EXHIBIT 99.2
Execution Copy
RESTRUCTURING AGREEMENT
Among
PERSONNEL GROUP OF AMERICA, INC.,
PFI CORP.,
STAFFPLUS, INC.,
INFOTECH SERVICES LLC,
BAL ASSOCIATES INCORPORATED,
ADVANCED BUSINESS CONSULTANTS, INC.,
VENTURI STAFFING PARTNERS, LLC,
VENTURI TEXAS STAFFING PARTNERS, LP,
THE LENDERS, SET FORTH ON THE SIGNATURE PAGES HERETO, UNDER AMENDMENT NO. 4,
DATED AS OF FEBRUARY 8, 2002, TO THE AMENDED AND RESTATED CREDIT AGREEMENT,
DATED AS OF JUNE 23, 1997, OF PERSONNEL GROUP OF AMERICA, INC., AS
SUBSEQUENTLY AMENDED BY AMENDMENT NO. 5 TO AMENDED AND
RESTATED CREDIT AGREEMENT AND WAIVER, DATED AS OF DECEMBER 31, 2002
and
THE HOLDERS, SET FORTH ON THE SIGNATURE PAGES HERETO, OF
THE OUTSTANDING 5 3/4% CONVERTIBLE SUBORDINATED NOTES
DUE 2004 OF PERSONNEL GROUP OF AMERICA, INC.
Dated as of March 14, 2003
TABLE OF CONTENTS
Page
----
ARTICLE I The Transactions........................................................................................3
1.1. The Loan Exchange...................................................................................3
1.2. The Notes Exchange..................................................................................7
1.3. The Charter Amendment...............................................................................9
ARTICLE II Corporate Governance Following the Notes Exchange.....................................................10
2.1. The By-Laws........................................................................................10
2.2. Directors..........................................................................................10
2.3. Officers...........................................................................................10
2.4. The Rights Plan....................................................................................11
ARTICLE III Effects on Capitalization; Exchange Mechanics; Adjustments...........................................12
3.1. Certain Effects of Transactions on Capitalization..................................................12
3.2. Depositary; Exchange Mechanics.....................................................................12
3.3. Distribution on Exchanged Notes....................................................................13
3.4. Fractional Shares..................................................................................13
3.5. Dissenters' Rights.................................................................................14
3.6. Adjustments to Prevent Dilution....................................................................14
3.7. Treatment of the Unexchanged Notes; Interest Payments Under the Indenture..........................14
ARTICLE IV Representations and Warranties........................................................................14
4.1. Representations and Warranties of the Parties......................................................14
4.2. Representations and Warranties of the Group........................................................15
4.3. Representations and Warranties of the Holders......................................................24
ARTICLE V Interim Operating Covenants; Alternative Proposals.....................................................26
5.1. Interim Operations of the Group....................................................................26
5.2. Alternative Proposals..............................................................................27
ARTICLE VI Other Agreements and Covenants........................................................................28
6.1. Information Supplied...............................................................................28
6.2. Stockholders Votes.................................................................................29
6.3. Filings; Other Actions; Notification...............................................................29
6.4. Taxation...........................................................................................30
6.5. Access.............................................................................................30
6.6. Stock Exchange Listing.............................................................................30
6.7. Publicity..........................................................................................31
6.8. Options; Stock Plans and Forms S-8.................................................................31
6.9. Expenses...........................................................................................31
6.10. Indemnification; Directors' and Officers' Insurance................................................32
6.11. Other Actions......................................................................................34
6.12. Holder Votes.......................................................................................35
6.13. Rule 144...........................................................................................36
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ARTICLE VII Conditions...........................................................................................36
7.1. Conditions to the Obligation of the Company to Effect the Charter Amendment........................36
7.2. Conditions to the Obligation of the Senior Lenders to Effect the Loan Exchange.....................37
7.3. Conditions to the Obligation of the Company to Effect the Loan Exchange............................38
7.4. Conditions to Obligation of Noteholders to Effect the Notes Exchange...............................38
7.5. Conditions to Obligation of the Company to Effect the Notes Exchange...............................40
ARTICLE VIII Termination.........................................................................................41
8.1. Termination by Mutual Consent......................................................................41
8.2. Termination of only Charter Amendment or Loan Exchange.............................................41
8.3. Termination of Entire Agreement and all Transactions...............................................42
8.4. Effect of Termination and Abandonment..............................................................44
ARTICLE IX Miscellaneous and General.............................................................................45
9.1. Survival...........................................................................................45
9.2. Entire Agreement; NO OTHER REPRESENTATIONS.........................................................45
9.3. Modification or Amendment..........................................................................46
9.4. Waiver of Conditions...............................................................................46
9.5. Counterparts.......................................................................................46
9.6. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL......................................................46
9.7. Notices and Waivers................................................................................47
9.8. No Third Party Beneficiaries.......................................................................50
9.9. Further Assurances.................................................................................50
9.10. Subsidiaries or Affiliates Actions; Actions of or Consent by the Holders...........................50
9.11. Transfer Taxes.....................................................................................50
9.12. Severability.......................................................................................51
9.13. Interpretation.....................................................................................51
9.14. Assignment; Holder Transferees.....................................................................51
9.15. Allocation of Consideration........................................................................51
9.16. Knowledge..........................................................................................51
ANNEX A (The Back-Up Plan)
EXHIBITS
--------
EXHIBIT A (Form of Amended and Restated Certificate of (Incorporation)
EXHIBIT B (Form of Amended and Restated By-Laws)
EXHIBIT C (Terms of Series B Preferred)
EXHIBIT D (Terms of Series A Warrants)
EXHIBIT E (Terms of Employment Agreements)
EXHIBIT F (Terms of New Equity Plan)
EXHIBIT G (Terms of New Senior Facility)
EXHIBIT H (Terms of Junior Secured Notes)
EXHIBIT I (Terms of Registration Rights Agreement)
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RESTRUCTURING AGREEMENT
RESTRUCTURING AGREEMENT (hereinafter called this "Agreement"),
dated as of March 14, 2003, among PERSONNEL GROUP OF AMERICA, INC., a Delaware
corporation (to be renamed Venturi Partners, Inc., the "Company"), PFI CORP., a
Delaware corporation ("PFI"), STAFFPLUS, INC., a Delaware corporation
("Staffplus"), INFOTECH SERVICES LLC, a North Carolina limited liability company
("Infotech"), BAL ASSOCIATES INCORPORATED., a California corporation
("Associates"), ADVANCED BUSINESS CONSULTANTS, INC., a Kansas corporation
("Consultants"), VENTURI STAFFING PARTNERS, LLC, a California limited liability
company ("Staffing Partners") and VENTURI TEXAS STAFFING PARTNERS, LP, a Texas
limited partnership ("Texas Staffing") (each of PFI, Staffplus, Infotech,
Associates, Consultants, Staffing Partners and Texas Staffing being either a
direct or indirect wholly-owned subsidiary of the Company (a "PGA Subsidiary"),
with the Company and the PGA Subsidiaries sometimes being hereinafter
collectively referred to as the "Group"); CERTAIN LENDERS UNDER AMENDMENT NO. 4,
DATED AS OF FEBRUARY 8, 2002, TO THE AMENDED AND RESTATED CREDIT AGREEMENT,
DATED AS OF JUNE 23, 1997, AS SUBSEQUENTLY AMENDED BY AMENDMENT NO. 5 TO AMENDED
AND RESTATED CREDIT AGREEMENT AND WAIVER, DATED AS OF DECEMBER 31, 2002 (as
amended, the "Existing Senior Facility"), of the Company set forth on the
signature pages hereto (the "Senior Lenders"); and CERTAIN HOLDERS OF THE 5 3/4%
CONVERTIBLE SUBORDINATED NOTES DUE 2004 (the "Notes") of the Company set forth
on the signature pages hereto (the "Noteholders," with the Senior Lenders and
the Noteholders sometimes being hereinafter collectively referred to as the
"Holders").
RECITALS
WHEREAS, the Company and the Holders have been in ongoing
discussions regarding deleveraging strategies for the Company;
WHEREAS, prior to the execution and delivery of this
Agreement, the Company, the Senior Lenders and certain original senior lenders
(the "Original Senior Lenders") under the Existing Senior Facility entered into
a purchase option agreement dated as of November 11, 2002 (the "Purchase Option
Agreement"), pursuant to which the Original Senior Lenders granted the Company
and the Senior Lenders an option to purchase the rights and obligations of the
Original Senior Lenders under the Existing Senior Facility;
WHEREAS, the Group and the Noteholders entered into or
otherwise agreed to an agreement in principle (the "Agreement in Principle"),
dated November 11, 2002, proposing preliminary terms for a comprehensive
restructuring of the Company, whereby the parties agreed to negotiate in good
faith the definitive terms of such restructuring transactions;
WHEREAS, the parties now propose to effect a restructuring of
the Company pursuant to the transactions described herein (the "Restructuring");
WHEREAS, the Company and the Senior Lenders desire that the
Senior Lenders exchange all outstanding claims under the Existing Senior
Facility for cash, subordinated debt
and related warrants of the Company, as described more specifically in Section
1.1 and otherwise upon the terms and subject to the conditions set forth in this
Agreement (the "Loan Exchange");
WHEREAS, the Company and the Noteholders have agreed to
exchange all of the Notes held by the Noteholders for cash and capital stock of
the Company, as more specifically described in Section 1.2 and otherwise upon
the terms and subject to the conditions and exceptions set forth in this
Agreement (the "Notes Exchange");
WHEREAS, the Company has entered into a separate agreement
with LC Capital Master Fund, Ltd. ("LC Capital") of even date herewith, pursuant
to which, among other things, LC Capital has agreed to exchange all of the Notes
held by it for the same consideration to be received by the Noteholders in, and
contemporaneously with, the Notes Exchange (the "LC Capital Side Letter")
WHEREAS, the Company proposes to effect a reverse stock split
and certain other amendments to its certificate of incorporation and in
connection therewith proposes to amend and restate such certificate of
incorporation (whether in its current form or as may be amended and restated, as
the context requires, the "Charter") to be substantially in the form attached
hereto as Exhibit A, all as more specifically described in Section 1.3 and
otherwise upon the terms and subject to the conditions set forth in this
Agreement (the "Charter Amendment" and, although each are independent
transactions, the Charter Amendment, the Notes Exchange and the Loan Exchange
sometimes being hereinafter collectively referred to as, the "Transactions");
WHEREAS, the Group and the Senior Lenders have further agreed,
upon the occurrence of certain events resulting in a termination of this
Agreement, to file, support and solicit a plan of bankruptcy reorganization
defined as the "Back-Up Plan" in Annex A hereto and otherwise upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, the respective members of the Board of Directors of
each of the Company and the PGA Subsidiaries have unanimously determined
(subject to abstention by certain directors who are entering into Employment
Agreements (as defined below) with respect to such agreements) that it is in the
best interests of the Group and the Persons (as defined below) to whom fiduciary
duties are owed by the directors of the Company to consummate the Restructuring
and each of the Transactions and, if applicable, the Back-Up Plan upon the terms
and subject to the conditions set forth in this Agreement and have approved this
Agreement;
WHEREAS, it is intended that, for federal income tax purposes,
(i) the exchange of the Notes for capital stock of the Company pursuant to the
Notes Exchange shall be treated as a reorganization within the meaning of
Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder (the "Code"), and (ii) all
consideration received by the Noteholders and the Senior Lenders in exchange for
their Notes and for their outstanding claims under the Existing Senior Facility,
respectively, shall be allocated first to a return of principal and second to
the payment of accrued but unpaid interest; and
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WHEREAS, the parties are entering into this Agreement to set
forth definitive terms for the Transactions and, if applicable, the Back-Up Plan
and any other actions contemplated by the Restructuring, and to make certain
representations, warranties and covenants, and prescribe various conditions, as
to the Transactions, the Back-Up Plan and any other actions contemplated by the
Restructuring.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
The Transactions
1.1. The Loan Exchange.
(a) Agreement to Effect the Loan Exchange. On the
terms and subject to the conditions set forth herein (including the conditions
set forth in Sections 7.2 and 7.3 hereof):
(i) Contemporaneously with the Loan Exchange
Closing (as defined below), and subject to completion of the
Loan Exchange, the Company shall exercise the option to
purchase the Optioned Rights (as defined in the Purchase
Option Agreement) of the Original Senior Lenders granted under
the Purchase Option Agreement. The Company further agrees that
contemporaneously with the Loan Exchange Closing it shall pay
or deliver to the Original Senior Lenders the consideration in
respect of their Optioned Rights under the Purchase Option
Agreement as follows:
(A) cash in an amount up to 75% of the face
amount of the Original Senior Lenders' pro rata share of the funded Loans (as
defined in the Existing Senior Facility) (excluding any commitments in respect
of outstanding but undrawn letters of credit under the Existing Senior Facility)
purchased by the Company pursuant to the Purchase Option Agreement, with the
exact amount of such cash to be determined based on the Purchase Option
Agreement and any subsequent agreement related thereto between the Senior
Lenders and the Original Senior Lenders;
(B) for each $1,000 of the face amount of
the Original Senior Lenders' pro rata share of the funded Loans (excluding any
commitments in respect of outstanding but undrawn letters of credit under the
Existing Senior Facility) purchased by the Company pursuant to the Purchase
Option Agreement, Series A Warrants (as defined below) to acquire up to 92.2367
shares of common stock, par value $0.01 per share, of the Company (including any
associated Rights (as defined below), the "Common Stock") as ratably reduced to
reflect any principal amount less than $1,000 so exchanged, with the exact
amount of shares of Common Stock underlying such Series A Warrants to be
determined based on the Purchase Option Agreement and any subsequent agreement
related thereto between the Senior Lenders and the Original Senior Lenders; and
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(C) cash equal to the amount of any accrued
and unpaid interest due to the Original Senior Lenders under the Existing Senior
Facility through and including the date of purchase of the Optioned Rights.
(ii) Each of the Senior Lenders agrees to
contribute, convey, transfer, assign and deliver to the
Company, at the Loan Exchange Closing, all the outstanding
claims of such Senior Lender under the Existing Senior
Facility, including all claims to interest, fees, costs and
penalties thereunder (the "Claims"), free and clear of any
liens, pledges, security interests, claims or other
encumbrances (collectively, "Liens"), and the Company agrees
that it shall accept and receive the Claims in exchange for
the Loan Exchange Consideration (as defined below);
(iii) The Company agrees that, in exchange
for the contribution, conveyance, transfer, assignment and
delivery to the Company of the Claims by the Senior Lenders,
the Company shall issue to each of the Senior Lenders, at the
Loan Exchange Closing, such Senior Lender's pro rata share of
the consideration described in the following clauses (A)-(D)
(collectively, the "Loan Exchange Consideration"):
(A) in exchange for up to $34,693,750 in
principal amount of then outstanding funded Loans under the Existing Senior
Facility (excluding any commitments in respect of outstanding but undrawn
letters of credit under the Existing Senior Facility) purchased by the Company,
such Lender's proportionate share of up to $39.2 million in principal amount of
New Junior Secured Notes (as defined below);
(B) after giving effect to (A) above, in
exchange for the remaining aggregate remaining principal amount of then
outstanding funded Loans under the Existing Senior Facility (excluding any
commitments in respect of outstanding but undrawn letters of credit under the
Existing Senior Facility), New Junior Secured Notes in an amount equal to such
remaining principal amount;
(C) cash equal to the amount of any accrued
and unpaid interest due to the Senior Lenders under the Existing Senior Facility
as of the Loan Exchange Closing Date; and
(D) for each $1,000 in principal amount of
New Junior Secured Notes issued by the Company pursuant to (A) and (B) above,
Series A Warrants to acquire up to 464.5170 shares of Common Stock, as ratably
reduced to reflect any principal amount less than $1,000 so issued.
No fewer than two business days prior to the Loan Exchange Closing Date, the
Company shall deliver to the Senior Lenders a schedule detailing the elements
of, and method of calculation for, the Loan Exchange Consideration, together
with any supporting or back-up information reasonably requested by the Senior
Lenders.
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(iv) Notwithstanding any provision of this
Agreement or any agreement referenced herein to the contrary:
(A) In lieu of consummating the Loan
Exchange and the transactions contemplated by the Purchase Option Agreement as
described above, the Senior Lenders and the Original Senior Lenders may grant
such waivers, forbearances or consents under the Existing Senior Facility as
required to permit the consummation of the Notes Exchange and the Charter
Amendment; provided, however, that if the Senior Lenders and the Original Senior
Lenders grant such waivers, forbearances or consents, the Noteholders'
obligations (other than those obligations set forth in Section 9.14) under this
Agreement (including, without limitation, to exchange their Notes) shall
terminate unless and until Noteholders holding at least 90% in principal amount
of the Notes held by all Noteholders consent in writing to consummate the Notes
Exchange as set forth in this Agreement. In connection with any such waivers,
forbearances or consents, the obligations of the Company and the Senior Lenders
hereunder with respect to the Loan Exchange and the Purchase Option Agreement
shall be deemed terminated.
(B) If the Senior Lenders and the Original
Senior Lenders do not grant the waivers, forbearances or consents described in
the foregoing subsection (A), the Noteholders shall have no obligations (other
than those obligations set forth in Section 9.14) under the terms of this
Agreement (including, without limitation, to exchange their Notes) unless and
until (1) the Company consummates the Loan Exchange and the transactions
contemplated by the Purchase Option Agreement, and (2) Noteholders holding 90%
in principal amount of the Notes held by all Noteholders approve in writing the
final and complete terms and conditions of the Loan Exchange and the
transactions contemplated by the Purchase Option Agreement.
(C) A Noteholders' execution of this
Agreement does not constitute consent or approval for purposes of this Section
1.1(a)(iv), and nothing under any other provision of this Agreement (including,
without limitation, Section 6.12) shall require a Noteholder to vote to approve
any transaction or arrangement contemplated under this Section 1.1(a)(iv).
(b) Loan Exchange Closing. The closing of the Loan
Exchange (the "Loan Exchange Closing") shall take place (i) at the offices of
Stroock & Stroock & Xxxxx LLP, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx at 10:00 A.M.
on the first business day after the business day on which the last to be
fulfilled or waived of the applicable conditions set forth in Article VII shall
be satisfied or waived in accordance with this Agreement (other than those
conditions that by their nature are to be satisfied at the Loan Exchange
Closing, but subject to the fulfillment or waiver of those conditions) or (ii)
at such other place and time and/or on such other date as the Company and the
Senior Lenders may agree in writing. The date on which the Loan Exchange Closing
occurs is referred to as the "Loan Exchange Closing Date". The Group agrees
that, in satisfaction of any commitments in respect of outstanding but undrawn
letters of credit under the Existing Senior Facility, the Group shall cash
collateralize or otherwise satisfy and release in full the Original Senior
Lenders and the Senior Lenders substantially as contemplated under the Purchase
Option Agreement.
(c) Closing Deliveries.
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(i) Company Deliveries. In connection with
and at the Loan Exchange Closing, the Company shall deliver to
the Senior Lenders the following items:
(A) the New Junior Secured Notes issued in
accordance with Section 1.1(a)(iii)(A) and (B), duly executed;
(B) the aggregate cash required to be paid
under Section 1.1(a)(iii)(C), by wire transfer of immediately available funds to
accounts specified by the Senior Lenders in written instructions delivered to
the Company at least one business day prior to the Loan Exchange Closing Date;
(C) the Series A Warrants issued in
accordance with Section 1.1(a)(iii)(D), duly executed;
(D) duly executed counterparts of the
agreements underlying any New Junior Secured Notes and Series A Warrants issued
to the Senior Lenders in the Loan Exchange (and copies of any other documents or
deliveries provided in connection therewith);
(E) the legal opinions of Xxxxxxxx, Xxxxxxxx
& Xxxxxx, P.A. and of the general counsel to the Company as to the Loan Exchange
and any Series A Warrants issued in connection therewith, dated as of the Loan
Exchange Closing Date, in form and substance reasonably satisfactory to the
Senior Lenders, duly executed;
(F) a certificate, dated as of the Loan
Exchange Closing Date, and signed by a secretary or assistant secretary of each
member of the Group, as to the entity's organizational documents, adopting
resolutions and, in the case of the Company, form of Series A Warrant and
attesting to the incumbency of its signing officers, duly executed;
(G) a "long form" good standing certificate
for each member of the Group, dated as of a recent date prior to the Loan
Exchange Closing Date (and in the case of any Delaware corporation, no more than
two business days prior thereto), issued by the Secretary of State of the State
of Delaware or the applicable state of incorporation or organization;
(H) evidence reasonably satisfactory to the
Senior Lenders of the purchase of the Optioned Rights purchased by the Company
from the Original Senior Lenders under the Purchase Option Agreement;
(I) evidence reasonably satisfactory to the
Senior Lenders of the cash collateralization or other satisfaction and release
in full of the Original Senior Lenders and the Senior Lenders under any
commitments in respect of outstanding but undrawn letters of credit under the
Existing Senior Facility; and
(J) such other written instruments or
accompanying documentation as may be reasonably necessary or appropriate in
order to document the satisfaction or waiver of the applicable closing
conditions set forth in Article VII and as reasonably requested by the Senior
Lenders.
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(ii) Senior Lenders Closing Deliveries. In
connection with and at the Loan Exchange Closing, each Senior
Lender shall deliver to the Company the following items:
(A) the notes representing the Claims (or
affidavits of lost notes in form and substance reasonably satisfactory to the
Company) surrendered by it; and
(B) such other written instruments or
accompanying documentation as may be reasonably necessary or appropriate in
order to document the satisfaction or waiver of the applicable closing
conditions set forth in Article VII and as reasonably requested by the Company.
1.2. The Notes Exchange.
(a) Agreement to Effect the Notes Exchange. On the
terms and subject to the conditions set forth herein:
(i) Company Agreement to Exchange. The
Company hereby agrees to acquire all of the Notes held by the
Noteholders in exchange for the Notes Exchange Consideration
(as defined below).
(ii) Notes Exchange Consideration. For the
purposes of this Agreement, the term "Notes Exchange
Consideration" shall mean the consideration payable by the
Company to each Noteholder in respect of each $1,000 in
principal amount of Notes exchanged in the Notes Exchange,
which consideration shall consist of (A) $28.75 in cash and
(B) 190.9560 shares of Common Stock and 9.5242 shares of
Series B Preferred Stock (as defined below), as ratably
reduced to reflect any principal amount less than $1,000 so
exchanged.
(iii) Noteholder Agreement to Exchange;
Certain Waivers and Forbearances. Except as otherwise
expressly set forth under its name on the signature pages
hereto, each of the Noteholders severally and not jointly
agrees to exchange all of the Notes held by it for the Notes
Exchange Consideration. In addition to the foregoing, each of
the Noteholders agrees that it:
(A) shall not take any action or exercise
any right that it may have under the Indenture (as defined below) to require the
Company to repurchase any Notes as the result of any Repurchase Event resulting
from a Termination of Trading (each as defined in the Indenture) or to
accelerate the Notes as a result thereof; and
(B) shall not instruct or procure the
Trustee (as such term is defined in the Indenture) to take any action that is
inconsistent with the terms and conditions of this Agreement.
(b) Notes Exchange Closing. The closing of the Notes
Exchange (the "Notes Exchange Closing") shall take place (i) at the offices of
Stroock & Stroock & Xxxxx LLP, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx at 10:00 A.M.
on the first business day after which the last to be fulfilled or waived of the
applicable conditions set forth in Article VII shall
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be satisfied or waived in accordance with this Agreement (other than those
conditions that by their nature are to be satisfied at the Notes Exchange
Closing, but subject to the fulfillment or waiver of those conditions) or (ii)
at such other place and time and/or on such other date as the Company and the
Noteholders may agree in writing. The date on which the Notes Exchange Closing
occurs is referred to as the "Notes Exchange Closing Date". To the extent
reasonably practicable and assuming that the waivers, forbearances or consents
referred to in Section 1.1(a)(iv) have not theretofore been granted, the parties
shall cooperate and use commercially reasonable efforts to cause the Notes
Exchange Closing to occur on the same day as the Loan Exchange Closing. The
Company further agrees to use commercially reasonable efforts to cause the
closing of the exchange of Notes contemplated by the LC Capital Side Letter to
occur simultaneously with the Notes Exchange Closing.
(c) Closing Deliveries.
(i) Company Deliveries. In connection with
and at the Notes Exchange Closing, the Company shall deliver
to each Noteholder the following items:
(A) the certificates representing the shares
of Capital Stock (as defined below) included in the Notes Exchange Consideration
to be received by such Noteholder, duly executed;
(B) the cash included in the Notes Exchange
Consideration to be received by such Noteholder, by wire transfer of immediately
available funds to an account specified by such Noteholder in writing delivered
to the Company at least two business days prior to the Notes Exchange Closing
Date;
(C) a copy of the legal opinions of
Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A. and of the general counsel of the Company as
to the Notes Exchange and the shares of Capital Stock issued in connection
therewith, dated as of the Notes Exchange Closing Date, in form and substance
reasonably satisfactory to the Noteholders, duly executed;
(D) the Registration Rights Agreement (as
defined below), duly executed; and
(E) such other written instruments or
accompanying documentation as may be reasonably necessary or appropriate in
order to document the satisfaction or waiver of the applicable closing
conditions set forth in Section 7.4 and as reasonably requested by the
Noteholders.
(ii) Noteholder Deliveries. In connection
with and at the Notes Exchange Closing, each Noteholder shall
deliver to the Company the following items:
(A) its Notes, indirectly through an agent,
custodian or similar arrangement in book-entry form (e.g., by letter of free
transfer) in exchange for the Notes Exchange Consideration, together with such
other written instruments or accompanying
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documentation as may be reasonably necessary or appropriate to transfer and
cancel such Notes; and
(B) such other written instruments or
accompanying documentation as may be reasonably necessary or appropriate in
order to satisfy or obtain a waiver of the applicable closing conditions set
forth in Section 1.2(a)(ii) and as reasonably requested by the Company.
1.3. The Charter Amendment.
(a) Adoption. Subject to obtaining the Charter
Amendment Requisite Vote, and subject to the satisfaction or waiver of the
applicable conditions in Section 7.1, the Company shall take all steps necessary
and appropriate to effect the Charter Amendment. The Company further
acknowledges and agrees that pending the Charter Amendment Requisite Vote, the
Company will comply with the provisions of Article Twelfth of the Charter
Amendment and all other provisions relating thereto.
(b) Filing and Effective Time. The Company shall file
the Charter Amendment with the Secretary of State of the State of Delaware as
promptly as practicable after the Company obtains the Charter Amendment
Requisite Vote. The Charter Amendment shall become effective upon such filing
with the Secretary of State of the State of Delaware, in such form as required
by, and executed in accordance with, the relevant provisions of the Delaware
General Corporation Law ("DGCL") (such effective time, the "Charter Amendment
Effective Time").
(c) The Reverse Split Ratio. In connection with and
as part of the Charter Amendment, the Company agrees to take all actions
necessary and appropriate to cause each outstanding share of Common Stock to be
split into, and without any further action on the part of the holder thereof, to
become and thereafter represent .0400 shares (the "Reverse Split") of Common
Stock, subject to adjustment as set forth in this paragraph (c), with effect as
of the Charter Amendment Effective Time. The parties acknowledge and agree that
the foregoing ratio was calculated on the assumption of 26,931,212 shares (the
"Assumed Share Amount") of Common Stock outstanding and underlying any
Below-Threshold Options (as defined below), which number has been derived from
the representations of the Company. If the actual aggregate number of shares of
Common Stock outstanding and underlying any Below-Threshold Options that
theretofore have not been canceled pursuant to Section 6.8 exceeds the Assumed
Share Amount by more than 150,000 shares (calculated on a pre-reverse split
basis two business days prior to the Notes Exchange Closing), the Company shall
proportionately increase the number of shares of Capital Stock to be issued as
Notes Exchange Consideration pursuant to Section 1.2(a)(iii) and the number of
shares of Common Stock underlying the New Equity Plan and the Series A Warrants
to be issued in the Loan Exchange and shall provide such reasonable written
support therefor at the Notes Exchange Closing.
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ARTICLE II
Corporate Governance Following the Notes Exchange
2.1. The By-Laws. The Company shall take any and all actions
necessary on its part to make effective, on or prior to the Notes Exchange
Closing Date, and subject to completion of the Notes Exchange, the amended and
restated by-laws of the Company attached hereto as Exhibit B (the "By-Laws"),
which shall remain effective through the Notes Exchange Closing and until
thereafter amended as provided therein or by applicable law.
2.2. Directors. The Company shall take any and all actions
necessary on its part (including obtaining the resignation of any directors) to
cause the directors comprising the full Board of Directors of the Company, on or
prior to the Notes Exchange Closing Date, and subject to completion of the Notes
Exchange, to consist of those members in the table set forth below (the "New
Board"), in each case such appointments to be in accordance with the Charter as
in effect immediately prior to the Notes Exchange Closing and to remain
effective through and from the Notes Exchange Closing in accordance with the
Charter, the By-Laws and applicable law. In addition, Mr. I. Xxxxxx Xxxxxxx and
another person to be designated by Xx. Xxxxxxxxxxx X. Xxxxxxx prior to the Notes
Exchange Closing shall be the initial board observers (as described in the
By-Laws). Thereafter, all nominations and elections shall be governed in
accordance with the Charter, the By-Laws, each as amended from time to time, and
applicable law. Such directors shall, from and after the Notes Exchange Closing,
be the directors of the Company until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Charter and the By-Laws.
------------------------------------- -----------------------------------------
DIRECTOR NAME CLASS (IF NO CHARTER
AMENDMENT)(1)
------------------------------------- -----------------------------------------
Xxxxx X. Xxxxxxxxx Re-Election in 2004
------------------------------------- -----------------------------------------
Xxxxx X. Xxxx Re-Election in 2005
------------------------------------- -----------------------------------------
Xxxxxxxxxxx X. Xxxxxxx Re-Election in 2005
------------------------------------- -----------------------------------------
* Re-Election in 2004
------------------------------------- -----------------------------------------
** Re-Election in 2003
------------------------------------- -----------------------------------------
** Re-Election in 2003
------------------------------------- -----------------------------------------
** Re-Election in 2003
------------------------------------- -----------------------------------------
* An incumbent independent director designated by the Company with consent of
the Noteholders.
** Independent directors to be designated by consent of the Noteholders prior to
the Notes Exchange Closing.
2.3. Officers. The senior executive officers of the Company
who have entered into their respective Employment Agreements at or prior to the
Notes Exchange Closing shall, from and after the Notes Exchange Closing and
subject to completion of the Notes Exchange, be the senior officers of the
Company until their successors have been duly elected or appointed and qualified
or until their earlier death, resignation or removal in accordance with the
Charter and
-------------------------
(1) The Board of Directors shall remain a classified board until the Charter
Amendment Effective Time.
10
the By-Laws and their respective Employment Agreements, each as amended from
time to time, and applicable law.
2.4. The Rights Plan. The parties shall contemporaneously with
the Notes Exchange Closing and subject to completion of the Notes Exchange
present to the New Board either an amendment and restatement of the Rights Plan
or a new rights agreement (as described below, and as so amended and restated or
newly adopted, as the case may be, the "New Rights Plan").
(a) The Company shall take all action necessary to
adopt and effect the New Rights Plan (including, if applicable, terminating the
Rights Plan), as approved by the New Board subject to fiduciary duties and
applicable law. The New Rights Plan shall be in a form provided by counsel to
the Noteholders prior to the Notes Exchange Closing and shall have customary
terms and conditions and such other provisions as may reasonably be agreed prior
to the Notes Exchange Closing by the Company and the Noteholders; provided that
the New Rights Plan shall in any event exempt from triggering the Rights, (a)
the beneficial ownership by the Noteholders of Capital Stock acquired in the
Transactions, (b) the beneficial ownership by any Significant Holder (as defined
in Exhibit A attached hereto) of Capital Stock acquired in accordance with the
Charter and (c) the beneficial ownership by any third party of Capital Stock
acquired in a transfer from a Significant Holder.
(b) The New Rights Plan shall also contain provisions
requiring that all Five Percent Holders (as defined in Exhibit A hereto),
including each qualifying member of a group constituting a Five Percent Holder,
be given the opportunity to participate pro rata, for the same amount and form
of consideration and otherwise on substantially the same terms and conditions
("Tag-Along Right"), in any proposed direct or indirect transfer to a third
party, whether in one or a series of related transactions, by any Significant
Holder(s) (or any Controlled or Controlling Affiliates (as defined in Exhibit A
hereto) of a Significant Holder or one or more Significant Holders acting in
concert), of Capital Stock representing an aggregate of 20% or more of the
voting stock of the Corporation, and the final form of such provisions of the
New Rights Plan shall be reasonably acceptable to each of the Noteholders.
