SECURITIES PURCHASE AGREEMENT
by and between
INTERNATIONAL TECHNOLOGY CORPORATION
and
CERTAIN PURCHASERS
IDENTIFIED HEREIN
Dated as of August 28, 1996
SECURITIES PURCHASE AGREEMENT
-----------------------------
This Securities Purchase Agreement (this "Agreement"), dated as of
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August 28, 1996, is by and among (i) International Technology Corporation, a
Delaware corporation (the "Company"), and (ii) Carlyle Partners II, L.P., a
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Delaware limited partnership ("CPII"), Carlyle Partners III, L.P. ("CPIII"), a
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Delaware limited partnership, Carlyle International Partners II L.P. ("CIPII"),
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a Cayman Islands limited partnership, Carlyle International Partners III L.P.
("CIPIII"), a Cayman Islands limited partnership, and C/S International
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Partners, a Cayman Islands limited partnership ("C/SIP"), each of which is a
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limited partnership of which TC Group, L.L.C. is the general partner
(collectively, the "Purchasers").
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RECITAL
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WHEREAS, the Company desires to sell to the Purchasers, and the
Purchasers desire to purchase from the Company, (i) an aggregate of 45,000
shares (the "Preferred Shares") of its newly issued convertible participating
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preferred stock, $100 par value per share (the "Convertible Preferred Stock"),
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having the rights, designations and preferences set forth in the Certificate of
Designations (as defined herein) and (ii) warrants (the "Warrants") to purchase
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5,000,000 shares of common stock, $1.00 par value per share, of the Company (the
"Common Stock"), for the consideration as set forth in Section 2.2.
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AGREEMENT
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NOW, THEREFORE, in consideration of the mutual covenants and premises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
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1.1. Defined Terms. As used herein, the terms below shall have the
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following meanings:
"Affiliate" shall mean any entity controlling, controlled by or under
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common control with the Company. For the purposes of this definition, "control"
shall have the meaning presently specified for that word in Rule 405 promulgated
by the SEC under the Securities Act.
"Agreement" shall mean this Securities Purchase Agreement, together
---------
with all schedules and exhibits referenced herein.
"Ancillary Agreements" means the Warrant Agreement and the
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Registration Rights Agreement.
1
"Ancillary Proposals" has the meaning specified in Section 6.1(a).
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"Applicable Law" means any statute, law, rule, or regulation or any
--------------
judgment, order, writ, injunction or decree of any Governmental Entity to which
a specified person or property is subject.
"Alternative Transaction" has the meaning set forth in Section 6.8 of
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the Agreement.
"Benefit Arrangement" means any employment, consulting, severance or
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other similar contract, arrangement or policy and each plan, arrangement
(written or oral), program, agreement or commitment providing for insurance
coverage (including without limitation any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits, life, health or accident benefits (including
without limitation any "voluntary employees' beneficiary association" as defined
in Section 501(c)(9) of the Code providing for the same or other benefits) or
for deferred compensation, profit-sharing bonuses, stock options, stock
appreciation rights, stock purchases or other forms of incentive compensation or
post-retirement insurance, compensation or benefits which (A) is not a Welfare
Plan, Pension Plan or Multiemployer Plan, (B) is entered into, maintained,
contributed to or required to be contributed to, as the case may be, by the
Company or an ERISA Affiliate or under which the Company or any ERISA Affiliate
may incur any liability, and (C) covers any present or former employees,
directors or consultants of the Company (with respect to their relationship with
such entities).
"Board of Directors" means the Board of Directors of the Company as it
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is constituted prior to the Closing Date.
"Bylaws" means the Bylaws of the Company as in effect on the date
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hereof.
"Business" means the business of the Company as described more fully
--------
in the "Business" section of the Company's Annual Report on Form 10-K for the
fiscal year ended March 29, 1996.
"Carlyle" means TC Group, L.L.C. or (to the extent appropriate from
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the context) one or more of its Affiliates.
"Carlyle Affiliates" means, at any time, any of the Purchasers and any
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of their Affiliates at such time, including, but not limited to, The Carlyle
Group, L.P., TC Group, L.L.C. and their respective affiliates.
"Carlyle Transaction Expenses" means the reasonable fees and expenses
----------------------------
incurred by the Purchasers and/or by Carlyle on behalf of the Purchasers,
including, but not limited to, fees and expenses of legal counsel, accountants,
consultants and travel expenses in connection with the preparation of the
Agreement and Carlyle's due diligence examination relating to the Agreement and
the transaction contemplated hereby, in an amount not to exceed $900,000.
2
"Certificate Amendments" means any amendments to the Certificate of
----------------------
Incorporation reasonably necessary in connection with the transactions
contemplated under this Agreement and the Ancillary Agreements, including,
without limitation, (a) an increase to the authorized number of shares of Common
Stock of the Company to 150,000,000 shares, (b) the terms and conditions of the
designations, rights and preference of the Convertible Preferred Stock set forth
in the Certificate of Designations, (c) such other changes to the Certificate of
Incorporation as are reasonably necessary to give effect to the rights,
preferences and designations of the Convertible Preferred Stock contained in the
Certificate of Designations and the provisions of this Agreement and the
Ancillary Agreements and (d) a reduction of the par value of a share of Common
Stock to $.01. Notwithstanding the foregoing, the Certificate Amendments will
not include the Ancillary Proposals (approval of which is not a condition to
Closing).
"Certificate of Designations" means the Certificate of Designations,
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Preferences and Relative, Participating, Optional and Other Special Rights and
Qualifications, Limitations and Restrictions thereof of the Cumulative
Convertible Participating Preferred Stock, $100 par value per share, of
International Technology Corporation, substantially in the form attached hereto
as Exhibit A.
"Certificate of Incorporation" means the Certificate of Incorporation
----------------------------
of the Company as amended or restated and as in effect on the date hereof.
"Closing" has the meaning set forth in Section 3.1 of the Agreement.
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"Closing Date" means the date five (5) business days following the
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date on which the last of the conditions to the Closing set forth in Section 7.1
have been fulfilled or waived and either the Purchasers, on the one hand, or the
Company, on the other hand, shall have notified the other party of such
fulfillment or waiver, or such other date as may be agreed to by the Purchasers
and the Company.
"Code" means the Internal Revenue Code of 1986, as it may be amended
----
from time to time.
"Commission" means the United States Securities and Exchange
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Commission.
"Common Stock" has the meaning set forth in the Recital to the
------------
Agreement.
"Conversion Shares" means the shares of Common Stock issuable upon the
-----------------
conversion of the Preferred Shares.
"Convertible Exchangeable Preferred Stock" means the 7% Cumulative
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Convertible Exchangeable Preferred Stock, $100 par value per share, of the
Company.
"Convertible Exchangeable Preferred Stock Certificate of Designations"
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means the Certificate of Designations of the 7% Cumulative Convertible
Exchangeable Preferred Stock, $100 par value per share, of the Company.
3
"Convertible Preferred Stock" has the meaning set forth in the Recital
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to the Agreement.
"Credit Facility" means, collectively, (a) the Credit Agreement among
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IT Corporation, the several lenders from time to time parties thereto and
Chemical Bank, as administrative agent, dated as of October 24, 1995 and (b) the
Note Purchase Agreement dated as of October 24, 1995 relating to the 8.67%
Guaranteed Senior Secured Notes due October 30, 2003.
"Employee Plans" means all Benefit Arrangements, Multiemployer Plans,
--------------
Pension Plans and Welfare Plans.
"Encumbrance" means any claim, lien, pledge, option, charge, easement,
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security interest, right-of-way, encumbrance or other rights of third parties,
and, with respect to any securities, any agreements, understandings or
restrictions affecting the voting rights or other incidents of record or
beneficial ownership pertaining to such securities.
"Environmental Conditions" means the Release or threatened Release of
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any Hazardous Material (whether or not upon a Facility or any former facility or
other property and whether or not such Release constituted at the time thereof a
violation of any Environmental Law) as a result of which Company has or may
become liable to any person or by reason of which any Facility, any former
facility or any of the assets of the Company may suffer or be subjected to any
Encumbrances.
"Environmental Laws" means any and all foreign, Federal, state, local
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or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
legally binding decrees, or other requirement of any Governmental Entity
(including, without limitation, common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of the environment or of
human health relating to exposure of any kind of Hazardous Materials, as has
been, is now, or may at any time hereafter be, in effect.
"Environmental Permits" means any and all permits, licenses,
---------------------
registrations, notifications, exemptions and any other authorization required
under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended.
"ERISA Affiliate" means any entity which is (or at any relevant time
---------------
was) a member of a "controlled group of corporations" with, under "common
control" with, a member of an "affiliated service group" with, or otherwise
required to be aggregated with the Company, as set forth in Section 414(b), (c),
(m) or (o) of the Code.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended.
"Facilities" means the offices and buildings and all other real
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property and related facilities which are owned, leased or operated by the
Company or any Subsidiary.
4
"Fixtures and Equipment" shall mean all of the furniture, fixtures,
----------------------
furnishings, machinery and equipment owned by the Company or any Subsidiary.
"GAAP" has the meaning set forth in Section 4.9 of the Agreement.
----
"Government Contracts" shall mean all contracts, options, agreements,
--------------------
commitments of sales or purchase orders of the Company with the United States
Government or any department or agency thereof, including, any contract, option,
agreement, commitment or sales order of the Company with any other party in
connection with a contract between a third party and the United States
Government or a department or agency thereof. Such term also includes all bids,
quotations and proposals, which if accepted, would result in a Government
Contract.
"Governmental Entity" means any court or tribunal in any jurisdiction
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(domestic or foreign) or any public, governmental, or regulatory body, agency,
department, commission, board, bureau, or other authority or instrumentality
(domestic or foreign).
"Hazardous Materials" means any hazardous substance, gasoline or
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petroleum (including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, ureaformaldehyde insulation, asbestos or asbestos-
containing materials, pollutants, contaminants, radioactivity, and any other
materials or substances of any kind, whether solid, liquid or gas, and whether
or not any such substance is defined as hazardous under any Environmental Law,
that is regulated pursuant to any Environmental Law or that could give rise to
liability under any Environmental Law.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
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1976, as amended.
"Interim Period" has the meaning set forth in Section 6.3 of the
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Agreement.
"Knowledge of the Company" (or similar language to that effect) means
------------------------
to the knowledge of Messrs. Gibson, DeLuca, Mahoney, Pompe, Xxxxxxx, Xxxx,
Soose, Rice, Ockelmann, Conway and Xxxxxxx.
"Material Adverse Effect" with respect to any person or entity shall
-----------------------
mean an event, occurrence or condition that has had or reasonably would be
expected to have a material adverse effect on the business, condition (financial
or otherwise), assets, liabilities, working capital or operations of such person
or entity and its Subsidiaries (if any), taken as a whole.
"Material Agreement" means (a) any written or oral agreement,
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contract, lease, commitment, understanding, instrument or obligation to which
the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any of their respective properties may be bound involving total
value or consideration or liability in excess of $5,000,000 (except with respect
to sales contracts, in which case the total value or consideration or liability
is in excess of $10,000,000), or (b) any other agreement listed as an exhibit to
the Company's Form 10-K for the fiscal year ended March 29, 1996.
5
"Material Subsidiary" means any one or more of IT Corporation, IT
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Environmental Services, Inc., IT Hanford, Inc., IT Tulsa Holdings, Inc.,
Gradient Corporation, Universal Professional Insurance Company and any other
Subsidiary which is a "significant subsidiary" within the meaning of Regulation
S-X.
