Stock to the Company
(duly endorsed or assigned for transfer), together with all other documents
required pursuant to the Redemption Notice, duly completed, in the manner and at
the place designated in the Redemption Notice and on or prior to the expiration
of the Offer Period. The Offer Price for such shares of Series A Preferred Stock
shall be payable in cash to the Person whose name appears on such certificate or
certificates as the owner thereof, and each surrendered certificate shall be
canceled and retired; provided, that if certificates surrendered represent more
shares than the Holder has elected to have redeemed, the Company shall issue
certificates for the shares that are not redeemed.
(c) Unless the Company defaults in the payment in full of
the applicable redemption price, Participating Dividends shall cease to
accumulate after the Redemption Date, and the Holders of such redeemed shares
shall cease to have any further rights with respect thereto after the Redemption
Date, other than the right to receive the redemption price, without interest.
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ARTICLE 8
MISCELLANEOUS
SECTION 8.1 Preemptive Rights. This Certificate of Designation does
not grant to any shares of Series A Preferred Stock any rights of preemption
whatsoever as to any securities of the Company, or any warrants, rights or
options issued or granted with respect thereto, regardless of how such
securities or such warrants, rights or options may be designated, issued or
granted.
SECTION 8.2 Reissuance of Series A Preferred Stock. Shares of Series
A Preferred Stock that have been issued and reacquired in any manner, including
shares redeemed or exchanged, shall (upon compliance with any applicable
provisions of the laws of Pennsylvania) have the status of authorized but
unissued shares of Preferred Stock of the Company and may be designated or
redesignated and issued or reissued, as the case may be, as part of any class or
series of Preferred Stock of the Company, except that such shares shall not be
reissued as shares of Series A Preferred Stock.
SECTION 8.3 Business Day. If any payment, redemption or exchange
shall be required by the terms hereof to be made on a day that is not a Business
Day, such payment, redemption, or exchange shall be made on the immediately
succeeding Business Day.
SECTION 8.4 Waiver. The Holders of a majority of the outstanding
shares of Series A Preferred Stock, voting or consenting, as the case may be, as
a separate class, may waive compliance with any provision of this Certificate of
Designation.
SECTION 8.5 Notice. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (a) on the date of delivery
if delivered personally, or if by facsimile, upon written confirmation of
receipt by facsimile, email or otherwise, (b) on the first Business Day
following the date of dispatch if delivered by a recognized next-day courier
service, or (c) on the earlier of confirmed receipt or the fifth Business Day
following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be
delivered to the addresses set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice:
if to the Company, to:
Xxxxxx Holding Co. (PA), Inc.
00 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
with copies to:
Investcorp International Inc.
000 Xxxx Xxxxxx, 00 Xxxx
X-00
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: E. Xxxxxxx Xxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
Any notice or communication to a Holder shall be delivered to the
Holder's address as it appears in the stock register of the Company and shall be
sufficiently given if so mailed within the time prescribed. Failure to mail a
notice or communication to a Holder or any defect in such notice shall not
affect its sufficiency with respect to other Holders.
ARTICLE 9
TRANSFER RESTRICTIONS
SECTION 9.1 Series A Preferred Stock.
(a) The certificates evidencing the Series A Preferred Stock
shall, unless otherwise agreed to by the Company and the Holders of any such
certificates, bear a legend substantially to the following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S
PROMULGATED UNDER THE SECURITIES ACT, PURSUANT TO REGISTRATION UNDER THE
SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING
TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
WITH THE SECURITIES ACT.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
COMPANY SUCH OPINIONS, CERTIFICATES AND OTHER INFORMATION AS THE COMPANY MAY
REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.
THE SECURITY REPRESENTED BY THIS CERTIFICATE MAY BE AUTOMATICALLY
CONVERTED UPON THE OCCURRENCE OF CERTAIN EVENTS SPECIFIED IN THE STATEMENT WITH
RESPECT TO SHARES FOR THIS SECURITY. SUCH AUTOMATIC CONVERSION CAN BE
ACCOMPLISHED WITHOUT THIS
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CERTIFICATE BEING SURRENDERED AND WHETHER OR NOT THE COMPANY GIVES NOTICE OF
SUCH AUTOMATIC CONVERSION.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH HOLDER WHO SO
REQUESTS A COPY OF THE CERTIFICATE OF DESIGNATION.
