EXECUTION COPY
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STOCK PURCHASE AGREEMENT
By and Among
NATIONAL EQUIPMENT SERVICES, INC.,
THE 1818 FUND III, L.P.,
CO-INVESTMENT PARTNERS, L.P.,
ERIE INDEMNITY COMPANY,
ERIE INSURANCE EXCHANGE
and
AQUILA LIMITED PARTNERSHIP
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Dated April 27, 1999
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TABLE OF CONTENTS
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Article 1 DEFINITIONS..................................................1
1.1 Definitions..................................................1
1.2 Accounting Terms.............................................9
Article 2 PURCHASE AND SALE OF PREFERRED STOCK.........................9
2.1 Purchase and Sale of Preferred Stock.........................9
2.2 Certificate of Designation..................................10
2.3 Fees........................................................10
2.4 Closing.....................................................10
Article 3 CONDITIONS TO THE OBLIGATION OF THE
PURCHASERS TO CLOSE.........................................11
3.1 Representations and Warranties True.........................11
3.2 Compliance with this Agreement..............................11
3.3 Officer's Certificate.......................................11
3.4 Secretary's Certificate.....................................12
3.5 Documents...................................................12
3.6 Purchase Permitted by Applicable Laws; Legal Investment.....12
3.7 Filing of Certificate of Designation........................12
3.8 Opinion of Counsel..........................................12
3.9 Approval of Counsel to the Purchasers.......................12
3.10 Consents and Approvals......................................12
3.11 No Material Adverse Change..................................13
3.12 Conduct of Business.........................................13
3.13 Registration Rights Agreement...............................13
3.14 Charter and By-Laws of the Company..........................13
3.15 Market Conditions...........................................13
3.16 No Litigation...............................................13
3.17 No Default or Breach........................................14
3.18 HSR Act.....................................................14
3.19 Other Purchaser.............................................14
3.20 Amendment to the Credit Agreement...........................14
Article 4 CONDITIONS TO THE OBLIGATION OF THE
PURCHASERS TO CLOSE AT THE SECOND CLOSING...................14
4.1 Representations and Warranties True.........................14
4.2 Compliance with this Agreement..............................14
4.3 Officer's Certificate.......................................14
4.4 Documents...................................................15
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4.5 Purchase Permitted by Applicable Laws; Legal Investment.....15
4.6 Opinion of Counsel..........................................15
4.7 Approval of Counsel to the Purchasers.......................15
4.8 Consents and Approvals......................................15
4.9 No Material Adverse Change..................................15
4.10 Conduct of Business.........................................15
4.11 Charter and By-Laws of the Company..........................16
4.12 Market Conditions...........................................16
4.13 No Litigation...............................................16
4.14 No Default or Breach........................................16
4.15 HSR Act.....................................................17
4.16 Other Purchaser.............................................17
4.17 Credit Agreement Amendment..................................17
4.18 Stockholder Approval........................................17
Article 5 CONDITIONS TO THE OBLIGATION OF THE
COMPANY TO CLOSE AT THE FIRST CLOSING.......................17
5.1 Representations and Warranties True.........................17
5.2 Compliance with this Agreement..............................17
5.3 Issuance Permitted by Applicable Laws.......................17
5.4 Approval of Counsel to the Company..........................18
5.5 Consents and Approvals......................................18
5.6 HSR Act.....................................................18
5.7 Amendment to the Credit Agreement...........................18
5.8 Consents and Approvals......................................18
Article 6 CONDITIONS TO THE OBLIGATION OF THE
COMPANY TO CLOSE AT THE SECOND CLOSING......................18
6.1 Representations and Warranties True.........................18
6.2 Compliance with this Agreement..............................19
6.3 Issuance Permitted by Applicable Laws.......................19
6.4 Approval of Counsel to the Company..........................19
6.5 Consents and Approvals......................................19
6.6 HSR Act.....................................................19
6.7 Stockholder Approval........................................19
6.8 Consents and Approvals......................................19
Article 7 REPRESENTATIONS AND
WARRANTIES OF THE COMPANY...................................20
7.1 Corporate Existence and Power...............................20
7.2 Corporate Authorization; No Contravention...................20
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7.3 Governmental Authorization; Third Party Consents............21
7.4 Binding Effect..............................................21
7.5 No Legal Bar................................................21
7.6 Litigation..................................................21
7.7 No Default or Breach........................................22
7.8 Title to Properties.........................................22
7.9 Taxes.......................................................22
7.10 Financial Condition.........................................23
7.11 No Material Adverse Change..................................23
7.12 Commission Documents........................................23
7.13 Environmental Matters.......................................23
7.14 Investment Company..........................................25
7.15 Subsidiaries................................................25
7.16 Capitalization..............................................25
7.17 Solvency....................................................25
7.18 Private Offering............................................26
7.19 Broker's, Finder's or Similar Fees..........................26
7.20 Full Disclosure.............................................26
7.21 Year 2000 Compliance........................................26
7.22 No Undisclosed Financial Liabilities........................27
7.23 Registration Rights Agreement...............................27
7.24 Trade Relations.............................................27
7.25 Material Contracts..........................................27
7.26 Business Plan...............................................28
7.27 Internal Controls...........................................28
7.28 ERISA.......................................................28
7.29 Labor Relations.............................................28
Article 8 REPRESENTATIONS AND WARRANTIES
AND COVENANTS OF THE PURCHASERS.............................29
8.1 Existence and Power.........................................29
8.2 Authorization; No Contravention.............................29
8.3 Binding Effect..............................................30
8.4 No Legal Bar................................................30
8.5 Investment Representations..................................30
8.6 Purchase for Own Account....................................30
8.7 Accredited Investor.........................................31
8.8 Broker's, Finder's or Similar Fees..........................31
8.9 Standstill..................................................31
8.10 Additional Representations..................................31
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Article 9 INDEMNIFICATION.............................................32
9.1 Indemnification by the Company..............................32
9.2 Notification................................................32
9.3 Registration Rights Agreement...............................33
Article 10 AFFIRMATIVE COVENANTS.......................................34
10.1 Financial Statements........................................34
10.2 Certificates; Other Information.............................35
10.3 Preservation of Corporate Existence.........................35
10.4 Payment of Obligations......................................36
10.5 Compliance with Laws........................................36
10.6 Notices.....................................................36
10.7 Issue Taxes.................................................36
10.8 Reservation of Shares.......................................37
10.9 Inspection..................................................37
10.10 Board Representation........................................38
10.11 Registration and Listing....................................39
10.12 HSR Act Filing..............................................39
10.13 Additional Registration Rights..............................39
10.14 Change of Control Offer.....................................40
10.15 Proxy Statement and Meeting of Company's Stockholders.......42
10.16 Registration Rights Agreement...............................43
Article 11 NEGATIVE COVENANTS..........................................44
11.1 Consolidations and Mergers..................................44
11.2 Transactions with Affiliates................................44
11.3 No Inconsistent Agreements..................................45
Article 12 MISCELLANEOUS...............................................45
12.1 Survival of Provisions......................................45
12.2 Notices.....................................................45
12.3 Successors and Assigns......................................47
12.4 Amendment and Waiver........................................48
12.5 Counterparts................................................48
12.6 Headings....................................................48
12.7 Determinations..............................................48
12.8 Governing Law...............................................48
12.9 Jurisdiction................................................49
12.10 Severability................................................49
12.11 Rules of Construction.......................................49
12.12 Remedies....................................................49
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12.13 Entire Agreement............................................49
12.14 Attorneys' Fees.............................................50
12.15 Publicity...................................................50
12.16 Expenses....................................................50
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EXHIBITS
Exhibit A Form of Certificate of Designation
Exhibit B Terms of Registration Rights Agreement with respect to the
Purchasers
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STOCK PURCHASE AGREEMENT, dated April 27, 1999, by and among
National Equipment Service, Inc., a corporation organized under the laws of
Delaware (the "Company"), The 1818 Fund III, L.P., a Delaware limited
partnership (the "Fund"), Co-Investment Partners, L.P., a Delaware limited
partnership ("CIP"), Erie Indemnity Company, a Pennsylvania corporation ("Erie
Indemnity"), Erie Insurance Exchange, a reciprocal organization ("Erie
Exchange"), Aquila Limited Partnership, a Connecticut limited partnership
("Aquila", and together with the Fund, CIP, Erie Indemnity and Erie Exchange,
the "Purchasers")
The Company proposes that the Company issue to the Purchasers
and that the Purchasers purchase, up to 100,000 shares of the Company's Senior
Redeemable Convertible Preferred Stock, Series A, par value $.01 per share, upon
the terms and subject to the conditions set forth in this Agreement.
In consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereto agree as follows:
Article 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Affiliate" has the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act; provided
that none of the Purchasers shall be deemed to be an "Affiliate" of the Company.
"Agreement" means this Agreement as the same may be
amended, supplemented or modified in accordance with the terms hereof.
"BBH&Co." means Xxxxx Brothers Xxxxxxxx & Co., a
partnership organized under the laws of the State of New York.
"Business Day" means any day other than a Saturday,
Sunday or other day on which commercial banks in the City of New York, New York
are authorized or required by law or executive order to close.
"Business Plan" has the meaning assigned to that term
in Section 7.26.
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"Certificate of Designation" means the Certificate of
Designation with respect to the Preferred Stock (the form of which is attached
hereto as Exhibit A) to be adopted by the Board of Directors of the Company and
filed with the Secretary of State of the State of Delaware.
"Closing" means, as applicable, the First Closing or
the Second Closing.
"Closing Date" means, as applicable, the First
Closing Date or the Second Closing Date.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commission" means the Securities and Exchange
Commission or any similar agency then having jurisdiction to enforce the
Securities Act.
"Commission Documents" means all registration
statements, proxy statements, reports and other documents (and all amendments
thereto), required to be filed by the Company under the Securities Act or the
Exchange Act.
"Common Stock" means the common stock, par value $.0l
per share, of the Company and each other class of capital stock of the Company
that does not have a preference over any other class of capital stock of the
Company as to dividends or upon liquidation, dissolution or winding up of the
Company and in each case, shall include any other class of capital stock of the
Company into which such stock is reclassified or reconstituted.
"Company" means National Equipment Services, Inc., a
Delaware corporation.
"Condition of the Company" means the assets,
business, properties or financial condition of the Company and its Subsidiaries
taken as a whole.
"Consolidated Net Worth" means, as of the date of
determination with respect to any Person, the consolidated stockholders' equity
of such Person and its Subsidiaries, determined in accordance with GAAP.
"Contractual Obligations" means as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other instrument to
which such Person is a party or by which it or any of its property is bound.
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"Credit Agreement" means the Credit Agreement dated
as of July 17, 1998 by and among the Company, First Union National Bank as
Lender and Agent and the other parties named therein (as amended, modified,
supplemented, replaced or increased).
"Credit Agreement Amendment" has the meaning assigned
that term in Section 3.20.
"Documents" has the meaning assigned to that term in
Section 7.20.
"DTC" means the Depositary Trust Company.
"Environmental Claims" means any written
notification, pursuant to Environmental Laws or principles of common law
relating to pollution, or protection of the environment or health and safety,
that any of the current or past operations of the Company or any of its
Subsidiaries, or any by-product thereof, or any of the property currently or
formerly owned, leased or operated by the Company or any of its Subsidiaries, or
the operations or property of any predecessor of the Company or any of its
Subsidiaries, is or may be implicated in or subject to any Claim, Requirements
of Law, or investigation by any Governmental Authority or any other Person.
"Environmental Compliance Costs" means any
expenditures, costs, assessments or expenses (including any expenditures, costs,
assessments or expenses in connection with the conduct of any Remedial Action,
as well as reasonable fees, disbursements and expenses of attorneys, experts,
personnel and consultants), necessary to cause the operations, real property,
assets, equipment or facilities owned, leased, operated or used by the Company
or any of its Subsidiaries to be in material compliance with Environmental Laws,
principles of common law concerning pollution, protection of the environment or
health and safety, or Permits issued pursuant to Environmental Laws; provided,
however, that Environmental Compliance Costs do not include expenditures, costs,
assessments or expenses necessary in connection with normal maintenance of such
real property, assets, equipment or facilities or the replacement of equipment
in the normal course of events due to ordinary wear and tear.
"Environmental Laws" means any applicable federal,
state, territorial, provincial or local law, common law doctrine, rule, order,
decree, judgment, injunction, license, permit or regulation (any of the above
having the force or effect of law) relating to environmental matters, including
those pertaining to land use, air, soil, surface water, ground water (including
the protection, cleanup, removal, remediation or damage thereof), public or
employee health or safety or any other environmental matter, together with any
other laws (federal, state, territorial, provincial or local) relating to
emissions, discharges, releases or threatened releases of any
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contaminant including, without limitation, medical, biological, biohazardous or
radioactive waste and materials, into ambient air, land, surface water,
groundwater, personal property or structures, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transportation, discharge or handling of any contaminant, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. ss. 9601 et seq.), the Hazardous Material
Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal Water Pollution Control
Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C. ss. 1251 et
seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601 et seq.), the
Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ss. 121 et seq.),
the Asbestos Hazard Emergency Response Act (15 U.S.C. ss. et seq.); the Safe
Drinking Water Act (42 U.S.C. ss. 300F et seq.); the Oil Pollution Act of 1990
(33 U.S.C. ss. 2701 et seq.); and the Occupational Safety and Health Act (29
U.S.C. ss. 651 et seq.), as such laws have been amended or supplemented and any
analogous federal, state or local laws, statutes and regulations promulgated
thereunder.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder.