"Multiemployer Plan" means any "multiemployer plan," as defined in
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Section 4001(a)(3) or 3(37) of ERISA, which (A) the Company or any ERISA
Affiliate maintains, administers, contributes to or is required to contribute
to, or, after September 25, 1980, maintained, administered, contributed to or
was required to contribute to, or under which the Company or any ERISA Affiliate
may incur any liability and (B) covers any employee or former employee of the
Company or any ERISA Affiliate (with respect to their relationship with such
entities).
"PBGC" means the Pension Benefit Guaranty Corporation.
----
"Pension Plan" means any "employee pension benefit plan" as defined in
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Section 3(2) of ERISA (other than a Multiemployer Plan) which (A) the Company or
any ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, or, within the five years prior to the Closing Date, maintained,
administered, contributed to or was required to contribute to, or under which
the Company or any ERISA Affiliate may incur any liability and (B) covers any
employee or former employee of the Company or any ERISA Affiliate (with respect
to their relationship with such entities).
"Permits" shall mean all licenses, permits, orders, consents,
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approvals, registrations, authorizations, qualifications and filings required by
any federal, state, local or foreign laws or governmental or regulatory bodies
and all industry or other non-governmental self-regulatory organizations.
"Permitted Encumbrances" means (i) any mechanic's or materialmen's
----------------------
lien or similar Encumbrances with respect to amounts not yet due and payable or
which are being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established, (ii) Encumbrances for Taxes not yet
due and payable or which are being contested in good faith by appropriate
proceeding, for which appropriate reserves have been established, (iii)
easements, licenses, covenants, rights of way and similar Encumbrances which,
individually or in the aggregate, would not materially and adversely affect the
marketability or value of the property encumbered thereby or materially
interfere with the operations of the Business or (iv) Encumbrances arising under
the Credit Facility.
"Person" means any individual, copartner, association, partnership,
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joint venture, limited liability company, trust, estate or other entity or
organization.
"Pre-Closing Environmental Conditions" means any Environmental
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Condition occurring or in existence on or prior to the Closing Date.
"Preferred Shares" has the meaning set forth in the Recital hereto.
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6
"Proceeding" means any action, suit or proceeding, whether civil,
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criminal, administrative, arbitrative or investigative, any appeal in such an
action, suit or proceeding, and any inquiry or investigation that could
reasonably be expected to lead to such an action, suit or proceeding.
"Proxy Material" means the proxy statement and other proxy materials
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(as amended and supplemented) to be used to solicit proxies on behalf of the
board of directors of the Company in connection with the Stockholders Meeting.
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement by and among the Company and the Purchasers substantially in the form
attached hereto as Exhibit B.
"Regulations" means any laws, statutes, ordinances, regulations,
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rules, notice requirements, court decisions and orders of any foreign, federal,
state or local government and any other governmental department or agency,
including without limitation Environmental Laws, energy, motor vehicle safety,
public utility, zoning, building and health codes, occupational safety and
health laws and laws respecting employment practices, employee documentation,
terms and conditions of employment and wages and hours.
"Release" means and includes any spilling, leaking, pumping, pouring,
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emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment or the workplace of any Hazardous Materials, and
otherwise as defined in any Environmental Law.
"Schedules" has the meaning set forth in Section 10.11 of the
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Agreement.
"SEC Filings" has the meaning set forth in Section 4.9 of the
-----------
Agreement.
"Securities" means the Preferred Shares and the Warrants.
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"Securities Act" means the Securities Act of 1933, as amended.
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"Stockholders Meeting" has the meaning set forth in Section 6.1 of the
--------------------
Agreement.
"Subsidiary" means, with respect to any Person, (a) any corporation of
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which at least a majority in interest of the outstanding voting stock (having by
the terms thereof voting power under ordinary circumstances to elect a majority
of the directors of such corporation, irrespective of whether or not at the time
stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time,
directly or indirectly, owned or controlled by such Person, by one or more
Subsidiaries of such Person, or by such Person and one or more of its
Subsidiaries, or (b) any corporate or non-corporate entity in which such Person,
one or more Subsidiaries of such Person, or such person and one or more
Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has an ownership interest and 100% of the revenue of
which is included in the
7
consolidated financial reports of such Person consistent with generally accepted
accounting principles.
"Tax" or "Taxes" means any federal, state, local or foreign net or
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gross income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax, governmental fee or like assessment or charge of any
kind whatsoever, including any interest, penalty or addition thereto, whether
disputed or not, imposed by any governmental authority or arising under any Tax
law or agreement, including, without limitation, any joint venture or
partnership agreement.
"Tax Return" means any return, declaration, report, claim for refund
----------
or information or return or statement relating to Taxes, including any schedule
or attachment thereto, and including any amendments thereof.
"Transaction" means, taken together, the transactions contemplated
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under this Agreement.
"Warrant Agreement" means that certain Warrant Agreement by and among
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the Company and the Purchasers substantially in the form attached hereto as
Exhibit C pursuant to which the Company shall issue to the Purchasers the
Warrants.
"Warrant Certificate" has the meaning set forth in Section 8.1 of the
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Agreement.
"Warrants" has the meaning set forth in the Recital to the Agreement.
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"Warrant Shares" means the Common Stock issuable upon the exercise of
--------------
the Warrants.
"Welfare Plan" means any "employee welfare benefit plan" as defined in
------------
Section 3(1) of ERISA, which (A) the Company or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to, or under which the
Company or any ERISA Affiliate may incur any liability and (B) covers any
employee or former employee of the Company or any ERISA Affiliate (with respect
to their relationship with such entities).
8
ARTICLE II
PURCHASE AND SALE OF SECURITIES
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2.1. Purchase and Sale of Securities. Upon the terms and subject
-------------------------------
to the conditions contained herein, on the Closing Date, the Company will sell
to the Purchasers and the Purchasers will purchase from the Company, all of the
Securities.
2.2. Consideration for Securities. Upon the terms and subject to
----------------------------
the conditions contained herein, as consideration for the purchase of the
Securities, on the Closing Date, the Purchasers shall pay to the Company an
aggregate purchase price in the amount of $45,000,000 payable by delivery to the
Company of same day funds.
ARTICLE III
CLOSING
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3.1. Closing. The closing of the transactions contemplated herein
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(the "Closing") shall be held at 10:00 a.m. Eastern Time on the Closing Date
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at the offices of Xxxxxx & Xxxxxxx, 0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 0000,
Xxxxxxxxxx, X.X. 00000, unless the parties hereto otherwise agree.
3.2. Deliveries by the Company at Closing. At Closing, the Company
------------------------------------
shall issue and deliver to the Purchasers:
(a) certificates evidencing the Preferred Shares in the name of
the several Purchasers (or their assignees) in the respective amounts as set
forth in a written notice provided to the Company by the Purchasers;
(b) certificates evidencing the Warrants in the name of the
several Purchasers (or their assignees) in the respective amounts as set forth
in a written notice provided to the Company by the Purchasers; and
(c) all such other documents and instruments as the Purchasers
or their counsel shall reasonably request to consummate or evidence the
Transaction.
3.3. Deliveries by the Purchasers at Closing. At Closing, the
---------------------------------------
Purchasers shall deliver to the Company:
(a) same day funds as provided in Section 2.2;
(b) all such other documents and instruments as the Company or
its counsel shall reasonably request to consummate or evidence the Transaction.
3.4. Certificates; Opinions. At Closing, the Purchasers and the
----------------------
Company shall deliver the certificates, opinion of counsel, and other documents
described in Article 7.
9
3.5. Ancillary Agreements. At Closing, the Company and the
--------------------
Purchasers shall enter into the Ancillary Agreements.
3.6. Form of Documents and Instruments. All of the documents and
---------------------------------
instruments delivered at Closing shall be in form and substance, and shall be
executed and delivered in a manner, reasonably satisfactory to the parties'
respective counsel.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to the Purchasers as follows:
4.1. Organization of the Company. The Company is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease, and
operate its properties and to carry on its business as presently being
conducted. No actions or proceedings to dissolve the Company are pending or, to
the Knowledge of the Company, threatened. The copies of the Certificate of
Incorporation and Bylaws heretofore delivered by the Company to the Purchasers
are accurate and complete as of the date hereof. The Company is duly qualified
or licensed to do business as a foreign corporation and is in good standing in
each jurisdiction in which the property owned, leased, or operated by it or the
conduct of its business requires such qualification or licensing, except where
the failure to do so taken in the aggregate would not have a Material Adverse
Effect on the Company.
4.2. Capitalization of the Company.
-----------------------------
(a) The authorized capital stock of the Company as of the date
hereof, consists of 100,000,000 shares of Common Stock and 180,000 shares of
preferred stock, of which 24,000 shares have been designated Convertible
Exchangeable Preferred Stock. As of August 23, 1996, 36,540,675 shares of Common
Stock and 24,000 shares of Convertible Exchangeable Preferred Stock are
outstanding (represented by 2,400,000 publicly traded depository shares). As of
August 23, 1996, 6,548,700 shares of Common Stock are reserved for issuance upon
exercise of outstanding employee stock options and 10,273,920 shares of Common
Stock are reserved for issuance upon conversion of the Convertible Exchangeable
Preferred Stock. Schedule 4.2 contains the aggregate number of outstanding
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options to purchase shares of Common Stock, the weighted average exercise price
with respect to such options and the plan or other arrangements pursuant to
which such options were issued. All outstanding shares of capital stock of the
Company have been validly issued and are fully paid and nonassessable, and no
shares of capital stock of the Company are subject to, nor have any been issued
in violation of, any preemptive or similar rights.
(b) Except as set forth above in paragraph (a) of this Section 4.2,
as contemplated by this Agreement and as set forth on Schedule 4.2 hereof,
------------
there are outstanding (i)
10
no shares of capital stock or other voting securities of the Company; (ii) no
securities of the Company convertible into or exchangeable for shares of capital
stock or other voting securities of the Company; (iii) no subscriptions,
options, warrants, calls, commitments, preemptive rights or other rights of any
kind to acquire from the Company, and no obligation of the Company to issue or
sell, any shares of capital stock or other voting securities of the Company or
any securities of the Company convertible into or exchangeable for such capital
stock or voting securities; and (iv) other than employee compensation plans
based on the Company's earnings and executive officer employment agreements, no
equity equivalents, interests in the ownership or earnings or other similar
rights of or with respect to the Company. There are no outstanding contractual
obligations of the Company to repurchase, redeem or otherwise acquire any shares
of Common Stock or any other securities of the type described in clauses (i)-
(iv) of the preceding sentence. There are no restrictions upon the voting or
transfer of any share of the capital stock or other voting securities of the
Company pursuant to the Certificate of Incorporation, the Bylaws or other
governing documents or any agreement or other instrument to which the Company is
a party or by which the Company is bound other than restricted stock held by
certain employees. Schedule 4.2 contains a true and correct list of all persons
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holding restricted stock (as defined under any plan or arrangement pursuant to
which it was issued), the number of shares of restricted stock held by such
persons and the document or documents which describe such restrictions.
4.3. Authorization of Issuance. Upon consummation of the
-------------------------
transactions contemplated hereby, the Securities acquired by the Purchasers from
the Company will be duly authorized and validly issued, fully paid and not
subject to any preemptive or similar rights. Upon consummation of the
transactions contemplated hereunder, the Conversion Shares will be duly
authorized and reserved for issuance and upon conversion in accordance with the
terms of the Cumulative Preferred Stock will be validly issued, fully paid and
nonassessable and not subject to any preemptive or similar rights. Upon
consummation of the transactions, the Warrant Shares will be duly authorized and
reserved for issuance and, upon exercise of the Warrants, and when issued and
paid for in accordance with the terms of the Warrants, will be validly issued,
fully paid and nonassessable and not subject to any preemptive or similar
rights.
