EXHIBIT 99.1
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PREFERRED STOCK ISSUANCE
AND RESTRUCTURING AGREEMENT
DATED AS OF
APRIL 29, 2002
BY AND AMONG
TELESPECTRUM WORLDWIDE INC.,
THE "LENDERS" LISTED ON THE SIGNATURE PAGES HERETO,
AND
BNP PARIBAS,
AS ADMINISTRATIVE AGENT
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms................................................. 2
Section 1.2 Miscellaneous................................................. 6
ARTICLE II
ISSUANCE OF PREFERRED STOCK AND RESTRUCTURING
Section 2.1 Authorization of Shares....................................... 6
Section 2.2 Issuance of Preferred Stock................................... 6
Section 2.3 Value of Preferred Stock...................................... 7
Section 2.4 Credit Agreement.............................................. 7
ARTICLE III
CLOSING, DELIVERY
Section 3.1 The Closing................................................... 7
Section 3.2 Delivery...................................................... 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Corporate Existence and Power................................. 7
Section 4.2 Subsidiaries.................................................. 8
Section 4.3 Capitalization; Voting Rights................................. 8
Section 4.4 Authorization; Binding Obligations............................ 9
Section 4.5 SEC Reports; Financial Statements............................. 10
Section 4.6 Offering Valid................................................ 10
Section 4.7 Certain Agreements or Obligations............................. 11
Section 4.8 Compliance with Law; Governmental Approvals................... 11
Section 4.9 Government Regulation......................................... 12
Section 4.10 Litigation.................................................... 12
Section 4.11 Absence of Defaults........................................... 12
Section 4.12 No Broker..................................................... 12
Section 4.13 Restructured Claims........................................... 12
Section 4.14 Accuracy of Representations under Credit Agreement............ 12
Section 4.15 Accuracy and Completeness of Information...................... 13
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Section 5.1 Requisite Power and Authority; Governmental Approvals......... 13
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 5.2 Investment Representations.................................... 13
Section 5.3 Litigation.................................................... 14
Section 5.4 No Broker..................................................... 14
ARTICLE VI
COVENANTS OF THE COMPANY AND THE INVESTORS
Section 6.1 Efforts....................................................... 14
Section 6.2 Authorization of Additional Shares of Common Stock............ 14
Section 6.3 Reservation of Shares......................................... 14
Section 6.4 Regulatory and Other Authorizations; Notices and Consents..... 15
Section 6.5 Appointment of Directors...................................... 15
Section 6.6 Reporting Requirements........................................ 15
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1 Conditions to Obligations of the Investors.................... 18
Section 7.2 Conditions to Obligations of the Company...................... 19
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS
Section 8.1 Survival of Representations and Warranties.................... 20
Section 8.2 Certain Other Matters Regarding Representations............... 20
ARTICLE IX
MISCELLANEOUS
Section 9.1 Investor Indemnification...................................... 20
Section 9.2 Expenses...................................................... 21
Section 9.3 Notices....................................................... 21
Section 9.4 No Waiver, Remedies Cumulative................................ 21
Section 9.5 Delays or Omissions........................................... 21
Section 9.6 Counterparts.................................................. 22
Section 9.7 Headings Descriptive.......................................... 22
Section 9.8 Entire Agreement; Supersedes Prior Agreement.................. 22
Section 9.9 Severability.................................................. 22
Section 9.10 Amendment or Waiver........................................... 22
Section 9.11 Governing Law and Jurisdiction................................ 22
Section 9.12 Waiver of Jury Trial.......................................... 23
Section 9.13 Successors and Assigns........................................ 23
Section 9.14 Release....................................................... 23
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TABLE OF CONTENTS
(CONTINUED)
PAGE
Section 9.15 No Third Party Beneficiaries.................................. 24
EXHIBITS
Exhibit A-1 - Series A Certificate of Designations
Exhibit A-2 - Series B Certificate of Designations
Exhibit B - Amended and Restated Certificate of Incorporation
Exhibit C - Stockholders Agreement
Exhibit D - Bylaws
Exhibit E - Charter Amendment
Exhibit F - Legal Opinion of Cozen ▇'▇▇▇▇▇▇
Exhibit G-1 - Employment Agreement Amendment
Exhibit G-2 - Retention Agreement
SCHEDULES
Schedule 2.2 - Issuance of Preferred Stock
Schedule 4.2(a) - Subsidiaries
Schedule 4.2(b) - Investments
Schedule 4.3(c) - Equity Securities; Repurchase Obligations, Price Adjustments
Schedule 4.7(a) - Certain Related Party Agreements
Schedule 4.7(b) - Debt and Guarantee to and Contracts with Related Parties
Schedule 4.8 - Required Consents and Government Approvals
Schedule 4.10 - Litigation
Schedule 4.12 - No Broker
Schedule 4.13 - Restructured Claims
Schedule 7.1(k) - Restructured Claims
Schedule 7.2(g) - Individuals Executing Employment and Retention Agreements
Schedule 9.14 - Release Transactions
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TELESPECTRUM WORLDWIDE INC.
PREFERRED STOCK ISSUANCE
AND RESTRUCTURING AGREEMENT
PREFERRED STOCK ISSUANCE AND RESTRUCTURING AGREEMENT (this
"AGREEMENT"), dated as of April 29, 2002, among TELESPECTRUM WORLDWIDE INC., a
Delaware corporation (the "COMPANY"), the "LENDERS" listed on the signature
pages hereto (individually referred to herein as a "LENDER," and collectively,
as the "LENDERS") and BNP PARIBAS, as administrative agent for and as
representative on behalf of the Lenders (in such capacity, the "ADMINISTRATIVE
AGENT").
R E C I T A L S
WHEREAS, the Company has agreed on the terms set forth below to
issue to the Lenders (each Lender, in its capacity as a purchaser hereunder and
any transferee of Preferred Stock held by such Lender, an "INVESTOR," and
collectively in such capacity, the "INVESTORS"): (i) 40,000 shares of Series A
Preferred Stock, par value $0.01 per share (the "SERIES A PREFERRED STOCK") in
consideration for and in satisfaction of indebtedness in the amount of
$40,000,000 currently owing to the Lenders by the Company under the Existing
Credit Agreement (as defined below); and (ii) 90,000 shares of Series B
Convertible Preferred Stock, par value $0.01 per share (the "SERIES B PREFERRED
STOCK") in consideration for and in satisfaction of all indebtedness under the
Existing Credit Agreement in excess of $65,000,000 (expected to be approximately
$96,000,000 at Closing);
WHEREAS, the Shares of Series B Preferred Stock are to be converted
into shares of Common Stock of the Company representing 95% of the outstanding
Common Stock of the Company on the Closing Date on a Fully Diluted Basis;
WHEREAS, simultaneously and in connection with the issuance of the
shares of Preferred Stock, the Lenders have agreed to amend and restate the
terms of the existing Amended and Restated Credit Agreement dated as of April
16, 2001 between the Company, the Lenders and the Administrative Agent (as
amended through the date hereof and as such agreement or any provision thereof
may have otherwise been amended, restated, supplemented, waived or otherwise
modified from time to time prior to the date hereof, the "EXISTING CREDIT
AGREEMENT");
WHEREAS, the Company desires that the Lenders and the Administrative
Agent enter into the Second Amended and Restated Credit Agreement of even date
herewith (as amended, restated, supplemented or modified from time to time in
accordance with the terms thereof, the "CREDIT AGREEMENT") among the Company,
the Lenders and the Administrative Agent; and
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the Lenders' obligation to make or continue the Term Loans (as
defined in the Credit Agreement).
NOW, THEREFORE, for good and valuable consideration, the receipt of
which are hereby acknowledged by the parties hereto, the parties hereto hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. All capitalized terms used herein and not
otherwise defined herein shall have the respective meanings ascribed to such
terms in the Credit Agreement. For purposes of this Agreement, the following
terms shall have the meanings herein specified unless the context requires
otherwise. Defined terms in this Agreement shall include in the singular number
the plural and in the plural the singular.
"Administrative Agent" means BNP Paribas, in its capacity as
Administrative Agent for and as representative on behalf of the Lenders, and any
successor thereto appointed pursuant to the Credit Agreement.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling (which may include, but is not limited to,
all directors and officers of such Person), controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors of such corporation or (ii) to direct or cause the direction of the
management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise.