"Financial Liabilities" has the meaning assigned that
term in Section 7.22.
"First Closing" has the meaning assigned to that term
in Section 2.4.
"First Closing Date" means the date specified in
Section 2.4.
"First Preferred Shares" has the meaning assigned to
that term in Section 2.1(a).
"First Purchase Price" has the meaning assigned to
that term in Section 2.1(a).
"GAAP" means generally accepted accounting principles
in the United States in effect from time to time.
"Governmental Authority" means the government of any
nation, state or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any
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corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
"Hazardous Materials" means those substances that are
regulated by, or form the basis of liability under, any Environmental Laws.
"Hazardous Substance" means any toxic waste,
pollutant, contaminant, hazardous substance, toxic substance, hazardous waste,
special waste, industrial substance or waste, petroleum or petroleum-derived
substance or waste, radioactive substance or waste, or any other substance
regulated under any applicable Environmental Law.
"Holder," with respect to Preferred Shares or Common
Stock issued upon conversion of the Preferred Shares, means each Purchaser and
any subsequent direct or indirect transferee of such security; provided that the
term Holder shall not include any Person who owns such security if it has been
registered under the Securities Act or if it has been transferred to such Person
after such security has been transferred pursuant to Rule 144 under the
Securities Act (or any successor provision) or otherwise transferred under
circumstances not requiring a legend.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations of the
Federal Trade Commission thereunder.
"Indebtedness" means as to any Person, without
duplication, (a) all obligations of such Person for borrowed money (including,
without limitation, reimbursement and all other obligations with respect to
surety bonds, letters of credit and bankers' acceptances, whether or not
matured), (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all obligations to pay the deferred purchase price of property
or services, except trade accounts payable and accrued liabilities arising in
the ordinary course of business, (d) all interest rate and currency swaps and
similar agreements under which payments are obligated to be made, whether
periodically or upon the happening of a contingency, (e) all indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), except trade accounts
payable and accrued liabilities arising in the ordinary course of business, (f)
all obligations under leases which have been or should be, in accordance with
GAAP, recorded as capital leases, (g) all indebtedness secured by any Lien
(other than Liens in favor of lessors under leases other than leases included in
clause (f)) on any property or asset owned or held by that Person regardless of
whether the indebtedness secured thereby shall have been assumed by that Person
or is non-recourse to the credit of that Person, (h) all obligations of such
Person to reimburse
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or prepay any bank or other Person in respect of amounts paid under a letter of
credit, banker's acceptance or similar instrument and (i) all capital stock
issued by such Person subject to mandatory redemption that is not contingent
upon future events or circumstances.
"Indemnified Party" has the meaning assigned to that
term in Section 9.1.
"Liabilities" has the meaning assigned to that term
in Section 9.1.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other) or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including, without limitation, those created by, arising
under or evidenced by, any conditional sale or other title retention agreement,
the interest of a lessor under a capitalized lease obligation, or any financing
lease having substantially the same economic effect as any of the foregoing).
"Market Price" shall mean, per share of the
applicable security on any date specified herein: (a) the closing price per
share of such security on such date published in The Wall Street Journal or, if
no such closing price on such date is published in The Wall Street Journal, the
average of the closing bid and asked prices on such date, as officially reported
on the principal national securities exchange on which such security is then
listed or admitted to trading; (b) if the applicable security is not then listed
or admitted to trading on any national securities exchange but is designated as
a national market system security, the last trading price of such security on
such date; or (c) if there shall have been no trading on such date, the average
of the reported closing bid and asked prices of such security on such date as
shown by NASDAQ and reported by any member firm of the NYSE, selected by the
Company.
"1997 Audited Financials" has the meaning assigned to
that term in Section 7.10.
"1998 Audited Financials" has the meaning assigned to
that term in Section 7.10.
"1999 Interim Financials" has the meaning assigned to
that term in Section 7.10.
"NYSE" means the New York Stock Exchange, Inc.
"Person" means any individual, firm, corporation,
partnership, limited liability company, trust, incorporated or unincorporated
association, joint
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venture, joint stock company, Governmental Authority or other entity of any
kind, and shall include any successor (by merger or otherwise) of such entity.
"Principal Stockholders" means Golder, Thoma,
Xxxxxxx, Xxxxxx Fund V, L.P., Xxxx Xxxxx, Xxxxxxx Xxxxxxxxx or any Affiliates of
any such Person.
"PORTAL" means Private Offerings, Resales and Trading
through Automated Linkages.
"Preferred Shares" means the First Preferred Shares
and, when issued and sold pursuant to the terms of this Agreement, the Second
Preferred Shares.
"Preferred Stock" means the Senior Redeemable
Convertible Preferred Stock, Series A, par value $.01 per share, of the Company.
"Proxy Statement" has the meaning assigned to that
term in Section 10.15(a).
"Purchasers" has the meaning set forth in the
recitals to this Agreement.
"Qualified Holder" means any Holder that holds at
least 10% of the shares of Preferred Stock issued hereunder or the shares of
Common Stock issued upon the conversion of such shares.
"Registration Agreement" means the Registration
Agreement, dated as of June 4, 1996, as amended as of December 31, 1996 and July
24, 1998, by and among the Company, Golder, Thoma, Xxxxxxx, Xxxxxx Fund IV, L.P.
and R&R Rentals, Inc.
"Registration Rights Agreement" has the meaning
assigned to that term in Section 10.16.
"Release" means any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into or through the indoor or outdoor environment or into, through
or out of any property, including the movement of Hazardous Substances through
or in the air, soil, surface water, ground water or property.
"Remedial Action" means all actions, whether
voluntary or involuntary, reasonably necessary to comply with, or discharge any
obligation under, Environmental Laws to (i) clean up, remove, treat, cover or in
any other way adjust Hazardous Substances in the indoor or outdoor environment;
(ii) prevent or control the
8
Release of Hazardous Substances so that they do not migrate or endanger or
threaten to endanger public health or welfare or the environment; or (iii)
perform remedial studies, investigations, restoration and post-remedial studies,
investigations and monitoring on, about or in any real property.
"Requirements of Law" means as to any Person, the
Certificate of Incorporation and By-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Second Closing" has the meaning assigned to that
term in Section 2.5.
"Second Closing Date" means assigned the date
specified in Section 2.5.
"Second Preferred Shares" has the meaning assigned to
that term in Section 2.1(b).
"Second Purchase Price" has the meaning assigned to
that term in Section 2.1(b).
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder.
"Solvent" means, with respect to any Person, that the
fair saleable value on a going concern basis of the assets and property of such
Person is, on the date of determination, greater than the total amount of
liabilities (including contingent and unliquidated liabilities) of such Person
as of such date and that, as of such date, such Person is able to pay all
liabilities of such Person as such liabilities mature. In computing the amount
of contingent or liquidated liabilities at any time, such liabilities will be
computed as the amount which, in light of all the facts and circumstances
existing at such time, represents the amount that, in the reasonable
determination of the Company's board of directors, is probable to become an
actual or matured liability.
"Stockholders' Meeting" has the meaning assigned to
that term in Section 10.15.
"Subsidiary" means, with respect to any Person,
another Person of which 50% or more of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such
first-mentioned Person. Unless
9
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in
this Agreement shall refer to a Subsidiary or Subsidiaries of the Company.
"Trading Days" shall mean a day on which the national
securities exchanges are open for trading.
"USTs" means any underground storage tanks or related
piping or dispensers.
"Voting Stock" means, with respect to any Person, any
securities or similar instruments of such Person whose holders are entitled
under ordinary circumstances to vote for the election of directors of such
Person (irrespective of whether at such time securities or similar instruments
of any other class or classes shall have or might have voting power by reason of
the happening of any contingency).
"Year 2000 Compliance" has the meaning assigned that
term in Section 7.21.
1.2 Accounting Terms. All accounting terms used herein not
expressly defined in this Agreement shall have the respective meanings given to
them in accordance with sound accounting practice. The term "sound accounting
practice" shall mean such accounting practice as, in the opinion of the
independent accountants regularly retained by the Company, conforms at the time
to GAAP applied on a consistent basis except for changes with which such
accountants concur.
Article 2
PURCHASE AND SALE OF PREFERRED STOCK
2.1 Purchase and Sale of Preferred Stock.
(a) Subject to the terms and conditions herein set
forth, the Company agrees that it will issue to each of the Purchasers, and each
of the Purchasers, severally but jointly, agrees that it will acquire from the
Company, at the First Closing, 36,000 shares of Preferred Stock in the case of
the Fund, 15,000 shares of Preferred Stock in the case of CIP, 1,800 shares of
Preferred Stock in the case of Erie Indemnity, 4,200 shares of Preferred Stock
in the case of Erie Exchange and 3,000 shares of Preferred Stock in the case of
Aquila (collectively, the "First Preferred Shares") for purchase price of
$36,000,000 in the case of the Fund, $15,000,000 in the case of CIP, $1,800,000
in the case of Erie Indemnity, $4,200,000 in the case of Erie Exchange and
$3,000,000 in the case of Aquila (collectively, the "First Purchase Price"), in
cash, by
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wire transfer of immediately available funds to an account designated by the
Company in a notice delivered to each Purchaser one day prior to the First
Closing Date.
(b) Subject to the terms and conditions herein set
forth, the Company agrees that it will issue to each of the Purchasers, and each
of the Purchasers, severally but jointly, agrees that it will acquire from the
Company, at the Second Closing, 24,000 shares of Preferred Stock in the case of
the Fund, 10,000 shares of Preferred Stock in the case of CIP, 1,200 shares of
Preferred Stock in the case of Erie Indemnity, 2,800 shares of Preferred Stock
in the case of Erie Exchange and 2,000 shares of Preferred Stock in the case of
Aquila (collectively, the "Second Preferred Shares") for a purchase price of
$24,000,000 in the case of the Fund, $10,000,000 in the case of CIP, $1,200,000
in the case of Erie Indemnity, $2,800,000 in the case of Erie Exchange and
$2,000,000 in the Aquila (collectively, the "Second Purchase Price" and together
with the First Purchase Price, the "Purchase Price"), in cash, by wire transfer
of immediately available funds to an account designated by the Company in a
notice delivered to each Purchaser one day prior to the Second Closing Date.
2.2 Certificate of Designation. The Preferred Shares shall
have the rights and preferences set forth in the Certificate of Designation.
2.3 Fees. The Company shall pay to the Purchasers at the First
Closing a facility fee equal to 5% of the aggregate First Purchase Price and at
the Second Closing a facility fee equal to 5% of the aggregate Second Purchase
Price, which shall be paid to each Purchaser as follows: (i) at the First
Closing each Purchaser shall be paid as its facility fee with respect to such
closing the amount set forth opposite such Purchaser's name on Schedule 1 hereto
under the heading "First Closing Facility Fee" and (ii) at the Second Closing
each Purchaser shall be paid as its facility with respect to such closing the
amount set forth opposite such Purchaser's name on Schedule 1 hereto under the
heading "Second Closing Facility Fee." All such payments shall be made in cash,
by wire transfer of immediately available funds.
2.4 Closing.
(a) The purchase and issuance of the First Preferred
Shares shall take place at the closing (the "First Closing") to be held at the
offices of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, 1285 Avenue of the
Americas, Xxx Xxxx, Xxx Xxxx 00000-0000 on May 14, 1999, or such later date on
or prior to June 18, 1999 as the parties may agree (the "First Closing Date"),
at 10:00 a.m., New York City time. At the First Closing, subject to the terms
and conditions set forth herein, the Company shall sell the First Preferred
Shares to the Purchasers by delivering to each Purchaser the First Preferred
Shares to be purchased by it registered in the name of such Purchaser or its
designees, with appropriate issue stamps, if any, affixed at the
11
expense of the Company, free and clear of any Lien, and each Purchaser shall
purchase the First Preferred Shares to be purchased by it.
(b) The purchase and issuance of the Second Preferred
Shares shall take place at the closing (the "Second Closing") to be held at the
offices of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, 1285 Avenue of the
Americas, Xxx Xxxx, Xxx Xxxx 00000-0000 on the next Business Day after the
Stockholders Meeting or on such later date on or prior to June 18, 1999 (or, in
the event the Commission conducts a review of the Proxy Statement, July 31,
1999) as the parties may agree (the "Second Closing Date"), at 10:00 a.m., New
York City time. At the Second Closing, subject to the terms and conditions set
forth herein, the Company shall sell the Second Preferred Shares to the
Purchasers by delivering to each Purchaser the Second Preferred Shares to be
purchased by it registered in the name of such Purchaser or its designees, with
appropriate issue stamps, if any, affixed at the expense of the Company, free
and clear of any Lien, and each Purchaser shall purchase the Second Preferred
Shares to be purchased by it.