4.4. Authorization. The Company has full corporate power and
-------------
authority to execute and deliver this Agreement and the Ancillary Agreements and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery by the Company of this Agreement and the Ancillary Agreements, and
the consummation by it of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary corporate action of the Company (other
than the approval of the transactions contemplated in this Agreement by the
stockholders of the Company in accordance with Applicable Law, the Certificate
of Incorporation and the rules of the New York Stock Exchange). This Agreement
has been duly executed and delivered by the Company and constitutes, and each
Ancillary Agreement executed or to be executed by the Company has been, or when
executed will be, duly executed and delivered by the Company and constitutes, or
when executed and delivered will constitute, a valid and legally binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting
creditors' rights generally, and (ii) general
11
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
4.5. Noncontravention. Assuming compliance with the matters
----------------
referred to in Section 6.1 and the approval of the Company's stockholders as
contemplated therein, the execution and delivery by the Company of this
Agreement and the Ancillary Agreements and the performance by it of the
transactions contemplated hereby and thereby do not and will not (i) conflict
with or result in a violation of any provision of the Certificate of
Incorporation or the Bylaws, or the charter, bylaws, or other governing
instruments of any Subsidiary, (ii) conflict with or result in a violation of
any provision of, or constitute (with or without the giving of notice or the
passage of time or both) a default under, or give rise (with or without the
giving of notice or the passage of time or both) to any loss of material
benefit, or of any right of termination, cancellation, or acceleration under,
any Material Agreement, except the Credit Facility, (iii) result in the creation
or imposition of any Encumbrance upon the properties of the Company or any
Subsidiary, or (iv) violate any Applicable Law binding upon the Company or any
Subsidiary, except, in the case of clauses (ii), (iii) and (iv) above, for any
such conflicts, violations, defaults, terminations, cancellations,
accelerations, or Encumbrances which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company or on the ability of
the Company to consummate the transactions contemplated hereby.
4.6. Consents and Approvals. No consent, approval, order,
----------------------
authorization of, or declaration, filing, or registration with, any Governmental
Entity is required to be obtained or made by the Company or any Subsidiary in
connection with the execution and delivery by the Company of this Agreement and
the Ancillary Agreements or the consummation of the transactions contemplated
hereby and thereby, other than (i) filings under the HSR Act and expiration or
termination of any applicable waiting period required thereunder; (ii) the
filing of the Certificate Amendments with the Secretary of State of the State of
Delaware; (iii) compliance with any applicable requirements of the Securities
Act; (iv) compliance with any applicable requirements of the Exchange Act; (v)
compliance with any applicable state securities laws; and (vi) such consents,
approvals, orders, or authorizations which, if not obtained, and such
declarations, filings, or registrations which, if not made, would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Except as set forth on Schedule 4.6, no consent or approval of any person other
------------
than any Governmental Entity is required to be obtained or made by the Company
or any Subsidiary in connection with the execution and delivery by the Company
of this Agreement and the Ancillary Agreements or the consummation of the
transactions contemplated hereby and thereby, other than (a) approval of the New
York Stock Exchange, (b) such approvals as are required to be received from the
holders of Common Stock, (c) approvals under the Credit Facility, and (d) such
consents, approvals, orders, or authorizations which, if not obtained, and such
declarations, filings, or registrations which, if not made, would not,
individually or in the aggregate, have a Material Adverse Effect.
4.7. Subsidiaries.
------------
(a) Except as otherwise set forth on Schedule 4.7, the
------------
Company does not own, directly or indirectly, more than five percent of the
capital stock or other securities of
12
any corporation or partnership or have any direct or indirect equity or
ownership interest of more than five percent in any other person, other than its
Subsidiaries. Schedule 4.7 lists each Subsidiary of the Company as of the date
------------
hereof and its respective jurisdiction of incorporation. Each Material
Subsidiary is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation. Each such
Material Subsidiary has all requisite corporate authority to own, lease, and
operate its properties and to carry on its business as now being conducted.
Except as otherwise indicated on Schedule 4.7, no actions or proceedings to
------------
dissolve any Material Subsidiary are pending.
(b) Except as otherwise indicated on Schedule 4.7, all the
------------
outstanding capital stock or other equity interests of each Subsidiary of the
Company is owned directly or indirectly by the Company, free and clear of all
Encumbrances and restrictions on voting, sale, transfer or disposition. All
outstanding shares of capital stock of each Subsidiary of the Company have been
validly issued and are fully paid and nonassessable. No shares of capital stock
or other equity interests of any Subsidiary of the Company are subject to, nor
have any been issued in violation of, preemptive or similar rights.
(c) Except for shares of Common Stock owned by the Company or any
Subsidiary and as set forth above on Schedule 4.7, there are outstanding (i) no
------------
shares of capital stock or other voting securities of any Subsidiary of the
Company; (ii) no securities of any Subsidiary of the Company convertible into or
exchangeable for shares of capital stock or other voting securities of any of
any Subsidiary of the Company; (iii) no subscriptions, options, warrants, calls,
commitments, preemptive rights or other rights of any kind to acquire from any
Subsidiary of the Company, and no obligation of any Subsidiary of the Company to
issue or sell, any shares of capital stock or other voting securities of any
Subsidiary of the Company or any securities of any Subsidiary of the Company
convertible into or exchangeable for such capital stock or voting securities;
and (iv) no equity equivalents, interests in the ownership or earnings, or other
similar rights of or with respect to any Subsidiary of the Company. There are no
outstanding contractual obligations of any Subsidiary of the Company to
repurchase, redeem or otherwise acquire any shares of capital stock or any other
securities of the type described in clauses (i)-(iv) of the preceding sentence.
4.8. Employee Benefit Plans and Other Agreements.
-------------------------------------------
(a) Disclosure; Delivery of Copies of Relevant Documents and
--------------------------------------------------------
Other Information. Schedule 4.8 contains a complete list of Employee Plans
----------------- ------------
which cover or have covered present or former employees, directors or
consultants of the Company or any of its Subsidiaries (with respect to their
relationship with such entities) (each, a "Company Employee Plan"). True and
complete copies of each of the following Company Employee Plan documents have
been delivered or made available by the Company to the Purchasers: (i) each
Company Employee Plan document (and, if applicable, related trust agreements and
all annuity contracts or other funding instruments) and all amendments thereto,
all reasonably available written descriptions thereof which have been
distributed to the Company's employees and those of its ERISA Affiliates during
the last 36 months and a complete description of any Company Employee Plan which
is not in writing (including a description of the number and level of employees
covered
13
thereby), (ii) the most recent determination or opinion letter issued by the
Internal Revenue Service with respect to each Pension Plan and each Welfare Plan
(other than a Multiemployer Plan which covers or has covered employees of the
Company or any of its ERISA Affiliates (with respect to their relationship with
such entities), (iii) for the three most recent plan years, Annual Reports on
Form 5500 Series required to be filed with any governmental agency for each
Pension Plan which covers or has covered employees or former employees of the
Company or any of its ERISA Affiliates (with respect to their relationship with
such entities) (each, a "Company Pension Plan"), (iv) a tabulation of age,
salary, service and related data as of the last day of the last plan year for
employees of the Company or any of its Subsidiaries and (v) a description
setting forth the amount of any liability of the Company as of the Closing Date
for payments more than thirty (30) calendar days past due with respect to each
Welfare Plan which covers or has covered employees or former employees of the
Company or any of its Subsidiaries.
(b) Employee Plans.
--------------
(i) Pension Plans.
-------------
(A) The funding method used in connection with each
Pension Plan which is subject to the minimum funding requirements of ERISA
is acceptable and the actuarial assumptions used in connection with funding
each such plan are reasonable. As of the last day of the last plan year of
each Pension Plan and as of the Closing Date, the "amount of unfunded
benefit liabilities" as defined in Section 4001(a)(18) of ERISA (but
excluding from the definition of "current value" of "assets" of such
Pension Plan, accrued but unpaid contributions) did not and will not exceed
zero. No "accumulated funding deficiency" (for which an excise tax is due
or would be due in the absence of a waiver) as defined in Section 412 of
the Code or as defined in Section 302(a)(2) of ERISA, whichever may apply,
has been incurred with respect to any Pension Plan with respect to any plan
year, whether or not waived. Neither the Company nor any ERISA Affiliate
has failed to pay when due any "required installment", within the meaning
of Section 412(m) of the Code and Section 302(e) of ERISA, whichever may
apply, with respect to any Pension Plan. Neither the Company nor any ERISA
Affiliate is subject to any lien imposed under Section 412(n) of the Code
or Section 302(f) of ERISA, whichever may apply, with respect to any
Pension Plan. Neither the Company nor any ERISA Affiliate has any liability
for unpaid contributions with respect to any Pension Plan.
(B) Neither the Company nor any ERISA Affiliate is
required to provide security to any Company Pension Plan under Section
401(a)(29) of the Code.
(C) Each Company Pension Plan and each related trust
agreement, annuity contract or other funding instrument is qualified and
tax-exempt under the provisions of Code Sections 401(a) (or 403(a), as
appropriate) and 501(a) and has been so qualified during the period from
its adoption to date.
14
(D) Each Company Pension Plan and each related trust
agreement, annuity contract or other funding instrument presently complies
and has been maintained in compliance, in all material respects, with its
terms and, both as to form and in operation, with the requirements
prescribed by any and all statutes, orders, rules and regulations which are
applicable to such plans, including without limitation ERISA and the Code.
(E) The Company has paid all premiums (and interest
charges and penalties for late payment, if applicable) due the PBGC with
respect to each the Company Pension Plan for each plan year thereof for
which such premiums are required. Neither the Company nor any ERISA
Affiliate has engaged in, or is a successor or parent corporation to an
entity that has engaged in, a transaction described in Section 4069 of
ERISA. There has been no "reportable event" (as defined in Section 4043(b)
of ERISA and the PBGC regulations under such Section) with respect to any
Pension Plan. No filing has been made by the Company or any ERISA Affiliate
with the PBGC, and no proceeding has been commenced by the PBGC, to
terminate any Pension Plan. No condition exists and no event has occurred
that could constitute grounds for the termination of any Pension Plan by
the PBGC. Neither the Company nor any ERISA Affiliate has, at any time, (1)
ceased operations at a facility so as to become subject to the provisions
of Section 4062(e) of ERISA, (2) withdrawn as a substantial employer so as
to become subject to the provisions of Section 4063 of ERISA, or (3) ceased
making contributions on or before the Closing Date to any Pension Plan
subject to Section 4064(a) of ERISA to which the Company or any ERISA
Affiliate made contributions during the six years prior to the Closing
Date.
(ii) Multiemployer Plans.
-------------------
(A) Neither the Company nor any ERISA Affiliate has,
at any time within the last 72 months, maintained, contributed to or been
obligated to maintain or contribute to, or withdrawn from, a Multiemployer
Plan.
(iii) Welfare Plans
-------------
(A) Each Welfare Plan presently complies and has been
maintained in compliance, in all material respects, with its terms and,
both as to form and operation, with the requirements prescribed by any and
all statutes, orders, rules and regulations which are applicable to such
Welfare Plan, including without limitation ERISA and the Code.
(B) Except as disclosed on Schedule 4.8, none of the
------------
Company, any ERISA Affiliate or any Welfare Plan has any present or future
obligation to make any payment to, or with respect to any present or former
employee of the Company or any ERISA Affiliate pursuant to, any retiree
medical benefit plan, or other retiree Welfare Plan, and no condition
exists which would prevent the Company from amending or terminating any
such benefit plan or Welfare Plan.