In addition to such legend, such certificates shall bear any legends
required by the Articles of Incorporation and by the laws of any state or other
jurisdiction.
(b) The Company shall refuse to register any attempted
transfer of shares of Series A Preferred Stock not in compliance with Section
9.1(a).
(c) Whenever the restrictions imposed by this Section 9.1
shall terminate and, if requested by the Company, upon delivery by any Holder of
an opinion of counsel stating that such shares of Series A Preferred Stock are
no longer Restricted Securities, such opinion to be in a form and from counsel
reasonably acceptable to the Company, the holder thereof shall be entitled to
receive from the Company, without expense to the Holder, a new stock certificate
not bearing the legend set forth in this Section 9.1.
SECTION 9.2 Conversion Shares.
(a) The certificates evidencing Conversion Shares issued
upon a conversion of Series A Preferred Stock pursuant to Section 6.1 shall,
unless otherwise agreed to by the Company and the Holders of any such
certificates, bear a legend substantially to the following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S
PROMULGATED UNDER THE SECURITIES ACT, PURSUANT TO REGISTRATION UNDER THE
SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING
TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
WITH THE SECURITIES ACT.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
COMPANY SUCH OPINIONS, CERTIFICATES AND OTHER INFORMATION AS THE COMPANY MAY
REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.
In addition to such legend, such certificates shall bear any legends
required by the Articles of Incorporation and by the laws of any state or other
jurisdiction.
(b) Whenever the restrictions imposed by this Section 9.2
shall terminate and, if requested by the Company, upon delivery by any Holder of
an opinion of counsel stating that such Conversion Shares are no longer
Restricted Securities, such opinion to be in a form and
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from counsel reasonably acceptable to the Company, the holder thereof shall be
entitled to receive from the Company, without expense to the Holder, a new stock
certificate not bearing the legend set forth in this Section 9.2.
ARTICLE 10
DELIVERY AND FORM
The certificates representing the Series A Preferred Stock will be
issued in fully registered form. Holders will be entitled to receive physical
delivery of a certificate for their Series A Preferred Stock ("Certificated
Preferred Stock") which shall bear the legend referred to in Section 9.1. Record
ownership of Certificated Preferred Stock will be shown on, and the transfer of
that ownership will be effected only through, records maintained by the Company.
ARTICLE 11
DEFINITIONS
SECTION 11.1 Definitions. As used in this Certificate of
Designation, the following terms shall have the following meanings:
"Affiliate" of any specified Person means (a) any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person; or (b) any other Person that owns,
directly or indirectly, 10% or more of such specified Person's Voting Stock; or
(c) any Person who is a director or officer of (i) such Person, (ii) any
Subsidiary of such Person or (iii) any Person described in clauses (a) or (b).
For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities,
by agreement or otherwise.
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person, or any authorized committee of the Board of Directors
of such Person.
"Business Day" means a day other than a Saturday, Sunday or other
day on which banking institutions in the State of New York are authorized or
required by law to close.
"Capital Stock" means:
(a) in the case of a corporation, corporate stock;
(b) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited); and
(c) in the case of an association or other business entity,
any and all shares, interests, participations, rights or other equivalents
(however designated) of corporate stock.