"Agreement" means this Agreement, as the same may be from time to
time further modified, amended, amended and restated and/or supplemented
together with all Exhibits and Schedules attached hereto or expressly
incorporated herein by reference.
"Applicable Law" means all applicable provisions of constitutions,
laws, statutes, ordinances, rules, treaties, regulations, permits, licenses,
approvals, interpretations and orders of all Governmental Authorities and all
orders and decrees of all courts and arbitrators.
"Board" means the Board of Directors of the Company.
"Business Day" means for all purposes any day other than a Saturday,
Sunday or legal holiday on which banks in New York, New York, are open for the
conduct of their commercial banking business.
"Bylaws" has the meaning provided in Section 4.1.
"Certificate of Incorporation" has the meaning provided in Section
2.1.
"Charter Amendment" has the meaning provided in Section 6.2.
"Closing" has the meaning provided in Section 3.1.
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"Closing Date" has the meaning provided in Section 3.1.
"Code" means the Internal Revenue Code of 1986, and the rules and
regulations thereunder, each as amended, supplemented or otherwise modified.
"Common Stock" has the meaning provided in Section 4.3.
"Company" has the meaning provided in the Preamble to this
Agreement.
"control" (including the terms "controlled by" and "under common
control with"), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly, of the power to direct or
cause the direction of the affairs or management of a Person, whether through
the ownership of voting securities, as trustee or executor, by contract or
otherwise.
"Conversion Shares" has the meaning provided in Section 2.1.
"Credit Agreement" has the meaning provided in the Recitals to this
Agreement.
"CRW" means CRW Financial, Inc., a wholly owned Subsidiary of the
Company.
"Debt" has the meaning assigned to such term in the Credit
Agreement.
"Equity Securities" of a Person means any capital stock or other
equity interest, or other securities convertible into or exercisable or
exchangeable for capital stock or any other rights, warrants or options to
acquire any of the foregoing securities or to participate in the equity of such
Person, such as stock appreciation rights.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Existing Benefit Arrangements" has the meaning set forth in Section
4.3(c).
"Existing Credit Agreement" has the meaning provided in the Recitals
to this Agreement.
"Fully Diluted Basis" means, with respect to any determination of
the number of shares of Common Stock outstanding, the sum, as of the date of
such determination, of (i) the number of shares of Common Stock actually issued
and outstanding (but excluding Common Stock held by CRW), plus (ii) without
duplication, the maximum number of shares of Common Stock issuable upon the
exercise or conversion of all options, warrants, convertible securities and
rights then outstanding whether or not then exercisable or convertible and
regardless of the exercise or conversion price.
"GAAP" means generally accepted accounting principles, as recognized
by the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board, consistently applied and maintained on a consistent
basis for the Company and its Subsidiaries throughout the period indicated and
consistent with the prior financial practice of the Company and its
Subsidiaries.
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"Governmental Approvals" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with, and
reports to, all Governmental Authorities.
"Governmental Authority" means any nation, province, state or other
political subdivision thereof, and any government or any Person exercising
executive, legislative, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Group" has the meaning assigned to it in Section 13(d)(3) of the
Exchange Act.
"Initial Conversion" has the meaning assigned to such term in the
Series B Certificate of Designations.
"Initial Shares" means the 40,000 shares of Series A Preferred Stock
and the 90,000 shares of Series B Preferred Stock to be issued to the Investors
at the Closing.
"Investors" has the meaning provided in the Recitals to this
Agreement.
"Lenders" has the meaning provided in the Preamble to this
Agreement.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"Loan Documents" has the meaning assigned to such term in the Credit
Agreement.
"Material Adverse Effect" means a material adverse effect upon (a)
the business, condition (financial or otherwise), operations, performance,
prospects or properties of the Company and its Subsidiaries, taken as a whole,
or (b) the ability of the Company to consummate the transactions contemplated by
the Preferred Stock Documents or perform its obligations thereunder.
"Obligations" has the meaning assigned to such term in the Credit
Agreement.
"Person" means an individual, corporation, limited liability
company, partnership, association, trust, business trust, joint venture, joint
stock company, sole proprietorship, unincorporated organization, Governmental
Authority or any other form of entity or group thereof.
"PIK Shares" means the shares of Preferred Stock to be issued in
payment of dividends on the Series A Preferred Stock upon the Company's election
to do so under the Series A Certificate of Designations.
"Preferred Stock Documents" has the meaning provided in Section 4.8.
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"Preferred Stock" has the meaning provided in Section 4.3.
"Restated Certificate" means the Certificate of Incorporation as
amended and restated by the Charter Amendment.
"Restructured Claims" has the meaning provided in Section 7.1(k).
"Restructuring" has the meaning provided in Section 2.4.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"SEC" means, at any time, the Securities and Exchange Commission or
any other federal agency then administering the Securities Act and other federal
securities laws.
"SEC Reports" has the meaning provided in Section 4.5(a).
"Series A Certificate of Designations" has the meaning provided in
Section 2.1.
"Series B Certificate of Designations" has the meaning provided in
Section 2.1.
"Series A Preferred Stock" has the meaning provided in the Recitals
to this Agreement.
"Series B Preferred Stock" has the meaning provided in the Recitals
to this Agreement.
"Shares" means the Initial Shares and the PIK Shares.
"Specified Holder" shall have the meaning provided in Section
6.6(c).
"Stock Option Plan" means the Telespectrum Worldwide Inc. 2002 Stock
Incentive Plan.
"Stockholders Agreement" has the meaning provided in Section 4.1.
"Subsidiary" means (i) any corporation of which a majority of the
securities entitled to vote generally in the election of directors thereof, at
the time as of which any determination is being made, are owned by another
entity, either directly or indirectly, and (ii) any joint venture, general or
limited partnership, limited liability company or other legal entity in which an
entity is the record or beneficial owner, directly or indirectly, of a majority
of the voting interests or the general partner.
"Taxes" means all taxes, charges, fees, levies, penalties or other
assessments imposed by any United States federal, state, local or foreign taxing
authority, including, but not limited to, income, excise, property, sales and
use, transfer, franchise, payroll, withholding, social security or other taxes,
including any interest, penalties or additions attributable thereto.
"Term Loans" has the meaning assigned to such term in the Credit
Agreement.
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Section 1.2 Miscellaneous. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. The use in this Agreement of the word "include" or "including," when
following any general statement, term or matter, shall not be construed to limit
such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
nonlimiting language (such as "without limitation" or "but not limited to" or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement, term or matter.
ARTICLE II
ISSUANCE OF PREFERRED STOCK AND RESTRUCTURING
Section 2.1 Authorization of Shares. The Company has authorized (i)
the issuance to the Investors of up to (x) 100,000 shares of Series A Preferred
Stock (consisting of 40,000 Initial Shares of Series A Preferred Stock and up to
60,000 shares of Series A Preferred Stock issuable as PIK Shares in respect
thereof) and (y) 90,000 shares of Series B Preferred Stock (collectively, the
"Shares") and (ii) the issuance of 740,049,366 shares of Common Stock to be
issued upon conversion of the shares of Series B Preferred Stock; provided that
the Company's authorization to issue more than 155,437,119 Conversion Shares is
subject to the completion of the transactions described in Section 6.2 hereof.
Following the Closing, the Company will seek to increase the number of
authorized shares of Common Stock to be issued upon conversion of the shares of
the Series B Preferred Stock in accordance with Section 6.2 hereof. All shares
of Common Stock issuable or issued upon conversion of the Series B Preferred
Stock are referred to herein as the "Conversion Shares." The shares of Series A
Preferred Stock shall have the rights, preferences, privileges and restrictions
set forth in the Certificate of Designations of Series A Preferred Stock of the
Company in the form attached hereto as Exhibit A-1 (the "Series A Certificate of
Designations"). The shares of Series B Preferred Stock shall have the rights,
preferences, privileges and restrictions set forth in the Certificate of
Designations of Series B Convertible Preferred Stock of the Company in the form
attached hereto as Exhibit A-2 (the "Series B Certificate of Designations"). The
Conversion Shares shall have the rights, preferences, privileges and
restrictions set forth in the Certificate of Incorporation of the Company, as
amended through the date hereof, attached hereto as Exhibit B (the "Certificate
of Incorporation").