15
(C) Each Welfare Plan which is a "group health plan,"
as defined in Section 607(1) of ERISA, has been operated in compliance with
provisions of Part 6 of Title I, Subtitle B of ERISA and 4980B of the Code
at all times.
(iv) Benefit Arrangements. Each Benefit Arrangement has
--------------------
been maintained in compliance, in all material respects, with its terms and
with the requirements prescribed by any and all statutes, orders, rules and
regulations which are applicable to such Benefit Arrangement, including
without limitation, the Code. Except as set forth in Schedule 4.8 and
------------
except as provided by law, the employment of all persons presently employed
or retained by the Company is terminable at will.
(v) Unrelated Business Taxable Income. No Employee Plan
---------------------------------
(or trust or other funding vehicle pursuant thereto) is subject to any tax
under Code Section 511.
(vi) Deductibility of Payments. Except as disclosed in
-------------------------
Schedule 4.8, there is no contract, agreement, plan or arrangement covering
any present or former employee, director or consultant of the Company or
any of its Subsidiaries (with respect to his or her relationship with such
entities) that, individually or collectively, provides for the payment by
the Company of any amount (i) that is not deductible under Section
162(a)(1) or 404 of the Code or (ii) that is an "excess parachute payment"
pursuant to Section 280G of the Code.
(vii) Fiduciary Duties and Prohibited Transactions. Neither
--------------------------------------------
the Company nor any plan fiduciary of any Welfare Plan or Pension Plan, has
engaged in any transaction in violation of Sections 404 or 406 of ERISA or
any "prohibited transaction," as defined in Section 4975(c)(1) of the Code,
for which no exemption exists under Section 408 of ERISA or Section
4975(c)(2) or (d) of the Code, or has otherwise violated the provisions of
Part 4 of Title I, Subtitle B of ERISA. The Company has not Knowingly
participated in a violation of Part 4 of Title I, Subtitle B of ERISA by
any plan fiduciary of any Welfare Plan or Pension Plan and has not been
assessed any civil penalty under Section 502(l) of ERISA.
(viii) Validity and Enforceability. Each Employee Welfare
---------------------------
Plan related trust agreement, annuity contract or other funding instrument
is legally valid and binding and in full force and effect.
(ix) Litigation. There is no action, order, writ,
----------
injunction, judgment or decree outstanding or claim, suit, litigation,
proceeding, arbitral action, governmental audit or investigation relating
to or seeking benefits under any Employee Plan that is pending, threatened
or anticipated against the Company, any ERISA Affiliate or any Employee
Plan other than routine claims for benefits.
(x) No Amendments. Except as disclosed in Schedule 4.8,
------------- ------------
neither the Company nor any ERISA Affiliate has any announced plan or
legally binding
16
commitment to create any additional Employee Plans which are intended to
cover present or former employees, directors or consultants of the Company
or any of its Subsidiaries (with respect to their relationship with such
entities) or to amend or modify any existing Company Employee Plan.
(xi) No Other Material Liability. No event has occurred
---------------------------
in connection with which the Company or any ERISA Affiliate or any Employee
Plan, directly or indirectly, could be subject to any material liability
(A) under any statute, regulation or governmental order relating to any
Employee Plan or (B) pursuant to any obligation of Seller to indemnify any
person against liability incurred under any such statute, regulation or
order as they relate to the Employee Plans.
(xii) Unpaid Contributions. Neither the Company nor any
--------------------
ERISA Affiliate has any liability for unpaid contributions under Section
515 of ERISA with respect to any Multiemployer Plan.
(xiii) Insurance Contracts. Neither the Company nor any
-------------------
Employee Plan (other than a Multiemployer Plan) holds as an asset of any
Employee Plan any interest in any annuity contract, guaranteed investment
contract or any other investment or insurance contract issued by an
insurance company that is the subject of bankruptcy, conservatorship or
rehabilitation proceedings.
(xiv) No Acceleration or Creation of Rights. Except as
-------------------------------------
disclosed on Schedule 4.8, neither the execution and delivery of this
------------
Agreement by the Company nor the consummation of the transactions
contemplated hereby will result in the acceleration or creation of any
rights of any person to benefits under any Employee Plan (including,
without limitation, the acceleration of the vesting or exercisability of
any stock options, the acceleration of the vesting of any restricted stock,
the acceleration of the accrual or vesting of any benefits under any
Pension Plan or the acceleration or creation of any rights under any
severance, parachute or change in control agreement).
4.9. SEC Filings. The Company has filed with the Commission all
-----------
forms, reports, schedules, statements, and other documents required to be filed
by it under the Securities Act, the Exchange Act, and all other Federal
securities laws and the rules and regulations promulgated thereunder, during the
period from March 31, 1993 to the date of this Agreement (the "SEC Filings").
-----------
Each SEC Filing was prepared in accordance with, and at the time of filing
complied in all material respects with, the requirements of the Securities Act,
the Exchange Act or other applicable Federal securities law and the rules and
regulations promulgated thereunder, as the case may be, except as the same was
corrected or superseded in an amendment to such SEC Filing filed with the
Commission. None of the SEC Filings, including, without limitation, any
financial statements or schedules included therein, at the time filed, contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading, except as the same was corrected or superseded in a subsequent
document duly filed with the Commission. The consolidated financial statements
17
(including, in each case, any related notes thereto) contained in the SEC
Filings have been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis (except as described therein)
and each presents fairly the consolidated financial position of the Company and
its consolidated Subsidiaries at the respective dates thereof and the
consolidated results of its operations and changes in cash flows for the period
indicated (subject to normal year-end audit adjustments in the case of any
unaudited interim financial statements).
4.10. Absence of Undisclosed Liabilities; Guarantees.
----------------------------------------------
(a) Except as set forth on Schedule 4.10 or to the extent
-------------
disclosed in the SEC Filings filed prior to the date hereof: (i) as of March 29,
1996, neither the Company nor any Subsidiary had any liabilities or obligations
(whether accrued, absolute, contingent, unliquidated, or otherwise) which are
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company, and (ii) since March 29, 1996, neither the
Company nor any Subsidiary has incurred any such material liabilities or
obligations, other than those incurred in the ordinary course of business
consistent with past practice or pursuant to or as contemplated by this
Agreement.
(b) Except as set forth on Schedule 4.10 or to the extent
-------------
disclosed in the SEC Filings filed prior to the date hereof: neither the Company
nor any Subsidiary is a party to: (i) any Material Agreement relating to the
making of any advance to, or investment in, any Person; or (ii) any Material
Agreement providing for a guaranty or other contingent liability with respect to
any indebtedness for money borrowed or similar obligation of any Person.
4.11. Absence of Certain Changes. Except as set forth on Schedule
-------------------------- --------
4.11 or to the extent disclosed in the Company's Form 10-K for the fiscal year
----
ended March 29, 1996, or in SEC Filings filed since March 29, 1996, (i) there
has not been any event or occurrences, or series of events or occurrences, which
have had, or which are reasonably likely to have, a Material Adverse Effect on
the Company, (ii) neither the Company nor any Subsidiary has incurred any
liability or engaged in any transaction that is material to the Company and its
Subsidiaries taken as a whole, or entered into any Material Agreement, except in
the ordinary course of business consistent with past practice, or as
contemplated by this Agreement, or (iii) neither the Company nor any Subsidiary
is in default under (and no event has occurred which with the lapse of time or
action by a third party could result in a default under) any Material Agreement
(except with respect to the Credit Facility).
4.12. Compliance With Laws. Except as set forth on Schedule 4.12,
-------------------- -------------
(i) the Company and its Subsidiaries are in compliance with all Applicable Laws
other than violations which, do not and will not, individually or in the
aggregate, have a Material Adverse Effect on the Company; (ii) each of the
Company and its Subsidiaries has obtained and holds all material permits,
licenses, variances, exemptions, orders, franchises, approvals and
authorizations of all Governmental Entities necessary for the lawful conduct of
its business or the lawful ownership, use and operation of its assets, except
when the failure to do so does not and will not, individually or in the
aggregate, have a Material Adverse Effect on the Company; (iii) neither the
Company nor any of its Subsidiaries has received any written notice of violation
of any Applicable Law,
18
which has not been dismissed or otherwise disposed of, that the Company or any
Subsidiary has not so complied other than with respect to violations of
Applicable Law which do not and will not, individually or in the aggregate, have
a Material Adverse Effect on the Company; and (iv) neither the Company nor any
of its Subsidiaries is charged or, to the best Knowledge of the Company,
threatened with, or, to the best Knowledge of the Company, under investigation
with respect to, any violation of any Applicable Law, including Environmental
Laws, relating to any aspect of the business of the Company or any Subsidiary
other than violations which do not and will not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
4.13. Litigation. The Company has delivered to the Purchasers an
----------
accurate list of all Proceedings pending or, to the best Knowledge of the
Company, threatened against or involving the Company or any Subsidiary (or any
of their respective directors or officers in connection with the business or
affairs of the Company or any Subsidiary) or any properties or rights of the
Company or any Subsidiary as of the date hereof. Any and all liabilities of the
Company and the Subsidiaries under such Proceedings that are probable and
subject to reasonable estimation within the meaning of generally accepted
accounting principles are adequately covered (except for standard deductible
amounts) by the existing insurance maintained by the Company or estimates in
accordance with generally accepted accounting principles for the uninsured costs
thereof are reflected in the financial statements of the Company. Except as set
forth on Schedule 4.13, the Company has no Knowledge of any facts that are
-------------
likely to give rise to any additional Proceedings that would reasonably be
expected to have a Material Adverse Effect on the Company. As of the date
hereof, there are no Proceedings (including with respect to Environmental Laws)
pending or, to the best Knowledge of the Company, threatened seeking to
restrain, prohibit, or obtain damages or other relief in connection with this
Agreement , the Ancillary Agreements or the transactions contemplated hereby or
thereby.
4.14. True and Complete Disclosure. The representations and
----------------------------
warranties of the Company set forth with this Agreement, the information
included in the Schedules, and in any certificates delivered pursuant to Section
7.3 of this Agreement are true and accurate in all material respects on the date
as of which such information is dated and not incomplete by omitting to state
any material fact necessary to make the statements of fact contained therein, in
the light of the circumstances under which they were made, not misleading at
such date. All financial projections prepared and furnished by the Company to
the Purchasers were prepared in good faith on the basis of assumptions believed
to be reasonable at the time such projections were prepared.
