--------------------------------------------------------------------------------
UNITED ROAD SERVICES, INC.
Shares of Series A
Participating Convertible Preferred Stock
STOCK PURCHASE AGREEMENT
Dated as of April 14, 2000
--------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
AGREEMENT made as of this 14th day of April, 2000 (the
"Agreement"), by and among United Road Services, Inc., a Delaware corporation
(the "Company"), and Blue Truck Acquisition, LLC, a Delaware limited liability
company (the "Investor").
W I T N E S S E T H:
WHEREAS, the Company wishes to issue and sell to the Investor,
and the Investor wishes to purchase from the Company, $25,000,000 worth of the
Company's authorized but unissued shares of the Company's Series A Participating
Convertible Preferred Stock, par value $.001 per share (the "Series A Preferred
Stock") having the rights and preferences set forth in the Certificate of
Designation (as defined herein), upon the terms and subject to the conditions
set forth herein;
WHEREAS, in connection with this Agreement and the
transactions contemplated hereby, the parties hereto, together with certain
other Persons, shall enter into other agreements ancillary hereto, including,
without limitation, the Investors' Agreement and the Registration Rights
Agreement (the "Ancillary Agreements"); and.
WHEREAS, simultaneously with the execution of this Agreement
the Company and Charter URS LLC ("Charterhouse") have entered into an amendment
to the Company's 8% Convertible Subordinated Debentures due 2008 (the
"Charterhouse Debentures") in the form of Exhibit A attached hereto.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the Investor and the
Company hereby agree as follows:
SECTION 1
TERMS OF PURCHASE AND ISSUANCE
1.1 Description of Series A Participating Convertible
Preferred Stock. The Company has authorized the issuance and sale to the
Investor of its Series A Preferred Stock for a per share purchase price (the
"Per Share Purchase Price") in the amount per share equal to the lesser of (A)
$2.00 and (B) an amount equal to the Thirty Day Average Share Price on the
Closing Date; provided, that if the Thirty Day Average Share Price is (A)
greater than or equal to $.84 per share but less than or equal to $1.00 per
share then the Per Share Purchase Price shall be $1.00, or (B) less than $.84
per share then the Per Share Purchase Price shall be 120% of the Thirty Day
Average Share Price; provided, further, that in the event the Company shall
effect a reverse stock split prior to the Closing each of the dollar amounts
described in this sentence shall be adjusted to equal the product obtained by
multiplying such dollar amount by the number of shares converted into one share
of Company Common Stock in the reverse stock split.
1.2 Sale and Purchase. At the Closing (as defined in Section
1.3 hereof) and subject to the terms and conditions herein set forth, the
Company shall issue
and sell to the Investor, and the Investor shall purchase from the Company, the
amount of shares of Series A Preferred Stock obtained by dividing $25,000,000
(the "Aggregate Purchase Price") by the Per Share Purchase Price.
1.3 Closing. The closing (the "Closing") of the sale and
purchase of the Series A Preferred Stock shall take place at the offices of
XxXxxxxxx, Will & Xxxxx, 000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, at 10:00
A.M., as promptly as practicable (and in any event no later than the third
business day) after the satisfaction or waiver of all the conditions set forth
in Sections 3 and 4 hereof or (b) at such other time, date or place as the
Investor and the Company may agree (the date upon which the Closing occurs, the
"Closing Date"). At the Closing, the Company will deliver the Series A Preferred
Stock in the form of a stock certificate issued in the Investor's name, against
payment of the full Purchase Price therefor in immediately available funds by
wire transfer by or on behalf of the Investor to the Company.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor that as of
the date hereof and as of the Closing Date:
2.1 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
carry on its business as it is now being conducted. The Company is duly
qualified to do business and is in good standing in each jurisdiction in which
the properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing could not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
2.2 Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of 35,000,000 shares of common stock, par
value $0.001 per share (the "Company Common Stock"), and 5,000,000 shares of
preferred stock, par value $0.001 per share ("Company Preferred Stock"). As of
the date hereof, (i) 17,851,649 shares of Company Common Stock are issued and
outstanding, all of which are validly issued and are fully paid, nonassessable
and free of preemptive rights, (ii) no shares of Company Common Stock and no
shares of Company Preferred Stock are held in the treasury of the Company, (iii)
2,260,402 shares of Company Common Stock are reserved for issuance pursuant to
the exercise of outstanding options and warrants to purchase Company Common
Stock and (iv) 5,499,596 shares of Company Common Stock are reserved for
issuance pursuant to the conversion of outstanding convertible debentures. There
are no shares of Company Preferred Stock issued and outstanding. Assuming the
exercise of all outstanding options and warrants to purchase Company Common
Stock, the conversion of all outstanding convertible debentures as of April 14,
2000, and the conversion of all of the Series A Preferred Stock (assuming a
conversion price for the Series A Preferred Stock of $1.679 per share) there
would be 40,571,789 shares of Company Common Stock issued and outstanding as of
the date hereof.
As of the date hereof, other than disclosed above or as listed
on Schedule 2.2 of the Company Disclosure Schedule, there are no outstanding
options, warrants, subscriptions, calls, convertible securities or other rights,
agreements, arrangements or commitments (contingent or otherwise) (including any
right of conversion or exchange under any outstanding security, instrument or
other agreement) obligating the Company to issue, deliver or sell, or cause to
be issued, delivered or sold, any shares of the capital stock of the Company or
obligating the Company to grant, extend or enter into any such agreement or
commitment. Except as disclosed on Schedule 2.2 of the Company Disclosure
Schedule, there are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or make any investment (in the form of a loan, capital contribution or
otherwise) in any other Person other than a subsidiary of the Company. Upon
consummation of the Closing as contemplated hereby, including receipt by the
Company of the Purchase Price, the Series A Preferred Stock owned by the
Investor will be validly issued, fully paid and nonassessable, and any shares of
capital stock issued upon the payment of dividends on the Series A Preferred
Stock or the conversion thereof in accordance with the terms thereof shall be
validly issued, fully paid and nonassessable.
2.3 Subsidiaries. Schedule 2.3 of the Company Disclosure
Schedule sets forth a complete list of the Company's direct and indirect
subsidiaries, including their respective jurisdictions of incorporation or
organization. Each direct and indirect subsidiary of the Company is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite power and authority to carry
on its business as it is now being conducted and each such subsidiary is
qualified to do business, and is in good standing, in each jurisdiction in which
the properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except as set forth on
Schedule 2.3 of the Company Disclosure Schedule and except where the failure to
be so qualified and in such good standing could not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect. All
of the outstanding shares of capital stock of each corporate subsidiary of the
Company are validly issued, fully, paid, nonassessable and free of preemptive
rights, and are owned, directly or indirectly, by the Company, free and clear of
any Liens, except that such shares are pledged to secure the Company's credit
facilities. There are no subscriptions or rights relating to the issuance of any
shares of capital stock of any such subsidiary of the Company, including any
right of conversion or exchange under any outstanding security, instrument or
agreement.
2.4 Power and Authority; Non-contravention; Government
Approvals.
(a) Power and Authority. The Company has all requisite
corporate power and authority to enter into this Agreement and, subject to the
Company Required Statutory Approvals (as defined in Section 2.4(c) hereof) and
the approval of the Company's stockholders (the "Company Stockholder Approval"),
to consummate the transactions contemplated hereby. This Agreement, the
Ancillary
Agreements and the transactions contemplated hereby and thereby have been
approved by the Board of Directors of the Company. Except as set forth on
Schedule 2.4(a) of the Company Disclosure Schedule, no other corporate
proceedings on the part of the Company are necessary to authorize the execution
and delivery of this Agreement and the Ancillary Agreements or, except for the
Company Required Statutory Approvals and the Company Stockholder Approval, the
consummation by the Company of the transactions contemplated hereby and thereby.
This Agreement and the Ancillary Agreements have been duly executed and
delivered by the Company, and assuming the due authorization, execution and
delivery by the other parties thereto, this Agreement and the Ancillary
Agreements constitute and, as of the Closing Date, will constitute valid and
legally binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as such enforcement may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting or relating to enforcement of creditors' rights
generally and (ii) general equitable principles, regardless of whether such
enforceability is considered in a proceeding at law or in equity. Neither the
Company nor any of its subsidiaries is in violation of any of the provisions of
their respective articles of incorporation, by-laws or equivalent organizational
documents in any material respect.
(b) Non-contravention. The execution and delivery of this
Agreement and the Ancillary Agreements by the Company does not violate, conflict
with or result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, could reasonably be expected
to constitute a default) under, or result in the termination, suspension,
revocation or cancellation of, or accelerate the performance required by, or
result in a right of termination, suspension, revocation or cancellation or
acceleration under, or result in the creation of any Lien, upon any of the
terms, conditions or provisions of (i) the respective charters or by-laws of the
Company or any of its subsidiaries, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
court, governmental authority or arbitration panel applicable to the Company or
any of its subsidiaries or any of their respective properties or assets, (iii)
except as set forth on Schedule 2.4(b)(iii) of the Company Disclosure Schedule
any note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or sublease or other instrument, obligation or
agreement of any kind to which the Company or any of its subsidiaries is now a
party or by which the Company or any of its subsidiaries or any of their
respective properties or assets may be bound or affected. The consummation by
the Company of the transactions contemplated hereby will not result in any
violation, conflict, breach, termination, suspensions, revocations,
cancellations, acceleration or creation of Liens under any of the terms,
conditions or provisions described in clauses (i) through (iii) of the preceding
sentence, subject (x) in the case of the terms, conditions or provisions
described in clause (ii) above, to obtaining (prior to the Closing) the Company
Required Statutory Approvals and the Company Stockholder's Approval and (y) in
the case of the terms, conditions or provisions described in clause (iii) above,
to obtaining (prior to the Closing) consents required from commercial lenders,
lessors or other third parties as specified in Section 2.4(b) of the Company
Disclosure Schedule. Excluded from the foregoing sentences of this paragraph (b)
insofar as they apply to the terms, conditions or provisions described in
clauses (ii) and (iii) of the first sentence of this paragraph (b) (and whether
resulting from such execution and delivery or consummation), are such
violations, conflicts, breaches, defaults, terminations, suspensions,
revocations, cancellations, accelerations or creations of Liens that could not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(c) Government Approvals. Except for (i) compliance with
any applicable requirements of the HSR Act and any comparable foreign filings or
approvals listed on Schedule 2.4(c) of the Company Disclosure Schedule; (ii)
compliance with any applicable requirements of the Securities Act and the
Exchange Act and (iii) such filings as may be required under any applicable
state securities or blue sky laws (the filings and approvals referred to in
clauses (i) through (iii) being herein referred to collectively as the "Company
Required Statutory Approvals"), and except as otherwise set forth on Schedule
2.4(c) of the Company Disclosure Schedule, no declaration, filing or
registration with, or notice to, or authorization, consent, approval, order or
permit of, any governmental or regulatory body or authority is necessary for the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby, other than such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, could not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
2.5 SEC Reports; Financial Statements.
(a) Since February 26, 1998, the Company has filed with
the SEC all forms, statements, reports and documents (including all exhibits,
post-effective amendments and supplements thereto) required to be filed by it
under each of the Securities Act and the Exchange Act (collectively, the
"Company SEC Reports"), all of which, as amended (if applicable) complied when
filed in all material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder. As of their respective
dates, the Company SEC Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The representation in the preceding
two sentences shall not apply to any misstatement or omission in any Company SEC
Report filed prior to the date of this Agreement which was superseded by an
amended or subsequent Company SEC Report filed prior to the date of this
Agreement.