Section 2.2 Issuance of Preferred Stock. Subject to the terms and
conditions hereof, at the Closing, the Company shall issue to the Investors (i)
the Initial Shares of Series A Preferred Stock in consideration for and in
satisfaction of indebtedness in the sum of $40,000,000 under the Existing Credit
Agreement and (ii) the Initial Shares of Series B Preferred Stock in
consideration for and in satisfaction of indebtedness in the amount equal to all
outstanding "Obligations" (as defined in the Existing Credit Agreement) on the
Closing Date, before giving effect to the transactions contemplated by this
Agreement, in excess of $65,000,000. The number of Initial Shares to be issued
to each Investor shall be equal to the amount set forth opposite such Investor's
name on Schedule 2.2 attached hereto. In the event that any Equity Securities of
the Company (other than as disclosed in Section 4.3 hereof) were outstanding on
the date hereof or any shares of Common Stock indicated in Section 4.3 as being
held by CRW were not held by CRW or the Company (in each case, "Undisclosed
Securities"),
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the Company shall take all actions necessary, including the issuance of
additional Common Stock to the Investors and ▇▇▇▇▇ ▇▇▇▇▇▇, such that, if such
additional shares of Common Stock were issued on the date hereof, the Investors
would have owned 95% of the Common Stock and ▇▇▇▇▇ ▇▇▇▇▇▇ would have owned 0.5%
of the Common Stock on the date hereof on a Fully Diluted Basis giving effect to
such Undisclosed Securities.
Section 2.3 Value of Preferred Stock. The Company and the Investors
have engaged FTI/▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ ("P&M") to determine the value of the Series A
Preferred Stock and Series B Preferred Stock issued pursuant hereto. P&M shall
deliver a copy of its valuation opinion to the Company and to the Administrative
Agent for delivery to each Investor. None of the Company, Administrative Agent
or Lenders shall take any position on any Tax return that is not consistent with
the valuations of the Preferred Stock as set forth in P&M's valuation opinion.
Section 2.4 Credit Agreement. Subject to the terms and conditions
hereof, at the Closing, the Company, each Investor and the Administrative Agent
hereby agree to enter into the Credit Agreement and the other Loan Documents
(the consummation of the transactions contemplated by the Credit Agreement and
the other Loan Documents together with the Issuance of Preferred Stock and the
other transactions contemplated hereby, collectively referred to herein as the
"Restructuring").
ARTICLE III
CLOSING, DELIVERY
Section 3.1 The Closing. The closing of the Restructuring (the
"Closing") shall take place on April 29, 2002 (such date, the "Closing Date"),
at the offices of O'Melveny & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇, or
at such other location as may be mutually agreed by the Company and the
Investors.
Section 3.2 Delivery. At the Closing, subject to the terms and
conditions hereof, the Company shall deliver to the Investors certificates
evidencing the Initial Shares to be issued to such Investor in accordance with
Section 2.2, registered in such Investor's or its nominee's name.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Investor as
follows:
Section 4.1 Corporate Existence and Power. Each of the Company and
its Subsidiaries is a corporation or other entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of
incorporation or formation, as the case may be, and has all requisite power and
authority to own, lease and operate its properties and assets and to carry on
its business as currently conducted. The Company has all requisite corporate
power and authority to execute and deliver this Agreement and the Stockholders
Agreement in the form attached hereto as Exhibit C (the "Stockholders
Agreement"), to issue the Shares and the Conversion Shares and consummate the
transactions contemplated hereby and thereby and to perform its obligations
hereunder and thereunder; provided that the Company's authorization to issue
more than 155,437,119 Conversion Shares is subject to completion of the
transactions
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described in Section 6.2 hereof. Each of the Company and its Subsidiaries is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation or other entity in all jurisdictions in which the character
or location of its activities and of the properties owned or operated by it
makes such qualification necessary, except where the failure to be so qualified
would not be reasonably likely to have a Material Adverse Effect. The Company
has provided to the Administrative Agent for distribution to the Investors a
complete and correct copy of the Certificate of Incorporation and of its Bylaws,
as amended through the date hereof, attached hereto as Exhibit D (the "Bylaws").
Section 4.2 Subsidiaries.
(a) Schedule 4.2(a) accurately sets forth each Subsidiary of the
Company, including its name, place of incorporation or formation, and if not
wholly owned directly or indirectly by the Company, the record ownership as of
the date of this Agreement of all capital stock or other equity interests issued
thereby. All shares of capital stock or other equity interests of any Subsidiary
directly or indirectly owned by the Company have been duly authorized and
validly issued, are fully paid and nonassessable and are directly or indirectly
owned by the Company free and clear of any Liens (other than Liens securing
obligations under the Credit Agreement) and have not been issued in violation
of, nor subject to, any preemptive, subscription or other similar rights.
(b) Except for the Subsidiaries and as set forth on Schedule 4.2(b),
the Company does not own any capital stock, membership interests, security or
other interest in any other Person, and except as set forth on Schedule 4.2(b),
neither the Company nor any of its Subsidiaries has any written, or to the
knowledge of the Company, oral understanding or agreement to provide funds to,
or make any investment (in the form of a loan, capital contribution or
otherwise) in, any other Person.
Section 4.3 Capitalization; Voting Rights.
(a) Immediately prior to the Closing, the authorized capital stock
of the Company consisted of the following: (i) 200,000,000 shares of Common
Stock, par value $0.01 per share (the "Common Stock"), 40,667,884 shares of
which are issued and outstanding (of which 6,946,583 shares are held by CRW,
which shares shall be contributed to the Company promptly after Closing); and
(ii) 5,000,000 shares of Preferred Stock, par value $0.01 per share (the
"Preferred Stock"), none of which are issued and outstanding.
(b) All issued and outstanding shares of the Company's capital stock
(i) have been duly authorized and validly issued, (ii) are fully paid and
nonassessable, (iii) were issued in compliance with all applicable state and
federal laws concerning the issuance of securities and (iv) were not issued in
violation of, or subject to, any preemptive, subscription or other similar
rights of any other Person.
(c) Schedule 4.3(c) sets forth a true and correct list of all
employment agreements, stock option agreements, bonus plans and similar
agreements or arrangements in effect immediately prior to Closing and the
parties thereto (the "Existing Benefit Arrangements"). Except as listed on
Schedule 4.3(c) under the heading "Continuing Benefit
8
Arrangements," all Existing Benefit Arrangements have been terminated and the
Company has no further obligations with respect thereto. The Company has
delivered to Administrative Agent for distribution to each Investor a copy of
the Stock Option Plan to be adopted by the Board following the approval of the
Charter Amendment. Schedule 4.3(c) sets forth a true and complete summary of
Equity Securities of the Company outstanding immediately prior to Closing,
including the holders thereof in the case of options (other than options issued
pursuant to the Company's 1996 Equity Compensation Plan), warrants or other
convertible securities. Except as set forth on Schedule 4.3(c), and except as
may be granted pursuant to this Agreement, there are no outstanding
subscriptions, options, calls, warrants, rights (including conversion or
preemptive rights and rights of first refusal), agreements or other Equity
Securities of any kind for the purchase or acquisition from the Company or any
Subsidiary of any of their securities, nor has the Company taken or agreed to
take any action to issue or grant the same. Except as described in this
Agreement or set forth on Schedule 4.3(c), (x) there are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any securities of the Company or any voting or Equity
Securities or interests of any Subsidiary, (y) except as contemplated hereunder
or under the Stockholders Agreement, there is no voting trust, proxy,
stockholder or other agreements or understandings to which the Company or any of
its Subsidiaries or, to the knowledge of the Company, any of its stockholders is
a party or is bound with respect to the voting or transfer of the capital stock
or other voting securities of the Company or any of its Subsidiaries and (z)
there are no other subscriptions, options, calls, warrants or other rights
(including registration rights, whether demand or piggyback registration
rights), agreements, arrangements or commitments of any character relating to
the issued or unissued Equity Securities of the Company or any of its
Subsidiaries to which the Company or any of its Subsidiaries is a party. The
issuance of the Shares (including Conversion Shares) is not and will not be
subject to any preemptive rights, rights of first refusal, subscription or
similar rights that have not been properly waived.