4.15. Taxes.
-----
(a) Except as set forth on Schedule 4.15:
-------------
(i) The Company and its Subsidiaries have filed, or been
included in, all Tax Returns required to be filed by them on or before the
Closing Date (taking into account all extensions for filing such Tax
Returns) and all such Tax Returns are correct and complete in all material
respects. Each affiliated group with which any of the Company and its
Subsidiaries files a consolidated or combined Tax Return has filed all such
Tax Returns that it was required to file for each taxable period during
which any of
19
the Company and its Subsidiaries was a member of the group. All such
consolidated and combined Tax Returns were correct and complete in all
materials respects;
(ii) All material Taxes due and payable by the Company
and/or its Subsidiaries (whether or not shown on any Tax Return) have been
timely paid in full. All material income Taxes owed by any affiliated group
with which any of the Company and its Subsidiaries files a consolidated or
combined Tax Return (whether or not shown on any Tax Return) have been paid
for each taxable period during which any of the Company and the
Subsidiaries was a member of the group;
(iii) There are no liens or encumbrances related to Taxes
on any of the assets of the Company or its Subsidiaries (other than for
current Taxes net yet due and payable);
(iv) The Company and its Subsidiaries have withheld all
material Taxes required to have been withheld and paid by them or on their
behalf in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party, and
such withheld Taxes have either been duly paid to the proper governmental
authority or set aside in accounts for such purpose;
(v) None of the Company and its Subsidiaries (A) has
been a member of any affiliated group filing a consolidated federal income
Tax Return (other than a group the common parent of which is the Company)
and (B) has any liability for the Taxes of any person as defined in Section
7701(a)(1) of the Code (other than the Company and its Subsidiaries) under
Treas. Reg. (S) 1.1502-6 (or any similar provision of state, local, or
foreign tax), as a transferee or successor, by contract, or otherwise;
(vi) The charges, accruals and reserves for Taxes
(including deferred Taxes) currently reflected on the Financial Statements
in accordance with GAAP are adequate in the reasonable estimation of the
Company to cover all unpaid Taxes accruing or payable by the Company and
its Subsidiaries in respect of taxable periods that end on or before the
Closing Date and for any taxable periods that begin before the Closing Date
and end thereafter to the extent such Taxes are attributable to the portion
of such period ending on the Closing Date (determined under the closing of
the books method of allocation);
(vii) The Company and its Subsidiaries have no Tax
deficiency or claim assessed or, to the best of the Company's Knowledge,
proposed or threatened (whether orally or in writing) against any of them,
except to the extent that adequate liabilities or reserves with respect
thereto are accrued on the Financial Statements in accordance with GAAP or
(i) such deficiency or claim is being contested in good faith by
appropriate proceedings, (ii) no such accrual is required by GAAP and (iii)
the nature and amount of the disputed Tax is set forth on Schedule 4.15.
-------------
20
(viii) None of the Company or any of its Subsidiaries has
made any payments, nor is any of them obligated to make any payments, and
is not a party to any agreements that could obligate it to make any
payments, that will not be deductible under Code Section 280G.
(b) Schedule 4.15 lists all federal, state, local, and
-------------
foreign Tax Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit. Correct and complete copies of all federal
Tax Returns, examination reports, and statements of deficiencies assessed
against or agreed to by the Company or any of its Subsidiaries since March 31,
1992 have been delivered to Purchaser.
4.16. Environmental Matters.
---------------------
(a) For purposes of this Section, the term "Company" shall
-------
include (i) the Company, (ii) any Affiliates of the Company, (iii) the Business,
(iv) all partnerships, joint ventures and other entities or organizations in
which Company or the Business was at any time or is a partner, joint venturer,
member or participant, and (v) all predecessor or former corporations,
partnerships, joint ventures, organizations, businesses or other entities,
whether in existence as of the date hereof or at any time prior to the date
hereof, the assets or obligations of which have been acquired or assumed by
Company or the Business or to which Company or the Business has succeeded.
(b) Except as disclosed in Schedule 4.16, the Company and its
-------------
Subsidiaries: (i) are, and within the period of all applicable statutes of
limitation have been, in compliance with all applicable Environmental Laws; (ii)
hold all Environmental Permits (each of which is in full force and effect)
required for any of their current or intended operations or for any property
owned, leased or otherwise operated by any of them; (iii) are, and within the
period of all applicable statutes of limitation have been, in compliance with
all of their Environmental Permits; and (iv) reasonably believe that each of
their Environmental Permits will be renewed effective prior to the expiration of
such Environmental Permit currently in effect, except where the failure to so
comply with such Environmental Laws, hold or comply with such Environmental
Permits or timely renew such Environmental Permits is not reasonably expected to
have a Material Adverse Effect.
(c) Except as set forth on Schedule 4.16, the Company and its
-------------
Subsidiaries have not received any notice of alleged, actual or potential
responsibility for, or any inquiry or investigation regarding, any Environmental
Condition except where such Environmental Condition is not reasonably expected
to have a Material Adverse Effect. The Company has not received any notice of
any other claim, demand or action by any individual or entity alleging any
actual or threatened injury or damage to any person, property, natural resource
or the environment arising from or relating to any Release or threatened Release
of any Hazardous Materials at, on, under, in, to or from any Facility or any
former Facilities, or in connection with any operations or activities of the
Company or any of its Subsidiaries except with respect to any claim, demand or
action which is not reasonably expected to have a Material Adverse Effect on the
Company.
21
(d) Except as disclosed in Schedule 4.16 or with respect to
-------------
such matters as have been fully and finally resolved and as to which there are
no remaining obligations Known or reasonably anticipated, neither the Company
nor any of its Subsidiaries has entered into or agreed to any consent decree,
order, or settlement or other agreement, nor is subject to any judgment, decree,
or order or other agreement, in any judicial, administrative, arbitral, or other
forum, relating to compliance with or liability under any Environmental Law,
except where such obligations, consent decrees, orders, settlement or other
agreements is not reasonably expected to have a Material Adverse Effect.
(e) Except as disclosed in Schedule 4.16 or, for real
-------------
property formerly owned or leased by the Company, for actions of third parties
occurring after the Company's disposition, Hazardous Materials have not been
transported, disposed of, emitted, discharged or otherwise Released or
threatened to be Released, to or at any real property presently or formerly
owned or leased by the Company or any of its Subsidiaries, or, to the Knowledge
of the Company, any other location, which Hazardous Materials are reasonably
expected to (i) give rise to liability of the Company or any Subsidiary under
any applicable Environmental Law, except where such liability is not reasonably
expected to have a Material Adverse Effect, or (ii) interfere with the Company's
or any Subsidiary's continued operations, except where such interference is not
reasonably expected to have a Material Adverse Effect or (iii) impair the fair
saleable value of any real property owned or leased by the Company or any
Subsidiary, except for such impairment as is not reasonably expected to have a
Material Adverse Effect.
(f) Except as disclosed in Schedule 4.16, neither the Company
-------------
nor any of its Subsidiaries has assumed or retained, by contract or operation of
law in connection with the sale or transfer of any assets or business,
liabilities arising from or associated with or otherwise in connection with such
assets or business of any kind, fixed or contingent, Known or not Known, under
any applicable Environmental Law, except where such liabilities are not
reasonably expected to have a Material Adverse Effect.
(g) True, complete and correct copies of the written reports,
and all parts thereof, of all environmental audits or assessments which have
been conducted in respect of any Facility or any former Facility within the past
five years, either by the Company or any attorney, environmental consultant or
engineer engaged for such purpose, have been delivered to the Purchasers and a
list of all such reports, audits and assessments and any other similar report,
audit or assessment of which the Company has Knowledge is included on Schedule
--------
4.16.
----
4.17. Insurance. Schedule 4.17 sets forth a list of the insurance
--------- -------------
policies held by, or for the benefit of, the Company and its Subsidiaries. Each
of the Company and its Subsidiaries carry, and will continue to carry, insurance
with reputable insurers (except as to self-insurance) with respect to such of
their respective properties and business, in such amounts and against such risks
as is customarily maintained by other entities of similar size engaged in
similar businesses (which may include self-insurance in amounts customarily
maintained by companies similarly situated or has been maintained in the past by
the Company and its Subsidiaries). None of such insurance was obtained through
the use of materially false or misleading information or the failure to provide
the insurer with all material information requested in order to evaluate the
liabilities
22
and risks insured. Neither the Company nor any of its Subsidiaries has received
any notice of cancellation or non-renewal of any insurance policies or binders.
4.18. Title to Assets, Etc. Except for Permitted Encumbrances, the
--------------------
Company and its Subsidiaries have good and marketable title to or valid and
subsisting leasehold interests in all assets material to their businesses as
currently conducted and, except as set forth on Schedule 4.18, none of the
material assets is subject to any Encumbrance, except for Encumbrances which,
individually or in the aggregate, are not substantial in amount and do not
materially detract from the value of the property or assets of the Company and
its Subsidiaries taken as a whole or interfere with the present use of such
property or assets (taken as a whole) and have not arisen other than in the
ordinary course of business. The Company and each Subsidiary has in all material
respects performed all the obligations required to be performed by it with
respect to all material assets leased by it through the date hereof, except
where the failure to perform would not have a Material Adverse Effect on the
Company and its Subsidiaries, taken as a whole. All such leases are valid,
binding and enforceable with respect to the Company and its Subsidiaries in
accordance with their terms and are in full force and effect; no event of
default has occurred which constitutes a default thereunder on the part of the
Company or any Subsidiary and the Company has no Knowledge of the occurrence of
any event of default which constitutes a default thereunder by any other party
which defaults are reasonably likely to have a Material Adverse Effect on the
Company.
4.19. Condition of Tangible Assets. The Facilities of the Company
----------------------------
and its Subsidiaries and the Fixtures and Equipment are in good operating
condition and repair (except for ordinary wear and tear) are reasonably
sufficient for the operation of the business of the Company and its Subsidiaries
as presently conducted and are in conformity, in all material respects, with all
Applicable Laws, ordinances, orders, regulations and other requirements
(including applicable zoning, environmental, motor vehicle safety or standards,
occupational safety and health laws and regulations) relating thereto currently
in effect, except where the failure to conform would not have a Material Adverse
Effect on the Company.
4.20. Contracts and Commitments. Except for documents set forth on
-------------------------
Schedule 4.20 or listed as exhibits to the Company's Annual Report on Form 10-K
-------------
for the fiscal year ended March 29, 1996, neither the Company nor any Subsidiary
is a party to any Material Agreement. Except as set forth on Schedule 4.20,
-------------
neither the Company nor any Subsidiary is (and, to the Knowledge of the Company,
no other party is) in material breach or violation of, or default under any
Material Agreement to which it is a party, the breach or violation of which is
reasonably likely to have a Material Adverse Effect on the Company.
4.21. Books and Records. The Company has made and kept (and given
-----------------
the Purchasers access to) books and records and accounts, which, in reasonable
detail, accurately and fairly reflect the activities of the Company and its
Subsidiaries, taken as a whole. The minute books of the Company and each
Subsidiary previously made available to the Purchasers accurately and adequately
reflect all action previously taken by the stockholders, the board of directors
and committees of the board of directors of the Company and each of the
Subsidiaries.
23
4.22. Labor Matters. Since March 31, 1993, neither the Company nor
-------------
any of its Subsidiaries has experienced any attempt by organized labor or its
representatives to make the Company or such Subsidiary conform to demands of
organized labor relating to its employees or to enter into a binding agreement
with organized labor that would cover the employees of the Company or any
Subsidiary. The Company and its Subsidiaries are in compliance with all
Applicable Laws respecting employment practices, terms and conditions of
employment and wages and hours except where noncompliance would not have a
Material Adverse Effect on the Company and its Subsidiaries, taken as a whole,
and, to the Company's Knowledge, are not engaged in any unfair labor practice.
There is no unfair labor practice charge or complaint against the Company or any
Subsidiary pending before the National Labor Relations Board or any other
governmental agency arising out of the activities of the Company or any of its
Subsidiaries, and the Company has no Knowledge of any facts or information which
would give rise thereto. There is no labor strike or labor disturbance pending
or, to the Company's Knowledge, threatened against the Company or any of its
Subsidiaries. There is no grievance currently being asserted and neither the
Company nor any Subsidiary has experienced since March 31, 1993, a work stoppage
or other labor difficulty which grievance, work stoppage or other labor
difficulty is reasonably likely to have a Material Adverse Effect on the
Company.