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"Change of Control" means such time as:
(a) prior the first public offering of Common Stock of the
Company, the Initial Control Group ceases to be the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of more than 50% of the total voting power of the Voting Stock or
more than 50% of the Common Stock, whether as a result of the issuance of
securities of the Company, any merger, consolidation, liquidation or dissolution
of the Company, any direct or indirect transfer of securities by the Initial
Control Group or otherwise (for purposes of this clause (a) and clause (b)
below, the Initial Control Group shall be deemed to beneficially own any Voting
Stock or common stock of an entity (the "specified entity") held by any other
entity (the "parent entity") so long as the Initial Control Group beneficially
owns (as so defined), directly or indirectly, in the aggregate a majority of the
voting power of the Voting Stock of the parent entity; or
(b) following the first public offering of Common Stock of
the Company (other than a Qualified IPO), (1) any "person" (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act), other than one or more members
of the Initial Control Group, is or becomes the beneficial owner (as defined in
clause (a) above, except that such person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 30% of the total voting power of the Voting
Stock of the Company, and (2) the Initial Control Group "beneficially owns" (as
defined in clause (a) above), directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Voting Stock of the Company than
such other person and does not have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of the Board
of Directors of the Company (for purposes of this clause (b), such other person
shall be deemed to beneficially own any Voting Stock of a specified entity held
by a parent entity, if such other person "beneficially owns" (as defined in
clause (a) above), directly or indirectly, in the aggregate more than 30% of the
voting power of the Voting Stock of such parent entity and the Initial Control
Group "beneficially owns" (as defined in clause (a) above), directly or
indirectly, in the aggregate a lesser percentage of the voting power of the
Voting Stock of such parent entity and does not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the board of directors of such parent entity).
"Class A Common Stock" means the Class A Common Stock of the
Company, par value $0.01 per share.
"Class B Common Stock" means the Class B Common Stock of the
Company, par value $0.01 per share.
"Class C Common Stock" means the Class C Common Stock of the
Company, par value $0.01 per share.
"Class D Common Stock" means the Class D Common Stock of the
Company, par value $0.01 per share.
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"Class E Common Stock" means the Class E Common Stock of the
Company, par value $0.01 per share.
"Class F Common Stock" means the Class F Common Stock of the
Company, par value $0.01 per share.
"Common Stock" means all shares of Capital Stock of the Company,
whether or not denominated as "common stock," which are entitled to share
ratably in the ordinary dividends of the Company or share ratably in the
proceeds of any liquidation of the Company after the payment of all preferential
claims, and shall include, without limitation, all shares of Class A Common
Stock, Class B Common Stock, Class C Common Stock, Class D Common Stock, Class E
Common Stock, Class F Common Stock and the No-Class Common Stock of the Company
authorized on the Issue Date, but exclude the Series A Preferred Stock and any
other Preferred Stock.
"Company" means Xxxxxx Holding Co. (PA), Inc., a Pennsylvania
corporation, and any successor.
"Conversion Shares" means the shares of Class F Common Stock or any
shares of Common Stock into which Class F Common Stock has been converted
pursuant to the Amended and Restated Articles of Incorporation, issuable upon
conversion of the Series A Preferred Stock from time to time.
"Convertible Security" shall mean any securities convertible into or
exercisable or exchangeable for, and all other options and rights to purchase or
subscribe for, Common Stock or other Convertible Securities, in each case,
whether outstanding on the Issue Date or thereafter issued.
"Current Market Value" per share of any class of Common Stock of the
Company shall mean:
(a) if such class of Common Stock is not then (i) registered
under the Exchange Act and (ii) traded on a national securities exchange or
quoted on the Nasdaq Stock Market, the value of such class of Common Stock on
the Business Day immediately prior to the date of the public announcement of the
transaction giving rise to the determination of Current Market Value, determined
in good faith by the Board of Directors of the Company, taking into account the
most recently completed arms-length transaction between the Company and a Person
other than an Affiliate of the Company and the closing of which occurs on such
date or shall have occurred within the six-month period preceding such date; or
(b)(i) if such class of Common Stock is then (A) registered
under the Exchange Act and (B) traded on a national securities exchange or on
the Nasdaq Stock Market, the average of the daily closing sales prices of such
class of Common Stock for the 5 consecutive trading days immediately preceding
the public announcement of the transaction giving rise to the determination of
Current Market Value, or (ii) if such class of Common Stock has been registered
under the Exchange Act and traded on a national securities exchange or on the
Nasdaq National Market System for less than 5 consecutive trading days before
such date of public announcement, then the average of the daily closing sales
prices for all trading days before such
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date for which closing sales prices are available. The closing sales price of
each such trading day shall be the closing sales price, regular way, on such
day, or if no sale takes place on such day, the average of the closing bid and
asked prices on such day.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder" means a Person in whose name any outstanding shares of
Series A Preferred Stock are registered in the register for the Series A
Preferred Stock.