Unless the Tag-Along Right is provided for in a separate written agreement
reasonably satisfactory to any and each Five Percent Holder, any amendment or
repeal of the provisions of the New Rights Plan regarding such Tag-Along Right
shall require the approval of any and each Five Percent Holder; provided,
however, that the foregoing limitation shall not apply to any amendment or
repeal of such provisions in connection with any merger, consolidation or
similar transaction with an entity that is not a Significant Holder or
Controlled or Controlling Affiliate thereof or a subsidiary of the Company and
that has the result of causing the stockholders of the Company immediately prior
to such transaction to beneficially own less than fifty percent (50%) of the
voting power of the shares entitled to vote generally in elections of directors
of the Company or the corporation surviving or resulting from such transaction
and less than fifty percent (50%) of the outstanding shares of Common Stock or
common stock of the corporation surviving or resulting from such transaction.
Five Percent Holders shall not be required to make representations and
warranties in connection with the exercise of their Tag-Along Right, other than
customary representations and warranties with respect to due organization, power
and authority, ownership of the shares of Capital Stock and ability to freely
convey such shares without liens and encumbrances, noncontravention of
organizational documents and material
11
agreements, accredited investor and other related status, and enforceability of
obligations under the applicable transfer documents.
(c) The Company agrees to take all actions necessary
to approve, for purposes of Section 203 of the DGCL and any other Takeover
Statute (as defined below), any transfer of Capital Stock by a Significant
Holder in accordance with the terms of the New Rights Plan.
ARTICLE III
Effects on Capitalization; Exchange Mechanics; Adjustments
3.1. Certain Effects of Transactions on Capitalization. As a
result of the applicable Transaction and without any action on the part of the
holder of any Capital Stock:
(a) Certain Effects of Charter Amendment. Each share
of the Common Stock issued and outstanding immediately prior to the Charter
Amendment Effective Time (including any shares of Common Stock owned by the
Company or any other direct or indirect Subsidiary (as defined below) of the
Company) shall be reverse split as provided pursuant to the Reverse Split and
shall, as so adjusted, otherwise remain outstanding and be entitled to the same
dividend and other relative rights, preferences, limitations and restrictions as
are provided by the Charter. At the Charter Amendment Effective Time, each
certificate formerly representing any of such shares prior to giving effect to
the Charter Amendment shall thereafter represent the number of shares after
giving effect to the Reverse Split and the right, if any, to receive cash in
lieu of fractional shares represented by such certificate for shares of Common
Stock pursuant to Section 3.4.
(b) Certain Effects of Notes Exchange. At and after
the Notes Exchange Closing, all Notes exchanged in the Notes Exchange shall no
longer be outstanding and shall be cancelled and retired and shall cease to
exist and shall thereafter represent only the right to receive the Notes
Exchange Consideration and the right, if any, to receive any distribution or
dividend pursuant to Section 3.3.
(c) Preferred Stock. Each share of Preferred Stock
(as defined below) issued and outstanding at the Notes Exchange Closing, and
each share of Preferred Stock issued and outstanding at the Charter Amendment
Effective Time, shall remain outstanding and shall be entitled to the same
dividend and other relative rights, preferences, limitations and restrictions as
are provided by the Charter (including the respective certificates of
designation in respect of such Preferred Stock).
3.2. Depositary; Exchange Mechanics.
(a) Depositary. Promptly following the date hereof,
the Company shall, with the Noteholders' prior approval, which shall not be
unreasonably withheld, select a depositary (the "Depositary"), which Depositary
will establish an account for the benefit of the Company to which Noteholders
shall transfer all of the Notes to be exchanged pursuant to the Notes Exchange
(the "Exchange Account").
12
(b) Letter of Free Transfer. In connection with the
Notes Exchange, the Company shall, as soon as practicable following the date
hereof, collect one or more letters of transfer from each of the Noteholders, in
customary form and with such other provisions to be reasonably agreed upon by
the Company and the Noteholders (a "Letter of Free Transfer"), together with
appropriate related instructions, specifying the mechanics for transfer of the
Notes held by them to the Exchange Account immediately prior to the Notes
Exchange Closing.
(c) Termination of Exchange Account. Any Notes that
have been delivered to the Depositary in connection with the Notes Exchange
shall be returned without charge to the holder thereof in the event that the
Notes Exchange Closing does not occur within five business days of transfer to
the Exchange Account, upon written notice of the applicable Noteholder. In the
event that this Agreement is terminated in accordance with its terms or the
Notes Exchange is abandoned hereunder and any Notes have been transmitted to the
Depositary, such Notes shall promptly be returned without charge to the Person
submitting the same. For the purposes of this Agreement, the term "Person" shall
mean any individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity (as defined below) or other
entity of any kind or nature.
(d) No Accrued Interest. In addition, each Person
exchanging Notes in the Notes Exchange shall be required in the appropriate
Letter of Free Transfer to waive, among other things, any interest owing on the
Notes exchanged in the Notes Exchange in respect of any period after a
previously scheduled interest payment date and prior to the Notes Exchange
Closing Date.
(e) Computations. The Company, in consultation with
the Noteholders and based on information received from the Depositary, shall
make all computations to give effect to this Article III.
3.3. Distribution on Exchanged Notes. All shares of Capital
Stock to be issued pursuant to the Notes Exchange shall be deemed issued and
outstanding as of the Notes Exchange Closing Date. Whenever a dividend or other
distribution is declared by the Company in respect of the Capital Stock, the
record date for which is on or after the Notes Exchange Closing Date, that
declaration shall include dividends or other distributions in respect of all
shares of Capital Stock issuable pursuant to this Agreement. No such dividends
or other distributions shall be paid to any Noteholder until the Notes of such
Noteholder are exchanged pursuant to the Notes Exchange and in accordance with
this Article III.
3.4. Fractional Shares. Notwithstanding any other provision of
this Agreement, no fractional shares of Capital Stock or right to purchase
fractional shares will be issued in any/ of the Transactions. Any Person
entitled to receive a fractional share (or right to purchase a fractional share)
in any of the Transactions instead shall be entitled to receive: (a) in the case
of any fractional shares of Common Stock resulting from the Reverse Split in the
Charter Amendment, a cash payment equal to the fair value thereof, based on the
product of the fractional amount of such share multiplied by the average per
share final bid price of the Common Stock on the OTC Bulletin Board for the 20
trading days ending on the fifth trading
13
day preceding the record date for the Reverse Split, if applicable, or otherwise
as determined in good faith by the Board of Directors of the Company; and (b) in
the case of any fractional shares of Capital Stock otherwise to be issued in the
Notes Exchange or underlying the Series A Warrants to be issued in the Loan
Exchange, such fractional interest shall be rounded down or up, as the case may
be, to the nearest whole share.
3.5. Dissenters' Rights. In accordance with Section 262 of the
DGCL, no appraisal rights shall be available to holders of shares of Common
Stock in connection with the Transactions.
3.6. Adjustments to Prevent Dilution. In the event that prior
to any of the Transactions, other than as a result of the Transactions the
Company changes the number of shares of Capital Stock or securities convertible
or exchangeable into or exercisable for shares of Capital Stock issued and
outstanding or otherwise subject to issuance as a result of a reclassification,
stock split (including a reverse split but excluding the Reverse Split), stock
dividend or distribution, recapitalization, merger, consolidation, subdivision,
issuer tender or exchange offer, or any other similar transaction, the Series A
Warrants, the Capital Stock issuable in the Notes Exchange and the New Equity
Plan (as defined below) shall be equitably adjusted.
3.7. Treatment of the Unexchanged Notes; Interest Payments
Under the Indenture. After the Notes Exchange Closing, the parties acknowledge
and agree that the Indenture, dated June 23, 1997, pursuant to which the Company
issued the Notes (the "Indenture") and the Notes not exchanged in the Note
Exchange shall continue to remain outstanding and in force and effect. The
Company agrees with the Noteholders that it shall on and after the date hereof
and up to and through the Notes Exchange Closing Date timely make any interest
payments as and when due under the Indenture.
ARTICLE IV
Representations and Warranties
4.1. Representations and Warranties of the Parties. Each of
the parties hereby represents and warrants, severally and not jointly, to each
of the other parties that:
(a) Organization, Good Standing and Qualifications.
It is duly organized, validly existing and in good standing under the laws of
its respective jurisdiction of organization and has all requisite corporate or
similar power and authority to own and operate its properties and assets and to
carry on its business as presently conducted and is qualified to do business and
is in good standing as a foreign corporation in each jurisdiction where the
ownership or operation of its properties or conduct of its business requires
such qualification, except where the failure to be so qualified or in such good
standing, when taken together with all other such failures, is not reasonably
likely to prevent, materially delay or materially impair the ability of it to
consummate the Transactions or any other transactions contemplated hereby;
provided, that the foregoing representation shall not apply to any party that is
an individual.
14
(b) Corporate Authority; Binding and Enforceable. It
has all requisite power and authority as a corporation, limited liability
company or limited partnership, as applicable, and has taken all action
necessary under applicable law governing its internal affairs and under its
governing documents in order to execute, deliver and perform its obligations
under this Agreement and to consummate the applicable Transactions and the other
transactions contemplated hereby, subject, in the case of the Company, to the
Stockholder Votes; provided, that the foregoing representation shall not apply
to any party that is an individual. This Agreement is a valid and binding
agreement of it, enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(c) No Organic or Legal Violations. The execution,
delivery and performance of this Agreement by it do not, and the consummation by
it of any applicable Transactions and the other transactions contemplated hereby
will not, constitute or result in (i) a breach or violation of, or a default
under, its certificate of incorporation or by-laws or comparable governing
instruments or (ii) a breach or violation of, or a default under, the
acceleration of any obligations or the creation of a Lien (as defined below) on
the assets of it (with or without notice, lapse of time or both) pursuant to any
federal, state, local or foreign law, statute, ordinance, rule, regulation,
judgment, order, injunction, decree, arbitration award, agency requirement or
similar restriction (collectively, "Laws") of any court or any foreign or
domestic governmental, regulatory or self-regulatory authority, agency,
commission, body or other entity (each, a "Governmental Entity") to which it is
subject, except, in the case of clause (ii) above, for any breach, violation,
default, acceleration or creation of a Lien that, individually or in the
aggregate, is not reasonably likely to prevent, materially delay or materially
impair the ability of it to consummate any applicable Transactions or the other
transactions contemplated hereby; provided, that the representation with respect
to clause (i) above shall not apply to any party that is an individual.
4.2. Representations and Warranties of the Group. Except as
set forth in the corresponding sections or subsections of the disclosure letter
delivered to the Holders by the Company on or prior to entering into this
Agreement (the "Disclosure Letter"), the Group hereby jointly and severally
represents and warrants to each of the Holders that:
(a) Organizational Documents. The Company has made
available to the Holders a complete and correct copy of each member of the
Group's certificate of incorporation and by-laws or similar organizational
documents, each as amended to date, and each as so delivered are in full force
and effect.
(b) Capital Structure. The authorized capital stock
of the Company consists of 95,000,000 shares of Common Stock and 5,000,000
shares of preferred stock, $0.01 par value per share (the "Preferred Stock" and,
together with the Common Stock, the "Capital Stock"), of which 500,000 shares
are designated as Series A Junior Participating Preferred Stock, par value $0.01
per share (the "Series A Preferred"). As of the close of business on December
31, 2002 there were outstanding 26,881,212 shares of Common Stock and no shares
of Series A Preferred. All of the outstanding shares of Common Stock have been
duly authorized and are validly issued, fully paid and nonassessable. The
Company has no shares of Capital Stock
15
reserved for issuance, except that, as of the close of business on December 31,
2002, there were 2,837,135 shares of Common Stock reserved for issuance pursuant
to the Company's 1995 Equity Participation Plan (the "Stock Plan"), 500,000
shares of Series A Preferred reserved for issuance pursuant to the Company's
Rights Agreement, dated as of February 6, 1996, as amended, between the Company
and Wachovia Bank, National Association (formerly known as First Union National
Bank), as Rights Agent (the "Rights Plan"), and a certain number of shares of
Common Stock subject to issuance pursuant to the Notes. Each of the outstanding
shares of capital stock or other securities of each of the Company's
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable
and owned by the Company or by a direct or indirect wholly owned Subsidiary of
the Company, free and clear of Liens. Except as set forth above, there are no
preemptive or other outstanding rights, options, warrants, conversion rights,
stock appreciation rights, redemption rights, repurchase rights, agreements,
arrangements or commitments to issue or sell any shares of capital stock or
other securities of the Company or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or giving any
Person a right to subscribe for or acquire, any securities of the Company or any
of its Subsidiaries, and no securities or obligations evidencing such rights are
authorized, issued or outstanding. The Company does not have outstanding any
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or, other than the Notes, convertible into or exercisable for
securities having the right to vote) with the stockholders of the Company on any
matter ("Voting Debt"). As used in this Agreement, the term "Subsidiary" means,
with respect to any party, any entity, whether incorporated or unincorporated,
of which at least a majority of the securities or ownership interests having by
their terms ordinary voting power to elect a majority of the Board of Directors
or other persons performing similar functions is directly or indirectly owned or
controlled by such party or by one or more of its respective Subsidiaries or by
such party and any one or more of its respective Subsidiaries.
Section 4.2(b) of the Disclosure Letter contains a correct and complete
list of each outstanding option, warrant or similar right (including any stock
appreciation rights) to purchase or acquire any shares of Common Stock under the
Stock Plan (each, an "Option") including the holder, date of grant, exercise
price and number of shares subject thereto and identifying in the Supplement to
Annex A to the Disclosure Letter each such Option that is not subject to an
irrevocable and legally binding agreement to cancel in connection with the Notes
Exchange and that also has an exercise price of less than either $2.21 per share
or that would have an exercise price of less than $55.25 per share pro forma
after giving effect to the Charter Amendment (such Options so identified with an
asterisk referred to herein as "Below-Threshold Options"). The Company agrees
that it shall promptly and in any event prior to the tenth business day before
the Notes Exchange Closing Date deliver to the Noteholders updates to the
Disclosure Letters identifying any changes in Section 4.2(b) thereof that result
from canceling or otherwise obtaining irrevocable and legally binding agreements
to cancel Options in connection with the Notes Exchange.
(c) Required Stockholder Votes; Issuance of Capital
Stock; Board Approval.
(i) The only approvals of stockholders of
the Company required for the Company to execute, deliver and
perform its obligations under
16
this Agreement and to consummate each of the Transactions are
the Stockholder Votes (as defined below).
(ii) Prior to the Notes Exchange Closing,
the Company will have taken all action necessary to permit it
to issue the Capital Stock required to be issued as Notes
Exchange Consideration. The Capital Stock, when issued in the
Notes Exchange, will be validly issued, fully paid and
nonassessable, and no stockholder of the Company will have any
preemptive right of subscription or purchase in respect
thereof.
(iii) The Board of Directors of the Company
and of each other member of the Group has (subject to
abstention by certain directors who are entering into
Employment Agreements with respect to such agreements)
unanimously approved this Agreement and each of the
Transactions and the other transactions contemplated hereby.
(d) Governmental Filings; No Registration. Other than
the filings and/or notices (i) pursuant to Section 1.3 (The Charter Amendment),
(ii) under the Securities Act of 1933, as amended (the "Securities Act") and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (iii) to
comply with state securities or "blue-sky" laws, (iv) required to be made with
the New York Stock Exchange (the "NYSE") and the National Association of
Securities Dealers and (v) with the Bankruptcy Court (as defined below) in
connection with the Back-Up Plan, no notices, reports or other filings are
required to be made by any of the Group with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
it from, any court or Governmental Entity in connection with the execution and
delivery of this Agreement by it and the consummation by it of the Transactions
and the other transactions contemplated hereby, except those that the failure to
make or obtain are not, individually or in the aggregate, reasonably likely to
prevent, materially delay or materially impair the ability of it to consummate
the Transactions and the other transactions contemplated hereby.
(e) Securities Act Exemption. Assuming the accuracy
of the Holders' representations in Section 4.3(b) and 4.3(c), it is not, and
will not be, necessary in connection with the offer, sale or delivery of the
Capital Stock in the Notes Exchange or of the Series A Warrants (without regard
to the Common Stock issuable thereunder) and the New Junior Secured Notes in the
Loan Exchange to register under the Securities Act the offer and sale of such
Capital Stock or Series A Warrants or New Junior Secured Notes.
(f) No Contract Violations. The execution, delivery
and performance of this Agreement by the Group do not, and the consummation by
the Group of the Transactions and the other transactions contemplated hereby
(other than pursuant to the Back-Up Plan) will not, constitute or result in a
breach or violation of, or a default under, the acceleration of any obligations
of, or the creation of any Lien on the assets of, the Company or any of its
Subsidiaries (with or without notice, lapse of time or both) pursuant to, any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation not otherwise terminable by either party thereto on 90 days' or less
notice ("Contracts") and binding upon the Company or any of its Subsidiaries or
any change in the rights or obligations of any party under any of the
17
Contracts, except for any breach, violation, default, acceleration, creation or
change that, individually or in the aggregate, is not reasonably likely to have
a Material Adverse Effect or to prevent, materially delay or materially impair
the ability of the Group to consummate the Transactions and the other
transactions contemplated hereby. As used in this Agreement, the term "Material
Adverse Effect" means a material adverse effect on the financial condition,
properties, prospects, business or results of operations of the Company and its
Subsidiaries taken as a whole; provided, however, that any such effect resulting
from any change (i) in law, rule, or regulation or generally accepted accounting
principles ("GAAP") or interpretations thereof that applies to the Group and
similar entities on substantially the same basis or (ii) in the staffing
industry specifically, or economic or business conditions generally, shall not
be considered when determining if a Material Adverse Effect has occurred.
(g) Company Reports; Financial Statements. The
Company has delivered to the Holders each registration statement, report, proxy
statement or information statement prepared by it since December 30, 2001 (the
"Audit Date"), including (i) the Company's Annual Report on Form 10-K for the
year ended December 30, 2001 and (ii) the Company's Quarterly Reports on Form
10-Q for the periods ended March 31, 2002, June 30, 2002 and September 29, 2002,
each in the form (including exhibits, annexes and any amendments thereto) filed
with the SEC (collectively, including any such reports filed subsequent to the
date hereof, the "Company Reports"). As of their respective dates, the Company
Reports did not, and any Company Reports filed with the SEC subsequent to the
date hereof will not, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading. Each of the consolidated balance sheets included in or
incorporated by reference into the Company Reports (including the related notes
and schedules) fairly presents, or will fairly present, the consolidated
financial position of the Company and its Subsidiaries as of its date and each
of the consolidated statements of income and of changes in financial position
included in or incorporated by reference into the Company Reports (including any
related notes and schedules) fairly presents, or will fairly present, the
results of operations, retained earnings and changes in financial position, as
the case may be, of the Company and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments that will not be material in amount or effect), in
each case in accordance with GAAP consistently applied during the periods
involved, except as may be noted therein.
(h) Absence of Certain Changes. Except as disclosed
in the Company Reports filed prior to the date hereof and the Report of the
Company on Form 8-K filed November 12, 2002, since the Audit Date the Company
and its Subsidiaries have conducted their respective businesses only in, and
have not engaged in any material transaction other than according to, the
ordinary and usual course of such businesses and there has not been (i) any
change in the financial condition, properties, prospects, business or results of
operations of the Company and its Subsidiaries or any development or combination
of developments of which the executive officers of the Company have knowledge
that, individually or in the aggregate, has had or is reasonably likely to have
a Material Adverse Effect; (ii) any material damage, destruction or other
casualty loss with respect to any material asset or property owned, leased or
otherwise used by the Company or any of its Subsidiaries, whether or not covered
by insurance; (iii) any declaration, setting aside or payment of any dividend or
other distribution in respect of the
18
capital stock of the Company, except for dividends or other distributions on its
capital stock publicly announced prior to the date hereof; or (iv) any change by
the Company in accounting principles, practices or methods. Since the Audit
Date, except as provided for herein or as disclosed in the Company Reports filed
prior to the date hereof, there has not been any increase in the compensation
payable or that could become payable by the Company or any of its Subsidiaries
to officers or key employees or any amendment of any of the Compensation and
Benefit Plans (as defined below) other than increases or amendments in the
ordinary course.
(i) Litigation and Liabilities. Except as disclosed
in the Company Reports filed prior to the date hereof, there are no (i) civil,
criminal or administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of the executive officers of the
Company, threatened against the Company or any of its affiliates or (ii)
obligations or liabilities, whether or not accrued, contingent or otherwise and
whether or not required to be disclosed, including those relating to
environmental and occupational safety and health matters, or any other facts or
circumstances of which the executive officers of the Company have knowledge that
could result in any claims against, or obligations or liabilities of, the
Company or any of its affiliates, except for those that are not, individually or
in the aggregate, reasonably likely to have a Material Adverse Effect or to
prevent or to materially impair the ability of the Group to consummate the
Transactions or the other transactions contemplated hereby.
(j) Employee Benefits.
(i) A copy of each bonus, deferred
compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option (including the Stock
Plan), employment, termination, severance, compensation,
medical, health, life, disability or other plan, agreement,
policy or arrangement that covers employees, directors, former
employees or former directors of the Company and its
Subsidiaries (the "Compensation and Benefit Plans") and any
trust agreement or insurance contract forming a part of such
Compensation and Benefit Plans has been made available to the
Noteholders prior to the date hereof. The Company has taken
all action required to terminate the Company's 2001
Non-Qualified Employee Stock Purchase Plan.
(ii) The Compensation and Benefit Plans are
listed in Section 4.2 (j) of the Disclosure Letter and any
"change of control" or similar provisions therein are
specifically identified in Section 4.2 (j) of the Disclosure
Letter.
(iii) All Compensation and Benefit Plans are
in compliance in all material respects (both in their terms
and in their operation) with all applicable laws, including
the Code and the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). Each Compensation and Benefit Plan
that is an "employee pension benefit plan" within the meaning
of Section 3(2) of ERISA (a "Pension Plan") and that is
intended to be qualified under Section 401 (a) of the Code has
received a favorable determination letter from the Internal
Revenue Service (the "IRS"), and the Company is not aware of
any circumstances likely to
19
result in revocation of any such favorable determination
letter. There is no pending or, to the knowledge of the
executive officers of the Company, threatened claim, action,
investigation, proceeding or lawsuit relating to the
Compensation and Benefit Plans (other than any claim for
benefits in the ordinary course). Neither the Company nor any
of its Subsidiaries has engaged in a transaction with respect
to any Compensation and Benefit Plan that, assuming the
taxable period of such transaction expired as of the date
hereof, would subject the Company or any of its Subsidiaries
to a tax or penalty imposed by either Section 4975 of the Code
or Section 502 of ERISA.
(iv) As of the date hereof, no liability
under Subtitle C or D of Title IV of ERISA has been or is
expected to be incurred by the Company or any Subsidiary with
respect to any ongoing, frozen or terminated "single-employer
plan", within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or
Section 414 of the Code (an "ERISA Affiliate"). The Company
and its Subsidiaries either (A) have not incurred and do not
expect to incur any withdrawal liability with respect to a
multiemployer plan under Subtitle E to Title IV of ERISA or
(B) have not contributed, or been obligated to contribute, to
a multiemployer plan under Subtitle E of Title IV of ERISA at
any time since September 26, 1980. No notice of a "reportable
event", within the meaning of Section 4043 of ERISA for which
the 30-day reporting requirement has not been waived, has been
required to be filed for any Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof
or will be required to be filed in connection with the
Transactions and the other transactions contemplated hereby.
(v) All contributions required to be made
under the terms of any Compensation and Benefit Plan as of the
date hereof have been timely made and any other liabilities of
the Company and its Subsidiaries have been reflected on the
most recent consolidated balance sheet filed or incorporated
by reference in the Company Reports prior to the date hereof.
Neither any Pension Plan nor any single-employer plan of an
ERISA Affiliate has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA and neither the Company, its
Subsidiaries or any ERISA Affiliate has failed to make when
due all quarterly contributions required under Section 412 of
the Code or Section 302 of ERISA. Neither the Company nor its
Subsidiaries has provided, or is required to provide, security
to any Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code.
(vi) Under each Pension Plan which is a
single-employer plan, as of the last day of the most recent
plan year ended prior to the date hereof, the actuarially
determined present value of all "benefit liabilities", within
the meaning of Section 4001(a)(16) of ERISA (as determined on
the basis of the actuarial assumptions contained in the
Pension Plan's most recent actuarial valuation), did
20
not exceed the then current value of the assets of such
Pension Plan, and there has been no material change in the
financial condition of such Pension Plan since the last day of
the most recent plan year.
(vii) Neither the Company nor its
Subsidiaries have any obligations for post-termination health,
life or other non-pension benefits under any Compensation and
Benefit Plan, except as set forth in Section 4.2(j) of the
Company Disclosure Letter or as required pursuant to Section
4980B of the Code and Sections 601 through 608 of ERISA. The
Company or its Subsidiaries may amend or terminate any such
plan under the terms of such plan at any time without
incurring any material liability thereunder with respect to
events subsequent to such termination.
(viii) The consummation of the Transactions
and the other transactions contemplated hereby will not (x)
entitle any employees of the Company or its Subsidiaries to
severance pay, (y) accelerate the time of payment or vesting
or trigger any payment of compensation or benefits under,
increase the amount payable or trigger any other obligation
pursuant to, any of the Compensation and Benefit Plans or (z)
result in any breach or violation of, or a default under, any
of the Compensation and Benefit Plans.
(ix) No event has occurred in connection
with which the Company, any Subsidiary, any ERISA Affiliate or
any Compensation and Benefit Plan, directly or indirectly
could be subject to any liability (a) under any statute,
regulation, or governmental order relating to any Compensation
and Benefit Plan or and single employer plan of an ERISA
Affiliate or (b) pursuant to any obligation of the Company or
a Subsidiary to indemnify a person against liability incurred
under any such statute, regulation or order as they relate to
the Compensation and Benefit Plans.
(x) All Compensation and Benefit Plans
covering current or former non-U.S. employees or former
employees of the Company and its Subsidiaries comply in all
material respects with applicable local law. The Company and
its Subsidiaries have no unfunded liabilities with respect to
any Pension Plan or other Plan that covers such non-U.S.
employees.
(k) Compliance with Laws; Permits. Except as set
forth in the Company Reports filed prior to the date hereof, the businesses of
each of the Company and its Subsidiaries have not been, and are not being,
conducted in violation of any Laws, except for violations or possible violations
that, individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect or to prevent or materially impair the ability of the
Group to consummate the Transactions and the other transactions contemplated
hereby. Except as set forth in the Company Reports filed prior to the date
hereof, no investigation or review by any Governmental Entity with respect to
the Company or any of its Subsidiaries is pending or, to the knowledge of the
executive officers of the Company, threatened, nor has any Governmental Entity
indicated an intention to conduct the same, except for those the outcome of
which are not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect or to
21
prevent or materially impair the ability of the Group to consummate the
Transactions and the other transactions contemplated hereby. To the knowledge of
the executive officers of the Company, no material change is required in the
Company's or any of its Subsidiaries' processes, properties or procedures in
connection with any such Laws, and the Company has not received any notice or
communication of any material noncompliance with any such Laws that has not been
cured as of the date hereof. The Company and each of its Subsidiaries have all
permits, licenses, trademarks, patents, trade names, copyrights, service marks,
franchises, variances, exemptions, orders and other governmental authorizations,
consents and approvals necessary to conduct its business as presently conducted
except those the absence of which are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect or to prevent or materially
impair the ability of the Group to consummate the Transactions and the other
transactions contemplated hereby.
(l) Takeover Statutes. No "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or regulation
(including Sections 55-9 and 55-9A of the North Carolina Business Corporation
Act (the "NCBCA") and Section 203 of the DGCL (each, a "Takeover Statute")) or
any anti-takeover provision in the Charter or By-Laws is, or at either of the
Notes Exchange Closing or the Loan Exchange Closing will be, applicable to, the
Loan Exchange Consideration, the Notes Exchange Consideration, the Transactions
or the other transactions contemplated hereby. Assuming the accuracy of the
Holders' representations and warranties contained in Section 4.3(a), the Board
of Directors of the Company has taken all action so that the Holders will not be
prohibited from entering into a "business combination" with the Company as an
"interested stockholder" (in each case as such term is used in Section 203 of
the DGCL) as a result of the execution of this Agreement or the consummation of
the Transactions or other transactions contemplated hereby. The Company
acknowledges and agrees that the provisions of Sections 55-9 and 55-9A of the
NCBCA or any other Takeover Statute under the NCBCA are now, and as of the Notes
Exchange Closing and the Loan Exchange Closing shall continue to be,
inapplicable to the Company.
(m) Tax Matters. As of the date hereof, neither the
Company nor any of its affiliates has taken or agreed to take any action, nor do
the executive officers of the Company have any knowledge of any fact or
circumstance, that would prevent the exchange of the Notes for Capital Stock in
the Notes Exchange from qualifying as a reorganization within the meaning of
Section 368(a)(1)(E) of the Code.
(n) Taxes. The Company and each of its Subsidiaries
(i) have prepared in good faith and duly and timely filed (taking into account
any extension of time within which to file) all Tax Returns (as defined below)
required to be filed by any of them and all such filed Tax Returns are complete
and accurate in all material respects; (ii) have paid all Taxes (as defined
below) that are shown as due on such filed Tax Returns or that the Company or
any of its Subsidiaries are obligated to withhold from amounts owing to any
employee, creditor or third party, except with respect to matters contested in
good faith; and (iii) have not waived any statute of limitations with respect to
Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency. As of the date hereof, there are not pending or, to the knowledge of
the executive officers of the Company threatened in writing, any audits,
examinations, investigations or other proceedings in respect of Taxes or Tax
matters. There are not, to the knowledge of the executive officers of the
Company, any unresolved questions or
22
claims concerning the Company's or any of its Subsidiaries' Tax liability that
are reasonably likely to have a Material Adverse Effect. The Company has made
available to the Holders true and correct copies of the United States federal
income Tax Returns filed by the Company and its Subsidiaries for each of the
fiscal years ended January 2, 2000, December 30, 2000 and December 30, 2001.
Neither the Company nor any of its Subsidiaries has any liability with respect
to income, franchise or similar Taxes that accrued on or before the Audit Date
in excess of the amounts accrued with respect thereto that are reflected in the
financial statements included in the Company Reports filed on or prior to the
date hereof. Neither the Company nor any of its Subsidiaries has any liability
with respect to income, franchise or similar Taxes that accrued on or before the
date of the consummation of the Transactions and other transactions contemplated
hereby in excess of the amounts accrued with respect thereto that are reflected
in the books and records of the Company and its subsidiaries as of such date.
As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the terms "Taxes" and "Taxable") includes all federal,
state, local and foreign income, profits, franchise, gross receipts,
environmental, customs duty, capital stock, severances, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts and any interest in respect of such penalties and
additions, and (ii) the term "Tax Return" includes all returns and reports
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to a Tax authority relating to
Taxes.
(o) Labor Matters. Neither the Company nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor, as of the date hereof, is the Company or any of its
Subsidiaries the subject of any material proceeding asserting that the Company
or any of its Subsidiaries has committed an unfair labor practice or seeking to
compel it to bargain with any labor union or labor organization. There is not
pending or, to the knowledge of the executive officers of the Company,
threatened, nor has there been for the past five years, any labor strike,
dispute, walk-out, work stoppage, slow-down or lockout involving the Company or
any of its Subsidiaries.
(p) Insurance. All material fire and casualty,
general liability, business interruption, product liability, and sprinkler and
water damage insurance policies maintained by the Company or any of its
Subsidiaries are with reputable insurance carriers, provide full and adequate
coverage for all normal risks incident to the business of the Company and its
Subsidiaries and their respective properties and assets, except for any such
failures to maintain insurance policies that, individually or in the aggregate,
are not reasonably likely to have a Material Adverse Effect.
(q) Rights Plan. The Company has amended the Rights
Plan to provide that none of the Noteholders and their affiliates shall be
deemed to become an Acquiring Person (as defined in the Rights Plan) as a result
of the execution of this Agreement or the consummation of the Transactions and
has taken any other action necessary to ensure the Rights (as defined in the
Rights Plan) shall not be triggered by the execution of this Agreement or the
consummation the Transactions and the other transactions contemplated hereby.
23
(r) Brokers and Finders. Neither any of the Group nor
any of its officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the Transactions or the other transactions contemplated hereby
(or any Alternative Proposal (as defined below)) except that the Company has
employed UBS Warburg LLC ("UBS") as its financial advisor, the arrangements with
which have been disclosed to the Noteholders prior to the date hereof.
