SECURITIES PURCHASE AGREEMENT
by and among
PROMEDCO MANAGEMENT COMPANY
GS CAPITAL PARTNERS III, L.P.
and
The Parties Listed On The Signature Page Hereto
January 13, 2000
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS................................................2
1.1. Defined Terms; Interpretations.......................2
ARTICLE II ISSUANCE AND SALE OF NOTES, GS SHARES AND PREFERRED
STOCK.....................................................11
2.1. Initial Issuance, Purchase and Sale.................11
2.2. The Initial Closing.................................12
2.3. Initial Closing Deliveries..........................12
2.4. Second Issuance, Purchase and Sale..................14
2.5. The Second Closing..................................14
2.6. Second Closing Deliveries...........................15
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............16
3.1. Organization; Subsidiaries..........................16
3.2. Due Authorization...................................18
3.3. Capitalization......................................18
3.4. SEC Reports.........................................19
3.5. Financial Statements................................20
3.6. Absence of Certain Changes..........................20
3.7. Litigation..........................................20
3.8. Title to Properties.................................21
3.9. Consents; No Violations.............................21
3.10. Compliance with Laws; Licenses......................22
3.11. Tax Matters.........................................22
3.12. Employee Benefit Plans..............................23
3.13. Intellectual Property...............................24
3.14. Commitments.........................................24
3.15. Acquisitions........................................27
3.16. Brokers or Finders..................................27
3.17. Proxy Statement.....................................27
3.18. Insurance...........................................28
3.19. Holding Company Act and Investment Company Act......28
3.20. Offering of the Notes, the GS Shares and the
Preferred Stock.....................................28
3.21. Existing Indebtedness; Future Liens.................29
3.22. Solvency............................................30
3.23. Section 203 of the DGCL; Takeover Statute...........30
3.24. Year 2000...........................................30
3.25. Margin Regulations..................................31
3.26. Disclosure..........................................31
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE INVESTORS...........31
4.1. Acquisition for Investment..........................31
4.2. Restricted Securities...............................31
4.3. Accredited Investor.................................32
4.4. Sufficient Funds....................................32
ARTICLE V COVENANTS.................................................32
5.1. Conduct of Business by the Company Pending the
Second Closing......................................32
5.2. No Solicitation.....................................33
5.3. Bank Financing......................................34
5.4. Press Releases; Interim Public Filings..............34
5.5. HSR Act.............................................35
5.6. Proxy Statement; Stockholders Meeting...............35
5.7. Consents; Approvals.................................36
5.8. Listing.............................................36
5.9. Board Representation................................36
5.10. Certificate of Designation..........................39
5.11. Cooperation.........................................39
5.12. Access to Property; Records.........................39
5.13. Incentive Stock Options.............................39
5.14. Notice of Breach....................................40
5.15. Transfer Taxes......................................40
5.16. Rule 144; Integration...............................40
5.17. Transfer Restrictions; Resale of Notes..............41
5.18. Preemptive Rights...................................41
5.19 Standstill Agreement................................42
5.20. Actions Requiring Investor Approval.................43
5.21. Dividends...........................................44
5.22. Use of Proceeds.....................................44
ARTICLE VI CONDITIONS................................................45
6.1. Conditions to Obligations of the Investors and
the Company.........................................45
6.2. Conditions to Obligations of the Investors..........45
6.3. Conditions to Obligations of the Company............46
ARTICLE VII TERMINATION...............................................47
7.1. Termination.........................................47
7.2. Effect of Termination...............................48
ARTICLE VIII SURVIVAL; CERTAIN REMEDIES...............................48
8.1. Survival............................................48
8.2 Indemnification for the Benefit of the Company......49
8.3 Indemnification by the Company......................49
8.4 Materiality.........................................49
8.5 Indemnification Procedures..........................50
8.6 Duplication.........................................51
ARTICLE IX MISCELLANEOUS.............................................52
9.1. Fees and Expenses...................................52
9.2. Public Announcements................................52
9.3. Restrictive Legends.................................52
9.4. Further Assurances..................................53
9.5. Successors and Assigns..............................53
9.6. Entire Agreement....................................53
9.7. Notices.............................................53
9.8. Amendments..........................................55
9.9. Counterparts........................................55
9.10. Headings............................................55
9.11. Nouns and Pronouns..................................55
9.12. GOVERNING LAW.......................................55
9.13. Submission to Jurisdiction..........................55
9.14. WAIVER OF JURY TRIAL................................56
9.15. Severability........................................56
EXHIBITS
Exhibit 2.3(a)(vi) Form of Opinion
Exhibit 2.3(a)(ix) Form of Amendment No. 1 to Rights Agreement
Exhibit 2.6(a)(iii) Form of Second Closing Opinion
Exhibit 5.10 Form of Certificate of Designation
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as
of January 13, 2000, by and among PROMEDCO MANAGEMENT COMPANY, a Delaware
corporation (the "Company"), GS CAPITAL PARTNERS III, L.P., a Delaware
limited partnership ("GSCP"), and certain affiliates of GSCP set forth on
the signature page of this Agreement (the "GSCP Affiliates", and
collectively with GSCP and including their respective successors and
permitted assigns, the "Investors", and each individually, an "Investor").
W I T N E S S E T H :
WHEREAS, upon the terms and subject to the conditions set forth
in this Agreement, simultaneously with the execution and delivery of this
Agreement, at the initial closing (the "Initial Closing"), the Company is
issuing and selling to the Investors, and the Investors are purchasing from
the Company, (i) $16,000,000 in aggregate principal amount of the Company's
Senior Subordinated Notes, due January 13, 2005 (the "Notes") and (ii)
1,250,000 shares (the "GS Shares") of the Company's common stock, par value
$0.01 per share (the "Common Stock"), for an aggregate purchase price of
$16,000,000 in cash; and
WHEREAS, upon the terms and subject to the conditions set forth
in this Agreement, at the second closing (the "Second Closing"), the
Company wishes to issue and sell to the Investors, and the Investors wish
to purchase from the Company, (i) an aggregate of 390,000 shares of the
Company's Series A Convertible Preferred Stock, par value $0.01 per share
(the "Preferred Stock") for an aggregate purchase price of $39,000,000 in
cash, and (ii) an aggregate of 160,000 shares of Preferred Stock for an
aggregate purchase price of $16,000,000 payable by delivery to the Company
of all outstanding Notes and GS Shares held by the Investors in exchange
therefor; and
WHEREAS, the Investors and the Company desire to provide for the
purchase and sale of the Notes, the GS Shares and the Preferred Stock and
to establish certain rights and obligations in connection therewith.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Defined Terms; Interpretations. The following terms, as used
herein, shall have the following meanings:
"Additional Financing" shall have the meaning ascribed thereto in
Section 5.3.
"Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
"Agreement" shall have the meaning ascribed thereto in the
preamble.
"Board of Directors" shall mean the Board of Directors of the
Company.
"Capitalized Lease" shall mean, with respect to any Person, any
lease or any other Commitment for the use of property which, in accordance
with generally accepted accounting principles, should be capitalized on the
lessee's or user's balance sheet.
"Capitalized Lease Obligation" of any Person shall mean and
include, as of any date as of which the amount thereof is to be determined,
the amount of the Liability capitalized or disclosed (or which should be
disclosed under U.S. GAAP) in a balance sheet of such Person as of such
date in respect of a Capitalized Lease of such Person.
"Certificate of Designation" shall have the meaning ascribed
thereto in Section 2.6(a)(iii).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitment" and "Commitments" shall have the meaning ascribed
thereto in Section 3.14(a).
"Common Stock" shall have the meaning ascribed thereto in the
recitals.
"Company" shall have the meaning ascribed thereto in the
preamble.
"Company Affiliates" shall have the meaning ascribed thereto in
Section 5.2.
"Company Indemnified Party" shall have the meaning ascribed
thereto in Section 8.2.
"Compensation and Benefit Plans" shall mean all bonus, vacation,
deferred compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase, restricted
stock and stock option plans, all employment or severance contracts, all
medical, dental, disability, health and life insurance plans, all other
material employee benefit and fringe benefit plans, contracts or
arrangements and any applicable "change of control" or similar provisions
in any plan, contract or arrangement sponsored, maintained or contributed
to by the Company or any of the Subsidiaries for the benefit of officers,
former officers, employees, former employees, directors, former directors,
or the beneficiaries of any of the foregoing or pursuant to which the
Company, any of the Subsidiaries or any ERISA Affiliate has or may have any
liability or obligation, contingent or otherwise.
"Confidentiality Agreement" shall have the meaning ascribed
thereto in Section 5.12.
"Consents" shall have the meaning ascribed thereto in Section
5.7.
"Consolidated EBITDA" shall have the meaning ascribed thereto in
the Credit Agreement as in effect on the date hereof.
"Conversion Shares" shall mean the shares of Common Stock
issuable upon conversion of the Preferred Stock.
"Credit Agreement" shall mean the Credit Agreement dated as of
December 17, 1998, among the Company, the Lenders referred to therein and
Bank of America, N.A. as Agent and Banc of America Securities, LLC, as
Arranger, and as amended by the First Amendment to Credit Agreement, dated
as of December 31, 1998, the Amended and Restated Credit Agreement and
First Amendment to Guarantee and Collateral Agreement, dated as of June 29,
1999, the First Amendment to Amended and Restated Credit Agreement dated as
of November 9, 1999 and the Consent and Second Amendment to Amended and
Restated Credit Agreement, dated as of November 12, 1999, all as amended,
modified, renewed, refunded, restated, replaced or refinanced from time to
time.
"Designated Senior Indebtedness" shall mean the obligations of
the Company under the Credit Agreement.
"DGCL" shall mean the Delaware General Corporation Law.
"Encumbrances" shall mean any liens, charges, claims, security
interests, restrictions, options, proxies, voting trusts or other
encumbrances.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean each business or entity which is a
member of a "controlled group of corporations," under "common control" or a
member of an "affiliated service group" with the Company or any of its
Subsidiaries within the meaning of Articles 414(b), (c) or (m) of the Code,
or required to be aggregated with the Company under Article 414(o) of the
Code, or is under "common control" with the Company, within the meaning of
Article 4001(a)(14) of ERISA, and the regulations promulgated and proposed
thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Exchange Act shall include
reference to the comparable section, if any, of any such successor federal
statute.
"Exchange and Registration Rights Agreement" shall have the
meaning ascribed thereto in the Notes.
"Xxxxx Xxxxx Offices" shall have the meaning ascribed thereto in
Section 2.2.
"GAAP" shall have the meaning ascribed thereto in Section 3.5.
"Governmental Entity" shall mean any supernational, national,
foreign, federal, state or local judicial, legislative, executive,
administrative or regulatory body or authority.
"Grandfathered Amount" shall have the meaning ascribed thereto in
the Shareholder Rights Plan.
"GS Shares" shall have the meaning ascribed thereto in the
recitals.
"GSCP" shall have the meaning ascribed thereto in the preamble.
"GSCP Affiliates" shall have the meaning ascribed thereto in the
preamble.
"Guarantee" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments
for deposit or collection) of any Person guaranteeing, or in effect
guaranteeing, any Indebtedness or other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly,
including, without limitation, all obligations incurred through an
agreement, contingent or otherwise, by such Person: (i) to purchase such
Indebtedness or obligation or any property or assets constituting security
therefor, (ii) to advance or supply funds (x) for the purchase or payment
of such Indebtedness or obligation, or (y) to maintain working capital or
other balance sheet condition, (iii) to lease property or to purchase
securities or other property or services primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of such Indebtedness or obligation, or (iv)
otherwise to assure the owner of the Indebtedness or obligation of the
primary obligor against loss in respect thereof. For the purposes of any
computations made under this Agreement, a Guarantee in respect of any
Indebtedness for borrowed money shall be deemed to be Indebtedness equal to
the outstanding amount of the Indebtedness for borrowed money which has
been guaranteed, and a Guarantee in respect of any other Liability shall be
deemed to be Indebtedness equal to the maximum aggregate amount of such
Liability.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.
"Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to deposits
or advances of any kind, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (iii) all obligations of
such Person under conditional sale or other title retention agreements
relating to property purchased by such Person, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of property or
services (other than accounts payable to suppliers and similar accrued
liabilities incurred in the ordinary course of business and paid in a
manner consistent with industry practice), (v) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any lien or security
interest on property owned or acquired by such Person whether or not the
obligations secured thereby have been assumed, (vi) all Capitalized Lease
Obligations of such Person, (vii) all Guarantees of such Person, (viii) all
obligations (including but not limited to reimbursement obligations)
relating to the issuance of letters of credit for the account of such
Person, (ix) all obligations arising out of foreign exchange contracts, and
(x) all obligations arising out of interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate insurance,
currency spot and forward contracts and other agreements or arrangements
designed to provide protection against fluctuations in interest or currency
exchange rates.
"Indemnification Claim Notice" shall have the meaning ascribed
thereto in Section 8.5(a).
"Indemnified Party" shall have the meaning ascribed thereto in
Section 8.5(a).
"Indemnifying Party" shall have the meaning ascribe thereto in
Section 8.5(a).
"Initial Closing" shall have the meaning ascribed thereto in the
recitals.
"Initial Closing Payment" shall be an amount in cash equal to
$480,000 payable to the Investors at the Initial Closing as provided in
Section 2.1.
"Initial Closing Purchase Price" shall have the meaning ascribed
thereto in Section 2.1.
The "Initial Noteholder Designee" shall be Xx. Xxxxxxx Xxxxx.
"Intellectual Property" shall mean (i) all inventions and
discoveries (whether patentable or unpatentable and whether or not reduced
to practice), all improvements thereto, and all patents, patent
applications and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions and
reexaminations thereof, (ii) all trademarks, service marks, trade dress,
logos, trade names and corporate names, together with all translations,
adaptations, derivations and combinations thereof and including all
goodwill associated therewith, and all applications, registrations and
renewals in connection therewith, (iii) all copyrightable works, all
copyrights and all applications, registrations and renewals in connection
therewith, (iv) all mask works and all applications, registrations and
renewals in connection therewith, (v) all know-how, trade secrets and
confidential business information, whether patentable or unpatentable and
whether or not reduced to practice (including ideas, research and
development, formulas, compositions, manufacturing and production process
and techniques, technical data, designs, drawings, specifications, customer
and supplier lists, pricing and cost information and business and marketing
plans and proposals), (vi) all computer software (including data and
related documentation), (vii) all management information systems, (viii)
all other proprietary rights, (ix) all copies and tangible embodiments
thereof (in whatever form or medium) and (x) all licenses and agreements in
connection therewith.