4.23. Payments. Neither the Company nor any of its Subsidiaries
--------
has, or indirectly, paid or delivered any fee, commission or other sum of money
or item of property, however characterized, to any finder, agent, government
official or other party, in the United States or any other country, which is in
any manner related to the business or operations of the Company or its
Subsidiaries and which the Company Knows or has reason to believe to have been
illegal under any federal, state or local laws of the United States (including,
without limitation the U.S. Foreign Corrupt Practices Act) or any other country
having jurisdiction; and neither the Company nor any of its Subsidiaries has
participated, directly or indirectly, in any boycotts or other similar practices
affecting any of its actual or potential customers.
4.24. Information. The information contained in the Proxy Material
-----------
(other than information with respect to the Purchasers, or any of their
Affiliates which shall have been supplied in writing by them or any of their
authorized representatives for use in or in preparing the Proxy Material) will
not, at the date of mailing to the Company's stockholders or at the date of the
Stockholders Meeting, contain any statement which, at the time and in light of
the circumstances under which it is made, is false or misleading with respect to
any material fact required to be stated therein or necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Stockholders Meeting. The Proxy Material will comply as to form
in all material respects with the Exchange Act and the rules and regulations of
the SEC thereunder.
4.25. Board Recommendations. By a vote of the directors present at
---------------------
a meeting of the board of directors of the Company (which meeting was duly
called and held and at which a quorum was present at all times), the board of
directors has (i) approved and adopted (A) this Agreement, including the
issuance of the Securities, (B) the Company's entering into the Ancillary
Agreements, and (C) the Certificate Amendments, and (ii) resolved to recommend
to the Company's stockholders approval of the transactions contemplated
hereunder and under the
24
Ancillary Agreements, including issuance of the Securities to the Purchasers
pursuant to this Agreement.
4.26. Intellectual Property.
---------------------
(a) The Company and its Subsidiaries either own or have valid
licenses or other rights to use all patents, copyrights, trademarks, software,
databases, data, other technical information used in their businesses as
presently conducted ("Proprietary Rights"), subject to the limitations
------------------
contained in the agreements governing the use of the same, with such exceptions
as would not result in a Material Adverse Effect on the Company. There are no
limitations contained in the agreements of the type described in the immediately
preceding sentence which, upon consummation of the transactions contemplated
hereunder, will alter or impair any such rights, breach any such agreement with
any third party vendor, or require payments of additional sums thereunder,
except any such limitations that would not have a Material Adverse Effect on the
Company. The Company and its Subsidiaries are in compliance in all material
respects with such licenses and agreements and, except as set forth on Schedule
--------
4.26, there are no pending or, to the best Knowledge of the Company or any
----
Subsidiary, threatened Proceedings challenging or questioning the validity or
effectiveness of any license or agreement relating to such property or the right
of the Company or any Subsidiary to use, copy, modify or distribute the same.
(b) No person has a right, other than those set forth on
Schedule 4.26 to receive a royalty or similar payment in respect of any material
-------------
Proprietary Rights whether or not pursuant to any contractual arrangements
entered into by the Company or its Subsidiaries.
4.27. Securities Offerings.
--------------------
(a) Except as set forth on Schedule 4.27, since March 31,
-------------
1993, the Company has not sold any securities other than securities registered
pursuant to the Securities Act.
(b) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act ("Regulation D")) of the Company
------------
has, directly or through any agent (provided that no representation is made as
to the Purchasers or any person acting on their behalf), (i) sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of any security
(as defined in the Securities Act) that is or will be integrated with the
offering and sale of the Securities in a manner that would require the
registration of the Securities under the Securities Act or (ii) engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the offering of the Securities.
4.28. No Other Agreements to Sell the Assets or the Company. Except
-----------------------------------------------------
as contemplated by this Agreement, none of the Company or any of its
Subsidiaries have any legal obligation, absolute or contingent, to any other
person or firm to sell the capital stock, material assets or business of the
Company or any Subsidiary or to effect any merger, consolidation, liquidation,
dissolution, recapitalization or other reorganization (except as to the
reorganization of
25
the Company's operating units as previously disclosed to the Purchasers) of the
Company or any Subsidiary or to enter into any agreement with respect thereto.
4.29. No Brokers. The Company has not employed, and is not subject
----------
to the valid claim of, any broker, finder, consultant or other intermediary in
connection with the transactions contemplated hereby who might be entitled to a
fee or commission from the Company in connection with such transactions, except
for Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation and Environmental
Financial Consulting Group, Inc.
4.30. Convertible Exchangeable Preferred Stock. The entering into
----------------------------------------
this Agreement and the consummation of the transactions contemplated hereby,
including, without limitation, the filing of the Certificate Amendments with the
office of the Secretary of State of the State of Delaware, do not and will not
violate or conflict with the terms of, or require the approval of holders of,
the Convertible Exchangeable Preferred Stock.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
--------------------------------------------
Each Purchaser hereby represents and warrants to the Company as
follows:
5.1. Organization of Purchaser. Purchaser is a limited partnership
-------------------------
duly formed and validly existing and in good standing as a limited partnership
under the laws of its jurisdiction of formation and has full partnership power
and authority to carry on its business as currently being conducted.
5.2. Authorization. Purchaser has full partnership power and
-------------
authority to execute and deliver this Agreement and the Ancillary Agreements and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery by Purchaser of this Agreement and the Ancillary Agreements, and
the consummation by it of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary partnership action of the Purchaser. This
Agreement has been duly executed and delivered by Purchaser and constitutes, and
each Ancillary Agreement executed or to be executed by Purchaser has been, or
when executed will be, duly executed and delivered by Purchaser and constitutes,
or when executed and delivered will constitute, a valid and legally binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, except that such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting
creditors' rights generally and (ii) general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
5.3. Noncontravention. The execution and delivery by Purchaser of
----------------
this Agreement and the Ancillary Agreements and the consummation by it of the
transactions contemplated hereby and thereby do not and will not (i) conflict
with or result in a violation of any provision of the agreement of limited
partnership or other governing agreement of Purchaser, (ii)
26
conflict with or result in a violation of any provision of, or constitute (with
or without the giving of notice or the passage of time or both) a default under,
or give rise (with or without the giving of notice or the passage of time or
both) to any right of termination, cancellation, or acceleration under, any
bond, debenture, note, mortgage, indenture, lease, agreement, or other
instrument or obligation to which Purchaser is a party or by which Purchaser or
any of its properties may be bound, (iii) result in the creation or imposition
of any Encumbrance upon the properties of Purchaser, or (iv) violate any
Applicable Law binding upon Purchaser, except, in the case of clauses (ii),
(iii), and (iv) above, for any such conflicts, violations, defaults,
terminations, cancellations, accelerations, or Encumbrances which would not,
individually or in the aggregate, materially and adversely affect the ability of
the Purchaser to consummate the transactions contemplated hereby.
5.4. Consents and Appeals. No consent, approval, order or
--------------------
authorization of, or declaration, filing or registration with, any Government
Entity is required to be obtained or made by Purchaser in connection with the
execution and delivery by Purchaser of this Agreement and the Ancillary
Agreements or the consummation of the transaction contemplated hereby and
thereby other than (i) filings under the HSR Act and expiration or termination
of any applicable waiting period required thereunder and (ii) any filings
required under Section 13 of the Exchange Act and Rule 13d-1 under the Exchange
Act and (iii) such consents, approvals, orders or authorization which, if not
made, would not, individually or in the aggregate, materially and adversely
affect the ability of the Purchaser to consummate the transactions contemplated
hereby.
5.5. Purchase for Investment.
-----------------------
(a) Purchaser and each of its partners has been furnished with
all information that it has requested for the purpose of evaluating the proposed
acquisition of the Securities pursuant hereto, and Purchaser (and each of its
partners) has had an opportunity to ask questions of and receive answers from
the Company regarding the Company and its business, assets, results of
operations, financial condition and prospects and the terms and conditions of
the issuance of the Securities.
(b) Purchaser is acquiring the Securities solely by and for
its own account, for investment purposes only and not for the purpose of resale
or distribution; and neither Purchaser nor any of its partners has any contract,
undertaking, agreement or arrangement with any person or entity to sell,
transfer of pledge to such person or anyone else any Securities; and neither
Purchaser nor any of its partners has any present plans or intentions to enter
into any such contract, undertaking or arrangement.
(c) Purchaser and each of its partners acknowledges and
understands that (i) no registration statement relating to the Securities, the
Conversion Shares or the Warrant Shares has been or is to be filed with the
Commission under the Securities Act or pursuant to the securities laws of any
state; (ii) the Securities, the Conversion Shares and the Warrant Shares cannot
be sold or transferred without compliance with the registration provisions of
the Securities Act or compliance with exemptions, if any, available thereunder;
(iii) the certificates representing the respective Securities will include a
legend thereon that refers to the foregoing; and (iv) the
27
Company has no obligation or intention to register the Securities, Conversion
Shares or the Warrant Shares under any federal or state securities act or law;
except to the extent, in each case, that the terms of the Registration Rights
Agreement shall otherwise provide.
(d) Purchaser and each of its partners (i) is an "accredited
investor" as defined in Rule 501 of Regulation D; (ii) has such knowledge and
experience in financial and business matters in general that it has the capacity
to evaluate the merits and risks of an investment in the Securities and to
protect its own interest in connection with an investment in the Securities;
(iii) has such a financial condition that it has no need for liquidity with
respect to its investment in the Securities to satisfy any existing or
contemplated undertaking, obligation or indebtedness; and (iv) is able to bear
the economic risk of its investment in the Securities for an indefinite period
of time.
5.6. Disclosure Documents. None of the information with respect to
--------------------
Purchaser or any of its Affiliates which shall have been supplied in writing by
Purchaser for inclusion in the Proxy Material will at the date of mailing of the
Proxy Material to the Company's stockholders contain any statement which, at the
time and in light of the circumstances under which it is made, is false or
misleading with respect to any material fact required to be stated therein or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders Meeting.
5.7. No Brokers. Purchaser has not employed, and is not subject to
----------
the valid claim of, any broker, finder, consultant or other intermediary in
connection with the transactions contemplated by this Agreement who might be
entitled to a fee or commission in connection with such transactions.
ARTICLE VI
ACTIONS BY THE COMPANY AND
--------------------------
THE PURCHASERS PRIOR TO THE CLOSING
-----------------------------------
The Company and each Purchaser covenants as follows for the period
from the date hereof through the Closing Date:
6.1. Meeting of Stockholders; Proxy Statement; Certificate
-----------------------------------------------------
Amendments.
----------
(a) The Company shall take all action necessary in accordance
with Applicable Law and the Certificate of Incorporation and Bylaws to duly
call, give notice of, convene and hold a meeting of its stockholders, which
meeting may be the Company's annual meeting of stockholders (the "Stockholders
Meeting") as promptly as practicable after the date hereof to consider and vote
upon the adoption and approval of the transaction as contemplated hereunder
(including, without limitation, the Certificate Amendments and proposals (the
"Ancillary Proposals") to amend the Certificate of Incorporation to (i) delete
-------------------
the classification of the Company's Board of Directors set forth in Article
Seventh of the Certificate of Incorporation and (ii) to delete the cumulative
voting for directors of the Company as set forth in Article Ninth
28
of the Certificate of Incorporation). The stockholder vote required for the
adoption and approval of the transactions contemplated hereunder shall be the
vote or votes required by Applicable Law, the Certificate of Incorporation and
the rules of the New York Stock Exchange, as represented by the Company in
Section 4.6. Except as provided in Section 6.1(b) below, the board of directors
of the Company shall (i) recommend to the Company's stockholders that they vote
in favor of the adoption and approval of all matters necessary to effectuate the
transactions contemplated hereunder, (ii) use its reasonable best efforts to
solicit from the Company's stockholders proxies in favor of such adoption and
approval, and (iii) take all other action reasonably necessary to secure a vote
of the Company's stockholders in favor of such adoption and approval. The
Company shall also use its reasonable best efforts to obtain a statement from
all of its executive officers and directors who own shares of Common Stock that
such persons intend to vote all such shares of Common Stock in favor of the
transactions contemplated hereunder at the Stockholders Meeting.