(d) The Shares have been duly and validly authorized and 155,437,119
of the Conversion Shares have been duly and validly reserved for issuance. Upon
issuance of the Initial Shares, any Shares issued as PIK Shares and the
Conversion Shares in accordance with the provisions of this Agreement and the
Series A Certificate of Designations, the Series B Certificate of Designations,
the Certificate of Incorporation or the Restated Certificate, as the case may
be, such shares will be duly authorized, validly issued, fully paid and
nonassessable, will be delivered to each Investor free and clear of all Liens
(other than limitations on transfer required by the Securities Act and those
placed thereon pursuant to the Stockholders Agreement) and will have the rights,
preferences, privileges and restrictions set forth in the Series A Certificate
of Designations, the Series B Certificate of Designations, the Certificate of
Incorporation or the Restated Certificate, as the case may be.
Section 4.4 Authorization; Binding Obligations. All corporate action
on the part of the Company, its officers, directors and stockholders necessary
for the designation of the Preferred Stock, the execution and delivery of this
Agreement, the Stockholders Agreement and the Loan Documents, the consummation
of the transactions contemplated hereby and thereby and the performance of all
obligations of the Company hereunder and thereunder as of the Closing Date has
been taken or will be taken prior to the Closing Date; provided that the
issuance of more than 155,437,119 of the Conversion Shares is subject to
completion of the transactions described in Section 6.2 hereof. The
authorizations taken as described in the
9
preceding sentence provide that neither the Investors as a group nor any
Investor will be an "interested stockholder" of the Company (as that term is
used in Section 203 of the Delaware General Corporation Law) as a result of
their acquisition of the Preferred Stock, the Conversion Shares, or the
consummation of any of the transactions contemplated by the Preferred Stock
Documents. This Agreement is and the Stockholders Agreement and Loan Documents
will be, when executed and delivered, legal, valid and binding obligations of
the Company enforceable against it in accordance with their respective terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally or by general equitable principles (whether
considered in a proceeding in equity or at law).
Section 4.5 SEC Reports; Financial Statements.
(a) The Company has filed with the SEC all forms, reports,
schedules, proxy statements (collectively, and in each case including all
exhibits and schedules thereto and documents incorporated by reference therein,
the "SEC Reports") required to be filed by the Company with the SEC since
January 1, 2001. As of its date of filing, each SEC Report complied in all
material respects with the requirements of the Exchange Act or the Securities
Act and none of such SEC Reports (including any and all financial statements
included therein) contained when filed or (except to the extent revised or
superceded by a subsequent filing with the SEC prior to the date hereof)
contains any untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
(b) The consolidated balance sheet of the Company and its
Subsidiaries as of December 31, 2001 and the related consolidated statements of
income and retained earnings and cash flows for the twelve-month period then
ended, copies of which have been furnished to the Investors and have been or
will be included in the SEC Reports, when read together with the other financial
information pertaining to the Company and its Subsidiaries which has heretofore
been furnished in writing to the Investors, fairly present the assets,
liabilities and financial position (on a consolidated basis) of the Company and
its Subsidiaries as at such dates, and the results of the operations and changes
of financial position (on a consolidated basis) for the periods then ended. All
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout the
periods involved, except as indicated in the notes thereto and comply as to
form, as of their date of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto. Neither the Company nor any of its Subsidiaries
has any material Debt, obligation or other unusual forward or long-term
commitment which is required to be reflected or reserved for and is not fairly
reflected or reserved for in the foregoing financial statements or in the notes
thereto. Since the date of the most recent balance sheet included in the SEC
Reports, neither Company nor any of its Subsidiaries has incurred liabilities or
any other obligations whatsoever that are material (individually or in the
aggregate) to the Company and its Subsidiaries, taken as a whole, except current
liabilities incurred in the ordinary course of business consistent with past
practice.
Section 4.6 Offering Valid. Assuming the accuracy of the
representations and warranties of the Investors contained in Section 5.2 hereof,
the offer, sale and issuance of the
10
Shares will be exempt from the registration requirements of the Securities Act
and will have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit or qualification requirements of
all applicable state securities laws.
Section 4.7 Certain Agreements or Obligations.
(a) Except as set forth on Schedule 4.7(a) or disclosed in the SEC
Reports, there are no contracts, agreements, understandings or proposed
transactions between the Company or any Subsidiary and any of its officers,
directors or Affiliates or any family member or Affiliate thereof that would be
required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by
the SEC.
(b) Except as disclosed in the SEC Reports, there are no obligations
of the Company or any Subsidiary to their respective officers, directors,
stockholders, or employees or any family member or Affiliate thereof other than
(a) for payment of salary for services rendered, (b) reimbursement for
reasonable expenses incurred on behalf of the Company or Subsidiary and (c) for
other standard employee benefits made generally available to all employees
(including stock option agreements outstanding under the Stock Option Plan).
Except as set forth on Schedule 4.7(b), neither the Company nor any Subsidiary
is a guarantor or indemnitor of any Debt of any other Person. Except as
disclosed in the SEC Reports or as set forth on Schedule 4.7(b), neither the
Company nor any Subsidiary is indebted, directly or indirectly, to any of their
respective officers, directors or stockholders or to any family member or
Affiliate thereof, in any amount whatsoever, other than for normal travel
advances or reimbursement for normal business expenses; and none of such
officers, directors or stockholders or any family member or Affiliate thereof is
indebted to the Company or any Subsidiary. Schedule 4.7(b) sets forth a
description of all transactions since January 1, 2001, between the Company and
any of its officers, directors and stockholders, and their respective spouses
and children in which such persons had a direct or indirect material interest
which are not disclosed in the SEC Reports.
Section 4.8 Compliance with Law; Governmental Approvals.
The execution, delivery and filing (where applicable) by the Company
of this Agreement, the Stockholders Agreement, the Series A Certificate of
Designations and the Series B Certificate of Designations (collectively, the
"Preferred Stock Documents") and the Loan Documents, and its performance of its
obligations under the Preferred Stock Documents and the Loan Documents in
accordance with their respective terms, the issuance of the Preferred Stock and
Conversion Stock and the consummation of the transactions contemplated hereby
and thereby do not and will not, by the passage of time, the giving of notice or
otherwise, (i) require any Governmental Approval not previously obtained and
disclosed in writing to the Investors or violate any Applicable Law relating to
the Company or any of its Subsidiaries, (ii) conflict with, result in a breach
of or constitute a default under the certificate of incorporation, bylaws or
other organizational documents of the Company or any of its Subsidiaries or any
indenture, agreement or other instrument to which such Person is a party or by
which any of its properties may be bound or any Governmental Approval relating
to such Person, (iii) result in or require the creation or imposition of any
Lien upon or with respect to any property now owned or hereafter acquired by
such Person, or (iv) other than as described in Section 6.2 hereof, require any
approval of stockholders or similar equity holders or any approval or consent of
any Person
11
under any indenture, agreement or other instrument to which such Person is a
party or by which any of its properties may be bound, except for such
Governmental Approvals or other approvals or consents listed on Schedule 4.8
which will be obtained on or before the Closing Date.
Section 4.9 Government Regulation. Neither the Company nor any of
its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" (as each such term is defined or used in the Investment
Company Act of 1940, as amended) and neither the Company nor any of its
Subsidiaries is, or after giving effect to the consummation of the transactions
contemplated by the Preferred Stock Documents will be, subject to regulation
under the Public Utility Holding Company Act of 1935 or the Interstate Commerce
Act, each as amended, or any other Applicable Law which limits its ability to
incur or consummate the transactions contemplated hereby.
Section 4.10 Litigation. Except as set forth on Schedule 4.10, as of
the Closing Date there are no actions, suits or proceedings at law or in equity
pending nor, to the knowledge of the Company or any of its Subsidiaries,
threatened against or in any other way relating adversely to or affecting the
Company or any of its Subsidiaries or any of their respective properties in any
court or before any arbitrator of any kind or before or by any Governmental
Authority which, if adversely determined, could reasonably be expected to have a
Material Adverse Effect. There are no material outstanding or unpaid judgments
against the Company or any of its Subsidiaries.