(s) LC Capital Side Letter. The Company has provided
to each of the Noteholders a true and complete signed copy of the LC Capital
Side Letter. The Indenture, this Agreement and the LC Capital Side Letter
constitute the only binding agreements between the Company and holders of Notes
relating to the purchase of Notes by or exchange of Notes with the Company or
any other members of the Group.
4.3. Representations and Warranties of the Holders. Each of
the Holders hereby severally, and not jointly, represents and warrants to the
Company that:
(a) Ownership of Claims, Notes and Capital Stock. As
of the date hereof, each of the Holders "Beneficially Owns" or is the
"Beneficial Owner" of (as such terms are defined in the Rights Plan) such number
of shares of Capital Stock and/or aggregate principal amount of Notes and/or
funded Loans (excluding any commitments in respect of outstanding but undrawn
letters of credit under the Existing Senior Facility, and subject to trades
pending between Holders) as is set forth next to its name on the signature pages
hereto, without giving effect to any Beneficial Ownership arising solely out of
being a party to this Agreement or the Purchase Option Agreement or Beneficial
Ownership of Common Stock arising solely out of the ownership of the Notes.
Subject to the foregoing sentence, the shares of Capital Stock, aggregate
principal amount of Notes, and aggregate principal amount of funded Loans set
forth next to the name of each Holder on the signature pages hereto constitute
the only shares of Capital Stock, Notes or funded Loans owned, beneficially
owned or otherwise directly or indirectly held by such Holder. Each Holder has
good title to all such Notes and Loans, free and clear of any Liens and any
options, warrants or rights to acquire any of the foregoing, in each case, that
would prevent or materially impair the performance of the obligations of the
Noteholders hereunder, and has full power and authority to assign and transfer
all such Notes and Loans.
(b) Status. The Holder understands that the Loan
Exchange and the Notes Exchange involve substantial risk. The Holder has
experience as an investor in securities of companies and acknowledges that it is
able to fend for itself, can bear the economic risk of an investment in the
Capital Stock and, to the extent applicable, the Series A Warrants and the New
Junior Secured Notes and has such knowledge and experience in financial or
business matters, that it is capable of evaluating the merits and risks of an
investment in the Capital Stock and, to the extent applicable, the Series A
Warrants and the New Junior Secured Notes and protecting its own interests in
connection with any such investment. Such Holder is an "accredited investor" as
defined in Rule 501 promulgated under the Securities Act.
(c) Investment Intent. The Holder is acquiring the
Shares of Capital Stock and, to the extent applicable, the Series A Warrants and
the New Junior Secured Notes issuable pursuant to the Transactions for its own
account and for investment purposes only and
24
not with a view to, or for resale in connection with, any distribution thereof
in violation of the Securities Act.
(d) Access to Information. The Holder has had an
opportunity to discuss the Company's business, management, and financial affairs
with the Company's management and the opportunity to review the Company's
business plan. The Holder has had an opportunity to ask questions of officers of
the Company, which questions were answered to its satisfaction. The Holder
acknowledges that it has had an opportunity to conduct its own independent due
diligence investigation of the Company.
(e) Brokers and Finders. Neither the Holder nor any
of its affiliates, officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finders'
fees in connection with the Transactions or the other transactions contemplated
hereby.
(f) Legal Proceedings. There are no actions, suits,
arbitrations or proceedings pending before any court or Governmental Entity
against it or, to the knowledge of such Holder, threatened against it, by any
court or Governmental Entity that individually or in the aggregate could
materially impair its ability to consummate the Transactions and such Holder is
not subject to any order of any court or Governmental Entity that individually
or in the aggregate is reasonably likely to have a material adverse effect on
its ability to consummate the Transactions.
(g) Confidentiality Agreements. Other than any
confidentiality agreements between the Holder and the Company, to such Holder's
knowledge, such Holder is not a party to any confidentiality agreement or
similar agreement that would prevent the Holder from disclosing information
required to be disclosed by it in connection with the consummation of the
Transactions.
(h) Restricted Securities. Each Holder agrees that,
at the time of issuance, the shares of Capital Stock to be issued, and
underlying Capital Stock to be issued, to the Noteholders, and the Series A
Warrants, the New Junior Secured Notes and the shares of Capital Stock
underlying the Series A Warrants to be issued to the Senior Lenders, hereunder
will not be registered under the Securities Act or qualified under any state
securities laws. Such securities are being issued on the basis that the Notes
Exchange and the Loan Exchange and the issuance by the Company of such
securities to such Holders under this Agreement are exempt from registration
under the Securities Act and from applicable state securities laws. Each Holder
agrees that the reliance by the Company on such exemptions is predicated, in
part, on such Holder's representations and warranties and other agreements set
forth in this Agreement. Each Holder acknowledges and agrees that each
certificate representing shares of Capital Stock, Series A Warrants or New
Junior Notes issued or underlying shares of Capital Stock or Series A Warrants
issued in the Transactions shall bear substantially the following legend and
that each certificate for shares of Series B Preferred Stock or Series A Warrant
shall bear any additional restrictive legends required by the certificate of
designation for the Series B Preferred Stock or the Warrant Agreement, as
applicable:
25
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES
LAW AND MAY NOT BE TRANSFERRED UNLESS (i) THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR SUCH APPLICABLE
STATE SECURITIES LAWS, OR (ii) IN THE OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE ISSUER, REGISTRATION UNDER THE SECURITIES ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH
SUCH TRANSFER.
ARTICLE V
Interim Operating Covenants; Alternative Proposals
5.1. Interim Operations of the Group. Each member of the Group
jointly and severally covenants and agrees as to itself and its Subsidiaries
that, after the date hereof and prior to the Loan Exchange Closing and the Notes
Exchange Closing (unless the Noteholders shall otherwise approve in writing or
as set forth in the Disclosure Letter and except as otherwise expressly
contemplated by this Agreement):
(a) the business of it and its Subsidiaries shall be
conducted in the ordinary and usual course and, to the extent consistent
therewith, it and its Subsidiaries shall use all reasonable efforts to preserve
its business organization intact and maintain its existing relations and
goodwill with customers, suppliers, distributors, creditors, lessors, employees
and business associates;
(b) it shall not (i) issue, sell, pledge, dispose of
or further encumber any capital stock owned by it in any of its Subsidiaries;
(ii) amend its certificate of incorporation or by-laws or, in the case of the
Company, amend, modify or terminate the Rights Plan; (iii) split, combine or
reclassify its outstanding shares of capital stock; (iv) declare, set aside or
pay any dividend payable in cash, stock or property in respect of any capital
stock other than dividends paid by wholly owned Subsidiaries to their parent
companies; or (v) repurchase, redeem or otherwise acquire, except in the case of
the Company, in connection with exercises and cancellations under the Stock Plan
or conversions under the Notes, or permit any of its Subsidiaries to purchase or
otherwise acquire, any shares of its capital stock or its indebtedness or any
securities convertible into or exchangeable or exercisable for any shares of its
capital stock or its indebtedness;
(c) neither it nor any of its Subsidiaries shall (i)
issue, sell, pledge, dispose of or encumber any shares of, or securities
convertible into or exchangeable or exercisable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of its capital
stock of any class or any Voting Debt or any other property or assets (other
than, in the case of the Company, shares of Common Stock issuable pursuant to
Options outstanding on the date hereof under the Stock Plan or upon conversion
of the Notes); (ii) other than in the ordinary and usual course of business,
transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or
encumber any other property or assets (including capital stock of any of its
Subsidiaries); (iii) incur or modify any debt for borrowed money (including
under the
26
Existing Senior Facility or the Notes but excluding purchase money indebtedness
incurred in the ordinary course and not material in amount) or any other
material indebtedness or liability; or (iv) make or authorize or commit for any
capital expenditures other than in the ordinary and usual course of business and
in amounts less than $2 million in the aggregate or, by any means, make any
acquisition of, or investment in, assets or stock of any other Person or entity
in excess of $1 million;
(d) except for any amendment to a Compensation and
Benefit Plan to the extent such amendment is described in Section 4.2(j) of the
Disclosure Letter, neither it nor any of its Subsidiaries shall terminate,
establish, adopt, enter into, make any new grants or awards under, amend or
otherwise modify, any Compensation and Benefit Plans or increase the salary,
wage, bonus or other compensation of any employees, other than as required by
Law or ordinary course increases to non-executive employees;
(e) neither it nor any of its Subsidiaries shall
settle or compromise any material claims or litigation or, except in the
ordinary and usual course of business modify, amend or terminate any of its
material Contracts or waive, release or assign any material rights or claims;
(f) neither it nor any of its Subsidiaries shall make
any Tax election or permit any insurance policy naming it as a beneficiary or
loss-payable payee to be cancelled or terminated except in the ordinary and
usual course of business;
(g) neither it nor any of its Subsidiaries shall
knowingly take any action or omit to take any action that would cause any of its
representations and warranties herein to become untrue in any material respect;
and
(h) neither it nor any of its Subsidiaries will
authorize or enter into an agreement to do any of the foregoing.
5.2. Alternative Proposals. The Company agrees that, except as
and to the extent consented to by the Noteholders, neither it nor any of its
Subsidiaries nor any of the officers and directors of it or its Subsidiaries
shall, and that it shall direct and use its best efforts to cause its and its
Subsidiaries' employees, agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its Subsidiaries) not
to, directly or indirectly, initiate, solicit, encourage or otherwise facilitate
any inquiries or the making of any proposal or offer with respect to a merger,
reorganization, share exchange, consolidation or similar transaction involving
(or any purchase, issuance or exchange of 20% or more of the assets or
indebtedness or any equity or debt securities of) it or any of its Subsidiaries
(any such proposal or offer being hereinafter referred to as an "Alternative
Proposal"). Notwithstanding the foregoing, nothing contained in this Agreement
shall prevent the Company or its Board of Directors from (A) complying with Rule
14e-2 promulgated under the Exchange Act with regard to an Alternative Proposal;
(B) providing information in response to a request therefor by a Person who has
made an unsolicited bona fide written Alternative Proposal if the Board of
Directors receives from the Person so requesting such information an executed
confidentiality agreement on terms substantially similar to those contained in
the Confidentiality Agreements (as defined below), it being understood that such
confidentiality agreement need not prohibit the
27
making, or amendment, of an Alternative Proposal; (C) engaging in any
negotiations or discussions with any Person who has made an unsolicited bona
fide written Alternative Proposal; or (D) recommending such an Alternative
Proposal to the stockholders and noteholders of the Company, if and only to the
extent that in the case referred to in this clause (D), the Board of Directors
of the Company (i) determines in good faith after consultation with outside
legal counsel that such action is necessary in order for its directors to comply
with their fiduciary duties under applicable law and (ii) determines in good
faith (after consultation with its financial advisor) that such Alternative
Proposal, if accepted, is reasonably likely to be consummated, taking into
account all legal, financial and regulatory aspects of the proposal and the
Person making the proposal and would, if consummated, result in a transaction
more favorable from a financial point of view to the Company and the Persons to
whom fiduciary duties are owed by the Board of Directors than the transactions
contemplated by this Agreement (any such more favorable Alternative Proposal
being referred to in this Agreement as a "Superior Proposal"). The Company
agrees that it will take the necessary steps to promptly inform the individuals
or entities referred to in the first sentence hereof of the obligations
undertaken in this Section. The Company agrees that it will notify the Holders
immediately if any such inquiries, proposals or offers are received by, any such
information is requested from, or any such discussions or negotiations are
sought to be initiated or continued with, any of its representatives indicating,
in connection with such notice, the name of such Person and the material terms
and conditions of any proposals or offers and thereafter shall keep the Holders
informed, on a current basis, on the status and terms of any such proposals or
offers and the status of any such discussions or negotiations. The Company also
agrees that it will take all steps to maintain and enforce any heretofore
executed confidentiality agreements in connection with its consideration of a
potential Alternative Proposal.
ARTICLE VI
Other Agreements and Covenants
6.1. Information Supplied. The Company and each of the Holders
agree, as to itself and, in the case of the Company, its Subsidiaries, that none
of the information supplied or to be supplied by it or its Subsidiaries for
inclusion or incorporation by reference in the Schedule 14A to be filed with the
SEC by the Company in connection with the Stockholders Meeting (as defined
below), including the proxy statement and related materials to be mailed to
holders of Capital Stock in connection with the Company's 2003 annual meeting of
stockholders to the extent practicable, or otherwise at a special meeting of
stockholders of the Company to be held as soon as possible following the Notes
Exchange Closing and the securing of the Stockholder Votes (the "Proxy
Statement") and any amendment or supplement thereto, will not at the date of
mailing to holders of Capital Stock and at the time of the Stockholders Meeting
(A) contain any untrue statement of material fact or (B) omit to state any
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. The Company shall correct promptly any material information in
the Proxy Statement that shall have become false or misleading, and each of the
Holders shall promptly notify the Company in writing upon becoming aware that
any material information provided by it for use in the Proxy Statement shall
have become false or misleading, and the Company further agrees to take all
steps necessary to cause the Proxy Statement as so
28
corrected to be filed with the SEC and as so corrected to be disseminated to
holders of Capital Stock in each such case as and to the extent required by
applicable federal securities laws.
6.2. Stockholders Votes. The Company will take, in accordance
with applicable law and its Charter and By-Laws, all action necessary to convene
a meeting of holders of shares of Capital Stock (including any such meeting held
pursuant to an adjournment or postponement, the "Stockholders Meeting") as
promptly as practicable after the Proxy Statement is mailed to its stockholders
to consider and vote upon the approval of the Charter Amendment and adoption of
the New Equity Plan. Approval of the Charter Amendment will require the
affirmative vote of the holders of a majority of the outstanding shares of
Capital Stock voting together as a single class (the "Charter Amendment
Requisite Vote"). Approval of the adoption of the New Equity Plan will require
the affirmative vote of the holders of a majority of votes cast by holders of
the shares of Common Stock present and entitled to vote at a meeting duly called
therefor, provided that the total vote cast on such proposal represents over 50%
of all votes entitled to be cast thereon (the "Plan Vote" and together with the
Charter Amendment Requisite Vote, the "Stockholder Votes"). The Company's Board
of Directors, subject to Section 5.2 hereof, shall recommend such approvals and
shall take all lawful and reasonable action to solicit such approvals.
6.3. Filings; Other Actions; Notification.
(a) The Company shall promptly prepare and promptly
following the Notes Exchange Closing shall file with the SEC the Proxy
Statement. The Company shall use its best efforts to have the Proxy Statement
cleared for mailing to the stockholders of the Company under the Exchange Act as
promptly as practicable after the filing thereof and promptly thereafter shall
mail or cause to be mailed the Proxy Statement to the stockholders of the
Company. The Company shall also use its commercially reasonable efforts to
obtain prior to the Notes Exchange Closing and the Loan Exchange Closing all
necessary state securities law or "blue sky" permits and approvals required in
connection with the Transactions. The Company shall use all best efforts to
secure the Stockholder Votes, without paying any money or other consideration to
stockholders in respect thereof.
(b) Each party agrees that it shall cooperate with
the other parties and use (and cause its respective affiliates to use) its
respective commercially reasonable efforts to take or cause to be taken all
actions, and do or cause to be done all things, necessary, proper or advisable
on its part under this Agreement and applicable Laws to consummate and make
effective the Transactions and the other transactions contemplated hereby as
soon as practicable, including preparing and filing as promptly as practicable
all documentation to effect all necessary notices, reports and other filings and
to obtain as promptly as practicable all consents, registrations, approvals,
permits and authorizations necessary or advisable to be obtained from any third
party and/or any Governmental Entity in order to consummate the Transactions or
any of the other transactions contemplated hereby.
(c) Each member of the Group shall, at the request of
any Holder, and each Holder shall, at the request of the Company, furnish the
other party with all information concerning itself, its affiliates, directors,
officers and security holders and such other matters as may be reasonably
necessary or advisable in connection with the Proxy Statement or any other
29
required statement, filing, notice or application made by or on behalf of the
Holders, the Company or any of their respective affiliates to any third party
and/or any court or Governmental Entity in connection with the Transactions and
the other transactions contemplated hereby. Subject to applicable Laws relating
to the exchange of information, the Holders and the Company shall have the right
to review in advance and, to the extent practicable, each will consult the other
on all the information relating to the Holders or the Group, as the case may be,
and any of their respective affiliates, that appear in any filing made with, or
written materials submitted to, any third party and/or any court or Governmental
Entity in connection with the Transactions and the other transactions
contemplated hereby. In exercising the foregoing rights, each of the parties
shall act reasonably and as promptly as practicable.
(d) The Company, on the one hand, and each of the
Holders, on the other hand, shall keep the other apprised of the status of
matters relating to completion of the Transactions and the other transactions
contemplated hereby, including promptly furnishing the other with copies of
notice or other communications received by such Holder or the Group, as the case
may be, or any of its affiliates, from any third party and/or any court or
Governmental Entity with respect to the Transactions and the other transactions
contemplated hereby. The Company shall give prompt notice to the Holders of any
change that is reasonably likely to prevent or to materially impair or delay the
Company's ability to effect the Transactions and the other transactions
contemplated hereby.
6.4. Taxation. None of the Group shall take or cause to be
taken any action, whether before or after the Closing Date, that would
disqualify the exchange of the Notes for Capital Stock in the Notes Exchange as
a "reorganization" within the meaning of Section 368(a)(1)(E) of the Code.
6.5. Access. Upon reasonable notice, and except as may
otherwise be required by applicable law, each of the Group shall (and shall
cause its Subsidiaries to) afford, prior to the Notes Exchange Closing Date, any
Noteholder's officers, employees, counsel, accountants and other authorized
representatives and, prior to the Loan Exchange Closing Date, any Senior
Lender's officers, employees, counsel, accountants and other authorized
representatives reasonable access, during normal business hours throughout such
applicable period, to its properties, books, contracts and records and, during
such period, each shall (and shall cause its Subsidiaries to) furnish promptly
to the other all information concerning its business, properties and personnel
as may reasonably be requested, provided that no investigation pursuant to this
Section shall affect or be deemed to modify any representation or warranty made
by the Company and, provided, further, that the foregoing shall not require the
Group to permit any inspection, or to disclose any information, that in the
reasonable judgment of the Company would result in the disclosure of any trade
secrets of third parties or violate any of its obligations with respect to
confidentiality if the Company shall have used commercially reasonable efforts
to obtain the consent of such third party to such inspection or disclosure. All
requests for information made pursuant to this Section shall be directed to an
executive officer of the Company or such Person as may be designated by the
Company. All such information shall be governed by the terms of the
Confidentiality Agreements.
6.6. Stock Exchange Listing. The Company shall use its best
efforts such that immediately after the Charter Amendment Requisite Vote is
obtained, the shares of Common
30
Stock, including those shares of Common Stock to be issued in the Notes Exchange
and the shares of Common Stock issuable upon conversion of the Series B
Preferred Stock issued in the Notes Exchange and upon exercise of the Series A
Warrants issued in the Loan Exchange, shall be approved for quotation on the
NASDAQ National Market System ("NASDAQ/NMS") or listing on the NYSE or the
American Stock Exchange or another "U.S. national securities exchange" or
"established automated over-the-counter trading market in the United States" (in
each case, within the meaning given to such terms in the Indenture), and shall
use its best efforts to maintain such status, including by amending the ratio
for the Reverse Split as reasonably necessary to satisfy the quotation or
listing requirements of the foregoing systems or exchanges and to maintain such
status.
6.7. Publicity. The Company and the Holders each shall consult
with each other prior to issuing any press releases or otherwise making public
announcements with respect to the Transactions and the other transactions
contemplated hereby except as may be required by Law.
6.8. Options; Stock Plans and Forms S-8.
(a) Options. Other than as disclosed in the
Disclosure Letter, the Group shall not take any action to cause or cause the
Transactions or other transactions contemplated hereby to result in the
acceleration of payment, vesting or exercisability of any benefit under any
Options, or any other incentive compensation arrangement or agreement. Prior to
the Notes Exchange Closing, the Company shall use all commercially reasonable
efforts to cancel, subject to completion of the Notes Exchange, each Option,
whether or not then exercisable, for either nominal or no cash payment.
(b) Stock Plan and Forms S-8. The Company shall take
any and all action required to terminate the Stock Plan prior to the Notes
Exchange Closing so that no Options or other awards remain reserved for grants
or issuance thereunder. As soon as practicable after the Notes Exchange Closing,
the Company shall file with the SEC a registration statement or statements on
Form S-8 (and any amendments to such currently filed Form S-8) with respect to
the termination of the Stock Plan and with respect to the Common Stock
underlying Options that remain outstanding under the Stock Plan and the new
options issued or issuable under the New Equity Plan, and shall use its best
efforts to maintain the effectiveness of such registration statement (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such Options and new options remain outstanding.
6.9. Expenses. The Group shall pay all charges and expenses
relating to the Transactions and the other transactions contemplated hereby and
by the Purchase Option Agreement, including fees and expenses of the Depositary
and expenses in connection with the printing and mailing of the Proxy Statement,
the making of any filings or mailings and obtaining of any approvals under the
Exchange Act, Securities Act or any state securities and "blue sky" laws. The
Group acknowledges and agrees that the reasonable fees and expenses of Stroock &
Stroock & Xxxxx LLP shall be paid by the Company, as billed, promptly after the
date hereof and in accordance with the Agreement in Principle and in any case
paid current on or prior to each of the Loan Exchange Closing Date, the Notes
Exchange Closing Date and the Charter Amendment Effective Time.
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6.10. Indemnification; Directors' and Officers' Insurance.(a)
(a) From and after the Notes Exchange Closing Date, the Company agrees that it
will indemnify and hold harmless each present and former director and officer of
the Company determined as of the Notes Exchange Closing Date (the "D&O
Indemnified Parties") against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in their capacity as a director or officer in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to matters existing or occurring on or prior to the Notes Exchange Closing Date,
whether asserted or claimed prior to, at or after the Notes Exchange Closing
Date, to the fullest extent that the Company would have been permitted under
Delaware law and its certificate of incorporation or by-laws in effect on the
date hereof to indemnify such Person (and the Company shall also advance
expenses as incurred to the fullest extent permitted under applicable law,
provided the Person to whom expenses are advanced provides an undertaking to
repay such advances if it is finally judicially determined (and such
determination is nonappealable) that such Person is not entitled to
indemnification).
(b) From and after the date hereof and whether or not
this Agreement is terminated in accordance with its terms or the Transactions
are consummated hereunder, the Company agrees that it will indemnify and hold
harmless each Noteholder as of the Notes Exchange Closing Date and its
directors, partners, stockholders, officers, advisors and agents (the
"Noteholder Indemnified Parties"), against any Costs incurred in their capacity
as a holder, or as a director, partner, stockholder, affiliates, officer,
advisor or agent thereof, in connection with any claim, action, suit, proceeding
or investigation, whether civil, criminal, administrative or investigative,
under the Exchange Act, the Securities Act, the Trust Indenture Act of 1939, as
amended, or the Indenture and arising out of or pertaining to this Agreement,
the Transactions or the other transactions contemplated hereby and existing or
occurring on or prior to the Notes Exchange Closing Date, whether asserted or
claimed prior to, at or after the Notes Exchange Closing Date (and the Company
shall also advance expenses as incurred to the fullest extent permitted under
applicable law, provided the Person to whom expenses are advanced provides an
undertaking to repay such advances if it is finally judicially determined (and
such determination is nonappealable) that such Person is not entitled to
indemnification); provided, that no Noteholder Indemnified Party shall be
entitled to indemnification or expense reimbursement hereunder to the extent
that the Costs are finally judicially determined (and such determination is
nonappealable) to arise solely out of such Noteholder Indemnified Party's gross
negligence or willful misconduct or of a material breach of a Holder's
representations, warranties or agreements hereunder.
(c) Any D&O Indemnified Party or Noteholder
Indemnified Party (collectively, the "Indemnified Parties") wishing to claim
indemnification under paragraph (a) or (b) of this Section, as applicable, upon
learning of any such claim, action, suit, proceeding or investigation, shall
promptly notify the Company thereof, but the failure to so notify shall not
relieve the Company of any liability it may have to such Indemnified Party
except to the extent such failure materially prejudices the Company. In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Notes Exchange Closing Date), (i) the Company shall
have the right to assume the defense thereof and shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if the
32
Company elects not to assume such defense or counsel for the Indemnified Parties
advises that there are issues which raise conflicts of interest between the
Company and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and the Company shall pay all reasonable fees and expenses
of such counsel for the Indemnified Parties promptly as statements therefor are
received; provided, however, that the Company shall be obligated pursuant to
this paragraph (b) to pay for only one firm of counsel for all D&O Indemnified
Parties on the one hand and one firm of counsel for all Noteholder Indemnified
Parties on the other hand in any jurisdiction unless the use of one firm of
counsel would present such counsel with a conflict of interest, (ii) the
Indemnified Parties will cooperate in the defense of any such matter and (iii)
the Company shall not be liable for any settlement effected without its prior
written consent; and provided, further, that the Company shall not have any
obligation hereunder to any Indemnified Party to the extent a court of competent
jurisdiction shall finally determine, and such determination shall have become
nonappealable, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. If any indemnity hereunder
is for any reason found not to be available with respect to any Indemnified
Party, then the Company and the Indemnified Party shall contribute to the amount
payable in such proportion as is appropriate to reflect relative faults and
benefits. Notwithstanding anything herein to the contrary, no Indemnified Party
shall have any rights to indemnification or contribution under this Section with
respect to Costs arising out of any claims, actions, suits or proceedings
initiated by such Indemnified Party (other than claims to enforce rights to
indemnification hereunder).
(d) The Company shall maintain the Company's existing
officers' and directors' liability insurance ("D&O Insurance") for directors and
officers serving at any time during the three-year period up to and including
the Notes Exchange Closing Date, for a period of six years after the Notes
Exchange Closing Date so long as the annual premium therefor is not in excess of
150% of the last annual premium paid prior to the date hereof (the "Current
Premium"); provided, however, that if the existing D&O Insurance expires, is
terminated or cancelled during such six-year period, the Company will use its
commercially reasonable efforts to obtain D&O Insurance with substantially the
same coverage and containing substantially the same terms and conditions as
existing policies, or as much coverage as can be obtained for the remainder of
such period for a premium not in excess (on an annualized basis) of 150% of the
Current Premium.
(e) The Company, and its successors or assigns, shall
not (i) consolidate with or merge into any other corporation or entity and shall
not be the continuing or surviving corporation or entity of such consolidation
or merger or (ii) sell, lease or transfer all or substantially all of its
properties and assets to any individual, corporation or other entity, unless and
in each such case, proper provisions shall be made so that the successors and
assigns of the Company, on such properties and assets, shall assume or
effectively provide for all of the obligations set forth in this Section.
(f) The provisions of this Section are intended to be
for the benefit of, and shall be enforceable by, each of the Indemnified
Parties, their heirs and their successors, assigns and representatives.
33
6.11. Other Actions.
(a) Series B Preferred Stock. The Company shall
finalize the certificate of designation for the Series B Preferred Stock as
promptly as practicable and shall, in connection with the Notes Exchange
Closing, execute and deliver and file the final form of the certificate of
designation for the Series B Preferred Stock. The "Series B Preferred Stock"
shall be substantially as set forth on Exhibit C and have customary terms and
conditions no less favorable to the Noteholders that those set forth in such
Exhibit and shall be in a form reasonably acceptable to the Company and the
Noteholders.
(b) Series A Warrants. The Company shall finalize the
Series A Warrants (including the agreement pursuant to which Series A Warrants
are issued) as promptly as practicable and shall, in connection with the Loan
Exchange Closing, execute and deliver the final form of the Series A Warrants
and their related agreement. The "Series A Warrants" shall mean those warrants
to acquire Common Stock substantially as set forth on Exhibit D and have
customary terms and conditions no less favorable to the Senior Lenders than
those set forth in such Exhibit and shall be in a form reasonably acceptable to
the Company and the Senior Lenders.
(c) Registration Rights Agreement. The Company shall
finalize the Registration Rights Agreement as promptly as practicable and shall,
in connection with the Notes Exchange, execute and deliver the final form of
Registration Rights Agreement. The "Registration Rights Agreement" shall mean
the Registration Rights Agreement by and among the Company, the Noteholders and
LC Capital substantially as set forth on Exhibit I and have customary terms and
conditions no less favorable to each of the Noteholders than those set forth in
such Exhibit and shall be in a form reasonably acceptable to the Company and
each of the Noteholders.
(d) Employment Agreements. The Company shall use
commercially reasonable efforts to finalize the Employment Agreements as
promptly as practicable and shall, in connection with the Notes Exchange
Closing, execute and deliver the final form of the Employment Agreements. The
"Employment Agreements" shall have customary terms and conditions and be
substantially as set forth in Exhibit E, as supplemented by Section 6.11(d) of
the Disclosure Letter, and in a form reasonably acceptable to the Company and
the Noteholders.
(e) New Equity Plan. The Company shall finalize the
New Equity Plan as promptly as practicable and shall, in connection with the
Notes Exchange Closing, approve and adopt the final form of the New Equity Plan
subject to securing the Plan Vote. The "New Equity Plan" shall mean a new equity
plan of the Company having terms substantially as set forth in Exhibit F and in
a form reasonably acceptable to the Company and the Noteholders.
(f) New Senior Facility. The Company shall use
commercially reasonable efforts to obtain as promptly as practicable a binding
commitment letter for the New Senior Facility (as defined below), in a customary
form subject to customary conditions reasonably acceptable to the Company and
the Noteholders. The Company shall use commercially reasonable efforts to
finalize and satisfy all conditions to funding under the New Senior Facility as
promptly as practicable and prior to the Loan Exchange Closing. The "New
34
Senior Facility" shall be substantially as set forth in Exhibit G and (unless
otherwise consented by the Noteholders) have customary terms and conditions no
less favorable to the Company and the holders of the New Junior Secured Notes in
any material respect than those set forth in such Exhibit and shall be in a form
reasonably acceptable to the Company and the Senior Lenders.
(g) New Junior Secured Notes. The Company shall use
all commercially reasonable efforts to finalize and satisfy all conditions to
the issuance of the New Junior Secured Notes (including the agreement pursuant
to which such notes are issued) as promptly as practicable and prior to the Loan
Exchange Closing and shall, to the extent required in connection with the Loan
Exchange, execute and deliver the final form of the New Junior Secured Notes and
their related agreement. The "New Junior Secured Notes" shall be substantially
as set forth on Exhibit H and have customary terms and conditions no less
favorable to the Senior Lenders than those set forth in such Exhibit and shall
be in a form reasonably acceptable to the Company and the Senior Lenders.
(h) Existing Senior Facility and Purchase Option
Agreement. The Company shall use all commercially reasonable efforts to keep in
full force and effect and to remain in compliance with all terms and conditions
of the Purchase Option Agreement and with all terms and conditions of the
Existing Senior Facility. The Company agrees that any amendment, waiver or
modification of any rights or obligations under the Purchase Option Agreement
shall be approved in advance in writing by the Senior Lenders and under the
Existing Senior Facility shall be approved in advance by the Noteholders. The
Company covenants and agrees with the Senior Lenders that any obligations of the
Company in respect of any Optioned Rights under the Purchase Option Agreement
shall be satisfied in full immediately upon consummation of the Loan Exchange.
(i) Takeover Statutes and Rights Plan. If any
Takeover Statute or the Rights Plan is or may become applicable to the
Transactions or the other transactions contemplated hereby, the Company and its
Board of Directors shall, subject to fiduciary duties, grant such approvals and
take such actions as are necessary so that such transactions may be consummated
as promptly as practicable on the terms contemplated by this Agreement and
otherwise act to eliminate or minimize the effects of such Takeover Statute or
the Rights Plan on such transactions.
(j) LC Capital Side Letter. The Company shall comply
with the terms of the LC Capital Side Letter and shall use commercially
reasonable efforts, including by enforcing all available rights and remedies
thereunder, to cause the consummation of the exchange of Notes contemplated by
the LC Capital Side Letter prior to or contemporaneously with the Notes Exchange
Closing.