Article 3
CONDITIONS TO THE OBLIGATION OF THE
PURCHASERS TO CLOSE AT THE FIRST CLOSING
The obligation of each Purchaser to purchase the First
Preferred Shares to be purchased by it, to pay the First Purchase Price to be
paid by it at the First Closing and to perform any obligations hereunder shall
be subject to the satisfaction or waiver of the following conditions on or
before the First Closing Date:
3.1 Representations and Warranties True. The representations
and warranties of the Company contained in Section 7 hereof shall be true and
correct in all material respects at and as of the First Closing Date as if made
at and as of such date.
3.2 Compliance with this Agreement. The Company shall have
performed and complied with all of its agreements and conditions set forth or
contemplated herein that are required to be performed or complied with by the
Company on or before the First Closing Date.
3.3 Officer's Certificate. Such Purchaser shall have received
a certificate, dated the First Closing Date and signed by the President or a
Vice-President of the Company, certifying that the conditions set forth in
Sections 3.1 and 3.2 hereof have been satisfied on and as of such date.
12
3.4 Secretary's Certificate. Such Purchaser shall have
received a certificate, dated the First Closing Date and signed by the Secretary
or an Assistant Secretary of the Company, certifying the truth and correctness
of attached copies of the Certificate of Incorporation and By-laws of the
Company and resolutions of the Board of Directors of the Company approving this
Agreement and the transactions contemplated hereby.
3.5 Documents. Such Purchaser shall have received copies of
such documents as it reasonably may request in connection with the sale of the
First Preferred Shares and the transactions contemplated hereby.
3.6 Purchase Permitted by Applicable Laws; Legal Investment.
The acquisition of and payment for the First Preferred Shares to be acquired by
such Purchaser hereunder and the consummation of the transactions contemplated
hereby with respect to such Purchaser (a) shall not be prohibited by any
applicable law or governmental regulation, (b) shall not subject such Purchaser
to any penalty or, in its reasonable judgment, other onerous condition under or
pursuant to any applicable law or governmental regulation and (c) shall be
permitted by the laws and regulations of the jurisdictions to which it is
subject.
3.7 Filing of Certificate of Designation. The Certificate of
Designation shall have been duly filed by the Company with the Secretary of
State of the State of Delaware.
3.8 Opinion of Counsel. Such Purchaser shall have received the
opinion of Xxxxxxxx & Xxxxx, counsel to the Company, dated the First Closing
Date, with respect to such matters as the Purchasers may reasonably request, in
form and substance reasonably acceptable to the Purchasers.
3.9 Approval of Counsel to the Purchasers. All actions and
proceedings hereunder and all documents required to be delivered by the Company
hereunder or in connection with the consummation of the transactions
contemplated hereby, shall have been reasonably acceptable to Xxxx, Weiss,
Rifkind, Xxxxxxx & Xxxxxxxx, counsel to such Purchaser, as to their form and
substance.
3.10 Consents and Approvals. All consents, exemptions,
authorizations, or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons, including, with respect to
Contractual Obligations of the Company, necessary or required in connection with
the execution, delivery or performance by the Company or enforcement against the
Company of this Agreement, the First Preferred Shares or the Registration Rights
Agreement shall have been obtained and be in full force and effect, and such
Purchaser shall have been furnished with appropriate evidence thereof.
13
3.11 No Material Adverse Change. Since December 31, 1998,
there shall have been no material adverse change, nor shall any such change be
threatened, in the Condition of the Company since that date.
3.12 Conduct of Business. The Company shall have conducted its
business in the ordinary course from the date hereof to the First Closing Date,
and no extraordinary or other material transactions not in the ordinary course
of business shall have occurred without such Purchaser's consent, it being
understood and agreed that the acquisition by the Company of (i) all of the
shares of capital stock of another Person or (ii) all or substantially all of
the assets of another Person shall, if such transaction (or series of
transactions) is approved by the Board of Directors of the Company, be
considered to be a transaction conducted in the ordinary course of business for
the purposes of this Section 3.12.
3.13 Registration Rights Agreement. The Company shall have
duly executed and delivered to such Purchaser the Registration Rights Agreement.
3.14 Charter and By-Laws of the Company. Except for the
Certificate of Designation, no amendments to the Certificate of Incorporation or
By-Laws of the Company as in effect on the date hereof shall have been effected.
3.15 Market Conditions. Between the date hereof and the First
Closing Date, (a) trading in the Common Stock shall not have been suspended by
the Commission or by the NYSE, (b) trading in securities generally on the NYSE
shall not have been suspended or limited or minimum or maximum prices shall not
have been generally established on such exchange, or additional material
governmental restrictions, not in force on the date of this Agreement, shall not
have been imposed upon trading in securities generally by such exchange or by
order of the Commission or any court or other Governmental Authority, (c) a
general banking moratorium shall not have been declared by either Federal or New
York State authorities and (d) any material adverse change in the financial or
securities markets in the United States or in political, financial or economic
conditions in the United States or, other than relating to Iraq or Kosovo, any
outbreak or material escalation of hostilities or declaration by the United
States of a national emergency or war or other calamity or crisis shall not have
occurred.
3.16 No Litigation. No action, suit, proceeding, claim or
dispute shall have been brought or otherwise arisen at law, in equity, in
arbitration or before any Governmental Authority against the Company or any of
its Subsidiaries which would reasonably be expected to (i) have a material
adverse effect on the Condition of the Company or (ii) have a material adverse
effect on the ability of the Company to perform its obligations under this
Agreement, the Preferred Shares or the Registration Rights Agreement.
14
3.17 No Default or Breach. Neither the Company nor any of its
Subsidiaries shall have been in default under or with respect to any Contractual
Obligation in any respect, which, individually or together with all such
defaults, would be materially adverse to the Condition of the Company or which
could materially adversely affect the ability of the Company to perform its
obligations under this Agreement, the Preferred Shares or the Registration
Rights Agreement.
3.18 HSR Act. The waiting period under the HSR Act with
respect to the First Preferred Shares to be acquired by such Purchaser shall
have expired or been terminated.
3.19 Other Purchaser. The Fund shall simultaneously be
purchasing all the First Preferred Shares to be purchased by it under this
Agreement.
3.20 Amendment to the Credit Agreement. Such Purchaser shall
have received a copy of an amendment to the Credit Agreement (the "Credit
Agreement Amendment") permitting the issuance of the Preferred Stock and
amending the definition therein of the term "Change of Control," in each case in
a manner reasonably satisfactory to such Purchaser.
Article 4
CONDITIONS TO THE OBLIGATION OF THE
PURCHASERS TO CLOSE AT THE SECOND CLOSING
The obligation of each Purchaser to purchase the Second
Preferred Shares to be purchased by it, to pay the Second Purchase Price at the
Second Closing and to perform any obligations hereunder shall be subject to the
satisfaction or waiver of the following conditions on or before the Second
Closing Date:
4.1 Representations and Warranties True. The representations
and warranties of the Company contained in Section 7 hereof shall be true and
correct in all material respects at and as of the Second Closing Date as if made
at and as of such date.
4.2 Compliance with this Agreement. The Company shall have
performed and complied with all of its agreements and conditions set forth or
contemplated herein that are required to be performed or complied with by the
Company on or before the Second Closing Date.
4.3 Officer's Certificate. Such Purchaser shall have received
a certificate, dated the Second Closing Date and signed by the President or a
Vice-
15
President of the Company, certifying that the conditions set forth in Sections
4.1 and 4.2 hereof have been satisfied on and as of such date.
4.4 Documents. Such Purchaser shall have received copies of
such documents as it reasonably may request in connection with the sale of the
Second Preferred Shares and the transactions contemplated hereby.
4.5 Purchase Permitted by Applicable Laws; Legal Investment.
The acquisition of and payment for the Second Preferred Shares to be acquired by
such Purchaser hereunder and the consummation of the transactions contemplated
hereby with respect to such Purchaser (a) shall not be prohibited by any
applicable law or governmental regulation, (b) shall not subject such Purchaser
to any penalty or, in its reasonable judgment, other onerous condition under or
pursuant to any applicable law or governmental regulation and (c) shall be
permitted by the laws and regulations of the jurisdictions to which it is
subject.
4.6 Opinion of Counsel. Such Purchaser shall have received the
opinion of Xxxxxxxx & Xxxxx, counsel to the Company, dated the Second Closing
Date, with respect to such matters as the Purchasers may reasonably request, in
form and substance reasonably acceptable to the Purchasers.
4.7 Approval of Counsel to the Purchasers. All actions and
proceedings hereunder and all documents required to be delivered by the Company
hereunder or in connection with the consummation of the transactions
contemplated hereby, shall have been reasonably acceptable to Xxxx, Weiss,
Rifkind, Xxxxxxx & Xxxxxxxx, counsel to such Purchaser, as to their form and
substance.
4.8 Consents and Approvals. All consents, exemptions,
authorizations, or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons, including, with respect to
Contractual Obligations of the Company, necessary or required in connection with
the execution, delivery or performance by the Company or enforcement against the
Company of this Agreement, the Second Preferred Shares or the Registration
Rights Agreement shall have been obtained and be in full force and effect, and
such Purchaser shall have been furnished with appropriate evidence thereof.
4.9 No Material Adverse Change. Since December 31, 1998, there
shall have been no material adverse change, nor shall any such change be
threatened, in the Condition of the Company since that date.
4.10 Conduct of Business. The Company shall have conducted its
business in the ordinary course from the date hereof to the Second Closing Date,
and no extraordinary or other material transactions not in the ordinary course
of business shall
16
have occurred without such Purchaser's consent, it being understood and agreed
that the acquisition by the Company of (i) all of the shares of capital stock of
another Person or (ii) all or substantially all of the assets of another Person
shall, if such transaction (or series of transactions) is approved by the Board
of Directors of the Company, be considered to be a transaction conducted in the
ordinary course of business for the purposes of this Section 4.10.
4.11 Charter and By-Laws of the Company. Except for the
Certificate of Designation, no amendments to the Certificate of Incorporation or
By-Laws of the Company as in effect on the First Closing Date shall have been
effected.
4.12 Market Conditions. Between the First Closing Date and the
Second Closing Date, (a) trading in the Common Stock shall not have been
suspended by the Commission or by the NYSE, (b) trading in securities generally
on the NYSE shall not have been suspended or limited or minimum or maximum
prices shall not have been generally established on such exchange, or additional
material governmental restrictions, not in force on the date of this Agreement,
shall not have been imposed upon trading in securities generally by such
exchange or by order of the Commission or any court or other Governmental
Authority, (c) a general banking moratorium shall not have been declared by
either Federal or New York State authorities and (d) any material adverse change
in the financial or securities markets in the United States or in political,
financial or economic conditions in the United States or, other than relating to
Iraq or Kosovo, any outbreak or material escalation of hostilities or
declaration by the United States of a national emergency or war or other
calamity or crisis shall not have occurred.
4.13 No Litigation. No action, suit, proceeding, claim or
dispute shall have been brought or otherwise arisen at law, in equity, in
arbitration or before any Governmental Authority against the Company or any of
its Subsidiaries which would reasonably be expected to, (i) have a material
adverse effect on the Condition of the Company or (ii) have a material adverse
effect on the ability of the Company to perform its obligations under this
Agreement, the Preferred Shares or the Registration Rights Agreement.
4.14 No Default or Breach. Neither the Company nor any of its
Subsidiaries shall have been in default under or with respect to any Contractual
Obligation in any respect, which, individually or together with all such
defaults, would be materially adverse to the Condition of the Company or which
could materially adversely affect the ability of the Company to perform its
obligations under this Agreement, the Preferred Shares or the Registration
Rights Agreement.
17
4.15 HSR Act. The waiting period under the HSR Act with
respect to the Second Preferred Shares to be acquired by such Purchaser shall
have expired or been terminated.
4.16 Other Purchaser. The Fund shall simultaneously be
purchasing all the Second Preferred Shares to be purchased by it under this
Agreement.
4.17 Credit Agreement Amendment. The Credit Agreement
Amendment shall not have been amended, modified or revoked.
4.18 Stockholder Approval. The stockholders of the Company
shall have duly approved at the Stockholders Meeting the issuance of the Second
Preferred Shares pursuant to this Agreement.
Article 5
CONDITIONS TO THE OBLIGATION OF THE
COMPANY TO CLOSE AT THE FIRST CLOSING
The obligations of the Company to issue and sell the Preferred
Shares to a Purchaser, and to consummate the transactions contemplated herein on
the First Closing Date with respect to such Purchaser, shall be subject to the
satisfaction or waiver of the following conditions on or before the First
Closing Date:
5.1 Representations and Warranties True. The representations
and warranties of such Purchaser contained in Article 8 hereof shall be true and
correct in all material respects at and as of the First Closing Date as if made
at and as of such date.
5.2 Compliance with this Agreement. Such Purchaser shall have
performed and complied with all of its agreements and conditions set forth or
contemplated herein that are required to be performed or complied with by the
Purchasers on or before the First Closing Date.
5.3 Issuance Permitted by Applicable Laws. The issuance of the
First Preferred Shares and the consummation of the transactions contemplated
hereby by the Company (a) shall not be prohibited by any applicable law or
governmental regulation, (b) shall not subject the Company to any penalty or, in
its reasonable judgment, other onerous condition under or pursuant to any
applicable law or governmental regulation and (c) shall be permitted by the laws
and regulations of the jurisdictions in which is it subject.