Section 4.11 Absence of Defaults. After giving effect to the
Restructuring, no event has occurred or is continuing, or will result from the
Restructuring, which constitutes a Default or an Event of Default (in each case,
as defined in the Credit Agreement).
Section 4.12 No Broker. Neither the Company nor any of its
Subsidiaries has employed any broker or finder, or incurred any liability for
any brokerage or finders' fees or any similar fees or commissions in connection
with the transactions contemplated by this Agreement, except as set forth on
Schedule 4.12.
Section 4.13 Restructured Claims. The Company has furnished to the
Investors true and complete copies of the instruments and documents relating to
the restructuring or settlement of the obligations of the Company under each of
the Restructured Claims. No agreement or understanding exists with respect to
the obligations under the Restructured Claims that have not been disclosed to
the Investors. Except as set forth on Schedule 4.13, on the Closing Date, the
Company shall have no Debt or other liabilities to any Person other than (i)
Debt under the Loan Documents, (ii) trade claims and other obligations incurred
in the ordinary course of business which are not past due and (iii) the portion
of the Restructured Claims to be paid after the Closing.
Section 4.14 Accuracy of Representations under Credit Agreement.
Each of the representations and warranties set forth in the Credit Agreement and
the other Loan Documents is true as of the Closing Date except for those that
speak as of a date certain, in which case they were true as of such date.
12
Section 4.15 Accuracy and Completeness of Information. All written
information, reports and other papers and data produced by or on behalf of the
Company and furnished to the Investors were, at the time the same were so
furnished, complete and correct in all material respects to the extent necessary
to give the recipient a true and accurate knowledge of the subject matter. No
document furnished or written statement made to the Administrative Agent or the
Investors by the Company in connection with the negotiation, preparation or
execution of this Agreement, any of the other Preferred Stock Documents or any
of the Loan Documents contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
therein not misleading. The Company is not aware of any facts not disclosed in
writing to the Administrative Agent or the Investors which could reasonably be
expected to have a Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor (as to itself only) hereby represents and warrants to
the Company as follows:
Section 5.1 Requisite Power and Authority; Governmental Approvals.
Such Investor is duly organized, validly existing and in good standing under the
laws of its jurisdiction of formation. Such Investor has all requisite power and
authority to execute and deliver this Agreement and the Stockholders Agreement,
to consummate the transactions contemplated hereby and thereby and to perform
its obligations hereunder and thereunder. All action on such Investor's part
necessary for the execution and delivery of this Agreement, the Loan Documents
and the Stockholders Agreement, the consummation of the transactions
contemplated hereby and thereby and the performance of all obligations of such
Investor hereunder and thereunder as of the Closing Date has been or will be
effectively taken prior to the Closing Date. This Agreement, the Loan Documents
and the Stockholders Agreement will be, when executed and delivered, legal,
valid and binding obligations of such Investor, enforceable against it in
accordance with their terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles (whether considered in a proceeding in equity or at law). The
execution and delivery of this Agreement, the Loan Documents and the
Stockholders Agreement and the performance of such Investor's obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby do not require any Governmental Approval not previously
obtained and disclosed in writing to the Company, except for such approvals or
filings as may be required by federal or state securities laws.
Section 5.2 Investment Representations. Such Investor acknowledges
that the Shares and the Conversion Shares have not been registered under the
Securities Act or under any state securities laws and are subject to certain
restrictions on transfer set forth in the Stockholders Agreement. Such Investor
(a) is acquiring the Shares and the Conversion Shares for investment for its own
account, not as a nominee or agent, and not with the view to, or for resale in
connection with, any distribution thereof, (b) is an "accredited investor"
within the meaning of Regulation D, Rule 501(a), promulgated by the SEC, (c)
acknowledges that the Shares and the Conversion Shares must be held indefinitely
unless subsequently registered under the Securities
13
Act or unless an exemption from the registration requirements of the Securities
Act is available and (d) represents that by reason of its business or financial
experience, such Investor has the capacity to protect its own interests in
connection with the transactions contemplated by this Agreement and the
Stockholders Agreement. Such Investor has had an opportunity to discuss the
Company's business, management and financial affairs with the Company's
management. Such Investor has had an opportunity to ask questions of and receive
answers from officers of the Company.
Section 5.3 Litigation. There is no action, suit or proceeding at
law or in equity pending, or to such Investor's knowledge, currently threatened
against such Investor which, if adversely determined, would, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of such Investor to perform its obligations under this Agreement and the
Stockholders Agreement and to consummate the transactions contemplated hereby
and thereby.
Section 5.4 No Broker. Such Investor has not employed any broker or
finder, or incurred any liability for any brokerage or finders' fees or any
similar fees or commissions in connection with the transactions contemplated by
this Agreement.
ARTICLE VI
COVENANTS OF THE COMPANY AND THE INVESTORS
Section 6.1 Efforts. Each party hereto agrees to use commercially
reasonable efforts to take any and all actions required in order to consummate
the transactions contemplated in this Agreement and the Stockholders Agreement.
Section 6.2 Authorization of Additional Shares of Common Stock. It
is a condition to the Closing hereunder that the Board of Directors of the
Company shall have adopted a resolution approving an amendment to the
Certificate of Incorporation in the form of Exhibit E (the "Charter Amendment"),
providing for an increase in the authorized number of shares of Common Stock
from 200,000,000 to 900,000,000 shares and declaring the advisability of such
Charter Amendment to its stockholders. Following the Closing Date, the Company
shall use commercially reasonable efforts to obtain approval of such Charter
Amendment from its stockholders and to implement such reverse stock split as
provided herein. Without limiting the generality of the foregoing, the Company
shall include a request for approval of such Charter Amendment in its proxy
materials for its 2002 annual stockholders meeting to be held on as soon as
reasonably possible, but in any event within 120 days of the date hereof. The
Company agrees that the record date for matters to be voted upon at such annual
meeting of stockholders shall be a date following the Initial Conversion. The
Investors agree to vote all Shares and Conversion Shares held by them on the
record date for such meeting in favor of such Charter Amendment.
Section 6.3 Reservation of Shares. From and after the Closing, the
Company shall at all times reserve and keep available for issuance (a) 60,000
shares of Series A Preferred Stock for payment of the dividends on the Series A
Preferred Stock (less such number of shares of Series A Preferred Stock that are
issued as PIK Shares) and (b) such number of its authorized but unissued shares
of Common Stock as shall be sufficient to permit the issuance of all of the
14
Conversion Shares and all options issued pursuant to the Stock Option Plan,
provided that the Company shall not be required to reserve more than 155,437,119
shares of Common Stock for issuance as Conversion Shares until the Charter
Amendment has become effective in accordance with Section 6.2 above.
Section 6.4 Regulatory and Other Authorizations; Notices and
Consents. Each of the parties hereto shall use their commercially reasonable
efforts to give such notices and obtain all other authorizations, consents,
orders and approvals of all governmental authorities and other third parties
that may be or become necessary for its execution and delivery of, and the
performance of its obligations pursuant to, this Agreement and the Stockholders
Agreement and will cooperate fully with the other parties hereto in promptly
seeking to obtain all such authorizations, consents, orders and approvals.
Section 6.5 Appointment of Directors. Upon the Closing, the Company
shall take all action (including adoption of any required amendment to the
Company's Bylaws) necessary to fix the size of the Board at five directors, to
cause there to occur three vacancies on the Board and to have such vacancies
filled by the remaining directors such that the Board is composed as set forth
in the Stockholders Agreement.
Section 6.6 Reporting Requirements.