(b) Each of the consolidated financial statements included
in the Company SEC Reports, together with the related notes and schedules
(collectively, the "Company Financial Statements"), has been prepared in
accordance with GAAP applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly presents the consolidated financial
position of Company and its subsidiaries as of the respective dates thereof and
the results of their operations and cash flow for the periods then ended, except
as otherwise noted therein and subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments and any other adjustments
described therein.
2.6 Absence of Undisclosed Liabilities. Except as set forth on
Schedule 2.6 of the Company Disclosure Schedule, the Company did not have at
September 30, 1999, and has not incurred since that date, any liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of any nature,
except (a) liabilities, obligations or contingencies (i) which are accrued or
reserved against in the Company Financial Statements contained in the SEC
Reports filed prior to the date hereof or
reflected in the notes thereto or (ii) which were incurred after September 30,
1999, and were incurred in the ordinary course of business and consistent with
past practices, (b) liabilities, obligations or contingencies which (i) are
incurred in the ordinary course of business or (ii) would not be disclosed on
the Company Financial Statements and (c) liabilities, obligations or
contingencies which are of a nature not required to be reflected in the Company
Financial Statements.
2.7 Absence of Certain Changes or Events. Since the date of
the most recent Company SEC Report filed prior to the date hereof that contains
consolidated financial statements of the Company and except as set forth on
Schedule 2.7 of the Company Disclosure Schedule, (a) there have been no events,
changes, or occurrences which have had, or are reasonably likely to have, a
Company Material Adverse Effect, (b) the Company and its subsidiaries have (i)
conducted their respective businesses in the ordinary and usual course, (ii) not
changed, in any material respect, the accounting methods or practices followed
by the Company, including, without limitation, any material change in any
assumption underlying, or method of calculating any bad debt, contingency or
other reserve or any material revaluation by the Company of any asset
(including, without limitation, any writing-down of the value of inventory or
writing-off of notes or accounts receivable), other than in the ordinary course
of business consistent with past practices, and (c) there has not been any (i)
(A) declaration, setting aside or payment of any dividend or distribution in
respect of any capital stock of the Company or any redemption, purchase or other
acquisition of any of its securities, (B) any split, combination,
reclassification, exchange or substitution of the capital stock or other
security of the Company or (C) any issuance of the Company's common stock at a
price which is below the average of the last reported sales price per share on
the Nasdaq National Market for the thirty consecutive trading days immediately
preceding such issuance, (ii) amendment of any term of any outstanding security
of the Company or any of its subsidiaries that would materially increase the
obligations of the Company or such subsidiary under such security, (iii) damage,
destruction or other casualty loss with respect to any asset or property owned,
leased or otherwise used by the Company or any of its subsidiaries, except for
such damage, destruction or loss that, individually or in the aggregate, could
not reasonably be expected to have a Company Material Adverse Effect, (iv)
incurrence, assumption or guarantee by the Company or any of its subsidiaries of
any indebtedness for borrowed money other than in the ordinary course of
business and consistent with past practices, except as incurred under facilities
existing as of the date of the most recent Company Financial Statement, (v)
making of any loan, advance or capital contribution to or investment in any
Person by the Company or any of its subsidiaries other than (A) loans, advances
or capital contributions to or investments in any wholly-owned subsidiary, (B)
loans or advances to the Company by any of its subsidiaries or (C) loans or
advances to employees of the Company or any of its subsidiaries made in the
ordinary course of business consistent with past practices, (vi) (A)
transactions, commitments, contracts or agreements entered into by the Company
or any of its subsidiaries relating to any material acquisition or disposition
of any assets or business or (B) modification, amendment, assignment,
termination or relinquishment by the Company or any of its subsidiaries of any
contract, license or other right that could be reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect, other than,
in either case, transactions, commitments, contracts or agreements modified,
amended, assigned, terminated, relinquished or expired in the ordinary course
of business consistent with past practices and those contemplated by this
Agreement, or (vii) other than in the ordinary course of business consistent
with past practice, any material increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement,
profit-sharing, stock option (including, without limitation, the granting of
stock options, stock appreciation rights, performance awards, or restricted
stock awards), stock purchase or other employee benefit plan, or any other
increase in the compensation payable or to become payable to any executive
officers or key employees of the Company or any of its subsidiaries.
2.8 Litigation. Schedule 2.8 of the Company Disclosure
Schedule sets forth a complete listing of all claims, actions, suits,
proceedings and investigations pending or, to the knowledge of the Company,
threatened in writing, by or against any of (i) the Company and its
subsidiaries, (ii) its or their respective properties, assets, rights or
businesses, or (iii) to the knowledge of the Company, any of its or their
officers or directors in connection with their businesses or affairs, in each
case which is (x) in the ordinary course of the Company and its subsidiaries and
could reasonably be expected, individually, to result in a liability to the
Company or any of its subsidiaries in excess of $50,000 or (y) outside the
ordinary course of business of the Company and its subsidiaries. There are no
claims, suits, actions or proceedings pending or, to the knowledge of the
Company, threatened against, relating to or affecting the Company, before any
court, governmental department, commission, agency, instrumentality or
authority, or any arbitrator that seek to restrain the consummation of this
transaction or which could reasonably be expected, either alone or in the
aggregate with all such claims, suits, actions or proceedings, to have a Company
Material Adverse Effect. Neither the Company nor any of its properties or assets
is subject to any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or authority or
arbitrator which prohibits or restricts the consummation of the transactions
contemplated hereby or could reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect.
2.9 No Violation of Law; Licenses; Permits and Registration.
Except as set forth on Schedule 2.9 of the Company Disclosure Schedule, neither
the Company nor any of its subsidiaries is in violation of, or has been given
notice or been charged with any violation of, any law, statute, order, rule,
regulation, ordinance or judgment (including, without limitation, any applicable
environmental law, ordinance or regulation) of any governmental or regulatory
body or authority or arbitration panel, except for violations which could not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Except as set forth on Schedule 2.9 of the Company
Disclosure Schedule, as of the date of this Agreement, no investigation or
review by any governmental or regulatory body or authority is pending or, to the
knowledge of the Company, threatened involving the Company or its subsidiaries,
nor has any governmental or regulatory body or authority indicated an intention
to conduct the same. Each of the Company and its subsidiaries has all material
permits, licenses, approvals, authorizations of and registrations under all
federal, state, local and foreign laws applicable to it, and from all applicable
governmental authorities as are required by the Company and its subsidiaries to
carry on their respective businesses as currently conducted.
2.10 Taxes. All material Tax Returns required to be filed
prior to the date hereof with respect to the Company and its subsidiaries or
their income, properties, franchises or operations have been timely filed. Each
such Tax Return has been prepared in material compliance with all applicable
laws and regulations, and all such Tax Returns are true and correct in all
material respects. The Company and its subsidiaries have duly paid in full or
made adequate provisions on the books of the Company and its subsidiaries in
accordance with GAAP for the payment of all Taxes for all past and current
periods. The liabilities and reserves for Taxes reflected in the Company balance
sheet included in the latest Company SEC Report filed prior to the date hereof
to cover all Taxes for all periods ending at or prior to the date of such
balance sheet have been determined in accordance with GAAP and there is no
material liability for Taxes for the Company and each subsidiary for any period
beginning after such date other than Taxes arising in the ordinary course of
business. The Company and its subsidiaries have withheld and paid all Taxes to
the appropriate governmental authorities required to have been withheld and paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party. Except as set forth on
Schedule 2.10 of the Company Disclosure Schedule, with respect to each taxable
period of the Company and its subsidiaries: (a) no material deficiency or
proposed adjustment which has not been settled or otherwise resolved for any
amount of Taxes has been asserted or assessed by any taxing authority against
the Company or any of its subsidiaries, other than a deficiency or an adjustment
being contested in good faith by appropriate proceedings and with respect to
which adequate reserves have been established on the books of the Company, (b)
the Company and its subsidiaries have not consented to extend the time in which
any Taxes may be assessed or collected by any taxing authority, (c) the Company
and its subsidiaries have not requested or been granted an extension of the time
for filing any Tax Return, (d) there is no action, suit, taxing authority
proceeding, or audit now in progress, or pending or, to the knowledge of the
Company, threatened against or with respect to the Company or any of its
subsidiaries regarding Taxes, and (e) there are no Liens for Taxes (other than
for current Taxes not yet due and payable) upon the assets of the Company or any
of its subsidiaries.
2.11 Labor and Employment Matters. Neither the Company nor any
of its subsidiaries is a party to or bound by any collective bargaining
agreement or any other agreement with a labor union, and, except as set forth on
Schedule 2.11 of the Company Disclosure Schedule to the Company's knowledge,
there has been no effort by any labor union during the 24-month period prior to
the date hereof to organize any employees of the Company or any of its
subsidiaries into one or more collective bargaining units. There is no pending
or, to the knowledge of the Company, threatened material labor dispute, strike
or work stoppage at the Company or any of its subsidiaries. All persons
classified by the Company or any of its subsidiaries as independent contractors
and/or leased employees satisfy the requirements of applicable law to be so
classified and neither the Company, nor any of its subsidiaries has any
obligation to provide benefits to any such person, whether or not under any
Company Plan (as such term is defined in Section 2.12 hereof).
2.12 Employee Benefit Plans; ERISA. Except as set forth on
Schedule 2.12(a) of the Company Disclosure Schedule, the Company and its
subsidiaries do not maintain or contribute to or have any obligation or
liability, actual or contingent, to or
with respect to, directly or indirectly, any employee benefit plans, programs,
arrangements or practices, including employee benefit plans within the meaning
set forth in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or other similar arrangements for the provision of
benefits to employees (such plans, programs, arrangements or practices of
Company and its subsidiaries being referred to as the "Company Plans").
With respect to each Company Plan, (i) no actions, suits or
claims (other than routine claims for benefits in the ordinary course) are
pending or, to the knowledge of the Company, threatened, (ii) to the knowledge
of the Company, no facts or circumstances exist that could give rise to any such
actions, suits or claims, and (iii) no events have occurred and no conditions
exist that would subject the Company or any of its subsidiaries, either directly
or indirectly, to any tax, fine, lien, penalty or other liability imposed by
ERISA, the Code or other applicable laws, rules and regulations. Neither Company
nor any of its subsidiaries has any obligation to create or contribute to any
additional such plan, program, arrangement or practice or to amend any such
plan, program, arrangement or practice so as to increase benefits or
contributions thereunder, except as required under the terms of the Company
Plans, or to comply with applicable law.