6.12. Holder Votes. In the event the Company solicits the
consent or approval of the Holders with respect thereto, each Holder shall vote
(or consent with respect to) or cause to be voted (or a consent to be given with
respect to) any Notes or Claims beneficially owned by it or any of its
affiliates or with respect to which it or any of its affiliates has the power
(by agreement, proxy or otherwise) to cause to be voted (or to provide a
consent) in favor of the adoption and approval of the Transactions and as
required under this Agreement. To the extent any Holder acquires additional
Notes or Claims, such Holder agrees that such Notes or Claims
35
shall be subject to this Agreement and that it shall vote (or consent with
respect to) or cause to be voted (or a consent to be given with respect to) any
such Notes or Claims (in each case to the extent still held by it or on its
behalf at the time of such vote or consent) in favor of the Transactions and as
required under this Agreement and that the obligations of such Holder under this
Agreement shall apply to such acquired Notes and Claims with the same force and
effect as if such Notes and Claims were owned by such Holder at the time of
execution of this Agreement; provided, however, that no Holder shall exchange
any Notes acquired by the Holder following the date of this Agreement to the
extent the exchange of such Notes would result in a Repurchase Event under the
Indenture. The parties acknowledge that nothing in this Section shall be deemed
to require any Holder to grant any waiver, forbearance or consent under the
Indenture or the Existing Senior Facility that is not otherwise expressly
provided hereunder or under the Purchase Option Agreement.
6.13. Rule 144. The Company shall file any reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder, and it will take such further action
as any Holder may reasonably request to make available adequate current public
information with respect to the Company meeting the current public information
requirements of Rule 144(c) under the Securities Act, to the extent required to
enable such Holder to sell shares of Common Stock held by the Holder without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (ii) any similar rule or regulation hereafter adopted by
the SEC.
ARTICLE VII
Conditions
7.1. Conditions to the Obligation of the Company to Effect the
Charter Amendment. The obligation of the Company to effect the Charter Amendment
is subject to the satisfaction or waiver at or prior to the Charter Amendment
Effective Time of each of the following conditions:
(a) Regulatory Consents. Other than the filing
provided for in Section 1.3, all actions by or in respect of, or filings with,
any court or Governmental Entity required to permit the consummation of the
Charter Amendment shall have been taken, made or obtained, except those that the
failure to take, make or obtain are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect or to provide a reasonable
basis to conclude that the parties hereto or any of their affiliates or
respective directors, officers, agents, advisors or other representatives would
be subject to the risk of criminal liability.
(b) Litigation. No court or Governmental Entity of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any temporary, preliminary or permanent Law or other order
(collectively, an "Order") that is in effect and restrains, enjoins or otherwise
prohibits consummation of the Charter Amendment and no Governmental Entity shall
have instituted any proceeding seeking any such Order.
36
7.2. Conditions to the Obligation of the Senior Lenders to
Effect the Loan Exchange. The obligation of the Senior Lenders to effect the
Loan Exchange is subject to the satisfaction or waiver at or prior to
consummation of the Loan Exchange of each of the following conditions:
(a) Regulatory Consents. All actions by or in respect
of, or filings with, any court or Governmental Entity required to permit the
consummation of the Loan Exchange shall have been taken, made or obtained,
except those that the failure to take, make or obtain are not, individually or
in the aggregate, reasonably likely to have a Material Adverse Effect or to
provide a reasonable basis to conclude that the parties hereto or any of their
affiliates or respective directors, officers, agents, advisors or other
representatives would be subject to the risk of criminal liability.
(b) Litigation. No court or Governmental Entity of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any Order that is in effect and restrains, enjoins or otherwise
prohibits consummation of the Loan Exchange and no Governmental Entity shall
have instituted any proceeding seeking any such Order.
(c) Representations and Warranties of the Group. Each
of the representations and warranties of the Group set forth in Sections 4.1 and
4.2 (a) - (f), (j) and (q) of this Agreement and in all certificates and
documents delivered by the Company or any of its Subsidiaries in connection with
the Loan Exchange qualified by any "Material Adverse Effect" or other
materiality or similar qualifications shall be true and correct in all respects,
and those not so qualified shall be true and correct in all material respects,
in each case as of the Loan Exchange Closing Date as though made on and as of
the Loan Exchange Closing Date (except to the extent any such representation or
warranty expressly speaks as of an earlier date, in which case such
representation or warranty shall have been accurate as of such earlier date),
and the Senior Lenders shall have received a certificate signed on behalf of the
Group by an executive officer of the Company to that effect.
(d) Performance of Obligations of the Group. Each of
the Group shall have performed in all material respects each of the obligations
required to be performed by it under this Agreement on or prior to the Loan
Exchange Closing Date, and the Senior Lenders shall have received a certificate
signed on behalf of each of the Group by an executive officer of the Company to
that effect.
(e) Consents. The Company shall have obtained the
consent or approval of each Person whose consent or approval shall be required
under any Contract to which the Company or any of its Subsidiaries is a party in
connection with the Loan Exchange, except those for which the failure to obtain
such consent or approval, individually or in the aggregate, is not reasonably
likely to have a Material Adverse Effect or is not reasonably likely to prevent
or materially impair the ability of the parties to consummate the Loan Exchange.
(f) Notes Exchange. The Notes Exchange Closing shall
have occurred or be occurring contemporaneously therewith.
37
(g) Purchase Option. The Original Senior Lenders
shall have performed their obligations to transfer the Optioned Rights in
accordance with the Purchase Option Agreement.
7.3. Conditions to the Obligation of the Company to Effect the
Loan Exchange. The obligation of the Company to effect the Loan Exchange is
subject to the satisfaction or waiver at or prior to consummation of the Loan
Exchange of each of the following conditions:
(a) Regulatory Consents. All actions by or in respect
of, or filings with, any court or Governmental Entity required to permit the
consummation of the Loan Exchange shall have been taken, made or obtained,
except those that the failure to take, make or obtain are not, individually or
in the aggregate, reasonably likely to have a Material Adverse Effect or to
provide a reasonable basis to conclude that the parties hereto or any of their
affiliates or respective directors, officers, agents, advisors or other
representatives would be subject to the risk of criminal liability.
(b) Litigation. No court or Governmental Entity of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any Order that is in effect and restrains, enjoins or otherwise
prohibits consummation of the Loan Exchange and no Governmental Entity shall
have instituted any proceeding seeking any such Order.
(c) Representations and Warranties of the Senior
Lenders. Each of the representations and warranties of the Senior Lenders set
forth in this Agreement and in all certificates and agreements to be delivered
by the Senior Lenders in connection with the Loan Exchange qualified by any
"Material Adverse Effect" or other materiality or similar qualifications shall
be true and correct in all respects, and those not so qualified shall be true
and correct in all material respects, in each case as of the Loan Exchange
Closing Date as though made on and as of the Loan Exchange Closing Date (except
to the extent any such representation or warranty expressly speaks as of an
earlier date, in which case such representation or warranty shall have been
accurate as of such earlier date).
(d) Performance of Obligations of the Senior Lenders.
Each of the Senior Lenders shall have performed in all material respects each of
the obligations required to be performed by it under this Agreement on or prior
to the Loan Exchange Closing Date.
(e) Necessary Funding. The Company shall have entered
into the New Senior Facility prior to or contemporaneously with the Loan
Exchange Closing and shall have (together with other funds available to the
Company) sufficient funds available thereunder for the Company to consummate the
Loan Exchange.
7.4. Conditions to Obligation of Noteholders to Effect the
Notes Exchange. The obligation of the Noteholders to effect the Notes Exchange
is subject to the satisfaction or waiver at or prior to the consummation of the
Notes Exchange of the following conditions:
(a) Regulatory Consents. All actions by or in respect
of, or filings with, any court or Governmental Entity required to permit the
consummation of the Notes Exchange shall have been taken, made or
38
obtained, except those that the failure to take, make or obtain are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect or to provide a reasonable basis to conclude that the parties hereto or
any of their affiliates or respective directors, officers, agents, advisors or
other representatives would be subject to the risk of criminal liability.
(b) Litigation. No court or Governmental Entity of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any Order that is in effect and restrains, enjoins or otherwise
prohibits consummation of the Notes Exchange and no Governmental Entity shall
have instituted any proceeding seeking any such Order.
(c) Representations and Warranties of the Group. Each
of the representations and warranties of the Group set forth in this Agreement
and in all certificates and documents delivered by the Company or any of its
Subsidiaries in connection with the Notes Exchange qualified by any "Material
Adverse Effect" or other materiality or similar qualifications shall be true and
correct in all respects, and those not so qualified shall be true and correct in
all material respects, in each case as of the Notes Exchange Closing Date as
though made on and as of the Notes Exchange Closing Date (except to the extent
any such representation or warranty expressly speaks as of an earlier date, in
which case such representation or warranty shall have been accurate as of such
earlier date), and the Noteholders shall have received a certificate signed on
behalf of the Group by an executive officer of the Company to that effect.
(d) Performance of Obligations of the Group. Each of
the Group shall have performed in all material respects each of the obligations
required to be performed by it under this Agreement on or prior to the Notes
Exchange Closing Date, and the Noteholders shall have received a certificate
signed on behalf of the Group by an executive officer of the Company to that
effect.
(e) Consents. The Company shall have obtained the
consent or approval of each Person whose consent or approval shall be required
under any Contract to which the Company or any of its Subsidiaries is a party in
connection with the Notes Exchange, except those for which the failure to obtain
such consent or approval, individually or in the aggregate, is not reasonably
likely to have a Material Adverse Effect or is not reasonably likely to prevent
or to materially impair the ability of the parties to consummate the Notes
Exchange.
(f) Blue Sky. The Company shall have received any and
all material state securities and "blue sky" permits and approvals necessary to
permit the issuance of the shares of Common Stock and shares of Series B
Preferred Stock as part of the Notes Exchange Consideration.
(g) No Breach Under Other Indebtedness of the
Company. There shall be (either immediately prior to, or after giving effect to,
the Notes Exchange) no breach or violation of, or a default under (with or
without notice, lapse of time or both), the Existing Senior Facility or any New
Senior Facility or New Junior Secured Notes.
39
(h) Amount of Notes Outstanding Following Notes
Exchange. After giving effect to the Notes Exchange and the exchange of Notes
contemplated by the LC Capital Side Letter, less than $10 million of the
principal amount of the Notes shall remain outstanding.
(i) Loan Exchange. The Company shall have obtained or
shall contemporaneously therewith obtain: (A) pursuant to Section 1.1(a)(iv)(A),
the written consent of Noteholders required to effect the Notes Exchange in the
situation where the Senior Lenders or Original Senior Lenders provide such
waivers, forbearances or consents referred to in such Section 1.1(a)(iv)(A); or
(B) pursuant to Section 1.1(a)(iv)(B), the written consent of the Noteholders
required to enter into the Loan Exchange and the transactions contemplated by
the Purchase Option and the Company closes the Loan Exchange and the
transactions contemplated by the Purchase Option contemporaneously with the
Notes Exchange.
7.5. Conditions to Obligation of the Company to Effect the
Notes Exchange. The obligation of the Company to effect the Notes Exchange is
subject to the satisfaction or waiver at or prior to the consummation of the
Notes Exchange of the following conditions:
(a) Regulatory Consents. All actions by or in respect
of, or filings with, any court or Governmental Entity required to permit the
consummation of the Notes Exchange shall have been taken, made or obtained,
except those that the failure to take, make or obtain are not, individually or
in the aggregate, reasonably likely to have a Material Adverse Effect or to
provide a reasonable basis to conclude that the parties hereto or any of their
affiliates or respective directors, officers, agents, advisors or other
representatives would be subject to the risk of criminal liability.
(b) Litigation. No court or Governmental Entity of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any Order that is in effect and restrains, enjoins or otherwise
prohibits consummation of the Notes Exchange and no Governmental Entity shall
have instituted any proceeding seeking any such Order.
(c) Representations and Warranties of the
Noteholders. Each of the representations and warranties of the Noteholders set
forth in this Agreement and in all certificates and documents delivered by the
Company or any of its Subsidiaries in connection with the Notes Exchange
qualified by any "Material Adverse Effect" or other materiality or similar
qualifications shall be true and correct in all respects, and those not so
qualified shall be true and correct in all material respects, in each case as of
the Notes Exchange Closing Date as though made on and as of the Notes Exchange
Closing Date (except to the extent any such representation or warranty expressly
speaks as of an earlier date, in which case such representation or warranty
shall have been accurate as of such earlier date).
(d) Performance of Obligations of the Noteholders.
Each of the Noteholders shall have performed in all material respects each of
the obligations required to be performed by it under this Agreement on or prior
to the Notes Exchange Closing Date.
40
ARTICLE VIII
Termination
8.1. Termination by Mutual Consent. This Agreement may be
terminated and any of the Transactions may be abandoned (whether before or after
any of the Stockholder Votes have been obtained) at any time prior to (i) the
Loan Exchange Closing, with respect to the Loan Exchange, (ii) the Notes
Exchange Closing, with respect to the Notes Exchange, and (iii) the Charter
Amendment Effective Time, with respect to the Charter Amendment, in each case by
the Company by action of its Board of Directors, on the one hand, and by written
consent of the Senior Lenders in the case of the Loan Exchange and of the
Noteholders in the case of either the Notes Exchange or the Charter Amendment.
8.2. Termination of only Charter Amendment or Loan Exchange.
(a) The Charter Amendment. The obligations to
consummate the Charter Amendment may be terminated and the Charter Amendment may
be abandoned (whether before or after the Charter Amendment Requisite Vote has
been obtained) at any time prior to the Charter Amendment Effective Time, by the
Company by action of its Board of Directors or by written consent of the
Noteholders, in the event of any of the following:
(i) the Charter Amendment Effective Time
shall not have occurred on or prior to December 31, 2003; or
(ii) any Order permanently restraining,
enjoining or otherwise prohibiting consummation of the Charter
Amendment shall become final and nonappealable.
Notwithstanding the foregoing, the right to terminate pursuant to this paragraph
(a) shall not be available to any party that has breached in any material
respect any of its obligations under this Agreement in any manner that shall
have proximately contributed to the occurrence of the failure of the Charter
Amendment Effective Time to have occurred prior to such termination.
(b) The Loan Exchange. The obligations to consummate
the Loan Exchange may be terminated and the Loan Exchange may be abandoned at
any time on or prior to the Loan Exchange Closing Date, in the event of any of
the following:
(i) By the Company by action of its Board of
Directors, or by written consent of the Senior Lenders, if:
(A) the Loan Exchange shall not have been
consummated by 6:00 pm (Eastern Daylight Time) on May 16, 2003; provided,
however, that such date may be extended by written consent of the Senior Lenders
to a date designated by such Senior Lenders; or
(B) any Order permanently restraining,
enjoining or otherwise prohibiting consummation of the Loan Exchange shall
become final and nonappealable.
41
Notwithstanding the foregoing, the right to terminate pursuant to this clause
(i) shall not be available to any party that has breached in any material
respect any of its obligations under this Agreement in any manner that shall
have proximately contributed to the occurrence of the failure of the Loan
Exchange to be consummated prior to such termination.
(ii) By the Company by action of its Board
of Directors if there has been a material breach by any of the
Senior Lenders of their respective representations,
warranties, covenants or agreements contained in this
Agreement that is not curable or, if curable, is not cured
within 30 days after written notice of such breach is given by
the Company to all of the Holders.
(iii) By written consent of the Senior
Lenders, if:
(A) there has been a material breach by any
of the Group of any representation or warranty contained in Sections 4.1 and 4.2
(a) - (f), (j) and (q) of this Agreement or any covenant or agreement of the
Group contained in this Agreement that is not curable or, if curable, is not
cured within 30 days after written notice of such breach is given by any of the
Senior Lenders to the Company;
(B) any of the Group files a voluntary
petition commencing a case under the Bankruptcy Code or an involuntary petition
is filed against any of the Group under Section 303 of the Bankruptcy Code and
is not dismissed within 45 days after such petition is filed; or
(C) the Purchase Option Agreement is
terminated in accordance with its terms either pursuant to the last sentence of
Section 6(a) thereof or by the Company or any of the Original Senior Lenders.
8.3. Termination of Entire Agreement and all Transactions.
This Agreement may be terminated and all of the Transactions may be abandoned
(whether before or after any of the Stockholder Votes have been obtained) at any
time prior to the Notes Exchange Closing, in the event of any of the following:
(a) Termination by the Company or the Noteholders.
This Agreement shall automatically terminate on the earlier of:
(i) 6:00 pm (Eastern Daylight Time) on May
16, 2003, if the Notes Exchange has not been consummated by
such time and date unless the Company and Noteholders holding
at least 90% in principal amount of the Notes held by all
Noteholders consent in writing to extend such termination date
to another date, which date shall be a date designated in such
written consent; or
(ii) Any Order permanently restraining,
enjoining or otherwise prohibiting consummation of the Notes
Exchange shall become final and nonappealable unless the
Company and Noteholders holding at least 90% in principal
amount of the Notes held by all Noteholders consent in writing
to not terminate the Agreement.
42
(b) Termination by the Company. By the Company by
action of its Board of Directors, if:
(i) (A) the Board of Directors of the
Company authorizes the Company, subject to complying with the
terms of this Agreement, to enter into a binding written
agreement concerning a transaction that constitutes a Superior
Proposal and the Company notifies the Holders in writing that
it intends to enter into such an agreement, attaching the most
current version of such agreement to such notice, (B) the
Holders do not make, within three business days of receipt of
the Company's written notification of its intention to enter
into a binding agreement for a Superior Proposal, an offer
that the Board of Directors of the Company determines, in good
faith after consultation with its financial advisors, is
reasonably likely to be consummated if it is accepted, taking
into account all legal, financial, and regulatory aspects of
the proposal and the Holders making the proposal and which
proposal is at least as favorable, from a financial point of
view, to the Company and the Persons to whom fiduciary duties
are owed by the Board of Directors as the Superior Proposal
and (C) the Company prior to such termination pays by wire
transfer of same day funds any fees and expenses required to
be paid pursuant to Section 6.9 (Expenses) and the Agreement
in Principle and the Purchase Option Agreement.
The Company agrees that it shall not enter into a binding
agreement referred to in (A) above until at least the fourth
business day after it has provided the notice to the Holders
required in (A) above and shall notify the Holders promptly of
its intention to enter into a written agreement referred to in
its notification and if such intention changes at any time
after giving such notification; or
(ii) There has been a material breach by (A)
any Noteholder holding (together with its affiliates) at least
$30 million in principal amount of the Notes held by the
parties to this Agreement or (B) any of the Noteholders that
are also Senior Lenders, in either case of their
representations, warranties, covenants or agreements contained
in this Agreement that is not curable or, if curable, is not
cured within 30 days after written notice of such breach is
given by the Company to all of the Holders.
(c) Termination by the Noteholders. By written
consent of the Noteholders, if:
(i) Any of the Group files a voluntary
petition commencing a case under the Bankruptcy Code or an
involuntary petition is filed against any of the Group under
Section 303 of the Bankruptcy Code and is not dismissed within
45 days after such petition is filed;
(ii) There has been a material breach by any
of the Group of any representation, warranty, covenant or
agreement of it contained in this
43
Agreement that is not curable or, if curable, is not cured
within 30 days after written notice of such breach is given by
any of the Noteholders to the Company; or
(iii) The Board of Directors of the Company
shall have withdrawn or adversely modified its approval or
recommendation of this Agreement or failed to reconfirm its
recommendation of this Agreement within five business days
after a written request by the Noteholders to do so (other
than in connection with accepting a Superior Proposal pursuant
to Section 5.2 and terminating this Agreement pursuant to
Section 8.3(b)(i)).
8.4. Effect of Termination and Abandonment.
(a) In the event of a termination of this Agreement
or the abandonment of any of the Transactions pursuant to this Article, the
applicable provisions of this Agreement (other than as set forth in Section 9.1)
shall become void and of no effect with no liability on the part of any party
hereto (or of any of its directors, officers, employees, agents, legal and
financial advisors or other representatives); provided, however, except as
otherwise provided herein, no such termination shall relieve any party hereto of
any liability or damages resulting from any breach of this Agreement.
(b) In the event that this Agreement is terminated
pursuant to Sections 8.2(a), 8.2(b)(i) or (b)(iii) or 8.3(c), then the Group
shall promptly, but in no event later than two days after the Company is
notified of such by the relevant Holders, pay all of the fees and expenses
required to be paid pursuant to Section 6.9 (Expenses), in each case payable by
wire transfer of same day funds. In the event that this Agreement is terminated
by any party pursuant to Section 8.3(a)(i), by the Company pursuant to Section
8.3(b)(ii)(B) or by the Noteholders pursuant to Section 8.3(c), the provisions
of Annex A shall thereafter become applicable; provided, however, that in the
case of termination by the Company pursuant to Section 8.3(b)(ii)(B) or by the
Noteholders pursuant to Section 8.3(c)(ii), the provisions of Annex A shall not
become applicable unless the terminating party, in its sole discretion, elects
to make Annex A applicable and notifies the other parties to the Agreement of
such election within five (5) business days after providing notice of
termination. The Group acknowledges that the agreements contained in this
paragraph are an integral part of the Transactions and the other transactions
contemplated hereby and that, without these agreements, the Holders would not
enter into this Agreement; accordingly, if the Group fails to promptly pay the
amount due pursuant to this paragraph, and, in order to obtain such payment, any
Holder commences a suit which results in a judgment against the any of the Group
for the fee set forth in this paragraph, the Group shall pay to the applicable
Holder its costs and expenses (including reasonable attorneys' fees) in
connection with such suit, together with interest on the amount of the fee at
the U.S. prime rate of Citibank N.A. in effect on the date such payment was
required to be made.
44
ARTICLE IX
Miscellaneous and General
9.1. Survival. Articles II and III and this Article IX, the
representations of the parties contained in Sections 4.1 and 4.3 and the
agreements of the parties contained in Sections 6.4 (Taxation), 6.6 (Stock
Exchange Listing), 6.9 (Expenses), 6.10 (Indemnification; Directors' and
Officers' Insurance), 6.11(j) (LC Capital Side Letter) and 6.13 (Rule 144) shall
survive the consummation of the Transactions. This Article, the representations
of the parties contained in Section 4.1, the agreements of the parties contained
in Sections 6.9 (Expenses) and 8.4 (Effect of Termination and Abandonment), the
Purchase Option Agreement and the Confidentiality Agreements shall survive the
termination of this Agreement in accordance with its terms. All other
representations, warranties, covenants and agreements in this Agreement shall
not survive the consummation of the Transactions or the termination of this
Agreement. Only the Confidentiality Agreements shall survive consummation of the
Back-Up Plan.
9.2. Entire Agreement; NO OTHER REPRESENTATIONS. This
Agreement (including any Annexes and Exhibits hereto), the Disclosure Letter,
the Purchase Option Agreement, the Confidentiality Agreement, dated June 13,
2002, between MatlinPatterson Global Opportunities Partners L.P. (formerly CSFB
Global Opportunities Partners L.P.) and the Company (the "Matlin CA"), the
Confidentiality Agreement, dated June 13, 2002, between Inland Partners, L.P.
and the Company (the "Inland CA"), the Confidentiality Agreement, dated June 13,
2002, between Links Partners, L.P. and the Company (the "Links CA"), the
Confidentiality Agreement, dated November 10, 2002 and amended on December 23,
2002, February 5, 2003 and March 4, 2003, between Zazove Associates, LLC and the
Company (as amended, the " Zazove CA"), the Confidentiality Agreement, dated
December 25, 2002, between Acme Widget, L.P. and the Company (the "Acme CA"),
the Confidentiality Agreement, dated February 5, 2003, between Xxxxx X.
Xxxxxxxxxxx and the Company (the "Linkenauger CA"), the Confidentiality
Agreement, dated February 5, 2003, between the Company and Highbridge
International LLC (the "Highbridge CA"), the Confidentiality Agreement, dated
February 19, 2003 among the Company and SC Fundamental Value Fund, L.P. and SC
Fundamental Value BVI, Ltd. (the "SC Fundamental CA") and the Confidentiality
Agreement, dated February 5, 2003, between the Company and Xxxxxx Associates,
LLC (together with the Matlin CA, the Inland CA, the Links CA, the Zazove CA,
the Acme CA, the Linkenauger CA, the Highbridge CA and the SC Fundamental CA,
the "Confidentiality Agreements") constitute the entire agreement, and supersede
all other prior agreements, understandings, representations and warranties both
written and oral, among the parties, with respect to the subject matter hereof.
EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN THIS AGREEMENT, NO PARTY MAKES ANY OTHER REPRESENTATIONS OR
WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES
MADE BY ITSELF OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL
AND LEGAL ADVISORS OR OTHER REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND
DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY,
NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR THE OTHER'S
REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH RESPECT TO ANY
ONE OR MORE OF THE FOREGOING.
45
9.3. Modification or Amendment. Subject to the provisions of
the applicable law, at any time prior to the Charter Amendment Effective Time,
the parties hereto may modify or amend this Agreement, by written agreement
executed and delivered by duly authorized officers of all of the respective
parties; provided, however, that the Company may act on behalf of the entire
Group with respect thereto.
9.4. Waiver of Conditions. The conditions to each of the
parties' obligations to consummate the Transactions and the Back-Up Plan are for
the sole benefit of each such party and may be waived by such party in whole or
in part to the extent permitted by applicable law; provided, however, that the
Company may act on behalf of the entire Group with respect thereto.
9.5. Counterparts. This Agreement may be executed in any
number of counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement.
9.6. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND
IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT
OF LAW PRINCIPLES THEREOF. The parties hereby irrevocably submit to the
jurisdiction of the courts of the State and County of New York and the Federal
courts of the United States of America located in the Southern District of the
State of New York solely in respect of the interpretation and enforcement of the
provisions of this Agreement and of the documents referred to in this Agreement,
and in respect of the transactions contemplated hereby, and hereby waive, and
agree not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is not
subject thereto or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that this Agreement or any such document may not be enforced in or by such
courts, and the parties hereto irrevocably agree that all claims with respect to
such action or proceeding shall be heard and determined in such a New York State
or Federal court. The parties hereby consent to and grant any such court
jurisdiction over the person of such parties and over the subject matter of such
dispute and agree that mailing of process or other papers in connection with any
such action or proceeding in the manner provided in the Section on notices below
or in such other manner as may be permitted by law shall be valid and sufficient
service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
46
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND
(IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
9.7. Notices and Waivers. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
or similar writing) and shall be given to such party at its address or facsimile
number set forth below or, if not below, on the signature pages hereof or to any
joinder agreement executed and delivered pursuant to Section 9.14 of this
Agreement, or such other address or facsimile number as such party may hereafter
specify in accordance with this Section for the purpose by notice to the party
sending the communication. Each such notice, request or other communication
shall be effective (a) if given by facsimile, when such facsimile is transmitted
to the facsimile number specified in this Section and receipt is confirmed, (b)
if given by mail, three business days after such communication is deposited in
the mail registered or certified, return receipt requested, with postage
prepaid, addressed as aforesaid, (c) if given by an overnight delivery service,
one business day after such communication is deposited with a reputable,
overnight delivery service, postage or delivery charges prepaid, addressed as
aforesaid, or (d) if given by any other means, when delivered at the address as
specified in this Section.
(a) If to the Group, to:
Personnel Group of America, Inc.
0000 Xxxxx Xxxxx Xxxxxxx, 0xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxx Xxxxxxxx, Xx.
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Facsimile: (000) 000-0000
(b) If to MatlinPatterson Global Advisers LLC, to:
MatlinPatterson Global Advisers LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
47
with a copy to:
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
(c) If to Inland Partners, L.P. or Links Partners
L.P., to:
Inland Partners, L.P. and Links Partners L.P.
c/o Xxxxx X. Xxxx
The Compass Group
0 Xxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
with a copy to:
Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Facsimile: (000)000-0000
and to:
I. Xxxxxx Xxxxxxx
The Compass Group
00 Xxxxxx Xxxx, Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Facsimile: (000) 000-0000
(d) If to Zazove Associates, LLC or Xx. Xxxx
Xxxxxx, to:
Zazove Associates, LLC
0000 Xxxxxx Xxxx.
Xxxxx 000x
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxx
Xxxx Xxxxxx
Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
48
(e) If to Acme Widget, L.P. or to R2 Investments,
LDC, to:
R2 Investments, LDC
c/o Amalgamated Gadget, L.P., its Investment Manager
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
(f) If to Xxxxx X. Xxxxxxxxxxx, to:
Xxxxx X. Xxxxxxxxxxx
00000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
(g) If to HighBridge Capital Management LLC or
Highbridge International LLC, to:
HighBridge International LLC
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx
Facsimile: (000) 000-0000
(h) If to SC Fundamental Value Fund, L.P. or SC
Fundamental Value BVI, Ltd., to:
SC Fundamental LLC
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
(i) If to Xxxxxx Associates LLC, to:
Xxxxxx Associates LLC
000 XX Xxxxx Xxx., Xxxxx 0000
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Facsimile: (000) 000-0000
49
(j) If to Xxxxxxx Xxxxx Barney, to:
Xxxxxxx Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xx., 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxx
Facsimile: (000) 000-0000
or to such other persons or addresses as may be designated in
writing by the party to receive such notice as provided above.
9.8. No Third Party Beneficiaries. Except as provided in
Section 6.10 (Indemnification; Directors' and Officers' Insurance), this
Agreement is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
9.9. Further Assurances. Each of the parties hereto covenants
and agrees upon the request of the other, to do, execute, acknowledge and
deliver or cause to be done, executed, acknowledged and delivered all such
further acts, deeds, documents, assignments, transfers, conveyances, powers of
attorney and assurances as may be reasonably necessary or desirable to give full
effect to the Transactions. Inland Partners, L.P., Links Partners, L.P. and
MatlinPatterson Global Opportunities Partners L.P. each further agrees, to be
present at the meeting of stockholders duly called by the Company to obtain the
Charter Amendment Requisite Vote and at any adjournment or postponement thereof
and to vote any shares of Capital Stock held by them in support of the Charter
Amendment.
9.10. Subsidiaries or Affiliates Actions; Actions of or
Consent by the Holders. Whenever this Agreement requires a Subsidiary of a
person who is a party hereto to take any action, such requirement shall be
deemed to include an undertaking on the part of such person to cause such
Subsidiary to take such action. Whenever this Agreement requires an affiliate of
a Person who is a party hereto to take any action, such requirement shall be
deemed to include an undertaking on the part of such Person to use commercially
reasonable efforts to cause such affiliate to take such action. Whenever this
Agreement permits any action of or consent by the Noteholders, the Senior
Lenders or the Holders as a group (including in connection with approving the
reasonableness of or finalizing the form of any filings, notices, agreements or
other documents or deliveries), unless a higher or lower amount is otherwise
expressly provided, any such action or consent may be taken or given (i) in the
case of Noteholders, by Noteholders holding 90% in principal amount of the Notes
held by all Noteholders, (ii) in the case of Senior Lenders, by Senior Lenders
holding 60% in principal amount of the Claims held by all Senior Lenders and
(iii) in the case of Holders as a group, by both Noteholders holding 90% in
principal amount of the Notes held by all Noteholders and by Senior Lenders
holding 60% in principal amount of the Claims held by all Senior Lenders.
9.11. Transfer Taxes. Any and all transfer, documentary,
sales, use, stamp, registration and other such Taxes and fees (including
penalties and interest) incurred in connection with the Transactions shall be
paid by the Company when due.
50
9.12. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.13. Interpretation. The table of contents and headings
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof. Where a reference in this Agreement is made to a Section or
Annex or Exhibit, such reference shall be to a Section or Annex of or Exhibit to
this Agreement unless otherwise indicated. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
9.14. Assignment; Holder Transferees. This Agreement shall not
be assignable by operation of law or otherwise; provided, however, that to the
extent such would not result in a breach of any part of this Agreement, and
subject to the following sentence, any Holder may designate by written notice to
the Company and the other Holders a transferee of all or any portion of Notes or
Claims held by such Holder, in which event, to the extent of such transfer, all
references herein to such Holder in such capacity shall be deemed references to
such transferee except that all representations and warranties made herein with
respect to such Holder as of the date of this Agreement shall be deemed
representations and warranties made with respect to such transferee as of the
date of such designation. No Holder may transfer its Claims or Notes, as the
case may be, including pursuant to a foreclosure of a pledge, to any third party
unless such transferring Holder shall, prior to any such transfer, obtain from
the transferee a joinder agreement in a form reasonably satisfactory to the
Company and the other Holders and deliver a copy of such joinder agreement to
the Company and to the other Holders.
9.15. Allocation of Consideration. The parties hereto
acknowledge and agree that all consideration received by the Noteholders and
Senior Lenders in exchange for their Notes and Claims, respectively, shall be
allocated first, to a return of principal and second, to the payment of accrued
but unpaid interest. No party hereto shall take any position on any Tax Return
which is inconsistent with this allocation.
