EXHIBIT B
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SECURITIES PURCHASE AGREEMENT
Among
LABONE, INC.,
WELSH, CARSON, XXXXXXXX & XXXXX IX, L.P.
and
THE OTHER PURCHASERS
NAMED ON SCHEDULE I HERETO
Dated as of August 31, 2001
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TABLE OF CONTENTS
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ARTICLE I. PURCHASE AND SALE OF INITIAL SECURITIES
ON THE CLOSING DATE; PURCHASE PRICE............................2
SECTION 1.01. Issuance, Sale and Delivery of the Initial
Securities.............................................2
SECTION 1.02. Closing................................................3
ARTICLE II. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY.................................................4
SECTION 2.01. Organization and Qualification.........................4
SECTION 2.02. Investments and Commitments; Subsidiaries..............5
SECTION 2.03. Capitalization.........................................6
SECTION 2.04. Corporate Power and Authority; Authorization
of Agreements; Non-Contravention.......................6
SECTION 2.05. Validity...............................................8
SECTION 2.06. Governmental Approvals.................................8
SECTION 2.07. SEC Filings............................................9
SECTION 2.08. Financial Statements...................................9
SECTION 2.09. Absence of Certain Changes or Events..................10
SECTION 2.10. Actions Pending.......................................10
SECTION 2.11. Compliance with Law; Material Permits.................10
SECTION 2.12. Title to and Condition of Properties..................10
SECTION 2.13. Real Property.........................................11
SECTION 2.14. Contracts.............................................11
SECTION 2.15. Intellectual Property; Software.......................12
SECTION 2.16. Tax Matters...........................................12
SECTION 2.17. Employee Benefit Plans................................14
SECTION 2.18. Customers.............................................15
SECTION 2.19. Labor Matters.........................................15
SECTION 2.20. Environmental Matters.................................15
SECTION 2.21. Insurance Coverage....................................16
SECTION 2.22. Offering of the Securities............................16
SECTION 2.23. Related-Party Transactions............................16
SECTION 2.24. Proxy Statement.......................................16
SECTION 2.25. Anti-Takeover Statutes and Certain Charter
Provisions; Rights Plan...............................17
SECTION 2.26. Xxxxxx Acquisition Agreement..........................17
SECTION 2.27. Completeness of Disclosure............................17
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SECTION 2.28. Brokers...............................................17
ARTICLE III. REPRESENTATIONS AND WARRANTIES
OF THE PURCHASERS.............................................18
SECTION 3.01. Organization and Authority............................18
SECTION 3.02. Authorization.........................................18
SECTION 3.03. Validity..............................................18
SECTION 3.04. Investment Representations............................19
SECTION 3.05. Governmental Approvals................................19
SECTION 3.06. Information Supplied..................................19
SECTION 3.07. Ownership of Capital Stock of the Company.............20
ARTICLE IV. COVENANTS OF THE PARTIES
PENDING THE CLOSING...........................................20
SECTION 4.01. Conduct of the Company's Business.....................20
SECTION 4.02. Access to Information Concerning the Company
and its Subsidiaries..................................22
SECTION 4.03. Authorizations, Consents, Waivers and Approvals.......22
SECTION 4.04. Further Assurances....................................23
SECTION 4.05. Notification of Certain Matters.......................23
SECTION 4.06. Anti-Takeover Statutes; Rights Plan Amendment.........23
SECTION 4.07. The Xxxxxx Acquisition................................23
SECTION 4.08. Nasdaq Quotation......................................24
SECTION 4.09. SEC and Other Filings.................................24
SECTION 4.10. Certificates of Designation...........................24
ARTICLE V. CONDITIONS PRECEDENT..........................................24
SECTION 5.01. Conditions Precedent to the Obligations of
Each Party............................................24
SECTION 5.02. Conditions Precedent to the Obligations of
the Purchasers........................................25
SECTION 5.03. Conditions Precedent to the Obligations of
the Company...........................................27
ARTICLE VI. POST-CLOSING COVENANTS AND AGREEMENTS.........................28
SECTION 6.01. Legends; Reservation of Shares........................28
SECTION 6.02. Board Composition.....................................28
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SECTION 6.03. Standstill Agreement..................................31
SECTION 6.04. Right To Purchase Series C Preferred Shares...........32
SECTION 6.05. Issuance of Series B Notes In Connection With
Subsequent Acquisitions...............................35
SECTION 6.06. Company Shareholder Approval..........................39
SECTION 6.07. Tax Consistency.......................................40
SECTION 6.08 Certain Veto Rights Applying After Company
Shareholder Approval..................................40
SECTION 6.09 Certain Negative Covenants Relating to the
Series B-2 Preferred Shares, Series C-2 Preferred
Shares, Series A Notes and Series B Notes.............41
ARTICLE VII. TERMINATION PRIOR TO CLOSING..................................48
SECTION 7.01. Termination of Agreement..............................48
SECTION 7.02. Effect of Termination.................................49
ARTICLE VIII. SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS; INDEMNIFICATION.....................49
SECTION 8.01. Survival of Representations, Warranties,
Covenants and Agreements..............................49
SECTION 8.02. Indemnification.......................................50
SECTION 8.03. Conditions of Indemnification.........................51
SECTION 8.04. Other Claims..........................................53
SECTION 8.05. Remedies Cumulative...................................53
ARTICLE IX. MISCELLANEOUS.................................................53
SECTION 9.01. Specific Performance..................................53
SECTION 9.02. Expenses, Etc.........................................53
SECTION 9.03. Execution in Counterparts.............................54
SECTION 9.04. Notices...............................................54
SECTION 9.05. Amendments and Waivers................................56
SECTION 9.06. Amendments, Supplements, Etc..........................56
SECTION 9.07. Entire Agreement......................................56
SECTION 9.08. Benefit of Agreement; Assignment......................56
SECTION 9.09. Governing Law.........................................57
SECTION 9.10. Jurisdiction and Venue................................57
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SECTION 9.11. Severability..........................................58
SECTION 9.12. Publicity.............................................58
SECTION 9.13. Appointment of the Purchaser Representative...........58
SECTION 9.14. Interpretation........................................58
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INDEX TO EXHIBITS AND SCHEDULES
Exhibit Description
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A Form of Series B-1 Preferred Certificate of Designation
B Form of Warrant Agreement
C Form of Series B-2 Preferred Certificate of Designation
D Form of Senior Subordinated Note
E Form of Series C-1 Preferred Certificate of Designation
F Form of Series C-2 Preferred Certificate of Designation
G Form of Rights Plan Amendment
H Form of Opinion of Xxxxxxxx & Xxxxxx LLP
I Form of Registration Rights Agreement
J Form of Opinion of Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol
K Form of Charter Amendment
Schedule Description
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I Purchasers/Initial Securities
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INDEX TO DEFINED TERMS
THIS INDEX IS INCLUDED FOR CONVENIENCE ONLY AND
DOES NOT CONSTITUTE A PART OF THE AGREEMENT
Term Reference
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"Additional Indebtedness" 6.09(A)(1)(L)
"Additional Securities" Recitals
"Additional Warrants" Recitals
"Affiliate" 6.02(a)
"Ancillary Agreements" 2.04(a)
"Annual Report" 2.02(b)
"Approval Date" 6.06(a)
"Balance Sheet Date" 2.08
"Board Meeting" 2.04(b)
"Capitalized Lease Obligations" 6.09(a)
"Charter Amendment" 6.06(a)
"ChoicePoint" Recitals
"Closing" 1.02(a)
"Closing Date" 1.02(a)
"COBRA" 2.17(c)
"Code" 2.17(c)
"Co-Investors" 6.04(a)
"Company" Recitals
"Company Common Stock" 2.03(a)
"Company Directors" 6.02(a)(iv)
"Company Group" 8.02(b)
"Company Preferred Stock" 2.03(a)
"Company SEC Filings" 2.07
"Company Shareholder Approval" 6.06(a)
"Company Shareholder Meeting" 6.06(a)
"Company Stock Options" 2.03(b)
"Confidentiality Agreement" 4.02(b)
"Conversion Shares" 2.04(b)
"Damages" 8.02
"Definitive Note Purchase Agreement" 6.05(d)
"Disclosure Schedule" Article II
"Disqualified Stock" 6.09(a)(ii)
"Employee Plan" 2.17(a)
"Environmental Event" 2.20
"Equity Offering" 6.04(b)
"ERISA" 2.17(a)
"Exchange Act" 2.06
"Existing Indebtedness" 6.09(a)(i)(E)
"GAAP" 2.08
"Governmental Body" 2.10
"HIPAA" 2.17(c)
"Indebtedness" 6.09(a)
"Industrial Revenue Bonds" 6.09(a)(i)(D)
"Initial Securities" Recitals
"Initial Warrants" Recitals
"In-the-Money Options" 6.04(d)
"In-the-Money Preferred Stock" 6.04(d)
"IRB Indebtedness" 6.09(a)(i)(D)
"Jointly-Selected Director" 6.02(a)(iv)
"Law" 2.04(c)
"Leased Properties" 2.13
"Liens" 2.02(b)
"Market Price" 6.04(d)
"Material Adverse Effect" 2.01
"Material Customers" 2.18
"Material Contracts" 2.14
"Material Permits" 2.11
"Missouri Code" 2.25
"Mutual Approval" 6.05(d)
"Non-WCAS Directors" 6.02(a)(iv)
"Notes" 6.09
"Order" 2.04(c)
"Original Transaction" 6.04(e)
"Xxxxxx" Recitals
"Xxxxxx Acquisition" Recitals
"Xxxxxx Acquisition Agreement" Recitals
"Xxxxxx Acquisition Documents" 4.07(c)
"Other Financing" 6.05(e)
"Parent" Recitals
"Permitted Liens" 2.12
"Potential Acquisition" 6.05(a)
"Potential Acquisition Notice" 6.05(a)
"Potential Acquisition Target" 6.05(a)
"Prohibited Related Party Transactions" 6.09(f)
"Proxy Statement" 6.06(b)
"Publicly-Available Contracts" 2.14
"Purchaser Group" 8.02
"Purchaser Representative" 9.13
"Purchaser" Recitals
"Reference Date" 6.04(d)
"Registration Rights Agreement" 5.02
"Related Party" 2.23
"Restricted Payments" 6.09(b)
"Restricted Period" 6.04(a)
"Returns" 2.16(a)
"Rights Plan Amendment" 5.02
"Rights Plan" 2.25
"SEC" 2.07
"Securities Act" 2.03(b)
"Senior Credit Agreement Indebtedness" 6.09(a)(i)(C)
"Senior Indebtedness" 6.09(a)(i)(D)
"Series A Notes" Recitals
"Series B Notes" Recitals
"Series B-1 Preferred Certificate of Designation" Recitals
"Series B-2 Preferred Certificate of Designation" Recitals
"Series B-1 Preferred Shares" Recitals
"Series B-2 Preferred Shares" Recitals
"Series B Note Transaction" 6.05(b)
"Series C-1 Preferred Certificate of Designation" Recitals
"Series C-2 Preferred Certificate of Designation" Recitals
"Series C-1 Preferred Shares" Recitals
"Series C-2 Preferred Shares" Recitals
"Series C Preferred Transaction" 6.04(a)
"Subsidiary" 2.02(a)
"Taxes" 2.16(b)
"Taxing Authorities" 2.16(b)
"Third Party Claim" 8.03
"Transaction Expenses" 9.02
"Voting Agreement" 5.02
"Voting Securities" 6.03
"Warrant Agreement" Recitals
"Warrant Certificate" 1.02(b)
"WCAS Cessation of Interest Notice" 6.05(b)
"WCAS Directors" 6.02(a)(iv)
"WCAS" Recitals
SECURITIES PURCHASE AGREEMENT dated as of August 31, 2001 among
LABONE, INC., a Missouri corporation (the "Company"), WELSH, CARSON, XXXXXXXX &
XXXXX IX, L.P., a Delaware limited partnership ("WCAS"), and the other persons
named on Schedule I hereto under the heading "Purchasers" (together with WCAS,
each individually a "Purchaser" and collectively the "Purchasers").
W I T N E S S E T H:
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WHEREAS, the Company is a party to a Stock Purchase Agreement, dated
as of August 31, 2001, by and among ChoicePoint Inc., a Georgia corporation
("Parent"), ChoicePoint Services Inc., a Georgia corporation and wholly-owned
subsidiary of Parent ("ChoicePoint"), and the Company (the "Xxxxxx Acquisition
Agreement"), pursuant to which the Company has agreed to acquire from
ChoicePoint (the "Xxxxxx Acquisition") all of the issued and outstanding shares
of capital stock of Xxxxxx Group, Inc., a Delaware corporation and wholly-owned
subsidiary of ChoicePoint ("Xxxxxx");
WHEREAS, in order to finance the Xxxxxx Acquisition, the Company
desires to issue and sell to the Purchasers on the Closing Date (as hereinafter
defined), and the Purchasers desire to purchase from the Company on the Closing
Date, for an aggregate purchase price of $50,000,000, (A)(1) an aggregate
14,000 shares of Series B-1 Cumulative Convertible Preferred Stock of the
Company (the "Series B-1 Preferred Shares") having a stated value of $1,000 per
share and a par value of $0.01 per share and the designation, powers,
preferences and rights, and qualifications, limitations and restrictions, set
forth in the form of certificate of designation attached as Exhibit A hereto
(the "Series B-1 Preferred Certificate of Designation"), together with an
aggregate 350,000 nominally-priced detachable common stock purchase warrants
(the "Initial Warrants") issued pursuant to the terms hereof and governed by the
Warrant Agreement, dated as of the date hereof, in the form attached as Exhibit
B hereto (the "Warrant Agreement") and (2) an aggregate 21,000 shares of Series
B-2 Cumulative Convertible Preferred Stock of the Company (the "Series B-2
Preferred Shares") having a stated value of $1,000 per share and a par value of
$0.01 per share and the designation, powers, preferences and rights, and
qualifications, limitations and restrictions, set forth in the form of
certificate of designation attached as Exhibit C hereto (the "Series B-2
Preferred Certificate of Designation") and (B) $15,000,000 in aggregate
principal amount of Series A Senior Subordinated Notes of the Company in the
form attached as Exhibit D hereto (the "Series A Notes" and, together with the
Series B-1 Preferred Shares, the Series B-2 Preferred Shares and the Initial
Warrants, the "Initial Securities"), all on the terms and subject to the
conditions set forth herein, including, without limitation, the consummation of
the Xxxxxx Acquisition on the terms and conditions set forth in the Xxxxxx
Acquisition Agreement;
WHEREAS, as a condition to the Purchasers' willingness to enter into
this Agreement and consummate the transactions contemplated hereby, the Company
will agree herein not to issue certain additional equity or equity-linked
securities for a period of three years following the Closing Date unless it
first grants to WCAS the right to purchase, together with its Co-Investors (as
hereinafter defined), up to an aggregate 15,000 shares of (A) if Company
Shareholder Approval (as hereinafter defined) has at the time of issuance been
obtained, Series C-1 Cumulative Convertible Preferred Stock of the Company
("Series C-1 Preferred Shares") having a stated value of $1,000 per share and a
par value of $0.01 per share and the designation, powers, preferences and
rights, and qualifications, limitations and restrictions, set forth in the form
of certificate of designation attached as Exhibit E hereto (the "Series C-1
Preferred Certificate of Designation") or (B) if Company Shareholder Approval
has not been obtained at the time of issuance, Series C-2 Cumulative Convertible
Preferred Stock of the Company ("Series C-2 Preferred Shares") having a stated
value of $1,000 per share and a par value of $0.01 per share and the
designation, powers, preferences and rights, and qualifications, limitations and
restrictions, set forth in the form of certificate of designation attached as
Exhibit F hereto ("Series C-2 Preferred Certificate of Designation"), all on the
terms and subject to the conditions, limitations and exceptions set forth
herein; and
WHEREAS, the Company and WCAS desire to set forth in this Agreement
the terms and conditions upon which the Company may agree to sell and WCAS may
agree to purchase, together with its Co-Investors, up to $15,000,000 in
aggregate principal amount of Series B Senior Subordinated Notes of the Company
in the form attached as Exhibit D hereto (the "Series B Notes") together with
certain additional nominally-priced detachable common stock purchase warrants
(the "Additional Warrants" and together with the Series C-1 Preferred Shares,
the Series C-2 Preferred Shares and the Series B Notes, the "Additional
Securities") in order to finance future acquisitions by the Company that are
approved by both the Board of Directors of the Company and WCAS;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I.
PURCHASE AND SALE OF INITIAL SECURITIES
ON THE CLOSING DATE; PURCHASE PRICE
SECTION 1.01. ISSUANCE, SALE AND DELIVERY OF THE INITIAL SECURITIES.
Subject to the terms and conditions set forth herein, and in reliance on the
mutual representations and warranties being made herein, on the Closing Date,
the Company shall issue, sell and deliver to each Purchaser, and each Purchaser
shall purchase from the Company, (1) the number of Series B-1 Preferred Shares,
the number of Series B-2 Preferred Shares and the number of Initial Warrants set
forth opposite the name of such Purchaser on Schedule I hereto and (2) a Series
A Note in the aggregate principal amount set forth opposite the name of such
Purchaser on Schedule I hereto. The Initial Securities shall be issued, sold and
delivered as provided in Section 1.02(b). Notwithstanding anything to the
contrary contained above, the respective obligations of the Purchasers to
purchase the Initial Securities hereunder shall be several and not
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joint obligations except that WCAS shall be jointly and severally obligated,
subject to the terms and conditions set forth herein, with each of the other
Purchasers named on Schedule I hereto with respect to such other Purchaser's
obligation to make full and prompt payment of the purchase price payable with
respect to the Initial Securities being purchased by such Purchaser hereunder.
SECTION 1.02. CLOSING. (a) Subject to the terms and conditions set
forth herein, the issuance, sale and delivery of the Initial Securities
contemplated by Section 1.01 (the "Closing") shall take place at the location of
and concurrently with the closing of the Obsorn Acquisition, or at such other
location and time and on such other date as the parties mutually agree (such
date and time of Closing being herein called the "Closing Date"). Subject to the
provisions of Article VII, failure to consummate the purchase and sale of the
Initial Securities on the date and at the location and time determined pursuant
to this Section 1.02(a) will not result in the termination of this Agreement.
(b) Subject to the terms and conditions set forth in this Agreement,
and concurrently with the consummation of the Xxxxxx Acquisition, at the
Closing:
(i) The Company shall issue and deliver to each Purchaser,
against payment of the purchase price therefor as set forth herein,
(1) a stock certificate in definitive form, registered in the name of
such Purchaser and evidencing the Series B-1 Preferred Shares being
purchased by such Purchaser hereunder, (2) a stock certificate in
definitive form, registered in the name of such Purchaser and
evidencing the Series B-2 Preferred Shares being purchased by such
Purchaser hereunder, (3) a definitive warrant certificate in the form
attached as Exhibit A to the Warrant Agreement (each a "Warrant
Certificate"), registered in the name of such Purchaser and evidencing
the Initial Warrants being purchased by such Purchaser hereunder, and
(4) a Series A Note, registered in the name of such Purchaser and
evidencing the indebtedness of the Company to such Purchaser in
connection with the purchase thereof;
(ii) As payment in full for the Initial Securities being
purchased by such Purchaser hereunder, and against delivery of the
certificates and promissory notes therefor as aforesaid, each
Purchaser shall pay, by wire transfer of immediately available funds
to an account of the Company designated in writing to the Purchaser
Representative (as hereinafter defined) not less than two business
days prior to the Closing Date, the sum set forth opposite the name of
such Purchaser on Schedule I hereto under the heading "Total Purchase
Price";
(iii) The Company shall pay to WCA Management Corporation,
by wire transfer of immediately available funds to an account
designated in writing to the Company not less than two business days
prior to the Closing Date, a $500,000 advisory fee for services
rendered in connection with the Xxxxxx Acquisition;
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(iv) The Company shall pay, by wire transfer of immediately
available funds to an account or accounts designed in writing to the
Company not less than two business days prior to the Closing Date, the
Transaction Expenses (as hereinafter defined) incurred by the
Purchasers, as contemplated by and in accordance with Section 9.02;
and
(v) The parties hereto shall execute and/or deliver or cause
to be executed and/or delivered each of the other documents,
instruments, certificates, agreements and opinions contemplated by
Sections 5.02 and 5.03 hereof.