(a) If all Obligations under the Credit Agreement are repaid and any
shares of Series A Preferred Stock or Series B Preferred Stock remain
outstanding, then thereafter the Company will deliver, or will cause to be
delivered, the following to each holder of Series A Preferred Stock and/or
Series B Preferred Stock:
(i) As soon as available and in any event within 30 days after
the end of each month, a consolidated balance sheet of the Company and its
Subsidiaries, in each case as of the end of such month, and consolidated
statements of operations and cash flows of the Company and its
Subsidiaries, in each case for the period commencing at the end of the
previous month and ending with the end of such month, and consolidated
statements of operations and cash flows of the Company and its
Subsidiaries for the period commencing at the end of the previous fiscal
year and ending with the end of such month, setting forth in each case in
comparative form the corresponding figures for the corresponding month and
fiscal year-to-date period of the preceding fiscal year and the
corresponding figures for the corresponding month and fiscal year-to-date
period of the annual forecast previously delivered pursuant to this
Section 6.6(a), all in reasonable detail and duly certified by the chief
financial officer of the Company, together with, (A) in the event of any
change from GAAP in the generally accepted accounting principles used in
the preparation of such financial statements, a statement of
reconciliation conforming such financial statements to GAAP and (B) a
brief narrative prepared by the chief financial officer of the Company,
outlining the factors impacting the financial results of the Company and
its Subsidiaries for such month.
(ii) As soon as available and in any event within 45 days
after the end of each fiscal quarter, a consolidated balance sheet of the
Company and its Subsidiaries, in each case as of the end of such fiscal
quarter, and consolidated statements of
15
operations and cash flows of the Company and its Subsidiaries, in each
case for the period commencing at the end of the previous fiscal quarter
and ending with the end of such fiscal quarter, and consolidated
statements of operations and cash flows of the Company and its
Subsidiaries for the period commencing at the end of the previous fiscal
quarter and ending with the end of such fiscal quarter, setting forth in
each case in comparative form the corresponding figures for the
corresponding fiscal quarter and fiscal year-to-date period of the
preceding fiscal year and the corresponding figures for the corresponding
month and fiscal year-to-date period of the annual forecast previously
delivered pursuant to this Section 6.6(a), all in reasonable detail and
duly certified by the chief financial officer of the Company, together
with, in the event of any change from GAAP in the generally accepted
accounting principles used in the preparation of such financial
statements, a statement of reconciliation conforming such financial
statements to GAAP.
(iii) As soon as available and in any event within 90 days
after the end of each fiscal year, a copy of the annual audit report for
such year for the Company and its Subsidiaries, including therein a
consolidated balance sheet of the Company and its Subsidiaries, as of the
end of such fiscal year, and consolidated statements of operations and
cash flows of the Company and its Subsidiaries, in each case for the
period commencing at the end of the previous fiscal year and ending with
the end of such fiscal year, accompanied as to such consolidated
statements by an opinion of an independent public accountant of recognized
standing, together with (i) a copy of any management letter prepared by
such accounting firm with respect to such fiscal year and distributed to
the Company and (ii) in the event of any change from GAAP in the generally
accepted accounting principles used in the preparation of such financial
statements, a statement of reconciliation conforming such financial
statements to GAAP.
(iv) When available, one copy of each annual report on Form
10-K and quarterly report on Form 10-Q of the Company, as filed with the
SEC.
(v) Such other financial statements and financial information
as the Company is required to deliver to the Lenders pursuant to the
Credit Agreement, as in effect immediately before repayment of the
Obligations thereunder.
(b) The Company will deliver to the Administrative Agent for its
review and comment a reasonable time prior to the filing thereof a draft of any
information proposed to be included in any periodic report to be filed by the
Company under the Exchange Act, any proxy materials to be filed or distributed
by the Company pursuant to the Exchange Act, any registration statement to be
filed by the Company under the Securities Act, or any press release or public
announcement to be issued by the Company which information, in any such case,
describes or otherwise relates to terms or ownership of the Series A Preferred
Stock or the Series B Preferred Stock, the provisions of this Agreement or any
other agreement among the holders of the Series A Preferred Stock or the Series
B Preferred Stock. Notwithstanding the foregoing, this Section 6.6(b) shall not
require prior delivery of any such information that relates solely to the Credit
Agreement and the terms thereof that is consistent with the Company's prior
disclosure policies and practices relating to the Existing Credit Agreement. The
reasonable comments and proposed changes to any such disclosure provided by any
Series A Stockholder or
16
Series B Stockholder will be incorporated into any such report, proxy statement,
registration statement or announcement prior to the filing or dissemination
thereof.
(c) The Company shall, and shall cause its Subsidiaries, officers,
directors, employees, auditors and other agents to, (a) afford the officers,
employees, auditors and other agents of the Administrative Agent and any holder
or holders of more than 2,000 shares (to be adjusted for any stock split,
reverse stock split, stock dividend or similar event) of the outstanding Series
A Preferred Stock or Series B Preferred Stock (a "Specified Holder"), during
normal business hours reasonable access at all reasonable times to its officers,
employees, auditors, legal counsel, properties, offices, plants and other
facilities and to all books and records, (b) furnish any Specified Holder with
all financial, operating and other data and information as such Specified
Holder, through its officers, employees, agents or representatives, may from
time to time reasonably request and (c) afford such Specified Holder the
opportunity to discuss the Company's affairs, finances and accounts with the
Company's officers from time to time as such Specified Holder may reasonably
request.
(d) The provisions of this Section 6.6 shall terminate with respect
to any Series A or Series B Stockholder at such time as such stockholder and its
Affiliates cease to own any shares of Series A Preferred Stock or Series B
Preferred Stock, as applicable. In addition, if any Series A Stockholder or
Series B Stockholder requests in writing that the Company cease providing to it
any information described in this Article VI for any period, the Company shall
comply with such request.
(e) Each of the parties hereto hereby agrees that throughout the
term of this Agreement it shall keep confidential (and shall cause its
directors, officers, general and limited partners, employees, representatives
and outside advisors and its Affiliates to keep confidential) all information
relating to the Company that it receives as an Investor from the Company that is
clearly identified as confidential or non-public by the Company except
information which (a) becomes known to such Investor from a source, other than
the Company, its directors, officers, employees, representatives or outside
advisors, which source is not obligated to the Company to keep such information
confidential, (b) becomes generally available to the public through no breach of
this Agreement by any party hereto or (c) the Investor discloses at the request
of any Governmental Authority or pursuant to legal process. Each of the parties
hereto agrees that (i) such information may be communicated to the directors,
officers, general and limited partners, employees, representatives, outside
advisors and Affiliates of any of the parties and (ii) it will cause its
directors, officers, general and limited partners, employees, representatives,
outside advisors or Affiliates to keep such non-public information confidential.
Each Investor acknowledges and agrees that it shall not, and it shall take
reasonable precautions to ensure that its directors, officers, general and
limited partners, representatives, outside advisors and Affiliates (to the
extent such Persons are provided access to material non-public information
regarding Company by such Investor) do not, trade in the Company's securities at
such time as it is in possession of material non-public information.
17
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1 Conditions to Obligations of the Investors. The
obligations of the Investors to effect the Closing shall be subject to the
following conditions, except to the extent waived in writing by the Investors:
(a) Representations and Warranties True; Performance of Obligations.
Each of the representations and warranties of the Company contained in this
Agreement and the Loan Documents that is qualified as to materiality or Material
Adverse Effect shall be true and correct, and each of the representations and
warranties of the Company contained in this Agreement or the Loan Documents that
is not so qualified as to materiality or Material Adverse Effect shall be true
and correct in all material respects, in each case as of the Closing Date
(except for those representations and warranties which address matters only as
of a particular date, which shall be true and correct, or true and correct in
all material respects, as the case may be, as of such date). The Company shall
have performed in all material respects all agreements, obligations, covenants
and conditions herein or therein required to be performed or observed by it on
or prior to the Closing Date.
(b) Legal Investment. At the time of Closing, there shall not be in
effect any Applicable Law directing that the purchase and sale of the Shares and
the other transactions contemplated by this Agreement and the Stockholders
Agreement not be consummated or which has the effect of rendering it unlawful to
consummate such transactions.
(c) Proceedings and Litigation. No action, suit or proceeding at law
or in equity shall have been commenced by any Governmental Authority against any
party hereto seeking to restrain or delay the purchase and sale of the Shares or
the other transactions contemplated by this Agreement and the Stockholders
Agreement.
(d) Approvals. All approvals, consents, permits and waivers of
Governmental Authorities and of the third parties listed on Schedule 4.8
necessary or appropriate for consummation of the transactions contemplated by
this Agreement and the Stockholders Agreement shall have been obtained, and no
such approval, consent, permit or waiver of any Governmental Authority or such
other third party shall contain any term or condition that any Investor in its
reasonable discretion determines to be unduly burdensome. The Board of Directors
of the Company shall have adopted a resolution approving the Charter Amendment
and declaring its advisability to the stockholders of the Company.