"Investor" and "Investors" shall have the meaning ascribed
thereto in the preamble.
"Investor Designees" shall have the meaning ascribed thereto in
Section 5.9(b).
"Investor Expenses" shall have the meaning ascribed thereto in
Section 9.1.
"Investor Indemnified Party" shall have the meaning ascribed
thereto in Section 8.3.
"IRS" shall mean the Internal Revenue Service.
"Knowledge", with respect to the Company, shall mean the
knowledge of each member of the board of directors of the Company and each
of the material Subsidiaries and each executive officer of the Company and
each of the material Subsidiaries, and the knowledge that any of the
foregoing individuals would have after due and reasonable inquiry and
investigation.
"Laws" shall mean any law, statute, rule, regulation, order or
other restriction of any court or Governmental Entity applicable to the
businesses conducted by the Company and the Subsidiaries.
"Leased Real Property" shall mean the real property leased or
subleased by the Company or any Subsidiary, together with, to the extent
leased or subleased by the Company or any Subsidiary, all buildings and
other structures, facilities or improvements currently or hereafter located
thereon, all fixtures, systems, equipment and items of personal property of
the Company or any Subsidiary attached or appurtenant thereto, and all
easements, licenses, rights and appurtenances relating to the foregoing.
"Liability" shall mean any debt, liability or obligation, whether
known or unknown, asserted or unasserted, accrued, absolute, contingent or
otherwise, whether due or to become due.
"Licenses" shall mean any licenses, franchise permits,
accreditations, consents, registrations, certificates, and other
governmental or regulatory permits, accreditations, authorizations or
approvals required for the operation of the businesses of the Company and
the Subsidiaries as presently conducted and for the ownership, lease or
operation of the Company's and the Subsidiaries' properties.
"Litigation" shall mean any claim, demand, action, suit,
proceeding, arbitration, investigation, civil, criminal or administrative
action, inquiry or hearing by or before any Governmental Entity or private
arbitration tribunal.
"Lock-up Agreements" shall mean the letters, date as of the date
hereof, from certain stockholders of the Company to the Investors.
"Losses" shall mean each and all of the following items: claims,
losses, (including, without limitation, losses of earnings) Liabilities,
obligations, payments, damages (actual, punitive or consequential),
charges, judgments, fines, penalties, amounts paid in settlement, costs and
expenses (including, without limitation, interest that may be imposed in
connection therewith, costs and expenses of investigation, suits,
proceedings, demands, assessments and fees, expenses and disbursements of
counsel, consultants and other experts).
"Market Value" shall mean the closing price of the Common Stock
on NASDAQ or such other exchange upon which the Common Stock might later be
traded, on the date specified.
"Material Adverse Effect" shall mean a material adverse effect on
the properties, business, operations, results of operations, earnings,
prospects, assets, Liabilities or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole.
"Multi-Employer Plan" shall have the meaning ascribed thereto in
Section 3.12(c).
"NASDAQ" shall mean the National Association of Securities
Dealers Automated Quotation National Market System.
"1998 Balance Sheet" shall have the meaning ascribed thereto in
Section 3.5.
"Notes" shall have the meaning ascribed thereto in the recitals.
"Noteholder Designees" shall have the meaning ascribed thereto in
Section 5.9(a).
"Owned Real Property" shall mean the real property owned by the
Company or any Subsidiary, together with all buildings and other
structures, facilities or improvements currently or hereafter located
thereon, all fixtures, systems, equipment and items of personal property of
the Company or any Subsidiary attached or appurtenant thereto and all
easements, licenses, rights and appurtenances relating to the foregoing.
"Permitted Encumbrances" shall have the meaning ascribed thereto
in Section 3.8(b).
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"Preferred Designees" shall have the meaning ascribed thereto in
Section 5.9(b).
"Preferred Stock" shall have the meaning ascribed thereto in the
recitals.
"Preferred Stock Registration Rights Agreement" shall have the
meaning ascribed thereto in Section 2.6(a)(ii).
"Proposed Securities" shall have the meaning ascribed thereto in
Section 5.18.
"Proxy Statement" shall have the meaning ascribed thereto in
Section 3.17.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement, dated as of the date hereof, among the Company and the
Investors.
"Representatives" shall have the meaning ascribed thereto in
Section 5.9(g).
"Required Lenders" shall have the meaning ascribed to such term
in the Credit Agreement.
"Restricted Cash" shall have the meaning ascribed thereto in the
Credit Agreement as in effect on the date hereof.
"Return" shall mean any report, return, statement, estimate,
declaration, notice, form or other information required to be supplied to a
taxing authority in connection with Taxes.
"SEC" shall mean the Securities and Exchange Commission.
"Second Closing" shall have the meaning ascribed thereto in the
recitals.
"Second Closing Date" shall have the meaning ascribed thereto in
Section 2.5.
"Second Closing Cash Purchase Price" shall have the meaning
ascribed thereto in Section 2.4.
"Second Closing Payment" shall be an amount in cash equal to
$1,170,000 payable to the Investors at the Second Closing as provided in
Section 2.4.
"Second Closing Termination Date" shall have the meaning ascribed
thereto in Section 7.1.
"SEC Reports" shall have the meaning ascribed thereto in Section
3.4.
"Second Purchase" shall have the meaning ascribed thereto in
Section 2.4.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Act shall include
reference to the comparable section, if any, of such successor federal
statute.
"Senior Indebtedness" shall have the meaning ascribed thereto in
the Notes.
"Shareholder Rights Plan" shall mean the Agreement, dated as of
February 18, 1997, between the Company and Xxxxxx Trust Company, as Rights
Agent.
"Significant Subsidiaries" shall mean any direct or indirect
subsidiary of the Company which would constitute a "significant subsidiary"
as defined in Rule 1-02 of Regulation S-X (or any successor thereto).
"Standstill Period" shall mean the period from the date hereof
until the later of (i) the third anniversary of the date hereof and (ii)
the date on which the Investors and Affiliates controlled by the Investors
beneficially own, in the aggregate, a number of shares of Common Stock
constituting less than 10.0% of the shares of Common Stock (assuming
conversion at such time of the Preferred Stock held by the Investors and
their Affiliates) beneficially owned by them immediately after the Second
Closing (as such number may be adjusted from time to time for stock splits,
reverse stock splits, dividends paid in Common Stock, reclassifications of
the Common Stock, and other similar events).
"Stockholders Meeting" shall have the meaning ascribed thereto in
Section 3.17.
"Subsidiary" or "Subsidiaries" shall mean any corporation,
limited liability company, partnership, business association or other
Person with respect to which the Company has, directly or indirectly,
ownership of or rights with respect to securities or other interests having
the power to elect a majority of such Person's board of directors or
analogous or similar governing body, or otherwise having the power to
direct the management, business or policies of that corporation, limited
liability company, partnership, business association or other Person.
"Tax" and "Taxes" shall means any and all federal, state, local,
foreign or other taxes of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect
thereto) imposed by any taxing authority, including, without limitation,
taxes or other charges on or with respect to income, franchises, windfall
or other profits, gross receipts, property, sales, use, capital stock,
payroll, employment, social security, workers' compensation, unemployment
compensation, or net worth, and taxes or other charges in the nature of
excise, withholding, ad valorem or value added, and includes, without
limitation, any liability for Taxes of another person, as a transferee or
successor, under Treas. Reg. ss. 1.1502-6 or analogous provision of Law or
otherwise.
"Tax Return" shall mean any return, report or similar statement
(including the attached schedules) required to be filed with respect to any
Tax, including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
"Terminating Breach" shall have the meaning ascribed thereto in
Section 7.1(d).
"TIA" shall mean the Trust Indenture Act of 1939.
"Total Debt" shall have the meaning ascribed thereto in the
Credit Agreement as in effect on the date hereof.
"Transaction Documents" shall mean this Agreement, the Notes, the
Voting Agreements, the Lock-up Agreements, the Certificate of Designation,
the Registration Rights Agreement and all other contracts, agreements,
schedules, certificates and other documents being delivered pursuant to or
in connection with this Agreement or the transactions contemplated hereby
or thereby.
"Transfer" shall have the meaning ascribed thereto in Section
5.17.
"Voting Agreements" shall mean the Voting Agreements, date as of
the date hereof, between the Investors and certain stockholders of the
Company.
ARTICLE II
ISSUANCE AND SALE OF NOTES, GS SHARES AND PREFERRED STOCK
2.1. Initial Issuance, Purchase and Sale. Simultaneously with the
execution and delivery of this Agreement, at the Initial Closing, the
Company is issuing and selling to each Investor, and each Investor is
purchasing from the Company, the aggregate principal amount of Notes and
the number of GS Shares set forth opposite such Investor's name on the
signature page hereto, for an aggregate purchase price of $16,000,000 in
cash, less the Initial Closing Payment (the "Initial Closing Purchase
Price"). The Company and the Investors agree that for U.S. federal, state
and local income Tax purposes, the portion of the Initial Closing Purchase
Price allocable to the Notes shall be $13,484,375 and the portion of the
Initial Closing Purchase Price allocable to the GS Shares shall be
$2,515,625. The Company and the Investors agree that they shall not take
any position inconsistent with any such allocation.
2.2. The Initial Closing. The Initial Closing is taking place at
the offices of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, Xxx Xxx Xxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Xxxxx Xxxxx Offices") simultaneously
with the execution and delivery of this Agreement.
2.3. Initial Closing Deliveries. (a) Simultaneously with the
execution and delivery of this Agreement, at the Initial Closing, the
Company is delivering or causing to be delivered to the Investors the
following:
(i) duly executed Notes in the principal amounts set forth
opposite such Investor's name on the signature page hereto;
(ii) certificates representing the number of GS Shares in
the amounts set forth opposite such Investor's name on the signature
page hereto;
(iii) a duly executed copy of the Registration Rights
Agreement;
(iv) duly executed copies of the Voting Agreements;
(v) duly executed copies of the Lock-up Agreements;
(vi) an opinion of the Company's counsel, dated as of the
date hereof, addressed to the Investors in the form of Exhibit
2.3(a)(vi), which opinion shall be reasonably satisfactory to the
Investors;
(vii) good standing certificates for the Company and each of
its Significant Subsidiaries, dated no earlier than five days prior to
the date hereof, from the jurisdiction in which each is incorporated;
(viii) a copy of the resolutions of the Board of Directors
(A) duly authorizing the execution and delivery of each of the
Transaction Documents and the performance of the transactions
contemplated thereby, and (B) approving the Investors becoming
"interested stockholders" under Section 203 of the DGCL, which
resolutions shall be certified as true, correct and effective as of
the date hereof by the Secretary or Assistant Secretary of the Company
and which shall be satisfactory to the Investors;
(ix) evidence, satisfactory to the Investors, that Amendment
No. 1 to the Rights Agreement, in the form attached hereto as Exhibit
2.3(a)(ix), has been duly executed;
(x) evidence, satisfactory to the Investors, that the
Initial Noteholder Designee shall be duly appointed to serve as a
member of "Class II" of the Board of Directors and the Executive
Committee of the Board of Directors and that the Board of Directors
shall consist of eight directors in each case effective as of January
20, 2000;
(xi) evidence, satisfactory to the Investors, that the
transactions contemplated hereby will not constitute a "Change in
Control" of the Company under any Commitment to which an officer is a
party or under any of the Compensation and Benefit Plans;
(xii) copies of all third-party consents required to be
obtained by the Company prior to the Initial Closing as set forth on
Schedule 3.9(b), including, without limitation, the consent of the
Required Lenders under the Credit Agreement, which consents shall be
reasonably satisfactory to the Investors;
(xiii) an Officers' Certificate, dated as of the date
hereof, certifying that each of the representations and warranties of
the Company contained in this Agreement are true and correct as of the
date hereof (disregarding for this purpose all references in such
representations and warranties to any materiality, Material Adverse
Effect, Knowledge or similar qualifications) (except to the extent
such representations and warranties are made as of a particular date,
in which case such representations and warranties shall have been true
and correct in all material respects as of such date), except for
failures to be true and correct which individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect;
and
(xiv) such other instruments and documents as the Investors
reasonably request.
(b) Simultaneously with the execution and delivery of this
Agreement, at the Initial Closing, the Investors are delivering to the
Company the following:
(i) the Initial Closing Purchase Price, which shall be paid
by wire transfer of immediately available funds to an account
designated at least three business days prior to the date hereof by
the Company;
(ii) a duly executed copy of the Registration Rights
Agreement; and
(iii) an Officers' Certificate, dated as of the date hereof,
certifying that each of the representations and warranties of the
Investors contained in this Agreement are true and correct
(disregarding for this purpose all references in such representations
and warranties to any materiality, material adverse effect, knowledge
or similar qualifications) as of the date hereof (except to the extent
such representations and warranties are made as of a particular date,
in which case such representations and warranties shall have been true
and correct in all material respects as of such date), except for
failures to be true and correct which individually or in the aggregate
would not reasonably be expected to have a material adverse effect on
the ability of the Investors to fulfill its obligations hereunder.
2.4. Second Issuance, Purchase and Sale. Upon the terms and
subject to the conditions set forth herein, at the Second Closing, the
Company shall issue and sell to each Investor, and each Investor shall
purchase from the Company, the number of shares of Preferred Stock set
forth opposite such Investor's name on the signature page hereto (i) for an
aggregate cash purchase price equal to $39,000,000, minus (x) the Second
Closing Payment and (y) any accrued and unpaid interest on the Notes
through and including the Second Closing Date (the "Second Closing Cash
Purchase Price"), and (ii) in exchange for all of the Notes and GS Shares
issued to such Investor at the Initial Closing (the transactions to occur
at the Second Closing, the "Second Purchase"); provided, that the Investors
shall have the right to reallocate among the Investors the Preferred Stock
to be purchased by each Investor by delivering written notice of such
reallocation to the Company not less than three days prior to the Second
Closing so long as such reallocation does not change the total number of
Preferred Stock being acquired hereunder or the Second Closing Purchase
Price.