Neither the Company nor any of its subsidiaries contributes
to, maintains, or has an actual or contingent liability with respect to, or
sponsors any defined benefit pension plan and/or arrangement (whether or not
subject to Title IV of ERISA). All Company Plans are in compliance in all
material respects with the requirements prescribed by any and all statutes
(including ERISA and the Code) and all other applicable laws, rules and
regulations. Except as set forth on Schedule 2.12(b) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has any actual or
contingent liability in respect of the provision of post-employment or
post-retirement benefits, including, but not limited to, health and life
insurance benefits to any person (other than post-employment benefits provided
in accordance with the health care continuation provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, or comparable state law).
Other than as set forth on Schedule 2.12(c) of the Company
Disclosure Schedule, no Company Plan or other agreement or arrangement exists
that, as a result of the transaction contemplated by this Agreement, could
result in the payment to any present or former employee of the Company or its
subsidiaries of any money or other property or accelerate the time of, or
increase the amount of payment to which such person may otherwise be entitled,
or provide any other rights or benefits to any present or former employee of the
Company or its subsidiaries or any other person, whether or not such payment
would constitute a parachute payment within the meaning of Section 280G of the
Code. Except as set forth on Schedule 2.12(c) of the Company Disclosure
Schedule, no employee or former employee of the Company or any of its
subsidiaries will become entitled to any bonus, retirement, severance, job
security or similar benefit or enhancement of such benefit (including
acceleration of vesting or exercise of an incentive award) as a result of the
transactions contemplated hereby.
2.13 Title to and Condition of Assets. Except as set forth on
Schedule 2.13 of the Company Disclosure Schedule, each of the Company and its
subsidiaries has good and marketable fee title to, or, in the case of leased
properties and assets, has good and valid leasehold interests in, all of its
tangible properties and assets, real, personal and mixed, used or held for use
in, or which are necessary to conduct, the business of the Company and its
subsidiaries as currently conducted, free and clear of all Liens, other than (a)
any Liens for current taxes, payments of which are not yet delinquent, (b) such
imperfections in title and easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value, or interfere with the present use of the property subject thereto or
affected thereby, or otherwise materially impair the Company's business
operations (in the manner presently carried on by the Company), or (c) Liens
arising under the Company's credit facilities or any refinancing or replacement
thereof.
2.14 Brokers and Finders. Except with respect to KPS
Management LLC (as contemplated by Sections 5.1 and 5.7), Charter URS LLC and
Xxxxxxxxx, Xxxxxx & Xxxxxxxx, Securities Corporation ("DLJ") each of whose fees
will be paid by the Company, (a) the Company is not a party to or bound by any
contract, arrangement or understanding with any person or firm which may result
in the obligation of the Company to pay any finder's fees, brokerage or agent
commissions or other like payments in connection with the transactions
contemplated hereby and (b) there is no claim for payment by the Company of any
investment banking fees, finder's fees, brokerage or agent commissions or other
like payments in connection with the negotiations leading to this Agreement or
the consummation of the transactions contemplated hereby.
2.15 Intellectual Property.
(a) Except as could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, the Company
and each of its subsidiaries own or have a valid license to use each trademark,
patent or copyright (including any registrations or applications for
registration of any of the foregoing) necessary to carry on the business of the
Company and its subsidiaries, taken as a whole, as currently conducted
(collectively the "Company Intellectual Property"). To the knowledge of the
Company, neither the Company nor any of its subsidiaries has received any
complaint, assertion, threat or allegation or otherwise has notice of any claim,
lawsuit, demand, proceeding or investigation involving any such matters or
otherwise knows that any of the Company Intellectual Property is invalid or
conflicts with the rights of any third party.
(b) Except as set forth on Schedule 2.15(b) of the Company
Disclosure Schedule, the Company and each of its subsidiaries owns free and
clear of all Liens or has a valid license to use all computer software that is
material to the operation of its business as presently conducted.
2.16 Environmental Matters.
(a) (i) The Company and its subsidiaries have conducted
their respective businesses in material compliance with all applicable
Environmental Laws (defined in Section 2.16(b)), including, without limitation,
having all permits, licenses
and other approvals and authorizations necessary for the operation of their
respective businesses as presently conducted, (ii) except as set forth on
Schedule 2.16(a)(ii) of the Company Disclosure Schedule, none of the properties
currently or formerly owned or operated by Company or any of its subsidiaries
contain any Hazardous Substance (defined in Section 2.16(c)) as a result of any
activity of Company or any of its subsidiaries in amounts exceeding the levels
permitted by applicable Environmental Laws and, to the knowledge of the Company
and Xxxxxxx Xxxxxx, no such condition exists on any of the properties as a
result of any activity by any other Person, (iii) since May 6, 1998, neither
Company nor any of its subsidiaries has received any notices, demand letters or
requests for information from any Federal, state, local or foreign governmental
entity indicating that Company or any of its subsidiaries may be in material
violation of, or materially liable under, any Environmental Law in connection
with the ownership or operation of their businesses, (iv) there are no civil,
criminal or administrative actions, suits, demands, claims, hearings,
investigations or proceedings pending or, to the knowledge of the Employees (as
defined in Section 3.11) and Xxxxxxx Xxxxxx, threatened, against the Company or
any of its subsidiaries under any Environmental Law arising out of, or related
to, the current or past operation of business of the Company and its
subsidiaries, (v) no Hazardous Substance has been disposed of, released or
transported in violation of any applicable Environmental Law from any properties
owned by the Company or any of its subsidiaries as a result of any activity of
the Company or any of its subsidiaries during the time such properties were
owned, leased or operated by the Company or any of its subsidiaries, and (vi)
neither the Company, its subsidiaries nor any of their respective properties are
subject to any liabilities or expenditures (fixed or contingent) relating to any
suit, settlement, court order, administrative order, regulatory requirement or
obligation, judgment or claim asserted or arising under any Environmental Law,
except violations of the foregoing clauses (ii), (iv) or (vi) that, individually
or in the aggregate, could not reasonably be expected to result in a liability
to the Company or any of its subsidiaries in excess of $100,000 in the
aggregate.
(b) As used herein, "Environmental Law" means any Federal,
state, local or foreign law, statute, ordinance, rule, regulation, code,
license, permit, authorization, approval, consent, legal doctrine, order,
judgment, decree, injunction, requirement or agreement with any governmental
entity relating to (x) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface land, subsurface land, plant and
animal life or any other natural resource) or to human health or safety or (y)
the exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of Hazardous Substances, in each case as amended and as in effect on the Closing
Date. The term "Environmental Law" includes, without limitation, (i) the Federal
Comprehensive Environmental Response Compensation and Liability Act of 1980, the
Superfund Amendments and Reauthorization Amendments and Reauthorization Act, the
Federal Water Pollution Control Act of 1972, the Federal Clean Air Act, the
Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of
1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal
Solid Waste Disposal Act and the Federal Toxic Substances Control Act, the
Federal Insecticide, Fungicide and Rodenticide Act, and the Federal Occupational
Safety and Health Act of 1970, each as amended and as in effect on the Closing
Date, and (ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of,
effects of or exposure to any Hazardous Substance.
(c) As used herein, "Hazardous Substance" means any
substance presently listed, defined, designated or classified as hazardous,
toxic, radioactive, or dangerous, or otherwise regulated, under any
Environmental Law. Hazardous Substance includes any substance to which exposure
is regulated by any government authority or any Environmental Law including,
without limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial substance
or petroleum or any derivative or by-product thereof, radon, radioactive
material, asbestos, or asbestos containing material, urea formaldehyde foam
insulation, lead or polychlorinated biphenyls.
2.17 Material Contracts. The Company's SEC Reports filed prior
to the date hereof contain a complete list of all contracts, agreements,
licenses, notes, bonds, mortgages, guarantees, security agreements and
commitments, including all amendments and modifications thereto, to which the
Company or any of its subsidiaries is a party that are required to be disclosed
pursuant to Item 601 of Regulation S-K under the Securities Act (the "Material
Contracts") except as disclosed on Schedule 2.17(a). Except as disclosed on
Schedule 2.17(b) of the Company Disclosure Schedule, each Material Contract is
valid and binding on the Company and is in full force and effect. The Company
and each of its subsidiaries are not in breach or violation of or in default in
the performance or observance of any terms or provisions of, and no event has
occurred which, with lapse of time or action by a third party, could result in a
default under any Material Contract. To the knowledge of the Company, no other
party to any Material Contract is in breach thereof or default thereunder.
2.18 Insurance. Neither the Company nor any of its
subsidiaries is in default with respect to any policies or binders of fire,
liability, workmen's compensation, vehicular or life insurance held by the
Company and its subsidiaries or other types of policies customary for motor
vehicle and equipment towing, recovery and transport services (the "Company
Insurance Policies"), and neither has failed to give any notice or present any
claim under such policy or binder in due and timely fashion, except as could
not, individually or in the aggregate, reasonably be expected to have Company
Material Adverse Effect. Schedule 2.18(a) of the Company Disclosure Schedule
sets forth a list of the Company Insurance Policies, and Schedule 2.18(b) of the
Company Disclosure Schedule sets forth the loss-runs for the past five years in
respect thereof or, in the case of the Company's subsidiaries, since the date of
the Company's acquisition of such subsidiary. The Company Insurance Policies are
sufficient for the operation of the Company's business and are in full force and
effect. Except as set forth on Schedule 2.18(c) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has received a notice
of cancellation or non-renewal of any such policy or binder. Except for claims
disclosed on Schedule 2.18(d) of the Company Disclosure Schedule, there are no
outstanding unpaid claims under any such policy or binder and, to the knowledge
of the Company, none of the material unpaid claims disclosed on Schedule 2.18(d)
of the Company Disclosure Schedule have been denied. The Company
has not received notice of any inaccuracy in any application for such policies
or binders, any failure to pay premiums when due or any similar state of facts
which might form the basis for termination of any such insurance, except as
could not, individually or in the aggregate, reasonably be expected to result in
a Company Material Adverse Effect.
2.19 Securities Law Compliance. Assuming the representations
and warranties of the Investor set forth in Section 7 hereof are true and
correct in all material respects, the issuance and sale of the Series A
Preferred Stock pursuant to this Agreement will be exempt from the registration
requirements of the Securities Act. Except as set forth on Schedule 2.19 of the
Company Disclosure Schedule, neither the Company nor any Person acting on its
behalf has, in connection with the sale of the Series A Preferred Stock, engaged
in (i) any form of general solicitation or general advertising (as those terms
are used within the meaning of Rule 502(c) under the Securities Act), (ii) any
action involving a public offering within the meaning of Section 4(2) of the
Securities Act, or (iii) any action that would require the registration under
the Securities Act of the offering and sale of the Series A Preferred Stock
pursuant to this Agreement or that would violate applicable state securities or
"blue sky" laws.
2.20 Acquisition Obligations.
(a) Schedule 2.20(a) sets forth a true and correct list of
the Company's acquisitions since May 6, 1998.
Except as disclosed in the Company's SEC Reports filed prior
to the date hereof, there is no outstanding right, option or other agreement of
any kind which has or could reasonably be expected to have the effect of
requiring the Company to register any of the Company's common stock or preferred
stock or any other security of the Company, and there is no outstanding security
of any kind of the Company convertible into any such right. Except as set forth
on Schedule 2.20(b) of the Company Disclosure Schedule, there is no agreement of
any kind which has or could reasonably be expected to have the effect of
requiring the Company to keep effective a registration statement of the Company
effective as of or following the date hereof with respect to any of the
Company's common stock or preferred stock or any other security of the Company.