(b) As promptly as practicable after the date hereof, the
Company shall take or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable to (i) prepare and file with the
Commission any documents or materials, including, but not limited to, the Proxy
Materials, pertaining to the issuance of the Securities and the Stockholders
Meeting, (ii) have the Proxy Materials cleared by the Commission (including with
respect to clauses (i) and (ii) by consulting with the Purchasers and responding
promptly to any comments from the Commission) and (iii) take such action as may
be required to be taken under applicable state securities or blue sky laws in
connection with the issuance of the Securities, the Conversion Shares or the
Warrant Shares. Except to the extent otherwise determined in good faith by the
Company's board of directors in the exercise of its fiduciary duties, taking
into account the advice of outside counsel, the Proxy Materials shall contain
the recommendation of the Board of Directors that stockholders of the Company
vote in favor of the adoption and approval of all matters necessary to
effectuate the transactions contemplated hereunder. The Company shall notify the
Purchasers promptly of the receipt of any comments on, or any requests for
amendments or supplements to, the Proxy Materials by the Commission, and the
Company shall supply the Purchasers with copies of all correspondence between it
and its representatives, on the one hand, and the Commission or members of its
staff, on the other, with respect to the Proxy Materials. The Company, after
consultation with the Purchasers, shall use its reasonable best efforts to
respond promptly to any comments made by the Commission with respect to the
Proxy Materials. The Company and the Purchasers shall cooperate with each other
in preparing the Proxy Materials, and the Company and the Purchasers shall each
use its reasonable best efforts to obtain and furnish the information required
to be included in the Proxy Materials. The Company and the Purchasers each
agrees promptly to correct any information provided by it for use in the Proxy
Statement if and to the extent that such information shall have become false or
misleading in any material respect, and the Company further agrees to take all
steps necessary to cause the Proxy Statement as so corrected to be filed with
the Commission and to be disseminated promptly to holders of shares of the
Common Stock, in each case as and to the extent required by Applicable Law.
29
(c) As promptly as practicable after the date hereof, the
Company shall provide the Purchasers with the form of the Certificate Amendments
(excluding the Certificate of Designations) substantially in the form to be
included in the Proxy Materials and to be filed with the Secretary of State of
the State of Delaware. The form of Certificate Amendments are subject to the
approval of the Purchasers, which approval shall not be unreasonably withheld.
6.2. Stock Exchange Approval. The Company shall use its reasonable
-----------------------
best efforts and take all action necessary to obtain the confirmation of the New
York Stock Exchange that the transactions contemplated hereby (including the
Certificate Amendments) will not violate Section 313 of the New York Stock
Exchange Listed Company Manual.
6.3. Continuing Operations. From the date of this Agreement to the
---------------------
earlier of (i) the Closing Date or (ii) the termination of this Agreement in
accordance with its terms (the "Interim Period"), the Company and its
--------------
Subsidiaries shall conduct their business in the ordinary and usual course, and,
except as set forth on Schedule 6.3, neither the Company nor any Subsidiary
------------
shall, without the prior consent of Purchasers except as expressly contemplated
hereby:
(a) amend its charter or bylaws; split (including any reverse
split), combine, or reclassify any shares of its capital stock; adopt
resolutions authorizing a liquidation, dissolution, merger, consolidation,
restructuring, recapitalization, or other reorganization of the capital
structure of the Company or any Subsidiary; or make any other material changes
in its capital structure;
(b) except in the ordinary course of business consistent with
past practice, (i) incur any material liability or obligation, (ii) become
liable or responsible for the material obligations of any other Person (other
than wholly owned Subsidiaries) or (iii) pay, discharge, or satisfy any material
claims, liabilities, or obligations (whether accrued, absolute, contingent,
unliquidated, or otherwise, and whether asserted or unasserted), other than the
payment, discharge, or satisfaction, in the ordinary course of business
consistent with past practice, of liabilities reflected or reserved against in
the financial statements; provided that, in no event shall any of the Companies
enter into any settlement or compromise of any litigation or claims involving
liability in excess of $1,000,000, without the prior written approval of the
Purchasers;
(c) incur any indebtedness for borrowed money, other than
revolving debt and letters of credit under the Credit Facility and up to an
aggregate of $2,000,000 of debt for capital assets;
(d) make any loans or advances to any person, other than (i)
advances to employees in the ordinary and usual course of business and (ii)
transactions among or between the Company and its Subsidiaries with respect to
cash management conducted in the ordinary and usual course of business;
30
(e) declare or pay any dividend or make any other distribution
with respect to its capital stock, other than dividends paid by any Subsidiary
to the Company or another Subsidiary in the ordinary and usual course of
business or to the holders of the Convertible Exchangeable Preferred Stock as
required pursuant to the terms of the Convertible Exchangeable Preferred Stock
Certificate of Designations;
(f) issue, sell, or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to purchase,
or otherwise) any of its capital stock or other securities other than as
contemplated herein or pursuant to stock options issued and outstanding as of
the date hereof or purchase or otherwise acquire any of its capital stock,
employee or director stock options or debt securities;
(g) subject to Encumbrance any of its assets or properties,
other than Permitted Encumbrances and Encumbrances permitted under the Credit
Facility;
(h) other than in the ordinary course of business and sales of
non-core assets of up to $3,000,000 in the aggregate, sell, lease, transfer, or
otherwise dispose of, directly or indirectly, any assets, or waive, release,
grant, or transfer any rights of value;
(i) acquire (by merger, consolidation, acquisition of stock or
assets or otherwise) any corporation, partnership or other business organization
or division thereof, create or make any investment in any Subsidiary (other than
a wholly owned Subsidiary); or make any other investment or expenditure of a
capital nature or binding commitment therefor, other than in amounts already
included in the capital expenditure budget for the Company and its Subsidiaries
for the fiscal year ended March 29, 1997, as previously provided to and approved
by Purchasers;
(j) enter into, adopt, or (except as may be required by law)
amend or terminate any collective bargaining agreement or any Benefit Plan;
approve or implement any employment severance arrangements (other than payments
made under the Company's existing severance policy in accordance with past
practice) or retain or discharge any officers and executive management
personnel; authorize or enter into any employment, severance, consulting
services or other agreement with any directors, officers and executive
management personnel or any of their Affiliates; or change the compensation or
benefits provided to any director, officer, or employee as of March 29, 1996,
other than arrangements previously disclosed to Purchaser;
(k) enter into any contract, agreement or lease involving
total value or consideration or liability in excess of $50,000,000 or other
commitment (not including cost reimbursable contracts) which other commitment
involves any material risk of loss to the business, assets, properties, or
financial position of the Company and its Subsidiaries; or, except as provided
for in Section 6.12, amend, modify, or change in any materially adverse respect
any of the agreements pertaining to existing indebtedness or any other existing
contract agreement or lease involving total value or consideration or liability
in excess of $50,000,000, or other commitment which is material to the business,
assets, properties, or financial position of the Company and its Subsidiaries,
taken as a whole;
31
(l) enter into any speculative or commodity swaps, xxxxxx or
other derivatives transactions or purchase any securities for investment
purposes, other than in connection with cash management of the Company;
(m) grant any option or preferential right to purchase or
enter into any other agreements that could adversely affect the marketability of
any material asset of the Company or any Subsidiary.
6.4. Press Releases. Except as may be required by applicable law
--------------
by the rules of any national securities exchange, neither Purchasers nor the
Company shall issue any press release with respect to this Agreement or the
transactions contemplated hereunder without the prior consent of the Company in
the case of the Purchasers, and of Carlyle in the case of the Company (which
consent shall not be unreasonably withheld under the circumstances). Any such
press release required by applicable law or by the rules of any national
securities exchange shall only be made after reasonable notice to the other
party.
6.5. Additional Financial Statements. During the period from the
-------------------------------
date hereof through the Closing Date, as soon as reasonably practicable after
they become available, the Company shall furnish to the Purchasers (i) the
quarterly consolidated financial statements of the Company and its consolidated
Subsidiaries, which shall have been prepared in accordance with GAAP and on a
basis consistent with past practice and (ii) all monthly financial statements or
reports of the Company and its consolidated Subsidiaries, which shall have been
prepared in a manner consistent with past practice.
6.6. Investigations and Access. The Company agrees to permit the
-------------------------
Purchasers and their agents and representatives reasonable access during normal
business hours to (i) the premises of the Company and its Subsidiaries and (ii)
all the books, computer software application systems, files and records of the
Company and its Subsidiaries, including, but not limited to, lease, loan, real
estate, financial, tax and personnel files and records, and to furnish the
Purchasers such financial and operating data and other information with respect
to the business, assets and properties of the Company as the Purchasers shall
reasonably request. The Company will authorize its accountants to provide the
Purchasers, in accordance with such accountant's internal policies, with their
working papers for the Company's financial statements. The Company shall deliver
true, correct and complete copies of all resolutions, and minutes of all
meetings, reflecting any action taken by the Company stockholders, board of
directors or committees of the board of directors and by each Subsidiary during
the period from the date hereof through the Closing Date.
6.7. Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to the Purchasers, and the Purchasers shall give prompt notice to
the Company, of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
any time from the date hereof to the Closing Date and (ii) any material failure
of the Company or the Purchasers, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder, and each party shall use all reasonable efforts to remedy such
failure. In addition, the Company shall give prompt notice to
32
the Purchasers of any material developments involving the operations or
activities of the Company or its Subsidiaries.
6.8. No Solicitation. Prior to the Closing (or the earlier
---------------
termination of this Agreement by the Purchasers), neither the Company nor any of
its Affiliates nor any of their respective directors, officers, employees,
representatives or agents, shall directly or indirectly, solicit or initiate any
discussions, submissions of proposals or offers or negotiations with,
participate in any negotiations or discussions with, or provide any information
or data of any nature whatsoever to, or otherwise cooperate in any other way
with, or assist or participate in, facilitate or encourage any effort or attempt
by, any corporation, partnership, person or other entity or group, other than
Purchasers and their respective partners, employees, representatives, agents and
Affiliates, concerning any Alternative Transaction, provided, however, that
nothing contained in this Section 6.8 shall prohibit the Board of Directors of
the Company from (i) furnishing information or affording access to properties,
books or records to, or entering into discussions or negotiations with, any
person or entity in connection with any unsolicited bona fide proposal by such
person or entity to enter into any Alternative Transaction or entering into an
Alternative Transaction if, and only to the extent that, (A) such Board of
Directors, after consultation with outside legal counsel (which may include its
regularly engaged outside legal counsel) determines in good faith that such
action is required for the Board of Directors to comply with its fiduciary
duties imposed by applicable law and (B) prior to furnishing such information
to, or entering into discussions or negotiations with, such person or entity,
the Company provides written notice to the Purchasers to the effect that it is
furnishing information or affording access to properties, books or records to,
or entering into discussions or negotiations with, such person or entity and (y)
receives from such person or entity an executed confidentiality agreement on
terms and in form customary for similar transactions or (ii) complying with Rule
14e-2 promulgated under the Exchange Act, with regard to an Alternative
Transaction. For purposes of this Agreement, "Alternative Transaction" means
-----------------------
any merger, consolidation, sale of substantial assets, sale of shares of capital
stock or other equity securities, recapitalization, debt restructuring (other
than as provided in Section 6.12) or similar transaction involving the Company
or any Subsidiary, or any division of the Company or any Subsidiary. As part of
the written notice provided to the Purchaser pursuant to clause (i)(B) above,
the Company shall indicate the identity of the offeror and the terms and
conditions of any proposals or offers or the nature of any inquiries or
contacts, and thereafter shall use reasonable efforts to keep Purchasers
informed, on a current basis, of the status and terms of any such proposals or
offers and the status of any such discussions or negotiations. The Company
shall not release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which the Company is a party except
the Company may provide to any third party a release or waiver of any standstill
agreement to which the Company is a party which release or waiver is reasonably
necessary for such third party to make, and for the Board of Directors to
consider, any unsolicited bona fide proposal to enter into any Alternative
Transaction.