2.5. The Second Closing. The parties agree that the Second
Closing shall take place at the Xxxxx Xxxxx Offices on the date of the
Stockholders Meeting in accordance with the provisions of Section 5.6.
2.6. Second Closing Deliveries. (a) At the Second Closing, the
Company shall deliver to the Investors the following:
(i) certificates representing the shares of Preferred Stock
in the amounts set forth opposite such Investor's name on the
signature page hereto;
(ii) a copy of the Certificate of Designation of the
Preferred Stock (the "Certificate of Designation"), as filed with the
Secretary of State of the State of Delaware;
(iii) an opinion of the Company's counsel, dated as of the
Second Closing Date, addressed to the Investors in the form of Exhibit
2.6(a)(iii), which opinion shall be satisfactory to the Investors;
(iv) a copy of the resolutions adopted by the Company's
stockholders at the Stockholders Meeting, which resolutions shall be
satisfactory to the Investors;
(v) evidence, satisfactory to the Investors, that the
Preferred Designees have been appointed to the Board of Directors and
that the Board of Directors consists of ten directors effective as of
the Second Closing;
(vi) evidence, satisfactory to the Investors, that the
Conversion Shares have been reserved for issuance and delivery upon
conversion of the Preferred Stock;
(vii) copies of all third-party consents required to be
obtained by the Company prior to the Second Closing as set forth on
Schedule 6.2(h), which consents shall be satisfactory to the
Investors;
(viii) an Officers' Certificate, dated as of the Second
Closing Date, certifying that the conditions set forth in Sections
6.2(a) and 6.2(b) have been satisfied; and
(ix) such other instruments and documents as the Investors
reasonably request.
(b) At the Second Closing, the Investors shall deliver to the
Company the following:
(i) the Second Closing Cash Purchase Price, which shall be
paid by wire transfer of immediately available funds to an account
designated at least three business days prior to the Second Closing
Date by the Company;
(ii) the Notes and the GS Shares purchased by the Investors
at the Initial Closing; and
(iii) an Officers' Certificate, dated as of the Second
Closing Date, certifying that the conditions set forth in Sections
6.3(a) and 6.3(b) have been satisfied.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Investor, as
of the date hereof and as of the Second Closing Date (to the extent the
Second Closing is consummated), as follows:
3.1. Organization; Subsidiaries. (a) 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 and licensed as a foreign corporation to do business, and is in
good standing (and has paid all relevant franchise or analogous taxes), in
each jurisdiction where the character of its assets owned or held under
lease or the nature of its business makes such qualification necessary,
except where the failure to so qualify or be licensed could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The minute books (containing the records of meetings of
stockholders, the Board of Directors, and any committees of the Board of
Directors), stock record books and certificate books of the Company contain
complete and correct records in all material respects of all corporate
actions taken at any such meetings and other corporate governance matters,
the stock ownership of the Company and the transfer of the shares of its
capital stock since the date of inception of the Company. Complete and
correct copies of all of the foregoing have previously been made available
to the Investors.
(b) Schedule 3.1(b) sets forth a complete and correct list of
each of the Subsidiaries. Except as set forth on Schedule 3.1(b), the
Company owns, either directly or indirectly through one or more
Subsidiaries, all of the capital stock or other equity interests of the
Subsidiaries free and clear of all Encumbrances, other than transfer
restrictions imposed by applicable federal and state securities Laws. All
of the issued and outstanding shares of capital stock or other equity
interests of each of the Subsidiaries held directly or indirectly by the
Company have been duly authorized and are validly issued, fully paid and
nonassessable. No shares of capital stock or other equity interests of any
of the Subsidiaries are entitled to preemptive rights. Except as set forth
on Schedule 3.1(b) or as disclosed in the SEC Reports, there are no
outstanding subscription rights, options, warrants, convertible or
exchangeable securities or other rights of any character whatsoever
relating to issued or unissued capital stock or other equity interests of
any of the Subsidiaries, or any Commitments of any character whatsoever
relating to issued or unissued capital stock or other equity interests of
any of the Subsidiaries or pursuant to which the Company or any of the
Subsidiaries is or may become bound to issue or grant additional shares of
its capital stock or other equity interests or related subscription rights,
options, warrants, convertible or exchangeable securities or other rights,
or to grant preemptive rights. Except as set forth on Schedule 3.1(b) or as
disclosed in the SEC Reports, there are no voting trusts, stockholders
agreements, proxies or other Commitments or understandings to which any of
the Subsidiaries is a party with respect to the voting or transfer of any
capital stock or other equity interest of any of the Subsidiaries. Except
as set forth on Schedule 3.1(b), the Company does not own, directly or
indirectly, any interest in any corporation, limited liability company,
partnership, business association or other Person.
(c) Each of the Subsidiaries is a corporation, limited liability
company, partnership, business association or other Person duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization and has the requisite power and authority to carry on its
business as it is now being conducted. Except as set forth on Schedule
3.1(c), each of the Subsidiaries is duly qualified and licensed to do
business, and is in good standing (and has paid all relevant franchise or
analogous taxes), in each jurisdiction where the character of its assets
owned or held under lease or the nature of the business conducted by it
makes such qualification necessary except where the failures of all of such
Subsidiaries to so qualify or be licensed could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The
minute books or other records (containing the records of meetings of
stockholders or other holders of other equity interests, the board of
directors or other similar governing body, and any committees thereof), the
stock ownership or analogous records and the certificate books of each of
the Subsidiaries contain complete and correct records in all material
respects of substantially all actions taken at any such meetings and other
governance matters, the stock or other equity ownership of each of the
Subsidiaries and the transfer of the shares of its capital stock or other
equity interest since the date of inception of the applicable Subsidiary.
Complete and correct copies of all of the foregoing have previously been
made available to the Investors.
3.2. Due Authorization. The Company has all right, corporate
power and authority to enter into this Agreement and each of the other
Transaction Documents to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by
the Company of this Agreement and each of the other Transaction Documents
to which it is a party, the issuance and sale of the Notes, the GS Shares
and the Preferred Stock by the Company and the compliance by the Company
with each of the provisions of this Agreement and each of the other
Transaction Documents to which it is a party (including the reservation and
issuance of the Conversion Shares and the consummation by the Company of
the transactions contemplated hereby and thereby) (a) are within the
corporate power and authority of the Company and (b) have been duly
authorized by all requisite corporate proceedings on the part of the
Company, except for the approval by the stockholders of the Company
referenced in Section 5.6. The Board of Directors has determined that it is
advisable and in the best interest of the Company's stockholders for the
Company to consummate the issuance and sale of the Notes, the GS Shares and
the Preferred Stock upon the terms and subject to the conditions set forth
in this Agreement, and has unanimously recommended that the Company's
stockholders approve the transactions referenced in Section 5.6. As of the
date hereof, the Board of Directors consist of seven directors and the
Initial Noteholder Designee shall be duly appointed to serve as a member of
the Board of Directors and the Executive Committee of the Board of
Directors as of January 20, 2000. This Agreement has been, and each of the
other Transaction Documents to which the Company is a party when executed
and delivered by the Company will be, duly and validly executed and
delivered by the Company, and this Agreement constitutes, and each of such
other Transaction Documents when executed and delivered by the Company will
constitute, a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except as enforceability
against the Company may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws now or hereafter in effect
relating to the rights of creditors generally. The GS Shares have been duly
and validly issued and are outstanding, fully paid and nonassessable. The
Conversion Shares at the Second Closing will be validly reserved for
issuance, and upon issuance in accordance with the Certificate of
Designation will be duly and validly issued and outstanding, fully paid and
nonassessable.
3.3. Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 50,000,000 shares of Common
Stock, of which 21,732,423 shares are issued and outstanding and (ii)
20,000,000 shares of preferred stock, par value $0.01 per share, of which
no shares are issued and outstanding. All of the issued and outstanding
shares of Common Stock have been duly authorized and are validly issued,
fully paid and nonassessable. Other than the shares of Preferred Stock to
be issued to the Investors at the Second Closing, no shares of capital
stock of the Company are entitled to preemptive rights. Except as set forth
on Schedule 3.3, as disclosed in the SEC Reports or as contemplated by this
Agreement or the other Transaction Documents, there are no outstanding
subscription rights, options, warrants, convertible or exchangeable
securities or other rights of any character whatsoever relating to issued
or unissued capital stock of the Company, or any Commitments of any
character whatsoever relating to issued or unissued capital stock of the
Company or pursuant to which the Company or any of the Subsidiaries is or
may become bound to issue or grant additional shares of its capital stock
or related subscription rights, options, warrants, convertible or
exchangeable securities or other rights, or to grant preemptive rights.
Except as set forth on Schedule 3.3, as disclosed in the SEC Reports or as
contemplated by this Agreement or the other Transaction Documents, (i) the
Company has not agreed to register any securities under the Securities Act
or under any state securities law or granted registration rights to any
Person or entity and (ii) there are no voting trusts, stockholders
agreements, proxies or other Commitments or understandings in effect to
which the Company is a party or of which it has Knowledge with respect to
the voting or transfer of any of the shares of Common Stock. Except as set
forth on Schedule 3.3, to the extent that any options, warrants or any of
the other rights described above are outstanding, neither the issuance and
sale of the Notes, the GS Shares or the Preferred Stock nor the issuance of
any Conversion Shares will result in an adjustment of the exercise or
conversion price or number of shares issuable upon the exercise or
conversion of any such options, warrants or other rights.
3.4. SEC Reports. The Company has timely filed all proxy
statements, reports and other documents required to be filed by it with the
SEC under the Exchange Act from and after January 1, 1997, and the Company
has made available to each of the Investors complete and correct copies of
all annual reports, quarterly reports, proxy statements and other reports
filed by the Company with the SEC under the Exchange Act from and after
such date (collectively, the "SEC Reports"). Each SEC Report was on the
date of its filing in compliance in all material respects with the
requirements of its respective report form and did not on the date of
filing 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
or will be made, not misleading, and as of the date hereof there is no fact
or facts not disclosed in the SEC Reports that relate specifically to the
Company or any of the Subsidiaries and which could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Complete and correct copies of all material correspondence between the
Company or any of the Subsidiaries, on the one hand, and the SEC, on the
other hand, have previously been made available to the Investors.
3.5. Financial Statements. The consolidated financial statements
(including any related schedules and/or notes) included in the SEC Reports
have been prepared in accordance with United States generally accepted
accounting principles ("GAAP") consistently followed throughout the periods
involved, except as may be noted therein, and fairly present in all
material respects the consolidated financial condition, results of
operations and changes in stockholders' equity of the Company and the
Subsidiaries as of the respective dates thereof and for the respective
periods then ended (in each case subject, as to interim statements, to
changes resulting from year-end adjustments). Neither the Company nor any
of the Subsidiaries has any Liability, except (i) liabilities and
obligations in the respective amounts reflected or reserved against in the
audited consolidated balance sheet of the Company and the Subsidiaries as
of December 31, 1998 (the "1998 Balance Sheet"), or (ii) liabilities and
obligations incurred in the ordinary course of business since December 31,
1998 which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
3.6. Absence of Certain Changes. Except as set forth on Schedule
3.6, as disclosed in the SEC Reports or as contemplated by this Agreement
or the other Transaction Documents, since December 31, 1998: (i) the
business of the Company and the Subsidiaries taken as a whole has been
conducted in the ordinary course of business consistent with past practice,
(ii) the Company and each of the Subsidiaries have not (a) suffered any
change, event or development or series of changes, events or developments
which could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, (b) suffered any damage, destruction or
casualty loss to its physical properties (whether or not covered by
insurance) which could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect or (c) been the subject of any
Litigation or threatened or commenced investigation by a Governmental
Entity, and (iii) there has not been any transaction, act, development,
circumstance or event that if it had occurred on or after the date hereof
without the prior consent of the Investors would constitute a breach of
Section 5.1.
3.7. Litigation. (a) Except as set forth on Schedule 3.7(a) or as
disclosed in the SEC Reports, there is no Litigation pending or, to the
Knowledge of the Company, threatened against the Company or any of the
Subsidiaries or involving any of their respective properties or assets by
or before any court, arbitrator or other Governmental Entity, which, if
determined adversely to the Company, could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(b) Neither the Company nor any of the Subsidiaries is in default
under or in breach of any order, judgment or decree of any court,
arbitrator or other Governmental Entity, and neither the Company nor any of
the Subsidiaries is a party or subject to any order, judgment or decree of
any court, arbitrator or other Governmental Entity.
3.8. Title to Properties. (a) The Company and each of the
Subsidiaries have good and valid title to, or, in the case of property
leased by them, a valid and subsisting leasehold interest in, their
respective properties and assets, free of all Encumbrances except for
Permitted Encumbrances.
(b) Schedule 3.8(b) sets forth a complete and correct list of all
Owned Real Property. With respect to the Owned Real Property, the Company
or a Subsidiary has good and marketable title in fee simple to the Owned
Real Property, free and clear of all Encumbrances except for (A)
Encumbrances set forth on Schedule 3.8(b), (B) liens for taxes not yet due
and payable, and (C) Encumbrances that are not individually or in the
aggregate material (the Encumbrances described in clauses (A), (B) and (C)
collectively, "Permitted Encumbrances").
(c) Schedule 3.8(c) sets forth a complete and correct list of all
Leased Real Property. With respect to the Leased Real Property, the Company
or a Subsidiary has good and valid leasehold estates in the Leased Real
Property, free and clear of all Encumbrances except for Permitted
Encumbrances.