(c) All amounts received by the Company in respect of the issuance and
sale of the Initial Securities pursuant to this Agreement shall be used solely
to pay the purchase price for the Xxxxxx Acquisition and/or to pay fees and
expenses incurred in connection with the Xxxxxx Acquisition and the transactions
contemplated by this Agreement.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
Except as set forth in the disclosure schedule delivered by the
Company to the Purchaser Representative prior to the execution and delivery of
this Agreement (the "Disclosure Schedule"), and, in each case, making specific
reference to the particular section of this Article II to which such exception
is being taken, the Company represents and warrants to each Purchaser as
follows:
SECTION 2.01. ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the Laws
(as hereinafter defined) of the State of Missouri. The Company has all requisite
corporate power and corporate authority to own or lease and operate its
properties and assets and to carry on its business as it is now being conducted.
The Company is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction in which the character of its properties
owned or leased or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified would not have a Material
Adverse Effect (as hereinafter defined). "Material Adverse Effect" means any
change, event, condition, circumstance or effect (or aggregation of changes,
events, conditions, circumstances and effects) that is or could reasonably be
expected to be materially adverse to the business, assets, financial condition,
prospects or results of operations of the Company and its Subsidiaries taken as
a whole, other than any change, event, condition, circumstance or effect (i)
relating to the economy or securities markets generally, (ii) relating to the
industries in which the Company and its Subsidiaries operate and not
specifically relating to or disproportionately affecting (relative to other
industry participants) the Company and its Subsidiaries or (iii) resulting from
the execution of, the announcement of, or the performance of this Agreement, or
any change in the value of the Series B-1 Preferred Shares, Series B-2
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Preferred Shares, Series A Notes or Company Common Stock (as hereinafter
defined) resulting from such execution, announcement, or performance (but not
including effects which were known to the Company on the date hereof and not
disclosed to the Purchasers in violation of the representations and warranties
contained in this Agreement). The Company has previously made available to the
Purchaser Representative or the Purchasers' counsel complete and accurate copies
of the minute books and the Articles of Incorporation and By-Laws of the
Company, each as in effect on the date hereof. The Company is not in default in
the performance, observance or fulfillment of any provision of its
organizational documents.
SECTION 2.02. INVESTMENTS AND COMMITMENTS; SUBSIDIARIES. (a) Except
for the outstanding capital stock of its Subsidiaries, the Company does not own,
directly or indirectly, (i) any shares of outstanding capital stock or
securities convertible into or exchangeable for capital stock of any other
corporation or (ii) any participating interest in the revenues or profits of any
corporation, partnership, limited liability company, joint venture or other
business enterprise. Except in connection with the Xxxxxx Acquisition, the
Company is not subject to any obligation to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
entity or other business enterprise that is not a wholly-owned Subsidiary of the
Company. For purposes of this Agreement, with respect to the Company, the term
"Subsidiary" shall mean any corporation, partnership, limited liability company,
joint venture or other business enterprise of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at the time
owned by the Company and/or one or more other Subsidiaries of the Company.
(b) A complete and accurate list of each Subsidiary of the Company is
set forth on Exhibit 21 to the Annual Report of the Company on Form 10-K for the
year ended December 31, 2000 (as amended by Amendment No. 1 thereto, the "Annual
Report"). Each Subsidiary of the Company is a corporation duly incorporated,
validly existing and in good standing under the Laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own or
lease and operate its properties and to carry on its business as it is now being
conducted. Each Subsidiary of the Company is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction in
which the character of its properties owned or leased or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified would not have a Material Adverse Effect. The Company has previously
made available to the Purchaser Representative or the Purchasers' counsel
complete and accurate copies of the minute books, stock ledgers, charter
documents and By-Laws of each of its Subsidiaries, each as in effect on the date
hereof. No such Subsidiary is in default in the performance, observance or
fulfillment of any provision of such organizational documents. All of the
outstanding shares of capital stock of each Subsidiary of the Company are
validly issued, fully paid and nonassessable and are owned by the Company or by
a wholly-owned Subsidiary of the Company, free and clear of any liens, charges,
pledges, security interests, mortgages, encum brances or adverse claims
("Liens"), and there are no proxies outstanding or restrictions on voting with
respect to any such shares.
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SECTION 2.03. CAPITALIZATION. (a) The authorized capital stock of the
Company consists of 40,000,000 shares of Common Stock, par value $0.01 per share
("Company Common Stock"), and 3,000,000 shares of Preferred Stock, par value
$.01 per share ("Company Preferred Stock"), of which, as of the Closing Date
(after the filing of the Series B-1 Preferred Certificate of Designation and the
Series B-2 Preferred Certificate of Designation), 300,000, 45,000, and 30,000
shares will have been designated as Series A Preferred Stock, Series B-1
Cumulative Convertible Preferred Stock and Series B-2 Cumulative Convertible
Preferred Stock, respectively. As of the date hereof, 10,788,310 shares of
Company Common Stock are issued and outstanding, all of which were duly
authorized, validly issued, fully paid and nonassessable. There are 2,271,710
shares of Company Common Stock held in the Company's treasury. As of the date
hereof and as of the Closing Date (prior to the issuance, sale and delivery of
the Initial Securities), there are and will be no shares of Company Preferred
Stock issued or outstanding or held in the Company's treasury.
(b) Except for (i) rights issued pursuant to and in accordance with
the Rights Plan (as hereinafter defined), (ii) rights under this Agreement and
the Ancillary Agreements (as hereinafter defined), (iii) warrants that have been
included as exhibits to the Annual Report and (iv) options (the "Company Stock
Options") to purchase shares of Company Common Stock granted pursuant to the
Company's 1987 Long-Term Incentive Plan, 1997 Long-Term Incentive Plan, or 2001
Long-Term Incentive Plan, no subscription, warrant, option or other right
(contingent or other) to purchase or acquire, or any securities convertible into
or exchangeable for, any shares of any class of capital stock of the Company or
any Subsidiary of the Company, or any stock appreciation or phantom stock right
or similar arrangement, is authorized or outstanding and there is not any
commitment of the Company or any Subsidiary of the Company to issue, or register
under the Securities Act of 1933 (the "Securities Act"), any shares, warrants,
options or other such rights or any securities convertible into or exchangeable
for capital stock or to distribute to holders of any class of capital stock any
evidences of indebtedness or assets. Neither the Company nor any Subsidiary of
the Company has any obligation (contingent or other) to purchase, redeem or
otherwise acquire any shares of capital stock or any interest therein or to pay
any dividend or make any other distribution in respect thereof.
SECTION 2.04. CORPORATE POWER AND AUTHORITY; AUTHORIZATION OF
AGREEMENTS; NON-CONTRAVENTION. (a) The Company has all requisite corporate power
and corporate authority to execute and deliver this Agreement, the Warrant
Agreement, the Registration Rights Agreement (as hereinafter defined), the
Rights Plan Amendment (as hereinafter defined), each Series A Note, each Warrant
Certificate, and each other instrument, certificate, agreement and document to
be executed and delivered by the Company at the Closing (such other instruments,
certificates, agreements and documents, together with the Warrant Agreement, the
Registration Rights Agreement, the Rights Plan Amendment, the Series A Notes,
and the Warrant Certificates, collectively, the "Ancillary Agreements") and to
perform its respective obligations hereunder and thereunder.
6
(b) The execution and delivery of this Agreement and each Ancillary
Agreement by the Company and the performance by the Company of its obligations
hereunder and thereunder, including, the issuance, sale and delivery by the
Company of the Initial Securities and the issuance and delivery by the Company
of the shares of Company Common Stock or Series B-1 Preferred Shares, as
applicable, issuable upon conversion or exercise of the Series B-1 Preferred
Shares (including the shares underlying the Series B-2 Preferred Shares that
would be issued if Company Shareholder Approval is obtained), the Series B-2
Preferred Shares and the Initial Warrants (the "Conversion Shares"), were
approved by the Board of Directors of the Company at a meeting duly called and
held on August 24, 2001 (the "Board Meeting"), and no other corporate
proceedings on the part of the Company (including approval of its shareholders)
are necessary to authorize this Agreement, the Ancillary Agreements and the
transactions contemplated hereby and thereby (except to the extent that such
transactions are expressly made subject to Company Shareholder Approval in this
Agreement or in the Ancillary Agreements).
(c) The execution and delivery of this Agreement and each Ancillary
Agreement by the Company do not, and the consummation by the Company of the
transactions contemplated hereby and thereby, including, the issuance, sale and
delivery of the Initial Securities and the issuance and delivery of the
Conversion Shares (including the shares that would be issued upon obtaining
Company Shareholder Approval, subject, in the case of those transactions that
have been expressly made subject to Company Shareholder Approval in this
Agreement or in the Ancillary Agreements, to the Company obtaining such Company
Shareholder Approval), will not, (i) violate or conflict with any provision of
the Articles of Incorporation or By-Laws of the Company; (ii) violate or
conflict with any foreign or domestic statute, law, doctrine, directive or
guideline (whether or not having the force of law), ordinance, rule or
regulation (each a "Law") or order, writ, judgment, decree, consent decree,
injunction, award, settlement agreement, stipulation, ruling or subpoena (each
an "Order") of any Governmental Body (as hereinafter defined) applicable to the
Company or any Subsidiary of the Company or any of their respective properties
or assets; or (iii) result (with or without the giving of notice or the lapse of
time or both) in any violation of or default under or loss of, or decrease (to
the Company or to any Subsidiary of the Company) or increase (to any third
party) in, any benefit under, or permit the acceleration, other modification or
termination of any obligation under, any Material Permit (as hereinafter
defined) or Material Contract (as hereinafter defined); or (iv) result in the
creation or imposition of any Lien (other than a Permitted Lien (as hereinafter
defined) upon any of the material properties or assets of the Company or any
Subsidiary of the Company, other than, in the cases of clauses (iii) and (iv)
above, as set forth in Item 2.04(c) of the Disclosure Schedule.
(d) The issuance, sale and delivery of the Initial Securities is not
subject to any preemptive rights of shareholders of the Company or to any right
of first refusal or other similar right in favor of any person. Upon the filing
of the Series B-1 Preferred Certificate of Designation and the Series B-2
Preferred Certificate of Designation, the Series B-1 Preferred Shares (including
those which are Conversion Shares) and the Series B-2 Preferred Shares will have
been duly authorized by the Company, and, the Series B-1 Preferred Shares
(including those which are Conversion Shares) and the Series B-2 Preferred
Shares, when issued in accordance
7
with the provisions of this Agreement or the Series B-2 Preferred Certificate of
Designation, as applicable, will be validly issued, fully paid and
nonassessable.
(e) The Conversion Shares have been duly authorized by the Company
and, when issued in accordance with the provisions of the Series B-1 Preferred
Certificate of Designation, the Series B-2 Preferred Certificate of Designation
or the Initial Warrants, as the case may be, the Conversion Shares will be
validly issued, fully paid and nonassessable shares of Company Common Stock or
Series B-1 Preferred Shares, as the case may be. The issuance and delivery of
the Conversion Shares is not now, and upon conversion or exercise of the Series
B-1 Preferred Shares (including those which are Conversion Shares), the Series
B-2 Preferred Shares and/or the Initial Warrants will not be, subject to any
preemptive rights of shareholders of the Company or to any right of first
refusal or other similar right in favor of any person.
(f) None of (A) the issuance, sale and delivery of the Series C-1
Preferred Shares and/or Series C-2 Preferred Shares pursuant to Section 6.04,
(B) the issuance, sale and delivery of the Series B Notes and the Additional
Warrants pursuant to Section 6.05 or (C) the issuance and delivery of Series C-1
Preferred Shares upon conversion of any Series C-2 Preferred Shares issued
pursuant to Section 6.04, are, or will be, subject to any preemptive rights of
shareholders of the Company or to any right of first refusal or other similar
right in favor of any person.
SECTION 2.05. VALIDITY. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except that (a) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other Laws, now or hereafter
in effect, relating to or limiting creditors rights generally and (b) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought. Each of the Ancillary Agreements, when
executed and delivered by the Company as provided in this Agreement, will
constitute the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except that (a) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other Laws, now or hereafter in effect,
relating to or limiting creditors rights generally, (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought and (c) the indemnification provisions
contained in the Registration Rights Agreement may be limited by applicable
federal or state securities laws.
SECTION 2.06. GOVERNMENTAL APPROVALS. Subject to the accuracy of the
representations and warranties of the Purchasers set forth in Article III
hereof, no consent, approval, Order or authorization of, or registration,
declaration or filing with, or other action by, any Governmental Body is
required to be made or obtained by the Company in connection with the execution
and delivery by the Company of this Agreement and the Ancillary Agreements and
the performance by the Company of its obligations hereunder and thereunder,
including, the
8
issuance, sale and delivery of the Initial Securities and the issuance and
delivery of the Conversion Shares, except (i) for the filing of the Series B-1
Preferred Certificate of Designation and the Series B-2 Preferred Certificate of
Designation with the Secretary of State of the State of Missouri, (ii) filings
pursuant to the Securities Exchange Act of 1934 (the "Exchange Act"), and (iii)
filings of notices of sale under applicable federal and state securities laws.
SECTION 2.07. SEC FILINGS. The Company has timely filed all forms,
reports, schedules, statements and other documents required to be filed with the
Securities and Exchange Commission (the "SEC") since January 1, 1998, including
(i) the Annual Report, (ii) the Quarterly Reports of the Company on Form 10-Q
for the three months ended March 31, 2001 and the three months ended June 30,
2001 and (iii) the Proxy Statement on Schedule 14A relating to the Company's
2001 annual meeting of stockholders (collectively, the "Company SEC Filings").
The Company SEC Filings, including, all financial statements and schedules
included therein, (i) were prepared in compliance with the requirements of the
Securities Act and/or the Exchange Act, as the case may be, and (ii) did not at
the time of filing (or if amended, supplemented or superseded by a subsequent
filing, on the date of that subsequent filing) and, in the case of any
registration statement, at the time of effectiveness, and in the case of any
proxy statement, at the time of mailing, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of the Subsidiaries of the
Company is required to file any forms, reports, schedules, statements or other
documents with the SEC.
SECTION 2.08. FINANCIAL STATEMENTS. The consolidated financial
statements of the Company included in the Company SEC Filings have been prepared
in accordance with United States generally accepted accounting principles
consistently applied and consistent with prior periods ("GAAP") and the
published rules and regulations of the SEC applicable thereto, except, in the
case of unaudited interim consolidated financial statements, as permitted by
Form 10-Q adopted under the Exchange Act. The consolidated balance sheets of the
Company included in the Company SEC Filings fairly present the financial
position of the Company and its Subsidiaries as of their respective dates, and
the related consolidated statements of operations, stockholders' equity and cash
flows included in the Company SEC Filings fairly present the results of
operations of the Company and its Subsidiaries for the respective periods then
ended, subject, in the case of unaudited interim financial statements, to
year-end adjustments (which consist of normal recurring accruals) and the
absence of certain footnote disclosures. Except for (A) liabilities or
obligations that are accrued or reserved against in the Company's balance sheet
as of June 30, 2001 (the "Balance Sheet Date") included in its Quarterly Report
on Form 10-Q for the three months then ended, (B) contingent liabilities to the
extent identified in the notes to the Company's financial statements contained
in the Annual Report (as qualified by any subsequent inclusion of a liability,
reserve or expense in the balance sheet as of June 30, 2001 included in its
Quarterly Report on Form 10-Q for the three months then ended), (C) liabilities
and obligations incurred subsequent to the Balance Sheet Date in the ordinary
course of
9
business and consistent with past practice and (D) obligations otherwise
incurred in the ordinary course of business and consistent with past practice
which are not required to be disclosed in accordance with GAAP, none of the
Company or any of its Subsidiaries has any material liabilities or obligations
(whether fixed, absolute, accrued, contingent, secured or unsecured, known or
unknown or otherwise).
SECTION 2.09. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for the
Xxxxxx Acquisition and except as set forth in Item 2.09 of the Disclosure
Schedule, since the Balance Sheet Date (i) the Company and its Subsidiaries have
conducted their respective businesses only in the ordinary course of business
and consistent with past practice, (ii) neither the Company nor any Subsidiary
of the Company has taken any of the actions described in Section 4.01, assuming
that Section 4.01 had applied to the period since the Balance Sheet Date, or
(iii) no event has occurred which could reasonably be expected to have a
Material Adverse Effect.
SECTION 2.10. ACTIONS PENDING. Except (i) as set forth in Item 2.10 of
the Disclosure Schedule or (ii) as disclosed in the Company SEC Filings made
prior to the date hereof, there is no action, suit, hearing, investigation,
proceeding or claim pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries or their respective
properties or assets, by or before any court, arbitrator, arbitration board,
tribunal or other judicial body or authority or administrative, governmental,
quasi- governmental or regulatory body, authority or agency or securities
exchange or association, including, the Nasdaq Stock Market ("Governmental
Body"). None of the actions, suits, investigations, proceedings or claims set
forth in Item 2.10 of the Disclosure Schedule, when taken together with all
other similar actions, whether or not any or all of such actions are adversely
determined, could reasonably be expected to have a Material Adverse Effect.
SECTION 2.11. COMPLIANCE WITH LAW; MATERIAL PERMITS. Neither the
Company nor any Subsidiary thereof is in default under or in violation of any
Order to which the Company or any such Subsidiary or any of their respective
properties or assets is or was subject or in violation, in any material respect,
of any Laws to which the Company or any such Subsidiary is or was subject. The
Company and its Subsidiaries possess all permits, authorizations, approvals,
registrations, variances and licenses that are necessary for the Company and its
Subsidiaries to own, use and maintain their material properties and assets used
in or required for the conduct of the business of the Company and its
Subsidiaries ("Material Permits"). Each Material Permit is in full force and
effect, and no proceeding is pending or, to the knowledge of the Company,
threatened, to suspend, revoke, limit or otherwise materially modify any
Material Permit, and no actions have been taken or, to the knowledge of the
Company, threatened, by any Governmental Body, in connection with the expiration
or renewal of any Material Permit.
SECTION 2.12. TITLE TO AND CONDITION OF PROPERTIES. (a) The Company
and its Subsidiaries have good and valid title to all their material assets and
properties, in each case free and clear of all Liens other than Liens permitted
by Section 6.09(c)(A)-(F) hereof and (i) liens for taxes not yet due and
payable, (ii) landlords' liens on fixtures and movable property located on
premises leased by the Company or a Subsidiary in the ordinary course of
business, (iii) purchase
10
money security interests in real property or equipment hereafter acquired by the
Company in the ordinary course of business, (iv) xxxxxxx'x, materialman's,
warehouseman's and similar Liens arising by Law for obligations not yet
delinquent, (v) zoning and planning restrictions, easements, permits and other
restrictions or limitations affecting the use of such properties that do not
materially detract from the value or materially impair the use of such
properties, and (vi) minor imperfections of title, if any, not material in
amount and not materially detracting from the value or materially impairing the
use of the property subject thereto or materially impairing the operations or
proposed operations of the Company and its Subsidiaries (the Liens described in
clauses (i) and (vi) above being referred to herein as "Permitted Liens").