Except as disclosed in the Company's SEC Reports filed prior to the date hereof,
no Person has any right arising out of an acquisition by either the Company or
any of its subsidiaries to participate in, or receive any payment based on
revenue, income, value, net worth or other financial measure of the Company
and/or any of its subsidiaries or any component or portion thereof.
2.21 Fraud and Abuse; Absence of Certain Business Practices.
None of the Company or any of its subsidiaries nor any officer or director
thereof nor, to the knowledge of the Company, any other Person or entity acting
on behalf of any of the Company or any of its subsidiaries, acting alone or
together, has (A) received, directly or indirectly, any rebates, payments,
commissions, promotional allowances or any other economic benefits, regardless
of their nature or type, from or on behalf of any Person or entity with whom any
of the Company and its subsidiaries has done business directly or indirectly, or
(B) directly or indirectly, given or agreed to give any gift or similar benefit
to any Person or entity who is or may be in a position to help or hinder the
business of
any of the Company and its subsidiaries which, in the case of either clause (A)
or clause (B) above, could reasonably be expected to subject any of the Company
and its subsidiaries to any damage or penalty in any civil, criminal or
governmental litigation or proceeding.
2.22 Disclosure.
(a) No representation or warranty by the Company in this
Agreement and no statement contained in the schedules or exhibits or in any
certificate to be delivered pursuant to this Agreement, contains or will contain
any untrue statement of a material fact or omits or will omit to state any
material fact necessary, in light of the circumstances under which it was made,
in order to make the statements therein not misleading.
(b) The Investor has been furnished with, or given access
to, complete and correct copies of all agreements, instruments or documents,
together with any amendments or supplements thereto, set forth on, or underlying
the Company Disclosure Schedule.
SECTION 3
CONDITIONS OF PURCHASE
The Investor's obligation to purchase and pay for the Series A
Preferred Stock shall be subject to the fulfillment to the Investors'
satisfaction on or before the Closing Date of the following conditions:
3.1 Satisfaction of Conditions. The representations and
warranties of the Company contained in this Agreement shall be, if specifically
qualified by materiality or Company Material Adverse Effect, true in all
respects and, if not so qualified, shall be true in all material respects, in
each case on and as of the Closing Date with the same effect as if made on and
as of the Closing Date, other than representations and warranties expressly
stated to be made as of the date of this Agreement or of another date other than
the Closing Date, which shall be true and correct as of such date, and the
covenants and agreements contained in this Agreement to be complied with by the
Company on or before the Closing shall have been complied with in all material
respects. The Company shall have delivered to the Investor a certificate dated
the Closing Date to the foregoing effect.
3.2 Company Material Adverse Effect. There shall not have been
any event, occurrence or change that has had or could be reasonably expected,
individually or in the aggregate, to have a Company Material Adverse Effect
after the date of this Agreement and prior to the Closing Date.
3.3 Opinion of Counsel. The Investor shall have received an
opinion of counsel to the Company, dated the Closing Date, in substantially the
form of Appendix A attached hereto.
3.4 Authorization. The Board of Directors of the Company shall
have duly adopted resolutions in form reasonably satisfactory to the Investor
authorizing the Company to consummate the transactions contemplated hereby in
accordance with the terms hereof, and the Investor shall have received a duly
executed certificate of the Secretary of the Company setting forth a copy of
such resolutions, the Company's Certificate of Designations, Preferences and
Rights of Series A Preferred Stock (the "Certificate of Designations") and the
By-laws and such other matters as may be requested by the Investor.
3.5 Effectiveness of Preferred Stock Terms. The Board of
Directors of the Company shall have adopted a resolution establishing the terms
of the Series A Preferred Stock as set forth in Appendix B hereto and such
action shall have been made effective by the filing of a certificate of
designations with the Secretary of State for the State of Delaware.
3.6 Delivery Documents. The Company shall have executed and
delivered to the Investor (or shall have caused to be executed and delivered to
the Investor by the appropriate persons) the following:
(a) Newly issued stock certificates issued to the Investor
and evidencing the shares of the Series A Preferred Stock purchased by the
Investor;
(b) A copy of the certificate of incorporation of the
Company, as amended, certified as of the Closing Date by the Secretary of State
of the State of Delaware;
(c) A copy of the By-laws of the Company, as amended to
provide in a manner reasonably satisfactory to the Investor that a quorum for a
meeting of the Board of Directors of the Company shall require that a majority
of the total number of all directors be present and that at all times until the
holders of the Series A Preferred Stock and the Series B Participating
Convertible Preferred Stock (as such term is defined in the Certificate of
Designation) no longer have the right under the Investors' Agreement or the
Certificate of Designation to designate at least three of the Company's
directors, a majority of the directors present be Investor Directors (as such
term is defined in the Investors' Agreement), certified by the Company's
secretary; and
(d) Certificates issued by the Secretary of State of
Delaware certifying that the Company is in good standing.
3.7 HSR Compliance. The waiting period (and any extension
thereof) under the HSR Act applicable to the consummation of the transactions
under this Agreement shall have expired or been terminated.
3.8 Consents. All consents set forth on Schedule 2.4(b) of the
Company Disclosure Schedule and the consents, authorizations, orders and
approvals of (or filings or registrations with) any governmental commission,
board or other regulatory body required to consummate the transactions under
this Agreement shall have been obtained and be in effect at the Closing Date.
3.9 Compliance with Law. The issuance and sale of the Series A
Preferred Stock to the Investor shall be made in conformity with all applicable
state and federal securities laws.
3.10 Stockholder Approval. At a special meeting of the
stockholders of the Company entitled to vote (the "Special Meeting"), the
stockholders of the Company shall have approved the issuance to the Investor
pursuant to this Agreement of the Series A Preferred Stock (the "20% Issuance").
3.11 Employment Arrangements. Xxxxxx Xxxxxxx, Xxxxxx Xxxx,
Xxxxxxx Xxxxxxx and Xxxxxx Xxxxxx Xxxxxxxx XX (collectively, the "Employees")
shall have entered into employment agreements with the Company substantially on
the terms set forth on Exhibit B, which agreements shall supercede and terminate
any agreement between each of the Employees and the Company otherwise in effect
as of the Closing and the forms of such agreements shall have been agreed to by
the Investor and the Employees not later than forty-five days following the date
hereof.
3.12 No Order.
(a) No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the Closing or
any of the other transactions contemplated hereby shall be in effect.
(b) No stockholder of the Company shall have brought an
action in its own name or in the name of the Company which seeks a remedy (in
law or equity) as a result of or otherwise in connection with (i) this Agreement
and the transactions contemplated hereby or (ii) the Company's SEC Reports filed
prior to the Closing (each, a "Stockholder Suit").
3.13 Ancillary Agreements. The Company shall have duly
authorized, executed and delivered an Investors' agreement, substantially in the
form attached hereto as Exhibit C (the "Investors' Agreement"), and a
registration rights agreement, substantially in the form attached hereto as
Exhibit D.
3.14 Investor Directors. There shall have been elected to the
Board of Directors of the Company, the number of directors entitled to be
appointed by the Investor pursuant to and in accordance with the terms of the
Investors' Agreement and the Certificate of Designation.
3.15 Refinancing Company's Credit Facility. A refinancing or
replacement of the Company's existing credit facility shall be available at the
Closing providing for at least $25 million available for borrowing in addition
to the amount outstanding at Closing, all on terms and conditions reasonably
satisfactory to the Investor, it being understood that as to principal,
maturity, rate, fees and security the Investor acknowledges that an $80 million
principal amount (including a $10 million letter of credit facility), five year
maturity loan, with interest at LIBOR plus 3% and/or Prime plus 1-1/2% and a
$1.5 million closing fee and $200,000 annual agency fee, which
is secured by a first lien on substantially all of the assets of the Company and
its subsidiaries, will be acceptable to the Investor.
3.16 Restructuring of Charterhouse Debentures. The Company,
the Investor and Charterhouse shall have consummated an agreement for
restructuring of the Charterhouse Debentures in substantially the form of
Exhibit E hereto.
3.17 NASDAQ Listing. The Company's shares shall trade on the
NASDAQ National Market.
3.18 Modification of Certificate of Designation. The Company
agrees that, at the election of the Investor in its sole discretion made not
later than 15 days after the date hereof, the Company and the Investor shall
undertake to modify and amend the form Certificate of Designation so as to grant
the Investor the right to have issued to it, in lieu of the Series A Preferred
Stock and the Series B Preferred Stock, shares of a single class of the
Company's convertible preferred stock that will be the economic equivalent of
the Series A Preferred Stock and the Series B Preferred Stock and which will (i)
accumulate and compound preferred dividends, (ii) participate in any other
dividends declared or paid by the Company, and (iii) be convertible, on the
terms and conditions and into the same number of shares of Company Common Stock
as would have been the case had the Investor purchased and converted the Series
A Preferred Stock (and any Series B Preferred Stock issuable thereon) as
contemplated by the Certificate of Designation. The form of such modified and
amended Certificate of Designation shall be in a form acceptable to the Company,
the Investor and Charterhouse.
SECTION 4
CONDITIONS OF SALE
The Company's obligation to issue the Series A Preferred Stock
to the Investor and perform its other obligations hereunder shall be subject to
the fulfillment to the Company's satisfaction on or before the Closing Date of
the following conditions:
4.1 Satisfaction of Conditions. The representations and
warranties of the Investor contained in this Agreement shall be true in all
material respects on and as of the Closing Date with the same effect as if made
on and as of the Closing Date, other than representations and warranties
expressly stated to be made as of the date of this Agreement or as of another
date other than the Closing Date, which shall be true and correct as of such
date, and the covenants and agreements contained in this Agreement to be
compiled with by the Investor on or before the Closing shall have been complied
with in all material respects. The Investor shall have delivered to the Company
a certificate dated the Closing Date to the foregoing effect.
4.2 HSR Compliance. The waiting period (and any extension
thereof) under the HSR Act applicable to the consummation of the transactions
under this Agreement shall have expired or been terminated.
4.3 Consents. All consents, authorizations, orders and
approvals of (or filings or registrations with) any governmental commission,
board or other regulatory
body required to consummate the transactions under this Agreement shall have
been obtained and be in effect at the Closing Date.
4.4 Compliance with Law. The issuance and sale of the Series A
Preferred Stock to the Investor shall be made in conformity with all applicable
state and federal securities laws.
4.5 Stockholder Approval. At the Special Meeting the
stockholders shall have approved the 20% Issuance.
4.6 Refinancing Company's Credit Facility. A commitment letter
from a lender containing customary closing conditions (the "Commitment Letter")
shall have been received by the Company for a new credit facility with a group
of banks reasonably satisfactory to the Company in an amount sufficient to allow
for repayment of all amounts outstanding under the Company's existing credit
facility as of the Closing Date and to provide for a minimum of $25 million of
additional borrowings that are immediately available to the Company after giving
effect to such repayment, all on terms and conditions reasonably satisfactory to
the Company; provided, however, that this condition shall be deemed satisfied
only if the Investor shall have delivered to the Company such a Commitment
Letter on or prior to 45 days after the date hereof; provided, further, however,
that it shall not be considered a customary condition for the commitment to be
subject to any further business due diligence and it shall be considered
customary that the commitment be subject to material adverse change,
documentation and market conditions.