9.16. Knowledge. For purposes of this Agreement, the phrase
"to the knowledge of the executive officers of the Company" or "to knowledge of
the Company" or any variation thereof shall mean the actual knowledge of the
following officers of the Company: Xxxxx X. Xxxxxxxxx, Chief Executive Officer;
Xxxxx X. Xxxx, President and Chief Financial Officer; Xxxxxxx X. Xxxxxx,
President - IT Services Division; and Xxx X. Xxxxxxxx, Xx. Senior Vice
President, General Counsel and Secretary, in each case, after reasonable inquiry
by such officers of those members of senior management having supervisory roles
with respect to the areas of the Company's business and operations that are the
subject of the representations and
51
warranties of the Company hereunder. For purposes of this Agreement, the phrase
"to the knowledge of a Holder" or any variation thereof shall mean the actual
knowledge of the authorized person executing this Agreement on behalf of such
Holder.
52
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first written above.
THE GROUP:
PERSONNEL GROUP OF AMERICA, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Chief Executive Officer
PFI CORP.
By: /s/ Xxxxx X. Xxxx
---------------------------------
Name: Xxxxx X. Xxxx
Title: President
STAFFPLUS, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
NFOTECH SERVICES LLC
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
BAL ASSOCIATES INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
ADVANCED BUSINESS CONSULTANTS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
VENTURI STAFFING PARTNERS, LLC
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
VENTURI TEXAS STAFFING PARTNERS, LP
By: StaffPLUS, Inc., its General Partner
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
S-1
[Restructuring Agreement]
THE HOLDERS:
INLAND PARTNERS, L.P.
(AS SENIOR LENDER AND NOTEHOLDER)
By: /s/ Xxxxx X. Xxxx
---------------------------
Name: Xxxxx X. Xxxx
Title: Attorney-in-Fact
Notes: $15,134,250
Loans: $21,811,765 (includes Loans
held by Links Partners, L.P.)
LINKS PARTNERS, L.P.
(AS SENIOR LENDER AND NOTEHOLDER)
By: /s/ Xxxxx X. Xxxx
---------------------------
Name: Xxxxx X. Xxxx
Title: Attorney-in-Fact
Notes: $15,134,250
Loans: $21,811,765 (includes Loans
held by Inland Partners, L.P.)
S-2
[Restructuring Agreement]
MATLINPATTERSON GLOBAL OPPORTUNITIES
PARTNERS L.P.
(AS SENIOR LENDER AND NOTEHOLDER)
By: MatlinPatterson Global Advisers
LLC, its Investment Advisor
By: /s/ Xxxx Xxxxxxxxx
---------------------------------
Name: Xxxx Xxxxxxxxx
Title: Chairman
Notes: $30,268,500
Loans: $21,963,235
S-3
[Restructuring Agreement]
ZAZOVE ASSOCIATES, LLC
(AS NOTEHOLDER)
By: /s/ Xxxxxxxxxxx X. Xxxx
-------------------------------
Name: Xxxxxxxxxxx X. Xxxx
Title: Portfolio Manager
Notes: $ 20,611,000
S-4
[Restructuring Agreement]
R2 INVESTMENTS, LDC
(AS NOTEHOLDER)
By: Amalgamated Gadget, L.P., its
Investment Manager
By: Scepter Holdings, Inc. its General
Partner
By: /s/ Xxxxxxxx Xxxxxx
-------------------------------
Name: Xxxxxxxx Xxxxxx
Title: President
Notes: $ 19,168,000
S-5
[Restructuring Agreement]
XXXXX X. XXXXXXXXXXX
(AS NOTEHOLDER)
/s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------
Notes: $ 2,328,000
S-6
[Restructuring Agreement]
XXXXXXX XXXXX XXXXXX
(AS NOTEHOLDER)
By:
-------------------------------
By: /s/ Xxxx Xxxx
-------------------------------
Name: Xxxx Xxxx
Title: Managing Director
Notes: $ 1,017,000, of which $ 717,000
will be exchanged by the Holder pursuant
to this Agreement.
S-7
[Restructuring Agreement]
SC FUNDAMENTAL VALUE FUND, L.P.
(AS NOTEHOLDER)
By: SC Fundamental LLC, its General Partner
By: /s/ Xxxx X. Xxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxx
Title: Member
Notes: $ 880,000
SC FUNDAMENTAL VALUE BVI, LTD.
(AS NOTEHOLDER)
By: SC Fundamental Value BVI, Inc., as
Managing General Partner of its
Investment Manager
By: /s/ Xxxx X. Xxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
Notes: $ 1,120,000
S-8
[Restructuring Agreement]
XXXXXX ASSOCIATES, LLC
(AS NOTEHOLDER)
By: /s/ Xxxx Xxxxxx
-------------------------------
Name:
Title:
Notes: $800,000
S-9
[Restructuring Agreement]
HIGHBRIDGE CAPITAL MANAGEMENT LLC
(AS NOTEHOLDER)
By: /s/ Xxxxxx Xxxxxx
-------------------------------
Name: Xxxxxx Xxxxxx
Title:
Notes: $500,000
S-10
[Restructuring Agreement]
XXXX XXXXXX
(AS NOTEHOLDER)
/s/ Xxxx Xxxxxx
-----------------------------------------
Notes: $500,000
XXXX XXXXXX, ON BEHALF OF XXXXX X. XXXXXX
& XXXX XXX XXXXXX JTWROS
(AS NOTEHOLDER)
/s/ Xxxx Xxxxxx
-----------------------------------------
Notes: $400,000
S-11
[Restructuring Agreement]
ANNEX A
(The Back-Up Plan)
Subject to termination as provided in Section III of this
Annex A below, the provisions of this Annex A shall become effective as
specified in Section 8.4(b) only upon a termination of this Agreement for the
reasons specified therein, whereupon the provisions of this Annex A shall become
binding on and inure to the benefit of only the Group and only the Senior
Lenders. The obligations of the Senior Lenders under this Annex A shall be in
their capacity as such and also in their capacity as Noteholders.
I. Group Covenants and Agreements. The Group hereby
jointly and severally covenants and agrees to each of the following:
(A) Filing of Cases. Within 45 calendar days of receiving the
notice of termination giving rise to the obligations in this Annex A, but in no
event after June 30, 2003, to commence and file (the date of filing being
referred to herein as the "Case Filing Date") for the Group consolidated cases
(the "Chapter 11 Cases") pursuant to voluntary petitions for reorganization
under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code")
in the Bankruptcy Court of the Southern District of the District of New York
(the "Bankruptcy Court");
(B) Generation of First-Day Pleadings. As promptly as
practicable and no fewer than five calendar days prior to the Case Filing Date,
provide for comment to the Senior Lenders and to Stroock & Stroock & Xxxxx LLP,
as counsel to certain of the Holders ("Holders Counsel"), a draft of all
pleadings, motions and orders, and supporting documents, reasonably anticipated
to be filed or otherwise included in connection with the commencement of the
Chapter 11 Cases (the "First-Day Pleadings"). Such First Day Pleadings shall in
all material respects be consistent with, and shall not contain any terms
inconsistent with, the terms and conditions set forth in this Annex A and on
Schedule 1 to this Annex A. The Group shall use all commercially reasonable
efforts to finalize, and shall otherwise cooperate with the Senior Lenders in
finalizing, as promptly as practicable and prior to the Filing Date the
First-Day Pleadings.
(C) Filing of Back-Up Plan and Disclosure Statement. To use
all commercially reasonable efforts to finalize and file, and otherwise
cooperate with the Senior Lenders in finalizing and filing, with the Bankruptcy
Court as promptly as practicable and prior to the date that is 30 calendar days
after the Case Filing Date, the initial Back-Up Plan and related initial
Disclosure Statement (the date of filing of the Back-Up Plan and Disclosure
Statement being referred to herein as the "Plan Filing Date") .
(D) Generation of Back-Up Plan and Disclosure Statement. As
promptly as practicable and no later than the Case Filing Date, provide for
comment to the Senior Lenders and to Holders Counsel an initial draft of the
Back-Up Plan and an initial draft of the Disclosure Statement, in each case as
prepared by counsel for the Group. As used in this Agreement, the term "Back-Up
Plan" shall mean a plan of
reorganization for use in the Chapter 11 Cases, including any amendments or
supplements thereto, that has been circulated and revised in accordance with the
process noted above, having customary terms and conditions that is in all
material respects consistent with, and does not contain any terms inconsistent
with, the terms and conditions set forth in this Annex A and on Schedule 1 to
this Annex A, as may be modified as provided in the following sentence. The
Back-Up Plan shall be consistent with this Annex A and in a form reasonably
acceptable to the Company and the Senior Lenders and shall contain such
modifications, amendments or clarifications in terms and conditions as may be
reasonably proposed by the Senior Lenders for inclusion therein or in any
amendments or supplements thereto or as may be proposed by the Company or the
Bankruptcy Court and consented to by the Senior Lenders. As used in this
Agreement, the term "Disclosure Statement" shall mean a disclosure statement in
respect of the Back-Up Plan for use in the Chapter 11 Cases, including any
amendments or supplements thereto, that has been circulated and revised in
accordance with the process noted above, having customary terms and conditions
that is in all material respects consistent with, and does not contain any terms
inconsistent with, the Back-Up Plan (as may be modified from time to time). The
Disclosure Statement shall be in a form reasonably acceptable to the Company and
the Senior Lenders and shall be otherwise in compliance with the Bankruptcy
Code, any related rules promulgated under the Bankruptcy Code (the "Bankruptcy
Rules") and any applicable rules or orders of the Bankruptcy Court.
(E) Generation of Definitive Documents. As promptly as
practicable and in accordance with a reasonably detailed document production and
transaction time line to be provided by Holders Counsel in connection with its
comments on the drafts of the Back-Up Plan, provide for comment to the Senior
Lenders and to Holders Counsel an initial draft of all material documents
underlying the Back-Up Plan (including such documents in respect of preferred
stock, warrants, rights, options or other securities or loans or notes to be
issued in the Restructuring, the amended and restated certificate of
incorporation and by-laws and any security documents or registration rights or
other security holder agreements) and any other material agreements relating to
confirmation and effectiveness of the Back-Up Plan and rights of security
holders in the reorganized Company, including the confirmation order and
disclosure statement order (such documents and agreements, as may be modified as
provided in the following sentence, the "Definitive Documents"), in each case to
have customary terms and conditions in all material respects consistent with,
and not to contain any terms inconsistent with, the Back-Up Plan . The
Definitive Documents shall be in a form reasonably acceptable to the Company and
the Senior Lenders and shall contain such modifications, amendments or
clarifications in terms and conditions as may be reasonably proposed by the
Senior Lenders or as may be proposed by the Company or the Bankruptcy Court and
consented to by the Senior Lenders.
(F) Confirmation and Approval. To use all commercially
reasonable efforts to obtain, and otherwise cooperate with the Senior Lenders in
obtaining, (i) as promptly as practicable and prior to the date that is 45
calendar days after the Plan Filing Date (the date of the order being referred
to herein as the "Disclosure Statement Approval Date"), an order of the
Bankruptcy Court approving the Disclosure Statement and forms of ballots in
connection therewith (the "Disclosure Statement Order") and (ii) as promptly
Annex A-p.2
as practicable and prior to the date that is 105 calendar days after the Plan
Filing Date (the date of the order being referred to herein as the "Confirmation
Date"), an order of the Bankruptcy Court confirming the Back-Up Plan (the
"Confirmation Order"); and, following such Confirmation Order, to use all best
efforts to consummate and make effective the Back-Up Plan, in each case pursuant
to and in compliance with applicable Laws (including the Bankruptcy Code and the
Bankruptcy Rules).
(G) General Filings, Review/Approval and Consultation. Without
prejudice to clauses above or other provisions of this Annex A and to the extent
reasonably practicable: (x) to file all applicable reports and other documents
pursuant to the Bankruptcy Code, the Bankruptcy Rules, the Exchange Act and the
Securities Act, and with any other applicable Governmental Entity, within the
time limits or periods specified therein, (y) to provide Holders Counsel with
all material pleadings, motions, orders, agreements or other documents to be
filed in the Chapter 11 Cases reasonably in advance of the date of filing and
obtain the prior approval of Holders Counsel, which approval the Senior Lenders
acknowledge may not be unreasonably delayed or withheld, to the form and
substance of any such pleading, motion, order, agreement or other document; and
(z) to consult with Holders Counsel reasonably in advance of taking (or upon
becoming aware of facts and circumstances creating a reasonable likelihood of a
need to take) any action in or with respect to matters to be raised in or
otherwise directly or indirectly having a material bearing on the outcome or
timing of the Chapter 11 Cases. In the event of any matter arising on an
emergency or expedited basis, the Company shall notify Holders Counsel of any
actions taken or proposed to be taken with respect thereto as expeditiously as
possible.
(H) General Disclosure and Business Actions. Without prejudice
to clauses above or other provisions of this Annex A and to the extent
reasonably practicable: (x) in advance of the filing or release of any material
public disclosure or press release in connection with the subject matter of this
Annex A (or any other restructuring of the Company), to afford a reasonable
opportunity to Holders Counsel to review and comment upon such disclosure or
press release; (y) to coordinate the preparation and filing or making of such
other disclosure or press release with Holders Counsel; and (z) to consult with
Holders Counsel reasonably in advance of taking or proposing to take any
material action outside of the ordinary course of the Group's business.
II. Senior Lender Covenants and Agreements. Each of
the Senior Lenders, severally and not jointly and in its capacity as such and
also in its capacity as a Noteholder, hereby agrees as follows:
(A) Ownership. It represents and warrants to the Company that,
as of the date hereof, it has investment and voting discretion with respect to
the principal amount of the Notes and the Claims set forth below its name on the
signature page of this Agreement (collectively referred to in this Annex A as
the "Debt") and all related claims, rights and causes of action arising out of
or in connection with or otherwise relating to such Debt (the "Related
Actions"), in each case free and clear of any Liens that would prevent or
materially impair the consummation of the Back-Up Plan, or has the power
Annex A-p.3
and authority to bind the beneficial owners of such Debt and Related Actions to
the terms of this Annex A, and it covenants and agrees that it has and shall
have full power and authority to vote on and consent to such matters concerning
the Debt and Related Actions and to exchange, assign and transfer such Debt and
Related Actions pursuant to the Back-Up Plan.
(B) Support. It covenants and agrees that, subject to the
Group being in compliance with and only for so long as the Group is in
compliance in all material respects with each obligation under this Agreement
(including in this Annex A) it shall support the Back-Up Plan and the
consummation of the transactions contemplated thereby. Such support shall
include the following: (i) after approval of the Disclosure Statement by the
Bankruptcy Court, to vote timely all of its claims in respect of the Debt and
Related Actions, as well as any other claims or interests in or against the
Company, in favor of the Back-Up Plan in accordance with voting procedures
approved by the Bankruptcy Court (and not to seek to revoke or withdraw such
vote); (ii) not to object in the Bankruptcy Court to the Disclosure Statement or
to any efforts to obtain acceptance of, and to confirm and implement, the
Back-Up Plan (except to the extent that the Disclosure Statement or the Back-Up
Plan shall be inaccurate, false or misleading, in each case in a material
manner); (iii) not to encourage or support in any fashion any person or entity
to vote against the Back-Up Plan or to take any other action prohibited to such
Holder in this Agreement; and (iv) not to take any other action for the purpose
of delaying, preventing, frustrating or impeding acceptance, confirmation or
implementation of the Back-Up Plan, including filing a motion or application
with the Bankruptcy Court seeking relief from the automatic stay in any of the
Chapter 11 Cases; provided, however, that nothing contained herein shall limit
the ability of such Senior Lender to consult with the Group or the Original
Senior Lenders or the Noteholders, or their respective representatives, or to
appear and be heard, concerning any matter arising in the Chapter 11 Cases to
the extent that such consultation or appearance is not inconsistent in any
material respect with its obligations hereunder and the terms of the Back-Up
Plan.
(C) Acquired Debt, Related Actions or Equity Interests. To the
extent it acquires additional Debt or Related Actions or holds or acquires
equity interests in the Company entitled to vote on the Back-Up Plan, it agrees
that such Debt, Related Actions or equity interests shall be subject to this
Agreement and that it shall vote (or cause to be voted) any such additional
Debt, Related Actions or equity interests (in each case, to the extent still
held by it or on its behalf at the time of such vote) in a manner consistent
with paragraph (B) above.
III. Termination of this Annex A and the Back-Up
Plan.
(A) Termination by the Parties. This Annex A may be terminated
and the Back-Up Plan may be abandoned at any time prior to the consummation of
the Back-Up Plan by written consent of the Company, on the one hand, or by
written consent of the Senior Lenders, on the other hand, in the event of any of
the following:
(i) The Back-Up Plan shall not have been
consummated by December 31, 2004; provided, however, that such
date may be extended by either
Annex A-p.4
the Company or by written consent of the Senior Lenders to a
date not beyond June 30, 2005; and, provided, further, that
the right to terminate this Annex A pursuant to this clause
shall not be available to any party that has breached in any
material respect any of its obligations under this Annex A in
any manner that shall have proximately contributed to the
occurrence of the failure of the Back-Up Plan to be
consummated.
(ii) Any Order permanently restraining,
enjoining or otherwise prohibiting consummation of the Back-Up
Plan shall become final and nonappealable.
(B) Termination by the Company. This Annex A may be terminated
and the Back-Up Plan may be abandoned at any time prior to the consummation of
the Back-Up Plan by the Company, in the event of any of the following:
(i) (x) The Group is not in material breach
of any of its obligations under this Agreement, (y) the
Company seeks to take any of the actions that would be
proscribed by this Annex A in reliance on Article IV below in
connection with entering into a binding written agreement
concerning an alternative proposal or proposing a plan and the
Company notifies the Senior Lenders in writing that it intends
to enter into such an agreement or plan, attaching the most
current version of such agreement or plan to such notice, and
(z) the Senior Lenders Holders do not make, within three
business days of receipt of the Company's written notification
of its intention to enter into a binding agreement or propose
a plan, an offer that the Company determines, in good faith
after consultation with its financial advisors, is reasonably
likely to be consummated if it is accepted, taking into
account all legal, financial, and regulatory aspects of the
proposal and is at least as favorable, from a financial point
of view, to the Company and Persons to whom fiduciary duties
are owed by the Board of Directors as the alternative proposal
or plan described in the preceding clause (y).
The Company agrees that it will not enter into a binding
agreement or propose a plan referred to above until at least
the fourth business day after it has provided the notice to
the Senior Lenders required thereby and to notify the Senior
Lenders promptly if its intention to enter into a written
agreement or propose a plan referred to in its notification
shall change at any time after giving such notification.
(ii) There has been a material breach by any
of the Senior Lenders of its respective representations,
warranties, covenants or agreements contained in this
Agreement that is not curable or, if curable, is not cured
within 30 days after written notice of such breach is given by
the Company to all of the Senior Lenders.
(C) Termination by the Senior Lenders. This Annex A may be
terminated and the Back-Up Plan may be abandoned at any time prior to the
Annex A-p.5
consummation of the Back-Up Plan by written consent of the Senior Lenders, in
the event of any of the following:
(i) The Case Filing Date shall not have
occurred on or prior to the day that is 45 days after the date
this Annex A became effective.
(ii) The Plan Filing Date shall not have
occurred on or prior to the day that is 45 calendar days after
the Case Filing Date; the Disclosure Statement Approval Date
shall not have occurred on or prior to the day that is 45
calendar days after the Plan Filing Date; or the Confirmation
Date shall not have occurred on or prior to December 31, 2004.
(iii) The Group shall fail on the Case
Filing Date to file the First-Day Motions or on the Plan
Filing Date to file the Back-Up Plan and the Disclosure
Statement with the Bankruptcy Court and request a prompt
hearing to consider the adequacy of the Disclosure Statement.
(iv) There has been a material breach by any
of the Group of any of their respective representations,
warranties, covenants or agreements contained in this
Agreement that is not curable or, if curable, is not cured
within 30 days after written notice of such breach is given to
the Company.
(v) Any of the Group shall (x) withdraw the
Back-Up Plan or file with the Bankruptcy Court any plan of
reorganization or liquidation other than the Back-Up Plan, (y)
modify its support of the Back-Up Plan in a manner
inconsistent with this Annex A or fail to reconfirm its
recommendation of the Back-Up Plan within five business days
after a written request by the Senior Lenders to do so or (z)
publicly announce its intention not to pursue the Back-Up
Plan.
(vi) An examiner with expanded powers or a
trustee shall have been appointed in one or more of the
Chapter 11 Cases, one or more of the Chapter 11 Cases shall
have been converted to a case under Chapter 7 of the
Bankruptcy Code, or one or more of the Chapter 11 Cases shall
have been dismissed by order of the Bankruptcy Court.
(vii) Any of the Group files a proposed
Confirmation Order in breach hereof.
(viii) The Company or any of the other
Persons described in Article IV of this Annex A shall take any
of the actions that would be proscribed by this Agreement but
for such Article allowing certain actions to be taken pursuant
thereto.
(D) Effects of Termination. In the event of termination of
this Annex A and the abandonment of the Back-Up Plan pursuant to this Article
III, the provisions of this Annex A shall become void and of no effect with no
liability on the part of any party hereto (or of any of its directors, officers,
employees, agents, legal and financial advisors
Annex A-p.6
or other representatives); provided, however, except as otherwise provided
herein, no such termination shall relieve any party hereto of any liability or
damages resulting from any breach of this Annex A and each party shall have all
rights and remedies available to it under applicable Law, the Existing Senior
Facility, the Indenture and the Notes and any ancillary documents or agreements
thereto. If this Annex A has been terminated at a time when permission of the
Bankruptcy Court shall be required for any Holder to change or withdraw (or
cause to withdraw) its vote to accept the Back-Up Plan, the Group shall not
oppose or encourage or support any opposition to any attempt by any Holder to
change or withdraw (or cause to change or withdraw) such vote at such time.
Further, if this Annex A is terminated due to a failure of the Back-Up Plan to
have been consummated pursuant to Section III.A.(i) above, each of the Senior
Lenders may file a motion or application seeking the vacatur of any Confirmation
Order entered by the Bankruptcy Court and none of the Group or the other Senior
Lenders shall oppose or encourage or support any opposition to such motion or
application.
IV. Alternative Plans; Fiduciary Duties. The Group covenants
and agrees that they shall not solicit, encourage or otherwise support, and
shall not engage in discussions with any of the Group's other creditors,
vendors, customers or suppliers or any actual or potential plan proponent,
investor or acquiror with regard to, any alternative plan of reorganization or
liquidation, any other recapitalization transaction for the Group or any new
investment in, loan to or acquisition of assets or stock of the Group, to the
extent any such solicitation, encouragement, support or discussions would be
inconsistent with the terms of the Back-Up Plan; provided, however, that nothing
contained herein shall limit the ability of any member of the Group to consult
with the Senior Lenders, the Original Senior Lenders or the Noteholders, or
their respective representatives, or to appear and be heard, concerning any
matter arising in the Chapter 11 Cases to the extent that such consultation or
appearance is not materially inconsistent with its obligations hereunder and the
terms of the Back-Up Plan. Notwithstanding anything to the contrary herein,
nothing in this Annex A shall require (a) the directors or officers of the
Company (in such person's capacity as a director or officer of the Company) to
take any action, or to refrain from taking any action, including withdrawing
support for the Back-up Plan, to the extent required to comply with his or her
fiduciary obligations under applicable Law, (b) any Holder or representative of
a Holder that is also a director or officer of the Company to take any action,
or to refrain from taking any action, to the extent required to comply with its
fiduciary obligations under Law applicable to actions of such director or
officer or (c) any Holder or representative of a Holder that is a member of a
statutory committee established in the Chapter 11 Cases to take any action, or
to refrain from taking any action, to the extent required to comply with
fiduciary obligations under Law applicable to actions of such member. Nothing
herein will limit or affect, or give rise to any liability, to the extent
required for discharge of the fiduciary obligations as described in this
Section.
V. Miscellaneous Provisions. The Group, jointly and severally,
and each of the Senior Lenders, severally and not jointly and in its capacity as
such and also in its capacity as a Noteholder, hereby agree as follows
(A) Cooperation and Good Faith. It shall cooperate with the
other parties bound by this Annex A and act in good faith and otherwise
reasonably coordinate its activities to the extent permitted by applicable Laws
in respect of all matters
Annex A-p.7
concerning the implementation of the Restructuring and the Back-Up Plan and the
pursuit and support of the Back-Up Plan. In such regard, it shall negotiate in
good faith the definitive documents implementing, achieving and relating to the
Back-Up Plan and the Restructuring, including the First-Day Motions, the
Definitive Documents, the Disclosure Statement Order and the Confirmation Order.
(B) Further Assurances. Each of the parties shall take such
actions as may be reasonably necessary to carry out the purposes and intent of
the Back Up Plan and this Agreement, including making and filing of any filings
or notices required with or to any Governmental Entity and the obtaining of any
consents therefrom (provided that no Senior Lender shall be required to incur
any expense, liability or other obligation or restriction) and shall refrain
from taking any action that would materially frustrate the purposes and intent
of the Back Up Plan and this Annex A, including proposing a plan that is not the
Back-Up Plan.
(C) Acknowledgment and Waiver of Certain Claims. The Group
acknowledges and agrees that (i) the Existing Senior Facility and the Indenture
and all instruments and documents executed in connection therewith constitute
valid and binding agreements of the Group, as applicable and (ii) for so long as
this Annex A is in effect, the Group will not assert any claim, counterclaim,
setoff or defense of any kind or nature, which would (other than as contemplated
or effectuated hereby) in any way affect the validity or enforceability of any
claim arising from the Debt or any Related Actions or in any way reduce or
affect the absolute and unconditional obligation of the Group to pay and/or
guarantee, as applicable, all of the obligations arising from the Debt or any
Related Actions; provided that any such claim, counterclaim, setoff or defense
possessed by the Group may be disclosed in the Disclosure Statement. This
Agreement is not and shall not be deemed a solicitation for consents to the
Back-Up Plan or a solicitation to tender or exchange any Debt or Related
Actions.
(D) Signing Definitive Documents. To the extent it is to be a
party thereto, it shall execute and deliver to the other parties thereto the
Definitive Documents.
(E) Fees. Notwithstanding anything to the contrary herein, the
Senior Lenders shall not be obligated to perform under this Annex A unless the
Group shall have fully discharged all of its obligations then due and owing,
except to the extent subject to a good faith dispute or as prohibited by the
Bankruptcy Court or required to be paid to the estate, under any existing
agreements between the Group and any Holder regarding the payment of fees and
expenses of such Holder or designated counsel or financial advisors of such
Holder in respect of the Restructuring (including the Agreement in Principle and
any agreement between the Company and Holders Counsel).
Annex A-p.8
SCHEDULE 1 to Annex A
(Term Sheet for the Back-Up Plan)
ADMINISTRATIVE, On or as soon as practicable after the effective date
PRIORITY TAX AND of the plan of restructuring filed in the Back-Up
OTHER PRIORITY CLAIMS Plan (the "Plan"), each holder of an administrative,
priority tax or other priority claim shall receive
cash equal to the full amount of its claim or
otherwise be rendered unimpaired. Holders of such
claims will be rendered unimpaired and as such will
be deemed to have accepted the Plan and will not be
entitled to vote.
Any ad valorem taxes and other non fiduciary
taxes/fees will be extended to maximum statutory
periods.
EXISTING SENIOR Holders of claims in respect of the Existing Senior
FACILITY CLAIMS Facility will have their letters of credit
obligations either cash collateralized or replaced
and, assuming $103 million in funded debt, receive
their pro rata share of a combination of (A) $50
million in cash, (B) $15 million of New Junior
Secured Notes (together with related Series A
Warrants), (C) the Convertible Preferred Stock and
(D) to the extent permitted by applicable Law, 3% of
the Common Stock of the reorganized Company to be
"gifted" as provided below. In consideration for the
agreements, waivers and consents given in Annex A and
the Agreement, to the extent permitted by applicable
Law, the Senior Lenders will waive their rights to
receive such Common Stock for the benefit of and
reallocation to the holders of Common Stock to be
"gifted" as set forth below.
OTHER SECURED CLAIMS All other allowed secured claims against any of the
"Debtors" (who will be the Group and any other
subsidiaries designated by the Senior Lenders) will
be rendered unimpaired pursuant to section 1124 of
the Bankruptcy
Code and as such will be deemed to have accepted the
Plan and will not be entitled to vote.
CAPITAL LEASES At the election of the Debtors (and with the consent
of the Senior Lenders) each holder of a capital lease
of the Debtors will either be rendered unimpaired and
such obligations will be reinstated, or such leased
equipment will be returned to such holder in full
satisfaction of such holder's allowed secured claim.
NOTES The Notes will be cancelled and each holder will
receive its pro rata share of Common Stock
representing 17% of the outstanding Common Stock
(assuming conversion of the Convertible Preferred
Stock and exercise of Series A Warrants) but prior to
any New Equity Plan.
UNSECURED CREDITORS Upon commencement of each of the Chapter 11 Cases
(which will be consolidated for administrative
purposes), the Company will seek approval of the
Bankruptcy Court for the payment of ordinary course
pre-petition claims of suppliers and vendors to the
extent such parties provide normal trade credit to
the Debtors.
Allowed general unsecured creditors of the Debtors
will be rendered unimpaired and as such be deemed to
have accepted the Plan and will not be entitled to
vote.
The Company will propose, subject to Senior Lender
consent not to be unreasonably withheld, a schedule
of unsecured claims (including, but not limited to,
certain leases and other executory contracts) to
which it objects and seeks to impair, with treatment
to be agreed among the parties.
CAPITAL STOCK AND To the extent permitted by applicable Law, all equity
RELATED RIGHTS AND interests (or purchase rights for such equity
CLAIMS interests) in the Company and related
Schedule 1 to Annex A-p.2
securities laws claims will be extinguished and each
holder will receive its pro rata share of Common
Stock representing 3% of the outstanding Common Stock
from the holders of claims under the Existing Senior
Facility and "gifted" from the holders of claims in
respect of the Existing Senior Facility.
EMPLOYEE MATTERS Pursuant to the Plan, the parties will adopt the New
Equity Plan and Employment Agreements substantially
as contemplated in the Notes Exchange.
Awards under the New Equity Plan will be at the
discretion of the Board of Directors of the Company
and will dilute any prior issuance in the Back-Up
Plan.
USE OF CASH COLLATERAL The parties will support a release of cash collateral
under the Existing Senior Facility of up to an amount
to be agreed to by the Parties pursuant to a
reasonable cash budget to be prepared by the Company
and will support any motions to such effect and to
permit the Debtors to use cash on hand, cash to be
generated from accounts and cash generated from
operations during the Chapter 11 Cases.
FILING The cases shall be filed in the bankruptcy court
located in the Southern District of New York, or, if
agreed by the Senior Lenders, the Northern District
of California or as otherwise agreed by the parties.
CONVERTIBLE PREFERRED As described in Schedule 2 to Annex A.
STOCK
REGISTRATION RIGHTS Direct or indirect holders of 5% of the outstanding
voting securities who cannot dispose of their shares
in one transaction pursuant to Rule 144 (assuming the
application of volume restrictions) shall be entitled
to customary piggyback registration rights and S-3
demand shelf registration
Schedule 1 to Annex A-p.3
rights to be agreed and subject to customary minimum
value and participation thresholds. The holders of
Series A Warrants will be entitled to shelf
registration on exercise. In all cases, customary
blackout and cutback provisions will apply.
The Debtors will use their best efforts to cause the
shares of Common Stock to be listed on a registered
national securities exchange or include them for
quotation on the NASDAQ/NMS.
CORPORATE GOVERNANCE Unless otherwise agreed by the Senior Lenders (with
such agreement not to be unreasonably withheld), the
composition of the new Board of Directors and the
provisions of the Charter and By-Laws shall be
substantially as contemplated in the Notes Exchange
and following the Charter Amendment, in each case
subject to any limitations imposed by the Bankruptcy
Code and other applicable Law.
MISCELLANEOUS The proposed Plan will provide that, on the Plan's
effective date, any and all claims of the Debtors and
debtors-in-possession against any person or entity of
every kind will vest in the reorganized Debtors and
will be prosecuted and administered by the management
of the reorganized Debtors, at the discretion of the
Board of Directors of the reorganized Debtors.
The proposed Plan will contain usual and customary
conditions precedent to confirmation of the proposed
Plan and the effective date, including the receipt of
all necessary regulatory and other governmental
approvals.
Upon the filing, the Debtors will not oppose the
formation of a creditors' committee at least a
majority of which is comprised of designees of the
Senior Lenders and Noteholders.
Schedule 1 to Annex A-p.4
Other elements of the Back-Up Plan (including,
without limitation, corporate and tax structure) and
implementation of the restructuring transactions to
be in form and substance reasonably acceptable to the
Senior Lenders.