(b) The assets, properties, contracts and rights of the Company and
its Subsidiaries include all of the assets, properties, contracts and rights
reasonably necessary for the conduct of the businesses of the Company and its
Subsidiaries as now conducted. The Company and each of its Subsidiaries have
maintained all of their material tangible assets in good and normal operating
condition, ordinary wear and tear excepted, and all such material tangible
assets are, in all material respects, adequate and suitable for the purposes for
which they are presently used.
SECTION 2.13. REAL PROPERTY. Except as disclosed in the Company SEC
Filings made prior to the date hereof, neither the Company nor any of its
Subsidiaries owns any real property. The Company and its Subsidiaries (i) have
good and marketable title to all real property owned by them and (ii) a valid
and enforceable leasehold interest in all of the material real property leased
by them (the "Leased Properties"), in each case, free and clear of all Liens
except for Permitted Liens. Each lease or other agreement relating to the Leased
Properties is a valid and subsisting agreement, without any material default of
the Company or any Subsidiary of the Company thereunder and, to the knowledge of
the Company, without any material default thereunder of the other party or
parties thereto.
SECTION 2.14. CONTRACTS. Except for the contracts, licenses, leases,
instruments and other commitments and agreements included as exhibits to or
incorporated by reference as exhibits to the Annual Report or any other Company
SEC Filing made subsequent to the filing of the Annual Report and prior to the
date hereof ("Publicly-Available Contracts"), Item 2.14 of the Disclosure
Schedule sets forth a complete and accurate listing of the following contracts,
licenses, leases, instruments and other commitments and agreements (together
with the Publicly-Available Contracts, the "Material Contracts"): (i) all
contracts, instruments and other commitments and agreements relating to the
borrowing of money, the granting of Liens or the extension of credit by or to
the Company and/or its Subsidiaries, (ii) all employment, severance and other
agreements with the officers and directors of the Company and its Subsidiaries,
(iii) all agreements between the Company and/or any Subsidiary of the Company,
on the one hand, and any Material Customer, on the other hand, (iv) all joint
venture agreements or other agreements providing for the sharing of revenues or
payment of royalties by or to the Company and/or its Subsidiaries, (v) all
agreements prohibiting, partially restricting, or otherwise limiting the ability
of the Company and/or its Subsidiaries to conduct any business anywhere in the
world, (vi) all
11
agreements (other than the Xxxxxx Acquisition Documents (as hereinafter
defined)) relating to the acquisition or sale by the Company or any Subsidiary
thereof of any company, business, division or other enterprise, whether in the
form of stock purchase, asset acquisition, or otherwise and whether or not such
acquisition or disposition was completed, (vii) all customer contracts involving
the receipt by the Company and/or any of its Subsidiaries of more than
$1,000,000 in any single year and all other contracts, licenses, leases,
instruments and other commitments and agreements involving the payment or
receipt by the Company and/or any of its Subsidiaries of more than $500,000 in
any single year or $2,500,000 or more in the aggregate and (viii) all agreements
to which the Company or any of its Subsidiaries is a party requiring the consent
of any third party thereto to the consummation of the transactions contemplated
hereby or by the Xxxxxx Acquisition Agreement or having provisions which will be
accelerated or otherwise affected by the consummation of such transactions. Each
Material Contract is a valid and subsisting agreement, without any material
default thereunder (with or without notice or the passage of time or both) of
the Company or any Subsidiary thereof and, to the knowledge of the Company,
without any material default (with or without notice or the passage of time or
both) thereunder of the other party or parties thereto. The Company has not
received notice of any cancellation or termination of, or of any threat to
cancel or terminate, any Material Contract.
SECTION 2.15. INTELLECTUAL PROPERTY; SOFTWARE. (a) The Company and its
Subsidiaries own or have adequate right to use all of the patents, trademarks
and trade names, trademark and trade name registrations, servicemarks,
servicemark registrations and copyrights that are reasonably necessary to the
conduct of their business. To the knowledge of the Company, (i) the Company and
its Subsidiaries conduct their businesses without infringement or violation of
any intellectual property rights of third parties, (ii) no third party is
claiming that the conduct of the business of the Company or any of its
Subsidiaries infringes, misappropriates or otherwise violates the intellectual
property rights of such third party and (iii) no person is challenging,
infringing, misappropriating or otherwise violating any intellectual property
rights of the Company or any of its Subsidiaries.
(b) To the knowledge of the Company, (i) the Company or a Subsidiary
thereof either owns or has a valid license covering each copy of software used
by the Company and its Subsidiaries, (ii) the use by the Company and its
Subsidiaries of the software licensed by them from third parties complies in all
material respects with the terms and conditions of such software licenses and
(iii) no use of any software by the Company or any of its Subsidiaries infringes
upon or violates any intellectual property or contract right of any third party.
SECTION 2.16. TAX MATTERS. (a) Except as disclosed in Item 2.16 of the
Disclosure Schedule or in the Company SEC Filings made prior to the date hereof,
the Company and its Subsidiaries have (i) timely filed all federal, state, local
and foreign returns, declarations, reports, estimates, information returns and
statements ("Returns") required to be filed by them in respect of any Taxes (as
hereinafter defined), all of which Returns were correct as filed (or as
subsequently amended) and correctly reflect the facts regarding the income,
business, assets, operations, activities and status of the Company and its
Subsidiaries as well as any Taxes
12
required to be paid or collected by the Company and its Subsidiaries, (ii)
timely paid or withheld all Taxes that are due and payable with respect to the
Returns referred to in clause (i) (other than Taxes that are being contested in
good faith by appropriate proceedings and are adequately reserved for in the
Company's most recent consolidated financial statements included in the Company
SEC Filings made prior to the date hereof), (iii) established reserves that are
adequate for the payment of all Taxes not yet due and payable with respect to
the results of operations of the Company and its Subsidiaries and (iv) complied
with all applicable Laws relating to the payment and withholding of Taxes and
has timely withheld from employee wages and paid over to the proper Taxing
Authorities (as hereinafter defined) when due all amounts required to be so
withheld and paid over.
(b) For purposes of this Agreement, "Taxes" shall mean (i) any net
income, alternative or add-on minimum tax, gross income, gross receipts, sales,
use, ad valorem, value added, transfer, franchise, profits, license, withholding
on amounts paid or received, payroll, employment, excise, severance, stamp,
occupation, premium, property, environmental or windfall profit taxes, custom
duties or other taxes, governmental fees or other like assessments or charges of
any kind whatsoever, together with any interest or any penalty, addition to tax
or additional amount imposed by any governmental authority responsible for the
imposition of any such taxes (domestic or foreign) ("Taxing Authorities"), (ii)
liability for the payment of any amounts of the type described in (i) as a
result of being a member of an affiliated, consolidated, combined or unitary
group, or being a party to any agreement or arrangement whereby liability for
payments of such amounts was determined or taken into account with reference to
the liability of any other person for any period and (iii) liability with
respect to the payment of any amounts described in (i) as a result of any
express or implied obligation to indemnify any other person.
(c) Except as disclosed in Item 2.16 of the Disclosure Schedule or in
the Company SEC Filings made prior to the date hereof, no Returns of the Company
or any of its Subsidiaries have been examined by any Taxing Authority.
(d) Except as disclosed in Item 2.16 of the Disclosure Schedule or in
the Company SEC Filings made prior to the date hereof, (i) no extensions of time
have been granted to the Company or any of its Subsidiaries to file any Return,
(ii) no deficiency or adjustment for any Taxes has been proposed, asserted or
assessed against the Company or any of its Subsidiaries, and there have never
been any, and no Federal, state, local or foreign audits or other administrative
proceedings or court proceedings are currently in progress or pending against
the Company or any of its Subsidiaries with respect to any Taxes owed by the
Company or any of its Subsidiaries, and (iii) no waiver or consent extending any
statute of limitations for the assessment or collection of any Taxes owed by the
Company or any of its Subsidiaries, has been executed by the Company or any of
its Subsidiaries or on behalf of the Company or any of its Subsidiaries, nor are
any requests for such waivers or consents pending.
13
SECTION 2.17. EMPLOYEE BENEFIT PLANS. (a) As used herein, "Employee
Plan" means any "employee benefit plan" (as that term is defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974 ("ERISA")), as well as
any other plan, program or arrangement involving direct and indirect
compensation, under which the Company or any Subsidiary of the Company has any
present or future obligations or liability on behalf of its employees or former
employees, contractual employees or their dependents or beneficiaries.
(b) On or prior to the date hereof, the Company has delivered to the
Purchaser Representative or its counsel accurate and complete copies of each of
the following with respect to each of the Employee Plans, all to the extent
applicable: (i) all plan documents and all amendments thereto, (ii) summary plan
descriptions and summaries of modifications, (iii) trust documents, insurance
contracts and other funding instruments, (iv) the two most recently prepared
financial statements and actuarial reports, (v) the two most recent annual
reports and (vi) determination letters received from the Internal Revenue
Service.
(c) Except as disclosed in Item 2.17 of the Disclosure Letter: (i)
each of the Employee Plans sponsored by the Company or any Subsidiary of the
Company that is qualified under Section 401 of the Code has received a favorable
determination letter from the Internal Revenue Service as to the qualification
of such Employee Plan, and such letter has not been modified, revoked or limited
by the failure to satisfy any condition thereof or by a subsequent amendment
thereto, or failure to amend such Employee Plan; (ii) each Employee Plan has
been operated and administered in accordance with its terms and is in compliance
with ERISA, the Internal Revenue Code of 1986 (the "Code") and all other
applicable Laws; (iii) all contributions due and payable in respect of any
Employee Plan have been made in full and in proper form, or adequate accruals
have been provided for in the most recent financial statements included in the
Company SEC Filings made prior to the date hereof for such amounts; (iv) neither
the Company nor any Subsidiary of the Company, nor to the knowledge of the
Company, any other "disqualified person" or "party in interest" (as defined in
Section 4975 of the Code and Section 3(14) of ERISA, respectively) with respect
to an Employee Plan has breached the fiduciary rules of ERISA or engaged in a
prohibited transaction which could subject the Company or any Subsidiary of the
Company to any tax or penalty imposed under Sections 4975 of the Code or Section
502 (i), (j) or (l) of ERISA; (v) each Employee Plan which is subject to the
requirements of the Consolidated Omnibus Budget Reconciliation of 1985 ("COBRA")
and the Health Insurance Portability and Accountability Act ("HIPAA") has been
maintained in compliance with COBRA and HIPAA, including all notice
requirements, and no tax payable on account of Section 4980B or any other
section of the Code has been or is expected to be incurred; (vi) neither the
Company nor any Subsidiary of the Company is or ever has been obligated to
contribute to any "multiemployer plan" (within the meaning of Section 3(37) of
ERISA, a "multiple employer plan" (within the meaning of Section 413 of the
Code, or a defined benefit plan (within the meaning of Section 3(35) of ERISA;
(vii) with respect to any Employee Plan, there has not been any act or omission
by the Company or any Subsidiary of the Company that has given rise to or could
give rise to any fines, penalties or related charges under ERISA or the Code for
which the Company or any Subsidiary of the Company could be liable; (viii) no
claims, actions, suits or
14
proceedings (other than routine benefit claims) are pending or, to the knowledge
of the Company, threatened against or relating to any Employee Plan, or any
fiduciary thereof, and to the knowledge of the Company, there is no basis for
any such claim, action, suit or proceeding; (ix) the Company has timely
deposited and transmitted all amounts withheld from employees for contributions
or premium payments for each Employee Plan into the appropriate trusts or
accounts; (x) each Employee Plan that allows loans to plan participants has been
operated in accordance with its terms, the plan's written loan policy and all
applicable laws; (xi) no individual who has been classified by the Company as a
non-employee (such as an independent contractor, leased employee or consultant)
shall have a claim against the Company for eligibility to participate in any
Employee Plan, if such individual is later reclassified as an employee of the
Company and (xii) no benefit payable or which may become payable by the Company
pursuant to any Employee Plan shall constitute an "excess parachute payment,"
within the meaning of Section 280G of the Code, which is or may be subject to
the imposition of an excise tax under Section 4999 of the Code or which would
not be deductible by reason of Section 280G of the Code.
SECTION 2.18. CUSTOMERS. Except as set forth in Item 2.18 of the
Disclosure Schedule or as disclosed in the Company SEC Filings made prior to the
date hereof, since January 1, 2000, neither the Company nor any Subsidiary of
the Company has lost, and the Company has not been notified that either the
Company or any of its Subsidiaries will lose or suffer material diminution in
any relationship with any customer that was one of the Company's and its
Subsidiaries' largest 25 customers (determined on the basis of revenues) for the
twelve months ended June 30, 2001 ("Material Customers").
SECTION 2.19. LABOR MATTERS. Neither the Company nor any of its
Subsidiaries is or has been a party to any collective bargaining or union
agreement, and no such agreement is or has been applicable to any of their
employees. There are no labor union grievances or unfair labor practice or labor
arbitration proceedings pending, or, to the knowledge of the Company, threatened
against the Company or any Subsidiary thereof. There are no labor unions or
other organizations representing or purporting to represent any employees of the
Company or any of its Subsidiaries and there are not any organizational efforts
being made or, to the knowledge of the Company, threatened involving any of such
employees. There are no material controversies between the Company or any of its
Subsidiaries, on the one hand, and any of their respective employees, leased
employees or independent contractors, on the other hand, and (ii) the Company
and its Subsidiaries have complied in all material respects with all Laws
relating to the hiring and retention of employees, leased employees and
independent contractors including those relating to wages, hours, equal
opportunity, collective bargaining and the withholding and payment of social
security and other taxes.
SECTION 2.20. ENVIRONMENTAL MATTERS. The Company and each Subsidiary
of the Company conducts its business in material compliance with all applicable
environmental Laws, and neither the Company nor any Subsidiary thereof has
received notice of any claim, action, suit, proceeding, hearing or investigation
based upon or related to the manufacture, pro-
15
cessing, distribution, use, treatment, storage, disposal, transport, or
handling, or the emission, discharge, release or threatened release into the
environment, of any pollutant, contaminant, or hazardous or toxic material or
waste (each, an "Environmental Event") by or on behalf of the Company or any
Subsidiary of the Company. To the knowledge of the Company, no notice of any
Environmental Event was given to any person or entity that occupied any of the
premises occupied or used by the Company or any Subsidiary thereof prior to the
date such premises were so occupied by the Company or such Subsidiary. Without
limiting the generality of the foregoing, neither the Company nor any
Subsidiary of the Company or, to the knowledge of the Company, any agent
thereof, has disposed of or placed on or in any real property, any waste
materials or hazardous substances in violation of any environmental Law.
SECTION 2.21. INSURANCE COVERAGE. The insurance coverage maintained by
the Company and its Subsidiaries is customary and adequate for corporations of
similar size engaged in the same business as the Company and its Subsidiaries.
The Company and its Subsidiaries have paid all premiums due under all insurance
policies maintained by them. All such insurance policies are in full force and
effect and no notice of termination or cancellation or denial of coverage has
been received in respect thereof.
SECTION 2.22. OFFERING OF THE SECURITIES. Assuming the accuracy of the
representations and warranties of the Purchasers set forth in Article III
hereof, neither the Company nor any person acting on the Company's behalf has
taken or will take any action (including, without limitation, any offer,
issuance or sale of any securities of the Company under circumstances which
might require the integration of such transactions with the sale of the Initial
Securities) which would subject the offering, issuance or sale of the Initial
Securities to the Purchasers pursuant to this Agreement to the registration
provisions of the Securities Act.
SECTION 2.23. RELATED-PARTY TRANSACTIONS. Except as disclosed in the
Company SEC Filings made prior to the date hereof, there are no existing
arrangements or proposed transactions between the Company or any Subsidiary
thereof, on the one hand, and any other person or entity (each a "Related
Party") on the other hand, that the Company would be required to disclose
pursuant to Item 404 of Regulation S-K of the SEC if a proxy statement of the
Company were required to be filed on or as of the date hereof.
SECTION 2.24. PROXY STATEMENT. The Proxy Statement (as hereinafter
defined) will not at the time of mailing thereof or at the time of the Company
Shareholder Meeting (as hereinafter defined), contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading, except that no
representation is being made by the Company with respect to statements made
therein based solely on information supplied by the Purchasers and their
representatives for inclusion in the Proxy Statement. The Proxy Statement will
comply as to form with the applicable provisions of the Exchange Act.
16
SECTION 2.25. ANTI-TAKEOVER STATUTES AND CERTAIN CHARTER PROVISIONS;
RIGHTS PLAN. The approval of this Agreement, the Ancillary Agreements and the
transactions contemplated hereby and thereby by the Board of Directors of the
Company at the Board Meeting is sufficient to render inapplicable to (A) the
issuance and delivery of the Initial Securities, the Conversion Shares, the
Additional Securities, and any securities issuable upon conversion or exercise
of the Additional Securities, and the Purchaser's ownership and voting of such
securities, the provisions of Section 351.459 of the General and Business
Corporation Law of the State of Missouri (the "Missouri Code") and (B) the
issuance and delivery of the Initial Securities, the Conversion Shares, the
Additional Securities, and any securities issuable upon conversion or exercise
of the Additional Securities, the provisions of Article X of the Articles of
Incorporation of the Company. Upon the adoption and effectiveness of the Rights
Plan Amendment, the provisions of the Rights Agreement dated as of February 11,
2000 between the Company and American Stock Transfer & Trust Company (the
"Rights Plan") will be rendered inapplicable to the issuance and delivery of the
Initial Securities, the Conversion Shares, the Additional Securities to the
Purchasers, and any securities issuable upon conversion or exercise of the
Additional Securities. Section 351.407 of the Missouri Code is not applicable to
the issuance and delivery of the Initial Securities, the Conversion Shares, the
Additional Securities, and any securities issuable upon conversion or exercise
of the Additional Securities and the Purchasers' ownership and voting of such
securities.
SECTION 2.26. XXXXXX ACQUISITION AGREEMENT. All representations and
warranties made by the Company in or pursuant to the Xxxxxx Acquisition
Agreement are true and correct in all material respects on and as of the date
hereof and shall be true and correct in all material respects on and as of the
closing date of the Xxxxxx Acquisition.
SECTION 2.27. COMPLETENESS OF DISCLOSURE. No representation, warranty
or statement by the Company in this Agreement or in any Ancillary Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact required to be stated herein or therein or
necessary to make any statement herein or therein, in light of the circumstances
in which they were made, not misleading.
SECTION 2.28. BROKERS. All negotiations relative to this Agreement and
the Ancillary Agreements and the transactions contemplated hereby and thereby
have been carried on by the Company directly with the Purchasers, without the
intervention of any other person on behalf of the Company in such manner as to
give rise to any valid claim by any other person for a finder's fee, advisory
fee, investment banking fee, brokerage commission or similar payment.
17
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASERS
Each Purchaser, severally and not jointly, represents and warrants to
the Company as follows, except that WCAS shall be jointly and severally liable
with each other Purchaser with respect to the representations and warranties of
each such Purchaser:
SECTION 3.01. ORGANIZATION AND AUTHORITY. WCAS is a limited
partnership duly organized, validly existing and in good standing under the Laws
of the State of Delaware. Each of the Purchasers has all requisite power and
authority to execute and deliver this Agreement and the Ancillary Agreements and
to perform such Purchaser's respective obligations hereunder the thereunder.
SECTION 3.02. AUTHORIZATION. The execution, delivery and performance
by such Purchaser of this Agreement and the Ancillary Agreements to which such
Purchaser is a party have been duly authorized by all requisite action on the
part of such Purchaser and will not violate any provision of Law or any Order
applicable to such Purchaser, the charter, limited partnership agreement or
other governing documents of such Purchaser, if any, or any provision of any
material indenture, agreement or other instrument by which such Purchaser or any
of such Purchaser's properties or assets are bound, or conflict with, result in
a breach of or constitute (with or without due notice or lapse of time or both)
a default under any such material indenture, agreement or other instrument.