18
5.4 Approval of Counsel to the Company. All actions and
proceedings hereunder and all documents required to be delivered by such
Purchaser hereunder or in connection with the consummation of the transactions
contemplated hereby, and all other related matters, shall have been reasonably
acceptable to Xxxxxxxx & Xxxxx, counsel to the Company, as to their form and
substance.
5.5 Consents and Approvals. All consents, exemptions,
authorizations, or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons necessary or required in connection
with the execution, delivery or performance by such Purchaser or enforcement
against such Purchaser of this Agreement shall have been obtained and be in full
force and effect, and the Company shall have been furnished with appropriate
evidence thereof.
5.6 HSR Act. The waiting period under the HSR Act with respect
to the First Preferred Shares to be acquired by such Purchaser shall have
expired or been terminated.
5.7 Amendment to the Credit Agreement. The parties to the
Credit Agreement (other than the Company) shall have executed and delivered the
Credit Agreement Amendment.
5.8 Consents and Approvals. All consents, exemptions,
authorizations, or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons, including, with respect to
Contractual Obligations of the Company, necessary or required in connection with
the execution, delivery or performance by the Company or enforcement against the
Company of this Agreement, the First Preferred Shares or the Registration Rights
Agreement shall have been obtained and be in full force and effect.
Article 6
CONDITIONS TO THE OBLIGATION
OF THE COMPANY TO CLOSE AT THE SECOND CLOSING
The obligations of the Company to issue and sell the Second
Preferred Shares to a Purchaser, and to consummate the transactions contemplated
herein on the Second Closing Date with respect to such Purchaser, shall be
subject to the satisfaction or waiver of the following conditions on or before
the Second Closing Date:
6.1 Representations and Warranties True. The representations
and warranties of such Purchaser contained in Article 8 hereof shall be true and
correct in
19
all material respects at and as of the Second Closing Date as if made at and as
of such date.
6.2 Compliance with this Agreement. Such Purchaser shall have
performed and complied with all of its agreements and conditions set forth or
contemplated herein that are required to be performed or complied with by the
Purchasers on or before the Second Closing Date.
6.3 Issuance Permitted by Applicable Laws. The issuance of the
Second Preferred Shares and the consummation of the transactions contemplated
hereby by the Company (a) shall not be prohibited by any applicable law or
governmental regulation, (b) shall not subject the Company to any penalty or, in
its reasonable judgment, other onerous condition under or pursuant to any
applicable law or governmental regulation and (c) shall be permitted by the laws
and regulations of the jurisdictions in which is it subject.
6.4 Approval of Counsel to the Company. All actions and
proceedings hereunder and all documents required to be delivered by such
Purchaser hereunder or in connection with the consummation of the transactions
contemplated hereby, and all other related matters, shall have been reasonably
acceptable to Xxxxxxxx & Xxxxx, counsel to the Company, as to their form and
substance.
6.5 Consents and Approvals. All consents, exemptions,
authorizations, or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons necessary or required in connection
with the execution, delivery or performance by such Purchaser or enforcement
against such Purchaser of this Agreement shall have been obtained and be in full
force and effect, and the Company shall have been furnished with appropriate
evidence thereof.
6.6 HSR Act. The waiting period under the HSR Act with respect
to the Second Preferred Shares to be acquired by such Purchaser shall have
expired or been terminated.
6.7 Stockholder Approval. The stockholders of the Company
shall have duly approved at the Stockholders' Meeting the issuance of the Second
Preferred Shares pursuant to this Agreement.
6.8 Consents and Approvals. All consents, exemptions,
authorizations, or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons, including, with respect to
Contractual Obligations of the Company, necessary or required in connection with
the execution, delivery or performance by the Company or enforcement against the
Company of this Agreement,
20
the Second Preferred Shares or the Registration Rights Agreement shall have been
obtained and be in full force and effect.
Article 7
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchasers
as follows:
7.1 Corporate Existence and Power. The Company, and each of
its Subsidiaries:
(a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization;
(b) has (i) full corporate (or other organizational)
power and authority and (ii) all governmental licenses, authorizations, consents
and approvals to own and operate its property, to lease the property it operates
as lessee and to conduct the business in which it is currently, or is currently
proposed to be, engaged;
(c) is duly qualified as a foreign person, licensed
and in good standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification; and
(d) is in compliance with all Requirements of Law;
except, in the case of (b)(ii), (c) or (d) of this Section 7.1, to the extent
that the failure to do so would not have a material adverse effect on the
Condition of the Company.
7.2 Corporate Authorization; No Contravention. Except as set
forth on Schedule 7.2, the execution, delivery and performance by the Company of
this Agreement, the Registration Rights Agreement and the transactions
contemplated hereby and thereby, including without limitation the issuance of
the Preferred Shares and the Common Stock issuable upon the conversion of the
Preferred Shares:
(a) is within the Company's corporate power and
authority and has been duly authorized by all necessary corporate action;
(b) will not violate, conflict with or result in any
breach or contravention of or the creation of any Lien under, any Contractual
Obligation of the
21
Company or any of its Subsidiaries, or any order or decree directly relating to
the Company or any of its Subsidiaries; and
(c) has been duly authorized by the Board of
Directors of the Company and no other corporate proceedings on the part of the
Company or its stockholders are necessary to authorize or approve the Agreement,
the Registration Rights Agreement or the transactions contemplated hereby and
thereby.
7.3 Governmental Authorization; Third Party Consents. No
approval, consent, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person, is necessary or
required in connection with the execution, delivery or performance by the
Company or enforcement against the Company of this Agreement, the Preferred
Shares, the Registration Rights Agreement or the transactions contemplated
hereby or thereby, except for the filing required under the HSR Act.
7.4 Binding Effect. This Agreement has been duly executed and
delivered by the Company, and at the Closing the Registration Rights Agreement
will be duly executed and delivered by the Company. At the First Closing the
First Preferred Shares will be duly executed and delivered by the Company and at
the Second Closing the Second Preferred Shares shall be duly executed and
delivered by the Company. Assuming it is enforceable against the Purchasers,
this Agreement constitutes the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, or similar laws
affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability. At the Closing, the Registration Rights
Agreement and the Preferred Shares will constitute the legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their respective terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
7.5 No Legal Bar. Neither the execution, delivery and
performance of this Agreement and the Registration Rights Agreement nor the
issuance or performance of the terms of the Preferred Shares will violate any
Requirement of Law or any Contractual Obligation of the Company or any of its
Subsidiaries or any rule or regulation of NYSE.
7.6 Litigation.
(a) Except as set forth on Schedule 7.6, there are no
actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of the
22
Company, threatened, at law, in equity, in arbitration or before any
Governmental Authority against the Company or any of its Subsidiaries:
(i) with respect to this Agreement, the
Preferred Shares or the Registration Rights Agreement or any of the transactions
contemplated hereby or thereby; or
(ii) which would, if adversely determined,
(i) have a material adverse effect on the Condition of the Company or (ii) have
a material adverse effect on the ability of the Company to perform its
obligations under this Agreement, the Preferred Shares or the Registration
Rights Agreement.
(b) No injunction, writ, temporary restraining order,
decree or any order of any nature has been issued by any court or other
Governmental Authority purporting to enjoin or restrain the execution, delivery
and performance of this Agreement, the Preferred Shares or the Registration
Rights Agreement.
7.7 No Default or Breach. No event has occurred and is
continuing (or will occur as a result of the Company entering into this
transaction) under this Agreement, the Preferred Shares or the Registration
Rights Agreement which constitutes a default under or breach of any of the
provisions of Article 10 or 11. Neither the Company nor any of its Subsidiaries
is in default under or with respect to any Contractual Obligation in any
respect, which, individually or together with all such defaults, would have a
material adverse effect on the Condition of the Company or on the ability of the
Company to perform its obligations under this Agreement, the Preferred Shares or
the Registration Rights Agreement.
7.8 Title to Properties. The Company and each of its
Subsidiaries have good and defensible title to, or hold leases in full force and
effect in all their real property, except for such defects in title as could
not, individually or in the aggregate, have a material adverse effect on the
Condition of the Company or the ability of the Company to perform its
obligations under this Agreement, the Preferred Shares or the Registration
Rights Agreement.
7.9 Taxes. The Company and its Subsidiaries have filed or
caused to be filed, or have properly filed extensions for, all income tax
returns which are required to be filed and have paid or caused to be paid all
taxes as shown on said returns and on all assessments received by it to the
extent that such taxes have become due, except taxes the validity or amount of
which is being contested in good faith by appropriate proceedings and with
respect to which adequate reserves have been set aside. The Company and its
Subsidiaries have paid or caused to be paid, or have established reserves that
the Company reasonably believes to be adequate for all income tax liabilities
applicable to the Company and its Subsidiaries for all fiscal years which have
23
not been examined and reported on by the taxing authorities (or closed by
applicable statutes).
7.10 Financial Condition. The Company heretofore has delivered
to the Purchasers true and correct copies of audited consolidated financial
statements of the Company and its Subsidiaries dated as of December 31, 1997
(the "1997 Audited Financials") and December 31, 1998 (the "1998 Audited
Financials") and the unaudited consolidated financial statements of the Company
and its Subsidiaries dated as of March 31, 1999 (the "1999 Interim Financials").
The 1997 Audited Financials, 1998 Audited Financials and 1999 Interim Financials
have been prepared in accordance with GAAP applied consistently and present
fairly in all material respects the consolidated financial condition of the
Company as of the dates thereof and the consolidated results of operations of
the Company for the period, or portion thereof, then ended (except in the case
of the 1999 Interim Financials, for normal year-end adjustment and the absence
of footnotes).
7.11 No Material Adverse Change. Since December 31, 1998,
there has not been any material adverse change, nor to the knowledge of the
Company is any such change threatened, in the Condition of the Company.
7.12 Commission Documents. The Company has filed all
Commission Documents and the Company has furnished the Purchasers correct and
complete copies of the final version of all Commission Documents, each as filed
with the Commission but without exhibits to any of them. Each Commission
Document was true and accurate in all material respects when filed with the
Commission and in compliance in all material respects with the requirements of
its respective report form.
7.13 Environmental Matters. Except as set forth on Schedule
7.13:
(a) Neither the Company nor any of its Subsidiaries
is in violation in any material respect of any applicable Environmental Law.
(b) The Company and its Subsidiaries have all Permits
required pursuant to Environmental Laws that are material to the conduct of the
business of the Company or any of its Subsidiaries, and all such Permits are in
full force and effect. The Company and its Subsidiaries have not received notice
of any action, cause of action, suit, claim, complaint, demand, litigation or
legal, administrative or arbitral proceeding or investigation to revoke, limit
or modify any of such Permits. The Company and each of its Subsidiaries is in
compliance in all material respects with all terms and conditions thereof.
24
(c) There is no material Environmental Claim pending
or, to the knowledge of the Company, threatened against the Company or any of
its Subsidiaries.
(d) The Company and its Subsidiaries have filed all
material notices required under Environmental Laws indicating the past or
present Release, generation, treatment, storage or disposal of Hazardous
Substances.
(e) Except for provisions contained in (i)
acquisition agreements entered into by the Company or any of its Subsidiaries or
(ii) leases of real property entered into by the Company or any of its
Subsidiaries, neither the Company nor any of its Subsidiaries has entered into
any written agreement with any Governmental Body or any other Person by which
the Company or any of the Subsidiaries has assumed responsibility, either
directly or as a guarantor or surety, for the remediation of any condition
arising from or relating to a Release or threatened Release of Hazardous
Substances into the environment.
(f) To the knowledge of the Company, there is not any
current or future obligation with respect to a Release or threatened Release of
Hazardous Substances for which the Company or any of its Subsidiaries may be
directly or indirectly responsible in an amount in excess of $250,000.
(g) Except in cases which would not give rise to any
liability of the Company or any of its Subsidiaries under any Environmental Law
in excess of $250,000, there is not now and has not been at any time in the past
at, on or in any of the real properties owned, leased or operated by the Company
or any of its Subsidiaries: (i) any generation, use, handling, Release,
treatment, recycling, storage or disposal of any Hazardous Substances; (ii) any
UST, surface impoundment, lagoon, landfill, solid waste disposal area, or other
containment facility (past or present) for the temporary or permanent storage,
treatment or disposal of Hazardous Substances; (iii) any asbestos-containing
material; (iv) any polychlorinated biphenyls (PCBs) used in hydraulic oils,
electrical transformers or other equipment; (v) any Release or threatened
Release, or any visible signs of Releases or threatened Releases, of a Hazardous
Substance in form or quantity requiring Remedial Action under Environmental
Laws; or (vi) any Hazardous Substances present at such property, excepting such
quantities as are handled in accordance with all applicable Environmental Laws.
(h) Except in cases which would not give rise to any
liability of the Company or any of its Subsidiaries under any Environmental Law
in excess of $250,000, neither the Company or any of its Subsidiaries has
transported, stored, treated or disposed, nor has it allowed or arranged for any
third persons to transport, store, treat or dispose, any Hazardous Substance to
or at: (i) any location other than a site lawfully permitted to receive such
substances for such purposes, or (ii) any location
25
designated for Remedial Action pursuant to Environmental Laws; nor has it
performed, arranged for or allowed by any method or procedure such
transportation or disposal in contravention of any Environmental Laws or in any
other manner that may result in Environmental Compliance Costs or in an
Environmental Claim.