3.9. Consents; No Violations. (a) Except as set forth on Schedule
3.9(a), neither the execution, delivery or performance by the Company of
this Agreement or any of the other Transaction Documents to which it is a
party nor the consummation of the transactions contemplated hereby or
thereby will (i) conflict with, or result in a breach or a violation of,
any provision of the certificate of incorporation or by-laws or other
organizational documents of the Company or any of the Subsidiaries; (ii)
constitute, with or without notice or the passage of time or both, a
breach, violation or default, create an Encumbrance, or give rise to any
right of termination, modification, cancellation, prepayment, suspension,
limitation, revocation or acceleration, under (A) any Law or (B) any
Commitment to which the Company or any of the Subsidiaries is a party or
pursuant to which any of them or any of their assets or properties is
subject, except, with respect to the matters set forth in this clause (ii),
for breaches, violations, defaults, Encumbrances, or rights of termination,
modification, cancellation, prepayment, suspension, limitation, revocation
or acceleration, which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect or adversely
affect the ability of the Company to consummate the transactions
contemplated by this Agreement or any other Transaction Document to which
it is a party; (C) constitute a "Change in Control" of the Company under
any Commitment to which an officer is a party or under any of the
Compensation and Benefit Plans; or (D) except for any required filing under
the HSR Act, require any consent, approval or authorization of,
notification to, filing with, or exemption or waiver by, any Governmental
Entity or any other Person on the part of the Company or any of the
Subsidiaries. Neither the Company nor any of the Subsidiaries is a party to
any agreement or bound by the terms of any instrument or security which
would prevent the Company from paying cash dividends on the Preferred Stock
on a current basis.
(b) The Company has received all consents required to be obtained
prior to or at the Initial Closing as set forth on Schedule 3.9(b),
including, without limitation, the consent of the Required Lenders under
the Credit Agreement to the transactions contemplated hereby and by the
other Transaction Documents.
3.10. Compliance with Laws; Licenses. Except as set forth on
Schedule 3.10 or as disclosed in the SEC Reports, the Company and each of
the Subsidiaries are in compliance in all material respects with all Laws,
and since January 1, 1997, neither the Company nor any of the Subsidiaries
has received any notice of any alleged violation of Law applicable to it.
Except as set forth on Schedule 3.10, the Company and each of the
Subsidiaries have all Licenses, and all of such Licenses are valid and in
full force and effect, and the Company and each of the Subsidiaries have
duly performed and are in compliance in all material respects with all of
their obligations under such Licenses. No event has occurred with respect
to any of such Licenses that allows, or after notice or lapse of time or
both would allow, the suspension, limitation, revocation, non-renewal or
termination thereof or would result in any other material impairment of the
rights of the holder thereof in and under any of such Licenses, and no
terminations thereof or proceedings to suspend, limit, revoke or terminate
any License have been threatened.
3.11. Tax Matters. The Company and each of the Subsidiaries have
(i) filed all federal, state, local and foreign Tax Returns required to be
filed by them (taking into account extensions), (ii) paid all Taxes shown
to be due on such Returns and paid or accrued on the 1998 Balance Sheet all
Taxes which are otherwise due and payable and (iii) paid or accrued on the
1998 Balance Sheet all Taxes for which a notice of assessment or collection
has been received, except in the case of clauses (i), (ii) or (iii) for any
such filings, payments or accruals which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Neither the IRS nor any other taxing authority has asserted any claim for
Taxes, nor to the Knowledge of the Company, is threatening to assert any
claims for Taxes, against the Company or any of the Subsidiaries which
claims, if determined adversely to the Company or any of the Subsidiaries,
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The Company and each of the Subsidiaries have
withheld or collected and paid over to the appropriate Governmental
Entities (or are properly holding for such payment) all Taxes required by
Law to be withheld or collected, except for amounts which could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. There are no liens for Taxes upon the assets of the Company
or any of the Subsidiaries (other than liens for Taxes that are not yet
due), except for liens which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any of the Subsidiaries (i) has any Liability under Treasury
Regulation Section 1.1502-6 or analogous state, local, or foreign law
provision, except to the extent any such Liabilities could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, or (ii) is a party to a Tax sharing or Tax indemnity
agreement or any other Commitment of a similar nature with any entity other
than the Company or any of the Subsidiaries that remains in effect and
under which the Company or any of the Subsidiaries could have any material
Liability for Taxes. No claim has been made by a taxing authority in a
jurisdiction where the Company or any of the Subsidiaries does not file Tax
Returns that the Company or any of the Subsidiaries is or may be subject to
taxation by that jurisdiction where such claim, if determined adversely to
the Company or any of the Subsidiaries, would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of the Subsidiaries is the subject of any
currently ongoing audit or examination with respect to a material amount of
Taxes, nor, to the Knowledge of the Company, has any such audit been
threatened or proposed, by any taxing authority.
3.12. Employee Benefit Plans. (a) Schedule 3.12 sets forth a
complete and correct list of (i) each material Compensation and Benefit
Plan, and (ii) each Compensation and Benefit Plan (whether or not material)
which contains a "change of control" or similar provision. The Company has
heretofore delivered or made available to the Investors complete and
correct copies of all such Compensation and Benefit Plans and any
amendments thereto (or if a Compensation and Benefit Plan is not in written
form, a written description thereof), any related trust or other funding
agreement or vehicle, the most recent reports or summaries required under
ERISA or the Code and, with respect to each Compensation and Benefit Plan
intended to qualify under Article 401 of the Code, the most recent
determination letter received from the IRS.
(b) The Company, each of the Subsidiaries and each ERISA
Affiliate have performed in all material respects all obligations required
to be performed by them under each Compensation and Benefit Plan and none
of the Company, any of the Subsidiaries or any ERISA Affiliate is in
material default under or in material violation of any Compensation and
Benefit Plan. Each Compensation and Benefit Plan has been established,
operated, maintained and administered, as the case may be, substantially in
accordance with its terms and in compliance with all applicable laws,
statutes, orders, rules and regulations, including, but not limited to,
ERISA and the Code.
(c) Except as set forth on Schedule 3.12, at no time has the
Company, any of the Subsidiaries or any ERISA Affiliate contributed to or
been required to contribute to, or incurred any withdrawal liability
(within the meaning of Article 4201 of ERISA) to, any Compensation and
Benefit Plan that is a "multi-employer plan" within the meaning of Sections
3(37) or 4001(a)(3) of ERISA (a "Multi-Employer Plan").
(d) None of the Company, any of the Subsidiaries or any ERISA
Affiliate (i) presently sponsors, maintains or contributes to, (ii) is
required to sponsor, maintain or contribute to or (iii) has ever sponsored,
maintained, contributed to or been required to contribute to, any
Compensation and Benefit Plan (other than a Multi-Employer Plan) that is an
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA
and that is subject to Title IV of ERISA.
3.13. Intellectual Property. Schedule 3.13 sets forth a complete
and correct list of each item of Intellectual Property owned or used by the
Company or any of the Subsidiaries. Except as disclosed on Schedule 3.13,
(i) the Company or a Subsidiary owns or has the right to use pursuant to a
valid license, sub-license or other agreement all of the Intellectual
Property used by it, except where the absence of any thereof could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect and (ii) neither the Company nor any of the Subsidiaries has
interfered with, infringed upon or misappropriated any Intellectual
Property rights of third parties, except for interferences, infringements
and misappropriations which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, and neither the
Company nor any of the Subsidiaries has received any written claim, demand
or notice alleging any such interference, infringement or misappropriation.
To the Knowledge of the Company, no third party has interfered with,
infringed upon or misappropriated any Intellectual Property rights of the
Company or any of the Subsidiaries, except for interferences, infringements
and misappropriations which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
3.14. Commitments.
-----------
(a) Schedule 3.14 sets forth (or cross-references to another
schedule hereto that sets forth) a complete and correct list of all
contracts or agreements (whether written or oral), including any amendments
thereto, (x) to which the Company or any of the Subsidiaries is a party or
(y) by or to which the Company or any of the Subsidiaries or any of their
properties may be bound or subject (whether or not listed or required to be
listed on Schedule 3.14, individually a "Commitment" and collectively, the
"Commitments") of the following types:
(i) Commitments for the sale of any tangible or
intangible properties or assets other than in the ordinary course of
business, or for the grant of any option or preferential rights to
purchase any such properties or assets, in each case providing for
aggregate payments in excess of $100,000;
(ii) Commitments for the construction, modification or
repair of any building, structure or facility or for the incurrence of
any capital expenditures or for the acquisition of fixed assets, in
each case providing for aggregate payments in excess of $100,000;
(iii) Commitments relating to the acquisition or
disposition by the Company or any of the Subsidiaries of any business
or the capital stock of any other Person that have not been
consummated or that have been consummated but contain representations,
covenants, guaranties, indemnities or other obligations that remain in
effect;
(iv) Commitments relating to any Litigation;
(v) Commitments relating to the lending or borrowing of
money, including loan agreements, performance bonds, letters of
credit, bankers acceptances and similar instruments or arrangements;
(vi) Commitments containing covenants of the Company or
any of the Subsidiaries or any successor thereto not to compete, not
to engage in any line of business or conduct business in any
geographical area or with any Person, or not to disclose certain
information;
(vii) Commitments pursuant to which the Company or any
of the Subsidiaries (x) leases, subleases, licenses or otherwise has
the right to use any real or personal property, whether tangible or
intangible, including leases and subleases of the Leased Real
Property, or (y) is the lessor of any real or personal property, in
each case providing for aggregate payments in excess of $100,000;
(viii) Commitments in respect of Licenses and
Commitments relating to Intellectual Property;
(ix) Commitments in respect of any joint venture,
partnership or other similar arrangement (including, without
limitation, any joint development agreement);
(x) Commitments with any Governmental Entity,
including, without limitation, the United States Department of Health
and Human Services;
(xi) Commitments relating to Indebtedness not included
under clause (v), including Commitments relating to outstanding
letters of credit or performance bonds or creating any Liability as
guarantor, surety, co-signer, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any Person, except as
endorser or maker of checks or letters of credit endorsed or made in
the ordinary course of business;
(xii) any Commitment that is material to the Company or
any of the Subsidiaries regardless of the size of any payment
thereunder and regardless of whether it would otherwise not be
required to be listed on Schedule 3.14 because of the exclusions set
forth in any of clauses (i) through (xi) of this Section 3.14(a); and
(xiii) Commitments currently in negotiation by the
Company or any of the Subsidiaries of a type that if entered into
would be required to be listed on Schedule 3.14 or to be disclosed on
any other schedule hereto.
(b) Complete and correct copies (or, if oral, full written
descriptions) of all Commitments required to be listed on Schedule 3.14,
including all amendments thereto, and complete and correct copies of all
standard form Commitments used in the conduct of the business, have been
made available to the Investors. Except as set forth on Schedule 3.14, all
of the Commitments are valid, binding, in full force and effect and
enforceable in accordance with their respective terms by the Company or a
Subsidiary (as the case may be) against the respective counterparties to
such Commitments except where the failure to be valid, binding or in full
force and effect could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as set forth on Schedule
3.14, (i) there is no breach, violation or default and no event that, with
or without notice or the passage of time or both, would constitute a
breach, violation or default, or give rise to any Encumbrance or right of
termination, modification, cancellation, prepayment, suspension,
limitation, revocation or acceleration under, any Commitment, except for
breaches, violations, defaults, Encumbrances or rights of termination,
modification, cancellation, prepayment, suspension, limitation, revocation
or acceleration that could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, and (ii) neither
the Company nor any of the Subsidiaries or, to the Company's Knowledge, any
other party to any of the Commitments is in arrears in respect of the
performance or satisfaction of the terms and conditions on its part to be
performed or satisfied under any of such Commitments except where any such
failure could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, and no waiver or indulgence thereunder
has been granted by any of the parties thereto. Schedule 3.14 sets forth a
complete and correct list of each Commitment that contains a provision
requiring the other party thereto to consent to the transactions
contemplated hereby in order for such Commitment to remain in full force
and effect following each Closing in accordance with its current terms.
3.15. Acquisitions. Schedule 3.15 sets forth a complete and
correct list of all acquisitions (by purchase of assets, purchase of stock,
merger or otherwise) of any Person or any businesses, business lines or
material assets pending or consummated or agreed to be consummated by the
Company or any of the Subsidiaries since January 1, 1997 or earlier to the
extent that the Company or any of the Subsidiaries has continuing
Liabilities with respect to any acquisition. All continuing material
Liabilities of the Company or any of the Subsidiaries in connection with
any acquisition (including, without limitation, arising out of
indemnification, the granting of registration rights or the terms of any
earn-out or make-whole provisions) are summarized on Schedule 3.15. In
connection with any acquisition consummated by the Company or any of the
Subsidiaries in which part or all of the consideration consisted of shares
of capital stock or any other securities (including, without limitation,
capital stock of the Company), such shares of capital stock or other
securities were issued in compliance with the registration requirements of
all applicable federal and state securities laws.
3.16. Brokers or Finders. No agent, broker, investment banker or
other Person is or will be entitled to any broker's or finder's fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement or the other Transaction Documents based on
arrangements made by or on behalf of the Company or any of the
Subsidiaries.
3.17. Proxy Statement. Any proxy statement to be sent to the
stockholders of the Company in connection with a meeting of the
stockholders of the Company in connection with the transactions
contemplated by this Agreement and the other Transaction Documents (the
"Stockholders Meeting"; such proxy statement as amended or supplemented is
referred to herein as the "Proxy Statement") will comply as to form in all
material respects with Article 14(a) of the Exchange Act and the rules
promulgated thereunder, and it shall not, on the date the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to
stockholders or at the time of the Stockholders Meeting, contain any untrue
statement of a material fact, or, in light of the circumstances under which
made, omit to state any material fact necessary in order to make the
statements made therein not false or misleading, or omit to state any
material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the
Stockholders Meeting which has become false or misleading. If at any time
prior to the Second Closing any event relating to the Company or any of the
Subsidiaries or any of their respective Affiliates, officers or directors
should be discovered by the Company that is required to be set forth in a
supplement to the Proxy Statement, the Company shall promptly inform the
Investors thereof.
3.18. Insurance. Schedule 3.18 sets forth a complete and correct
list of all insurance coverage carried by the Company and each of the
Subsidiaries, including for each policy the type and scope of coverage, the
carrier and the amount of coverage. The Company maintains a directors' and
officers' insurance policy with National Union Fire Insurance Company of
Pittsburgh, PA, a complete and correct copy of which has previously been
delivered to the Investors.