"Initial Control Group" means Investcorp, its Affiliates, the
holders of the Class A, Class B, Class C, Class D and Class E Common Stock
immediately following the Recapitalization, any Person acting in the capacity of
an underwriter or initial purchaser in connection with a public or private
offering of the Company's Capital Stock, or any Permitted Transferee of any of
the foregoing Persons.
"Investcorp" means Investcorp Bank B.S.C., a Bahrain stock
corporation.
"Issue Date" means, [ ], 2003, the date the Series A Preferred Stock
is originally issued.
"Liquidation Preference" means, as of any date, the sum of (a) the
Initial Liquidation Preference per share of Series A Preferred Stock, plus (b)
accrued and unpaid Preferred Dividends added to the Liquidation Preference in
accordance with Section 3.1(a), minus (c) the Base Amount of any special
dividend paid pursuant to Section 3.1(d).
"No-Class Common Stock" means the class of common stock designated
as "Common Stock" of the Company, par value $.01 per share.
"Permitted Transferee" means, (A) with respect to any Person, (i)
the spouse, former spouse, lineal descendants, heirs, executors, administrators,
testamentary trustees, legatees or beneficiaries of any such Person, and (ii) a
trust, the beneficiaries of which, or a corporation or partnership or limited
liability company, the stockholders, general or limited partners or members of
which, include only such Person or his or her spouse, former spouse, lineal
descendants or heirs, in each case to whom such Person has transferred, or
through which it holds, the beneficial ownership of any securities of the
Company, and (B) with respect to Investcorp, any other investor with whom
Investcorp or any Affiliate thereof has an administrative relationship with
respect to securities of the Company, including but not limited to holders of
the Class D Common Stock.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Dividend Payment Date" means March 31, June 30, September
30 and December 31 of each year.
"Preferred Stock" means, with respect to any Person, any Capital
Stock of such Person (however designated) that is preferred as to the payment of
dividends or distributions, or
C-23
as to the distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, over shares of Capital Stock of any
other class or series of such Person. With respect to the Company, "Preferred
Stock" includes the Series A Preferred Stock.
"Recapitalization" means the recapitalization of the Company,
effective [_______], 2003, pursuant to which the Company will reclassify and
redeem shares of its Common Stock, and issue the Series A Preferred Stock, and
the other transactions related thereto, including the cancellation of certain
options to purchase the Capital Stock of the Company and making payments to
optionholders with respect thereto.
"Restricted Securities" means "restricted securities" as such term
is defined in Rule 144(a)(3) promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Stock" is defined in Section 1.1.
"Subsidiary" means, with respect to any Person:
(a) any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person (or a combination thereof); and
(b) any partnership (i) the sole general partner or the
managing general partner of which is such Person or a Subsidiary of such Person
or (ii) the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
Unless otherwise specified, "Subsidiary" refers to a Subsidiary of
the Company.
"Time of Determination" means (a) in the case of any distribution to
existing shareholders to which Section 6.2(d) applies, the time and date of the
determination of shareholders entitled to receive such securities or property,
or (b) in the case of any other issuance and sale to which Section 6.2(c) or
6.2(d) applies, the time and date of such issuance or sale.
"Voting Stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person. Unless otherwise specified, "Voting Stock" refers
to Voting Stock of the Company.
SECTION 11.2 Rules of Construction. For the purposes of this
Certificate of Designation (a) words in the singular shall be held to include
the plural and vice versa and words of one gender shall be held to include the
other gender as the context requires, (b) the word "including" and words of
similar import shall mean "including, without limitation," (c) a capitalized
word has the meaning assigned to it, (d) an accounting term not otherwise
defined has
C-24
the meaning assigned to it in accordance with generally accepted accounting
principles in the United States of America as in effect from time to time, and
(e) "or" is not exclusive.
IN WITNESS WHEREOF, Xxxxxx Holding Co. (PA), Inc. has caused this
Certificate of Designation to be signed by _______________, its
__________________, on the date and year first above written.
XXXXXX HOLDING CO. (PA), INC.
By
---------------------------------
Name:
Title:
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