Releases to be provided to all parties, subject to
satisfactory completion of legal due diligence.
The Debtors will not seek to assume (as that term is
used in Section 365 of the Bankruptcy Code) any
employment, consulting or similar contract, except
pursuant to prior agreement with the Senior Lenders.
Schedule 1 to Annex A-p.5
SCHEDULE 2 to Annex A
(Terms of Convertible Preferred)
HOLDERS: Holders of claims under Existing Senior Facility.
FACE AMOUNT: $35 million in the aggregate. The number of shares of
the Convertible Preferred Stock shall be the number
that represents 70% of the Common Stock on an
as-converted basis after giving effect to the
issuance of Common Stock in exchange for the Notes,
the "gifting" of Common Stock to the existing
stockholders and the issuance and exercise of the
Series A Warrants but prior to any New Equity Plan
issuances.
DIVIDENDS: Periodic accruing dividend of 14% and rights to
participating dividends.
LIQUIDATION The liquidation preference shall be the greater of
PREFERENCE: (i) the initial purchase price per share (as adjusted
for any stock splits, recapitalizations or stock
consolidations) plus any accumulated and unpaid
dividends (whether or not earned or declared and
whether or not there are funds legally available for
the payment of dividends) and (ii) the amount per
share of the Convertible Preferred Stock equal to the
aggregate amount of distributions or payments that
would be payable on such date, after taking into
account any amounts payable in respect of senior
stock or parity stock, to a holder of the number of
shares of Common Stock into which such share of
Convertible Preferred Stock would be convertible if
such share of Convertible Preferred Stock were
converted into shares of Common Stock immediately
prior to event giving rise to the payment of the
liquidation preference.
CONVERSION: The holders of the Convertible Preferred Stock shall
have the right to convert into shares of Common
Stock, at any time after 24 months from the issue
date, at an initial conversion ratio of one share of
Convertible Preferred Stock for 100 shares of Common
Stock (subject to adjustments as discussed below).
CONVERSION The conversion ratio shall be subject to
RATIO ADJUSTMENTS: adjustment (i) for any dividends, distributions, or
stock splits and similar recapitalization
transactions and (ii) on a weighted average basis for
any issuances of Common Stock or any securities
convertible into or exercisable for Common Stock with
a purchase price (including exercise price or
conversion price) less than the fair market value
with a carve-out for any issuance pursuant to
employee benefits plans, incentive stock and stock
compensation or fee payment agreements (including the
New Equity Plan), to landlords or equipment lessors
or lenders or in joint ventures, acquisitions or
similar strategic arrangements.
OPTIONAL REDEMPTION: The Company may at its option redeem the Convertible
Preferred Stock, in whole or in part, at any time or
from time to time at a redemption price equal to the
then liquidation preference pursuant to clause (i)
above.
MANDATORY None.
REDEMPTION:
VOTING RIGHTS: Holders are entitled to vote, on a deemed as
converted basis, with the Common Stock and also as a
separate class upon any amendments that adversely
affect rights, preferences, privileges or powers of
or restrictions for the benefit of the Convertible
Preferred Stock; provided that there shall be no
separate class vote for any new stock issuances.
PREEMPTIVE RIGHTS: No preemptive rights of subscription.
Schedule 2 to Annex A-p.2
EXHIBIT A
(Form of Restated Certificate of Incorporation)
FORM OF
RESTATED
CERTIFICATE OF INCORPORATION
OF
PERSONNEL GROUP OF AMERICA, INC.
The undersigned, Xxxxx Xxxxxxxxx, certifies that he is the
Chief Executive Officer of Personnel Group of America, Inc. (the "Corporation"),
a corporation organized and existing under the General Corporation Law of the
State of Delaware (the "GCL"), and does hereby further certify as follows:
1. The name of the Corporation is Personnel Group of America,
Inc. and the Corporation was originally incorporated under the name Personnel
Group of America, Inc.
2. The original certificate of incorporation of the
Corporation was filed with the Secretary of State of the State of Delaware on
July 7, 1995 and the original restated certificate of incorporation of the
Corporation (the "Original Restated Certificate of Incorporation") was filed
with the Secretary of State of the State of Delaware on July 28, 1995.
3. This Restated Certificate of Incorporation was duly adopted
by the Board of Directors of the Corporation (the "Board of Directors") and by
the stockholders of the Corporation in accordance with Sections 242 and 245 of
the GCL.
4. This Restated Certificate of Incorporation restates and
integrates and further amends the Original Restated Certificate of
Incorporation, as heretofore amended or supplemented.
5. Upon the filing (the "Effective Time") of this Restated
Certificate of Incorporation pursuant to the GCL, and without further action on
the part of the Corporation or its stockholders: (a) each share of Common Stock,
par value $0.01 per share, of the Corporation shall be combined on a basis of 1
share for every 25 shares (the "Reverse Stock Split"); (b) the par value of each
share of Common Stock, par value $0.01 per share, shall be restated to $0.01 per
share; (c) each 25 shares of Common Stock, par value $0.01 per share,
outstanding shall be deemed to represent one share of Common Stock, par value
$0.01 per share; and (d) all fractional shares resulting from the
foregoing shall be eliminated and each holder thereof shall be entitled to
receive a cash payment equal to such holder's fraction of a share of Common
Stock, par value $0.01 per share, multiplied by $____ per share(1). Each
certificate that theretofore represented a share or shares of Common Stock (the
"Original Share Number") shall thereafter represent that number of shares of
Common Stock equal to the quotient resulting from the division of the Original
Share Number by 25, rounded down to the nearest whole number, plus cash in
respect of any fractional number of shares resulting from the Reverse Stock
Split as calculated in accordance with clause (d) of the preceding sentence.
6. The text of the Original Restated Certificate of
Incorporation is hereby amended and restated to read in its entirety as follows:
First. The name of the corporation is Venturi Partners, Inc.
(the "Corporation").
Second. The address of the Corporation's registered office in
the State of Delaware is The Corporation Trust Company, The Corporation Trust
Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, County of New Castle.
The name of its registered agent at such address is The Corporation Trust
Company.
Third. The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of Delaware (the "GCL").
Fourth.
(a) Authorized Capital Stock. The total number of
shares of all classes of stock which the Corporation shall have authority to
issue is one hundred million (100,000,000), of which ninety-five million
(95,000,000) shares, par value $0.01 per share, shall be designated as "Common
Stock" and five million (5,000,000) shares, par value $0.01 per share, shall be
designated as "Preferred Stock". Subject to the terms of any serial designations
for any series of Preferred Stock, the number of authorized shares of Common
Stock or any series of Preferred Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative vote of
the holders of a majority of the outstanding shares entitled to vote, voting
together as a single class, irrespective of the provisions of Section 242(b)(2)
of the GCL or any corresponding provision hereafter enacted.
(b) Common Stock. The powers, preferences and rights,
and the qualifications, limitations and restrictions, of each class of the
Common Stock are as follows:
(i) No Cumulative Voting. The holders of
shares of Common Stock shall not have cumulative voting
rights.
(ii) Dividends; Stock Splits. Subject to the
rights of the holders of Preferred Stock, and subject to any
other provisions of this Restated Certificate of
Incorporation, as it may be amended from time to time, holders
of shares of
-----------------------
(1) To be calculated in accordance with Section 3.4 of the Agreement prior
to filing the restated certificate of incorporation with the Delaware
Secretary of State.
Exhibit A-p.2
Common Stock shall be entitled to receive such dividends and
other distributions in cash, stock or property of the
Corporation when, as and if declared thereon by the Board of
Directors from time to time out of assets or funds of the
Corporation legally available therefor.
(iii) Liquidation, Dissolution, Etc. In the
event of any liquidation, dissolution or winding up (either
voluntary or involuntary) of the Corporation, the holders of
shares of Common Stock shall be entitled to receive the assets
and funds of the Corporation available for distribution after
payments to creditors and to the holders of any Preferred
Stock of the Corporation that may at the time be outstanding,
in proportion to the number of shares held by them,
respectively.
(iv) Merger, Etc. In the event of a merger
or consolidation of the Corporation with or into another
entity (whether or not the Corporation is the surviving
entity), the holders of each share of Common Stock shall be
entitled to receive the same per share consideration on a per
share basis.
(v) No Preemptive Or Subscription Rights. No
holder of shares of Common Stock shall be entitled to
preemptive or subscription rights.
(vi) Power To Sell And Purchase Shares.
Subject to the requirements of applicable law, the Corporation
shall have the power to issue and sell all or any part of any
shares of any class of stock herein or hereafter authorized to
such persons, and for such consideration, as the Board of
Directors shall from time to time, in its discretion,
determine, whether or not greater consideration could be
received upon the issue or sale of the same number of shares
of another class, and as otherwise permitted by law. Subject
to the requirements of applicable law, the Corporation shall
have the power to purchase any shares of any class of stock
herein or hereafter authorized from such persons, and for such
consideration, as the Board of Directors shall from time to
time, in its discretion, determine, whether or not less
consideration could be paid upon the purchase of the same
number of shares of another class, and as otherwise permitted
by law.
(c) Preferred Stock. Shares of Preferred Stock may be
issued in one or more series from time to time by the Board of Directors, and
the Board of Directors is expressly authorized to fix for each such class or
series such voting powers, full or limited, or no voting powers and such
designations, preferences and relative participating optional or other special
rights and such qualifications, limitations and restrictions thereof, as shall
be stated and expressed in the resolution or resolutions adopted by the Board of
Directors providing for the issuance of such class or series, in each case
subject to the terms of this Restated Certificate of Incorporation including
without limitation the following:
(i) the distinctive serial designation of
such series which shall distinguish it from other series;
Exhibit A-p.3
(ii) the number of shares included in such
series;
(iii) the dividend rate (or method of
determining such rate) payable to the holders of the shares of
such series, any conditions upon which such dividends shall be
paid and the date or dates upon which such dividends shall be
payable;
(iv) whether dividends on the shares of such
series shall be cumulative and, in the case of shares of any
series having cumulative dividend rights, the date or dates or
method of determining the date or dates from which dividends
on the shares of such series shall be cumulative;
(v) the amount or amounts which shall be
payable out of the assets of the Corporation to the holders of
the shares of such series upon voluntary or involuntary
liquidation, dissolution or winding up the Corporation, and
the relative rights of priority, if any, of payment of the
shares of such series;
(vi) the price or prices at which, the
period or periods within which and the terms and conditions
upon which the shares of such series may be redeemed, in whole
or in part, at the option of the Corporation or at the option
of the holder or holders thereof or upon the happening of a
specified event or events;
(vii) the obligation, if any, of the
Corporation to purchase or redeem shares of such series
pursuant to a sinking fund or otherwise and the price or
prices at which, the period or periods within which and the
terms and conditions upon which the shares of such series
shall be redeemed or purchased, in whole or in part, pursuant
to such obligation;
(viii) whether or not the shares of such
series shall be convertible or exchangeable, at any time or
times at the option of the holder or holders thereof or at the
option of the Corporation or upon the happening of a specified
event or events, into shares of any other class or classes or
any other series of the same or any other class or classes of
stock of the Corporation, and the price or prices or rate or
rates of exchange or conversion and any adjustments applicable
thereto; and
(ix) whether or not the holders of the
shares of such series shall have voting rights, in addition to
the voting rights provided by law, and if so the terms of such
voting rights.
Fifth. The following provisions are inserted for the
management of the business and the conduct of the affairs of the Corporation,
and for further definition, limitation and regulation of the powers of the
Corporation and of its directors and stockholders:
(a) The business and affairs of the Corporation shall
be managed by or under the direction of the Board of Directors.
Exhibit A-p.4
(b) The Board of Directors shall consist of not less
than seven (7) nor more than nine (9) members, the exact number of which shall
be fixed from time to time in the manner provided in the By-Laws of the
Corporation, as amended from time to time (the "By-Laws"). The number of
directors constituting the Board of Directors shall be fixed at seven (7) as of
the date hereof. Election of directors need not be by written ballot unless the
By-Laws so provide.
(c) In addition to the powers and authority
hereinbefore or by statute expressly conferred upon them, the directors are
hereby empowered to exercise all such powers and do all such acts and things as
may be exercised or done by the Corporation, subject, nevertheless, to the
provisions of the GCL, this Restated Certificate of Incorporation, and any
By-Laws adopted by the stockholders; provided, however, that no By-Laws
hereafter adopted by the stockholders shall invalidate any prior act of the
directors which would have been valid if such By-Laws had not been adopted.
Sixth. No director shall be personally liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director, except to the extent such exemption from liability
or limitation thereof is not permitted under the GCL as the same exists or may
hereafter be amended. If the GCL is amended hereafter to authorize the further
elimination or limitation of the liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
authorized by the GCL, as so amended. Any repeal or modification of this Article
Sixth shall not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification with respect to
acts or omissions occurring prior to such repeal or modification.
Seventh. The Corporation shall indemnify its directors and
officers to the fullest extent authorized or permitted by law, as now or
hereafter in effect, and such right to indemnification shall continue as to a
person who has ceased to be a director or officer of the Corporation and shall
inure to the benefit of his or her heirs, executors and personal and legal
representatives; provided, however, that, except for proceedings to enforce
rights to indemnification, the Corporation shall not be obligated to indemnify
any director or officer (or his or her heirs, executors or personal or legal
representatives) in connection with a proceeding (or part thereof) initiated by
such person unless such proceeding (or part thereof) was authorized or consented
to by the Board of Directors. The right to indemnification conferred by this
Article Seventh shall include the right to be paid by the Corporation the
expenses incurred in defending or otherwise participating in any proceeding in
advance of its final disposition.
The Corporation may, to the extent authorized from time to
time by the Board of Directors, provide rights to indemnification and to the
advancement of expenses to employees and agents of the Corporation similar to
those conferred in this Article Seventh to directors and officers of the
Corporation.
The rights to indemnification and to the advance of expenses
conferred in this Article Seventh shall not be exclusive of any other right
which any person may have or hereafter acquire under this Restated Certificate
of Incorporation, the By-Laws, any statute, agreement, vote of stockholders or
disinterested directors or otherwise.
Exhibit A-p.5
Any repeal or modification of this Article Seventh shall not
adversely affect any rights to indemnification and to the advancement of
expenses of a director or officer of the Corporation existing at the time of
such repeal or modification with respect to any acts or omissions occurring
prior to such repeal or modification.
Eighth. Meetings of stockholders may be held within or without
the State of Delaware, as the By-Laws may provide. The books of the Corporation
may be kept (subject to any provision contained in the GCL) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws.
Ninth. In furtherance and not in limitation of the powers
conferred upon it by the laws of the State of Delaware, the Board of Directors
shall have concurrent power with the stockholders to adopt, amend, alter, add to
or repeal the By-Laws. Notwithstanding any other provision of this Restated
Certificate of Incorporation (and in addition to any other vote that may be
required by law), for so long as there is a Significant Holder, either (i) the
approval of the Board of Directors, including the affirmative vote of at least
one of the persons designated as nominees by the Significant Holder prior to
their election to the Board of Directors and in accordance with the terms of the
By-Laws ("Significant Holder Designees"), or (ii) the affirmative vote of the
holders of at least seventy-five percent (75%) of the voting power of the shares
entitled to vote generally in the election of directors shall be required to
amend, alter, add to or repeal the By-Laws (including by merger, consolidation,
recapitalization or otherwise).
Tenth. The Corporation hereby elects not to be governed by
Section 203 of the GCL pursuant to Section 203(b)(3) therein.
Eleventh. The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Restated Certificate of
Incorporation in the manner now or hereafter prescribed in this Restated
Certificate of Incorporation, the By-Laws or the GCL, and all rights herein
conferred upon stockholders are granted subject to such reservation; provided,
however, that, notwithstanding any other provision of this Restated Certificate
of Incorporation (and in addition to any other vote that may be required by
law), for so long as there is a Significant Holder:
(a) subject to the following paragraph (b), either
(i) the recommendation or approval of the Board of Directors, including the
recommendation or affirmative vote of at least one of the Significant Holder
Designees, or (ii) the affirmative vote of the holders of at least seventy-five
percent (75%) of the voting power of the shares entitled to vote generally in
the election of directors, shall be required to amend, alter, change or repeal
any provision of this Restated Certificate of Incorporation or to adopt any
provisions inconsistent with the purpose and intent thereof (including by
merger, consolidation, recapitalization or otherwise); and
(b) the approval or affirmative vote of (i) any and
each Five Percent Holder and (ii) the Board of Directors by a vote of at least
eighty percent (80%) of the entire Board of Directors shall be required to
amend, alter, change or repeal Article Twelfth or to adopt any provisions
inconsistent with the purpose and intent of Article Twelfth hereof (including by
merger, consolidation, recapitalization or otherwise) but excluding any
amendment, alteration,
Exhibit A-p.6
change or repeal in connection with a merger, consolidation or similar
transaction with an entity that is not a Significant Holder or Controlled or
Controlling Affiliate thereof or a Subsidiary of the Corporation and that has
the result of causing the stockholders of the Corporation immediately prior to
such transaction to beneficially own less than fifty percent (50%) of the voting
power of the shares entitled to vote generally in elections of directors of the
Corporation or the corporation surviving or resulting from such transaction and
less than fifty percent (50%) of the outstanding shares of Common Stock or
common stock of the surviving or resulting corporation.
Twelfth.
(a) Control Transactions.
(i) In addition to any affirmative vote
required by law or this Restated Certificate of Incorporation
or the By-Laws, and except as otherwise expressly provided in
Section (a)(ii) of this Article Twelfth, a Control Transaction
shall require the affirmative vote of not less than fifty
percent (50%) of the votes actually cast by the holders of all
the then outstanding shares of Voting Stock, voting together
as a single-class, excluding Voting Stock beneficially owned
by any Significant Holder, or any Controlled or Controlling
Affiliate thereof, proposing to effect the Control
Transaction. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that
a lesser percentage or separate class vote may be specified,
by law or in any agreement with any national securities
exchange or otherwise.
(ii) The provisions of Section (a)(i) of
this Article Twelfth shall not be applicable to any particular
Control Transaction, and such Control Transaction shall
require only such affirmative vote, if any, as is required by
law or by any other provision of this Restated Certificate of
Incorporation or the By-Laws, or any applicable rule or
listing standard of any securities exchange or market on which
any of the Corporation's securities are listed or approved for
trading, if all of the conditions specified in either of the
following paragraphs (A) or (B) are met (any Control
Transaction that satisfies the conditions in paragraphs (A) or
(B) or in Section (a)(i) of this Article Twelfth being, an
"Approved Control Transaction"):
A. Prior to the consummation of the
Control Transaction, it shall have been
approved by the Board of Directors by a vote
of at least eighty percent (80%) of the
entire Board of Directors.
B. Prior to consummating the
Control Transaction, the Significant Holder,
or any Controlled or Controlling Affiliate
thereof, proposing to effect such a Control
Transaction shall have made an offer to all
of the holders of shares of the class of
Capital Stock the acquisition of which by a
Significant Holder, or any
Exhibit A-p.7
Controlled or Controlling Affiliate thereof,
would give rise to the proposed Control
Transaction (the "Target Stock") and on a
proportionate basis to all holders of shares
of any class of Capital Stock that is
convertible into or exchangeable for Target
Stock or into or for which Target Stock is
convertible or exchangeable, for the
purchase of any or all of such shares
("Qualifying Offer"), which offer remains
open for at least twenty (20) business days
and otherwise complies with the rules and
regulations of the Securities Exchange Act
of 1934, as amended (the "Act") and which
offer is made for consideration that is at
least equal to or greater than any other
consideration to be paid by the Significant
Holder, or the Controlled or Controlling
Affiliate, for Voting Stock to be acquired
in the Control Transaction or that was paid
by the Significant Holder, or the Controlled
or Controlling Affiliate, for Voting Stock
during the one hundred and eighty (180) days
preceding the commencement of the Qualifying
Offer; provided that any such Control
Transaction shall be consummated within
ninety (90) days of the expiration of the
Qualifying Offer.
(iii) Anything to the contrary herein
notwithstanding, the provisions of this Article Twelfth shall
not apply to any transaction following the consummation of an
Approved Control Transaction.
(b) Related-Party Transactions. In addition to any
affirmative vote required by law or this Restated Certificate of Incorporation
or the By-Laws, a Related-Party Transaction shall require the approval or
affirmative vote of (i) any and each Five Percent Holder prior to the
consummation of such Related-Party Transaction and (ii) the Board of Directors
by a vote of at least eighty percent (80%) of the entire Board of Directors
prior to the consummation of such Related-Party Transaction. Such affirmative
vote or approval shall be required notwithstanding the fact that no vote may be
required, or that a lesser or separate class vote may be specified, by law or in
any agreement with any national securities exchange or otherwise.
(c) The following definitions shall apply with
respect to this Restated Certificate of Incorporation:
(i) The term "Control Transaction" shall
mean:
A. The acquisition in one or a
series of transactions by a Significant
Holder, or any Controlled or Controlling
Affiliate thereof, of shares of any class or
series of Capital Stock that has the effect
of causing such Significant Holder to
increase its beneficial ownership to
seventy-five percent (75%) or more of the
votes entitled to be cast by the holders of
all then outstanding shares of Voting Stock;
or
Exhibit A-p.8
B. any reclassification of
securities (including any reverse stock
split), or recapitalization of the
Corporation (including any stock repurchases
by the Corporation), or any merger or
consolidation of the Corporation with any of
its Subsidiaries or any other transaction
(whether or not with or otherwise involving
a Significant Stockholder) that has the
effect, directly or indirectly, of
increasing the proportionate share of any
class or series of Capital Stock, or any
securities convertible into Capital Stock or
into equity securities of any Subsidiary,
that is beneficially owned by any
Significant Stockholder, such that after
giving effect to such reclassification,
recapitalization or other transaction, a
Significant Holder will beneficially own
seventy-five percent (75%) or more of the
votes entitled to be cast by the holders of
all then outstanding shares of Voting Stock.
(ii) The term "Related-Party Transaction"
shall mean:
A. a liquidation or dissolution of
the Corporation that is voted for or
consented to by any Related Party, or any
Controlled or Controlling Affiliate thereof,
that immediately prior to such transaction
beneficially owns more than fifty percent
(50%) of the votes entitled to be cast by
the holders of all then outstanding shares
of Voting Stock; or
B. any sale of assets of the
Corporation or any material Subsidiary to,
or any acquisition of assets from or share
subscription in, a Related Party, or any
Controlled or Controlling Affiliate thereof,
directly or indirectly and in any
transaction or series of related
transactions, the value of which in each
case exceeds $5 million; or
C. any merger, statutory share
exchange or consolidation involving the
Corporation or any Subsidiary, directly or
indirectly and in any transaction or series
of related transactions, the value of which
in each case exceeds $5 million, with any
Related Party or any Controlled or
Controlling Affiliate thereof; or
D. any merger, statutory share
exchange or consolidation involving the
Corporation or any Subsidiary, directly or
indirectly and in any transaction or series
of related transactions, the value of which
in each case exceeds $5 million and pursuant
to which any Related Party, or any
Controlled or Controlling Affiliate thereof,
is
Exhibit A-p.9
entitled to receive consideration in respect
of its securities that is different in form
(including, as different in form, the
retention by some stockholders of their
existing securities, while other
stockholders of the same class are not so
retaining their existing securities) or
amount from that offered to other holders of
the same class of securities (excluding
ancillary arrangements or rights entailing
no monetary payments other than for
reasonable third-party legal fees,
out-of-pocket expense reimbursement and
indemnification for the benefit of a Related
Party or its Controlled or Controlled
Affiliates for liabilities in respect of
which other holders of the same class have
no liability); or
E. any other transaction or series
of related transactions, the value of which
in each case exceeds $5 million, between or
among the Corporation and/or any Subsidiary,
on the one hand, and any Related Parties or
any Controlled or Controlling Affiliates
thereof, on the other hand (other than a
subscription for shares of the Corporation
by any Related Party or any Controlled or
Controlling Affiliate thereof, pursuant to a
rights offering made available to all
holders of Common Stock on a pro rata basis
and for the same amount and form of
consideration and otherwise on substantially
the same terms and conditions).
(iii) The term "Capital Stock" shall mean
all capital stock of the Corporation authorized to be issued
from time to time under Article Fourth of this Certificate of
Incorporation; and the term "Voting Stock" shall mean all
Capital Stock which by its terms may be voted on all matters
submitted to stockholders of the Corporation generally.
(iv) The term "Significant Holder" shall
mean any person (other than the Corporation or any Subsidiary
and other than any profit-sharing, employee stock ownership or
other employee benefit plan of the Corporation or any
Subsidiary or any trustee of or fiduciaries with respect to
any such plan when acting in such capacity) who, individually
or as a member of a group within the meaning of Rule 13d-5
under the Act, is the beneficial owner of Voting Stock
representing twenty percent (20%) or more of the votes
entitled to be cast by the holders of all then outstanding
shares of Voting Stock;
(v) A person shall be a "beneficial owner"
of any Capital Stock (A) which such person or any of its
Controlled or Controlling Affiliates owns, directly or
indirectly; (B) which such person or any of its Controlled or
Controlling Affiliates has, directly or indirectly, (1) the
right to acquire (whether such right is exercisable
immediately or subject only to the passage of time),
Exhibit A-p.10
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversation rights, exchange rights,
warrants or options or otherwise, or (2) the right to vote
pursuant to any agreement, arrangement or understanding; or
(C) which are owned, directly or indirectly, by any other
person with which such person or any of its Controlled or
Controlling Affiliates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Capital Stock. For the purposes of
determining whether a person is a Significant Holder pursuant
to paragraph (c)(iv) of this Article Twelfth or a Controlled
or Controlling Affiliate pursuant to paragraph (c)(vi) of this
Article Twelfth, the number of shares of Capital Stock deemed
to be outstanding shall include shares deemed beneficially
owned by such person through application of this paragraph
(c)(v) of this Article Twelfth, but shall not include any
other shares of Capital Stock that may be issuable pursuant to
any agreement, arrangement or understanding, or upon exercise
of conversion rights, warrants or options, or otherwise.
(vi) The term "Controlled or Controlling
Affiliate" shall mean with respect to a specified person, a
person that directly or indirectly through one or more
intermediaries, controls or is controlled by, or is under
common control with, the person specified; provided that the
Corporation and its Subsidiaries shall not, and the executive
officers or directors of the Corporation or any of its
Subsidiaries shall not, solely as a result of holding such
office, be deemed a "Controlled or Controlling Affiliate" of a
Significant Holder; and provided, further, that for purposes
of this definition, the term "control" (including the terms
"controlling," "controlled by" and "under common control
with") shall mean the possession direct or indirect, of the
power to direct or cause the direction of the management and
policies of a person through the ownership of more than fifty
percent (50%) of the voting securities of such person or the
ability to otherwise designate a majority of the board of
directors or managers of such person.
(vii) The term "Subsidiary" means any
company or other entity of which a majority of any class of
equity security is beneficially owned by the Corporation;
provided, however, that for the purposes of the definition of
Significant Holder set forth in paragraph (c)(iv) of this
Article Twelfth, the term "Subsidiary" shall mean only a
company of which a majority of each class of equity security
is beneficially owned by the Corporation.
(viii) The term "Five Percent Holder" means
any person (other than the Corporation or any Subsidiary and
other than any profit-sharing, employee stock ownership or
other employee benefit plan of the Corporation or any
Subsidiary or any trustee of or fiduciaries with respect to
any such plan when acting in such capacity) who, as of the
record date (if any) established for any applicable
transaction or vote (or if there is no record date, as of the
date of consummation of the transaction) and based on the most
recent reports or disclosures filed publicly under the Act,
individually or as a member of a group within the meaning of
Rule 13d-5 under the Act, is the beneficial owner of Voting
Stock representing five percent (5%) or more of the votes
entitled to be cast by
Exhibit A-p.11
the holders of all then outstanding shares of Voting Stock;
provided that for purposes of this definition only, a person
who reports or discloses beneficial ownership as a member of a
group or by virtue of a relationship with other persons with
respect to the Voting Stock, shall not be deemed to
beneficially own any shares of Voting Stock held by persons
beneficially owning Voting Stock representing two percent (2%)
or less of the votes entitled to be cast by the holders of all
then outstanding shares of Voting Stock and any such person
beneficially owning Voting Stock representing two percent (2%)
or less of the votes entitled to be cast by the holders of all
then outstanding shares of Voting Stock shall not be deemed a
Five Percent Holder or otherwise be entitled to exercise any
rights of a Five Percent Holder.
(ix) The term "Related Party" means, in
connection with any Related Party Transaction, any person who
at any time during the eighteen (18) month period preceding
such Related Party Transaction constituted a Significant
Holder.
(x) The term "entire Board of Directors" as
used in this Article Twelfth and in this Restated Certificate
of Incorporation, generally, means the total number of
directors of the Corporation then holding office and entitled
to vote.
(d) The Board of Directors shall for purposes of this
Article Twelfth be entitled to rely on information contained in the most recent
disclosures filed publicly under the Act as to (i) whether a person is a
Significant Holder, (ii) the number of shares of Capital Stock or other
securities beneficially owned by any person, and (iii) whether a person is a
Controlled or Controlling Affiliate of another. Any such decision made in good
faith on such basis shall be conclusive. Any persons deemed Significant Holders
or Five Percent Holders solely by virtue of being a member of a group or having
a relationship with other persons, which membership or relationship is described
in disclosures filed publicly under the Act, shall at the request of the
Corporation, select one designee to act on their behalf with respect to any
rights or obligations hereunder.
IN WITNESS WHEREOF, the corporation has caused this Restated
Certificate of Incorporation to be signed by Xxxxx Xxxxxxxxx, its Chief
Executive Officer, this ____ day of _____________, 2003.
PERSONNEL GROUP OF AMERICA, INC.
By:
----------------------------------
Xxxxx Xxxxxxxxx
Chief Executive Officer
Exhibit A-p.12
EXHIBIT B
(Form of Amended and Restated By-Laws)
FORM OF
AMENDED AND RESTATED
BY-LAWS
OF
VENTURI PARTNERS, INC.
ARTICLE I
Stockholders
Section 1.1 Annual Meetings. Unless directors are elected by
written consent in lieu of an annual meeting as permitted by this subsection, an
annual meeting of stockholders shall be held for the election of directors on a
date and at a time designated by or in the manner provided in these By-Laws.
Stockholders may, unless the certificate of incorporation otherwise provides,
act by written consent to elect directors.
Section 1.2 Nature of Business at Meetings of Stockholders. No
business may be transacted at an annual meeting of stockholders, other than
business that is either (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors (or
any duly authorized committee thereof), (b) otherwise properly brought before
the annual meeting by or at the direction of the Board of Directors (or any duly
authorized committee thereof) or (c) otherwise properly brought before the
annual meeting by any stockholder of the Corporation (i) who is a stockholder of
record on the date of the giving of the notice provided for in this Section 1.2
and on the record date for the determination of stockholders entitled to vote at
such annual meeting and (ii) who complies with the notice procedures set forth
in this Section 1.2.
In addition to any other applicable requirements, for
business to be properly brought before an annual meeting by a stockholder, such
stockholder must have given timely notice thereof in proper written form to the
Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary
must be delivered to or mailed and received at the principal executive offices
of the Corporation not less than sixty (60) days nor more than ninety (90) days
prior to the anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the annual meeting is
called for a date that is not within thirty (30) days before or after such
anniversary date, notice by the stockholder in order to be timely must be so
received not later than the close of business on the tenth (10th) day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure of the date of the annual meeting was made, whichever
first occurs.
To be in proper written form, a stockholder's notice
to the Secretary must set forth as to each matter such stockholder proposes to
bring before the annual meeting (i) a brief description of the business desired
to be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (ii) the name and record address of such
stockholder, (iii) the class or series and number of shares of capital stock of
the Corporation which are owned beneficially or of record by such stockholder,
(iv) a description of all arrangements or understandings between such
stockholder and any other person or persons (including their names) in
connection with the proposal of such business by such stockholder and any
material interest of such stockholder in such business and (v) a representation
that such stockholder intends to appear in person or by proxy at the annual
meeting to bring such business before the meeting.
No business shall be conducted at the annual meeting
of stockholders except business brought before the annual meeting in accordance
with the procedures set forth in this Section 1.2, provided, however, that, once
business has been properly brought before the annual meeting in accordance with
such procedures, nothing in this Section 1.2 shall be deemed to preclude
discussion by any stockholder of any such business. If the Chairman of an annual
meeting determines that business was not properly brought before the annual
meeting in accordance with the foregoing procedures, the Chairman shall declare
to the meeting that the business was not properly brought before the meeting and
such business shall not be transacted.