3.19. Holding Company Act and Investment Company Act. Neither the
Company nor any of the Subsidiaries is: (i) a "public utility company" or a
"holding company," or an "affiliate" or a "subsidiary company" of a
"holding company," or an "affiliate" of such a "subsidiary company," as
such terms are defined in the Public Utility Holding Company Act of 1935,
as amended, or (ii) a "public utility," as defined in the Federal Power
Act, as amended, or (iii) an "investment company" or an "affiliated person"
thereof or an "affiliated person" of any such "affiliated person," as such
terms are defined in the Investment Company Act of 1940, as amended.
3.20. Offering of the Notes, the GS Shares and the Preferred
Stock. (a) It is not necessary in connection with the offer, sale and
delivery of the Notes, the GS Shares and the Preferred Stock to the
Investors to register the Notes, the GS Shares or the Preferred Stock under
the Securities Act. Until such time as the exchange notes are issued
pursuant to the Exchange and Registration Rights Agreement or the Notes or
exchange notes are otherwise registered pursuant to an effective
registration statement under the Securities Act, it is not necessary to
qualify an indenture relating to the Notes or exchange notes under the TIA.
(b) The Company has not, directly or indirectly, offered, sold or
solicited any offer to buy and will not, directly or indirectly, offer,
sell or solicit any offer to buy, any security of a type or in a manner
which would be integrated with the sale of the Notes, the GS Shares or the
Preferred Stock and require any of the Notes, the GS Shares or the
Preferred Stock to be registered under the Securities Act. None of the
Company, its Affiliates or any person acting on its or any of their behalf
has engaged or will engage in any form of general solicitation or general
advertising (within the meaning of Rule 502(c) under the Securities Act) in
connection with the offering of the Notes, the GS Shares and the Preferred
Stock. With respect to any Notes, GS Shares or Preferred Stock, if any,
sold in reliance upon the exemption afforded by Regulation S: (i) none of
the Company, its Affiliates or any person acting on its or their behalf has
engaged or will engage in any directed selling efforts within the meaning
of Regulation S and (ii) each of the Company and its Affiliates and any
Person acting on its or their behalf has complied and will comply with the
offering restrictions set forth in Regulation S.
(c) The Notes are eligible for resale pursuant to Rule 144A and
will not, as of the date hereof, be of the same class as securities listed
on a national securities exchange registered under Section 6 of the
Exchange Act or quoted on a U.S. automated interdealer quotation system.
3.21. Existing Indebtedness; Future Liens. (a) Schedule 3.21 sets
forth a complete and correct list of all outstanding Indebtedness of the
Company and each of the Subsidiaries as of the date hereof. Neither the
Company nor any of the Subsidiaries has defaulted and no waiver of default
is currently in effect, in the payment of any principal or interest on any
such Indebtedness and no event or condition exists with respect to any such
Indebtedness that would permit (or that with notice or the lapse of time,
or both, would permit) one or more Persons to cause such Indebtedness to
become due and payable before its stated maturity or before its regularly
scheduled dates of payment. Neither the Company nor any of the Subsidiaries
has received any notice from any Person declaring or threatening to declare
any Indebtedness owed by the Company or any of the Subsidiaries to such
Person due and payable prior to the stated maturity of such Indebtedness or
before its regularly scheduled dates of payment.
(b) Neither the Company nor any of the Subsidiaries has agreed or
consented to cause or permit in the future (upon the happening of a
contingency or otherwise) any of its property or assets, whether now owned
or hereafter acquired, to be subject to any Encumbrances (other than
Permitted Encumbrances).
3.22. Solvency. The Company is not, and after giving effect to
the issuance and sale of the Notes, the GS Shares and the Preferred Stock
and the application of the proceeds therefrom will not be, insolvent within
the meaning of Title 11 of the United States Code or any comparable state
law provision.
3.23. Section 203 of the DGCL; Takeover Statute. The Board of
Directors has taken all action necessary to cause the restrictions
contained in Section 203 of the DGCL to be inapplicable to the transactions
contemplated by this Agreement or the other Transaction Documents and to
approve the Investors becoming "interested stockholders" (as defined in
such Section), whether by way of the transactions contemplated by this
Agreement or the other Transaction Documents, conversion of the Preferred
Stock or any other future transaction. The execution, delivery and
performance of this Agreement or any of the other Transaction Documents and
the consummation of the transactions contemplated hereby or thereby will
not cause to be applicable to the Company any "fair price," "moratorium,"
"control share acquisition" or other similar antitakeover statute or
regulation enacted under state or federal laws.
3.24. Year 2000. To the knowledge of the Company, the software,
computers and other hardware and systems used by the Company and each of
the Subsidiaries will (i) accurately process date information before,
during and after January 1, 2000, including, but not limited to, accepting
date input, providing date output and performing calculations on dates or
portions of dates; (ii) function accurately and without interruption
before, during and after January 1, 2000 without any change in operations
associated with the advent of the new century; (iii) respond to two digit
year date input in a way that resolves the ambiguity as to century in a
disclosed, defined and predetermined manner; and (iv) store and provide
output of date information in ways that are unambiguous as to century. The
Company and each of the Subsidiaries have contacted their principal vendors
and suppliers and other Persons with whom the Company or any of the
Subsidiaries has material business relationships, and each of such vendors,
suppliers and other Persons have notified the Company or the applicable
Subsidiary that its software, computers and other hardware and systems are
Year 2000 compliant in all material respects to the extent affecting the
Company or any of the Subsidiaries. The ability of such vendors, suppliers
and other Persons to identify and resolve their own Year 2000 issues could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
3.25. Margin Regulations. No part of the proceeds from the sale
of the Notes will be used, directly or indirectly, for the purpose of
buying or carrying any margin stock within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System (12 C.F.R. 221), or
for the purpose of buying or carrying or trading in any securities. Margin
stock does not constitute more than 5% of the value of the consolidated
assets of the Company and the Subsidiaries and the Company has no present
intention that margin stock will constitute more than 5% of the value of
such assets. As used in this Section, the terms "margin stock" and "purpose
of buying or carrying" shall have the meanings assigned to them in
Regulation U.
3.26. Disclosure. Neither this Agreement nor any other
Transaction Document, nor any schedule or exhibit hereto or thereto, nor
any certificate furnished to the Investors by or on behalf of the Company
in connection with the transactions contemplated hereby and thereby,
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. The financial forecasts furnished by the Company to
the Investors have been reasonably prepared and reflect the best currently
available estimates and judgment of the Company's management as to the
expected future financial performance of the Company and the Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each of the Investors, severally and not jointly, hereby
represents and warrants to the Company, as of the date hereof and as of the
Second Closing Date (to the extent the Second Closing is consummated), as
follows:
4.1. Acquisition for Investment. Such Investor is acquiring the
Notes, the GS Shares and the Preferred Stock for its own account, for
investment and not with a view to the distribution thereof within the
meaning of the Securities Act.
4.2. Restricted Securities. Such Investor understands that (i)
the Notes, the GS Shares and the Preferred Stock will not be registered
under the Securities Act or any state securities laws by reason of their
issuance by the Company in a transaction exempt from the registration
requirements thereof and (ii) the Notes, the GS Shares, the Preferred Stock
and the Conversion Shares may not be sold unless such disposition is
registered under the Securities Act and applicable state securities laws or
is exempt from registration thereunder.
4.3. Accredited Investor. Such Investor is an "accredited
investor" (as defined in Rule 501(a) under the Securities Act).
4.4. Sufficient Funds. Such Investor will have available
sufficient funds to pay its obligations under this Agreement on the date
any such obligation is due.
ARTICLE V
COVENANTS
5.1. Conduct of Business by the Company Pending the Second
Closing. The Company covenants and agrees that, between the date hereof and
the earlier of the Second Closing Date and the Second Closing Termination
Date, unless the Investors otherwise agree in writing, the Company shall,
and shall cause each of the Subsidiaries to, (a) conduct its business only
in the ordinary course and consistent with past practice; (b) use
reasonable best efforts to preserve and maintain its assets and properties
and its relationships with its customers, suppliers, advertisers,
distributors, agents, officers and employees and other Persons with which
it has significant business relationships; (c) use reasonable best efforts
to maintain all of the material assets it owns or uses in the ordinary
course of business consistent with past practice; (d) use reasonable best
efforts to preserve the goodwill and ongoing operations of its business;
(e) maintain its books and records in the usual, regular and ordinary
manner, on a basis consistent with past practice; (f) perform and comply in
all material respects with its Commitments; and (g) comply in all material
respects with applicable Laws. Except as expressly contemplated by this
Agreement or as set forth on Schedule 5.1, between the date hereof and the
earlier of the Second Closing Date and the Second Closing Termination Date,
the Company shall not, and shall cause each of the Subsidiaries not to, do
any of the following without the prior written consent of the Investors:
(i) change any method of accounting or accounting
practice used by the Company or any Subsidiary, other than such
changes required by GAAP;
(ii) other than in connection with the transactions
contemplated hereby, repurchase, redeem or otherwise acquire or
exchange any share of Common Stock or other equity interests; except
for issuances of Common Stock pursuant to the exercise of options to
purchase Common Stock or pursuant to existing Commitments outstanding
on the date hereof, in each case listed on Schedule 3.3, and except as
contemplated by this Agreement and pursuant to acquisitions permitted
pursuant to Sections 3.7 and 3.13 of the Notes, issue or sell any
additional shares of the capital stock of, or other equity interests
in, the Company or any of the Subsidiaries, or securities convertible
into or exchangeable for such shares or other equity interests, or
issue or grant any subscription rights, options, warrants or other
rights of any character relating to shares of such capital stock, such
other equity interests or such securities;
(iii) amend the Company's certificate of incorporation
or by-laws, except with respect to the filing of the Certificate of
Designation, or amend any Subsidiary's charter or by-laws or other
organizational documents in any material respect;
(iv) make any change in the Company's or any
Subsidiary's Tax accounting methods, any new election with respect to
Taxes or any modification or revocation of any existing election with
respect to Taxes or settle or otherwise dispose of any Tax audit,
dispute, or other Tax proceeding;
(v) take any action that is reasonably likely to result
in any of the representations and warranties set forth in Article III
becoming false or inaccurate in any material respect as of the Second
Closing Date; or
(vi) agree to take any of the actions restricted by
this Section 5.1.
5.2. No Solicitation. Between the date hereof and the earlier of
the Second Closing and the Second Closing Termination Date, other than in
connection with the transactions contemplated hereby, neither the Company
nor any of the Subsidiaries shall solicit, propose or facilitate (including
by way of providing information regarding the Company or any of the
Subsidiaries or their respective businesses to any Person), directly or
indirectly, any inquiries, discussions, offers or proposals for, continue
or enter into negotiations looking toward, or enter into or consummate any
Commitment or understanding in connection with any offer or proposal
regarding, any purchase or other acquisition of all or any material portion
of the Company and the Subsidiaries taken as a whole, the business or
assets of the Company and the Subsidiaries taken as a whole, any debt
financing (other than pursuant to Section 5.3 hereof), or any of the
capital stock of or equity interests in (whether newly issued or currently
outstanding) the Company or any of the Subsidiaries (other than with
respect to proposed acquisitions by the Company of businesses for which the
Company would use its capital stock as consideration as permitted by
Sections 3.7 and 3.13 of the Notes), or any merger, business combination or
recapitalization involving the Company or any of the material Subsidiaries
or their respective businesses; and the Company shall cause the
Subsidiaries and the Affiliates, officers, directors, employees,
representatives and agents of the Company and the Subsidiaries
(collectively, "Company Affiliates") to refrain from engaging in any of the
above activities that the Company is restricted from engaging in. The
Company agrees to promptly inform the Investors of the identity of any
Person making any inquiry, offer or proposal, and the nature and terms of
any such inquiry, offer or proposal, and to keep the Investors promptly and
fully informed as to the status thereof. The Company shall be liable to the
Investors for any breach of the covenants set forth in this Section 5.2 by
any Company Affiliate.
5.3. Bank Financing. Prior to the Second Closing, the Company
shall obtain additional senior debt financing under the Credit Agreement or
another facility syndicated or privately placed by a bank or its affiliates
in an amount not less than $65 million, on terms reasonably satisfactory to
the Investors taking into account current market conditions (the
"Additional Financing"). The Investors shall use their reasonable best
efforts to assist and cooperate with the Company in its efforts to obtain
the Additional Financing; provided, however, that any such assistance and
cooperation by the Investors shall not, in any case, require the Investors
to waive or modify any of their rights under any of the Transaction
Documents and shall not require the expenditure of any funds by the
Investors.
5.4. Press Releases; Interim Public Filings. Subject to Section
9.2, the Company shall deliver to the Investors complete and correct copies
of all press releases and public filings made between the date hereof and
the earlier of the Second Closing and the Second Closing Termination Date.
The Company shall not disclose the name or identity of any of the Investors
as an investor in the Company in any press release or other public
announcement or in any document or material filed with any Governmental
Entity without the prior written consent of such Investor, unless such
disclosure is required by applicable Law, in which case prior to making
such disclosure the Company shall give written notice to such Investor,
describing in reasonable detail the proposed content of such disclosure,
shall permit such Investor to review and comment upon the form and
substance of such disclosure and shall take such comments into account in
making such disclosure.
5.5. HSR Act. Each of the Investors and the Company shall
cooperate with the other in making filings under the HSR Act and shall use
its best efforts to take, or cause to be taken, all actions necessary,
proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement to occur at the
Second Closing, including using its reasonable best efforts to resolve such
objections, if any, as the Antitrust Division of the Department of Justice
or the Federal Trade Commission or state antitrust enforcement or other
Governmental Entities may assert under antitrust Laws with respect to the
transactions contemplated hereby. In the event an action is instituted by
any Person challenging the transactions contemplated hereby as violative of
the antitrust laws, the Investors and the Company shall use their
reasonable best efforts to resist or resolve such action.