4.7 Certificates for Related Parties. At the Closing, the
Investor shall have delivered to the Company, in form and substance reasonably
satisfactory to the Company, certificates executed by each of the equity
interest holders in the Investor with respect to their investment intent and
qualification as accredited and sophisticated investors, and containing
representation and warranties for the benefit of the Company similar to those in
Section 7.1.
4.8 No Order.
(a) No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the Closing or
any of the other transactions contemplated hereby shall be in effect.
(b) No stockholder of the Company shall have brought an
action in its own name or in the name of the Company which seeks a remedy (in
law or equity) as a result of or otherwise in connection with this Agreement and
the transactions contemplated hereby.
4.9 Refinancing Company's Credit Facility. A refinancing or
replacement of the Company's existing credit facility shall be available at the
Closing providing for at least $25 million available for borrowing in addition
to the amount outstanding at Closing, all on terms and conditions reasonably
satisfactory to the Company, it being understood that as to principal, maturity,
rate, fees and security the
Company acknowledges that an $80 million principal amount (including a $10
million letter of credit facility), five year maturity loan, with interest at
LIBOR plus 3% and/or Prime plus 1-1/2% and a $1.5 million closing fee and
$200,000 annual agency fee, which is secured by a first lien on substantially
all of the assets of the Company and its subsidiaries, will be acceptable to the
Company.
SECTION 5
COVENANTS
5.1 Annual Management Fee. Commencing as of the Closing Date,
the Company will pay KPS Management LLC an annual management fee of (a)
$1,000,000, payable in arrears in quarterly installments on the last day of each
calendar quarter, as long as holders of the Series A Preferred Stock have the
right under the Investors' Agreement or the Certificate of Designation to
designate a majority of the Company's directors or (b) $500,000, payable in
arrears in quarterly installments on the last day of each calendar quarter for
as long as the Investor has the right under the Investors' Agreement or the
Certificate of Designation to designate at least three of the Company's
directors. The Company shall not be obligated to pay (but such amounts shall
accrue with interest at an annual rate of [Prime plus 1-1/2%]) the annual
management fee if the Company shall be in default under its senior credit
facility unless such payment is otherwise permitted thereby. No management fee
will be paid or accrue to KPS Management LLC if the Investor does not have the
right under the Investors' Agreement or the Certificate of Designation to
designate at least three Directors.
5.2 Expenses.
(a) If the Closing occurs, the Company will pay the actual
reasonable fees and expenses incurred by the Investor in connection with the
negotiation, execution, delivery and performance of this Agreement and the
agreements, documents and instruments contemplated hereby or executed pursuant
hereto (including the reasonable fees and expenses of counsel, accountants and
other representatives engaged by the Investor in connection with such
transactions) ("Transaction Expenses").
(b) If this Agreement is terminated for any reason, other
than a material breach of any representation, warranty, covenant or agreement on
the part of the Investor set forth in this Agreement, the Company shall
reimburse the Investor for its Transaction Expenses in an amount not to exceed
$400,000 within five days after receiving documentation evidencing such fees,
except that if this Agreement is terminated pursuant to Section 8.4(d) or
Section 8.4(h) the maximum amount shall be $750,000.
(c) If this Agreement is terminated pursuant to Sections
8.4(f), (g) or (i), then the Company shall pay to the Investor a fee not later
than the time of such termination, in cash of $3,000,000 less the amount of
Transaction Expenses of the Investor theretofore reimbursed by the Company (the
"Breakup Fee"). If (i) on or after the date hereof but before the Special
Meeting (A) any Person or group shall have informed the Company that such Person
or group or any member or Affiliate thereof proposes, intends to propose, is
considering proposing, or will or may, if the 20%
Issuance is delayed, abandoned or not approved by the Company's stockholders,
propose a Superior Proposal or (B) any such Person or group or the Company
publicly announces (including any filing with any federal or state office or
agency) that such Person or group or any member or Affiliate thereof has
proposed, intends to propose, is considering proposing, or will or may, if the
20% Issuance is delayed, abandoned or not approved by the Company's
stockholders, propose a Superior Proposal and (ii) either the Company or the
Investor terminates this Agreement pursuant to Section 8.4(h), and, not later
than six months after such termination, the Company shall enter into a
definitive purchase agreement with respect to a Competing Transaction with such
Person or group or a member or Affiliate thereof that constitutes a Superior
Proposal (the "Alternative Definitive Agreement"), the Breakup Fee shall be paid
by the Company to the Investor if, as and when (whether or not within the six
month period referred to above) the Company shall consummate the transactions
contemplated by the Alternative Definitive Agreement.
(d) Notwithstanding anything to the contrary contained
herein, the Company will pay the fees and expenses incurred by the Company or
any of its subsidiaries in connection with the negotiation, execution, delivery
and performance of this Agreement and the agreements, documents and instruments
contemplated hereby or executed pursuant hereto (including the fees and expenses
of counsel, accountants and other representatives engaged by the Company or any
of its subsidiaries in connection with such transactions).
5.3 Conduct of Business by the Company Pending the Closing.
The Company covenants and agrees that, prior to the Closing Date or earlier
termination of this Agreement as provided herein, unless the Investor shall
otherwise agree in writing and except as contemplated by this Agreement:
(a) the Company shall, and shall cause its subsidiaries
to, act and carry on their respective businesses in the ordinary course of
business substantially consistent with past practice and use its and their
respective reasonable best efforts to preserve substantially intact their
current material business organizations, keep available the services of their
current officers and employees (except for terminations of employees in the
ordinary course of business) and preserve their material relationships with
others having significant business dealings with them;
(b) the Company shall not (i) create any new class of
shares having a preference with respect to dividends and/or liquidation over or
on parity with the Series A Preferred Stock, (ii) increase the authorized number
of shares of Series A Preferred Stock, (iii) (A) declare, set aside, pay or
effect any dividend or other distribution or payment in cash, stock or property
in respect of any of its shares of capital stock, provided, that the Company may
implement a reverse stock split of the Company Common Stock substantially on the
terms and conditions set forth in the Company's Preliminary Proxy Statement as
filed with the SEC on March 30, 2000, or (B) split, combine, reclassify,
exchange or substitute any of the capital stock or other security of the
Company, (iv) sell a majority of its assets in one or a series of related
transactions, or effect any merger, consolidation or combination of the Company
with another Person, or (v) effect any tender or exchange offer involving the
Company's equity securities or any
security convertible into, exchangeable for, or that otherwise gives the holder
the right to obtain, equity securities of the Company;
(c) neither the Company nor any of its subsidiaries shall
(i) except as expressly permitted by Section 5.3(j) and except for shares issued
upon the exercise of stock options outstanding as of the date hereof, issue,
grant, sell, pledge or transfer or agree or propose to issue, grant, sell,
pledge or transfer any shares of capital stock, stock options, warrants, debt or
equity securities or rights of any kind or rights to acquire any such shares,
securities or rights of the Company, any of its subsidiaries or any successor
thereto, (ii) acquire directly or indirectly by redemption or otherwise any
shares of the capital stock of the Company or its subsidiaries of any class or
any options, warrants or other rights to purchase any such shares except for
employee stock options, "holdback" shares which revert to the Company under the
terms of the agreements pursuant to which the Company made the acquisitions set
forth on Schedule 2.20(a) of the Company Disclosure Schedule, or as otherwise
provided in this Agreement, or (iii) enter into or modify any contract,
agreement, commitment or arrangement with respect to any of the foregoing;
(d) neither the Company nor any of its subsidiaries shall
make any material change in its accounting principles or methods, except as may
be required by a change in GAAP or a change in any rule or regulation of the
SEC;
(e) neither the Company nor any of its subsidiaries shall
acquire or agree to acquire by merging or consolidating with, or by purchasing a
substantial portion of the stock or assets of, or by any other manner, any
Person;
(f) neither the Company nor any of its subsidiaries shall
sell, lease, license, mortgage or otherwise encumber or subject to any Lien or
otherwise dispose of any of its property or assets except for (x) assets
acquired after the date hereof in accordance with the terms of this Agreement
and which become subject to Liens pursuant to the Company's existing credit
facilities, (y) vehicles or equipment acquired or leased after the date hereof,
and (z) the sale of any assets in one or a series of transactions with a book
value lower than $50,000 individually and $3,000,000, in the aggregate;
(g) except as set forth in Schedule 5.3(g) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries shall
acquire or agree to acquire any assets, other than inventory, vehicles or
equipment in the ordinary course of business consistent with past practice, that
are material, individually or in the aggregate, to the Company and its
subsidiaries, taken as a whole, or make or agree to make any capital
expenditures except capital expenditures which, in the aggregate, do not exceed
$4,000,000 per fiscal quarter;
(h) neither the Company nor any of its subsidiaries shall
(i) (A) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another Person except for guaranties by the Company of
obligations of the Company's subsidiaries, or of independent contractors
providing services to the Company in the ordinary course of business (B) issue
or sell any debt securities or warrants or other rights to acquire any debt
securities of the Company or any of its subsidiaries, (C) guarantee any debt
securities of another person, (D) enter into any "keep well" or other agreement
to maintain any financial statement condition of another person or (E) enter
into any arrangement having the economic effect of any of the foregoing, except
for (x) draw-downs by the Company incurred in the ordinary course of business
consistent with past practice under currently existing indebtedness agreements
or (y) any indebtedness in an aggregate amount not to exceed $5,000,000, or (ii)
make any loans, advances or capital contributions to, or investments in, any
other Person, other than to the Company or any direct or indirect wholly-owned
subsidiary of the Company;
(i) neither the Company nor any of its subsidiaries shall
adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or reorganization or resolutions
providing for or authorizing such a liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or reorganization, other than
internal restructurings or reorganizations undertaken for operational purposes
only;
(j) except in the ordinary course of business consistent
with past practice, neither the Company nor any of its subsidiaries shall adopt,
establish, enter into, terminate, withdraw from or amend (except as may be
required by law) any bonus, profit sharing, thrift compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment or
other employee benefit plan, agreement, trust, fund or other arrangement for the
benefit or welfare of any employee, director or former director or employee, or
increase the compensation or fringe benefits of or loan or advance money or
other property to any director, employee or former director or employee or pay
any benefit not required by any existing plan, arrangement or agreement;
(k) except in the ordinary course of business consistent
with past practice, neither the Company nor any of its subsidiaries shall grant
to employees any new or modified severance (except for increases in severance
granted to employees other than executive officers in the ordinary course of
business which are immaterial individually and in the aggregate) or termination
arrangement or increase or accelerate any benefits payable under its severance
or termination pay policies in effect on the date hereof;
(l) neither the Company nor any of its subsidiaries shall
engage in any transaction with, or enter into any agreement, arrangement, or
understanding with, directly or indirectly, any of the Company's or its
subsidiaries' Affiliates, including, without limitation, any transactions,
agreements, arrangements or understandings with any affiliate or other Person
covered under Item 404 of Regulation S-K under the Securities Act that would be
required to be disclosed under such Item 404, except pursuant to agreements,
arrangements or understandings existing as of the date hereof and disclosed on
Schedule 5.3(l) of the Company Disclosure Schedule or in the Company's SEC
Reports filed prior to the date hereof;
(m) neither the Company nor any of its subsidiaries shall
authorize any, or commit or agree to do any of the things described in clauses
(a) through (l).