SECTION 3.03. VALIDITY. This Agreement has been duly executed and
delivered by such Purchaser and constitutes the legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in accordance
with its terms, except that (a) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other Laws, now
or hereafter in effect, relating to or limiting creditors' rights generally and
(b) the remedy of specific performance and injunctive and other terms of
equitable relief may be subject to equitable defenses and the discretion of the
court before which a proceeding therefor may be brought. Each of the Ancillary
Agreements to which such Purchaser is a party, when executed and delivered in
accordance with this Agreement, will constitute the legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in accordance
with its terms, except that (a) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other Laws, now
or hereafter in effect, relating to or limiting creditors' rights generally, (b)
the remedy of specific performance and injunctive and other terms of equitable
relief may be subject to equitable defenses and the discretion of the court
before which a proceeding therefor may be brought and (c) the indemnification
provisions contained in the Registration Rights Agreement may be limited by
applicable federal or state securities laws.
18
SECTION 3.04. INVESTMENT REPRESENTATIONS. (a) Such Purchaser is
acquiring the Initial Securities being purchased by such Purchaser hereunder for
such Purchaser's own account, for investment, and not with a view toward the
resale or distribution thereof.
(b) Such Purchaser understands that such Purchaser must bear the
economic risk of such Purchaser's investment for an indefinite period of time,
because the Initial Securities are not and, when issued, the Conversion Shares
will not be registered under the Securities Act or any applicable state
securities laws and may not be resold unless subsequently registered under the
Securities Act and such other laws or unless an exemption from such registration
is available. Such Purchaser also understands that, except as provided in the
Registration Rights Agreement, it is not contemplated that any registration will
be made under the Securities Act to permit resale of the Initial Securities or
the Conversion Shares.
(c) Such Purchaser is able to fend for itself in the transactions
contemplated by this Agreement and has the ability to bear the economic risks of
the investment in the Initial Securities being purchased hereunder for an
indefinite period of time. Such Purchaser further acknowledges that such
Purchaser has had the opportunity to ask questions of, and receive answers from,
officers of the Company with respect to the business and financial condition of
the Company and the terms and conditions of the purchase and sale of the Initial
Securities and to obtain additional information necessary to verify such
information to the extent that the Company can acquire it without unreasonable
effort or expense.
(d) Such Purchaser has such knowledge and experience in financial and
business matters that such Purchaser is capable of evaluating the merits and
risks of its investment in the Initial Securities. Such Purchaser further
represents that such Purchaser, is an "accredited investor" as such term is
defined in Rule 501 of Regulation D of the SEC under the Securities Act with
respect to its purchase of the Initial Securities, and that any such Purchaser
that is a limited partnership or other entity has not been formed solely for the
purpose of purchasing the Initial Securities.
SECTION 3.05. GOVERNMENTAL APPROVALS. No registration or filing with,
or consent or approval of, or other action by, any Governmental Body is or will
be necessary by such Purchaser for the valid execution, delivery and performance
by such Purchaser of this Agreement.
SECTION 3.06. INFORMATION SUPPLIED. None of the written information
supplied by any Purchaser specifically for inclusion or incorporation by
reference in the Proxy Statement will at the time of filing or mailing thereof
or at the time of the Company Shareholder Meeting, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading.
19
SECTION 3.07. OWNERSHIP OF CAPITAL STOCK OF THE COMPANY. The
Purchasers do not beneficially own (within the meaning of Rule 13d-3 under the
Exchange Act) any securities of the Company. No Purchaser shall acquire
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of any security of the Company prior to the Closing. For purposes of this
Section 3.07 only, neither the execution, delivery or performance of this
Agreement nor the execution, delivery or performance of the Voting Agreement (as
hereinafter defined) shall be deemed to give rise to any beneficial ownership of
securities by the Purchasers.
ARTICLE IV.
COVENANTS OF THE PARTIES
PENDING THE CLOSING
SECTION 4.01. CONDUCT OF THE COMPANY'S BUSINESS. Except as otherwise
agreed to in writing by the Purchaser Representative on behalf of the Purchasers
subsequent to the date hereof, or as otherwise set forth in Item 4.01 of the
Disclosure Schedule or as expressly contemplated hereby, at all times between
the date hereof and the Closing Date, the Company shall, and shall cause each of
its Subsidiaries to:
(a) operate its business only in the usual, regular and ordinary
manner and on a basis consistent with past practice, and use its
commercially reasonable efforts to preserve its current business
organization, keep available the services of its officers and
employees and preserve its present relationships with its customers
and suppliers and all other persons with which it has material
business dealings;
(b) maintain its material assets and properties in good repair,
order and condition, reasonable wear and tear excepted;
(c) maintain its books of account and records in the usual,
regular and ordinary manner, on a basis consistent with past practice,
and use its commercially reasonable efforts to comply in all material
respects with all Laws applicable to it and perform all of its
material contractual obligations without default;
(d) not amend its Articles or Certificate of Incorporation or
By-Laws;
(e) not change the character of its business in any manner;
(f) not incur any material obligation, debt or liability of any
kind or nature whatsoever (whether fixed, absolute, accrued,
contingent, secured or unsecured, known or unknown or otherwise, and
whether due or to become due), except in the ordinary course of
business and consistent with past practice;
20
(g) not discharge or satisfy any material Lien or pay any
material obligation, debt or liability of any kind or nature
whatsoever (whether fixed, absolute, accrued, contingent, secured or
unsecured, known or unknown or otherwise, and whether due or to become
due), other than payments of obligations, debts or liabilities in the
ordinary course of business and consistent with past practice;
(h) not mortgage, pledge or subject to any Lien (other than
Permitted Liens) any of its material assets or properties;
(i) not transfer, lease or otherwise dispose of any of its
material assets or properties except for fair consideration in the
ordinary course of business and consistent with past practice or,
except in the ordinary course of business and consistent with past
practice, acquire any material assets or properties;
(j) other than distributions by wholly-owned Subsidiaries of the
Company to the Company or to other wholly-owned Subsidiaries of the
Company, not declare, set aside or pay any distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock or redeem or otherwise acquire any of its capital stock
or split, combine, reclassify or otherwise similarly change its
capital stock or authorize the creation or issuance of, or, other
than in connection with the issuance or exercise of Company Stock
Options, issue or sell any of its capital stock or any securities or
obligations convertible into or exchangeable therefor, or give any
person any right to acquire any of its capital stock;
(k) not make any loan or investment of a capital nature, whether
by purchase of stock or securities, contributions to capital, property
transfers or otherwise, in any other partnership, corporation or other
entity;
(l) not cancel or compromise any material debt or claim, except
in the ordinary course of business and consistent with past practice;
(m) not waive or release any rights of material value or
surrender or cause to be revoked or otherwise terminated any Material
Permit;
(n) not transfer or grant any material rights under or with
respect to any material intellectual property, or permit any license,
permit or other form of authorization relating to any material
intellectual property to lapse;
(o) not make or grant any wage, salary or benefit increase or
bonus payment applicable to any group or classification of employees
generally, enter into or amend in any material respect the terms of
any employment contract with, or make any material loan to, or grant
any severance benefits to, or enter into or amend in any material
respect
21
the terms of any material transaction of any other nature with, any
officer, director, employee or Related Party;
(p) not enter into any contract, agreement, license or lease
which involves payments by the Company or any of its Subsidiaries in
excess of $200,000 per annum or $750,000 in the aggregate;
(q) not enter into any other transaction, contract or commitment,
except in the ordinary course of business and consistent with past
practice;
(r) not take any action, enter into any transaction or make any
agreement or commitment, or knowingly permit any event to occur, which
would result in (A) any of the representations or warranties of the
Company contained in Article II of this Agreement not being true and
correct in any material respect at and as of the time immediately
after the occurrence of such action, transaction or event or on the
Closing Date or (B) any of the conditions precedent set forth in
Article V not being satisfied at Closing; or
(s) not agree to take or enter into any agreement or commitment
to take any of the actions prohibited by clauses (a)-(r) of this
Section 4.01.
SECTION 4.02. ACCESS TO INFORMATION CONCERNING THE COMPANY AND ITS
SUBSIDIARIES. (a) Between the date of this Agreement and the Closing Date, the
Company shall afford, and shall cause its Subsidiaries to afford, the
representatives of the Purchasers reasonable access during normal business hours
to the offices, facilities, books and records of the Company and its
Subsidiaries and the opportunity to discuss the affairs of the Company and its
Subsidiaries with the officers, employees, accountants, customers, suppliers and
landlords of the Company and its Subsidiaries familiar therewith. Any
investigation pursuant to this Section 4.02 shall be conducted in a manner that
does not unreasonably interfere with the conduct of business by the Company and
its Subsidiaries.
(b) Except as required by Law, the Purchasers shall hold, and will
cause their respective officers, employees, partners, representatives and agents
to hold, any confidential information obtained by them in accordance with the
terms and conditions of the letter agreement dated May 3, 2001 between the
Company and WCAS (the "Confidentiality Agreement").
(c) No investigation pursuant to this Section 4.02 shall affect, add
to or subtract from any representations or warranties of the parties hereto or
the conditions to the obligations of the parties hereto to effect the
transactions contemplated hereby.
SECTION 4.03. AUTHORIZATIONS, CONSENTS, WAIVERS AND APPROVALS.
Between the date hereof and the Closing Date, the Company shall use its
commercially reasonable efforts to promptly apply for and seek to obtain and to
make, and cause its Subsidiaries to promptly apply
22
for and seek to obtain and to make, all authorizations, consents, waivers and
approvals and all notices, filings and registrations required, or reasonably
requested by the Purchaser Representative, in connection with the execution,
delivery and performance by the Company of this Agreement, the Ancillary
Agreements and the Xxxxxx Acquisition Documents.
SECTION 4.04. FURTHER ASSURANCES. Between the date hereof and the
Closing Date, subject to the terms and conditions herein provided, each of the
parties hereto agrees to use its commercially reasonable efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement.
SECTION 4.05. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to the Purchaser Representative of (i) the occurrence, or failure
to occur, of any event that would cause any of its representations or warranties
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date hereof to Closing Date and (ii) any material failure
of the Company to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder prior to the Closing. No notice
pursuant to this Section 4.05 shall affect, add to or subtract from any
representations or warranties of the parties hereto or the conditions to the
obligations of the parties hereto to effect the transactions contemplated
hereby.
SECTION 4.06. ANTI-TAKEOVER STATUTES; RIGHTS PLAN AMENDMENT. The
Company shall (i) take all action necessary to ensure that no "business
combination", "fair price," "control share acquisition" or other similar
anti-takeover statute or regulation, including the provisions of Sections
351.407 and 351.459 of the Missouri Code, is or becomes applicable to the
issuance and delivery of the Initial Securities or any Conversion Shares or any
of the other transactions contemplated by this Agreement or the Ancillary
Agreements (including any Series C Preferred Transaction or Series B Note
Transaction) or to the ownership or voting of any of such securities (including
any securities issued in any Series C Preferred Transaction or Series B Note
Transaction) and (ii) if any such anti-takeover statute or similar statute or
regulation becomes applicable to any of such transactions or to the ownership or
voting of any of such securities, take all action necessary to ensure that each
of such transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement and the Ancillary Agreements and otherwise to
minimize the effect of such statute or regulation on such transactions and the
ownership and voting of such securities. Prior to the Closing Date, the Company
shall cause the Rights Plan Amendment to be executed and delivered by the
parties thereto and become effective in accordance with its terms.
SECTION 4.07. THE XXXXXX ACQUISITION. (a) The Company shall use its
commercially reasonable efforts to cause Parent, ChoicePoint and Xxxxxx to
afford the representatives of the Purchasers reasonable access during normal
business hours to the offices, facilities, books and records of Xxxxxx and its
subsidiaries and the opportunity to discuss the
23
affairs of Xxxxxx and its subsidiaries with the officers, employees,
accountants, customers, suppliers and landlords of Xxxxxx and its subsidiaries
familiar therewith.
(b) The Company shall given prompt notice to the Purchaser
Representative of the occurrence of any event (that with or without the passage
of time or the giving of notice) constitutes a default or event of default of
any party under the Xxxxxx Acquisition Agreement.
(c) Prior to the Closing, the Company shall not, without the prior
written consent of the Purchaser Representative, amend, supplement or modify the
terms and conditions of, or waive any of its rights or closing conditions under,
the Xxxxxx Acquisition Agreement or any other agreement or instrument entered
into or to be entered into in connection with the Xxxxxx Acquisition (together
with the Xxxxxx Acquisition Agreement, the "Xxxxxx Acquisition Documents"). True
and correct copies of the Xxxxxx Acquisition Documents (as in effect on the date
hereof) have been delivered to the Purchaser Representative and to the
Purchasers' counsel.
(d) The Company shall keep the Purchaser Representative informed of,
and consult with it on a prompt and regular basis on, all matters and
developments regarding the Xxxxxx Acquisition.
SECTION 4.08. NASDAQ QUOTATION. The Company shall use all commercially
reasonable efforts to cause the Conversion Shares that are Company Common Stock
to be authorized for quotation on the Nasdaq Stock Market, subject only to
official notice of issuance thereof.
SECTION 4.09. SEC AND OTHER FILINGS. The Company shall promptly
provide the Purchaser Representative and the Purchasers' counsel with copies of
all filings made or to be made by the Company with the SEC or any other
Governmental Body in connection with this Agreement or the Xxxxxx Acquisition
Agreement and the transactions contemplated hereby and thereby and a reasonable
opportunity to comment thereon.
SECTION 4.10. CERTIFICATES OF DESIGNATION. Prior to the Closing, the
Company shall cause to be filed with the Secretary of State of the State of
Missouri the Series B-1 Preferred Certificate of Designation and the Series B-2
Preferred Certificate of Designation pursuant to and in accordance with the
Missouri Code.
ARTICLE V.
CONDITIONS PRECEDENT
SECTION 5.01. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EACH PARTY.
The obligation of each party hereto to consummate the purchase and sale of the
Initial Securities at Closing is subject to the satisfaction, on or before the
Closing Date, of the following conditions,
24
any or all of which may be waived in whole or in part by the Purchaser
Representative on behalf of the Purchasers, on the one hand, or the Company, on
the other hand:
(a) No Legal Prohibition. No injunction or other Order of any court or
other Governmental Body of competent jurisdiction nor any Law shall be in effect
that would prevent the consummation of the transactions contemplated by this
Agreement or the Ancillary Agreements. No legal action or proceeding shall have
been instituted by or before any Governmental Body that seeks to restrain,
prohibit, invalidate or otherwise materially affect the consummation of the
transactions contemplated by this Agreement or any Ancillary Agreement.
(b) Xxxxxx Acquisition. Simultaneously with the Closing hereunder, the
Xxxxxx Acquisition shall have been consummated in accordance with the terms of
the Xxxxxx Acquisition Documents and all applicable Laws, without the giving of
any waivers by the Company (unless such waivers were approved with the written
consent of the Purchaser Representative), and the Company shall have so
certified to the Purchasers in writing.
SECTION 5.02. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
PURCHASERS. The obligation of each Purchaser to consummate the purchase and sale
of the Initial Securities at Closing is subject to the satisfaction, on or
before the Closing Date, of the following conditions, any or all of which may be
waived in whole or in part by the Purchaser Representative on behalf of all of
the Purchasers:
(a) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of the Company set forth in Article II of this
Agreement that are qualified with reference to a Material Adverse Effect or
otherwise qualified by reference to materiality shall be true and correct in all
respects and all representations and warranties that are not so qualified shall
be true and correct in all material respects, in each case, as of the Closing
Date with the same force and effect as if made on the Closing Date (except that
representations and warranties made as of a particular date shall be true and
correct as of such date), and the Company shall have so certified to the
Purchasers in writing.
(b) PERFORMANCE. The Company shall have performed and complied in all
material respects with all agreements and conditions contained herein that are
required to be performed or complied with by it prior to or on the Closing
Date, and the Company shall have so certified to the Purchasers in writing.
(c) ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by the Company in connection with the transactions
contemplated by this Agreement and the Ancillary Agreements and the Xxxxxx
Acquisition Documents shall have been taken or obtained by the Company, and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Purchaser Representative and the Purchasers' counsel.
25
(d) NO MATERIAL ADVERSE CHANGE. There shall not have occurred since
the Balance Sheet Date any event which could reasonably be expected to have a
Material Adverse Effect, and the Company shall have so certified to the
Purchasers in writing.
(e) CONSENTS AND APPROVALS. All authorizations, consents, waivers and
approvals required in connection with the execution, delivery and performance of
this Agreement and each Ancillary Agreement, including, without limitation, all
such authorizations, consents, waivers and approvals indicated as being so
required in Item 2.04(c) and Item 2.06 of the Disclosure Schedule, shall have
been duly obtained and shall be in form and substance reasonably satisfactory
to the Purchaser Representative and the Purchasers' counsel.
(f) RIGHTS PLAN AMENDMENT. The Rights Plan shall have been amended by
an amendment thereto in the form of Exhibit G hereto (the "Rights Plan
Amendment") and such amendment shall be in full force and effect.
(g) CERTIFICATES OF DESIGNATION. The Series B-1 Preferred Certificate
of Designation and the Series B-2 Preferred Certificate of Designation shall
have each been filed in accordance with the Articles of Incorporation of the
Company and the Missouri Code.
(h) OPINION OF COUNSEL. The Purchasers shall have received the opinion
of Xxxxxxxx & Xxxxxx LLP, counsel to the Company, dated the Closing Date and
substantially in the form of Exhibit H hereto.
(i) REGISTRATION RIGHTS AGREEMENT. The Company shall have executed and
delivered a counterpart to the Registration Rights Agreement in the form
attached as Exhibit I hereto (the "Registration Rights Agreement").
(j) WARRANT AGREEMENT. The Company shall have executed and delivered a
counterpart to the Warrant Agreement.
(k) VOTING AGREEMENT. The Voting Agreement, dated as of the date
hereof, between WCAS and the Stockholders (as defined therein) (the "Voting
Agreement") shall have been executed and delivered by the parties thereto (other
than WCAS) and shall be in full force and effect.
(l) QUOTATION OF COMPANY COMMON STOCK. The Conversion Shares that are
Company Common Stock shall have been authorized for quotation on the Nasdaq
Stock Market, subject only to official notice of issuance thereof.
(m) SUPPORTING DOCUMENTS. The Purchaser Representative or the
Purchasers' counsel shall have received copies of the
following supporting documents:
26
(i) (A) the Articles of Incorporation of the Company certified as
of a recent date by the Secretary of State of the State of Missouri
and (B) a certificate of such Secretary of State as to the due
incorporation, existence and good standing of the Company and listing
all documents on file with said official;
(ii) a certificate of the Secretary of the Company dated the
Closing Date and certifying (A) that attached thereto is a true and
complete copy of the By-Laws of the Company as in effect on the date
of such certification and (B) other than the filing of the Series B-1
Preferred Certificate of Designation and the Series B-2 Preferred
Certificate of Designation, that the Articles of Incorporation of the
Company have not been amended since the date of the last amendment
referred to in the certificate delivered pursuant to clause (i)(B)
above;
(iii) certified copies of (A) all resolutions of the Board of
Directors of the Company relating to this Agreement, the Ancillary
Agreements, the Xxxxxx Acquisition Documents and the transactions
contemplated hereby and thereby and (B) the Xxxxxx Acquisition
Documents; and
(iv) such additional officer's and secretary's certificates with
respect to the Company and its Subsidiaries and other supporting
documents and information with respect to the operations and affairs
of such entities as the Purchaser Representative or the Purchasers'
counsel may reasonably request.
All such documents shall be reasonably satisfactory in form and substance to the
Purchaser Representative and the Purchasers' counsel.
SECTION 5.03. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY.