Section 1.3 Special Meetings. Special meetings of stockholders
may be called at any time by any officer of the Corporation at the written
request of the Chairman of the Board, the Chief Executive Officer or a majority
of the Board of Directors, or at the request in writing of stockholders owning a
majority of the capital stock of the Corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting. Any such special meeting shall be held at such date, time and
place either within or without the State of Delaware as may be stated in the
notice of the meeting.
Section 1.4 Notice of Meetings; Remote Participation. Whenever
stockholders are required or permitted to take any action at a meeting, a
written notice of the meeting shall be given which shall state the place, date
and hour of the meeting, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called. Unless otherwise provided by law, the
written notice of any meeting shall be given, not less than ten (10) nor more
than sixty (60) days before the date of the meeting, to each stockholder
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
given when deposited in the United States mail, postage prepaid, directed to the
stockholder at such stockholder's address as it appears on the records of the
Corporation. Rather than holding a meeting at any place, the Board of Directors
may determine that a meeting shall be held solely by means of remote
communications, which means shall meet the requirements of the Delaware General
Corporation Law. The Board of Directors may permit the stockholders and their
proxy holders to participate in meetings of the stockholders (whether such
meetings are held at a designated place or solely by means of remote
communication) using one or more methods of remote communication that satisfy
the requirements of the Delaware General Corporation Law. The Board of Directors
may adopt such guidelines and procedures applicable to participation in
stockholders' meetings by means of remote communication as it deems appropriate.
Participation in a stockholders' meeting by means of a method of remote
communication permitted by the Board of Directors shall constitute presence in
person at the meeting.
Section 1.5 Adjournments. Any meeting of stockholders, annual
or special, may be adjourned from time to time by the Chairman of the meeting,
to reconvene at the same or some
Exhibit B-p.2
other place, and notice need not be given of any such adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 1.6 Quorum. At each meeting of stockholders, except
where otherwise provided by law or the certificate of incorporation or these
by-laws, the holders of a majority of the outstanding shares of stock entitled
to vote on a matter at the meeting, present in person or represented by proxy,
shall constitute a quorum. For purposes of the foregoing, where a separate vote
by class or classes is required for any matter, the holders of a majority of the
outstanding shares of such class or classes, present in person or represented by
proxy, shall constitute a quorum to take action with respect to that vote on
that matter. Two or more classes or series of stock shall be considered a single
class if the holders thereof are entitled to vote together as a single class at
the meeting. In the absence of a quorum of the holders of any class of stock
entitled to vote on a matter, or of all stockholders, the holders of such class
so present or represented or of all stockholders may, by majority vote, adjourn
the meeting of such class, or of the whole, from time to time in the manner
provided by Section 1.5 of these by-laws until a quorum of such class, or of the
whole, shall be so present or represented. Shares of its own capital stock
belonging on the record date for the meeting to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors of such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted for quorum
purposes; provided, however, that the foregoing shall not limit the right of the
Corporation to vote stock, including but not limited to its own stock, held by
it in a fiduciary capacity.
Section 1.7 Organization. Meetings of stockholders shall be
presided over by the Chairman of the Board, or in the absence of the Chairman of
the Board, by a chairman designated by the Board of Directors, or in the absence
of such designation by a chairman chosen at the meeting. The Secretary, or in
the absence of the Secretary an Assistant Secretary, shall act as secretary of
the meeting, but in the absence of the Secretary and any Assistant Secretary the
chairman of the meeting may appoint any person to act as secretary of the
meeting.
The order of business at each such meeting shall be
as determined by the chairman of the meeting. The chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts and things as are necessary or desirable for the proper
conduct of the meeting, including, without limitation, the establishment of
procedures for the maintenance of order and safety, limitations on the time
allotted to questions or comments on the affairs of the Corporation,
restrictions on entry to such meeting after the time prescribed for the
commencement thereof and the opening and closing of the voting polls.
Section 1.8 Inspectors. Prior to any meeting of stockholders,
the Board of Directors or the President shall appoint one or more inspectors to
act at such meeting and make a written report thereof and may designate one or
more persons as alternate inspectors to replace any inspector who fails to act.
If no inspector or alternate is able to act at the meeting of stockholders, the
person presiding at the meeting shall appoint one or more inspectors to act at
the meeting. Each inspector, before entering upon the discharge of his or her
duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability. The inspectors shall ascertain the number of shares outstanding and the
voting power of
Exhibit B-p.3
each, determine the shares represented at the meeting and the validity of
proxies and ballots, count all votes and ballots, determine and retain for a
reasonable period a record of the disposition of any challenges made to any
determination by the inspectors and certify their determination of the number of
shares represented at the meeting and their count of all votes and ballots. The
inspectors may appoint or retain other persons to assist them in the performance
of their duties. The date and time of the opening and closing of the polls for
each matter upon which the stockholders will vote at a meeting shall be
announced at the meeting. No ballot, proxy or vote, nor any revocation thereof
or change thereto, shall be accepted by the inspectors after the closing of the
polls. In determining the validity and counting of proxies and ballots, the
inspectors shall be limited to an examination of the proxies, any envelopes
submitted therewith, any information provided by a stockholder who submits a
proxy by telegram, cablegram or other electronic transmission from which it can
be determined that the proxy was authorized by the stockholder, ballots and the
regular books and records of the corporation, and they may also consider other
reliable information for the limited purpose of reconciling proxies and ballots
submitted by or on behalf of banks, brokers, their nominees or similar persons
which represent more votes than the holder of a proxy is authorized by the
record owner to cast or more votes than the stockholder holds of record. If the
inspectors consider other reliable information for such purpose, they shall, at
the time they make their certification, specify the precise information
considered by them, including the person or persons from whom they obtained the
information, when the information was obtained, the means by which the
information was obtained and the basis for the inspectors' belief that such
information is accurate and reliable.
Section 1.9 Voting; Proxies.
(a) Unless otherwise provided in the certificate of
incorporation, each stockholder entitled to vote at any meeting of stockholders
shall be entitled to one vote for each share of stock held by such stockholder
which has voting power upon the matter in question. If the certificate of
incorporation provides for more or less than one vote for any share on any
matter, every reference in these by-laws to a majority or other proportion of
stock shall refer to such majority or other proportion of the votes of such
stock. Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for such stockholder by proxy, but no
such proxy shall be voted or acted upon after three years from its date, unless
the proxy provides for a longer period. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power,
regardless of whether the interest with which it is coupled is an interest in
the stock itself or an interest in the Corporation generally. A stockholder may
revoke any proxy which is not irrevocable by attending the meeting and voting in
person or by filing an instrument in writing revoking the proxy or another duly
executed proxy bearing a later date with the Secretary of the Corporation.
(b) Without limiting the manner in which a
stockholder may authorize another person or persons to act for such stockholder
as proxy, the following shall constitute a valid means by which a stockholder
may grant such authority:
(i) A stockholder may execute a writing
authorizing another person or persons to act for such stockholder as proxy.
Execution may be accomplished by the stockholder or such stockholder's
authorized officer, director, employee or agent signing such writing or causing
such person's signature to be affixed to such writing by any reasonable means,
including, but not limited to, by facsimile signature.
Exhibit B-p.4
(ii) A stockholder may authorize another
person or persons to act for such stockholder as proxy by transmitting or
authorizing the transmission of a telegram, cablegram or other means of
electronic transmission to the person who will be the holder of the proxy or to
a proxy solicitation firm, proxy support service organization or like agent duly
authorized by the person who will be the holder of the proxy to receive such
transmission, provided that any such telegram, cablegram or other means of
electronic transmission must either set forth or be submitted with information
from which it can be determined that the telegram, cablegram or other electronic
transmission was authorized by the stockholder. If it is determined that such
telegrams, cablegrams or other electronic transmissions are valid, the
inspectors or, if there are no inspectors, such other persons making that
determination shall specify the information on which they relied.
Any copy, facsimile telecommunication or
other reliable reproduction of the writing or transmission authorizing
another person or persons to act as proxy for a stockholder may be
substituted or used in lieu of the original writing or transmission for
any and all purposes for which the original writing or transmission
could be used; provided, however, that such copy, facsimile
telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission.
(c) Voting at meetings of stockholders need not be by
written ballot and need not be conducted by inspectors unless the holders of a
majority of the outstanding shares of all classes of stock entitled to vote
thereon present in person or represented by proxy at such meeting shall so
determine. Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors. In all other matters, unless otherwise provided by
law or by the certificate of incorporation or these by-laws, the affirmative
vote of the holders of a majority of the shares present in person or represented
by proxy at the meeting and entitled to vote on the subject matter shall be the
act of the stockholders. Where a separate vote by class or classes is required,
the affirmative vote of the holders of a majority of the shares of such class or
classes present in person or represented by proxy at the meeting shall be the
act of such class or classes, except as otherwise provided by law or by the
certificate of incorporation or these by-laws.
Section 1.10 Fixing Date for Determination of Stockholders of
Record. In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors, and which record date shall not be more than sixty nor
less than ten days before the date of such meeting. If no record date is fixed
by the Board of Directors, the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which date shall not be more than ten days after
the date upon
Exhibit B-p.5
which the resolution fixing the record date is adopted by the Board of
Directors. Any stockholder of record seeking to have the stockholders authorize
or take corporate action by written consent shall, by written notice to the
secretary, request the Board of Directors to fix a record date. The Board of
Directors shall promptly, but in all events within ten days of the date on which
such request is received, adopt a resolution fixing the record date. If no
record date has been fixed by the Board of Directors within ten days of the date
on which such request is received, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is required by applicable law, shall be
the first date on which a signed written consent setting forth the action taken
or proposed to be taken is delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business, or
an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is required by law, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action.
In order that the Corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty days
prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.
Section 1.11 List of Stockholders Entitled to Vote. The
Secretary shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, for a period of a least ten days prior to the meeting
either (a) on a reasonably accessible electronic network, provided that the
information required to gain access to such list is provided with notice of the
meeting, or (b) during ordinary business hours, for a period of at least ten
days prior to the meeting, either at a place within the city where the meeting
is to be held, which place shall be specified in the notice of the meeting, or,
if not so specified, at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting during the
whole time thereof and may be inspected by any stockholder who is present.
Section 1.12 Consent of Stockholders in Lieu of Meeting.
Unless otherwise provided in the certificate of incorporation, any action
required by law to be taken at any annual or special meeting of stockholders of
the Corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Every written consent shall bear the date of signature
of each stockholder who signs the consent and no written consent shall be
effective to take the corporate action referred
Exhibit B-p.6
to therein unless, within sixty days of the earliest dated consent duly executed
and delivered to the Corporation, written consents signed by a sufficient number
of holders to take action are delivered to the Corporation. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing
and who, if the action had been taken at a meeting, would have been entitled to
notice of the meeting if the record date for such meeting had been the date that
written consents signed by a sufficient number of stockholders to take the
action were delivered to the Corporation as provided in this Section 1.12.
ARTICLE II
Board of Directors
Section 2.1 Powers; Number; Qualifications. The business and
affairs of the Corporation shall be managed by or under the direction of the
Board of Directors, except as may be otherwise provided by law or in the
certificate of incorporation. The Board of Directors shall consist of not less
than seven (7) nor more than nine (9) members or as otherwise set forth in the
certificate of incorporation, the exact number of which shall initially be fixed
upon adoption of these by-laws at seven (7) and, thereafter, shall be fixed from
time to time by resolution of the Board of Directors (the "Board Resolution") or
by resolution adopted by the holders of a majority of the capital stock of the
Corporation issued and outstanding and entitled to vote (the "Stockholder
Resolution"); provided that in the event of any conflict between the Board
Resolution and the Stockholder Resolution, the Stockholder Resolution shall
govern. Directors need not be stockholders.
Section 2.2 Significant Holder Nominees and Observers;
Management Nominees.
(a) In connection with any election of directors by
the stockholders and, in each case, to the extent permitted by law and by
applicable rules or listing standards of any securities exchange or market on
which any of the Corporation's securities are listed or approved for trading,
the nominees shall be (and for any such nominees to be qualified to serve as
directors they shall be) nominated as follows:
(i) For so long as there are one or more
Significant Holders (as hereinafter defined), the Significant Holders shall have
the right to designate in writing, and in accordance with the timing,
eligibility and other applicable requirements set forth in these by-laws, such
number of nominees for election to the Board of Directors as shall be required
such that immediately following such election, no less than two of the directors
comprising the Board of Directors shall be persons who were designated as
nominees by the Significant Holders prior to their election to the Board of
Directors ("Significant Holder Designees"). Significant Holders shall further
have the right to select two representatives in addition to such Significant
Holder Designees (the "Observers"), who shall be permitted to attend all
meetings of the Board of Directors, including all committees thereof, solely in
a non-voting observer capacity provided the Significant Holders inform the
Chairman of the Board of Directors in writing of the identity of the Observers
prior to any such meeting. If there is more than one Significant Holder at the
time any action is to be taken or any determination to be made regarding the
designation of Significant Holder Designees (including the removal of, or the
filling of vacancies created by, Significant Holder Designees in accordance with
this Restated Certificate of Incorporation) or the selection of Observers, any
such action or determination shall be taken or made by the affirmative vote of
the holders of a majority of the shares of Voting Stock voted by such
Significant Holders in such action or determination. To the extent
Exhibit B-p.7
permitted by law and in any applicable rule or listing standard of any
securities exchange or market on which any of the Corporation's securities are
listed or approved for trading, Significant Holder Designees shall be members of
each committee of the Board of Directors, and Observers shall be entitled to
attend meetings of each such committee. The term "Significant Holder" shall mean
any person (other than the Corporation or any Subsidiary and other than any
profit-sharing, employee stock ownership or other employee benefit plan of the
Corporation or any Subsidiary or any trustee of or fiduciaries with respect to
any such plan when acting in such capacity) who is the beneficial owner of
Voting Stock representing twenty percent (20%) or more of the votes entitled to
be cast by the holders of all then outstanding shares of Voting Stock. The term
"Voting Stock" shall mean all Capital Stock which by its terms may be voted on
all matters submitted to stockholders of the Corporation generally, and the term
"Capital Stock" shall mean all capital stock of the Corporation authorized to be
issued from time to time under the certificate of incorporation.
(ii) The Chief Executive Officer of the
Corporation (the "Chief Executive Officer"), if there be one, and otherwise the
executive officer exercising the powers and discharging the duties of the
senior-most executive of the Corporation (the "Acting CEO"), shall have the
right to designate in writing, and in accordance with the timing and other
applicable requirements set forth by resolution of the Board of Directors or the
Governance or Nominating Committee of the Corporation, at least one member of
senior management of the Corporation as a nominee for election to the Board of
Directors (the "Management Designee").
(iii) Except as otherwise set forth in the
certificate of incorporation, all nominees for election to the Board of
Directors other than those designated pursuant to (i) or (ii) above shall be
designated in accordance with Sections 2.4 and 3.2 of these by-laws.
(b) As a condition to exercising the right to
designate any Significant Holder Designees or Observers, Significant Holders
shall agree to be present at any meeting of stockholders duly called for the
election of directors and to vote all shares of Voting Stock (as hereinafter
defined) held by them in favor of the slate of director nominees recommended by
the Board of Directors at any such meeting or any adjournment or postponement
thereof.
(c) In order to be eligible for election to the Board
of Directors, any Significant Holder Designee shall be an Eligible Person. For
purposes hereof, an "Eligible Person" shall mean (x) the Significant Holder or
any executive officer thereof and (y) any other person other than a person whose
election to the Board of Directors, in the written opinion of counsel for the
Corporation, is reasonably likely to violate or conflict with, or result in any
material limitation on the ownership or operation of any business or assets of
the Corporation or its Subsidiaries under, any statute, law, ordinance,
regulation, rule, judgment, decree or order of any court or governmental or
regulatory authority.
(d) Significant Holders shall provide the Corporation
with timely notice of any determinations regarding designations of Significant
Holder Designees and any Observers. To be timely, a notice informing the
Corporation of the Significant Holder Designees to be nominated for election to
the Board of Directors by the stockholders shall be delivered in writing to the
Governance or Nominating Committee of the Corporation not less than twenty (20)
days prior to the mailing of proxy statement to be distributed to stockholders
in connection with the annual meeting of stockholders; provided the Corporation
shall give the Significant Holders, at least sixty (60) days prior written
notice of such mailing date. Any such notice given by the Significant Holders
Exhibit B-p.8
shall also contain as to each person whom the Significant Holders have
designated as a nominee for election as a director (i) the name, age, business
address and residence address of the person, (ii) the principal occupation or
employment of the person, (iii) the class or series and number of shares of
capital stock of the Corporation which are owned beneficially or of record by
the person, and (iv) any other information relating to the person that
reasonably would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitations of proxies for
election of directors pursuant to Section 14 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder. To be timely, a notice informing the Corporation of the Significant
Holder Designee being designated to fill a vacancy in a seat held by a
Significant Holder Designee shall be delivered no later than thirty (30) days
following the delivery of written notice from the Corporation to the effect that
such a vacancy exists. To be timely, information regarding the identity of
Observers (including changes in the selection of Observers) selected to attend a
Board or committee meeting shall be delivered in writing to the attention of the
Chairman of the Board of Directors or, in the case of a committee meeting, may
instead be delivered to the attention of the chairman of such committee, at
least 24 hours prior to the meeting. Once the Corporation has been informed of
the identity of the Observers, no additional notice shall be required in
connection with individual meetings unless and until there is a change in the
selection of the Observers.
Section 2.3 Election; Term of Office; Resignation: Removal;
Vacancies. Each director shall hold office until his or her successor is elected
and qualified, subject, however, to his or her earlier death, resignation,
retirement, disqualification or removal from office. Any director may resign at
any time upon written notice to the Board of Directors or to the President or
the Secretary of the Corporation. Such resignation shall take effect at the time
specified therein, and unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective. Any director or the entire
Board of Directors may be removed, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors.
Subject to the provisions in the certificate of incorporation (including the
terms of any one or more classes or series of preferred stock) and the
requirements for filling vacancies set forth in Section 3.2 of these by-laws,
vacancies and newly created directorships resulting from any increase in the
authorized number of may be filled by a majority of the directors then in
office, although less than a quorum, or by the sole remaining director, and the
directors so chosen shall hold office until their successors are duly elected
and qualified or until their earlier death, resignation, retirement,
disqualification or removal from office; provided, however, that any vacancy in
a seat belonging to a Significant Holder Designee, whether by resignation or
otherwise, shall be filled by an individual who prior thereto shall have been
designated or approved in writing by the Significant Holder(s), and any vacancy
in the seat belonging to the Management Designee, whether by resignation or
otherwise, shall be filled by an executive officer of the Corporation who prior
thereto shall have been designated or approved in writing by the Chief Executive
Officer or the Acting CEO, as applicable.
Section 2.4 Nomination of Directors. Only persons who are
nominated in accordance with the following procedures shall be eligible for
election as directors of the Corporation, except as may be otherwise provided in
the certificate of incorporation with respect to the right of holders of
preferred stock of the Corporation to nominate and elect a specified number of
directors in certain circumstances and in the certificate of incorporation and
these by-laws with respect to the right of Significant Holders and the Chief
Executive Officer or Acting CEO to nominate for election a specified number of
directors in certain circumstances. Nominations of persons for election to the
Board of Directors may be made at any annual meeting of stockholders, or
Exhibit B-p.9
at any special meeting of stockholders called for the purpose of electing
directors, (a) by or at the direction of the Board of Directors (or any duly
authorized committee thereof, including the Special Nominating Committee
described in Article II of these by-laws) in accordance with the by-laws or (b)
by any stockholder of the Corporation (i) who is a stockholder of record on the
date of the giving of the notice provided for in this Section 2 and on the
record date for the determination of stockholders entitled to vote at such
meeting and (ii) who complies with the notice procedures set forth in this
Section 2.4.
In addition to any other applicable requirements, for
a nomination to be made by a stockholder, such stockholder must have given
timely notice thereof in proper written form to the Secretary of the
Corporation.
To be timely, a stockholder's notice to the Secretary
must be delivered to or mailed and received at the principal executive offices
of the Corporation (a) in the case of an annual meeting, not less than sixty
(60) days nor more than ninety (90) days prior to the anniversary date of the
immediately preceding annual meeting of stockholders; provided, however, that in
the event that the annual meeting is called for a date that is not within thirty
(30) days before or after such anniversary date, notice by the stockholder in
order to be timely must be so received not later than the close of business on
the tenth (10th) day following the day on which such notice of the date of the
annual meeting was mailed or such public disclosure of the date of the annual
meeting was made, whichever first occurs; and (b) in the case of a special
meeting of stockholders called for the purpose of electing directors, not later
than the close of business on the tenth (10th) day following the day on which
notice of the date of the special meeting was mailed or public disclosure of the
date of the special meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice
to the Secretary must set forth (a) as to each person whom the stockholder
proposes to nominate for election as a director (i) the name, age, business
address and residence address of the person, (ii) the principal occupation or
employment of the person, (iii) the class or series and number of shares of
capital stock of the Corporation which are owned beneficially or of record by
the person and (iv) any other information relating to the person that would be
required to be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder; and (b) as to the stockholder giving the notice (i) the
name and record address of such stockholder, (ii) the class or series and number
of shares of capital stock of the Corporation which are owned beneficially or of
record by such stockholder, (iii) a description of all arrangements or
understandings between such stockholder and each proposed nominee and any other
person or persons (including their names) pursuant to which the nomination(s)
are to be made by such stockholder, (iv) a representation that such stockholder
intends to appear in person or by proxy at the meeting to nominate the persons
named in its notice and (v) any other information relating to such stockholder
that would be required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder. Such notice must be accompanied by a written
consent of each proposed nominee to being named as a nominee and to serve as a
director if elected.
No person shall be eligible for election as a
director of the Corporation unless nominated in accordance with the procedures
set forth in this Section 2. If the Chairman of the meeting determines that a
nomination was not made in accordance with the foregoing procedures, the
Exhibit B-p.10
Chairman shall declare to the meeting that the nomination was defective and such
defective nomination shall be disregarded.
Section 2.5 Regular Meetings. Regular meetings of the Board of
Directors may be held at such places within or without the State of Delaware and
at such times as the Board may from time to time determine, and if so determined
notice thereof need not be given.
Section 2.6 Special Meetings. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Delaware whenever called by the Chairman of the Board, the Chief Executive
Officer or by any two directors. Reasonable notice thereof shall be given by the
person or persons calling the meeting to each of the directors and to any
Observers.
Section 2.7 Participation in Meetings by Conference Telephone
Permitted. Unless otherwise restricted by the certificate of incorporation or
these by-laws, members of the Board of Directors, or any committee designated by
the Board, including any Observers, may participate in a meeting of the Board or
of such committee, as the case may be, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this
by-law shall constitute presence in person at such meeting.
Section 2.8 Quorum; Vote Required for Action. At all meetings
of the Board of Directors one-third of the entire Board shall constitute a
quorum for the transaction of business; provided, however, that for so long as
there is a Significant Holder, the quorum for the transaction of business by the
Board of Directors shall include at least one Significant Holder Designee.
Subject to Article VI, the vote of a majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board unless the
certificate of incorporation or these by-laws shall require a vote of a greater
number. In case at any meeting of the Board a quorum shall not be present, the
members of the Board present may adjourn the meeting from time to time until a
quorum shall be present.
Section 2.9 Organization. Meetings of the Board of Directors
shall be presided over by the Chairman of the Board, if any, or in the absence
of the Chairman of the Board by the Vice Chairman of the Board, if any, or in
the absence of the Vice Chairman of the Board by the President, or in their
absence by a chairman chosen at the meeting. The Secretary, or in the absence of
the Secretary an Assistant Secretary, shall act as secretary of the meeting, but
in the absence of the Secretary and any Assistant Secretary the chairman of the
meeting may appoint any person to act as secretary of the meeting.
Section 2.10 Action by Directors Without a Meeting. Unless
otherwise restricted by the certificate of incorporation or these by-laws, any
action required or permitted to be taken at any meeting of the Board of
Directors, or of any committee thereof, may be taken without a meeting if all
members of the Board or of such committee, as the case may be, consent thereto
in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
Section 2.11 Compensation of Directors. Unless otherwise
restricted by the certificate of incorporation or these by-laws, the Board of
Directors shall have the authority to fix the compensation of directors.
Exhibit B-p.11
ARTICLE III
Committees
Section 3.1 Committees. The Board of Directors may designate
one or more committees, each committee to consist of one or more of the
directors of the Corporation, subject to the last sentence of this Section 3.1.
The Board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in the
place of any such absent or disqualified member. Any such committee, to the
extent provided in the resolution of the Board of Directors or in these by-laws,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in reference
to the following matters: (i) approving or adopting, or recommending to the
stockholders, any action or matter expressly required by law to be submitted to
stockholders for approval, (ii) adopting, amending or repealing these By-Laws or
(iii) removing or indemnifying directors. The Significant Holder Designees
shall, unless they otherwise request, be members of each committee of the Board
of Directors, subject to applicable law and any rule or listing standard of any
securities exchange or market on which any of the Corporation's securities are
listed or approved for trading.
Section 3.2 Special Committee of Significant Holders. For so
long as there are any Significant Holder(s), in connection with any election of
directors by the stockholders (and, in each case, to the extent permitted by law
and by applicable rules or listing standards of any securities exchange or
market on which any of the securities of the Corporation are listed or approved
for trading), a committee comprised of the Significant Holder Designees and one
Independent Director (as hereinafter defined) selected by majority vote of all
of the Independent Directors on the Board of Directors (the "Special Nominating
Committee") shall be responsible for designating nominees (and for any such
nominees to be qualified to serve as directors they shall be nominated) as
follows:
(a) If the Significant Holder(s) are the beneficial
owners of Voting Stock representing forty percent (40%) or more of the votes
entitled to be cast by the holders of all then outstanding Voting Stock, the
Special Nominating Committee shall have the right to designate in writing, and
in accordance with the eligibility, timing and other applicable requirements in
these by-laws, nominees to fill the maximum number of available seats for
Independent Directors on the Board of Directors such that immediately following
such election, up to four (4) of the Independent Directors serving on the Board
of Directors shall have been designated nominees for election by the Special
Nominating Committee.
(b) If the Significant Holder(s) are the beneficial
owners of Voting Stock representing thirty percent (30%) or more, but less than
forty percent (40%), of the votes entitled to be cast by the holders of all then
outstanding Voting Stock, the Special Nominating Committee shall have the right
to designate in writing, and in accordance with the eligibility, timing and
other applicable requirements in these by-laws, nominees to fill the maximum
number of available seats for Independent Directors on the Board of Directors
such that immediately following such election, up to three (3) of the
Independent Directors serving on the Board of Directors shall have been
designated nominees for election by the Special Nominating Committee.
Exhibit B-p.12
(c) If the Significant Holder(s) are the beneficial
owners of Voting Stock representing twenty percent (25%) or more, but less than
thirty percent (30%), of the votes entitled to be cast by the holders of all
then outstanding Voting Stock, the Special Nominating Committee shall have the
right to designate in writing, and in accordance with the eligibility, timing
and other applicable requirements in these by-laws, nominees to fill the maximum
number of available seats for Independent Directors on the Board of Directors
such that immediately following such election, up to two (2) of the Independent
Directors serving on the Board of Directors shall have been designated nominees
for election by the Special Nominating Committee.
(d) If the Significant Holder(s) are the beneficial
owners of less than twenty-five percent (25%), of the votes entitled to be cast
by the holders of all then outstanding Voting Stock, the Special Nominating
Committee shall have the right to designate in writing, and in accordance with
the eligibility, timing and other applicable requirements in these by-laws,
nominees to fill the maximum number of available seats for Independent Directors
on the Board of Directors such that immediately following such election, one of
the Independent Directors serving on the Board of Directors shall have been
designated a nominee for election by the Special Nominating Committee.
(e) To be timely, a notice informing the Corporation
of the nominees designated by the Special Nominating Committee for election to
the Board of Directors shall be delivered in writing to the Governance or
Nominating Committee of the Corporation not less than twenty (20) days prior to
the mailing of proxy statement to be distributed to stockholders in connection
with the annual meeting of stockholders; provided the Corporation shall give the
Special Nominating Committee at least sixty (60) days prior written notice of
such mailing date. Any such notice given by the Special Nominating Committee
shall also contain as to each person whom the Special Nominating Committee has
designated as a nominee for election as a director (i) the name, age, business
address and residence address of the person, (ii) the principal occupation or
employment of the person, (iii) the class or series and number of shares of
capital stock of the Corporation which are owned beneficially or of record by
the person, and (iv) any other information relating to the person that
reasonably would be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitations of proxies for
election of directors pursuant to Section 14 of the Exchange Act and the rules
and regulations promulgated thereunder.
(f) Any vacancy in a seat belonging to an Independent
Director who was designated as a nominee for election to the Board of Directors
by the Special Nominating Committee, whether by resignation or otherwise, shall
be filled by an individual who prior thereto shall have been designated or
approved in writing by the Special Nominating Committee.
(g) In order to be eligible for election, any persons
designated nominees by the Special Nominating Committee must qualify as
Independent Directors. For purposes hereof, "Independent Director" shall mean
those directors of the Board of Directors who are not Significant Holder
Designees or officers of the Corporation or any of its Subsidiaries and who
qualify as "independent" under the rules or listing standards of any securities
exchange or market on which any of the Corporation's securities are listed or
approved for trading.
Section 3.3 Committee Rules. Unless the Board of Directors
otherwise provides, each committee designated by the Board may adopt, amend and
repeal rules for the conduct of its business. In the absence of a provision by
the Board or a provision in the rules of such committee to
Exhibit B-p.13
the contrary, a majority of the entire authorized number of members of such
committee shall constitute a quorum for the transaction of business, the vote of
a majority of the members present at a meeting at the time of such vote if a
quorum is then present shall be the act of such committee, and in other respects
each committee shall conduct its business in the same manner as the Board
conducts its business pursuant to Article II of these by-laws.
ARTICLE IV
Officers
Section 4.1 Officers; Election. As soon as practicable after
the annual meeting of stockholders in each year, the Board of Directors shall
elect a President and a Secretary, and it may, if it so determines, elect from
among its members a Chairman of the Board and a Vice Chairman of the Board. The
Board may also elect one or more Vice Presidents, one or more Assistant Vice
Presidents, one or more Assistant Secretaries, a Treasurer and one or more
Assistant Treasurers and such other officers as the Board may deem desirable or
appropriate and may give any of them such further designations or alternate
titles as it considers desirable. Any number of offices may be held by the same
person unless the certificate of incorporation or these by-laws otherwise
provide.
Section 4.2 Term of Office; Resignation; Removal; Vacancies.
Unless otherwise provided in the resolution of the Board of Directors electing
any officer, each officer shall hold office until his or her successor is
elected and qualified or until his or her earlier resignation or removal. Any
officer may resign at any time upon written notice to the Board or to the
Chairman or Chief Executive Officer, if any, or to the President or Secretary of
the Corporation. Such resignation shall take effect at the time specified
therein, and unless otherwise specified therein no acceptance of such
resignation shall be necessary to make it effective. The Board may remove any
officer with or without cause at any time. Any such removal shall be without
prejudice to the contractual rights of such officer, if any, with the
Corporation, but the election of an officer shall not of itself create
contractual rights. Any vacancy occurring in any office of the Corporation by
death, resignation, removal or otherwise may be filled by the Board at any
regular or special meeting.
Section 4.3 Powers and Duties. The officers of the Corporation
shall have such powers and duties in the management of the Corporation as shall
be stated in these by-laws or in a resolution of the Board of Directors which is
not inconsistent with these by-laws and, to the extent not so stated, as
generally pertain to their respective offices, subject to the control of the
Board. The Secretary shall have the duty to record the proceedings of the
meetings of the stockholders, the Board of Directors and any committees in a
book to be kept for that purpose. The Board may require any officer, agent or
employee to give security for the faithful performance of his or her duties.
ARTICLE V
Stock
Section 5.1 Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed by or in the name of
the Corporation by the Chairman or Vice Chairman of the Board of Directors or a
President of the Corporation, and by the Secretary or an Assistant Secretary, of
the Corporation, representing the number of shares of stock in the Corporation
owned by such holder. If such certificate is manually signed by one officer or
manually countersigned by a transfer agent or by a registrar, any other
signature on the certificate may be a facsimile. In case any
Exhibit B-p.14
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue.