5.6. Proxy Statement; Stockholders Meeting. The Company shall
hold the Stockholders Meeting as soon as practicable after the date hereof
for the purpose of acting upon this Agreement and the transactions to be
consummated at the Second Closing to the extent requiring stockholder
approval, including, without limitation, the issuance and sale of the
Preferred Stock to the Investors; provided, however, that the Company shall
adjourn the Stockholders Meeting from time to time until all of the
conditions set forth in Article VI (other than the condition set forth in
Section 6.1(c) and other than those conditions that by their nature are to
be satisfied at the Second Closing) are satisfied or waived, such that the
Stockholders Meeting shall take place on the same day as the Second Closing
in accordance with Section 2.5. The Company shall recommend that its
stockholders approve this Agreement and the transactions contemplated
hereby requiring such stockholder approval. The Company and the Investors
shall cooperate in the preparation of the Proxy Statement to be mailed to
the Company's stockholders in connection with the solicitation of such
approval and shall use their reasonable best efforts to take, or cause to
be taken, all actions necessary to prepare the Proxy Statement, file the
Proxy Statement with the SEC and respond to any comments it may have, and
distribute the Proxy Statement to the Company's stockholders as
expeditiously as practicable; provided, that the Company shall file the
Proxy Statement with the SEC no later than January 31, 2000. The Company
shall give the Investors a reasonable opportunity to review and comment on
the Proxy Statement and related communications with stockholders of the
Company, and the Investors shall have the right to consent to any
descriptions of or references to (i) the Investors or any of their
Affiliates, and (ii) the Transaction Documents and the other agreements
executed concurrently therewith and the transactions contemplated thereby
in the Proxy Statement or such communications, which consent shall not be
unreasonably withheld or delayed.
5.7. Consents; Approvals. The Company shall use its reasonable
best efforts to obtain all consents, waivers, exemptions, approvals,
authorizations or orders (collectively, "Consents") (including, without
limitation (i) Consents required to avoid any breach, violation, default,
encumbrance or right of termination, modification, cancellation,
prepayment, suspension, limitation, revocation or acceleration set forth on
Schedule 3.9 or required to be set forth thereon, (ii) all Consents
pursuant to the Company's or any of the Subsidiaries' financing documents,
including without limitation, all indentures and credit agreements of the
Company or any of the Subsidiaries, and (iii) all United States and foreign
governmental and regulatory rulings and approvals), and the Company shall
make all filings (including, without limitation, all filings with United
States and foreign governmental or regulatory agencies), required or
desirable in connection with the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents, in each
case as promptly as practicable but in any event prior the Second Closing
if permitted to be filed prior thereto; provided, however, no payment
(other than filing fees related to the matters contemplated hereby and
except as set forth on Schedule 6.2(h)) or other accommodation shall be
made by the Company in connection with obtaining any of the foregoing
without the Investors' prior written consent. The Company also shall use
its reasonable best efforts to obtain all necessary state securities laws
or blue sky permits and approvals required to consummate the transactions
contemplated by the Second Purchase and shall furnish all information as
may be reasonably requested in connection with any such action.
5.8. Listing. The Company shall use its best efforts to cause the
Common Stock to continue to be listed on NASDAQ during the term of this
Agreement and for so long as any Notes, Preferred Stock, GS Shares or
Conversion Shares are outstanding. Prior to the Second Closing, the Company
shall prepare and submit to NASDAQ a listing application covering the
Conversion Shares and shall obtain approval for the listing of such
Conversion Shares, subject to official notice of issuance. Promptly after
the Second Closing Termination Date, the Company shall prepare and submit
to NASDAQ a listing application covering the GS Shares and shall obtain
approval for the listing of such GS Shares, subject to official notice of
issuance.
5.9. Board Representation. (a) From January 20, 2000 and for so
long as the Investors and their Affiliates own at least $5,500,000 in
aggregate principal amount of the Notes, GSCP shall have the right to
designate, at all times and from time to time, one director of the Company
(which director shall also serve on the Executive Committee of the Board of
Directors) (individuals designated pursuant to this paragraph, together
with the Initial Noteholder Designee, the "Noteholder Designees"). GSCP
shall cause the Noteholder Designee to resign from the Executive Committee
of the Board of Directors on the Second Closing Termination Date.
(b) From the Second Closing Date and for so long as the Investors
and their Affiliates collectively beneficially own a number of shares of
Common Stock (assuming conversion at such time of the Preferred Stock held
by the Investors and their Affiliates) that is not less than (i) 66 2/3% of
the number of shares of Common Stock beneficially owned (assuming
conversion at such time of the Preferred Stock held by the Investors and
their Affiliates) by them immediately after the Second Closing (as such
number may be adjusted for stock splits, reverse stock splits, dividends
paid in Common Stock, reclassifications of the Common Stock, and other
similar events), GSCP shall have the right to designate, at all times and
from time to time, three directors of the Company; (ii) 33 1/3% of the
number of shares of Common Stock beneficially owned (assuming conversion at
such time of the Preferred Stock held by the Investors and their
Affiliates) by them immediately after the Second Closing (as such number
may be adjusted for stock splits, reverse stock splits, dividends paid in
Common Stock, reclassifications of the Common Stock, and other similar
events), GSCP shall have the right to designate, at all times and from time
to time, two directors of the Company; and (iii) 10.0% of the number of
shares of Common Stock beneficially owned (assuming conversion at such time
of the Preferred Stock held by the Investors and their Affiliates) by them
immediately after the Second Closing (as such number may be adjusted for
stock splits, reverse stock splits, dividends paid in Common Stock,
reclassifications of the Common Stock, and other similar events), GSCP
shall have the right to designate, at all times and from time to time, one
director of the Company (individuals designated pursuant to this paragraph,
the "Preferred Designees", and together with the Noteholder Designees, the
"Investor Designees") The Initial Preferred Designees elected pursuant to
paragraph (c) below and the Initial Noteholder Designee elected prior to
the Initial Closing shall be the initial Preferred Designees.
(c) Prior to the Second Closing, each of the Company and the
Board of Directors shall take such action as may be necessary (including
seeking any necessary vote or approval of any stockholder of the Company,
taking any action necessary to expand the size of the Board of Directors,
or causing any existing director to resign in order to make room for the
Initial Preferred Designees) to cause the Initial Preferred Designees to be
elected to the Board of Directors.
(d) GSCP and the Company agree that one Preferred Designee shall
have the right to sit on the Executive Committee of the Board of Directors.
(e) If requested by GSCP, the Company will use its reasonable
best efforts (in accordance with the certificate of incorporation and
by-laws of the Company and the DGCL) to cause the removal any Investor
Designee (in accordance with the certificate of incorporation and by-laws
of the Company and the DGCL). Any vacancy among the Investor Designees
caused by removal or by the death, retirement or resignation of any
Investor Designee shall be filled by a Person designated by GSCP, and the
Company agrees to take any such action as is necessary, in accordance with
the certificate of incorporation and by-laws of the Company and the DGCL,
to cause such designee to be appointed or elected to the Board of
Directors. In the event that the term of any director who at such time is
an Investor Designee is to expire, then in connection with any meeting of
the Company's stockholders at which a successor to such director is to be
elected, the Company shall nominate an Investor Designee designated by GSCP
and shall recommend that stockholders vote in favor of such individual's
election to the Board of Directors in any proxy statement, information
statement or other communication to stockholders issued or disseminated by
the Company. In the event of any vacancy among the Investor Designees, the
Board of Directors shall not take any action not approved by the remaining
Investor Designee(s) (or by the Investors if there be no remaining Investor
Designee) during the period from the time GSCP informs the Company of a
designee to fill any such vacancy to the time such designee is duly
appointed or elected to the Board of Directors. Whenever the number of
directors that GSCP has the right to designate is reduced in accordance
with paragraphs (a) and (b) above, GSCP will cause the appropriate number
of Investor Designee(s) to tender their resignation(s) from the Board of
Directors.
(f) After the date hereof, without the prior written consent of
GSCP, the Board of Directors (i) shall not consist of more than eight
members so long as the Investors and their Affiliates own any Notes and
(ii) shall not consist of more than ten members so long as the Investors
and their Affiliates beneficially own at least 10.0% of the number of
shares of Common Stock beneficially owned (assuming conversion at such time
of the Preferred Stock held by the Investors and their Affiliates) by them
immediately after the Second Closing (as such number may be adjusted for
stock splits, reverse stock splits, dividends paid in Common Stock,
reclassifications of the Common Stock, and other similar events).
(g) The rights set forth in this Section 5.9 are intended to
satisfy the requirement of contractual management rights for purposes of
qualifying GSCP's interests in the Company as venture capital investments
for purposes of the Department of Labor's "plan assets" regulations, and in
the event such rights are not satisfactory for such purpose as to GSCP, the
Company and the Investors shall reasonably cooperate in good faith to agree
upon mutually satisfactory management rights which satisfy such
regulations.
5.10. Certificate of Designation. The Preferred Stock shall have
the terms, designations, powers, preferences and relative participation,
optional and other special rights, qualifications, limitations and
restrictions set forth in the form of the Certificate of Designation
attached hereto as Exhibit 5.10. The Company shall, prior to or
concurrently with the Second Closing, cause the Certificate of Designation
to be filed with the Secretary of State of the State of Delaware.
5.11. Cooperation. The Investors and the Company agree to use
their reasonable best efforts to take, or cause to be taken, as promptly as
practicable all such further actions as shall be necessary to make
effective and consummate the transactions contemplated by the Second
Purchase and the other transactions contemplated hereby.
5.12. Access to Property; Records. Between the date hereof and
the earlier of the Second Closing and the Second Closing Termination Date,
the Company shall give the Investors and their Affiliates, officers,
employees, directors, attorneys, accountants, investment bankers, agents
and representatives reasonable access upon reasonable advance notice to the
assets, properties, offices and other facilities, Commitments, accounting
books, legal documents and other business and financial records (including
all interim financial statements) of the Company, and to the outside
auditors of the Company and their work papers relating to the Company and
the Subsidiaries. The parties hereto agree that no investigation by the
Investors or its representatives shall affect or limit the scope of the
representations and warranties of the Company contained in this Agreement
or in any other Transaction Document delivered pursuant hereto or limit the
Liability for breach of any such representation or warranty. Each Investor
agrees to hold all information obtained pursuant to this Section 5.12
confidential pursuant to the letter agreement, dated October 18, 1999,
between the Company and Xxxxxxx, Xxxxx & Co. (the "Confidentiality
Agreement").
5.13. Incentive Stock Options. (a) At the Initial Closing, the
Company shall cause to be granted options to acquire 660,000 shares of
Common Stock, at a per share exercise price equal to the Market Value as of
such date, in such amounts and to such persons as are reasonably determined
by the Board of Directors after consultation with the Investors. Such
options shall be "incentive stock options" within the meaning of Section
422 of the Code to the extent possible (and shall otherwise be
non-qualified stock options) and shall be evidenced by award agreements
which contain customary terms and conditions reasonably acceptable to the
Investors.
(b) At the Second Closing, the Company shall cause to be granted
options to acquire 1,540,000 shares of Common Stock at a per share exercise
price equal to the Market Value as of such date, in such amounts and to
such persons as are reasonably determined by the Board of Directors after
consultation with the Investors. Such options shall be "incentive stock
options" within the meaning of Section 422 of the Code to the extent
possible (and shall otherwise be non-qualified stock options) and shall be
evidenced by award agreements which contain customary terms and conditions
reasonably acceptable to the Investors.
5.14. Notice of Breach. From the date hereof through the earlier
of the Second Closing and the Second Closing Termination Date, as promptly
as practicable, and in any event not later than five business days after
senior management of the Company becomes aware thereof, the Company shall
provide the Investors with written notice of (a) any representation or
warranty of the Company contained in this Agreement or any other
Transaction Document being untrue or inaccurate in any material respect at
any time from the date hereof to the earlier of the Second Closing and the
Second Closing Termination Date, or (b) any failure of the Company to
comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by the Company under this Agreement or any other
Transaction Document; provided, however, that the delivery of any notice
pursuant to this Section 5.14 shall not limit or otherwise affect the
remedies available to the Investors, or modify in any way any disclosure
made in this Agreement or any other Transaction Document or the schedules
hereto or thereto as of the date hereof.
5.15. Transfer Taxes. The Company shall be responsible for any
Liability with respect to any transfer, stamp or similar Taxes that may be
payable in connection with the execution, delivery and performance of this
Agreement including, without limitation, any such Taxes with respect to the
issuance of the Notes, the GS Shares, the Preferred Stock or the Conversion
Shares.
5.16. Rule 144; Integration. (a) So long as any Notes, GS Shares,
Preferred Stock or Conversion Shares are outstanding, the Company shall
file all reports required to be filed by it under the Securities Act and
the Exchange Act and after the Second Closing, shall take such further
action as the Investors may reasonably request, all to the extent required
to enable the Investors to sell any of the foregoing securities pursuant to
and in accordance with Rule 144. Such action shall include, but not be
limited to, making available adequate current public information meeting
the requirements of paragraph (c) of Rule 144. During the period of two
years following the Initial Closing, the Company shall not, and shall not
permit any of its Affiliates to, resell any of the Notes which constitute
"restricted securities" under Rule 144 that have been reacquired by any of
them.
(b) The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined
in the Securities Act) that would be integrated with the sale of the Notes
in a manner that would require the registration under the Securities Act of
the sale of Notes to the Investors or any Affiliate of the Investors.
(c) From the date hereof until December 31, 2000, the
Company shall not offer for sale, sell, contract to sell, loan or pledge or
otherwise dispose of, directly or indirectly, or file a registration
statement for, or announce any offer, sale, contract for sale of or other
disposition of any debt securities (or securities convertible into or
exercisable or exchangeable into debt securities) issued or guaranteed by
the Company without the prior written consent of the Investors.
5.17. Transfer Restrictions; Resale of Notes. The Investors will
not, prior to the 90th day following the Second Closing Termination Date,
sell, transfer, assign, convey, gift, mortgage, pledge, encumber,
hypothecate, or otherwise dispose of, directly or indirectly, ("Transfer")
any of the Notes except for Transfers between and among the Investors and
their Affiliates.