The obligation of the Company to consummate the purchase and sale of the Initial
Securities at Closing is subject to the satisfaction, on or before the Closing
Date, of the following conditions, any or all of which may be waived in whole or
in part by the Company:
(a) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of the Purchasers set forth in Article III of
this Agreement shall be true and correct in all material respects as of the
Closing Date with the same effect as if made on the Closing Date, and the
Purchasers shall have so certified to the Company in writing.
(b) PERFORMANCE. The Purchasers shall have performed and complied in
all material respects with all agreements and conditions contained herein that
are required to be performed or complied with by them prior to or on the Closing
Date, and the Purchasers shall have so certified to the Company in writing.
27
(c) OPINION OF COUNSEL. The Company shall have received the opinion of
Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol, counsel to the Purchasers, dated
the Closing Date and substantially in the form of Exhibit J hereto.
(d) REGISTRATION RIGHTS AGREEMENT. Each Purchaser shall have executed
and delivered a counterpart to the Registration Rights Agreement.
ARTICLE VI.
POST-CLOSING COVENANTS AND AGREEMENTS
SECTION 6.01. LEGENDS; RESERVATION OF SHARES. (a) So long as
applicable, each certificate representing Initial Securities or Conversion
Shares shall contain, in addition to any legend required under the Rights Plan,
the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH
OTHER SECURITIES LAWS OR UNLESS EXEMPTIONS FROM SUCH REGISTRATION
REQUIREMENTS ARE APPLICABLE WITH RESPECT TO SUCH DISPOSITION."
(b) So long as any of the Initial Securities remain outstanding, the
Company shall at all times keep reserved for issuance upon the conversion of the
Series B-1 Preferred Shares (including on an as-converted basis (assuming
Company Shareholder Approval is obtained) all outstanding Series B-2 Preferred
Shares) and/or the exercise of the Initial Warrants, a sufficient number of
shares of Company Common Stock to satisfy its obligations to issue Conversion
Shares under the Series B-1 Preferred Certificate of Designation and the Initial
Warrants. So long as any of the Series B-2 Preferred Shares remain outstanding,
the Company shall at all times keep reserved for issuance upon conversion of the
Series B-2 Preferred Shares, a sufficient number of Series B-1 Preferred Shares
to satisfy its obligation to issue Conversion Shares under the Series B-2
Preferred Certificate of Designation.
SECTION 6.02. BOARD COMPOSITION. (a) Subject to the provisions of
Sections 6.02(b) and 6.02(d):
(i) So long as the Purchasers and their respective
Affiliates beneficially own (determined in accordance with Rule 13d-3
under the Exchange Act) Series B-1 Preferred Shares, Series B-2
Preferred Shares and/or Conversion Shares which represent 50% or more
of the shares of Company Common Stock purchased hereunder on the
28
Closing Date (determined on an as-converted basis assuming conversion
of all Series B-2 Preferred Shares into Series B-1 Preferred Shares
upon Company Shareholder Approval and conversion of all Series B-1
Preferred Shares (including those which are Conversion Shares) into
Company Common Stock), the Purchaser Representative shall have the
right to nominate for election on behalf of the Purchasers and such
Affiliates three directors to serve on the Company's Board of
Directors.
(ii) So long as the Purchasers and their respective
Affiliates beneficially own (determined in accordance with Rule 13d-3
under the Exchange Act) Series B-1 Preferred Shares, Series B-2
Preferred Shares and/or Conversion Shares which represent 25% or more
(but less 50%) of the shares of Company Common Stock purchased
hereunder on the Closing Date (determined on an as-converted basis
assuming conversion of all Series B-2 Preferred Shares into Series B-1
Preferred Shares upon Company Shareholder Approval and conversion of
all Series B-1 Preferred Shares (including those which are Conversion
Shares) into Company Common Stock), the Purchaser Representative shall
have the right to nominate for election on behalf of the Purchasers
and such Affiliates two directors to serve on the Company's Board of
Directors.
(iii) So long as the Purchasers and their respective
Affiliates beneficially own (determined in accordance with Rule 13d-3
under the Exchange Act) Series B-1 Preferred Shares, Series B-2
Preferred Shares and/or Conversion Shares and such shares represent
less than 25% (but more than 5%) of the shares of Company Common Stock
purchased hereunder on the Closing Date (determined on an as-converted
basis assuming conversion of all Series B-2 Preferred Shares into
Series B-1 Preferred Shares upon Company Shareholder Approval and
conversion of all Series B-1 Preferred Shares (including those which
are Conversion Shares) into Company Common Stock), the Purchaser
Representative shall have the right to nominate for election on behalf
of the Purchasers and such Affiliates one director to serve on the
Company's Board of Directors.
(iv) So long as the Purchasers and their respective
Affiliates beneficially own (determined in accordance with Rule 13d-3
under the Exchange Act) at least 5% of the shares of Company Common
Stock purchased hereunder (determined on an as-converted basis
assuming conversion of all Series B-2 Preferred Shares into Series B-1
Preferred Shares upon Company Shareholder Approval and conversion of
all Series B-1 Preferred Shares (including those which are Conversion
Shares) into Company Common Stock, in addition to the right to
nominate for election directors under clause (i), (ii) or (iii) above,
as applicable (the directors so nominated, the "WCAS Directors" and
the other members of the Board of Directors of the Company (other than
the Jointly-Selected Director (as hereinafter defined)), the "Company
Directors"), one of the members of the Board of Directors of the
Company not nominated by the Purchaser Representative pursuant to
clause (i), (ii) or (iii) above, as applicable, shall be a person
mutually agreed upon by the Purchaser Representative and the Company
Directors (the "Jointly-Selected Director" and together with the
Company Directors, the "Non-WCAS Directors").
29
The term "Affiliate" when used herein shall have the meaning provided in Rule
501(b) promulgated under the Securities Act.
(b) Notwithstanding anything to the contrary contained in Section
6.02(a) above, until such time as Company Shareholder Approval has been
obtained, but only so long as the Purchasers and their respective Affiliates
beneficially own (determined in accordance with Rule 13d-3 under the Exchange
Act) at least 5% of the shares of Company Common Stock purchased hereunder
(determined on an as-converted basis assuming conversion of all Series B-2
Preferred Shares into Series B-1 Preferred Shares upon Company Shareholder
Approval and conversion of all Series B-1 Preferred Shares (including those
which are Conversion Shares) into Company Common Stock, the Purchaser
Representative shall have the right to nominate on behalf of the Purchasers and
such Affiliates one director to serve on the Board of Directors of the Company
(it being understood that (x) until Company Shareholder Approval is obtained,
the provisions of this Section 6.02(b) and not the provisions of Section 6.02(a)
shall govern and (y) once Company Shareholder Approval is obtained, the
provisions of this Section 6.02(b) shall no longer be of any force or effect and
the provisions of Section 6.02(a) shall govern).
(c) For so long as the Purchaser Representative is entitled to
nominate directors to serve on the Board of Directors of the Company on behalf
of the Purchasers and their Affiliates under the provisions of Section 6.02(a)
or 6.02(b), the Company shall, (i) in connection with any vote or meeting of
stockholders of the Company at which directors are to be elected, nominate the
nominees of the Purchaser Representative as set forth above and (ii) use its
reasonable best efforts to cause their election to the Board of Directors of the
Company by the holders of the Common Stock, including (A) nominating such
nominee, (B) including the nominee in the Company's proxy statement, (C)
recommending a vote for such nominee, (D) casting votes pursuant to proxies
given to the Company in favor of such nominee and (E) taking or causing to be
taken, all other actions and doing, or causing to be done, all other things
necessary (in the reasonable opinion of the Purchaser Representative) to give
effect to the provisions of Sections 6.02(a) or 6.02(b) above, as applicable. If
the Purchaser Representative for any reason fails to nominate a person to fill
any such directorship, such directorship shall remain vacant until such time as
the Purchaser Representative nominates a director to fill such directorship and
such directorship shall not be filled by resolution or vote of the Company's
Board of Directors or the Company's other stockholders. All persons nominated to
the Board of Directors of the Company by the Purchaser Representative pursuant
to this Section 6.02 shall receive the same compensation and benefits (including
equity-based compensation) that are provided to the other non-executive members
of the Board of Directors of the Company. In addition, for so long as the
provisions of this Section 6.02 remain in effect, the Company shall maintain
policies of directors and officers liability insurance, with financially sound
and reputable insurers, having terms that are customary for companies similarly
situated.
(d) The provisions of this Section 6.02 are intended to operate in
conjunction with the provisions contained in Section 7(c) of the Series B-1
Preferred Certificate of Designation, such that, if the holders of Series B-1
Preferred Shares are entitled to elect directors
30
pursuant to said Section 7(c), the number of directors that such holders are
entitled to elect pursuant to said Section 7(c) shall reduce the number of
directors to be nominated by the Purchaser Representative on behalf of the
Purchasers and their Affiliates pursuant to this Section 6.02.
(e) So long as the Purchasers and/or their Affiliates are entitled to
nominate directors to the Board of Directors of the Company pursuant to Section
6.02(a) or 6.02(b) above, as applicable, (i) the Board of Directors of the
Company shall at all times consist of seven directors and (ii) the Purchasers
and such Affiliates shall also be entitled to proportionate representation by
WCAS Directors on each committee and subcommittee of the Board of Directors of
the Company (other than the audit committee to the extent prohibited by
applicable Law), such committee and subcommittee representatives to be
designated by the WCAS Directors. In the event the WCAS Directors are entitled
to designate one or more directors to serve on a committee or subcommittee of
the Board of Directors of the Company under this Section 6.02(e), the Company
shall use its reasonable best efforts to cause their appointment to such
committee or subcommittee.
(f) The Purchasers agree that, from the Closing Date until the seventh
anniversary of the Closing Date, such Purchasers shall (i) use their reasonable
best efforts to cause the election or appointment to the Board of Directors of
the Company of the persons nominated by the Company Directors to fill the
positions on such Boards of Directors allocated to the Company Directors, (ii)
use their reasonable best efforts to cause the Company Directors to have
proportionate representation on all committees of such Boards of Directors and
(iii) not directly or indirectly take any action to seek or cause the removal of
any Company Director as such a director or committee member without the written
consent of a majority of the Non-WCAS Directors.
SECTION 6.03. STANDSTILL AGREEMENT. WCAS agrees that, from the Closing
Date until the seventh anniversary of the Closing Date, or, if earlier, until
the first date upon which the Purchasers and their respective Affiliates hold
fewer than 5% of the shares of Company Common Stock purchased hereunder
determined on an as-converted basis assuming (i) the conversion of all Series
B-2 Preferred Shares into Series B-1 Preferred Shares upon Company Shareholder
Approval, (ii) the conversion of all Series B-1 Preferred Shares (including
those which are Conversion Shares) into Company Common Stock, (iii) the exercise
of all Initial Warrants, (iv) the conversion of all other convertible securities
held by WCAS and its Affiliates (including any Series C-1 Preferred Shares or
Series C-2 Preferred Shares) and (v) the exercise of all other outstanding
warrants (including any Additional Warrants) held by WCAS and its Affiliates,
the Purchasers will not take, or encourage or cause any other person or entity
to take, any of the following actions without the prior written consent of a
majority of the Non-WCAS Directors: (i) acquire, offer to acquire, or agree to
acquire ownership (including without limitation beneficial ownership within the
meaning of Rule 13d-3 under the Exchange Act), by purchase or otherwise, of any
Voting Securities (as hereinafter defined), assets or business of the Company or
any Subsidiary, or direct or indirect rights or options to acquire any Voting
Securities, assets or
31
business of the Company or any Subsidiary (other than Voting Securities (1) in
connection with transfers of Securities among the Purchasers and their
Affiliates, (2) the acquisition of Series C-1 Preferred Shares, Series C-2
Preferred Shares or Additional Warrants as contemplated hereby, (3) upon the
conversion of any Series B-1 Preferred Shares, Series B-2 Preferred Shares,
Series C-1 Preferred Shares or Series C-2 Preferred Shares or upon the exercise
of any Initial Warrants or Additional Warrants, (4) the acquisition of Voting
Securities in connection with hedging transactions (so long as such transactions
do not increase the overall holdings of Voting Securities of the Purchasers that
are involved), (5) in connection with the Voting Agreement and (6) shares of
Company Common Stock and/or options to purchase shares of Company Common Stock
granted to individual Purchasers who are directors of the Company in connection
with equity-based compensation provided to non-executive members of the Board of
Directors of the Company; (ii) make, or in any way participate in, directly or
indirectly, any "solicitation" of "proxies" (as such terms are used in the
Exchange Act rules) or consents with respect to any Voting Securities of the
Company or any Subsidiary or become a participant in any election contest; (iii)
execute any written consent in lieu of a meeting of the holders of any class of
Voting Securities that is solicited by or on behalf of any shareholder of the
Company; (iv) initiate, propose or otherwise solicit shareholders for the
approval of any shareholder proposal (as described in Rule 14a-8 under the
Exchange Act or otherwise); (v) make any public announcement with respect to,
submit any public proposal for or public offer of, or approach any party other
than the Company regarding any extraordinary transaction involving the
acquisition of the Company or its securities or assets; (vi) form, join or in
any way participate in or assist in the formation of a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) in connection with any of the
foregoing; (vii) otherwise act, alone or in concert with others, in a manner
designed or having the deliberate effect of circumventing the restrictions
otherwise imposed hereunder; (viii) disclose or publicly announce any intention,
plan or arrangement inconsistent with the foregoing; or (ix) finance any other
persons or entities in connection with any of the activities prohibited by the
foregoing clauses (i) through (viii). As used herein, "Voting Securities" means
all securities of the Company ordinarily having the power to vote for the
election of any director of the Company and any securities or indebtedness
convertible into or exchangeable or exercisable for, directly or indirectly, any
such securities.
SECTION 6.04. RIGHT TO PURCHASE SERIES C PREFERRED SHARES. (a) The
Company agrees that, from the Closing Date until the third anniversary of the
Closing Date (the "Restricted Period"), it shall not conduct any Equity Offering
(as hereinafter defined) unless and until it first grants to WCAS pursuant to
this Section 6.04 the right to purchase, together with its Affiliates, general
partners, and other related co-investors that are reasonably acceptable to the
Company (collectively, "Co-Investors"), (A) if Company Shareholder Approval has
been obtained, Series C-1 Preferred Shares or (B) if Company Shareholder
Approval has not yet been obtained, Series C-2 Preferred Shares, in either case,
for a purchase price of $1,000 per share. This Section 6.04 shall apply to all
proposed Equity Offerings during the Restricted Period; provided, that (i) WCAS
and its Co-Investors shall not have the right to purchase in any single
transaction pursuant to this Section 6.04 (each such transaction, a "Series C
Preferred Transaction") Series C-1 Preferred Shares or Series C-2 Preferred
Shares with a stated value in excess of the amount
32
proposed to be raised by the Company pursuant to the related proposed Equity
Offering and (ii) WCAS and its Co-Investors shall not have the right to purchase
more than $15,000,000 in the aggregate of Series C-1 Preferred Shares and Series
C-2 Preferred Shares pursuant to this Section 6.04 (measured by reference to the
stated value thereof).
(b) For purposes of this Section 6.04, "Equity Offering" shall mean
any offer by the Company to sell or sale by the Company of any shares of capital
stock of the Company, or any debt or equity security convertible into or
exchangeable for, or carrying rights or options to purchase, capital stock of
the Company, other than:
(i) the issuance of Series A Preferred Shares of the
Company, the Series B-1 Preferred Shares, the Series B-2 Preferred
Shares, the Series C-1 Preferred Shares or the Series C-2 Preferred
Shares, shares of capital stock upon conversion thereof or shares of
capital stock upon exercise of the Initial Warrants or the Additional
Warrants or upon the conversion or exercise of any other option,
warrant or convertible security outstanding on the date hereof and
disclosed in Item 6.04(b) of the Disclosure Schedule;
(ii) the issuance of options (or Company Common Stock upon
the exercise of such options) to employees, consultants, contractors,
officers or directors of the Company or its Subsidiaries pursuant to
any compensation plan or arrangement approved by the Board of
Directors of the Company;
(iii) the issuance of securities constituting, in the
aggregate, not more than three percent of the outstanding Company
Common Stock on a fully-diluted basis to banks or institutional
lenders in connection with debt financings, equipment financings or
similar transactions or to strategic partners in primarily
non-financing transactions, in all such cases as approved by the Board
of Directors of the Company;
(iv) the issuance of Additional Warrants pursuant to Section
6.05;
(v) the issuance of rights and other securities under and
pursuant to the Rights Plan, and
(vi) the issuance of shares in connection with stock splits,
stock dividends or like transactions.
(c) Prior to issuing any securities pursuant to a proposed Equity
Offering, the Company shall give written notice thereof to WCAS. Such notice
shall set forth the material terms and conditions of such Equity Offering and
the securities to be sold in connection therewith, including the aggregate
amount that the Company intends to raise in such Equity Offering. In the event
that the consideration to be received by the Company for such securities is
other than cash, such notice shall state the fair value of such consideration as
determined in good faith by the Board of Directors of the Company. Each such
notice shall constitute an offer by the
33
Company to sell to WCAS and its Co-Investors, for $1,000 per share, Series C-1
Preferred Shares or Series C-2 Preferred Shares, as applicable (depending on
whether Company Shareholder Approval has been obtained), with an aggregate
stated value equal to the lesser of (x) $15,000,000 less the aggregate amount of
all Series C-1 Preferred Shares and/or Series C-2 Preferred Shares purchased in
all previous Series C Preferred Transactions, if any, or (y) the amount proposed
to be raised by the Company in such Equity Offering. For a period of thirty days
following the giving of such notice, WCAS shall be entitled, by written notice
to the Company, to elect to purchase all or any portion of such Series C-1
Preferred Shares or Series C-2 Preferred Shares, as applicable. In the event
that WCAS shall not elect pursuant to this Section 6.04 to purchase any or all
of the shares in connection with the Equity Offering described in such notice,
the Company may issue such securities not elected to be purchased by WCAS in
such amounts and on such terms and conditions without further compliance with
this Section 6.04 within the sixty day period following the end of such
thirty-day period. In the event that any such offer is accepted by WCAS within
such thirty-day period, the Company shall sell to WCAS and its Co-Investors, and
WCAS and its Co-Investors shall purchase from the Company, the Series C-1
Preferred Shares or Series C-2 Preferred Shares, as the case may be, elected to
be purchased by WCAS as soon as practicable pursuant to a definitive stock
purchase agreement that is customary for similar transactions and contains
standard and adequate representations, warranties, covenants, conditions and
indemnities which are no less favorable to WCAS and its Co-Investors than those
contained in this Agreement and which are, subject to reasonable and appropriate
modification, substantially similar to those contained in this Agreement (it
being understood that such agreement would not contain provisions similar to
those contained in Sections 6.02, 6.03, 6.04, 6.05 or 6.08 hereof).
(d) The initial conversion price of any Series C-1 Preferred Shares
issued in any Series C Preferred Transaction shall be equal to the lower of:
(i) the product of (x) the average closing price per share
of Company Common Stock for the twenty trading days immediately
preceding the closing date of such Series C Preferred Transaction
("Market Price") and (y) 1.1; and
(ii) a conversion price determined as follows:
CP = [(7.5 x EBITDA) - (ND + PS)] / FDS
As used in the above formula, the following shall have the meanings
set forth below:
CP = the initial conversion price of such Series C-1 Preferred
Shares
EBITDA = the consolidated net income of the Company before
interest, income taxes, depreciation and amortization for
the twelve months ending prior to the closing date of such
Series C Preferred Transaction, adjusted for synergies
related to acquisitions during such prior twelve month
period in
34
such amount, if any, as may be agreed upon by the
Company and the Purchaser Representative but excluding
non-recurring gains or losses to the extent agreed upon by
the Company and the Purchaser Representative
ND = all Indebtedness (as hereinafter defined) of the Company
and its Subsidiaries as of the last day of the last full
month preceding the closing date of such Series C Preferred
Transaction (the "Reference Date") less the sum of (i) the
cash and cash equivalents of the Company and its
Subsidiaries as of the Reference Date and (ii) the aggregate
exercise price of all stock options of the Company that are
outstanding on the Reference Date and that have an exercise
price less than the Market Price ("In-the-Money Options")
PS = the aggregate liquidation preference of all shares of
preferred stock of the Company outstanding on the Reference
Date, excluding any shares of convertible preferred stock
having a conversion price less than the Market Price
("In-the-Money Preferred Stock")
FDS = the number of shares of Company Common Stock outstanding
on the Reference Date on a fully-diluted basis giving effect
to the exercise of all then outstanding In-the-Money Options
and the conversion of all then outstanding In-the-Money
Preferred Stock
All calculations made pursuant to this Section 6.04(d) shall be made in
accordance with GAAP and certified by the Chief Executive Officer or Chief
Financial Officer of the Company.