5.4 Public Announcements. The initial press release relating
to this Agreement shall be a joint press release the text of which has been
agreed to by each of the Investor and the Company. Thereafter, each of the
Investor and the Company shall consult with the other before issuing any press
release with respect to this Agreement or any of the transactions contemplated
hereby.
5.5 Company Stockholders' Meeting. The Company shall use its
best efforts to take all actions necessary or advisable and permitted by
applicable Law to (i) hold a stockholders' meeting as promptly as practicable
for the purpose of voting upon the approval of the issuance of the Series A
Preferred Stock pursuant to the terms of the Certificate of Designations, (ii)
recommend that the stockholders of the Company vote to approve the 20% Issuance,
and (iii) secure the requisite vote or consent of stockholders for the 20%
Issuance.
5.6 No Solicitation of Transactions.
(a) The Company will not, directly or indirectly, and will
cause its subsidiaries and affiliates, and their respective officers, directors,
employees, investment bankers, attorneys, accountants and other advisers or
representatives (collectively, the "Representatives") not to, directly or
indirectly, solicit, initiate or encourage (including by means of furnishing
non-public information), or take any other action to facilitate, any inquiries
or the making of any proposal or offer that constitutes, or may reasonably be
expected to lead to, any Competing Transaction, or enter into or maintain or
continue discussions or negotiate with any Person in furtherance of such
inquiries or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or authorize or permit any of its subsidiaries or any
Representative retained by it to take any such action.
(b) Notwithstanding the foregoing, (i) the Company may, in
response to an unsolicited bona fide written offer or proposal with respect to a
proposed Superior Proposal and pursuant to a confidentiality agreement no less
favorable to the Company than the Investor Confidentiality Agreement, furnish
confidential or non-public information to a financially capable Person (a
"Potential Acquirer") and negotiate with such Potential Acquirer if the Board of
Directors of the Company, after consulting with its outside legal counsel,
determines in good faith that the failure to provide such confidential or
non-public information to or negotiate with such Potential Acquirer would be
reasonably likely to constitute a breach of its fiduciary duty to the Company's
stockholders, and (ii) the Company's Board of Directors may recommend to the
Company's stockholders that they accept such Superior Proposal or otherwise take
and disclose to the Company's stockholders a position contemplated by Rule 14e-2
under the Exchange Act. It is understood and agreed that negotiations and other
activities conducted in accordance with this Section 5.6(b) shall not constitute
a violation of Section 5.6(a).
(c) The Company shall promptly, but in any event within
two days, advise the Investor in writing of any Competing Transaction or any
inquiry regarding the making of a Competing Transaction, including any request
for information, the material terms and conditions of such request, Competing
Transaction or inquiry and
the identity of the Person making such request, Competing Transaction or
inquiry. The Company shall keep the Investor reasonably informed of the status
and details, including any amendments or proposed amendments, of any such
request, Competing Transaction or inquiry.
5.7 Transaction Fee. At the Closing, the Company will pay KPS
Management LLC a transaction fee of $2,500,000.
5.8 All Reasonable Efforts; Agreement to Cooperate.
(a) Subject to the terms and conditions herein provided,
each of the parties hereto shall use all reasonable efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement. Each of the Investor
and the Company shall as promptly as practicable after the date hereof, file a
Notification and Report Form under the HSR Act with the Federal Trade Commission
and the Antitrust Division of the Department of Justice and each of the Investor
and the Company shall promptly respond to any request for additional information
pursuant to the HSR Act.
(b) Without limiting the generality of the foregoing, and
notwithstanding anything in this Agreement to the contrary, the Company shall
use its reasonable best efforts to take or cause to be taken all reasonable
action and to do, or cause to be done, and to assist and cooperate with the
other parties hereto in doing, all things necessary, proper or advisable to
obtain all consents, amendments to or waivers from other parties under the terms
of all Material Contracts and other material leases, agreements, indentures,
instruments, permits, concessions, franchises or licenses applicable to the
Company or its subsidiaries required as a result of the transactions
contemplated by this Agreement and obtain all necessary consents, approvals and
authorizations as are required to be obtained under any federal or state law or
regulation.
(c) Without limiting the generality of the foregoing, and
notwithstanding anything in this Agreement to the contrary, the Investor will
use its commercially reasonable efforts to take or cause to be taken, all
reasonable action and to do, or cause to be done, and to assist and cooperate
with the other parties hereto in doing, all things necessary, proper or
advisable to obtain a refinancing or replacement of the Company's existing
credit facility in an amount sufficient to repay all amounts outstanding under
the Company's existing credit facility as of the Closing Date and to provide for
a minimum of $30 million of additional borrowings that are immediately available
to the Company after giving effect to such repayment. Nothing in this Section
5.8(c) shall require the Investor to agree to any modification of the
Certificate of Designation, this Agreement or any of the Ancillary Agreements or
make an investment in the Company that is greater than the amount contemplated
hereby.
SECTION 6
CONFIDENTIALITY; ACCESS
6.1 Existing Agreement. The existing confidentiality
agreement between Investor and the Company (the "Investor Confidentiality
Agreement") shall remain in full force and effect until the Closing; provided,
however, that in the event of a conflict between (i) this Agreement and the
Ancillary Agreements and (ii) the Investor Confidentiality Agreement, this
Agreement and the Ancillary Agreements shall supersede the Investor
Confidentiality Agreement.
6.2 Access; Notification of Certain Matters.
(a) Upon reasonable notice, the Company shall afford the
Investor and its representatives and representatives of all prospective sources
of financing reasonable access during normal business hours to the offices,
properties, books, records and personnel of the Company and its subsidiaries and
such additional information concerning the business and properties of the
Company and its subsidiaries as the Investor and its representatives may
reasonably request. The Company shall instruct its and its subsidiaries'
employees, counsel and financial advisors to cooperate with the Investor in its
investigation of the business of the Company and its subsidiaries.
(b) The Company shall, promptly (and in any event within
five (5) business days) after obtaining knowledge of any of the following
occurring subsequent to the date of this Agreement and prior to the Closing
Date, notify the Investor of: (i) any material claims, actions, proceedings, tax
audits or investigations commenced or, to its knowledge, threatened in writing,
involving or affecting the Company or any of its subsidiaries or any of their
properties or assets, which if adversely resolved could reasonably be expected
to have a Company Material Adverse Effect, (ii) any notice of, or other written
communication relating to, a default or event which, with notice or lapse of
time or both, could reasonably be expected to become a default, received by the
Company or any of its subsidiaries, under any agreement, contract, lease,
indenture, permit, concession, franchise, license or other instrument to which
the Company or any of its subsidiaries is a party where such a default has had
or could reasonably be expected, individually or in the aggregate, to have a
Company Material Adverse Effect, (iii) any material event or emergency outside
the normal course of the business of the Company or any of its subsidiaries,
including, without limitation, any instances of wrongful injury or wrongful
death involving the Company or any of its subsidiaries, or otherwise of a nature
that would reasonably be expected to customarily be reported at a meeting of the
Board of Directors of the Company or of any of its committees, or (iv) any
governmental complaints, investigations, proceedings or hearings (or
communications indicating that the same may be contemplated) relating to either
the Company or any of its subsidiaries that are of a nature which would
customarily be reported at a meeting of the Board of Directors of the Company or
any of its committees.
6.3 Management Rights. In addition to the Investor's rights
set forth in the Investors' Agreement, and in no way limiting such rights, the
Investor shall have the following rights:
(a) Consultation with Management. During the period after
the Closing until Investor no longer owns any stock of the Company (the
"Consultation Period"), the Company shall permit the Investor at all reasonable
times and at the Company's expense, to discuss the Company's business and
affairs with its officers, directors and independent accountants.
(b) Proposals and Recommendations. During the Consultation
Period, the Investor shall be entitled, from time to time, to make proposals,
recommendations and suggestions to the Company relating to the business and
affairs of the Company; provided, however, that failure by the Company to accept
such proposals, recommendations or suggestions shall not be considered a breach
of this Agreement or the Ancillary Agreements by the Company.
(c) Examination of Books. During the Consultation Period,
the Company shall permit the Investor at all reasonable times and at the
Investor's expense, to examine such books, records, documents and other written
information in the possession of the Company relating to its affairs as the
Investor may reasonably request.
(d) Inspection of Properties. During the Consultation
Period, the Company shall permit the Investor, at all reasonable times and at
the Investor's expense, to visit and inspect the Company's properties.
SECTION 7
INVESTOR REPRESENTATIONS
7.1 Representations. It is the understanding of the Company,
and the Investor hereby represents and warrants to the Company with respect to
the Investor's purchase of Series A Preferred Stock hereunder that:
(a) The execution of this Agreement has been duly
authorized by all necessary action on the part of the Investor, has been duly
executed and delivered by the Investor, and constitutes a valid, binding
agreement of the Investor, enforceable in accordance with its terms.
(b) The Investor is acquiring the Series A Preferred Stock
for its own account, for investment, and not with a view to any "distribution"
thereof within the meaning of the Securities Act.
(c) The Investor understands that because the Series A
Preferred Stock has not been registered under the Securities Act, it cannot
dispose of any or all of the Series A Preferred Stock unless such securities are
subsequently registered under the Securities Act or exemptions from such
registration are available. The Investor understands that each certificate
representing the Series A Preferred Stock will bear the following legend or one
substantially similar thereto:
The securities represented by this certificate have not been
registered under the Securities Act. These securities have
been acquired for investment and not with a view to
distribution or resale, and may not be sold or otherwise
transferred without an effective registration statement for
such securities under the Act or the availability of an
exemption from such registration requirements.
(d) The Investor is sufficiently knowledgeable and
experienced in the making of special situation investments so as to be able to
evaluate the risks and merits of its investment in the Company, and is able to
bear the economic risk of loss of its investment in the Company.
(e) The Investor has been advised that none of the Series
A Preferred Stock has been registered under the Securities Act or under the
"blue sky" laws of any jurisdiction and that the Company, in issuing the Series
A Preferred Stock is relying upon, among other things, the representations and
warranties of the Investor contained in this Section 7.
(f) Except for KPS Management LLC, no broker, finder,
agent or similar intermediary has acted on behalf of the Investor in connection
with this Agreement or the transactions contemplated hereby and except as set
forth in Sections 2.14, 5.1 and 5.7, there are no brokerage commissions,
finder's fees or similar fees or commissions payable in connection therewith.
SECTION 8
INDEMNIFICATION AND TERMINATION
8.1 Indemnification, Fees and Expenses.
(a) Each party shall indemnify, defend, and hold the other
party harmless against all liability, losses, claims, charges, actions, suits,
proceedings, penalties, fines, settlements, judgments or damages, together with
all reasonable costs and expenses related thereto (including reasonable legal
and accounting fees and expenses) (collectively, "Losses"), arising from the
breach of any of its representations, warranties, covenants or agreements
contained in this Agreement.