(i) The Company and each of its Subsidiaries is in
full compliance with the upgrade requirements for USTs in effect as of December
31, 1998 pursuant to the Resource Conservation and Recovery Act, 42 U.S.C. ss.
6901 et seq., except for such noncompliance as would not, individually or in the
aggregate, have a material adverse effect on the Condition of the Company or the
ability of the Company to perform its obligations under this Agreement, the
Preferred Shares or the Registration Rights Agreement.
7.14 Investment Company. Neither the Company nor any Person
controlling the Company is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
7.15 Subsidiaries. Schedule 7.15 sets forth a complete and
accurate list of all of the Subsidiaries of the Company together with their
respective jurisdictions of incorporation or organization. Except as set forth
on Schedule 7.15, each such Subsidiary is directly or indirectly wholly owned by
the Company.
7.16 Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of 100,000,000 shares of Common Stock, par
value $.0l per share, and 10,000,000 shares of preferred stock, par value $.01
per share, of which as of the date hereof, 24,121,885 shares of Common Stock and
no shares of preferred stock are issued and outstanding. Except as set forth on
Schedule 7.16, there are no shares of capital stock of the Company reserved for
issuance. All of the outstanding shares of capital stock of the Company have
been duly authorized and are fully paid and non-assessable. The Preferred Shares
when issued upon payment of the Purchase Price, and the shares of Common Stock
when issued upon conversion of the Preferred Shares, will be duly authorized,
and, in each case, validly issued, fully paid and non assessable. Except as set
forth on Schedule 7.16 or in the Certificate of Designation, there are no
options, warrants or other rights to purchase shares of capital stock or other
securities of the Company, nor is the Company obligated in any manner to issue
shares of its capital stock or other securities. Except as contemplated hereby
and for relevant state and federal securities laws, there are no restrictions on
the transfer of shares of capital stock of the Company.
7.17 Solvency. On and as of the Closing Date, after giving
effect to the transactions contemplated in this Agreement, the Company will be
Solvent.
26
7.18 Private Offering. No form of general solicitation or
general advertising was used by the Company or, to its knowledge, its
representatives in connection with the offer or sale of the Preferred Shares. No
registration of the Preferred Shares pursuant to the provisions of the
Securities Act or, assuming the accuracy of the representations of the
Purchasers in Sections 8.5, 8.6 and 8.7, any state securities or "blue sky" laws
will be required by the offer, sale or issuance of the Preferred Shares pursuant
to this Agreement. The Company agrees that neither it, nor anyone acting on its
behalf, will offer or sell the Preferred Shares or any other security so as to
require the registration of the Preferred Shares pursuant to the provisions of
the Securities Act or any state securities or "blue sky" laws, unless such
Preferred Shares are so registered.
7.19 Broker's, Finder's or Similar Fees. Except as set forth
herein, there are no brokerage commissions, finder's fees or similar fees or
commissions payable in connection with the transactions contemplated hereby
based on any agreement, arrangement or understanding with the Company or any of
its Subsidiaries, or any action taken by any such entity.
7.20 Full Disclosure. No statement by the Company contained in
(i) this Agreement or (ii) any Commission Documents or any other documents,
certificates, notices or consents (collectively, "Documents") delivered to any
Purchaser in connection with the purchase and sale of the Preferred Shares at or
prior to the Closing contains (or will contain) an untrue statement of a
material fact or omits (or will omit) to state a material fact required to be
stated therein or necessary to make the statements made, in the light of the
circumstances in which made, not materially false or misleading.
7.21 Year 2000 Compliance. Except as set forth in Schedule
7.21, all computer hardware and software (including all computer hardware and
software contained in imbedded systems) used in the business of the Company and
its Subsidiaries (whether such hardware and software is owned by the Company and
its Subsidiaries or is licensed from third parties) (collectively, the
"Technology Systems") is designed to be used prior to, during and after the
calendar year 2000 and such hardware and software will continue to operate
during each such time period to accurately process date data (including, but not
limited to calculating, comparing and sequencing) from, into and between the
twentieth and twenty-first centuries, including leap year calculations (the
"Year 2000 Compliance"), except where to the failure to be so designed or to so
operate would not, individually or in the aggregate, have a material adverse
effect on the Condition of the Company. The occurrence of the calendar year 2000
will not affect the Technology Systems of the Company and its Subsidiaries,
except to the extent that such occurrence would not have a material adverse
effect on the Condition of the Company. To the knowledge of the Company, no
material expenditures in excess of currently budgeted items is necessary to
cause Technology
27
Systems to operate properly prior to, during and after the calendar year 2000.
The Company and its Subsidiaries have taken reasonable steps to determine
whether the failure of any third parties with which the Company and its
Subsidiaries have a material relationship to achieve Year 2000 Compliance could
have a material adverse effect on the Condition of the Company.
7.22 No Undisclosed Financial Liabilities. Except as set forth
on Schedule 7.22, the Company and its Subsidiaries, after giving effect to the
transactions contemplated hereby, will not have any direct or indirect
indebtedness, liability (including, without limitation, product liability or
warranty claim), obligation, whether known or unknown, fixed or unfixed,
contingent or otherwise, and whether or not of a kind required by GAAP to be set
forth on a financial statement (collectively "Financial Liabilities"), other
than (i) Financial Liabilities fully and adequately reflected on the 1998
Audited Financials, (ii) those incurred since December 31, 1998 in the ordinary
course of business, (iii) Financial Liabilities incurred pursuant to this
Agreement and (iv) such additional Financial Liabilities that would not,
individually or in the aggregate, have a material adverse effect on the
Condition of the Company.
7.23 Registration Rights Agreement. Schedule 7.23 sets forth
all agreements to which the Company or any Subsidiary is a party or by which it
is bound relating to the registration of its securities or, in the case of a
Subsidiary, the securities of the Company. None of the agreements listed on
Schedule 7.23 grants any registration rights to any Person which are
inconsistent with the rights to be granted to the Purchasers in the Registration
Rights Agreement.
7.24 Trade Relations. To the best knowledge of the Company,
there exists no actual or threatened termination, cancellation or limitation of,
or any adverse modification or change in, the business relationship or business
of the Company and its Subsidiaries taken as a whole or their business with any
customer or any group of customers which is individually or in the aggregate
material to the business of the Company and its Subsidiaries taken as a whole,
or with any material supplier.
7.25 Material Contracts. Neither the Company nor any of its
Subsidiaries is a party to any Contractual Obligation and is not subject to any
charge, corporate restriction, judgment, injunction, decree or Requirement of
Law materially adversely affecting, or which may adversely affect the Condition
of the Company. Filed as exhibits to the Commission Documents are all contracts,
agreements and commitments of the Company and any Subsidiary, whether written or
oral, including without limitation, any dealer agreements, other than (a) this
Agreement and the Registration Rights Agreement, (b) purchase orders in the
ordinary course of the Company's and any Subsidiary's business, and (c) any
other contracts, agreements and commitments of the Company or any of its
Subsidiaries that (i) do not extend beyond December 31, 2000 and involve the
receipt or payment of not more than $50,000, and
28
(ii) are not material to the Condition of the Company. All of the contracts,
agreements and commitments of the Company and its Subsidiaries filed as exhibits
to the Commission Documents are in full force and effect and binding upon the
parties thereto in accordance with their terms. Neither the Company nor any of
its Subsidiaries, nor, to the knowledge of the Company or any of its
Subsidiaries, any other party to such contracts, agreements and commitments, is
in default thereunder, nor does any condition exist that with notice or lapse of
time, or both would constitute a default thereunder. Neither the Company nor any
of its Subsidiaries has any knowledge of any proposed, pending, or likely
cancellation or termination of any such contract, agreement or commitment. No
violations under dealer agreements exist, including without limitation, with
respect to territorial exclusivity.
7.26 Business Plan. Prior to the date hereof, the Company
delivered to each Purchaser its business plans for fiscal year 1999 attached as
Schedule 7.26 (the "Business Plan"). The assumptions used in preparation of the
Business Plan were reasonable when made and continue to be reasonable as of the
Closing Date. The Business Plan has been prepared in good faith and the Business
Plan gives effect to the transactions contemplated by this Agreement. Each
Purchaser acknowledges that the Business Plan contains assumptions about future
events and that actual results during the period or periods covered may differ
from the data and results contained in such Business Plan.
7.27 Internal Controls. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that, to the knowledge of the Company, (a) transactions
are executed in accordance with management's general or specific authorization;
(b) transactions are recorded as necessary (i) to permit preparation of
financial statements in conformity with generally accepted accounting principles
and (ii) to maintain accountability for assets; (c) access to assets is
permitted only in accordance with management's general or specific
authorization; and (d) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any material differences.
7.28 ERISA. Neither the Company nor any of the Subsidiaries
has violated any provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or the rules and regulations promulgated thereunder,
except for such violations which, singly or in the aggregate, would not have a
material adverse effect on the Condition of the Company.
7.29 Labor Relations. (i) Neither the Company nor any of its
Subsidiaries is in breach of any collective bargaining agreement, (ii) the
Company and each of its Subsidiaries is in substantial compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages
29
and hours, including but not limited to, the Workers Adjustment and Retraining
Notification Act, and neither the Company nor any of its Subsidiaries is engaged
in any unfair labor practice, (iii) there is no unfair labor practice complaint
against the Company or any of its Subsidiaries pending before the National Labor
Relations Board, (iv) there is no labor strike, material dispute, slowdown or
stoppage actually pending or, to the best of the Company's or any Subsidiary's
knowledge, threatened against or affecting the Company or any of its
Subsidiaries, (v) with respect to the Company or any of its Subsidiaries, no
material grievance or arbitration proceeding arising out of or under collective
bargaining agreements is pending or exists and, to the best of the Company's or
any Subsidiary's knowledge, no claim therefor is threatened, and (vi) neither
the Company nor any of its Subsidiaries (after the date any such Subsidiary
became a Subsidiary of the Company) has experienced any work stoppage since
inception.
Article 8
REPRESENTATIONS AND WARRANTIES
AND COVENANTS OF THE PURCHASERS
Each of the Purchasers represents and warrants (as to itself
only) to, and covenants and agrees (as to itself only) with, the Company as
follows:
8.1 Existence and Power. Such Purchaser:
(a) is duly organized and validly existing under the
laws of the jurisdiction of its organization; and
(b) has the power and authority to own and operate
its property, to lease the property it operates as lessee and to conduct the
business in which it is currently, or is currently proposed to be, engaged.
8.2 Authorization; No Contravention. The execution, delivery
and performance by such Purchaser of this Agreement:
(a) is within such Purchaser's power and authority
and has been duly authorized by all necessary action;
(b) does not contravene the terms of such Purchaser's
Agreement of Limited Partnership or other organizational document, or any
amendment thereof or any other Requirement of Law; and
30
(c) will not violate, conflict with or result in any
breach or contravention of or the creation of any Lien under, any Contractual
Obligation of such Purchaser, or any order or decree directly relating to such
Purchaser.
8.3 Binding Effect. This Agreement and, when executed by the
Company on the First Closing Date, the Registration Rights Agreement has been
duly executed and delivered by such Purchaser, constitutes the legal, valid and
binding obligation of such Purchaser enforceable against it in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability.
8.4 No Legal Bar. The execution, delivery and performance of
this Agreement will not violate any Requirement of Law or any Contractual
Obligation of such Purchaser.
8.5 Investment Representations. Such Purchaser understands
that neither the Preferred Shares nor any Common Stock issuable upon conversion
of the Preferred Shares has been registered under the Securities Act and that
the certificates for such securities will bear a legend to that effect.
8.6 Purchase for Own Account. The Preferred Shares (including,
for purposes of this Section 8.6, the Common Shares issuable upon conversion of
the Preferred Shares) to be acquired by such Purchaser pursuant to this
Agreement are being acquired for its own account and with no intention of
distributing or reselling such securities or any part thereof in any transaction
that would be in violation of the securities laws of the United States of
America, or any state, without prejudice, however, to the rights of such
Purchaser at all times to sell or otherwise dispose of all or any part of the
Preferred Shares under an effective registration statement under the Securities
Act, or under an exemption from such registration available under the Securities
Act, and subject, nevertheless, to the disposition of such Purchaser's property
being at all times within its control. If such Purchaser should in the future
decide to dispose of any Preferred Shares, such Purchaser understands and agrees
that it may do so only in compliance with the Securities Act and applicable
state securities laws, as then in effect, and that stop-transfer instructions to
that effect, where applicable, will be in effect with respect to such Preferred
Shares. If such Purchaser should decide to dispose of any Preferred Shares,
other than pursuant to the provisions of the Registration Rights Agreement, such
Purchaser, if requested by the Company, will have the obligation in connection
with such disposition, at such Purchaser's expense, of delivering an opinion of
counsel of recognized standing in securities law, in connection with such
disposition to the effect that the proposed disposition of the Preferred Shares
would not be in violation of the Securities Act or any applicable state
securities laws and, assuming such opinion is required and is otherwise
appropriate in
31
form and substance under the circumstances, the Company will accept, and will
recommend to any applicable transfer agent or trustee for any of the Preferred
Shares that it accept, such opinion. Such Purchaser agrees to the imprinting, so
long as required by law, of a legend on certificates representing all of the
Preferred Shares and the shares of Common Stock issued on conversion thereof to
the following effect:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
8.7 Accredited Investor. Such Purchaser is an "accredited
investor" as that term is defined in Regulation D promulgated under the
Securities Act.