(e) In the event that Series C-2 Preferred Shares are issued in a
Series C Preferred Transaction (the "Original Transaction"), and thereafter
Company Shareholder Approval is obtained, the conversion price of the Series C-1
Preferred Shares to be issued upon the automatic conversion of the Series C-2
Preferred Shares issued in such Original Transaction shall be calculated as if
such Series C-1 Preferred Shares were issued on the closing date of the Original
Transaction (giving effect to any adjustments that would have been made in
accordance with the terms and provisions of the Series C-1 Preferred Certificate
of Designation (if such Series C-1 Preferred Shares were outstanding from the
closing date of the Original Transaction to the date of such conversion).
(f) The Company agrees that, so long as any Series B-1 Preferred
Shares, Series B-2 Preferred Shares, Series C-1 Preferred Shares and/or Series
C-2 Preferred Shares remain outstanding, it will not issue any Series C-1
Preferred Shares or Series C-2 Preferred Shares to anyone other than WCAS and
its Co-Investors.
SECTION 6.05. ISSUANCE OF SERIES B NOTES IN CONNECTION WITH SUBSEQUENT
ACQUISITIONS. (a) If, at any time after the date hereof and prior to the
termination of this Section
35
6.05 as provided in Section 6.05(f) below, the Company shall identify an
acquisition opportunity for the Company, the consummation of which would require
the Company to obtain third-party debt financing (other than debt which by its
terms is not subordinate to any other debt or obligations of the Company) (each
a "Potential Acquisition"), the Company shall notify WCAS of such Potential
Acquisition and the need to obtain such financing. Any such notice (each a
"Potential Acquisition Notice") shall include all material information
reasonably available to the Company with respect to the entity or business
proposed to be acquired (the "Potential Acquisition Target") and all other
material information reasonably available to the Company that is relevant to
WCAS's decision whether or not to finance such acquisition. Without limiting the
generality of the foregoing, each Potential Acquisition Notice shall include a
description of the terms and conditions upon which the Company would expect to
consummate such Potential Acquisition, the amount of such debt (in the form of
Series B Notes) that the Company proposes to issue and the terms and conditions
of any Other Financing (as hereinafter defined) that the Company would expect to
obtain in connection with such Potential Acquisition.
(b) As promptly as reasonably practicable after the giving of any
Potential Acquisition Notice, and, in any event within ten days of the giving of
such notice, appropriate representatives of the Company and WCAS shall make
themselves available to discuss the status of the Potential Acquisition, the
Company's strategic rationale therefor and the information provided to WCAS in
connection with the Potential Acquisition Notice. As soon as practicable after
the conclusion of such discussions and following the delivery to WCAS of any
follow-up information reasonably requested by WCAS (and, in any event, within
ten days thereof) WCAS shall provide the Company either (i) a non-binding
indication of interest with respect to the sale and purchase of the Series B
Notes proposed to be issued to finance the Potential Acquisition (a "Series B
Note Transaction") or (ii) a notification that WCAS will not proceed with such
Series B Note Transaction (a "WCAS Cessation of Interest Notice").
(c) In connection with any Potential Acquisition and related Series B
Note Transaction, the Company shall use all commercially reasonable efforts to
afford the representatives of WCAS reasonable access during normal business
hours to the offices, facilities, books and records of the Potential Acquisition
Target and the opportunity to discuss the affairs of the Potential Acquisition
Target with the officers, employees, accountants, customers, suppliers and
landlords of the Company and such Potential Acquisition Target familiar
therewith. In addition, the Company shall keep the WCAS informed of, and consult
with it on a prompt and regular basis on, all matters and developments regarding
each Potential Acquisition and the proposed financing therefor.
(d) If, after completion of their respective due diligence
investigations with respect to such Potential Acquisition, and in light of the
proposed terms and conditions upon which such acquisition would be financed and
consummated, (i) the Board of Directors of the Company concludes that such
Potential Acquisition, the related Series B Note Transaction and any Other
Financing transactions related thereto would be in the best interest of the
Company and its shareholders and approves such transactions and (ii) WCAS
concludes that the Series B Note
36
Transaction would be in its best interest and approves such transaction (the
approvals described in clauses (i) and (ii) are collectively referred to herein
as "Mutual Approval"), the Series B Note Transaction will be consummated as
follows:
(i) Each such Series B Note Transaction shall be consummated
pursuant to the terms and conditions set forth in a definitive note
purchase agreement that is customary for similar transactions and
contains standard and adequate representations, warranties, covenants,
conditions and indemnities which are no less favorable in the
aggregate to WCAS and its Co-Investors than those contained in this
Agreement and which are, subject to reasonable and appropriate
modification, substantially similar to those contained in this
Agreement (a "Definitive Note Purchase Agreement"); and
(ii) In connection with the issuance of Series B Notes in
any such Series B Note Transaction the Company shall also issue to
WCAS and its Co-Investors an aggregate number of Additional Warrants
to be determined as follows:
(A) If the average closing price per share of Company Common
Stock for the twenty trading days immediately preceding the
closing date of such Series B Note Transaction is equal to
or less than $35.00 (as adjusted for any stock splits, stock
dividends, reverse stock splits, share consolidations or
similar transactions), then the aggregate number of
Additional Warrants to be issued in such Series B Note
Transaction (SBW) shall be determined as follows:
SBW = M x P
---------------
$15,000,000
(B) If the average closing price per share of Company Common
Stock for the twenty trading days immediately preceding the
closing date of such Series B Note Transaction exceeds
$35.00 (as adjusted for any stock splits, stock dividends,
reverse stock splits, share consolidations or similar
transactions), then the aggregate number of Additional
Warrants to be issued in such Series B Note Transaction
(SBW) shall be determined as follows:
SBW = 0.25 x P
--------
S
As used in the above formulas, the following shall have the meanings
set forth below:
S = the average closing price per share of Company Common
Stock for the twenty trading days immediately preceding the
closing date of such Series B Note Transaction
37
P = the aggregate principal amount of Series B Notes to be
issued in such Series B Note Transaction
M = the number of Additional Warrants that would be issued if
P was equal to $15,000,000 and S was less than or equal to
$35.00 (as adjusted for any stock splits, stock dividends,
reverse stock splits, share consolidations or similar
transactions), determined in accordance with the following
table:
S M
---------------- --------------------
Less than $10.00 300,000
$10.01 - $15.00 275,000
$15.01 - $20.00 225,000
$20.01 - $25.00 175,000
$25.01 - $30.00 150,000
$30.01 - $35.00 100,000
(all such figures as adjusted for any stock splits, stock
dividends, reverse stock splits, share consolidations or
similar transactions)
(e) WCAS hereby agrees that it shall use its commercially reasonable
efforts to conduct its due diligence investigations, obtain its internal
approvals and consummate any Series B Note Transactions contemplated hereby, in
each case, subject to the other provisions of this Section 6.05, in accordance
with any reasonable timetable proposed by the Company in connection with any
Potential Acquisition.
(f) Notwithstanding anything to the contrary contained herein, (i) the
Company agrees that it shall not seek to obtain any debt financing (other than
debt which by its terms is not subordinate to any other debt or obligations of
the Company) for any Potential Acquisition from any person other than WCAS and
its Co-Investors ("Other Financing") unless and until WCAS and its Co-Investors
are offered an opportunity to finance such acquisition through the purchase of
Series B Notes as provided in this Section 6.05; provided, that the aggregate
principal amount of Series B Notes issued pursuant to this Section 6.05 shall
not exceed $15,000,000 (i.e., the Company shall not be restricted by this
Section 6.05 from obtaining Other Financing once $15,000,000 in aggregate
principal amount of Series B Notes have been issued hereunder in one or more
Series B Note Transactions) and (ii) the Company's ability to obtain Other
Financing shall at all times remain subject to the provisions of Section 6.04.
(g) WCAS may terminate the provisions of this Section 6.05 at any time
after the date hereof by delivering to the Company a written notice of such
termination. The Company may terminate the provisions of this Section 6.05 at
any time after the third anniversary of the Closing Date by delivering to WCAS a
written notice of such termination.
38
(h) Notwithstanding anything to the contrary set forth above, nothing
in this Section 6.05 shall be construed as a commitment of WCAS to provide
financing for any Potential Acquisition. The parties hereto understand and agree
that no agreement or agreement to agree providing for any Series B Note
Transaction shall be deemed to exist between the parties as a result of this
Section 6.05 unless and until Mutual Approval has been obtained and a final
Definitive Note Purchase Agreement with respect thereto shall have been executed
and delivered by the parties. In addition, (i) the Company acknowledges that
WCAS may deliver a WCAS Cessation of Interest Notice at any time after delivery
of a Potential Acquisition Notice and prior to the execution and delivery of a
Definitive Note Purchase Agreement and (ii) the Company may, at any time,
without liability to WCAS hereunder (except as provided in Section 9.02 below),
determine not to proceed with any Potential Acquisition.
SECTION 6.06. COMPANY SHAREHOLDER APPROVAL. (a) As soon as reasonably
practicable after the Closing Date, the Company shall take all action necessary
in accordance with all applicable Laws and its Articles of Incorporation and
By-Laws to duly call, give notice of and convene a meeting (the "Company
Shareholder Meeting") of its shareholders to consider and vote upon the approval
of (1) the termination of the application of the "Conversion Cap" described in
Section 4(a)(ii) of the Series B-1 Preferred Certificate of Designation, (2) the
automatic conversion of the Series B-2 Preferred Shares into Series B-1
Preferred Shares pursuant to Section 4(a) of the Series B-2 Preferred
Certificate of Designation, (3) the automatic conversion of any and all Series
C-2 Preferred Shares into Series C-1 Preferred Shares pursuant to Section 4(a)
of the Series C-2 Preferred Certificate of Designation, (4) the rights of the
holders of the Series B-1 Preferred Shares to elect directors to the Board of
Directors of the Company as described in paragraphs 7(c)(ii) and 7(c)(iii) of
the Series B-1 Preferred Certificate of Designation and (5) an amendment to the
Articles of Incorporation of the Company (the "Charter Amendment") substantially
in the form of Exhibit K hereto ("Company Shareholder Approval"). The Board of
Directors of the Company has approved the matters referred to in (1) through (4)
above and shall approve the matters referred to in (5) above and shall recommend
that the shareholders of the Company vote to approve such matters. The Company
shall use all commercially reasonable efforts to solicit from its shareholders
proxies in favor of Company Shareholder Approval. The date on which Company
Shareholder Approval is obtained, if at all, is hereinafter referred to as the
"Approval Date".
(b) The Company shall, as promptly as practicable after the Closing
Date, but in no event later than 30 days after the Closing Date, prepare and
file with the SEC (after giving the Purchaser Representative and the Purchasers'
counsel the opportunity to review and comment thereon) a proxy statement to be
used in connection with the Company Shareholder Meeting (such proxy statement,
together with the form of proxy included therein and any amendments thereof or
supplements thereto, in the form mailed to the Company's shareholders, is herein
referred to as, the "Proxy Statement"). The Company will use all commercially
reasonable efforts to cause the Proxy Statement to be mailed to its shareholders
at the earliest practicable date and shall use all commercially reasonable
efforts to hold the Company Shareholder Meeting as soon as practicable after the
Closing Date.
39
(c) The Company shall notify the Purchaser Representative of the
receipt of any comments of the staff of the SEC and of any requests by the staff
for amendments or supplements to the Proxy Statement, or for additional
information, and shall promptly supply the Purchaser Representative with copies
of all correspondence between the Company or its representatives and the staff
of the SEC with respect thereto. If, at any time prior to the Company
Shareholder Meeting, any event should occur relating to or affecting the Company
or its Subsidiaries, which event should be described in an amendment or
supplement to the Proxy Statement, the Company shall promptly inform the
Purchaser Representative and shall promptly prepare, file (after giving the
Purchaser Representative and the Purchasers' counsel the opportunity to review
and comment thereon) and clear with the SEC and, if required by applicable Law,
distribute to the Company's shareholders, such amendment or supplement.
(d) Prior to the Approval Date, the Company shall make appropriate
provision and take appropriate action such that a sufficient number of vacancies
will exist on the Company's Board of Directors on the Approval Date that the
holders of the Series B-1 Preferred Shares are able to elect the appropriate
number of directors to the Company's Board of Directors on the Approval Date, as
described in Section 7(c) of the Series B-1 Preferred Certificate of
Designation.
SECTION 6.07. TAX CONSISTENCY. The Company shall treat the Series B-1
Preferred Shares, the Series B-2 Preferred Shares, the Series C-1 Preferred
Shares and the Series C-2 Preferred Shares as stock that participates in the
corporate growth of the Company to a significant extent within the meaning of
Treasury Regulation ss. 1.305-5(a), and not as "preferred stock" for purposes of
the Section 305 of the Code and the Treasury Regulations promulgated thereunder,
unless otherwise required pursuant to a final determination or a change in
applicable statutes or regulations.
SECTION 6.08 CERTAIN VETO RIGHTS APPLYING AFTER COMPANY SHAREHOLDER
APPROVAL. From and after the Approval Date, and so long as the Purchasers and
their respective Affiliates beneficially own (determined in accordance with Rule
13d-3 under the Exchange Act) Series B-1 Preferred Shares, Series B-2 Preferred
Shares and/or Conversion Shares which represent 35% or more of the shares of
Company Common Stock purchased hereunder on the Closing Date (determined on an
as-converted basis after giving effect to the conversion of all of the Series
B-2 Preferred Shares into Series B-1 Preferred Shares upon Company Shareholder
Approval and conversion of all Series B-1 Preferred Shares (including those
which are Conversion Shares) into Company Common Stock), the Purchaser
Representative on behalf of the Purchaser and such Affiliates shall have the
right to approve, on behalf of the Purchasers and such Affiliates, the following
transactions: (i) any merger or consolidation involving the Company or any sale
of all or substantially all of the assets of the Company and its Subsidiaries
taken as a whole, (ii) any acquisition (or series of related acquisitions) of
stock or assets of any entity or business by the Company or any Subsidiary of
the Company outside of the ordinary course of business (whether by merger or
purchase of stock or assets or otherwise) for consideration greater than
$10,000,000 (it being agreed that the value of all non-cash
40
consideration payable in respect thereof will be determined in good faith by the
Board of Directors of the Company and include the Board of Director's
determination of the value of any contingent consideration payable in such
transaction or series of related transactions), (iii) any sale, lease, transfer
or other divestiture of material assets outside the ordinary course of business
by the Company or any Subsidiary of the Company, (iv) any capital project or
series of related capital projects costing in excess of $3,000,000, (v) any
material changes in the Company's and its Subsidiaries' business strategy or
operations from those in existence on the date hereof, (vi) any Restricted
Payments (as hereinafter defined), (vii) any Prohibited Transactions With
Affiliates (as hereinafter defined), (viii) any material change to any equity
incentive plan of the Company or any of its Subsidiaries, (ix) any material
increase in the compensation or benefits payable under any management incentive
plan of the Company or any of its Subsidiaries and (x) any restructuring of
senior management of the Company and its Subsidiaries.
SECTION 6.09 CERTAIN NEGATIVE COVENANTS RELATING TO THE SERIES B-2
PREFERRED SHARES, SERIES C-2 PREFERRED SHARES, SERIES A NOTES AND SERIES B
NOTES. From and after the Closing Date, and so long as any Series B-2 Preferred
Shares, Series C-2 Preferred Shares, Series A Notes or Series B Notes remain
outstanding, the Company shall comply with the following covenants and
agreements and cause each of its Subsidiaries to comply with the following
covenants and agreements unless compliance is waived in writing by (x) the
holders of a majority of the outstanding Series B-2 Preferred Shares and Series
C-2 Preferred Shares, voting together as a single class, and (y) the holders of
not less than a majority in principal amount of the "Notes" (such term being
used herein as defined in the form of Senior Subordinated Note attached as
Exhibit D hereto):
(a) LIMITATION ON INDEBTEDNESS AND DISQUALIFIED STOCK. The
Company will not and will not permit any of its Subsidiaries to,
directly or indirectly:
(i) contract, create, incur, assume or suffer or
permit to exist any Indebtedness (including by way of
transferring to any third party any Indebtedness of the
Company or any Subsidiary of the Company presently held by
the Company or any Subsidiary of the Company), except:
(A) Indebtedness represented by the
Notes;
(B) Indebtedness under Sections 1.4 of
the Xxxxxx Acquisition Agreement;
(C) up to $28,000,000 of Indebtedness of
the Company and its Subsidiaries under the line of
credit letter agreement, dated March 8, 2000,
between the Company and Commerce Bank N.A., as
amended, modified, supplemented, amended and
restated, extended, renewed, refinanced and/or
replaced in an aggregate principal amount not
exceeding such amount ("Senior Credit Agreement
Indebtedness");
41
(D) Indebtedness in respect of the City
of Lenexa, Kansas Taxable Industrial Revenue Bonds
(LabOne, Inc. Project) Series 1998A outstanding on
the date hereof (the "Industrial Revenue Bonds")
under the (x) Reimbursement Agreement, dated as of
September 1, 1998, between the Company and
Commerce Bank N.A., as amended, modified,
supplemented, amended and restated, refinanced
and/or replaced, and (y) the Lease, dated as of
September 1, 1998, between the Company and the
City of Lenexa, Kansas, in an aggregate amount not
to exceed $16,300,000, as reduced by the amount of
all payments of principal on the Industrial
Revenue Bonds made after the date hereof ("IRB
Indebtedness" and, together with the Senior Credit
Agreement Indebtedness, "Senior Indebtedness");
(E) other Indebtedness of the Company
and its Subsidiaries existing on the date hereof
and set forth in Item 6.09(a)(i)(E) of the
Disclosure Schedule ("Existing Indebtedness") and
Indebtedness incurred in connection with any
subsequent extension, renewal or refinancing
thereof; provided, that (x) the amount thereof is
not increased and (y) the terms thereof are no
less favorable to the holders of the Series B-2
Preferred Shares, the Series C-2 Preferred Shares
and the Notes than the terms of the agreement or
instrument being extended, renewed or refinanced;
(F) Indebtedness owing by the Company or
any Subsidiary of the Company to any wholly-owned
Subsidiary of the Company or to the Company;
(G) Capitalized Lease Obligations (as
hereinafter defined) of the Company and its
Subsidiaries in an amount not to exceed $1,000,000
in the aggregate;
(H) Indebtedness related solely to
interest rate protection or currency hedging
obligations entered into to protect the Company
and its Subsidiaries from fluctuations in interest
or currency exchange rates and not for speculative
purposes;
(I) Indebtedness of the Company or any
of its Subsidiaries in connection with standby
letters of credit or performance, surety or appeal
bonds issued in the ordinary course of business;
(J) Indebtedness of any Person acquired
by the Company or any Subsidiary, existing at the
time of acquisition and not incurred in
contemplation thereof;
42
(K) Indebtedness that is incurred and
used to repurchase all of the outstanding Series A
Notes and Series B Notes or to redeem all of the
outstanding Series B-2 Preferred Shares and Series
C-2 Preferred Shares pursuant to obligations of
the Company to effect such repurchases or
redemptions; provided, that any such Indebtedness
that is used to redeem the Series B-2 Preferred
Shares and Series C-2 Preferred Shares shall (x)
be subordinated to all Notes then outstanding, if
any, and (y) not require repayment of principal
prior to the scheduled repayment at maturity of
any Notes then outstanding;
(L) other Indebtedness of the Company
and its Subsidiaries so long as the aggregate
amount of all Indebtedness of the Company and its
Subsidiaries, after giving effect to the
incurrence thereof, does not exceed three times
the consolidated net income of the Company before
interest, income taxes, depreciation and
amortization for the twelve months ending as of
the date of such incurrence, adjusted for
synergies from pending or completed acquisitions
on such date in such amount, if any, as may be
agreed upon by the Company and the Purchaser
Representative which agreement will not be
unreasonably withheld or delayed ("Additional
Indebtedness"); and
(M) guarantees of Indebtedness otherwise
permitted hereunder; or
(ii) issue any capital stock of the Company or any
of its Subsidiaries (other than Series C-1 Preferred Shares
and/or Series C-2 Preferred Shares) which by its terms (or
by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any
event, matures, or is mandatorily redeemable, whether
pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or
in part prior to the later of Company Shareholder Approval
and December 31, 2008 ("Disqualified Stock").