5.18. Preemptive Rights. (a) From the Second Closing Date and for
so long as the Investors collectively beneficially own (assuming conversion
of all shares of Preferred Stock into Common Stock) not less than 10.0% of
the total number of shares of Common Stock outstanding from time to time,
in the event the Company proposes to issue any capital stock of any kind
(including any Common Stock, preferred stock, warrants, options or
securities or units comprising securities convertible into or exchangeable
for Common Stock or preferred stock or rights to acquire the same) of the
Company, other than (1) pursuant to an employee or non-management director
stock option plan, stock bonus plan, stock purchase plan or other
management equity program or plan, (2) pursuant to any merger, share
exchange or acquisition pursuant to which shares of Common Stock are
exchanged for, or issued upon cancellation or conversion of, equity
securities of an entity engaged primarily in, or to acquire assets
primarily for use in, the business conducted by the Company and the
Subsidiaries or a business reasonably related to the business conducted by
the Company and the Subsidiaries, or (3) securities issuable upon exercise
of previously issued warrants, options or other rights to acquire capital
stock or upon conversion of previously issued securities convertible into
capital stock, then the Company shall:
(i) deliver to the Investors written notice setting
forth in reasonable detail (1) the terms and provisions of the
securities proposed to be issued (the "Proposed Securities"); (2) the
price and other terms of the proposed sale of such securities; (3) the
amount of such securities proposed to be issued; and (4) such other
information as the Investors may reasonably request in order to
evaluate the proposed issuance; and
(ii) offer to issue to the Investors in the aggregate a
portion of the Proposed Securities equal to a percentage determined by
dividing (x) the number of shares of Common Stock beneficially owned
by the Purchasers (assuming conversion of all shares of Preferred
Stock into Common Stock, by (y) the total number of shares of Common
Stock then outstanding.
The Investors must exercise the purchase rights hereunder within ten
business days after receipt of such notice from the Company.
(b) Upon the expiration of the offering period described above,
or if the Investors shall default in paying for or purchasing the Proposed
Securities on the terms offered by the Company, the Company shall
thereafter be free to sell such Proposed Securities that the Investors have
not elected to purchase during the ninety days following such expiration on
terms and conditions no more favorable to the purchasers thereof than those
offered to the Investors. Any Proposed Securities offered or sold by the
Company after such 90 day period must be reoffered to the Investor pursuant
to this Section 5.18.
(c) The election by the Investors not to exercise preemptive
rights under this Section 5.18 in any one instance shall not affect their
rights (other than in respect of a reduction in its percentage holdings) as
to any subsequent proposed issuance. Any sale of such securities by the
Company without first giving the Investors the rights described in this
Section 5.18 shall be void and of no force and effect, and the Company
shall not register such sale or issuance on the books and records of the
Company.
5.19 Standstill Agreement. (a) During the period commencing on
the date hereof and ending on the earlier of (i) the expiration of the
Standstill Period or (ii) the date these provisions terminate as provided
herein, except as (x) contemplated by this Agreement or any other
Transaction Document or (y) specifically approved in writing in advance by
the Company, the Investors shall not, and shall cause any Affiliates
controlled by them to not, in any manner, directly or indirectly:
(A) acquire, or offer or agree to acquire, or become
the beneficial owner of or obtain any rights in respect of any capital
stock of the Company in an amount in excess of the Grandfathered
Amount, except for the Conversion Shares or otherwise as permitted
pursuant to this Agreement or any other Transaction Document,
provided, however, that the foregoing limitation shall not prohibit
the acquisition of securities of the Company or any of its successors
issued as dividends or as a result of stock splits and similar
reclassifications or received in a merger or other business
combination in respect of Preferred Shares or Shares held by the
Investors or any of their Affiliates at the time of such dividend,
split or reclassification or merger or business combination; or
(B) solicit proxies or consents or become a
"participant" in a "solicitation" (as such terms are defined or used
in Regulation 14A under the Exchange Act) of proxies or consents with
respect to any voting securities of the Company or any of its
successors or initiate or become a participant in any stockholder
proposal or "election contest" (as such term is defined or used in
Rule 14a-11 under the Exchange Act) with respect to the Company or any
of its successors or induce others to initiate the same (except for
activities undertaken by the Investors or the Investor Designees in
connection with solicitations by the Board of Directors).
(b) The standstill provisions set forth herein shall terminate on
the earliest of (i) the last day of the Standstill Period, (ii) the
occurrence of any breach by the Company in any material respect of any
covenant or agreement contained in this Agreement or in any other
Transaction Document, (iii) the filing of a voluntary bankruptcy petition
by the Company or on the 60th day following the filing of an involuntary
bankruptcy petition against the Company if such petition is not discharged
with prejudice during such 60-day period, (iv) the occurrence of a change
in control (as defined in the Certificate of Designation) of the Company or
(v) the occurrence of a Third Party Proposal.
(c) For purposes of this Agreement, a Third Party Proposal shall
mean and occur if any Person (other than the Investors or their Affiliates)
makes a bona fide offer for all or substantially all of the Company's
outstanding equity securities or assets.
(d) Notwithstanding anything to the contrary in this Agreement or
in any other Transaction Document, nothing shall prohibit the Investors
from making an offer to the Board of Directors to purchase all or
substantially all of the Company's outstanding equity securities or assets.
5.20. Actions Requiring Investor Approval. So long as at the
Investors and their Affiliates beneficially own at least one-third of the
shares of Preferred Stock issued at the Second Closing, the Company shall
not, and shall not permit any of its Subsidiaries to, directly or
indirectly, without the consent of GSCP:
(a) authorize a consolidation with or merger with or into,
or conveyance, transfer or lease of all or substantially all assets as an
entirety to, any Person;
(b) authorize a liquidation, dissolution, recapitalization
or reorganization;
(c) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization
for a purchase price greater than $20 million;
(d) create, incur, assume or suffer to exist any
Indebtedness after the date hereof if such additional Indebtedness would
cause the ratio of (i) Total Debt (less Restricted Cash) to (ii)
Consolidated EBITDA for the period of four consecutive quarters of the
Company ending on, or most recently preceding, the date of determination,
to be greater than 4.5 to 1.00;
(e) enter into any business, either directly or through any
subsidiary or joint venture or similar arrangement, except for those
businesses in which the Company and its Subsidiaries, taken as whole, are
engaged on the date hereof or which are reasonably related, incidental, or
ancillary thereto; or
(f) authorize, adopt or approve an amendment to the
certificate of incorporation or by-laws of the Company, each as in effect
as of the Second Closing.
5.21. Dividends. The Company agrees that it shall pay cash
dividends on the Preferred Stock on a current basis so long as it is not
precluded from doing so under its debt instruments or Delaware law. In
furtherance thereof, the Company agrees to use its best efforts to pay such
dividends, including, without limitation, using its best efforts to refrain
from entering into any agreements which would preclude such payments, to
seek a waiver under any agreements which would prevent such payments at any
time and to take whatever actions are necessary, including revaluing
assets, to create surplus for the purpose of paying such dividends.
5.22. Use of Proceeds. The proceeds from the sale of the Notes,
the GS Shares and the Preferred Stock shall be used for general corporate
purposes as shall be determined by the Board of Directors.
ARTICLE VI
CONDITIONS
6.1. Conditions to Obligations of the Investors and the Company.
The respective obligations of the Investors and the Company to consummate
the Second Purchase shall be subject to the satisfaction or waiver at or
prior to the Second Closing of each of the following conditions:
(a) no statute, rule or regulation or order of any
Governmental Entity court or administrative agency shall be in effect
that prohibits the consummation of the transactions to be consummated
at the Second Closing;
(b) any waiting period (and any extension thereof) under the
HSR Act applicable to the transactions to be consummated at the Second
Closing shall have expired or been terminated; and
(c) the issuance of the Preferred Stock to the Investors in
connection with the Second Purchase shall have been approved and
adopted by the requisite vote of the stockholders of the Company in
accordance with applicable NASDAQ rules and the Company's certificate
of incorporation and by-laws.
6.2. Conditions to Obligations of the Investors. The obligation
of the Investors to consummate the Second Purchase shall be subject to the
satisfaction or waiver at or prior to the Second Closing of each of the
following conditions:
(a) each of the representations and warranties of the
Company contained in this Agreement shall be true and correct
(disregarding for this purpose all references in such representations
and warranties to any materiality, Material Adverse Effect, Knowledge
or similar qualifications) when made and as of the Second Closing
(except to the extent such representations and warranties are made as
of a particular date, in which case such representations and
warranties shall have been true and correct in all material respects
as of such date), except for failures to be true and correct which
individually or in the aggregate would not reasonably be expected to
have a Material Adverse Effect;
(b) the Company in all material respects shall have
performed, satisfied and complied with each of its covenants and
agreements set forth in this Agreement to be performed, satisfied and
complied with prior to or at the Second Closing, disregarding for this
purpose all references in such covenants and agreements to any
materiality or similar qualifications;
(c) the Certificate of Designation shall have been duly
filed with the Secretary of State of the State of Delaware and shall
be in full force and effect;
(d) the Conversion Shares shall have been duly authorized
and reserved for issuance and approved for listing on NASDAQ, subject
to official notice of issuance;
(e) the Company shall have obtained the Additional
Financing;
(f) the Board of Directors shall consist of ten directors,
three of whom shall be the Preferred Designees, effective as of the
Second Closing;
(g) there shall not have occurred after December 31, 1998
any change or development or series of changes or developments
(including without limitation as a result of any change in the Law)
which has resulted in or could reasonably be expected to result
individually or in the aggregate in a Material Adverse Effect;
(h) the Consents set forth on Schedule 6.2(h) shall have
been obtained or made by the Company, without any payment or other
accommodation having been or being made by the Company or any of the
Subsidiaries (except for the payment set forth on Schedule 6.2(h));
and
(i) the Company shall have made the deliveries set forth in
Section 2.6(a) hereof.
6.3. Conditions to Obligations of the Company. The obligation of
the Company to consummate the Second Purchase shall be subject to the
satisfaction or waiver at or prior to the Second Closing of each of the
following conditions:
(a) each of the representations and warranties of the
Investors contained in this Agreement shall be true and correct
(disregarding for this purpose all references in such representations
and warranties to any materiality, material adverse effect, knowledge
or similar qualifications) when made and as of the Second Closing
(except to the extent such representations and warranties are made as
of a particular date, in which case such representations and
warranties shall have been true and correct in all material respects
as of such date), except for failures to be true and correct which
individually or in the aggregate would not reasonably be expected to
have a material adverse effect on the ability of the Investors to
fulfill its obligations hereunder;
(b) the Investors in all material respects shall have
performed, satisfied and complied with each of its covenants and
agreements set forth in this Agreement to be performed, satisfied and
complied with prior to or at the Second Closing, disregarding for this
purpose all references in such covenants and agreements to any
materiality or similar qualifications; and
(c) the Investors shall have made the deliveries set forth
in Section 2.6(b) hereof.
ARTICLE VII
TERMINATION
7.1. Termination. The obligations of the parties to consummate
the Second Closing may be terminated at any time prior to the Second
Closing, notwithstanding approval thereof by the stockholders of the
Company:
(a) by mutual written consent of the Company and the
Investors at any time prior to the Second Closing; or
(b) by either the Investors or the Company if the Second
Closing shall not have been consummated by May 15, 2000; or
(c) by either the Investors or the Company if a Governmental
Entity shall have issued a nonappealable final order, decree or ruling
or taken any other action having the effect of permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement; or
(d) by the Investors or the Company, (i) if any
representation or warranty of the other set forth in this Agreement or
in any other Transaction Document shall be untrue in any material
respect when made, or (ii) upon a breach in any material respect of
any covenant or agreement on the part of the other set forth in this
Agreement or in any other Transaction Document (either (i) or (ii)
above being a "Terminating Breach"); provided, that, if such
Terminating Breach is curable within ten business days after notice of
a party's intent to terminate this Agreement, through the exercise of
reasonable efforts, and for so long as the other party continues to
exercise such reasonable efforts during such ten business day cure
period, the termination shall be effective immediately following
notice and such ten business day cure period and only if the
Terminating Breach is not cured as of such time; or
(e) by the Investors if an "Event of Default" under the
Notes shall have occurred and be continuing; or
(f) by either the Company or the Investors in the event that
the stockholders of the Company fail to approve the transactions
described in Section 5.6 at the Stockholders Meeting; or
(g) by the Investors if the Company shall not have complied
in all respects with the covenants set forth in Section 5.9(a).
Any party exercising its right to terminate under this Section
7.1 shall exercise such right by delivery of written notice to the other
party in accordance with Section 9.7 hereof. The date of any termination of
the obligations of the parties to consummate the Second Closing pursuant to
this Section 7.1 is referred to herein as the "Second Closing Termination
Date".
7.2. Effect of Termination. In the event of any termination of
the obligations to consummate the Second Closing pursuant to Section 7.1,
all obligations and agreements of the parties contained in this Agreement
or in any other Transaction Document that relate to the Second Closing
shall forthwith become void and there shall be no Liability on the part of
any party hereto relative to such obligations and agreements, provided that
nothing contained in this Agreement shall relieve any party from Liability
for any breach of this Agreement or any other Transaction Document
occurring prior to any such termination.
ARTICLE VIII
SURVIVAL; CERTAIN REMEDIES
8.1. Survival. The representations and warranties of the parties
contained in this Agreement or in any of the other Transaction Documents
shall expire on the later of (i) the one year anniversary of the Initial
Closing if the parties' obligations to consummate the Second Closing are
terminated under Section 7.1 or (ii) the one year anniversary of the Second
Closing, except that the representations and warranties set forth in
Section 3.11 shall survive until 30 days after the expiration of the
applicable statute of limitations (including any extensions thereof) and
the representations and warranties set forth in Sections 3.2 and 3.3 shall
survive indefinitely. After the expiration of such periods, any claim by a
party hereto based upon any such representation or warranty shall be of no
further force and effect unless a party has asserted a claim in accordance
with this Article VIII for breach of any such representation or warranty
prior to the expiration of such period, in which event any representation
or warranty to which such claim relates shall survive with respect to such
claim until such claim is resolved as provided in this Article VIII. The
covenants and agreements of the parties contained in this Agreement or in
any of the other Transaction Documents shall survive until performed in
accordance with their terms without limitation as to time.