If the Corporation is authorized to issue more than
one class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided by law, in lieu of the foregoing requirements, there may be
set forth on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock a statement that the
Corporation will furnish without charge to each stockholder who so requests the
powers, designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
Section 5.2 Lost, Stolen or Destroyed Stock Certificates;
Issuance of New Certificates. The Corporation may issue a new certificate of
stock in the place of any certificate theretofore issued by it, alleged to have
been lost, stolen or destroyed, and the Corporation may require the owner of the
lost, stolen or destroyed certificate, or such owner's legal representative, to
give the Corporation a bond sufficient to indemnify it against any claim that
may be made against it on account of the alleged loss, theft or destruction of
any such certificate or the issuance of such new certificate.
ARTICLE VI
Fundamental Actions
For so long as there are any Significant Holders, the
following matters shall require (in addition to any other vote required
by law, the certificate of incorporation or these by-laws) either (a)
the approval of the Board of Directors, including the affirmative vote
of at least one of the Significant Holder Designees, or (b) the
affirmative vote of the holders of at least seventy-five percent (75%)
of the voting power of the shares entitled to vote at the election of
directors:
(i) any divestiture or sale of assets or businesses
of the Corporation or any of its subsidiaries that are material to the
Corporation and its subsidiaries taken as a whole;
(ii) the liquidation, dissolution or winding-up of
the Corporation;
(iii) any merger or other business combination or
reorganization other than one (A) where the transaction has been approved by the
unanimous vote of the entire Board of Directors or (B) where the holders of
Voting Stock of the Corporation prior to such transaction will beneficially own
(within the meaning of the certificate of incorporation) in the aggregate at
least eighty percent (80%) of the surviving corporation's Voting Stock,
immediately after giving effect to such transaction; or
Exhibit B-p.15
(iv) any amendment to the certificate of
incorporation or the by-laws.
ARTICLE VII
Miscellaneous
Section 7.1 Fiscal Year. The fiscal year of the Corporation
shall be determined by the Board of Directors.
Section 7.2 Seal. The Corporation may have a corporate seal
which shall have the name of the Corporation inscribed thereon and shall be in
such form as may be approved from time to time by the Board of Directors. The
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or in any other manner reproduced.
Section 7.3 Waiver of Notice of Meetings of Stockholders,
Directors and Committees. Whenever notice is required to be given by law or
under any provision of the certificate of incorporation or these by-laws, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or members of a committee of directors need be specified
in any written waiver of notice unless so required by the certificate of
incorporation or these by-laws.
Section 7.4 Indemnification of Directors, Officers and
Employees. The Corporation shall indemnify to the full extent permitted by law
any person made or threatened to be made a party to any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person or such person's testator or intestate is or was
after the date of adoption of these by-laws, a director, officer or employee of
the Corporation or serves or served after the date of adoption of these by-laws,
at the request of the Corporation or any other enterprise as a director, officer
or employee. Expenses, including reasonable attorneys' fees, incurred by any
such person in defending any such action, suit or proceeding shall be paid or
reimbursed by the Corporation promptly upon receipt by it of an undertaking of
such person to repay such expenses if it shall ultimately be determined that
such person is not entitled to be indemnified by the Corporation. The rights
provided to any person by this by-law shall be enforceable against the
Corporation by such person who shall be presumed to have relied upon it in
serving, after the date of adoption of these by-laws or continuing to serve,
after the date of adoption of these by-laws, as a director, officer or employee
as provided above. No amendment of this by-law shall impair the rights of any
person arising at any time with respect to events occurring prior to such
amendment. For purposes of this by-law, the term "Corporation" shall include any
successor of the Corporation and any constituent corporation (including any
constituent of a constituent) absorbed by the Corporation in a consolidation or
merger; the term "other enterprise" shall include any corporation, partnership,
joint venture, trust or employee benefit plan; service "at the request of the
Corporation" shall include service as a director, officer or employee of the
Corporation which imposes duties on, or involves services by, such director,
officer or employee with respect to an employee benefit plan, its participants
or beneficiaries; any excise taxes assessed on a person with respect to an
employee benefit plan shall be deemed to be indemnifiable expenses; and action
by a person with respect to an
Exhibit B-p.16
employee benefit plan which such person reasonably believes to be in the
interest of the participants and beneficiaries of such plan shall be deemed to
be action not opposed to the best interests of the Corporation.
The rights to indemnification and to the advance of
expenses conferred in this section shall not be exclusive of any other right
which any person may have or hereafter acquire under these by-laws, any statue,
agreement, vote of stockholders or the Board of Directors, or otherwise.
Section 7.5 Interested Directors; Quorum. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or committee
thereof which authorizes the contract or transaction, or solely because his or
her or their votes are counted for such purpose, if: (1) the material facts as
to his or her relationship or interest and as to the contract or transaction are
disclosed or are known to the Board or the committee, and the Board or committee
in good faith authorizes the contract or transaction by the affirmative votes of
a majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or (2) the material facts as to his or her
relationship or interest and as to the contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the stockholders;
or (3) the contract or transaction is fair as to the Corporation as of the time
it is authorized, approved or ratified, by the Board, a committee thereof or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
Section 7.6 Form of Records. Any records maintained by the
Corporation in the regular course of its business, including its stock ledger,
books of account and minute books, may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, microphotographs or any other information
storage device, provided that the records so kept can be converted into clearly
legible form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
Section 7.7 Amendment of By-Laws. These by-laws may be
altered, amended or repealed, in whole or in part, or new by-laws may adopted,
by the stockholders or by the Board of Directors as provided in the certificate
of incorporation and this Article VII; provided, however, that notice of such
alteration, amendment, repeal or adoption of new by-laws be contained in the
notice of such meeting of stockholders or Board of Directors, as the case may
be.
Section 7.8 Interpretation. As used in these by-laws, the term
"entire Board of Directors" means the total number of directors of the
Corporation then holding office and entitled to vote.
Exhibit B-p.17
EXHIBIT C
(Terms of Series B Preferred)
TYPE OF 1,095,283 shares of Series B Convertible
SECURITY: Participating Senior Preferred Stock ("Series B
Preferred Stock").
CLOSING: Notes Exchange Closing.
RIGHTS AND PREFERENCES OF SERIES B PREFERRED STOCK:
DIVIDEND RIGHTS: The Series B Preferred Stock will be entitled to
receive dividends pari passu with the Common Stock
and any other series of Preferred Stock.
LIQUIDATION In the event of any liquidation, dissolution or
PREFERENCE: winding up of the Company, each share of the Series B
Preferred Stock will be entitled to an amount per
share equal to $0.01 plus an amount equal to all
declared but unpaid dividends per share of Series B
Preferred Stock (the "Preference Amount"). Any
remaining assets of the Company legally available for
distribution to shareholders will be distributed pro
rata among the holders of the Series B Preferred
Stock and the Common Stock on an as-converted basis.
If the Company has insufficient assets to permit
payment of the Preference Amount in full to all
holders of Series B Preferred Stock, the assets of
the Company will be distributed ratably to the
holders of the Series B Preferred Stock in proportion
to the Preference Amount each such holder would
otherwise be entitled to receive.
A merger or consolidation of the Company in which its
stockholders do not retain a majority of the voting
power in the surviving corporation, or a sale of all
or substantially all of the Company's assets, will
each be deemed to be a liquidation, dissolution or
winding up of the Company.
REDEMPTION: Other than pursuant to Automatic Conversion as
discussed below, the Series B Preferred Stock will
not be redeemable.
CONVERSION RIGHTS: The holders of the Series B Preferred Stock shall
have the right to convert the Series B Preferred
Stock into shares of Common Stock at any time. The
initial
conversion rate for the Series B Preferred Stock
shall be one share of Series B Preferred Stock into
100 Shares of Common Stock.
The Company will keep reserved or use best efforts to
authorize for reserve, the shares issuable upon
conversion.
AUTOMATIC The Series B Preferred Stock shall automatically be
CONVERSION: converted into Common Stock, at the then applicable
conversion rate, in whole but not in part, upon
written notice delivered by the Company certifying
that shares of Common Stock are available therefor
and a copy of an opinion of counsel as to due and
valid issuance and non-assessability or, to the
extent shares are available for conversion, pro rata
upon the written direction of holders owning over 50%
of the shares of Series B Preferred Stock.
RECUSAL: Holders will cause any director nominees to recuse
themselves from any deliberation or consideration of
actions to cause the Company to initiate Automatic
Conversion.
ANTIDILUTION The conversion ratio of the Series B Preferred Stock
PROVISIONS: shall be subject to adjustment for dividends or other
distributions or for forward or reverse stock splits,
including the Reverse Split.
VOTING RIGHTS: Each share of Series B Preferred Stock carries a
number of votes equal to the number of shares of
Common Stock then issuable upon its conversion into
Common Stock. The Series B Preferred Stock will
generally vote together with the Common Stock and not
as a separate class, except as required by law and as
provided below.
PROTECTIVE Consent of the holders of a majority of the
PROVISIONS: outstanding Series B Preferred Stock, voting as a
class, shall be required for: (i) any amendment or
change of the rights, preferences, privileges or
powers of, or the restrictions provided for the
benefit of, the Series B Preferred Stock; (ii) any
action that authorizes, creates or issues shares of
any class of stock having preferences superior to or
on parity with the Series B Preferred Stock
(including prior or parity redemption, liquidation or
dividends); (iii) any action
Exhibit C-p.2
that reclassifies any outstanding shares into shares
having preferences or parity as to dividends or
assets senior to or on parity with the preferences of
the Series B Preferred Stock; (iv) any amendment of
the Charter that adversely affects the rights of the
Series B Preferred Stock; (v) the declaration or
payment of a dividend any junior stock (other than a
dividend payable solely in shares of junior stock);
or (vi) any merger, consolidation or sale of all or
substantially all of the assets of the Company.
ACQUISITION: The acquisition of shares of the Series B Preferred
Stock shall be made pursuant to this term sheet and
the Notes Exchange.
Exhibit C-p.3
EXHIBIT D
(Terms of Series A Warrants)
HOLDERS: Senior Lenders and Original Senior Lenders.
SECURITIES: Series A Warrants to purchase shares of Common Stock.
EXERCISE PRICE: The Series A Warrants shall be exercisable at a price
per share assuming an aggregate post-exercise equity
value of $60 million (which will represent an
exercise price of approximately $0.33 per share as of
the Loan Exchange Closing and an exercise price of
approximately $8.24 per share after giving effect to
the Charter Amendment); provided, that in the Back-Up
Plan the exercise price shall be reduced to $0.01 per
share.
EXERCISE: Each Series A Warrant shall be exercisable beginning
October 1, 2004; provided, that each Series A Warrant
may be immediately exercisable upon a change of
control or sale of the Company or a sale of all or
substantially all of the assets of the Company or
upon an acceleration of the maturity of the Notes
under the Indenture.
ADJUSTMENTS: The number of shares to be received upon exercise and
the exercise price shall be subject to customary
anti-dilution adjustments for dividends,
distributions, or stock splits, including the Reverse
Split, and similar recapitalization transactions;
and, if having an exercise price based on the $60
million equity value, on a weighted average basis for
issuances of Common Stock or any securities
convertible into or exercisable for Common Stock with
a purchase price, exercise price or conversion price
less than the lower of the exercise price or the
current market price at time of issuance with a carve
out for any issuances pursuant to employee benefits
plans, incentive stock and stock compensation or fee
payment agreements, to landlords or equipment lessors
or lenders or joint ventures, acquisitions or similar
strategic arrangements.
TERM: Each Series A Warrant will expire ten years from the
issue date.
TRANSFER Series A Warrants may be transferred in whole or in
RESTRICTIONS: part, but not in fractional amounts.
VOTING RIGHTS: The Series A Warrants will contain no voting or
similar rights. Any amendment to the warrant
agreement for the Series A Warrants may be approved
by the holders of a majority of shares issuable upon
exercise of the Series A Warrants.
SUCCESSORS: Any successor of the Company shall succeed to all
rights and obligations of the Company under the
Series A Warrants.
Exhibit D-p.2
EXHIBIT E
(Terms of Employment Agreements)
BASE SALARY: As per Disclosure Letter.
PERFORMANCE BONUS: The employee will be eligible to participate in a
Company performance - based bonus program on such
terms and conditions set forth in the Disclosure
Letter.
EQUITY AWARDS: Assuming the cancellation of any Options held under
the Stock Plan, the employee will participate in the
New Equity Plan, with accelerated vesting as per the
Disclosure Letter.
OTHER BENEFITS: The employee will be eligible to participate in such
medical, life, disability, and retirement programs as
the Company maintains for similarly situated
employees.
TERM: 2 year(s), with automatic extensions of 1 year unless
either party provides 3 months advance written notice
of termination.
TERMINATION: FOR CAUSE OR BY EMPLOYEE WITHOUT GOOD REASON. The
employee will receive any accrued but unpaid base
salary.
WITHOUT CAUSE OR BY EMPLOYEE WITH GOOD REASON. The
employee will receive severance as per the Disclosure
Letter, payable in accordance with the Company's
regular payroll practice and subject to receipt of a
release and continued compliance with other terms of
agreement. The Company will maintain existing medical
coverage for employee during such period or, if
earlier, until replacement employment is secured. The
refusal of the Company to extend an employment
agreement beyond the end of a term (other than for
"cause") shall be deemed a termination without cause
for purposes of determining severance.
NON-DISCLOSURE,
NON-COMPETITION
AND NON-SOLICITATION: Customary non-disclosure, non-competition and
non-solicitation provisions will be included. The
non-disclosure provision will be for an unlimited
period. The non-competition and non-solicitation
provisions will be for the duration of employment and
for a period of 2 years following a termination of
employment.
EMPLOYEES AFFECTED: Xxxxx X. Xxxxxxxxx, Chief Executive Officer
Xxxxx X. Xxxx, President and Chief Financial Officer
Xxxxxxx X. Xxxxxx, President - IT Services Division
Xxx X. Xxxxxxxx, Xx., Senior Vice President, General
Counsel and Secretary
EXHIBIT F
(Terms of New Equity Plan)
AWARD TYPES/
AGGREGATE SHARE LIMIT: The Plan will authorize grants of stock options,
stock appreciation rights ("SARs"), restricted stock,
deferred stock awards and performance awards (and
dividend equivalent rights relating to options, SARs,
deferred stock and performance awards), in the case
of stock or option awards, for up to 10.336% of the
fully-diluted shares of Common Stock outstanding
immediately after the Notes Exchange Closing (after
giving effect to any Series A Warrants issued in the
Loan Exchange).
INITIAL GRANTS: Pursuant to an allocation proposed by the CEO and
approved by the Compensation Committee, as per the
Disclosure Letter.
INDIVIDUAL SHARE LIMIT: Grants to any single individual during a calendar
year cannot exceed an agreed percentage of shares
under the Plan.
ELIGIBLE PERSONS/
INDIVIDUAL GRANTS: Grants are to be made to key employees, directors and
consultants selected by the Board or a Committee of
the Board, with share numbers and exercise/purchase
price determined by the Board or Committee.
DURATION: The duration of an option or SAR will not exceed ten
years.
VESTING: Awards will vest 20% on each anniversary date of
grant and over 5 years unless otherwise provided by
the Board or Committee or otherwise provided in
Employment Agreement.
TERMINATION
OF EMPLOYMENT: Following a termination of employment, vested options
and/or SARs must be exercised within three months (12
months in the case of death or disability), except
that options and SARs terminate immediately upon a
termination for Cause. Any non-vested portions of
options, SARs or other awards are forfeited upon any
termination. "Cause" will be as defined in the
employee's employment agreement, if applicable, or as
determined in the discretion of the Board or
Committee if there is no employment agreement.
ACCELERATION OF VESTING: The Board or Committee will have discretion to
accelerate vesting of awards.
ANTI-DILUTION: Customary anti-dilution provisions will be included.
EXERCISE PERIOD EXTENSION: The Board or Committee will have discretion
to extend the post-employment exercise
period of an option and/or SAR.
TERMINATION OF UNEXERCISED
GRANTS IN MERGER/SALE: Unvested options and SARs will be canceled
and vested but unexercised options (and any
vested but unexercised SARs unrelated to
options) will terminate and be cashed out
for the difference between the then value of
the Common Stock (based on the transaction)
and the exercise price, unless the options
(and SARs) are assumed by the successor.
Exhibit F-p.2
EXHIBIT G
(Terms of New Senior Facility)
BORROWER The Company and each of its wholly owned
subsidiaries.
FACILITY A senior secured revolving credit facility (the
"Revolver") which will also provide the Company with
a letter of credit subfacility of not less than $10
million. The aggregate amount of outstanding letters
of credit would be reserved against the credit
availability created under the Revolver. Draws under
the letter of credit subfacility must reimbursed
immediately or rolled into the Revolver.
INTEREST RATES Advances outstanding under the Revolver would bear
interest initially, at the Company's option, at (a)
the base rate plus no more than 1.75 percentage
points, or (b) at the LIBOR rate plus no more than
3.75 percentage points. After closing, interest rates
will vary in accordance with a performance grid to be
agreed upon by the Company and the lenders. The
Company would be charged a letter of credit fee (plus
bank issuance charges) at a rate equal to no more
than 3.75 percentage points per annum times the
undrawn amount of all outstanding letters of credit.
EXPENSES The Company would reimburse lenders (and the agent)
for their out-of-pocket costs and expenses relating
to this financing transaction, including but not
limited to search fees, filing and recording fees,
attorneys fees and expenses, and financial
examination and collateral appraisal fees and
expenses.
USE OF PROCEEDS To (i) refinance the Company's indebtedness, (ii)
fund certain fees and expenses associated with the
Revolver, (iii) finance the ongoing working capital,
capital expenditure, and general corporate needs of
the Company and (iv) pay expenses associated with the
Proposed Restructuring.
TERM Not less than three years from the closing date.
COLLATERAL A first priority perfected security interest in all
of the Company's now owned or hereafter acquired
accounts receivable and such other property and
assets as may be agreed by the Company and lenders.
FINANCIAL Customary for credit facilities of this type.
COVENANTS
AND OTHER TERMS
FINANCIAL Customary for credit facilities of this type.
REPORTING
CONDITIONS Customary for credit facilities of this type,
PRECEDENT including but not limited to subordination terms with
TO CLOSING respect to permitted junior indebtedness that are
acceptable to lenders and/or the agent.
CLOSING DATE Simultaneously with closing of Loan Exchange.
Exhibit G-p.2
EXHIBIT H
(Terms of Junior Secured Notes)
NOTES: New Junior Secured Notes ("New Junior Secured Notes"
or "Junior Notes").
ISSUER: The Company.
HOLDERS: Holders of Claims under Existing Senior Facility.
ISSUANCE: The Junior Notes will be issued in exchange for the
Holders' existing Claims to the Issuer, either in the
Loan Exchange or the Back-Up Plan.
GUARANTORS: All direct and indirect U.S. subsidiaries of Issuer.
AMOUNT
LOAN EXCHANGE: Up to such initial principal amount to be issued in
the Loan Exchange, as required to consummate the Loan
Exchange.
The Issuer and the Senior Lenders may agree to a
different amount.
BACKUP PLAN: $15 million initial principal, if issued under the
Backup Plan. The Issuer and the Senior Lenders may
agree to a different amount.
ADDITIONAL JUNIOR
NOTES: If the Junior Notes are issued pursuant to the Loan
Exchange and are not paid in full within two years,
on the second anniversary of issuance of the Junior
Notes, the Issuer will issue to each holder of Junior
Notes an additional $107.14 of Junior Notes for each
$1,000 in principal amount of Junior Notes held by
such holder as of such anniversary.
REPAYMENT
MATURITY: Four years from the Loan Exchange Closing Date.
CASH SWEEP: As permitted by the New Senior Facility, promptly
after each December 31 (beginning December 31, 2003)
Issuer will prepay principal of the Junior Notes in
the amount of the lesser of: (i) An agreed percentage
of EBITDA minus debt service, taxes and permitted
capital expenditures for the year (or portion
thereof) then ended; and (ii) the excess of
consolidated cash and cash equivalents on such
December 31 over working capital required on such
December 31 by the New Senior Facility.
DEBT PROCEEDS: As permitted by the New Senior Facility, Issuer will
apply an agreed percentage of the net proceeds of any
debt (other than under the New Senior Facility) by
the Issuer or any subsidiary to prepay principal of
the Junior Notes.
EQUITY ISSUANCE As permitted by the New Senior Facility, Issuer will
PROCEEDS: apply an agreed percentage of the net cash proceeds
of any equity issuance (other than under the Series A
Warrants and the New Equity Plan incentive plans and
equity issued in the Notes Exchange) by the Issuer or
any subsidiary to prepay principal of the Junior
Notes.
ASSET SALE PROCEEDS: As permitted by the New Senior Facility, Issuer will
apply an agreed percentage of the net proceeds of any
sale of assets (other than inventory in the ordinary
course of business) by the Issuer or any subsidiary
to prepay principal of the Junior Notes.
CHANGE OF CONTROL: Issuer will prepay the entire outstanding principal
of the Junior Notes on a change of control of the
Issuer.
TAX PREPAYMENT: Subject to approval from the lenders under the New
Senior Facility (which Issuer will use its best
efforts to secure), Issuer will apply 100% of any
proceeds from any tax refunds to prepay the principal
of the Junior Notes.
NET PROCEEDS: Net proceeds of debt, equity or asset sales are the
proceeds net of direct costs and amounts required to
be applied to the New Senior Facility.
Exhibit H-2
OPTIONAL PREPAYMENT: The Issuer may prepay principal of the Junior Notes
in whole or in part, in cash, at 100% of principal
amount plus accrued and unpaid interest to the date
of prepayment.
APPLICATION OF All prepayments will be applied to the ratable
PREPAYMENTS: prepayment of the outstanding principal of the Junior
Notes.
INTEREST ON With any payment of principal, Issuer shall pay all
PREPAYMENTS: interest, fees and other amounts accrued on that
principal.
SENIOR DEBT All prepayments will be subject to any limitations
LIMITATION: agreed between the Issuer and the provider of the New
Senior Facility.
INTEREST
INTEREST RATE: 15% per annum.
METHOD OF PAYMENT: At each quarterly interest payment date, Issuer shall
pay accrued interest in cash at the rate of at least
12% per annum on the outstanding principal. Issuer
shall pay the remaining interest accrued on the
outstanding principal at any quarterly interest
payment date either in cash or by issuance of
additional Junior Notes in the amount of the interest
accrued but not paid in cash.
PAYMENT DATES: Quarterly.
BASIS: Actual/365/6.
YIELD AND TAX Customary.
PROTECTION:
RANKING AND SECURITY
RANKING: All Junior Notes will be subordinate to the Senior
Claims (as defined below). The Junior Notes will be
senior to all other debt of Issuer.
SENIOR CLAIMS: The following will be "Senior Claims":
Exhibit H-3
(i) principal, interest and other amounts under the
New Senior Facility;
(ii) purchase money security interests and capital
leases in the ordinary course of business; and
(iii) any extension or refinancing of any Senior
Claim in (i) above.
SECURITY: The Junior Notes will be secured by a second interest
in all collateral securing the Senior Claims.
SUBORDINATION: Any amounts otherwise distributable on the Junior
Notes in any liquidation or insolvency distribution
of the Issuer will be applied to the Senior Claims
until the Senior Claims are paid in full.
STANDSTILL: Issuer will not make payments (other than by delivery
of additional Junior Notes to make quarterly interest
payments) on the Junior Notes: (i) after an
acceleration of the Senior Claims (unless the
acceleration shall have been rescinded); or (ii)
during any event of default or any payment or
bankruptcy default on the Senior Claims (unless the
default shall have continued for 180 days without
acceleration).
APPROVAL: The subordination and intercreditor terms are subject
to negotiation and approval of the New Senior
Facility the holders of a majority in principal
amount of the Junior Notes, acting reasonably.
REPRESENTATIONS, COVENANTS, DEFAULTS AND OTHER PROVISIONS
REPRESENTATIONS: Substantially the same as the New Senior Facility,
other than representations reflecting the ranking and
lien priority of the Junior Notes.
Representations will include, at a minimum, those
customary for similar debt and for leveraged
transactions.
COVENANTS: Substantially the same as the New Senior Facility,
other than:
Exhibit H-4
(i) covenants reflecting the ranking and lien
priority of the Junior Notes; and
(ii) Issuer, the Guarantors and the Holders will
complete the Loan Exchange if the conditions are
satisfied.
Covenants will include, at a minimum, those customary
for similar debt and for leveraged transactions and
will include specific restrictions on the following:
(i) new debt;
(ii) transactions with affiliates and related
parties;
(iii) disposition of assets;
(iv) sale/leasebacks;
(v) liens;
(vi) dividends, distributions and stock repurchases;
(vii) change of business;
(viii) merger and similar transactions; and
(ix) total debt, other than Senior Claims and under
Junior Notes, not to exceed $50 million.
CONDITIONS: Substantially the same as the New Senior Facility,
other than:
(i) conditions reflecting the ranking and lien
priority of the Junior Notes;
(ii) the New Senior Facility is drawn in accordance
with its terms; and
(iii) Issuer has the cash available from cash
balances, the New Senior Facility and any other
sources to effect the Loan Exchange.
Conditions will include, at a minimum, those
customary for similar debt and for leveraged
transactions.
DEFAULT: Substantially the same as the New Senior
Exhibit H-5
Facility, other than defaults reflecting the ranking
and lien priority of the Junior Notes and cross
default to the New Senior Facility.
Defaults will include, at a minimum, those customary
for similar debt and for leveraged transactions.
REMEDIES: Substantially the same as the New Senior Facility.
WAIVER AND AMENDMENT: Consent of holders of a majority of the principal of
the Junior Notes. However, the time and amount of a
payment to a Holder, and a Holder's entitlement to
the ratable benefit of the security, may be changed
only with the consent of the Holder.
EXPENSES: The Issuer and Guarantors will pay the reasonable
costs in connection with the proposed transactions
regardless of whether the transactions close.
INDEMNITY: The Issuer and the Guarantors will indemnify any
agents and the Holders against all losses and claims
relating to the Junior Notes or the proposed
transactions, other than those arising from the
indemnified party's own bad faith, gross negligence
or willful misconduct.
GOVERNING LAW: New York.
RECUSAL: The holders will cause any director nominees to
recuse themselves from redemption actions taken by
the Board.
TRANSFERS: Transfers of the Junior Notes will be subject to the
consent of the Company, which consent will not be
unreasonably withheld.
Exhibit H-6
EXHIBIT I
Registration Rights Agreement
Principal Terms
Demand Registration
Rights: Noteholders holding, in the aggregate, a majority of
the outstanding shares of Common Stock may request a
total of 2 registrations (each, a "Demand
Registration") of the shares of Common Stock issued
to, or underlying shares of Series A Preferred Stock
issued to, the Noteholders pursuant to the
Transactions ("Registrable Securities"), so long as
the anticipated aggregate offering price to the
public for any such offering is expected to be at
least $20,000,000. The Company shall not be obligated
to effect a Demand Registration if Form S-3 (or any
successor form) is available in which case the
Company shall register the Registrable Securities
pursuant to a Shelf Registration (defined below). A
registration shall not count as a Demand Registration
unless the registration statement is declared
effective and is maintained for at least six months
or such shorter period as is sufficient to sell all
the Registrable Securities included therein.
Incidental Registration
Rights: Subject to the cut-back provisions described below,
if at any time the Company determines that is shall
file a registration statement under the Securities
Act, the Company shall give the Noteholders prompt
notice of such registration. Following such notice,
the Noteholders shall be granted the opportunity to
participate in such registration in proportion to the
percentage ownership of Registrable Securities by the
Noteholders.
Shelf Registration: The Company shall use reasonable best efforts to file
and cause to become effective as promptly as
practicable following the Notes Exchange Closing Date
a Shelf Registration on behalf of the Noteholders
(whether on a short form or long form of registration
statement) (a "Shelf Registration"), for a delayed or
continuous offering under Rule 415 under the
Securities Act, or any successsor provision, and to
maintain such Shelf Registration in effect until the
second anniversary of the Notes Exchange Closing
Date. At any time thereafter, Noteholders holding, in
the aggregate, 5% of the outstanding shares of Common
Stock may request that the Company file a Shelf
Registration on behalf of the Noteholders. The
Noteholders shall be entitled to an unlimited number
of additional Shelf Registrations. No registration of
Registrable Securities effected pursuant to a Shelf
Registration shall be counted as a Demand
Registration.
Obligations of the
Purchaser: The Company shall use its reasonable best efforts to
effect any registration requests, and to comply with
the requirements of all
relevant state "blue sky" and federal securities laws
necessary to effect such registration requests. The
Company shall provide the Noteholders with such
number of registration statements and prospectuses as
the Noteholders shall reasonably request. The Company
shall cooperate in the registration process and, in
connection with any Demand Registration, any roadshow
or other investor meetings in connection with the
sale of the Registrable Securities so registered and
shall secure the participation of its management for
such purposes.
Fees and Expenses: The Company shall pay all fees, expenses, or other
costs incurred with respect to each registration
request made by the Noteholders (other than
underwriters' discounts and commissions and placement
fees) including, without limitation, the expenses of
preparing any registration statement, commission and
state "blue sky" filing, all registration, filing and
qualification fees, word processing, duplicating,
printers' and accounting fees, listing fees,
messenger and federal laws, reasonable fees and
expenses of one firm of counsel for all selling
Noteholders, and fees and expenses for the
disbursement of the Company's counsel, independent
auditors or other advisors.
Indemnification: The Company shall indemnify the Noteholders and their
respective directors, members, managers, partners,
officers and other affiliates against any losses,
claims, damages or liabilities, joint or several, to
which the Noteholder may become subject insofar as
such losses, claims, damages or liabilities arise out
of or are based on any untrue or alleged untrue
statement or any fact contained in any registration
statement, unless the liability relates to material
furnished in writing by the Noteholder to the Company
specifically for use in the registration statement.
Selection of Underwriters: In connection with any Demand Registration or any
Shelf Registration that takes the form of an
underwritten offering, the Noteholders holding a
majority of the Registrable Securities participating
in such registration shall select the underwriters in
connection with the sale of registered securities,
with the approval of the Company, such approval not
to be unreasonably withheld.
Assignability: The Noteholders may assign all registration rights,
provided the assignment is made in connection with a
transfer of the Registrable Securities and such
transfer is made in accordance with the provisions of
the New Rights Plan and the Charter.
Delay of Filing or Sales: If (i) the Board of Directors of the Company
determines that filing a registration statement or
maintaining the effectivness of a
Exhibit I-2
current registration statement would have a material
adverse effect on the Company or its stockholders in
relation to any material acquisition or disposition,
financing or other corporate transaction and the
Company has determined in good faith that disclosure
thereof would not be in the best interests of the
Company and its stockholders at the time requested by
the Noteholders or (ii) the Company has determined in
good faith that filing a registration statement or
maintaining the effectiveness of a current
registration statement would require disclosure of
material information the Company has a valid business
purpose of retaining as confidential at such time,
the Company shall be entitled to postpone filing or
suspend the use by the Noteholder of the Demand
Registration or Shelf Registration for a reasonable
period of time, but not in excess of 60 consecutive
calendar days. The Company shall be entitled to
exercise such postponement or suspension rights more
than one time in any calendar year; provided that
such exercise shall not prevent the Noteholders from
being entitled to at least 240 days of effective
registration rights per year and that no postponement
or suspension period may commence if it is less than
30 calendar days from the prior such suspension
period. Other than the initial Shelf Registration
contemplated above, the Company shall not be
obligated to effect any Shelf Registration within 120
days after the effective date of a previous
registration statement filed by the Company (except
for registrations on Form S-4 or Form S-8, or other
forms prescribed under the Securities Act for the
same purpose or for an exchange offer).
Cutbacks: If a registration by the Company of its securities
involves an underwritten offering, and the managing
or lead underwriter or underwriters shall advise the
Company in writing (a copy of which shall be provided
by the Company to the Noteholders), that in its or
their opinion, the number of Registrable Securities
requested and otherwise proposed to be included in
such registration exceeds the number that can be sold
in such offering within a price range acceptable to
the Company, then the Company shall allocate the
securities to be included in such registration as
follows: First, the Company shall be entitled to
include all of the securities that they have proposed
to be included, and second, to the extent that any
other securities may be included without exceeding
the limitations recommended by the underwriter as
aforesaid, the Noteholders shall be entitled to
participate in that registration pro rata among any
shares of Registrable Securities that the Noteholders
requested for inclusion in the incidental
registration (or on such other proportion mutually
agreed by the Noteholders).
Exhibit I-3
Termination of Rights: The rights of a Noteholder to register Registrable
Securities hereunder shall terminate with respect to
such Noteholder once such Noteholder is legally able
to dispose of all of its Registrable Securities in
one transaction pursuant to Rule 144 under the
Securities Act.
Exhibit I-4