(b) The Company shall indemnify, defend, and hold the
Investor harmless against all Losses arising from any Stockholder Suit
instituted prior to the Closing of which the Investor did not have knowledge at
the Closing or instituted after the Closing.
(c) All indemnification obligations under this Section 8
shall be net of any insurance proceeds received by the indemnified party in
respect of the event or circumstance giving rise to the claim for
indemnification.
8.2 Indemnification Procedure. Whenever a claim shall arise
for indemnification under Section 8.1, the party entitled to indemnification
(the "Indemnified Party") shall give notice to the other party (the
"Indemnifying Party") of any matter that the Indemnified Party has determined
has given or could give rise to a right of indemnification under this Agreement
within 30 days after the Indemnified Party first
learns of such claim, stating the amount of the Loss, if known, and method of
computation thereof, and containing a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises, provided, however, that the failure to provide such notice shall not
release the Indemnifying Party from any of its obligations under Section 8.1
except to the extent the Indemnifying Party is materially prejudiced by such
failure and shall not relieve the Indemnifying Party from any other obligation
or liability that it may have to any Indemnified Party otherwise than under
Section 8.1. The obligations and liabilities of the Indemnifying Party under
Section 8.1 with respect to Losses arising from claims of any third party which
are subject to the indemnification provided for in Section 8.1 ("Third Party
Claims") shall be governed by and contingent upon the following additional terms
and conditions: if an Indemnified Party shall receive notice of any Third Party
Claim, the Indemnified Party shall give the Indemnifying Party notice of such
Third Party Claim following receipt by the Indemnified Party of such notice in
the time frame provided above; provided, however, that the failure to provide
such notice shall not release the Indemnifying Party from any of its obligations
under Section 8.1 except to the extent the Indemnifying Party is materially
prejudiced by such failure and shall not relieve the Indemnifying Party from any
other obligation or liability that it may have to any Indemnified Party
otherwise than under Section 8.1. The Indemnifying Party shall be entitled to
assume and control the defense of such Third Party Claim at its expense and
through counsel of its choice if it gives notice of its intention to do so to
the Indemnified Party within ten days of the receipt of such notice from the
Indemnified Party; provided, however, that if there exists or is reasonably
likely to exist a conflict of interest that would prevent the same counsel from
representing both the Indemnified Party and the Indemnifying Party, then the
Indemnified Party shall be entitled to retain its own counsel, at the expense of
the Indemnifying Party provided that no more than one law firm (plus any local
counsel required) is so retained. In the event the Indemnifying Party exercises
the right to undertake any such defense against any such Third Party Claim as
provided above, the Indemnified Party shall cooperate with the Indemnifying
Party in such defense and make available to the Indemnifying Party, at the
Indemnifying Party's expense, all witnesses, pertinent records, materials and
information in the Indemnified Party's possession or under the Indemnified
Party's control relating thereto as is reasonably required by the Indemnifying
Party. Similarly, in the event the Indemnified Party is, directly or indirectly,
conducting the defense against any such Third Party Claim, the Indemnifying
Party shall cooperate with the Indemnified Party in such defense and make
available to the Indemnified Party, at the Indemnifying Party's expense, all
witnesses, pertinent records, materials and information in the Indemnifying
Party's possession or under the Indemnifying Party's control relating thereto as
is reasonably required by the Indemnified Party. No such Third Party Claim may
be settled by the Indemnifying Party without the prior written consent of the
Indemnified Party.
8.3 Indemnification Thresholds and Limitations.
(a) Except as set forth below, neither party shall have
any indemnification obligations hereunder in respect of a breach of any
representation or warranty set forth in this Agreement, unless the aggregate
Losses by the Indemnified Party exceed $250,000 (the "Basket Amount"), in which
case the Indemnifying Party shall indemnify the other party in respect of the
excess above that amount.
(b) Notwithstanding any provision herein to the contrary,
neither party shall have liability for any claim for indemnification asserted by
the other party to the extent the amount of such claim combined with any
previous claims for indemnification exceeds $25,000,000 (the "Cap").
(c) The Company and the Investor have agreed that separate
standards will apply to the use of terms such as "material," "materiality," and
"Material Adverse Effect" (together, the "Company Materiality Terms") for
purposes of determining the satisfaction of Section 3.1, on the one hand, and
the rights to indemnification under Section 8.3, on the other. For purposes of
determining the satisfaction of Section 3.1, the Company Materiality Terms shall
each be given their respective separate meanings in accordance with applicable
law. For purposes of indemnification, the representations and warranties in
Section 2 shall be construed as if they were not qualified by the Company
Materiality Terms.
(d) Notwithstanding anything to the contrary contained
herein, the Basket Amount and the Cap shall not apply with respect to any Losses
for amounts paid by the Investor or its directors, officers or affiliates as a
result of or otherwise in connection with a Stockholder Suit in which the
Investor or its directors, officers or affiliates are named as a defendant and
which was (x) instituted prior to the Closing and of which the Investor did not
have knowledge at the Closing or (y) instituted after the Closing.
(e) The indemnification provided for in Section 8.1(b)
shall be limited as follows: Losses arising under Stockholder Suits covered by
Section 3.12(b)(ii) shall be limited to actual out-of-pocket costs of defense
(including reasonable fees and expenses of counsel) and amounts paid by the
Investor or the Company in settlement or by reason of judgments incurred that
are not actually recovered under an insurance policy and shall not include any
other measure of damage or loss, including without limitation, consequential
damages. Such Losses shall not be indemnified in cash but, subject to Sections
8.3(a) and 8.3(b), shall be recovered by a downward adjustment in the Conversion
Price of the Series A Preferred Stock and the Series B Preferred Stock. Losses
arising under Stockholder Suits covered by Section 3.12(b)(i) shall, subject to
Sections 8.3(a) and 8.3(b), be limited to cash reimbursement of the actual
out-of-pocket costs of defense (including reasonable fees and expenses of
counsel) incurred by the Investor.
(f) The Company shall pay to the Investor 50% of the
amount by which the fee paid to DLJ by the Company exceeds $1.5 million (in cash
or fair market value of Company Common Stock). Such payment shall not exceed
$750,000 paid in Company Common Stock valued at the fair market value thereof as
of the date of payment.
8.4 Termination. This Agreement may be terminated and the
other transactions contemplated by this Agreement may be abandoned at any time
prior to the Closing Date, notwithstanding any requisite approval and adoption
of this Agreement and the transactions contemplated by this Agreement, pursuant
to a written notice of such termination, as follows:
(a) by mutual written consent of each of the Investor and
the Company;
(b) by either the Investor or the Company if the Closing
date shall not have occurred on or before August 31, 2000; provided, however,
that the right to terminate this Agreement under this Section 8.4(b) shall not
be available to any party whose breach has caused the failure of the Closing to
occur on or before such date;
(c) by the Company if there shall be any (x) restraining
order, injunction or other order issued by any court of competent jurisdiction
or other legal restraint or prohibition preventing the Closing or any of the
other transactions contemplated hereby which is final and nonappealable or (y)
action commenced by a stockholder of the Company which seeks a remedy (in law or
equity) as a result of or otherwise in connection with this Agreement and the
transactions contemplated hereby.
(d) by the Investor upon a breach of any representation,
warranty, covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty shall have become untrue, such
that the conditions set forth in Section 3.1 would not be satisfied
("Terminating Company Breach"); provided, however, that if such Terminating
Company Breach is curable by the Company through the exercise of its reasonable
best efforts and for as long as the Company continues to exercise such efforts,
but not beyond the date specified in paragraph (b) above, the Investor may not
terminate this Agreement under this Agreement 8.4(d);
(e) by the Company upon a breach of any representation,
warranty, covenant or agreement on the part of the Investor set forth in this
Agreement, or if any representation or warranty shall have become untrue, such
that the conditions set forth in Section 4.1 would not be satisfied
("Terminating Investor Breach"); provided, however, that if such Terminating
Investor Breach is curable by the Investor through the exercise of its
reasonable best efforts and for as long as the Investor continues to exercise
such efforts, but not beyond the date specified in paragraph (b) above, the
Company may not terminate this Agreement under this Section 8.2(e);
(f) by the Company if the Company receives a Superior
Proposal, resolves to accept such Superior Proposal; provided, however, that
prior to such termination (x) the Company shall have given the Investor two
days' prior written notice of its intention to terminate pursuant to this
provision and (y) the Company shall have paid to the Investor in immediately
available funds the amounts referred to in Section 5.2(c);
(g) by the Company if (A) a tender or exchange offer is
commenced by a Potential Acquirer for all outstanding shares of Company common
stock, and (B) the Company's Board of Directors determines, in good faith and
after consultation with an independent financial advisor, that such offer
constitutes a Superior Proposal and resolves to accept such Superior Proposal or
recommend to the stockholders that they tender their shares in such tender or
exchange offer; provided, however, that prior to such termination (x) the
Company shall have given the Investor two days' prior written notice of its
intention to terminate pursuant to this provision and (y) the Company
shall have paid to the Investor in immediately available funds the amounts
referred to in Section 5.2(c);
(h) by either the Company or the Investor if the
stockholders of the Company fail to approve the 20% Issuance at the Special
Meeting;
(i) by the Investor if (i) the Board of Directors of the
Company has withdrawn, modified or changed its approval or recommendation of
this Agreement, or approved or recommended a Superior Proposal, (ii) the Company
enters into any agreement with a Person with respect to a transaction the
proposal of which qualifies as a Superior Proposal, or (iii) (A) a third party
commences a tender offer or exchange offer for all of the outstanding shares of
the Company common stock and (B) the Board of Directors of the Company has
recommended that the shareholders of the Company tender their shares in such
tender or exchange offer, or (iv) the Board of Directors of the Company shall
have resolved to do any of the foregoing;
(j) by the Investor, if a Company Material Adverse Effect
has occurred;
(k) by the Company, after the expiration of 45 days from
the date hereof but on or prior to 55 days after the date hereof, if the
condition set forth in Section 4.6 shall not have been satisfied; or
(l) by the Investor if there shall be any Stockholder
Suit.
8.5 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 8.5, this Agreement shall forthwith become void,
there shall be no liability under this Agreement on the part of the Investor or
the Company or any of their respective officers or directors, and all rights and
obligations of each party hereto shall cease, subject to the remedies set forth
in Sections 5.2(b) and 5.2(c); provided, however, that nothing herein shall
relieve any party from liability for any willful or intentional breach of any
covenant or agreement of such party contained in this Agreement.
SECTION 9
DEFINITIONS
9.1 As used herein, the following terms shall have the
following meanings:
"Affiliate" means, with respect to any Person, any other
Person, directly or indirectly, controlling, controlled by, or under common
control with, such Person. For purposes of this definition, the term "control"
(including the correlative terms "controlling", "controlled by" and "under
common control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Disclosure Schedule" means the disclosure schedule of
the Company attached hereto and incorporated herein by this reference which
identifies exceptions to, and sets forth certain other information regarding,
the representations and warranties and covenants of the Company contained herein
by numbered Schedules corresponding to the Section numbers of such provisions.