8.8 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
with the transactions contemplated hereby based on any agreement, arrangement or
understanding with such Purchaser or any action taken by such Purchaser.
8.9 Standstill. Each Purchaser agrees that, unless otherwise
agreed by the Company in writing, for a period of three years from the First
Closing Date it will not acquire any Voting Stock of the Company if as a result
of such acquisition, the Purchasers and their Affiliates will beneficially own
in the aggregate in excess of 49% of the Voting Stock of the Company.
Notwithstanding anything to the contrary in the immediately preceding sentence,
BBH&Co. shall be entitled to process any unsolicited orders to buy any Voting
Stock of the Company and BBH&Co. shall be entitled to solicit orders to purchase
or recommend that Persons purchase Voting Stock of the Company.
8.10 Additional Representations. (a) With respect to any
Closing that occurs prior to June 30, 1999, the Fund hereby represents and
warrants to the Company that the "person", as defined in Section 801.1(a)(1) of
the Rules (the "Rules") promulgated under the HSR Act, within which the Fund is
included, does not have annual net sales or total assets of $10,000,000 or more
as determined in accordance with the HSR Act and Rules.
(b) CIP hereby represents and warrants to the Company
that no filing is required under the HSR Act in connection with its purchase of
the First Preferred Shares and Second Preferred Shares to be purchased by it.
32
Article 9
INDEMNIFICATION
9.1 Indemnification by the Company. In addition to all other
sums due hereunder or provided for in this Agreement, the Company agrees to
indemnify and hold harmless each Purchaser and its Affiliates (including,
without limitation, Xxxxx Brothers Xxxxxxxx & Co. and Lexington Partners, Inc. )
and their respective officers, directors, agents, employees, subsidiaries,
partners and controlling persons (each, an "Indemnified Party") to the fullest
extent permitted by law from and against any and all losses, claims, damages,
expenses (including reasonable fees, disbursements and other charges of counsel)
or other liabilities ("Liabilities") resulting from any breach of any covenant,
agreement, representation or warranty of the Company in this Agreement or any
legal, administrative or other actions (including actions brought by the Company
or any equity holders of the Company or derivative actions brought by any Person
claiming through the Company or in the Company's name), proceedings or
investigations (whether formal or informal), or written threats thereof, based
upon, relating to or arising out of this Agreement, the Preferred Shares, the
Registration Rights Agreement, the transactions contemplated hereby or thereby,
or any indemnified person's role therein or in the transactions contemplated
hereby or thereby as long as a written claim thereof is made before the
expiration of the relevant survival period set forth in Section 12.1 below;
provided, however, that the Company shall not be liable under this Section 9.1:
(a) for any amount paid in settlement of claims without the Company's consent
(which consent shall not be unreasonably withheld) or (b) to the extent that it
is finally judicially determined that such Liabilities resulted primarily from
the willful misconduct, bad faith or gross negligence of such Indemnified Party
or any Affiliate thereof; provided, further, that if and to the extent that such
indemnification is unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of such indemnified
liability which shall be permissible under applicable laws. In connection with
the obligation of the Company to indemnify for expenses as set forth above, the
Company further agrees to reimburse each Indemnified Party for all such expenses
(including reasonable fees, disbursements and other charges of counsel) as they
are incurred by such Indemnified Party; provided, however, that if an
Indemnified Party is reimbursed hereunder for any expenses, such reimbursement
of expenses shall be refunded to the extent it is finally judicially determined
that the Liabilities in question resulted primarily from the willful misconduct,
bad faith or gross negligence of such Indemnified Party or any Affiliate
thereof.
9.2 Notification. Each Indemnified Party under this Article 9
will, promptly after the receipt of notice of the commencement of any action or
other proceeding against such Indemnified Party in respect of which indemnity
may be sought
33
from the Company under this Article 9, notify the Company in writing of the
commencement thereof. The omission of any Indemnified Party so to notify the
Company of any such action shall not relieve the Company from any liability
which it may have to such Indemnified Party (i) other than pursuant to this
Article 9 or (ii) under this Article 9 unless, and only to the extent that, such
omission results in the Company's forfeiture of substantive rights or defenses.
In case any such action or other proceeding shall be brought against any
Indemnified Party and it shall notify the Company of the commencement thereof,
the Company shall be entitled to participate therein and, to the extent that it
may wish, to assume the defense thereof, with counsel reasonably satisfactory to
such Indemnified Party; provided, however, that any Indemnified Party may, at
its own expense, retain separate counsel to participate in such defense.
Notwithstanding the foregoing, in any action or proceeding in which both the
Company and an Indemnified Party is, or is reasonably likely to become, a party,
such Indemnified Party shall have the right to employ separate counsel at the
Company's expense and to control its own defense of such action or proceeding
if, in the reasonable opinion of counsel to such Indemnified Party, (a) there
are or may be legal defenses available to such Indemnified Party or to other
indemnified parties that are different from or additional to those available to
the Company or (b) any conflict or potential conflict exists between the Company
and such Indemnified Party that would make such separate representation
advisable; provided, however, that in no event shall the Company be required to
pay fees and expenses under this Article 9 for more than one firm of attorneys
in any jurisdiction in any one legal action or group of related legal actions.
The Company agrees that the Company will not, without the prior written consent
of such Purchaser, settle, compromise or consent to the entry of any judgment in
any pending or threatened claim, action or proceeding relating to the matters
contemplated hereby (if any Indemnified Party is a party thereto or has been
actually threatened to be made a party thereto) unless such settlement,
compromise or consent includes an unconditional release of such Purchaser and
each other Indemnified Party from all liability arising or that may arise out of
such claim, action or proceeding. The rights accorded to Indemnified Parties
hereunder shall be in addition to any rights that any Indemnified Party may have
at common law, by separate agreement or otherwise.
9.3 Registration Rights Agreement. Notwithstanding anything to
the contrary in this Article 9, the indemnification and contribution provisions
of the Registration Rights Agreement shall govern any claim made with respect to
registration statements filed pursuant thereto or sales made thereunder.
34
Article 10
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees (a) with each
Purchaser, with respect to all of this Article 10, and (b) with any other
Qualified Holder, with respect to all of this Article 10 except Sections
10.1(c),(d) and (e), 10.9, 10.10 and 10.12:
10.1 Financial Statements. The Company shall promptly deliver
to such Purchaser and (except with respect to Section 10.1(c),(d) and (e)) any
other Qualified Holder:
(a) as soon as available, but not later than ninety
(90) days after the end of each fiscal year of the Company, a copy of the
audited consolidated balance sheet of the Company and its Subsidiaries as of the
end of such year and the related consolidated statements of income and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous year, all in reasonable detail and accompanied by a
management discussion and analysis of the operations of the Company and its
Subsidiaries for such fiscal year and by the opinion of PricewaterhouseCoopers
LLP (or any successor thereto) or another nationally recognized independent
public accounting firm which report shall state that such consolidated financial
statements present fairly in all material respects the financial position for
the periods indicated in conformity with GAAP applied on a basis consistent with
prior years (except for changes with respect to which such accounting firm
concurs); provided, however, that the delivery of a copy of the Company's Annual
Report on Form 10-K shall satisfy the requirements of this Section 10.1(a);
(b) commencing with the fiscal period ending on June
30, 1999, as soon as available, but in any event not later than forty-five (45)
days after the end of each of the first three fiscal quarters of each year, the
unaudited consolidated balance sheet of the Company and its Subsidiaries, and
the related consolidated statements of income and cash flow for such quarter and
for the period commencing on the first day of the fiscal year and ending on the
last day of such quarter, all certified by an appropriate officer of the
Company; provided, however that the delivery of a copy of the Company's
Quarterly Report on Form 10-Q shall satisfy the requirements of this Section
10.1(b);
(c) commencing with the month ending on April 30,
1999, as soon as available, but in any event not later than thirty (30) days
after the end of each month, the unaudited monthly and year-to-date financial
statements setting forth in each case, in comparative form, the figures for the
previous year and the budget figures, all certified by an appropriate officer of
the Company;
35
(d) as soon as available and in any event not later
than thirty (30) days prior to the end of each fiscal year, the financial plan
of the Company and its Subsidiaries for the next succeeding fiscal year,
including cash flow projection and operating budget, calculated monthly, and as
soon as available any updates or revisions to such financial plan;
(e) annual budgets and such other financial and
operating data of the Company and its Subsidiaries, as any Purchaser reasonably
may request, to the extent that such information is formally prepared for the
Company's Chairman, President, Board of Directors, banks, other lenders,
security holders, the SEC or the financial community;
(f) at any time when it is not subject to Section 13
or 15(d) of the Exchange Act, upon request, to such Purchaser and prospective
purchasers of the Preferred Shares, information of the type that would satisfy
the requirement of subsection (d)(4)(i) of Rule 144A (or any similar successor
provision) under the Securities Act; and
(g) except as otherwise provided in Section 10.1(a)
and (b), promptly after the same are filed, copies of all Commission Documents.
10.2 Certificates; Other Information. The Company shall
furnish to such Purchaser and to any other Qualified Holder:
(a) concurrently with the delivery of the financial
statements referred to in Section 10.1(a) or 10.1(b), a certificate of the
Company's Chief Financial Officer stating that to the best of knowledge of such
officer there is no default under or breach of Articles 10 and 11, except as
specified in such certificates; and
(b) promptly upon receipt, copies of all accountants'
management letters and all certificates relating to compliance, defaults,
material litigation, and other material adverse changes.
10.3 Preservation of Corporate Existence. Except in connection
with a Change of Control, the Company shall, and shall cause each of its
Subsidiaries to:
(a) preserve and maintain in full force and effect
its corporate or organizational existence and good standing under the laws of
its jurisdiction of incorporation or organization except as permitted by Section
11.2;
(b) preserve and maintain in full force and effect
all material rights, privileges, qualifications, licenses and franchises
necessary in the normal conduct of its business; and
36
(c) use its reasonable efforts to preserve its
business organization.
10.4 Payment of Obligations. The Company shall, and shall
cause its Subsidiaries to, pay and discharge as the same shall become due and
payable, all their respective obligations and liabilities, including without
limitation:
(a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company or such Subsidiary;
(b) all lawful claims which the Company and each of
its Subsidiaries is obligated to pay, which are due and which, if unpaid, might
by law become a Lien upon its property, unless the same are being contested in
good faith by appropriate proceedings and adequate reserves in accordance with
GAAP are being maintained by the Company or such Subsidiary; and
(c) all payments of principal of and interest on
Indebtedness when due (giving effect to any grace periods relating thereto);
except, in the case of (a), (b) and (c) of this Section 10.4, to the extent that
the failure to do so would not, individually or in the aggregate, have a
material adverse effect on the Condition of the Company.
10.5 Compliance with Laws. The Company shall comply, and shall
cause each Subsidiary to comply, in all material respects with all Requirements
of Law and with the directions of any Governmental Authority having jurisdiction
over it or its business, except such as to which such failure to comply would
not have a material adverse effect on the Condition of the Company.
10.6 Notices. Upon knowledge of the Chief Executive Officer,
the President or the Chief Financial Officer of the Company of the events
described in this Section 10.6, the Company shall give written notice within 15
days to each Purchaser of any (i) material default or event of default under any
material Contractual Obligation of the Company or any of its Subsidiaries, or
(ii) material dispute, litigation, investigation, proceeding or suspension which
may exist at any time against the Company, or any of its Subsidiaries or its
assets, each accompanied by a statement setting forth details of the occurrence
referred to therein and stating what action the Company proposes to take with
respect thereto.
10.7 Issue Taxes. The Company shall pay, or cause to be paid,
all documentary and similar taxes levied under the laws of any applicable
jurisdiction in
37
connection with the issuance of the Preferred Shares and the execution and
delivery of the other agreements and documents contemplated hereby and any
modification of the Preferred Shares or such other agreements and documents and
will hold such Purchaser harmless, without limitation as to time, against any
and all Liabilities with respect to all such taxes.
10.8 Reservation of Shares. The Company shall at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issue or delivery upon conversion of the Preferred Shares as provided
in the Certificate of Designation, such number of shares of Common Stock as
shall then be issuable or deliverable upon the conversion of all outstanding
Preferred Shares. Such shares of Common Stock shall, when issued or delivered in
accordance with the Certificate of Designation, be duly and validly issued and
fully paid and non-assessable. The Company shall issue the Common Stock into
which the Preferred Shares are convertible upon the proper surrender of the
Preferred Shares in accordance with the provisions of the Certificate of
Designation and shall otherwise comply with the terms thereof.
10.9 Inspection.
(a) The Company will permit, and will cause each of
its Subsidiaries to permit, representatives of each of the Purchasers to visit
and inspect any of its properties, to examine its corporate, financial and
operating records and make copies thereof or abstracts therefrom, and to discuss
its affairs, finances and accounts with their respective directors, officers and
independent public accountants, all at such reasonable times during normal
business hours and as often as may be reasonably requested, upon reasonable
advance notice to the Company.