(e) Compliance Certificate; Secretary's Certificate. The Company
shall have delivered to the Investors a compliance certificate, executed by the
Chief Executive Officer or the President of the Company, dated as of the Closing
Date, to the effect that the conditions specified in Section 7.1(a) and Section
7.1(c) have been satisfied. The Company shall have delivered to the Investors a
certificate executed by the Secretary of the Company, dated as of the Closing
Date, certifying as to (i) the resolutions of the Board evidencing approval of
the consummation of the transactions contemplated by this Agreement and the
Stockholders Agreement and the authorization of the named officer or officers to
execute and deliver this Agreement and the Stockholders Agreement, (ii) certain
of the officers of the Company, their
18
titles and examples of their signatures and (iii) the resolution described in
the last sentence of Section 7.1(d) above.
(f) Legal Opinion. The Investors shall have received from legal
counsel to the Company an opinion addressed to them, dated as of the Closing
Date, in substantially the form attached hereto as Exhibit F.
(g) Certificates of Designations. The Series A Certificate of
Designations and the Series B Certificate of Designations shall have been filed
with and certified by the Secretary of State of the State of Delaware.
(h) Stockholders Agreement. The Stockholders Agreement shall have
been executed and delivered by the Company and the Management Agent (as defined
therein).
(i) Credit Agreement. The Credit Agreement and the other Loan
Documents shall have been executed and delivered by the Borrowers.
(j) Board of Directors. The Company shall have taken all actions
required by Section 6.5.
(k) Restructured Claims. The Company shall have restructured or
settled each of the obligations described on Schedule 7.1(k), in each case on
terms and pursuant to documentation in form and substance satisfactory to the
Investors in their sole discretion (collectively, and as they may hereafter be
amended, restated or otherwise modified pursuant to the terms hereof and
thereof, the "Restructured Claims").
Section 7.2 Conditions to Obligations of the Company. The
obligations of the Company to effect the Closing shall be subject to the
following conditions, except to the extent waived in writing by the Company:
(a) Representations and Warranties True. Each of the representations
and warranties of the Investors contained in this Agreement shall be true and
correct in all material respects as of the Closing Date. Each Investor shall
have performed in all material respects all agreements, obligations, covenants
and conditions herein required to be performed or observed by it on or prior to
the Closing Date.
(b) Legal Investment. At the time of Closing, there shall not be in
effect any Applicable Law directing that the purchase and sale of the Shares and
the other transactions contemplated by this Agreement and the Stockholders
Agreement not be consummated or which has the effect of rendering it unlawful to
consummate such transactions.
(c) Proceedings and Litigation. No action, suit or proceeding at law
or in equity shall have been commenced by any Governmental Authority against any
party hereto seeking to restrain or delay the purchase and sale of the Shares or
the other transactions contemplated by this Agreement and the Stockholders
Agreement.
(d) Approvals. All approvals, consents, permits and waivers of
Governmental Authorities and other third parties listed on Schedule 4.8(a)
necessary or appropriate for
19
consummation of the transactions contemplated by this Agreement and the
Stockholders Agreement shall have been obtained.
(e) Stockholders Agreement. The Stockholders Agreement shall have
been executed and delivered by each Investor.
(f) Credit Agreement. The Credit Agreement and any other Loan
Documents requiring the signature of each Investor shall have been executed and
delivered by each Investor.
(g) Employment and Retention Agreements. Amendments to the existing
employment agreements in substantially the forms under Exhibit G-1 hereto and
retention agreements in substantially the forms under Exhibit G-2 hereto,
respectively, shall have been executed and delivered by the Company and the
individuals listed on Schedule 7.2(g) hereto.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS
Section 8.1 Survival of Representations and Warranties. The
representations and warranties contained in this Agreement shall survive
indefinitely.
Section 8.2 Certain Other Matters Regarding Representations
(a) The representations and warranties contained in Article IV and V
of this Agreement, and the rights and remedies that may be exercised by any
Person with respect thereto, shall not be limited or otherwise affected by or as
a result of any information furnished to, or any investigation made by, any such
Person or its representatives.
(b) For purposes of this Agreement, each statement or other item of
information set forth by any party on any Schedule hereto shall be deemed to be
a representation and warranty made by such party in this Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Investor Indemnification. The Company agrees to
indemnify and hold harmless each Investor, its respective directors and officers
and its Affiliates (and the directors, officers, partners, Affiliates and
controlling persons thereof, each, an "INVESTOR INDEMNITEE") from and against
any and all liability, including, without limitation, all obligations, costs,
fines, claims, actions, injuries, demands, suits, judgments, proceedings,
investigations, arbitrations (including stockholder claims, actions, injuries,
demands, suits, judgments, proceedings, investigations or arbitrations) and
expenses, including, without limitation, accountant's and attorney's fees and
expenses (together the "LOSSES"), incurred by such Investor or such Investor
Indemnitee before or after the date of this Agreement and arising out of,
resulting from, or relating to (i) such Investor's purchase and/or ownership of
the Equity Securities of the Company, (ii) the transactions contemplated by this
Agreement, the Stockholders Agreement, the Series A Certificate of Designations
and the Series B Certificate of Designations, (iii) any litigation to which an
Investor or an Investor Indemnitee is made a party in its capacity as a
preferred stockholder or owner of preferred securities (or a partner, director,
20
officer, Affiliate or controlling person of an Investor in such capacity) of the
Company or (iv) any franchise taxes imposed on an Investor attributable to its
ownership of Series A Preferred Stock or Series B Preferred Stock; provided that
indemnification for Claims referred to in Section 5.7 of the Stockholders
Agreement shall be available solely in accordance with and governed by such
Sections.
Section 9.2 Expenses. The Company shall pay all costs and expenses
that it incurs with respect to the negotiation, execution, delivery and
performance of this Agreement, the Stockholders Agreement and the Loan
Documents. In addition, the Company shall, at or after the Closing, reimburse
all reasonable expenses of the Administrative Agent and each Investor incurred
in connection with the consummation of the transactions contemplated by this
Agreement, the Stockholders Agreement and the Loan Documents, including the
payment of the reasonable fees, disbursements and expenses payable to
consultants, accountants and counsel to the Administrative Agent and each
Investor. The Company shall also pay the fees and expenses of the Administrative
Agent and each Investor (including the payment of the reasonable fees,
disbursements and expenses payable to consultants, accountants and counsel to
the Administrative Agent and each Investor) with respect to the enforcement of
any rights hereunder.
Section 9.3 Notices. All notices required or permitted hereunder
shall be in writing and shall be deemed effectively given: (a) upon personal
delivery to the party to be notified; (b) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient, if not, then on
the next business day; (c) five days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (d) one business
day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt; provided, however, that
notices and communications to the Administrative Agent shall not be effective
until received by the Administrative Agent. All communications shall be sent to
the parties at their respective addresses set forth, and in the manner
specified, in the Credit Agreement; or, at such other address as shall be
designated by any party in a written notice to the other parties hereto as
provided in this Section 9.3.
Section 9.4 No Waiver, Remedies Cumulative. No failure or delay on
the part of any of the Investors or the Administrative Agent in exercising any
right, power or privilege hereunder and no course of dealing between the
Company, on the one hand, and any of the Investors or the Administrative Agent,
on the other, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power, or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder. The rights and remedies herein expressly provided are cumulative and
not exclusive of any rights or remedies which any of the Investors or the
Administrative Agent would otherwise have. No notice to or demand on the Company
in any case shall entitle the Company to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of any of
the Investors or the Administrative Agent to any other or further action in any
circumstances without notice or demand.
Section 9.5 Delays or Omissions. It is agreed that no delay or
omission to exercise any right, power or remedy accruing to any party, upon any
breach, default or noncompliance by another party under this Agreement or the
Stockholders Agreement, shall impair any such right, power or remedy, nor shall
it be construed to be a waiver of any such
21
breach, default or noncompliance, or any acquiescence therein, or of or in any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent or approval of any kind or character on
any Investor's part of any breach, default or noncompliance under this Agreement
or the Stockholders Agreement or any waiver on such party's part of any
provisions or conditions of this Agreement or the Stockholders Agreement, must
be in writing and shall be effective only to the extent specifically set forth
in such writing.