"Company Material Adverse Effect" shall mean any material
adverse effect on the business, operations, assets, condition (financial or
other) or results of operations of the Company and its subsidiaries, taken as a
whole.
"Competing Transaction" means the occurrence of a transaction
resulting in any of the following: (i) any Person, other than a trustee or other
fiduciary holding securities of the Company under a Company benefit plan or any
of the Company's subsidiaries or any stockholder (and such stockholder's
Affiliates) as of the date hereof and direct transferees thereof, becoming,
after the date hereof, the "beneficial owner" (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of securities of the Company
representing, or convertible into, 20% or more of the outstanding Company common
stock; (ii) the merger or consolidation of the Company with any other
corporation; or (iii) the sale or transfer (in one transaction or a series of
related transactions) of all or any substantial part of the assets of the
Company and its subsidiaries, taken as a whole (including, without limitation, a
sale of stock of a subsidiary of the Company (whether by sale or direct
issuance), representing a substantial part of the assets of the Company and its
subsidiaries, taken as a whole) other than to a subsidiary of the Company.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"GAAP" means generally accepted accounting principles as in
effect in the United States of America from time to time, consistently applied.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"knowledge of the Company" or "Company's knowledge" shall mean
the knowledge of Xxxxxx X. Xxxxxxx, Xxxxxx Xxxx, Xxx Xxxxxxxx, Xxxxxxx Xxxxxxx,
Xxxx XxXxxx, Xxxxxxx Xxxxx, Xxxxxxx Xxxxxxxxx and Xxxxxxx Xxxxxx.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien, claim or charge of any kind (including, but not limited to,
any conditional sale or other title retention agreement, any lease in the nature
thereof, and the filing of or agreement to give any financing statement under
the Uniform Commercial Code or comparable law or
any jurisdiction in connection with such mortgage, pledge, security interest,
encumbrance, lien or charge).
"Person" means an individual, corporation, limited liability
company, partnership, association, trust or any other entity or organization.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Superior Proposal" means an offer made by a third party to
consummate a Competing Transaction that the Board determines, in its reasonable
judgment (after consultation with a nationally recognized independent financial
advisor), to be more favorable to the Company's stockholders than the terms of
the transactions contemplated by this Agreement; provided, however, that as used
in Section 5.1(c), Superior Proposal shall mean a Competing Transaction that is
more favorable to the Company's stockholders than the terms of the transaction
contemplated by this Agreement from a financial point of view.
"Tax Returns" means any return, report or other document
required to be supplied to a taxing authority in connection with Taxes.
"Taxes" means all taxes, including, without limitation,
income, gross receipts, excise, property, sales, withholding, social security,
occupation, use, service, license, payroll, franchise, transfer and recording
taxes, fees and charges, windfall profits, severance, customs, import, export,
employment or similar taxes, charges, fees, levies or other assessments imposed
by the United States, or any state, local or foreign government or subdivision
or agency thereof, together with all interest and all penalties, additions to
tax or additional amounts imposed by any of them.
"Thirty Day Average Share Price" means the average of the last
reported sale prices per share of the Company Common Stock on the Nasdaq
National Market (or on such other United States stock exchange or public trading
market on which the shares of Company Common Stock are listed or trade at the
time of the calculation; provided, however, that if a reverse stock split is
effected between the date hereof and the Closing, the sale price on all days
prior to such effective date shall be adjusted by multiplying such price by the
number of shares converted into one share of Company Common Stock in such
reverse stock split.
"20% Issuance" shall have the meaning provided in Section 3.10
hereof.
9.2 As used herein, the following terms shall have the
meanings ascribed to them in the Section of this Agreement opposite each such
term:
Term Section
---- -------
Aggregate Purchase Price 1.2
Agreement Preamble
Alternative Definitive Agreement 5.2(c)
Ancillary Agreements Preamble
Basket Amount 8.3(a)
Breakup Fee 5.2(c)
Cap 8.3(b)
Certificate of Designations Preamble
Charterhouse Preamble
Closing 1.3
Closing Date 1.3
Commitment Letter 4.6
Company Preamble
Company Common Stock 2.2
Company Financial Statements 2.5(b)
Company Insurance Policies 2.18
Company Intellectual Property 2.15(a)
Company Materiality Terms 8.3(c)
Company Plans 2.12
Company Preferred Stock 2.2
Company Required Statutory Approvals 2.4(c)
Company SEC Reports 2.5(a)
Company Stockholder Approval 2.4(a)
Consultation Period 6.3(a)
"control" 9.1(a)
DLJ 2.14
Employees 3.11
Environmental Law 2.16(b)
Hazardous Substance 2.16(c)
Indemnified Party 8.2
Indemnifying Party 8.2
Investor Preamble
Investor Confidentiality Agreement 6.1
Investors' Agreement 3.13
Losses 8.2(b)
Material Contracts 2.17
Per Share Purchase Price 1.1
Potential Acquirer 5.6(b)
Representatives 5.6(a)
Series A Preferred Stock Preamble
Special Meeting 3.10
Stockholder Suit 3.12(b)
Terminating Company Breach 8.4(d)
Terminating Investor Breach 8.4(e)
Third Party Claims 8.2
Transaction Expenses 5.2(b)
20% Issuance 3.10
SECTION 10
GENERAL
10.1 Amendments, Waivers and Consents. For the purposes of
this Agreement and all agreements, documents and instruments executed pursuant
hereto, except as otherwise specifically set forth herein or therein, no course
of dealing between the Company and any Investor and no delay on the part of any
party hereto in exercising any rights hereunder or thereunder shall operate as a
waiver of the rights hereof and thereof. No covenant or other provision hereof
or thereof may be waived otherwise than by a written instrument signed by the
party so waiving such covenant or other provision; provided, however, that
except as otherwise provided herein or therein, changes in or additions to, and
any consents required by, this Agreement may be made, and compliance with any
term, covenant, condition or provision set forth herein may be omitted or waived
(either generally or in a particular instance and either retroactively or
prospectively) with respect to the holders of the Series A Preferred Stock by a
consent or consents in writing signed by the holders of a majority in interest
of such series; provided, further, that the amendment, modification or waiver of
any provision which by its terms requires the consent or approval of holders of
more than a majority in interest of such series shall only be effective if it is
signed by holders of such requisite percentage. Any amendment or waiver effected
in accordance with this Section 10.1 shall be binding upon each holder of the
Series A Preferred Stock at the time outstanding, each future holder of all such
securities and the Company. The waiver or failure to insist upon strict
compliance with any condition or provision hereof shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other waiver or failure.
10.2 Survival of Representations, Warranties and Covenants,
Assignability of Rights. All representations and warranties made herein and in
the certificates, exhibits or schedules delivered or furnished by or on behalf
of a party to the other party in connection herewith or therewith shall be
deemed material and to have been relied upon by the receiving party, and, except
as otherwise provided in this Agreement, shall survive the delivery of the
Series A Preferred Stock regardless of any instruction until 60 days after the
Investor receives the audited financial statements of the Company for the year
ended December 31, 2000, and shall not merge in the performance of any
obligation and shall bind each party's successors, assigns and heirs, whether so
expressed or not, and, except as otherwise provided in this Agreement, all such
covenants, agreements, representations and warranties shall inure to the benefit
of the successors and assigns of the receiving party and to transferees of the
Series A Preferred Stock of the Investor, whether so expressed or not.
10.3 Governing Law. This Agreement shall be deemed to be a
contract made under, and shall be construed in accordance with, the laws of the
State of New York (without giving effect to principles of conflicts of law the
effect of which would cause the application of domestic substantive laws of any
other jurisdiction).
10.4 Section Headings; Counterparts. The descriptive headings
in this Agreement have been inserted for convenience only and shall not be
deemed to limit or otherwise affect the construction of any provision thereof or
hereof. This Agreement
may be executed simultaneously in any number of counterparts, each of which when
so executed and delivered shall be taken to be an original; but such
counterparts shall together constitute but one and the same document.
10.5 Notices and Demands. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
mailed by registered or certified mail (return receipt requested) or sent via
facsimile to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(i) If to Investor to:
c/o KPS Special Situations Fund, L.P.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(ii) If to the Company, to:
United Road Services, Inc.
00 Xxxxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, President
Facsimile: (000) 000-0000
with a copy to:
XxXxxxxxx, Will & Xxxxx
000 00xx Xxxxxx, XX
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
10.6 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement.
10.7 Integration. This Agreement, including the exhibits,
documents and instruments referred to herein or therein, and the existing
confidentiality agreement between Investor and the Company, constitute all of
the agreements and supersede all other prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
10.8 No Assignment. Except as otherwise provided herein, (i)
this Agreement may not be assigned, pledged, hypothecated or otherwise
transferred by the Company without the consent of all of the parties hereto and
(ii) the Investor may assign this Agreement to any of its Affiliates without the
consent of the Company.
10.9 Jurisdiction. Each party hereby irrevocably submits to
the exclusive jurisdiction of the courts of the State of New York and the
federal courts of the United States of America located in such state solely in
respect of any claim relating to the interpretation and enforcement of the
provisions of this Agreement and of the documents referred to in this Agreement,
or otherwise in respect of the transactions contemplated hereby and thereby, and
hereby waives, and agrees not to assert, as a defense in any action, suit or
proceeding in which any such claim is made that it is not subject thereto or
that such action, suit or proceeding may not be brought or is not maintainable
in such courts or that the venue thereof may not be appropriate or that this
Agreement or any such document may not be enforced in or by such courts. The
parties hereby consent to and grant any such court jurisdiction over such
parties and over the subject matter of any such claim and agree that mailing of
process or other papers in connection with any such action, suit or proceeding
in the manner provided in Section 10.5, or in such other manner as may be
permitted by law, shall be valid and sufficient service thereof.
10.10 Waiver of Jury Trial. Each party acknowledges and agrees
that any controversy which may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore each party hereby irrevocably
and unconditionally waives any right such party may have to a trial by jury.
Each party certifies and acknowledges that (i) no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing
waiver, (ii) such party understands and has considered the implications of this
waiver, (iii) such party makes this waiver voluntarily, and (iv) such party has
been induced to enter into this Agreement by, among other things, the mutual
waivers, agreements and certifications in this section.
10.11 Third-Party Beneficiary. Except for Sections 3.18
(Modification of Certificate of Designation), 5.1 (Annual Management Fee) and
5.7 (Transaction Fee), nothing expressed or implied in this Agreement is
intended or shall be construed to confer upon or give any Person other than the
parties hereto any rights or remedies under or by reason of this Agreement or
any transaction contemplated hereby.
[Signature page follows]
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as a sealed instrument as of the day and year first above written.
UNITED ROAD SERVICES, INC.
By /s/ Xxxxxx X. Xxxxxxx
---------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
BLUE TRUCK ACQUISITION, LLC
By /s/ Xxxxxxx Xxxxxx
------------------
Name: Xxxxxxx Xxxxxx
Title: Principal
Appendix A
(Form of Legal Opinion)
Appendix B
(Form of Certificate of Designations, Preferences and Rights of
Series A Preferred Stock)