(b) Each Purchaser will utilize reasonable good faith
efforts to maintain as confidential any information obtained from the Company or
its Subsidiaries (to the extent such Purchaser is advised by the Company that
such information is confidential) pursuant to Sections 10.1, 10.2, 10.6, 10.9
and 10.10 (other than information which (i) at the time of disclosure or
thereafter is generally available to and known by the public (other than as a
result of a disclosure directly or indirectly by such Purchaser or any of its
representatives), (ii) is available to such Purchaser on a non- confidential
basis from a source other than the Company or its Subsidiaries; provided that
such source was not known by such Purchaser to be bound by a confidentiality
agreement with the Company or any of its Subsidiaries, (iii) has been
independently developed by such Purchaser or (iv) which was obtained more than
one year prior to such disclosure); provided, however, each Purchaser may
disclose information (a) to its advisors, representatives, agents, partners (and
their representatives and advisors) and employees, (b) to any prospective
transferee of the Preferred Shares or the Common Shares issuable on the
conversion of the Preferred Shares or of an interest in such Purchaser or in a
successor fund sponsored by the general partner of such Purchaser,
38
(c) as may be required by law (including a court order, subpoena or other
administrative order or process) or applicable regulations to which such
Purchaser is or becomes subject, (d) in connection with any litigation arising
out of or related to this Agreement, (e) to the executive officers of the
Company or any of its Subsidiaries, or (f) with the consent of the Company.
10.10 Board Representation.
(a) The Company shall, at or prior to the First
Closing Date, cause one vacancy to be created on its Board of Directors (by
increasing the number of members of the Board of Directors or otherwise) and at
such date shall cause one person designated by the Fund to be elected to its
Board of Directors. Such designee shall serve until the next succeeding annual
meeting of stockholders of the Company to be held after such election.
(b) Commencing with such next succeeding annual
meeting of stockholders of the Company referred to in Section 10.10(a), and at
each annual meeting of stockholders of the Company thereafter, so long as the
Fund holds 20% of the shares of Common Stock issued or issuable upon conversion
of the Preferred Shares (whether or not the Preferred Shares have been
converted) acquired by the Fund on the First Closing Date and Second Closing
Date, if any, the Fund shall be entitled to designate one director to the
Company's Board of Directors. The Company shall cause such designee of the Fund
to be included in the slate of nominees recommended by the Board to the
Company's stockholders for election as directors, and the Company shall use its
reasonable best efforts to cause the election of such designee, including voting
all shares for which the Company holds proxies (unless otherwise directed by the
stockholder submitting such proxy) or is otherwise entitled to vote, in favor of
the election of such person. Notwithstanding the foregoing, if the Fund has not
designated a person pursuant to Section 10.10(a) and is entitled to do so, the
Fund shall be entitled to receive all notices and materials distributed to the
members of the Board of Directors of the Company, and to designate one person
who shall be entitled to attend all meetings of the Board of Directors and
committees thereof and to receive minutes of all such meetings upon preparation
thereof.
(c) In the event such designee of the Fund shall
cease to serve as a director for any reason, other than by reason of the Fund
not being entitled to designate a designee as provided in Section 10.10(b), the
Company shall use its reasonable best efforts to cause the vacancy resulting
thereby to be filled by a designee of the Fund.
(d) In addition to the rights granted pursuant to
Sections 10.10(a), (b) and (c) above, (i) so long as the Fund holds 20%of the
shares of Common Stock issued or issuable upon conversion of the Preferred
Shares (whether or
39
not the Preferred Shares have been converted) acquired by the Fund on the First
Closing Date and the Second Closing Date, if any, the Fund shall have the right
to have a representative attend all regular and special meetings of the Board of
Directors of the Company and (ii) so long as CIP holds 20%of the shares of
Common Stock issued or issuable upon conversion of the Preferred Shares (whether
or not the Preferred Shares have been converted) acquired by CIP on the First
Closing Date and the Second Closing Date, if any, CIP shall have the right to
have a representative attend all regular and special meetings of the Board of
Directors of the Company. These visitation rights shall include the right to
receive the same notice and materials provided to the Board at the same time as
provided to the Board.
10.11 Registration and Listing. If any shares of Common Stock
required to be reserved for purposes of conversion of the Preferred Shares as
provided in the Certificate of Designation require registration with or approval
of any Governmental Authority under any Federal or state or other applicable law
before such Common Stock may be issued or delivered upon conversion, the Company
will endeavor in good faith and as expeditiously as possible to cause such
Common Stock to be duly registered or approved, as the case may be, unless such
registration or approval is required solely because of a breach of such
Purchaser's representation contained in Section 8.6. So long as the Common Stock
is quoted on the NYSE or listed on any national securities exchange, the
Company, if permitted by the rules of such system or exchange, will quote or
list and keep quoted or listed on such system or exchange, upon official notice
of issuance, all Common Stock issuable or deliverable upon conversion of the
Preferred Shares. In addition, at the request of such Purchaser, the Company
will endeavor in good faith and as expeditiously as possible to obtain private
placement numbers for the Preferred Shares and the Common Stock issued upon
conversion of the Preferred Shares, assigned by the CUSIP Service Bureau of
Standard & Poors' ratings group and make such securities PORTAL and DTC
eligible.
10.12 HSR Act Filing. The Company shall prepare and file, and
cooperate with each Purchaser so that it may prepare and file, in each case
within five Business Days of a request by such Purchaser, notification and
report forms in compliance with the HSR Act, and shall otherwise fully comply
with the requirements of the HSR Act. The Company shall bear all of its own
expenses and all out-of-pocket expenses (including filing fees and reasonable
attorneys' fees, charges and expenses) of each Purchaser in connection with any
such preparation and filing.
10.13 Additional Registration Rights. The Company shall not
provide any registration rights with respect to its securities which are
inconsistent with those granted under the Registration Rights Agreement or grant
rights with respect to its securities for a "shelf" registration if similar
rights are not then provided to the Purchasers in the Registration Rights
Agreement.
40
10.14 Change of Control Offer.
(a) If a Change of Control (as defined below) occurs,
then the Company shall within 5 Business Days thereafter offer to purchase from
each Holder of Preferred Shares (a "Change of Control Offer"), and thereafter
shall purchase from each Holder which accepts such Change of Control Offer, all
(but not less than all) outstanding Preferred Shares then held by such Holder
pursuant to such Change of Control Offer at a purchase price equal to the
greater of: (A) the amount, if any, that each Holder of shares of Preferred
Stock would be entitled to receive per share of Common Stock in connection with
such Change of Control if such Holder of Preferred Stock had converted its
shares immediately prior to any relevant record date or payment in connection
with such Change of Control, or (B) $20.00 in cash per share of Common Stock
assuming such Holder of Preferred Stock had converted its shares of Preferred
Stock immediately prior to any relevant record date or payment in connection
with such Change of Control or otherwise immediately prior to the occurrence of
such Change of Control, not sooner than 20 days and not later than 40 days after
the date of such notice (subject to compliance with applicable securities laws);
provided, that notwithstanding anything to the contrary contained herein, any
payment required to be made in connection with the approval by the stockholders
of the Company of a transaction described in clauses (iv) and (v) of the
definition of "Change of Control" shall be made simultaneously with the
consummation of such transaction and any such payment shall not be required to
be made if such transaction does not occur. For the purposes of clause (A) of
the preceding sentence, if, in connection with a Change of Control, the holders
of shares of Common Stock are to receive securities of another Person that are
listed or admitted to trading on a national securities exchange or quoted in the
over-the-counter market, the amount that a Holder of shares of Preferred Stock
would be entitled to receive per share of Common Stock in connection with such
Change of Control shall be deemed to be equal to an amount which is 95% of the
Market Price of the securities to be received per share of Common Stock
calculated as of the Trading Day immediately preceding the occurrence of the
transaction contemplated by such Change of Control.
A "Change of Control" of the Company shall be deemed to have
occurred:
(i) At such time as any Person or "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) other than the
Principal Stockholders is or becomes the beneficial owner, directly or
indirectly, of outstanding shares of stock of the Company entitling
such Person or Persons to exercise 50% or more of the total votes
entitled to be cast at a regular or special meeting, or by action by
written consent, of the stockholders of the Company in the election of
directors (the term "beneficial owner" shall be determined in
accordance with Rule 13d-3 of the Exchange Act);
41
(ii) If a majority of the Board of Directors of the
Company shall consist of Persons other than Continuing Directors. The
term "Continuing Director" shall mean any member of the Board of
Directors on the First Closing Date, any director elected pursuant to
Section 10.10 and any other member of the Board of Directors who shall
be recommended or elected to succeed a Continuing Director by a
majority of Continuing Directors who are the members of the Board of
Directors;
(iii) If immediately after any merger, consolidation,
combination, reclassification or recapitalization or similar
transaction, the Principal Stockholders shall be the beneficial owner
(as such term is defined in clause (i) above), directly or indirectly,
of outstanding shares of stock of the Company (or any Person surviving
such transaction) entitling the Principal Stockholders to exercise 50%
or more of the total voting power of all classes of stock of the
Company (or the surviving Person in such transaction) entitled to vote
in the elections of the directors and, in anticipation of, in
connection with or as a result of, such transaction, the Company (or
such surviving Person) shall have incurred or issued additional
Indebtedness such that the total Indebtedness so incurred or issued
equals at least 50% of the consideration payable in such transaction;
provided, however, that any such transaction shall not be considered a
Change of Control if the Holders shall have participated therein on no
less than a pari passu basis (assuming conversion of all of the
Holders' Preferred Shares into Common Stock) with the Principal
Stockholders;
(iv) At such time as the stockholders of the Company
shall have approved a reorganization, merger or consolidation or
similar transaction, in each case, with respect to which all or
substantially all the Persons who were the beneficial owners of the
outstanding shares of capital stock of the Company immediately prior to
such reorganization, merger or consolidation, beneficially own,
directly or indirectly, less than 50% of the Voting Stock of the
Company (excluding the Voting Stock that the Holders of Preferred
Shares shall be entitled to receive as a result of such reorganization,
merger or consolidation) resulting from such reorganization, merger or
consolidation;
(v) At such time as the stockholders of the Company
shall have approved the sale or other disposition of all or
substantially all the assets of the Company in one transaction or in a
series of related transactions; or
(vi) If any transaction occurs, the result of which
is that the Common Stock is not required to be registered under Section
12 of the Exchange Act and that the holders of Common Stock do not
receive common stock of the Person surviving such transaction which is
required to be registered under Section 12 of the Exchange Act.
42
(b) The Change of Control Offer shall remain open
from the time of mailing until the purchase date set forth in the Notice of
Offer. The Notice of Offer shall be accompanied by a copy of the information
most recently required to be supplied under Section 10.1(a) and Section 10.1(b).
The Notice of Offer shall contain all instruments and materials necessary to
enable the Holders to tender Preferred Shares pursuant to the Change of Control
Offer. The Notice of Offer, which shall govern the terms of the Change of
Control Offer, shall state:
(i) that the Change of Control Offer is
being made pursuant to this Section 10.12 and that tendered Preferred
Shares will be purchased;
(ii) the purchase price and the date
designated for purchase;
(iii) that the Change of Control Offer is
being made for all (but not less than all) Preferred Shares held by a
Holder;
(iv) that the Preferred Shares purchased
pursuant to the Change of Control Offer shall cease to accrue dividends
or interest after the date designated for purchase;
(v) such other information respecting the
procedures for accepting the Change of Control Offer as the Company
shall include and such other information as may be required by law; and
(vi) that (unless otherwise required by law)
any Holder will be entitled to withdraw its election if the Company
receives, not later than the close of business on the third Business
Day next preceding the date scheduled for purchase, facsimile
transmission or letter setting forth the name of the Holder, the number
of Preferred Shares owned by such Holder (all of which shall have been
delivered for purchase) and a statement that such Holder is withdrawing
its election to have such Preferred Shares purchased.
(c) The Purchasers understand that the Credit
Agreement may not permit certain payments with respect to the Preferred Stock.
10.15 Proxy Statement and Meeting of Company's Stockholders.
(a) The Company shall call a meeting of its
stockholders (the "Stockholders' Meeting") as soon as reasonably practicable
after the date of this Agreement, for the purpose of voting upon approval of the
sale of the Second Preferred Shares pursuant to this Agreement and such other
related matters as it deems
43
appropriate. In connection with the Stockholders' Meeting, (i) the Company shall
prepare and file with the Commission a Proxy Statement and mail such Proxy
Statement to its stockholders, (ii) the Board of Directors of the Company shall
recommend to its stockholders the approval of the sale of the Second Preferred
Shares pursuant to this Agreement and (iii) the Board of Directors and officers
of the Company shall use their reasonable efforts to obtain such stockholders'
approval. Each Purchaser agrees to assist and cooperate with the Company in the
preparation of the Proxy Statement with respect to information therein
concerning any such Purchaser.