Section 9.6 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all of which shall together constitute one and the same
instrument.
Section 9.7 Headings Descriptive. The headings of the several
sections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
Section 9.8 Entire Agreement; Supersedes Prior Agreement. This
Agreement and the Exhibits and Schedules hereto, the Stockholders Agreement, the
Loan Documents and the other documents delivered pursuant hereto or thereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.
Section 9.9 Severability. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 9.10 Amendment or Waiver. Neither this Agreement nor any of
the terms hereof may be amended, modified, supplemented, waived, discharged or
terminated unless such amendment, modification, supplement, waiver, discharge or
termination is in writing signed by the Company and the Administrative Agent
(with the consent of the Investors holding 50.1% of the aggregate Liquidation
Preference of the Preferred Stock outstanding or, if such amendment,
modification, supplement, waiver, discharge or termination is proposed to be
entered into prior to Closing, with the consent of the Required Lenders (as
defined in the Credit Agreement)). Any waiver or consent shall be effective only
in the specific instance or for the specific purpose for which it was given.
Section 9.11 Governing Law and Jurisdiction. This Agreement, and the
rights and obligations of the parties hereunder, shall be construed in
accordance with and governed by the law of the State of New York. Any legal
action or proceeding with respect to this Agreement may be brought in the courts
of the State of New York or of the United States for the Southern District of
New York and, by execution and delivery of this Agreement, irrevocably accepts
for itself and in respect of its property, unconditionally, the jurisdiction of
the aforesaid courts with respect to any such action or proceeding.
22
Section 9.12 Waiver of Jury Trial.
EACH PARTY HEREBY AGREES TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. The parties each acknowledge that this waiver is a material
inducement for the parties to enter into a business relationship, that the
parties have already relied on the waiver in entering into this Agreement and
that each will continue to rely on the waiver in their related future dealings.
Each party further warrants and represents that it has reviewed this waiver with
its legal counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
Section 9.13 Successors and Assigns. This Agreement shall remain in
full force and effect and shall be binding in accordance with and to the extent
of its terms upon the Company and its successors and assigns, and shall inure to
the benefit of the Administrative Agent and the Investors, and their respective
successors and assigns, notwithstanding that from time to time during the term
of the Credit Agreement there may be no obligations outstanding. The Company
acknowledges and agrees that this Agreement is made for the benefit of the
Administrative Agent and the Investors and that the Administrative Agent and/or
the Investors may enforce all of the obligations of the Company hereunder
directly against the Company. The Company may not assign any of its rights or
obligations hereunder without the consent of the Administrative Agent and the
Investors. The Company shall keep a complete record of any assignments permitted
hereunder and shall notify the Administrative Agent and the Investors pursuant
to the provisions of Section 9.3 within five (5) Business Days of any such
assignment. The Administrative Agent or any Investor, as the case may be, that
assigns preferred stock subject to rights and obligations under this Agreement
shall notify: (a) in the case of an assignment by the Administrative Agent, the
Company and the Investors; or (b) in the case of an assignment by any Investor,
the Company, the Administrative Agent and each of the other Investors, and in
each case pursuant to the provisions of Section 9.3 within five (5) Business
Days of any such assignment.
Section 9.14 Release. In consideration of the promises contained
herein, in the Stockholders Agreement and the Credit Agreement, effective upon
Closing, each Investor, for itself and each of its predecessors and successors,
by merger or otherwise, and the Company irrevocably and unconditionally
releases, remises and forever discharges (i ) the directors, officers and
employees of the Company holding such positions as of the Closing Date (each of
the foregoing, a "Releasee"), (ii) their and the Company's respective agents,
representatives and professionals (each of the foregoing, a "Professional
Releasee"), and (iii) the Releasees' liability insurers, Genesis Insurance
Company and XL Specialty Insurance Company (the "D&O Insurers"), (a) with
respect to each Releasee, from any and all claims of any kind or nature relating
to any act or omission of any such Releasee acting in his or her capacity as a
director, officer, employee or stockholder of the Company or in connection with
the transactions described on Schedule 9.14, which each Investor or the Company
had, now has and/or hereafter may have against such Releasee, (b) with respect
to each Professional Releasee, any and all
23
claims of any kind or nature arising from any relationships of such Professional
Releasee with the Company or a Releasee regarding matters related to the
Company, which each such Investor or the Company had, now has and/or hereafter
may have against such Professional Releasee, and (c) with respect to the D&O
Insurers, any and all claims of any kind or nature arising from existing
insurance coverage in favor of the Company or any Releasee relating to any such
Releasee's act or omission as a director, officer, employee or stockholder of
the Company or in connection with the transactions described in Schedule 9.14,
which each Investor or the Company had, now has and or hereafter may have
against such Releasee.
Section 9.15 No Third Party Beneficiaries. This Agreement is not
intended to confer upon any persons other than the parties hereto any rights or
remedies hereunder other than the rights granted to ▇▇▇▇▇ ▇▇▇▇▇▇ pursuant to
Section 2.2 hereof and the releases granted to the Releasees, the Professional
Releasees and the D&O Insurers pursuant to Section 9.14.
24
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this agreement to be duly executed and delivered as of the date
first above written.
THE COMPANY: TELESPECTRUM WORLDWIDE INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
THE LENDERS: BNP PARIBAS (F/K/A BANQUE NATIONALE DE
PARIS), as Administrative Agent, and a Lender and
Investor
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Managing Director
S-1 EXECUTION
ENDEAVOR, LLC,
as a Lender and Investor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
S-2 EXECUTION
FLEET NATIONAL BANK (F/K/A BANKBOSTON, N.A.),
as a Lender and Investor
By: /s/ G. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
Name: G. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
S-3 EXECUTION
▇▇▇ ▇▇▇▇▇▇ PRIME RATE INCOME
TRUST, as a Lender and Investor
By: ▇▇▇ ▇▇▇▇▇▇ Investment Advisory Corp.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
S-4 EXECUTION
▇▇▇ ▇▇▇▇▇▇ SENIOR FLOATING RATE FUND,
as a Lender and Investor
By: ▇▇▇ ▇▇▇▇▇▇ Investment Advisory Corp.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Director
S-5 EXECUTION
▇▇▇ ▇▇▇▇▇▇ SENIOR INCOME TRUST, as
a Lender and Investor
By: ▇▇▇ ▇▇▇▇▇▇ Investment Advisory Corp.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President
TBH-I, L.P., as a Lender and Investor
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Authorized Signatory
▇▇▇▇▇ FARGO BANK, N.A., as a Lender and
Investor
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President/Principal
S-6 EXECUTION
FIRST SOURCE LOAN OBLIGATIONS TRUST,
as a Lender and Investor
By: First Source Financial, Inc., its Servicer
and Administrator
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
S-7 EXECUTION
ENDURANCE CLO I, LTD, as a Lender
By: ING Capital Advisors, LLC
As Portfolio Manager
By: /s/ ▇▇▇▇▇ ▇▇▇▇
____________________________________________
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Senior Vice President
KZH ING-2 LLC, as a Lender and Investor
By: /s/ ▇▇▇▇▇ ▇▇▇
____________________________________________
Name: ▇▇▇▇▇ ▇▇▇
Title: Authorized Agent
S-8 EXECUTION
KZH ING-3 LLC, as a Lender and Investor
By: /s/ ▇▇▇▇▇ ▇▇▇
____________________________________________
Name: ▇▇▇▇▇ ▇▇▇
Title: Authorized Agent
ARCHIMEDES FUNDING, L.L.C. , as a Lender
and Investor
By: ING Capital Advisors, LLC,
as Collateral Manager
By: /s/ ▇▇▇▇▇ ▇▇▇▇
____________________________________________
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Senior Vice President
ARCHIMEDES FUNDING II, L.L.C., as a
Lender and Investor
By: ING Capital Advisors, LLC,
as Collateral Manager
By: /s/ ▇▇▇▇▇ ▇▇▇▇
____________________________________________
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Senior Vice President
FIRST DOMINION FUNDING III, as a Lender
and Investor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
____________________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Authorized Signatory
S-9 EXECUTION