As used herein, "Indebtedness" means, with respect to the
Company or any Subsidiary of the Company, (i) indebtedness
for borrowed money; (ii) liabilities or obligations in
respect of guarantees or letters of credit, excluding
obligations with respect to trade letters of credit entered
into in the ordinary course of business to the extent that
such letters of credit are not are not drawn upon or, if
drawn upon, to the extent the drawing is reimbursed no later
than the third business day following receipt by the Company
of a demand for reimbursement; (iii) the deferred purchase
price of assets or services purchased (excluding trade
accounts payable and accrued obligations incurred in the
ordinary course of business); (iv) any obligation to pay a
specified purchase price for goods or services whether or
not delivered or accepted pursuant to any agreement; (v)
liabilities or obligations of the Company or any Subsidiary
of the Company, as lessee, under any lease of property
(whether real, personal or mixed) which, in accordance with
GAAP, should be classified as a capital lease ("Capitalized
Lease Obligations") (i.e., not operating leases); or (vi)
liabilities or obligations in respect of any sale-leaseback
transaction.
(b) RESTRICTED PAYMENTS. The Company will not and will not
permit any of its Subsidiaries to, directly or indirectly:
(i) declare or pay any dividends on, or make any
other distribution or payment on account of, or redeem,
retire, purchase or otherwise acquire for value, any shares
of any class of capital stock, whether now or hereafter
outstanding, or make any other distribution in respect
thereof, whether in cash, property or in obligations of the
Company or any of its Subsidiaries, except for:
(A) any of the foregoing with respect to
the Company's Series B-1 Preferred Shares, Series
B-2 Preferred Shares, Series C-1 Preferred Shares
or Series C-2 Preferred Shares;
(B) dividends or distributions payable
in capital stock (other than Disqualified Stock)
or in options, warrants, or other rights to
purchase capital stock (other than Disqualified
Stock);
(C) dividends, distributions or payments
by any Subsidiary to the Company or to any
wholly-owned Subsidiary of the Company; and
(D) repurchases of shares of any class
of stock of the Company from employees upon
termination of employment; provided, that the
aggregate amount of such repurchases shall not
exceed $100,000 in any calendar year; or
(ii) make any voluntary or optional payments of
principal of, or retire, redeem, purchase or otherwise
acquire for value any Indebtedness other than payments in
respect of (A) Senior Credit Agreement Indebtedness, (B)
payments of IRB Indebtedness which correspond to scheduled
payments of principal on the Industrial Revenue Bonds or (C)
payments in respect of Additional Indebtedness.
The declarations, payments, purchases, redemptions,
retirements, acquisitions or distributions prohibited by
this Section 6.09(b) are herein called "Restricted
Payments".
44
The provisions of Section 6.09(b) shall not be violated by reason of:
(1) the redemption, repurchase, defeasance or other
acquisition or retirement for value of the Series A Notes,
the Series B Notes, the Series B-2 Preferred Shares and/or
the Series C-2 Preferred Shares (including the premium, if
any, and accrued and unpaid interest thereon) with the
proceeds of, or in exchange for, Indebtedness incurred under
Section 6.09(a)(i)(K);
(2) payments or distributions to dissenting
stockholders pursuant to applicable Law in connection with a
consolidation, merger or transfer of assets that complies
with the provisions of this Agreement, the Notes and the
Series B-1 Preferred Certificate of Designation, the Series
B-2 Preferred Certificate of Designation, Series C-1
Preferred Certificate of Designation, and the Series C-2
Preferred Certificate of Designation applicable to mergers,
consolidations and transfers of all or substantially all of
the property and assets of the Company;
(3) repurchases of capital stock deemed to occur upon
the exercise of stock options if such options or capital
stock represents a portion of the exercise price thereof;
and
(4) payments not to exceed $250,000 in the aggregate
solely to enable the Company to make payments to holders of
its Series B-1 Preferred Shares, Series B-2 Preferred
Shares, Series C-1 Preferred Shares and/or Series C-2
Preferred Shares in lieu of the issuance of fractional
shares of its capital stock.
(c) LIMITATION ON LIENS. The Company will not and will not
permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume or otherwise cause or suffer to exist any consensual
Liens (other than Permitted Liens) on any property or asset now owned
or hereafter acquired, or on any income or profits therefrom, or
assign or convey any right to receive income therefrom, except for:
(A) Liens securing Senior Indebtedness
or Additional Indebtedness that is subordinated to
no other Indebtedness of the Company;
(B) Liens existing on the date hereof
and set forth in Item 6.09(c)(A) of the Disclosure
Schedule, together with any subsequent extensions
or renewals thereof; provided that neither the
Indebtedness secured thereby nor the property
subject thereto is increased;
(C) Liens granted by a Subsidiary of the
Company in favor of the Company or a wholly-owned
Subsidiary of the Company to secure Indebtedness
owing to the Company or such wholly-owned
Subsidiary;
45
(D) Liens with respect to the property
of any Person acquired by the Company or any
Subsidiary after the date hereof, existing at the
time of acquisition and not incurred in
contemplation thereof, which Liens are not
applicable to any property of the Company or any
Subsidiary other than the property so acquired;
(E) Liens that (1) restrict in a
customary manner the subletting, assignment or
transfer of any property or asset that is subject
to a lease, license, conveyance or similar
contract or (2) exist by virtue of any transfer
of, agreement to transfer, option or right with
respect to, any property or assets of the Company
or any Subsidiary not otherwise prohibited
hereunder;
(F) Liens in connection with operating
leases; and
(G) other Liens arising after the date
hereof in the ordinary course of business so long
as the value of the property secured thereby (as
determined in good faith by the Board of Directors
of the Company) does not exceed $500,000 in the
aggregate.
(d) CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, ETC.
The Company will not and will not permit any of its Subsidiaries to:
(i) wind up, liquidate or dissolve;
(ii) enter into any transaction of merger or
consolidation, unless (x) the Company is the surviving
corporation or unless the surviving corporation shall assume
in writing the Company's obligations under the Series B-2
Preferred Shares, the Series C-2 Preferred Shares, the
Series A Notes and the Series B Notes and (y) no Event of
Default (as such term is defined in the Notes) exists
immediately prior to or will exist after such transaction
under the terms of the Notes and no default exists
immediately prior to or will exist after such transaction
under the terms of the Series B-2 Preferred Stock, the
Series C-2 Preferred Stock, any Material Contract, or any
instrument evidencing material Indebtedness of the Company
or any Subsidiary;
(iii) directly or indirectly, sell or otherwise
dispose of or transfer all or any part of its property or
assets (including, without limitation, any sale of capital
stock or other securities convertible into capital stock
other than the sale of directors' qualifying shares) other
than to the Company or a wholly-owned Subsidiary of the
Company; provided that, the foregoing shall not prohibit
sales or other dispositions of property or assets (other
than as provided in clause (iv) below) for an amount at
least equal to the fair value of such property or assets (as
46
determined in good faith by the Board of Directors of the
Company) so long as such aggregate fair value of such assets
or property does not exceed $500,000 in respect of any
single transaction or series of related transactions or
$1,000,000 in the aggregate;
(iv) sell any capital stock of any wholly-owned
Subsidiary of the Company unless the sale is for all such
capital stock;
(v) after Company Shareholder Approval, directly
or indirectly (A) acquire, whether through merger, purchase
of assets or stock or otherwise, any corporation,
partnership, limited liability company or other business
enterprise or any division or line of business thereof, or
(B) make any investment of a capital nature in or loan to
any corporation, partnership, limited liability company or
other business enterprise (other than investments in and/or
loans to wholly-owned Subsidiaries of the Company), in
either case, in any single transaction or series of related
transaction valued at $10,000,000 or more (as determined in
good faith by the Board of Directors of the Company); or
(vi) after Company Shareholder Approval, make any
capital expenditures or engage in any capital project or
series of related capital projects costing in excess of
$3,000,000.
(e) PROHIBITIONS AGAINST CERTAIN DIVIDENDS AND OTHER
RESTRICTIONS. The Company will not and will not permit any of its
Subsidiaries to create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the
ability of:
(i) any Subsidiary of the Company to (A) pay
dividends or make any other distributions permitted by
applicable Law on any capital stock of such Subsidiary; (B)
pay any Indebtedness owed to the Company or any other
Subsidiary of the Company or (C) make loans or advances to
the Company or any other Subsidiary of the Company; or
(ii) the Company to redeem the Series B-2
Preferred Shares or Series C-2 Preferred Shares in
accordance with the terms of the Series B-2 Preferred
Certificate of Designation or the Series C-2 Preferred
Certificate of Designation, as applicable;
provided, that this Section 6.09(e) shall not restrict the
Liens listed in Section 6.09(c)(A)-(E), encumbrances or
restrictions existing on the Closing Date, and any
extension, renewal or refinancing of the instruments or
agreements underlying such restrictions so long as the terms
thereof are no less favorable to the holders of the Series
B-2 Preferred Shares, the Series C-2 Preferred Shares and
the Notes
48
than the terms of the agreement or instrument being
extended, renewed or refinanced.
(f) LIMITATION ON TRANSACTIONS WITH RELATED PARTIES. The
Company shall not enter into, or permit any of its Subsidiaries to
enter into, any transaction with any of the types of persons described
in Item 404(a) of Regulation S-K of the SEC, except for (i) normal
employment arrangements, benefit programs and employee incentive
option programs on reasonable terms, (ii) normal compensation
arrangements with directors of the Company and its Subsidiaries, (iii)
any transaction approved by the Board of Directors of the Company or
the shareholders of the Company in accordance with the provisions of
Section 351.327 of the Missouri Code, (iv) transactions in the
ordinary course of business and on arm's length terms and (v)
transactions with the Purchasers and their Affiliates in accordance
with this Agreement and the Ancillary Agreements. ("Prohibited Related
Party Transactions").
(g) EMPLOYEE MATTERS. The Company shall not make (i) any
material change to any equity incentive plan of the Company or any of
its Subsidiaries, (ii) any material increase in the compensation or
benefits payable under any management incentive plan of the Company or
any of its Subsidiaries, and (iii) any restructuring of any senior
management of the Company or its Subsidiaries.
ARTICLE VII.
TERMINATION PRIOR TO CLOSING
SECTION 7.01. TERMINATION OF AGREEMENT. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned at any time
prior to the Closing:
(a) by the mutual written consent of the Company and the
Purchaser Representative on behalf of the Purchasers;
(b) by the Purchaser Representative on behalf of the Purchasers
if there shall have been a material breach by the Company of any of
its representations, warranties, covenants or agreements contained in
this Agreement and such breach would result in the failure to satisfy
one or more of the conditions set forth in Section 5.01 or Section
5.02 and such breach (x) by its nature is not capable of being cured
or (y) shall not have been cured within ten days after notice thereof
shall have been received by the Company;
(c) by the Company if there shall have been a material breach by
the Purchasers of any of their representations, warranties, covenants
or agreements contained in this Agreement and such breach would result
in the failure to satisfy one or more of the conditions set forth in
Section 5.01 or Section 5.03 and such breach (x) by its nature is not
capable of being cured or (y) shall not have been cured within ten
days after notice
48
thereof shall have been received by the Purchaser Representative on
behalf of the Purchasers;
(d) by either the Company or the Purchaser Representative on
behalf of the Purchasers if the Closing shall not have occurred prior
to the close of business on September 30, 2001, provided, that, the
right to terminate this Agreement under this Section 7.01(d) shall not
be available to any party whose breach of this Agreement has been the
cause of, or resulted in, the failure of the Closing to occur on or
before the close of business on such date;
(e) by either the Company or the Purchaser Representative on
behalf of the Purchasers if the Obsorn Acquisition Agreement is
terminated in accordance with the terms of Section 9 thereof;
provided, that, the Company shall not have the right to terminate this
Agreement under this Section 7.01(e) if it shall have consented to
such termination of the Xxxxxx Acquisition Agreement in violation of
Section 4.07(c); or
(f) upon the issuance of a final and non-appealable Order by any
Governmental Body of competent jurisdiction enjoining the consummation
of the transactions contemplated hereby; provided, that, the right to
terminate this Agreement under this Section 7.01(f) shall not be
available to any party whose actions or inaction has been the cause of
the imposition of such injunction or the failure to have such
injunction removed.
Any party desiring to terminate this Agreement pursuant to this Section 7.01
shall give notice to the other parties in accordance with Section 9.04.
SECTION 7.02. EFFECT OF TERMINATION. In the event of termination of
this Agreement pursuant to Section 7.01, this Agreement, except for the
provisions of Section 4.02(b) and Articles VII and IX, shall become void and
have no effect, without any liability on the part of any party or its
Affiliates, directors, officers, employees, agents, partners or stockholders,
provided, that nothing in this Section 7.02 shall relieve any party of liability
for a breach of any provision of this Agreement occurring prior to such
termination.
ARTICLE VIII.
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS; INDEMNIFICATION
SECTION 8.01. SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. All representations, warranties, covenants and agreements contained
in or made pursuant to this Agreement and the Ancillary Agreements shall survive
the Closing Date for a period of eighteen months; provided, that (i) the
representations and warranties made in Sections 2.01, 2.03, 2.04, 2.05, 3.01 and
3.02 shall survive the Closing Date indefinitely, (ii) the
49
representations and warranties made in Sections 2.16 and 2.17 shall survive
until 90 days after the expiration of all applicable statutes of limitation
(including all periods of extension, whether automatic or permissive) and (iii)
all covenants and agreements that require or contemplate performance after the
Closing Date shall survive in accordance with their respective terms. For
purposes of this Article VIII, each statement contained in a certificate or
other instrument delivered by a party pursuant to this Agreement or any
Ancillary Agreement shall be deemed to constitute a representation made by such
party pursuant hereto or thereto. Notwithstanding the foregoing, if notice of an
indemnification claim shall have been delivered before the aforementioned time
period has elapsed with respect to a breach of representation, warranty,
covenant or agreement, such representation, warranty, covenant or agreement
shall survive until such claim is finally resolved. The right to
indemnification, payment of Damages (as hereinafter defined) or any other remedy
based on the representations, warranties, covenants and agreements contained in
or made pursuant to this Agreement or any Ancillary Agreement will not be
affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance or non-compliance with, any such
representation, warranty, covenant or agreement. The waiver of any condition
based on the accuracy of any representation or warranty, or on the performance
of or compliance with any covenant or agreement, will not affect the right to
indemnification, payment of Damages, or any other remedy based on such
representations, warranties, covenants and agreements.
SECTION 8.02. INDEMNIFICATION. (a) Subject to the terms and conditions
of this Article VIII, the Company hereby agrees to indemnify, defend and hold
the Purchasers and their respective Affiliates, officers, directors, employees,
agents, shareholders, partners and other representatives (collectively, the
"Purchaser Group") harmless from and against all demands, claims, actions,
causes of action, assessments, losses (including any diminution in the value of
the Initial Securities or the Conversion Shares), damages, liabilities, costs
and expenses, including without limitation interest, penalties and reasonable
attorneys' fees and expenses (collectively, "Damages"), asserted against,
resulting to, imposed upon, suffered by or incurred by any member of the
Purchaser Group by reason of, resulting from or arising out of (i) any breach or
inaccuracy of any representation or warranty of the Company contained in or made
pursuant to this Agreement or any Ancillary Agreement, (ii) any breach of or
non-compliance with any covenant or agreement of the Company contained in or
made pursuant to this Agreement or any Ancillary Agreement, (iii) any claim,
action, proceeding or investigation or threat of claim, action, proceeding or
investigation brought by or on behalf of any person other than the Company that
relates to this Agreement, the Ancillary Agreements, the Xxxxxx Acquisition
Documents or the transactions contemplated hereby or thereby, or (iv) any untrue
statement or alleged untrue statement of any material fact contained in the
Proxy Statement or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading (except to the extent arising out of or based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
conformity with information furnished by the Purchasers in writing specifically
for use
50
in such Proxy Statement); provided, that, (x) the Company shall not be
liable under this Section 8.02(a) unless the aggregate amount of Damages with
respect to all matters referred to in this Section 8.02(a) exceeds $500,000 (in
which case all such Damages shall be made subject to indemnification hereunder),
(y) the Company's maximum liability under this Section 8.02(a) shall not exceed
$50,000,000 in the aggregate and (z) if the Damages for which the
indemnification is being sought are the result of a misrepresentation or breach
of warranty, then a written claim for indemnification must be delivered to the
Company within the applicable survival period set forth in Section 8.01. Any
payment made to any Purchaser hereunder in respect of any Damages shall be
treated as an adjustment to the purchase price of the Securities.
(b) Subject to the terms and conditions of this Article VIII, each
Purchaser, severally and not jointly (other than WCAS, whose obligations
hereunder shall be joint and several with each other Purchaser with respect to
the obligations of such other Purchasers) hereby agrees to indemnify, defend and
hold the Company and its Affiliates, officers, directors, employees, agents,
shareholders, and other representatives (collectively, the "Company Group")
harmless from and against all demands, claims, actions, causes of action,
assessments, losses, damages, liabilities, costs and expenses, including without
limitation interest, penalties and reasonable attorneys' fees and expenses,
asserted against, resulting to, imposed upon, suffered by or incurred by any
member of the Company Group by reason of, resulting from or arising out of (i)
any breach or inaccuracy of any representation or warranty of the Purchasers
contained in or made pursuant to this Agreement or any Ancillary Agreement or
(ii) any breach of or non-compliance with any covenant or agreement of the
Purchasers contained in or made pursuant to this Agreement or any Ancillary
Agreement; provided, that, (x) the Purchasers shall not be liable under this
Section 8.02(b) unless the aggregate amount of Damages with respect to all
matters referred to in this Section 8.02(b) exceeds $500,000 (in which case all
such Damages shall be made subject to indemnification hereunder), (y) each
Purchaser's liability under this Section 8.02(b) shall not exceed the amount of
the purchase price paid by such Purchaser for the Initial Securities and (z) if
the Damages for which the indemnification is being sought are the result of a
misrepresentation or breach of warranty, then a written claim for
indemnification must be delivered to the Purchasers within the applicable
survival period set forth in Section 8.01.