(b) The Company hereby represents, warrants and
agrees with the Purchasers that the Proxy Statement will not, at the time the
Proxy Statement is mailed, and at the date of the Stockholders' Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading, or to
correct any statement made in any earlier communication with respect to the
solicitation of any proxy or approval of the transactions contemplated by this
Agreement in connection with which the Proxy Statement shall be mailed. The
Company further represents, warrants and agrees that the Proxy Statement will
comply as to form in all material respects with the provisions of the Exchange
Act. The letter to stockholders, notice of meeting, proxy statement and form of
proxy, or any information statement filed under the Exchange Act, as the case
may be, that may be provided to stockholders of the Company in connection with
the transactions contemplated by this Agreement (including any supplements), and
any schedules required to be filed with the Commission in connection therewith,
as from time to time amended or supplemented, are collectively referred to as
the "Proxy Statement."
(c) The Company shall take all actions necessary in
accordance with the Delaware General Corporation Law and the bylaws of the
Company to duly call, give notice of, convene and hold the Stockholders' Meeting
within forty-five (45) calendar days after the date hereof.
(d) Each Purchaser hereby represents, warrants and
agrees with the Company that, solely with respect to information supplied in
writing by such Purchaser for inclusion in the Proxy Statement, the Proxy
Statement will not, at the time the Proxy Statement is mailed, and at the date
of the Stockholders' Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they are
made, not misleading, or to correct any such information previously supplied to
the Company.
10.16 Registration Rights Agreement. Prior to the First
Closing Date, the Registration Agreement as in effect on the date hereof shall
have been modified to incorporate the Purchasers on the terms set forth on
Exhibit B hereto and on such other
44
terms as the Purchasers may reasonably request (as so modified, the Registration
Agreement shall be referred to herein as the "Registration Rights Agreement").
Article 11
NEGATIVE COVENANTS
The Company hereby covenants and agrees with each Purchaser
and each Holder that so long as any Preferred Shares are outstanding:
11.1 Consolidations and Mergers. Except in connection with a
Change of Control, the Company shall not merge, consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions) all or substantially all of its assets (whenever
acquired), except the Company may consolidate or merge with or into, or sell all
or substantially all of its assets to, any Person if:
(a) The corporation or partnership formed by such
consolidation or surviving such merger or the Person which acquires all or
substantially all of the assets of the Company shall be (after giving effect to
such transaction) a Solvent corporation or partnership organized or formed, as
the case may be, and existing under, the laws of the United States, any state
thereof, or the District of Columbia and shall expressly assume in writing all
of the obligations of the Company under this Agreement, the Preferred Shares and
the Registration Rights Agreement;
(b) immediately after giving effect to such
transaction, no default under, or breach of, provisions of Articles 10 and 11
exists;
(c) the corporation or partnership formed by or
surviving any such transaction or the Person which acquires all or substantially
all of the assets of the Company shall have a Consolidated Net Worth at least
equal to 90% of the Consolidated Net Worth of the Company immediately prior to
such transaction; and
(d) the Company shall have furnished to the Holders
(i) an opinion of counsel satisfactory to a majority in interest of the Holders
addressing the matters (other than Solvency) set forth in clause (a) above and
(ii) the certificate of the Chief Financial Officer of the Company to the effect
that such transaction has been consummated in compliance with the foregoing
requirements; provided that nothing in this Section 11.1 shall affect the rights
of any Holder under this Agreement, the Preferred Shares or the Registration
Rights Agreement.
45
11.2 Transactions with Affiliates. The Company shall not, and
shall not permit any of its Subsidiaries to, enter into any transaction with any
Affiliate of the Company or of any such Subsidiary, unless approved by a
majority of the independent directors of the Company or is otherwise on
arm's-length terms.
11.3 No Inconsistent Agreements. Neither the Company nor any
of its Subsidiaries shall enter into any loan or other agreement, or enter into
any amendment or other modification to any currently existing agreement, which
by its terms restricts or prohibits the ability of the Company to issue Common
Stock upon conversion of the Preferred Stock in accordance with the Certificate
of Designation and this Agreement or to perform its obligations under this
Agreement or the Registration Rights Agreement; provided, that it will not be
considered to be a breach of this Section 11.3 if the Credit Agreement restricts
dividends on or the redemption of the Preferred Shares issued pursuant to this
Agreement.
Article 12
MISCELLANEOUS
12.1 Survival of Provisions. All warranties, representations
and covenants made by the Company in or under this Agreement shall be considered
to have been relied upon by each Purchaser and shall survive the execution and
delivery of this Agreement and the issuance to such Purchaser of the Preferred
Shares, regardless of any investigation made by or on behalf of such Purchaser.
All warranties, representations and covenants made by a Purchaser or on its
behalf shall survive the execution and delivery of this Agreement and the
issuance to such Purchaser of the Preferred Shares. Except as otherwise set
forth in Article 10 or 11, all of the representations and warranties made herein
and each of the provisions of Articles 7, 8, 9 and 12 shall survive the
execution and delivery of this Agreement, any investigation by or on behalf of a
Purchaser or any Affiliate, acceptance of the Preferred Shares and payment
therefor, payment or prepayment of the Preferred Shares upon redemption or
otherwise, conversion of the Preferred Shares or termination of this Agreement;
provided that the representations and warranties set forth in Articles 7 and 8
shall expire and terminate upon the earlier of (i) the conversion of all of the
Preferred Shares into Common Stock and (ii) ninety (90) days after the filing of
the Company's Form 10-K for the fiscal year ended December 31, 1999.
12.2 Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopier,
courier service or personal delivery:
46
(a) if to the Fund at the following address:
The 1818 Fund III, L.P.
c/o Brown Brothers Xxxxxxxx & Co.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xx. Xxxxxxxx X. Xxxxxx
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx Xxxxx, Esq.
(b) if to CIP at the following address:
Co-Investment Partners, L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.:
Attention: Xxxxxx X. Xxxx
with a copy to:
Kramer, Levin, Naftalis & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
(c) if to Erie Indemnity or Erie Exchange at the
following address:
c/o Erie Insurance Group
000 Xxxx Xxxxxxxxx Xxxxx
Xxxx, Xxxxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
47
(d) if to Aquila at the following address:
Aquila Limited Partnership
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
(e) if to the Company at the following address:
National Equipment Services, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxx Xxxxxxx
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Perl, Esq.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; when delivered
by courier, if delivered by commercial overnight courier service; five Business
Days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is acknowledged, if telecopied.
12.3 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
parties hereto. Each Purchaser may assign any of its rights under this
Agreement, the Preferred Shares or the Registration Rights Agreement to any of
its Affiliates. Subject to the restrictions of this Agreement, each Purchaser
may assign any of its rights under this Agreement (other than those set forth in
Section 10.1(c), (d) or (e), 10.2(b), 10.6, 10.9, 10.10 or 10.12), or the
Preferred Shares, or a portion thereof to any other Holder. Notwithstanding
anything to the contrary contained herein, each Purchaser may assign its rights
to purchase shares of Preferred Stock at the Second Closing pursuant to Section
2.1(b) (and the right to receive any fees pursuant to Section 2.3); provided,
that in no event shall such Purchaser be relieved of its obligation hereunder to
purchase any such shares of Preferred Stock at the Second Closing; provided,
further, that any such assignee of such rights shall be deemed to be a
"Purchaser" for all
48
purposes of this Agreement. The Company may not assign any of its rights under
this Agreement without the written consent of each Purchaser. Except as provided
in Article 9, no Person other than the parties hereto is intended to be a
beneficiary of this Agreement, the Preferred Shares or the Registration Rights
Agreement.
12.4 Amendment and Waiver. No failure or delay on the part of
the Company or any Purchaser in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to the Company or any Purchaser at law, in equity or otherwise. Any
amendment, supplement, modification or termination of or to any provision of
this Agreement, any waiver of any provision of this Agreement, and any consent
to any departure by the Company from the terms of any provision of this
Agreement, shall be effective only in the specific instance and for the specific
purpose for which made or given and shall be effective only when signed in
writing by or on behalf of holders of at least 51% of the Common Stock issued
and issuable upon conversion of the Preferred Shares (whether or not converted)
it being understood that the terms of this Agreement may be waived or amended
with the written consent of holders of at least 51% of the Common Stock issued
and issuable upon conversion of the Preferred Shares (whether or not converted).
Except where notice is specifically required by this Agreement, no notice to or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances.
12.5 Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
12.6 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
12.7 Determinations. Except where any provision expressly
requires that a determination be reasonable or a consent not be unreasonably
withheld, or be subject to qualifications to similar effect, all determinations
to be made by the Company, any Purchaser or any Holder hereunder in its opinion
or judgment or with its approval or otherwise shall be made by it in its sole
discretion.
12.8 Governing Law. This Agreement has been negotiated,
executed and delivered in the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of law.
49
12.9 Jurisdiction. Each party to this Agreement hereby
irrevocably agrees that any legal action or proceeding arising out of or
relating to this Agreement or any agreements or transactions contemplated hereby
may be brought in the courts of the State of New York located in New York City
or of the United States of America for the Southern District of New York and
hereby expressly submits to the personal jurisdiction and venue of such courts
for the purposes thereof and expressly waives any claim of improper venue and
any claim that such courts are an inconvenient forum. Each party hereby
irrevocably consents to the service of process of any of the aforementioned
courts in any such suit, action or proceeding by the mailing of copies thereof
by registered or certified mail, postage prepaid, to the address set forth in
Section 12.2, such service to become effective 10 days after such mailing.
12.10 Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired,
unless the provisions held invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions hereof.
12.11 Rules of Construction. Unless the context otherwise
requires, "or" is not exclusive, and references to Sections or subsections refer
to Sections or subsections of this Agreement.
12.12 Remedies. If a breach of this Agreement or the
Certificate of Designation by the Company or any of the Purchasers occurs and is
continuing, the Company or any Holder, as the case may be, may pursue any
available remedy by proceeding at law or in equity to enforce the performance
(including, without limitation, the specific performance) of any provision of
this Agreement or the Certificate of Designation. A Holder may maintain a
proceeding even if it does not possess any of the Preferred Shares or does not
produce any of them in the proceeding. Except as otherwise provided by law, a
delay or omission by the Company or any Holder, as the case may be, in
exercising any right or remedy accruing upon any such breach shall not impair
the right or remedy or constitute a waiver of or acquiescence in any such
breach. No remedy is exclusive of any other remedy. All available remedies are
cumulative.
12.13 Entire Agreement. This Agreement, together with the
Exhibits and Schedules hereto, the Certificate of Designation and the
Registration Rights Agreement, is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein or
therein. This Agreement, together with the Exhibits and
50
Schedules hereto, the Certificate of Designation, the Registration Rights
Agreement supersede all prior agreements and understandings between the parties
with respect to such subject matter.
12.14 Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, the Certificate of Designation or the
Registration Rights Agreement or any other document or instrument contemplated
hereby or thereby, or where any provision hereof or thereof is validly asserted
as a defense, the successful party shall be entitled to recover reasonable
attorneys' fees, charges and disbursements in addition to any other available
remedy.
12.15 Publicity. Except as may be required by applicable law
or regulation, no party hereto shall issue a publicity release or announcement
or otherwise make any public disclosure concerning this Agreement or the
transactions contemplated hereby, without prior approval by the other parties
hereto. If any announcement is required by law to be made by any party hereto,
prior to making such announcement such party will deliver a draft of such
announcement to the other parties and shall give the other parties an
opportunity to comment thereon.
12.16 Expenses. The Company acknowledges and agrees that if
the transactions contemplated hereby are consummated, the Company shall
reimburse such Purchaser for all (i) reasonable out-of-pocket expenses and all
consulting and legal fees and expenses and other charges of such Purchaser in
connection with the negotiation, execution and delivery of this Agreement, the
Preferred Shares and the Registration Rights Agreement (including, without
limitation, all fees, disbursements and related charges of Xxxx, Weiss, Rifkind,
Xxxxxxx & Xxxxxxxx) and (ii) reasonable fees and expenses of accountants for the
Purchasers in connection with accounting due diligence, and (iii) the reasonable
expenses incurred by the Purchasers, in connection with consulting services. All
such out-of-pocket fees and expenses incurred by the Purchasers prior to or in
connection with the Closing shall be paid at the Closing, and the Purchasers may
in their discretion offset the amount of such fees and expenses against the
Purchase Price of the Preferred Shares. Notwithstanding the foregoing, the
maximum amount of expenses to be reimbursed by the Company pursuant to this
Section 12.16 shall not exceed $250,000. The Company shall pay the reasonable
fees, out of pocket expenses and all expenses and other charges of each
Purchaser incurred in connection with any amendment to this Agreement, the
Certificate of Designation or the Registration Rights Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their respective representatives
hereunto duly authorized as of the date first above written.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
THE 1818 FUND III, L.P.
By: Xxxxx Brothers Xxxxxxxx & Co.,
General Partner
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: General Partner
CO-INVESTMENT PARTNERS, L.P.
By: CIP Partners, LLC, its
General Partner
By: /s/ Xxxxxx X. Xxxx
------------------------------------
Name: Xxxxxx X. Xxxx
Title: Individual Managing Member
ERIE INDEMNITY COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President,
Treasurer & Chief
Investment Officer
52
ERIE INSURANCE EXCHANGE
By: Erie Indemnity Company,
its attorney-in-fact
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President,
Treasurer & Chief
Investment Officer
AQUILA LIMITED PARTNERSHIP
By: Xxxxxxxx Management Company, LLC,
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