8.2 Indemnification for the Benefit of the Company. Each Investor
agrees, from and after the date hereof, to indemnify the Company and its
Affiliates and agents, and the officers, directors, employees, successors,
transferees and assigns of each of them (each, a "Company Indemnified
Party") against and hold them harmless from and against all Losses incurred
by any of them based upon, resulting from or arising out of (i) the breach
of any representation or warranty of such Investor contained in this
Agreement or any of the other Transaction Documents or (ii) the breach of
or failure to perform any covenant or agreement of such Investor contained
in this Agreement or any of the other Transaction Documents.
8.3 Indemnification by the Company. The Company agrees, subject
to Section 8.1, from and after the date hereof, to indemnify the Investors
and their respective Affiliates and agents and the officers, directors,
employees, members, successors, transferees and assigns of each of them
(each, an "Investor Indemnified Party") against and hold them harmless from
and against all Losses incurred by any of them based upon, resulting from
or arising out of (i) the breach of any representation or warranty of the
Company contained in this Agreement or any of the other Transaction
Documents, or (ii) the breach of or failure to perform any covenant or
agreement of the Company contained in this Agreement or any of the other
Transaction Documents.
8.4 Materiality. Except for the representation and warranty
contained in the penultimate sentence of Section 3.4, the Material Adverse
Effect and other materiality (or correlative meaning) qualifications
included in the representations, warranties, covenants and agreements
contained herein or in any of the other Transaction Documents shall have no
effect on any provisions in this Article VIII concerning the indemnities of
the Company or the Investors with respect to such representations,
warranties, covenants and agreements, each of which representations,
warranties, covenants and agreements shall be read as though there were no
Material Adverse Effect or other materiality qualification for purposes of
such indemnities.
8.5 Indemnification Procedures. (a) An Investor Indemnified Party
or a Company Indemnified Party, as the case may be (for purposes of this
Section 8.5, an "Indemnified Party"), shall give the indemnifying party
under Section 8.2 or 8.3, as applicable (for purposes of this Section 8.5,
an "Indemnifying Party"), prompt written notice (the "Indemnification Claim
Notice") of any third party claim for which it will seek indemnification
hereunder; provided that failure of the Indemnified Party to give the
Indemnifying Party prompt written notice as provided herein shall not
relieve the Indemnifying Party of any of its obligations hereunder except
to the extent that the Indemnifying Party is prejudiced thereby. The
Indemnifying Party shall have the right to assume, through counsel of its
own choosing, which counsel shall be reasonably satisfactory to the
Indemnified Party, the defense of any third party claim which is the
subject of indemnification hereunder at its own expense. If the
Indemnifying Party elects to assume the defense of any such claim, the
Indemnified Party may participate with its own counsel in such defense, but
in such case the fees and expenses of counsel to the Indemnified Party
shall be paid by the Indemnified Party. The Indemnified Party shall, upon
reasonable notice, provide the Indemnifying Party with access to its
records and personnel relating to any such claim during normal business
hours and shall otherwise cooperate with the Indemnifying Party in the
defense or settlement thereof, and the Indemnifying Party shall reimburse
the Indemnified Party for all its reasonable out-of-pocket expenses in
connection therewith. If the Indemnifying Party elects to direct the
defense of any such claim, the Indemnified Party shall not pay, or permit
to be paid, any part of such claim unless the Indemnifying Party consents
in writing to such payment (which consent shall not be unreasonably
withheld) or unless the Indemnifying Party withdraws from or fails to
maintain the defense of such claim or unless a final judgment from which no
appeal may be taken by or on behalf of the Indemnifying Party is entered
against the Indemnified Party for indemnification; provided that, if the
third party claimant is prepared to settle its claim by payment to it of a
specified amount and, notwithstanding the request of the Indemnified Party
for consent to the proposed settlement, the Indemnifying Party does not
consent thereto, then the Indemnifying Party shall indemnify the
Indemnified Party separately for the difference, if any, between the
specified amount of the proposed settlement and the amount which is finally
adjudicated to be the amount of the Liability to the third party. No
settlement in respect of any third-party claim may be effected by the
Indemnifying Party without the Indemnified Party's prior written consent
(which consent shall not be unreasonably withheld). If the Indemnifying
Party shall fail to undertake any such defense (or shall fail upon request
to advise the Indemnified Party in writing that it will undertake such
defense) within 30 days of receipt of the Indemnification Claim Notice, or
subsequently withdraws from or fails to maintain the defense of such claim,
the Indemnified Party shall have the right to undertake the defense or
settlement thereof at the Indemnifying Party's expense. If the Indemnified
Party assumes the defense of any such claim pursuant to this Section 8.5 it
may conduct such defense (including entering into any settlement) as it
reasonably deems appropriate.
(b) Notwithstanding the foregoing, with respect to any claim
that the Indemnifying Party is defending, the Indemnified Party shall have
the right to retain separate counsel to represent it and the Indemnifying
Party shall pay the fees and expenses of such separate counsel if there are
conflicts that make it reasonably necessary for separate counsel to
represent the Indemnified Party and the Indemnifying Party.
(c) The parties agree to treat any indemnification payments
made by the Company pursuant to this Agreement for Tax purposes as
adjustments to the purchase price of the Notes and the GS Shares or the
Preferred Stock, as the case may be.
8.6 Duplication. Any Liability for indemnification hereunder
shall be determined without duplication of recovery by reason of the state
of facts giving rise to such Liability constituting a breach of more than
one representation, warranty, covenant or agreement; provided, however,
that subject to there being no duplication of recovery, the Indemnified
Party shall be entitled to recover to the maximum extent provided in this
Agreement (by way of example, if any Indemnified Party's entitlement to
indemnification is both by reason for a breach of a representation and
warranty to which the one year survival period of Section 8.1 applies and
by reason of a breach of a representation and warranty to which such
survival period does not apply, the Indemnified Party shall be entitled to
indemnification without regard to such one year survival period.)
8.7 Subordination. The Investors agree that the indemnification
obligations of the Company pursuant to this Article VIII are hereby made
subordinate and subject in right of payment to the prior payment in full of
the Designated Senior Indebtedness in the same manner as the Notes are
subordinated to the Senior Indebtedness pursuant to the subordination
provisions of the Notes. The provisions of this Section 8.7 shall not be
amended or modified without the prior written consent of the Required
Lenders.
ARTICLE IX
MISCELLANEOUS
9.1. Fees and Expenses. At the Initial Closing and at the Second
Closing or the Second Closing Termination Date, as applicable, the Company
shall reimburse the Investors in cash for their fees and expenses incurred
as of the date hereof or the Second Closing (to the extent not previously
reimbursed by the Company) as the case may be, in connection with this
Agreement and the other Transaction Documents and the transactions
contemplated hereby and thereby (including, without limitation, the fees
and disbursements of its attorneys, accountants, consultants and other
advisors) (collectively, "Investor Expenses"); provided, however, that the
amount of Investor Expenses in respect of which the Investors shall be
reimbursed hereunder shall not exceed $700,000 in the aggregate.
9.2. Public Announcements. The Investors and the Company shall
consult with each other before issuing any press release with respect to
this Agreement or the transactions contemplated hereby and neither shall
issue any such press release or make any such public statement without the
prior consent of the other, which consent shall not be unreasonably
withheld; provided, however, that a party may, without the prior consent of
the other party, issue such press release or make such public statement as
may upon the advice of counsel be required by Law or the rules and
regulations of NASDAQ, if it has used reasonable efforts to consult with
the other party prior thereto.
9.3. Restrictive Legends. None of the Notes, the Preferred Stock,
the GS Shares or the Conversion Shares may be transferred without
registration under the Securities Act and applicable state securities laws
unless counsel to the Company shall advise the Company that such transfer
may be effected without such registration. Each Note or certificate
representing any of the foregoing shall bear legends in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS [NOTE] [CERTIFICATE]
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT, OR
THE SECURITIES LAWS OF ANY JURISDICTION. SUCH
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, ASSIGNED, ENCUMBERED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES
THAT IS EFFECTIVE UNDER SUCH ACT OR APPLICABLE STATE
SECURITIES LAW, OR (II) ANY EXEMPTION FROM REGISTRATION
UNDER SUCH ACT, OR APPLICABLE STATE SECURITIES LAW,
RELATING TO THE DISPOSITION OF SECURITIES, INCLUDING
RULE 144.
9.4. Further Assurances. At any time or from time to time after
the Initial Closing, the Company, on the one hand, and the Investors, on
the other hand, agree to cooperate with each other, and at the request of
the other party, to execute and deliver any further instruments or
documents and to take all such further action as the other party may
reasonably request in order to evidence or effectuate the consummation of
the transactions contemplated hereby or by the other Transaction Documents
and to otherwise carry out the intent of the parties hereunder or
thereunder.
9.5. Successors and Assigns. This Agreement shall bind and inure
to the benefit of the Company and the Investors and their respective
successors, permitted assigns, heirs and personal representatives of the
Company and the Investors, provided that the Company may not assign its
rights or obligations under this Agreement to any Person without the prior
written consent of the Investors, and provided further that no Investor may
assign its rights or obligations under this Agreement to any Person (other
than an Affiliate of such Investor) without the prior written consent of
the Company, which consent shall not be unreasonably withheld or delayed.
In addition, and whether or not any express assignment has been made, the
provisions of this Agreement that are for the Investors' benefit as
purchasers or holders of Notes, Preferred Stock, the GS Shares or the
Conversion Shares are also for the benefit of, and enforceable by, any
subsequent holder of such Notes, Preferred Stock, GS Shares or Conversion
Shares.
9.6. Entire Agreement. This Agreement and the other Transaction
Documents and the Confidentiality Agreement contain the entire agreement
among the parties with respect to the subject matter hereof and supersede
all prior and contemporaneous arrangements or understandings with respect
thereto.
9.7. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally recognized overnight courier or first class registered or
certified mail, return receipt requested, postage prepaid, addressed to
such party at the address set forth below or such other address as may
hereafter be designated in writing by such party to the other parties:
(i) if to the Company, to:
ProMedCo Management Company
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Mr. Xxxxxx Xxxxx
Chief Financial Officer
with a copy to (which shall not constitute notice):
Xxxx, Xxxxx & Xxxxxx
000 Xxx Xxxxxxxxx, XX
Xxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
(ii) if to the Investors, to:
GS Capital Partners III, L.P.
c/o Goldman, Xxxxx & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxxxx Xxxxx
Attention: Xxx Xxxxx, Esq.
with copies to (which shall not constitute notice):
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
All such notices, requests, consents and other communications
shall be deemed to have been given or made if and when delivered personally
or by overnight courier to the parties at the above addresses or sent by
electronic transmission, with confirmation received, to the telecopy
numbers specified above (or at such other address or telecopy number for a
party as shall be specified by like notice).
9.8. Amendments. The terms and provisions of this Agreement may
be modified or amended, or any of the provisions hereof waived, temporarily
or permanently, in a writing executed and delivered by the Company and the
Investors. No waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof
(whether or not similar). No delay on the part of any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof.
9.9. Counterparts. This Agreement may be executed in any number
of counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute
but one agreement.
9.10. Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
9.11. Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice versa.
9.12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW.
9.13. Submission to Jurisdiction. Each of the parties hereto
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of New York and of the United
States of America, in each case located in the County of New York, for any
Litigation arising out of or relating to this Agreement or the other
Transaction Documents and the transactions contemplated hereby and thereby
(and agrees not to commence any Litigation relating hereto or thereto
except in such courts), and further agrees that service of any process,
summons, notice or document by U.S. registered mail to its respective
address set forth in this Agreement shall be effective service of process
for any Litigation brought against it in any such court. Each of the
parties hereto hereby irrevocably and unconditionally waives any objection
to the laying of venue of any Litigation arising out of this Agreement or
the transactions contemplated hereby in the courts of the State of New York
or the United States of America, in each case located in the County of New
York, hereby further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such Litigation brought in any
such court has been brought in an inconvenient forum.
9.14. WAIVER OF JURY TRIAL. THE COMPANY AND THE INVESTORS HEREBY
WAIVE ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.
9.15. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid,
but if any provision of this Agreement is held to be invalid or
unenforceable in any respect, such invalidity or unenforceability shall not
render invalid or unenforceable any other provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PROMEDCO MANAGEMENT COMPANY
By: /s/ Xxxxxx X. Xxxxx
-------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
GS CAPITAL PARTNERS III, L.P.
$11,891,152.84 Notes
By: GS ADVISORS III, L.P.
its general partner 928,994 GS Shares
By: GS ADVISORS III, INC., 408,757 shares of Preferred Stock
its general partner
By: /s/ Xxxxxxxxx X. Xxxxxxxxxx
----------------------------
Name: Xxxxxxxxx X. Xxxxxxxxxx
Title: Vice President
GS CAPITAL PARTNERS III
OFFSHORE, L.P.
By: GS ADVISORS III (CAYMAN), L.P. $3,269,010.03 Notes
its general partner
255,391 GS Shares
By: GS ADVISORS III, INC.,
its general partner 112,372 shares of Preferred Stock
By: /s/ Xxxxxxxxx X. Xxxxxxxxxx
----------------------------
Name: Xxxxxxxxx X. Xxxxxxxxxx
Title: Vice President
XXXXXXX, XXXXX & CO.
VERWALTUNGS GMBH
By: /s/ Xxxxxx X. Xxxxxxxxx $548,955.04 Notes
/s/ Xxxxxxxxx X. Xxxxxxxxxx
---------------------------- 42,888 GS Shares
Name: Xxxxxx X. Xxxxxxxxx
Title: Managing Director 18,871 shares of Preferred Stock
Name: Xxxxxxxxx X. Xxxxxxxxxx
Title: Registered Agent
STONE STREET FUND 2000, LLC
By: /s/ Xxxxxxxxx X. Xxxxxxxxxx $290,909.09 Notes
--------------------------
Name: Xxxxxxxxx X. Xxxxxxxxxx 22,727 GS Shares
Title: Vice President
10,000 shares of Preferred Stock