SECTION 8.03. CONDITIONS OF INDEMNIFICATION. (a) In order for a member
of the Purchaser Group or Company Group to be entitled to indemnification
pursuant Section 8.02 of this Agreement in respect of, arising out of, or
involving a claim made by any person not a party to this Agreement (a "Third
Party Claim"), the indemnified party must within 20 days after receipt of notice
of commencement of any action, suit or proceeding relating to a Third Party
Claim give the indemnifying party written notice thereof together with a copy of
such claim, process or other legal pleading (provided that failure so to notify
the indemnifying party of the assertion of a claim within such period shall not
affect the indemnifying party's indemnity obligation hereunder except as and to
the extent that such failure shall actually and materially adversely affect the
defense of such claim), and, subject to Sections 8.03(b), (c) and (e) below, the
indemnifying party shall have the right to undertake the defense thereof by
counsel of its own choosing that is reasonably acceptable to the indemnified
party; provided, that if the
51
indemnifying party is also a party to such proceeding and the indemnified party
determines in good faith upon advice of counsel that joint representation would
be inappropriate, the indemnifying party shall not have the right to undertake
such defense but shall remain liable for the fees and expenses of counsel
incurred by the indemnified party in defending such Third Party Claim.
(b) In the event that the indemnifying party, by the 20th day after
receipt of notice of any such Third Party Claim (or, if earlier, by the tenth
day preceding the day on which an answer or other pleading must be served in
order to prevent judgment by default in favor of the person asserting such Third
Party Claim), does not elect to defend against such claim, the indemnified party
will have the right to undertake the defense, compromise or settlement of such
claim on behalf of and for the account and risk of the indemnifying party.
(c) If the indemnifying party assumes such defense, the indemnified
party shall have the right to participate in the defense thereof and to employ
counsel, at its own expense, it being understood that the indemnifying party
shall control such defense.
(d) If the indemnifying party assumes the defense of a Third Party
Claim, (i) no compromise or settlement of such Third Party Claim may be effected
by the indemnifying party without the indemnified party's consent unless (A)
there is no finding or admission of any violation of Law or any violation of the
rights of any person and no effect on any other claims that may be made against
the indemnified party and (B) the sole relief provided is monetary damages that
are paid in full by the indemnifying party and (ii) the indemnified party will
have no liability with respect to any compromise or settlement of such Third
Party Claim effected without its consent.
(e) Anything in this Section 8.03 to the contrary notwithstanding, the
indemnifying party shall not be entitled to assume the defense of any Third
Party Claim if the Third Party Claim seeks an order, injunction or other
equitable relief or relief for other than money damages against the indemnified
party that the indemnified party reasonably determines, after conferring with
counsel, cannot be separated from any related claim for money damages (it being
understood that if such equitable relief or other relief portion of the Third
Party Claim can be so separated from that for money damages, the indemnifying
party shall be entitled to assume the defense of the portion relating to money
damages). In such event, the indemnified party will have the right to undertake
the defense, compromise or settlement of such claim on behalf of and for the
account and risk of the indemnifying party; provided, that no compromise or
settlement of such Third Party Claim may be effected by the indemnified party
without the indemnifying party's consent.
(f) In connection with any Third Party Claim, the indemnified party
will cooperate with all reasonable requests of the Company and the Company will
cooperate with all reasonable requests of the indemnified party.
52
SECTION 8.04. OTHER CLAIMS. In the event any indemnified party should
have a claim against the indemnifying party that does not involve a Third Party
Claim being asserted against or sought to be collected from such indemnified
party, the indemnified party shall deliver notice of such claim with reasonable
promptness to the indemnifying party. Subject to the provisions in this Article
VIII governing the time periods within which claims for indemnification may be
made, the failure by any indemnified party to so notify the indemnifying party
shall not relieve the indemnifying party from any liability that it may have to
such indemnified party, except to the extent that the indemnifying party
demonstrates that it has been materially prejudiced by such failure. If the
indemnifying party does not notify the indemnified party within 20 days
following its receipt of such notice that the indemnifying party disputes its
liability to the indemnified party, such claim specified by the indemnified
party in such notice shall be conclusively deemed a liability of the
indemnifying party and the indemnifying party shall pay the amount of such
liability to the indemnified party on demand or, in the case of any notice in
which the amount of the claim (or any portion thereof) is estimated, on such
later date when the amount of such claim (or such portion thereof) becomes
finally determined. If the indemnifying party has timely disputed its liability
with respect to such claim, as provided above, the indemnifying party shall
promptly pay any amount of such claim that is not disputed and such dispute
shall be resolved in accordance with Section 9.10 below.
SECTION 8.05. REMEDIES CUMULATIVE. Except to the extent a party may be
entitled to the remedy of specific performance, and except for a breach of any
representation, warranty, or covenant as a result of any matter constituting
fraud or criminal activity under applicable Law, the indemnification provisions
of this Article VIII shall be the exclusive remedy of the parties hereto against
any other party under this Agreement with respect to claims relating to this
Agreement and the transactions contemplated hereby.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur and that a remedy at law would not be adequate in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties hereto shall be entitled by any court of
competent jurisdiction to an injunction or injunctions, without actual proof of
damages or the necessity of posting bond, to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement, this
being in addition to any other remedy to which they are entitled at law or in
equity.
SECTION 9.02. EXPENSES, ETC. (a) The Company hereby agrees that,
whether or not the transactions contemplated hereby are consummated, it shall
pay up to $500,000 of the out-of-pocket costs and expenses of the Purchasers,
including fees and disbursements of counsel,
53
advisors, accountants and consultants, that are incurred by the Purchasers in
connection with (i) the negotiation, preparation, execution and delivery of this
Agreement and the Ancillary Agreements, (ii) the Purchasers' due diligence
investigations with respect to the Company and its Subsidiaries and the Xxxxxx
Acquisition and (iii) the closing of the transactions contemplated by this
Agreement, the Ancillary Agreements and the Xxxxxx Acquisition Agreement
("Transaction Expenses"); provided, that, (A) the Company shall not be required
to pay the Transaction Expenses of the Purchasers pursuant to this Section 9.02
if the transactions contemplated hereby are not consummated solely as a result
of a material breach of this Agreement by any Purchaser and (B) 50% of the fees
and expenses of each of Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol and Ernst &
Young LLP, in each case relating to the Xxxxxx Acquisition, are being billed to
the Company separate and apart from the Transaction Expenses and shall be paid
directly by the Company and shall not therefor apply against the $500,000
limitation set forth above. In addition, the Company hereby agrees to pay (A)
all of the reasonable out-of-pocket costs and expenses of WCAS and its
Co-Investors, including fees and disbursements of counsel, advisors, accountants
and consultants, incurred in connection with (x) any and all Series C Preferred
Transactions and Series B Notes Transactions and (y) the preparation and review
of the Proxy Statement and the Company Shareholder Meeting and (B) any fees and
expenses associated with any filing required to be made under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 in connection with any
conversion of any Series B-1 Preferred Shares, Series B-2 Preferred Shares,
Series C-1 Preferred Shares or Series C-2 Preferred Shares or any exercise of
any Initial Warrants or Additional Warrants.
(b) The Company, on the one hand, and the Purchasers, severally and
not jointly (other than WCAS, whose obligations hereunder shall be joint and
several with each other Purchaser with respect to the obligations of such other
Purchasers), on the other hand, will indemnify the other and hold it or them
harmless from and against any claims for finders' fees, advisory or investment
banking fees or brokerage commissions in relation to or in connection with the
transactions contemplated hereby as a result of any agreement or understanding
between such indemnifying party and any third party.
SECTION 9.03. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. Any or
all such counterparts may be executed by facsimile.
SECTION 9.04. NOTICES. All notices, requests, instructions and other
documents that are required to be or may be given or delivered pursuant to the
terms of this Agreement shall be in writing and shall be sufficient in all
respects if delivered by hand or national overnight courier service, transmitted
by facsimile or mailed by registered or certified mail, postage pre-paid, as
follows:
54
if to the Company, to it at:
00000 Xxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
and
Attention: Xxxx XxXxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxxx LLP
0000 Xxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
if to any Purchaser, to the Purchaser Representative:
c/o Welsh, Carson, Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto. Such notices, requests,
instructions and other documents shall be deemed given or delivered (i) five
business days following sending by registered or certified mail, postage
prepaid, (ii) one business day following sending by national overnight courier
service, (iii) when sent, if sent by facsimile (but only if such facsimile is
actually received) or (iv) when delivered, if delivered by hand.
55
SECTION 9.05. AMENDMENTS AND WAIVERS. The Company, on the one hand,
and the Purchaser Representative on behalf of the Purchasers, on the other hand,
may, by written notice to the other, (i) extend the time for the performance of
any of the obligations or other actions of the other(s) under this Agreement;
(ii) waive any inaccuracies in the representations or warranties of the other(s)
contained in this Agreement or in any document delivered pursuant to this
Agreement; (iii) waive compliance with any of the conditions or covenants of the
other(s) contained in this Agreement; or (iv) waive performance of any of the
obligations of the other(s) under this Agreement. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement or otherwise,
including without limitation any investigation by or on behalf of the Company,
on the one hand, or the Purchasers, on the other hand, shall be deemed to
constitute a waiver by the party or parties taking such action of compliance
with any representations, warranties, covenants or agreements contained in this
Agreement. The waiver by the Company, on the one hand, and the Purchaser
Representative on behalf of the Purchasers, on the other hand, of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.
SECTION 9.06. AMENDMENTS, SUPPLEMENTS, ETC. At any time this Agreement
may be amended or supplemented by such additional agreements, articles or
certificates as may be determined by the parties hereto to be necessary,
desirable or expedient to further the purposes of this Agreement, or to clarify
the intention of the parties hereto, or to add to or modify the covenants, terms
or conditions hereof or to effect or facilitate the consummation of any of the
transactions contemplated hereby. Any such instrument must be in writing and
signed by the Company and the Purchaser Representative on behalf of the
Purchasers. Notwithstanding anything to the contrary contained above, from and
after the date hereof and until the second business day preceding the Closing
Date, WCAS shall have the right to amend the names of the other Purchasers
appearing on Schedule I hereto and the allocation of the Initial Securities
among the Purchasers by written notice to the Company; provided, that, no such
amendment shall modify the aggregate amounts of Series B Preferred Shares,
Initial Warrants and/or Series A Notes being purchased hereunder or the
respective purchase prices therefor; provided, further, that, prior to the
Closing Date, any additional Purchaser(s) added to Schedule I by WCAS shall (i)
agree in writing to be bound by the terms of this Agreement as a Purchaser
hereunder and (ii) be reasonably acceptable to the Company.
SECTION 9.07. ENTIRE AGREEMENT. This Agreement, including its exhibits
and the Disclosure Schedule, together with the Ancillary Agreements and the
Confidentiality Agreement, constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and, except as provided in
Section 4.02(b), supersede all prior agreements and understandings, oral and
written, between the parties hereto with respect to the subject matter hereof
other than the Confidentiality Agreement which shall survive the execution and
delivery of this Agreement and the Closing.
SECTION 9.08. BENEFIT OF AGREEMENT; ASSIGNMENT. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and
56
permitted assigns and nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto, their respective
successors and permitted assigns, with respect to Article VIII, the members of
the Purchaser Group or Company Group not party hereto, any rights, remedies,
obligations or liabilities under or by reason of this Agreement. The rights and
obligations of the parties hereto shall not be assigned without the consent of
the Company, in the case of any assignment by a Purchaser, or the Purchaser
Representative, on behalf of the Purchasers, in the case of any assignment by
the Company, and any attempted assignment in violation of this Section 9.08
shall be null and void; provided, that, the Purchasers' rights hereunder are
assignable, in connection with any transfer of Initial Securities or Conversion
Shares, to any Affiliate thereof, and in the case of the Purchasers other than
WCAS, to any family member or trust for the benefit of such Purchaser or such
family members.
SECTION 9.09. GOVERNING LAW. This Agreement and all disputes arising
out of or relating to this Agreement, its subject matter, the performance by the
parties of their respective obligations hereunder or the claimed breach hereof,
whether in tort, contract or otherwise, shall be governed by and construed in
accordance with the internal laws of the State of New York without giving effect
to its choice of law principles, except that Missouri corporate Law shall apply
to all matters relating to the corporate affairs of the Company.
SECTION 9.10. JURISDICTION AND VENUE. Each suit, action or proceeding
arising out of or relating to this Agreement or any Ancillary Agreement, the
subject matter hereof or thereof, the performance by the parties of their
obligations hereunder or thereunder or the claimed breach hereof or thereof,
whether brought at law or in equity and whether based in tort, contract or
otherwise, shall be brought in the federal or state courts located in the County
of New York, New York, and each of the parties to this Agreement hereby submits
with regard to any such suit, action or proceeding for itself and in respect to
its property, generally and unconditionally, to the exclusive jurisdiction of
the aforesaid courts and of the appropriate appellate courts therefrom. Each of
the parties hereto hereby irrevocably waives, and agrees not to assert, by way
of motion, as a defense, counterclaim or otherwise, in any such suit, action or
proceeding (a) any claim that it is not personally subject to the jurisdiction
of such courts for any reason other than the failure to lawfully serve process,
(b) that it or its property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise), (c) that the suit, action or
proceeding in any such court is brought in an inconvenient forum, (d) that the
venue of such suit, action or proceeding is improper, (e) that this Agreement or
any Ancillary Agreement or the subject matter hereof or thereof may not be
enforced in or by such courts or (f) any right to a trial by jury which is
hereby waived. Each party hereto agrees that process in any such suit, action or
proceeding may be served on such party anywhere in the world, whether within or
without the jurisdiction of such courts and that service of process on such
party as provided in Section 9.04 shall be deemed effective service of process
on such party.
57
SECTION 9.11. SEVERABILITY. Each provision of this Agreement shall be
treated as a separate and independent clause, and the unenforceability of any
one clause shall in no way impair the enforceability of any of the other clauses
contained herein. If one or more of the provisions contained in this Agreement
shall for any reason be held to be unenforceable, such provision or provisions
shall be construed by the appropriate judicial body by limiting or reducing it
or them, so as to be enforceable to the maximum extent compatible with
applicable Law, and no other provision hereof shall be affected by such holding,
limitation or reduction.
SECTION 9.12. PUBLICITY. Except as otherwise required by applicable
Law, and except for disclosures jointly approved by the Company and the
Purchaser Representative as to content, timing and manner of publication, no
party hereto shall issue, or cause or allow any Subsidiary or other controlled
Affiliate thereof to issue, any press release or otherwise publicly disclose any
information, or make, or cause or allow any Subsidiary or other controlled
Affiliate thereof to make, any other public statement relating to or connected
with this Agreement or the Ancillary Agreements or the matters contained herein
or therein. In the event that any party hereto believes in good faith that such
a public disclosure is required by applicable Law, it shall nonetheless use its
good faith efforts to consult (as to the content, timing and manner of
publication thereof) with the Company or the Purchaser Representative, as
applicable, a reasonable period of time prior to making such disclosure.
SECTION 9.13. APPOINTMENT OF THE PURCHASER REPRESENTATIVE. The
Purchasers hereby appoint WCAS as their agent and attorney-in-fact to act as
"Purchaser Representative" hereunder, to take and receive notices on behalf of
the Purchasers hereunder, to execute on behalf of the Purchasers hereunder
waivers, amendments and consents relating hereto, and to take all other actions
necessary or appropriate in the judgment of WCAS for the accomplishment of the
foregoing or to carry out the purposes of this Agreement (WCAS, in such
capacity, is herein referred to as the "Purchaser Representative"). A decision,
act, waiver, consent or instruction of WCAS as Purchaser Representative
hereunder shall constitute the action of each of the Purchasers and shall be
final, binding and conclusive upon each of such Purchasers. For such purposes,
notices or communications to or from the Purchaser Representative shall
constitute notice to or from each of the Purchasers.
SECTION 9.14. INTERPRETATION. (a) As used herein, the words "hereof",
"herein", "herewith" and words of similar import shall, unless otherwise stated,
be construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and the words "Article" and "Section" are
references to the articles and sections of this Agreement unless otherwise
specified. Whenever the words "include", "includes" or "including" are used in
this Agreement they shall be deemed to be followed by the words "without
limitation". Each accounting term used in this Agreement has the meaning given
to it in accordance with GAAP. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms. Any
agreement, instrument or statute defined or referred to herein means such
agreement, instrument or statute as from time to time amended, qualified or
supplemented, including (in the
58
case of agreements and instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes. References to the
Securities Act and the Exchange Act are also references to the rules and
regulations of the SEC promulgated thereunder. References to a person are also
to its successors and permitted assigns.
(b) The parties have participated jointly in the negotiation and
drafting of this Agreement and each Ancillary Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement and
each Ancillary Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement or any
Ancillary Agreement.
59
IN WITNESS WHEREOF, the Company, the Purchasers and the Purchaser
Representative have executed this Securities Purchase Agreement as of the day
and year first above written.
LABONE, INC.
By: /s/ W. Xxxxxx Xxxxx XX
------------------------------------
Name: W. Xxxxxx Xxxxx XX
Title: President
WELSH, CARSON, XXXXXXXX &
XXXXX IX, L.P.
By: WCAS IX Associates LLC,
Its General Partner
By: /s/ Xxxxxxxx X. Rather
------------------------------------
Xxxxxxxx X. Rather
Managing Member
WCAS MANAGEMENT CORPORATION
By: /s/ Xxxxxxxx X. Rather
------------------------------------
Xxxxxxxx X. Rather
Treasurer
Xxxxxxx X. Xxxxx
Xxxxxxx Xxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxx X. XxXxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxxx X. Xxxxxx
Xxxxxxx X. Xx Xxxxxx
Xxxx X. Xxxxxxx
XXX FBO Xxxxxxxx X. Rather
D. Xxxxx Xxxxxxx
Xxxxxx Xxxxx
Xxxx X. Xxxxx
XXX FBO Xxxxx X. Xxxxxxx
Xxxx Xxxxxxx
Xxxx Xxxxxxx
Xxxx X. Xxx
By: /s/ Xxxxxxxx X. Rather
------------------------------------
Xxxxxxxx X. Rather
as Attorney-in-Fact
SCHEDULE I
Purchasers/Initial Securities
-----------------------------
Principal
Number of Number of Series Number of Amount of Total
Series B-1 B-2 Initial Series A Purchase
Purchasers Preferred Shares Preferred Shares Warrants Notes Price
---------- ---------------- ---------------- -------- ----- -----
Welsh, Carson, Xxxxxxxx 13,592 20,388 339,801 $14,562,900 $48,543,000
&Stowe IX, L.P.
WCAS Management 7 10 147 6,300 21,000
Corporation
Xxxxxxx X. Xxxxx 51 78 1,302 55,809 186,027
Xxxxxxx Xxxxxx 51 78 1,302 55,808 186,027
Xxxxx X. Xxxxxxxx 51 77 1,303 55,808 186,027
Xxxxxx X. XxXxxxxxx 52 78 1,302 55,808 186,027
Xxxxxx X. Xxxxxxxxx 52 78 1,302 55,808 186,028
Xxxxxxxx X. Xxxxxx 52 78 1,302 55,808 186,028
Xxxxxxx X. Xx Xxxxxx 38 56 938 40,196 133,986
Xxxx X. Xxxxxxx 28 42 703 30,147 100,490
XXX FBO Xxxxxxxx X. 8 13 209 8,958 29,860
Rather
D. Xxxxx Xxxxxxx 7 11 175 7,500 25,000
Xxxxxx Xxxxx 1 1 14 600 2,000
Xxxx X. Xxxxx 1 1 14 600 2,000
XXX FBO Xxxxx X. 1 1 14 600 2,000
Xxxxxxxx
Xxxx Xxxxxxx 6 8 140 6,000 20,000
Xxxx Xxxxxxx 1 1 18 750 2,500
Xxxx X. Xxx 1 1 14 600 2,000
----------------------- ------------------- ------------------ --------------- ---------------
Totals 14,000 21,000 350,000 $15,000,000 $50,000,000
======================= =================== ================== =============== ===============