6.9. HSR Act Notification. To the extent it is determined that the
--------------------
HSR Act will be applicable to the transactions as contemplated hereunder, each
of the affected parties hereto shall (i) file or cause to be filed, as promptly
as practicable after the execution and delivery of this Agreement and in no
event later than ten business days after the date of this Agreement, with the
00
Xxxxxxx Xxxxx Xxxxxxxxxx xxx xxx Xxxxxx Xxxxxx Department of Justice, all
reports and other documents required to be filed by such party under the HSR Act
concerning the transactions contemplated hereby and (ii) promptly comply with or
cause to be complied with any requests by the Federal Trade Commission or the
United States Department of Justice for additional information concerning the
Transaction, in each case so that the waiting period applicable to this
Agreement and the transaction contemplated hereby under the HSR Act shall expire
as soon as practicable after the execution and deliver), of this Agreement. Each
party hereto agrees to request, and to cooperate with the other party or parties
in requesting, early termination of any applicable waiting period under the HSR
Act.
6.10. Employee Matters.
----------------
(a) On or prior to the Closing, the Company shall use its
reasonable best efforts to enter into employment agreements with the individuals
listed on Schedule 6.10, the terms and conditions of which are summarized on
-------------
Schedule 6.10 and will include a reasonable and customary noncompetition
-------------
agreement and an award to such individuals of incentive stock options. The
employment agreement, and all terms and conditions thereof, are subject to the
prior approval of the Purchasers. Such employment agreements shall supersede any
existing employment or severance agreements between the Company and such
employees.
(b) On or prior to the Closing, the Company shall adopt an
amendment to the Company's Non-Employee Directors Retirement Plan in the form
attached hereto as Exhibit D, and shall use its reasonable best efforts to
obtain from each person who is a beneficiary under such plan, in a form
reasonably satisfactory to the Purchasers, a consent to such amendment and such
person's agreement to forego any waiver of the age and service requirements
under such plan that may result from the execution of this Agreement and the
consummation of the transactions contemplated hereby. Additionally, the Company
shall use its reasonable best efforts to obtain from each non-employee director
a written waiver of all rights to the acceleration of vesting requirements under
any Non-Employee Director Non-Qualified Agreement under the 1991 Stock Incentive
Plan to which such director is a party.
(c) On or prior to the Closing, the Board of Directors shall
take all actions necessary to ensure that the acquisition of the Securities by
the Purchasers and the transactions contemplated herein shall not result in the
acceleration or creation of any rights of any person to benefits under any
Employee Plan (including, without limitation, the acceleration of the vesting or
exercisability of any stock options, the acceleration of the vesting of any
restricted stock, the acceleration of the accrual or vesting of any benefits
under any Pension Plan or the acceleration or creation of any rights under any
severance, parachute or change in control agreement), other than as may occur
under (i) outstanding stock options granted to employees of the Company and its
Subsidiaries under the 1983 Stock Incentive Plan and to non-employee directors
under the 1991 Stock Incentive Plan and (ii) the Non-Employee Directors
Retirement Plan.
34
6.11. Action by the Company.
---------------------
(a) In the event that the Company's stockholders shall vote to
approve the transactions contemplated hereby, then, immediately prior to the
Closing, the Board of Directors shall take, or cause to be taken, all actions
necessary to (i) file with the Secretary of State of the State of Delaware the
Certificate Amendments, (ii) cause the board of directors of the Company as of
the Closing Date to consist of seven (7) directors, four (4) of which shall be
elected by the Purchasers by delivery of a written consent on the Closing Date,
and (iii) effect any amendment to the Bylaws necessary or advisable to
effectuate the transactions contemplated herein.
6.12. Amendment to Credit Facility. Notwithstanding anything in
----------------------------
Section 6.3 to the contrary, on or prior to the Closing, the Company shall use
its reasonable best efforts to enter into an amendment to the Credit Facility
upon terms and conditions reasonably satisfactory to Purchasers which amendments
will, among other things, (i) modify current covenants, (ii) increase the limits
on the Company's ability to make capital expenditures for contemplated
acquisitions and (iii) confirm that the entering into this Agreement, and the
consummation of the transactions contemplated hereby, including without
limitation, the acquisition of the Securities by the Purchasers, and the filing
of the Certificate Amendments with the Office of the Secretary of State of the
State of Delaware, do not and will not constitute a Change in Control or a
breach of or default under the Credit Facility.
6.13. Foreign Ownership, Control or Influence. If at any time
---------------------------------------
government contracting authorities notify the Company that it may not
participate in bidding or performing work under a Government Contract based on
the degree of foreign ownership, control or influence over the Company, the
Purchasers will use all reasonable efforts to cooperate with the Company in
attempting to appeal or overturn the decision of such government contracting
authority and, if such efforts are unsuccessful, will take other reasonable
measures to avoid or mitigate foreign influences so as to satisfy such
government contracting authority that classified information and "special
nuclear material" will not be compromised. This provision shall not obligate the
Purchasers to take any action which results in an impairment of the economic or
tax benefits of their investment in the Company.
6.14. Liability Insurance. On or prior to the Closing, the Company
-------------------
shall ensure that each person serving on the board of directors of the Company
on and after the Closing Date shall receive the same liability insurance
coverage as a member of the board of directors as the Company's directors
receive as of the date hereof (including coverage for liabilities arising before
the date of taking office to the extent arising from such person's status as a
prospective member of the board of directors) and that such policies shall be in
full force and effect in accordance with their terms as of the Closing Date.
ARTICLE VII
CONDITIONS TO CLOSING
---------------------
35
7.1. Conditions to Each Party's Obligations. The respective
--------------------------------------
obligations of each party to consummate the transactions contemplated hereby on
the Closing Date is subject to the satisfaction or waiver, on or prior to the
Closing Date, of each of the following conditions:
(a) No Governmental or Other Proceedings or Litigation.
--------------------------------------------------
There shall be no injunction or court order restraining consummation of the
transactions contemplated hereunder and there shall be no pending or threatened
action or proceeding by or before a court or governmental body brought by or on
behalf of any Governmental Entity seeking to restrain or invalidate all or any
portion of the transactions contemplated hereunder, and there shall not have
been adopted any law or regulation making all or any portion of the transactions
contemplated hereunder illegal.
(b) Stockholder Approval. The holders of the requisite
--------------------
number of shares of outstanding Common Stock of the Company shall have duly and
validly approved all items necessary to effectuate the transactions contemplated
hereby and under the Ancillary Agreements, including without limitation, the
Certificate Amendments.
(c) HSR Act. To the extent that the HSR Act is applicable to
-------
the transactions contemplated hereunder, all waiting periods (and any extensions
thereof) applicable to any such transactions under the HSR Act shall have
expired or been terminated.
(d) NYSE Listing. The New York Stock Exchange shall have
------------
informed the Company that the transactions contemplated hereby will not violate
Section 313 of the New York Stock Exchange Listed Company Manual and the New
York Stock Exchange shall not have indicated any intention to delist the
Company's Common Stock.
7.2. Conditions to the Company's Obligations. The obligations of
---------------------------------------
the Company to consummate the transactions contemplated hereby on the Closing
Date is subject to the satisfaction or waiver on or prior to the Closing Date,
of each of the following conditions:
(a) Representations, Warranties and Covenants. All
-----------------------------------------
representations and warranties of the Purchasers contained in this Agreement
shall be true and correct in all material respects at and as of the Closing Date
as if such representations and warranties were made at and as of the Closing
Date, and the Purchasers shall have performed in all material respects all
agreements and covenants required hereby to be performed by it prior to or at
the Closing Date. There shall be delivered to the Company a certificate (signed
by a general partner of each Purchaser) to the foregoing effect.
(b) Consents. All consents, approvals, Permits and waivers
--------
from Governmental Entities and other parties necessary to permit the Company to
consummate the transactions contemplated hereby including, but not limited to,
the approval of the New York Stock Exchange to the transactions contemplated
hereby, shall have been obtained, unless the failure to obtain any such consent,
approval, Permit or waiver would not have a Material Adverse Effect upon the
Company and its Subsidiaries, taken as a whole.
36
(c) Opinion of Counsel. The Purchasers shall have delivered
------------------
to the opinions of Xxxxxx & Xxxxxxx counsel to Purchasers, with regard to the
matters set forth on Exhibit E hereto, in form and substance reasonably
acceptable to the Company.
(d) Certificates. Each Purchaser will furnish the Company
------------
with such certificates of its general partner and others to evidence compliance
with the conditions set forth in this Article VII as may be reasonably requested
by the Company.
(e) Average Stock Price. The average of the average of the
-------------------
daily high and low sales price for a share of Common Stock on the New York Stock
Exchange for each ten (10) New York Stock Exchange trading day period commencing
on the date hereof and ending prior to the Closing Date shall be greater than or
equal to $1.75.
7.3. Conditions to the Purchasers' Obligations. The obligation of
-----------------------------------------
the Purchasers to consummate the transactions contemplated hereby on the Closing
Date is subject to the satisfaction or waiver on or prior to the Closing Date of
each of the following conditions:
(a) Representations, Warranties and Covenants. All
-----------------------------------------
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects at and as of the Closing Date as if
such representations and warranties were made at and as of the Closing Date, and
the Company shall have performed in all material respects all agreements and
covenants required hereby to be performed prior to or at the Closing Date. There
shall be delivered to the Purchasers a certificate (signed by the President and
Chief Executive Officer and the Secretary of the Company) to the foregoing
effect.
(b) Consents. All consents, approvals, Permits and waivers
--------
from Governmental Entities and other parties necessary to permit the Purchasers
and the Company to consummate the transactions contemplated hereby shall have
been obtained, unless the failure to obtain any such consent, approval, Permit
or waiver would not have a Material Adverse Effect upon the Company, taken as a
whole, or the Purchasers.
(c) Opinion of Counsel. The Company shall have delivered to
------------------
the Purchasers the opinions of Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel for the
Company with respect to the matters set forth on Exhibit F hereto.
(d) Certificates. The Company shall furnish the Purchasers
------------
with such certificates of the Chief Executive Officer and the Secretary of the
Company and others to evidence compliance with the conditions set forth in this
Article VIII as may be reasonably requested by the Purchasers.
(e) No Adverse Changes. Since the date of this Agreement,
------------------
there shall not have been any Material Adverse Effect on the Company.
(f) Resignations and Elections of Directors. All actions
---------------------------------------
shall have been taken by the Company, its stockholders and board of directors so
that, immediately upon the Purchasers' purchase of the Securities, the board of
directors shall consist of seven (7) directors
37
and the Purchasers may, by execution and delivery of a written consent, elect
four (4) members of the board of directors of the Company effective as of the
Closing Date.
(g) Amendment of Certificate and Bylaws. The Certificate of
-----------------------------------
Incorporation and the Bylaws will have been amended on or prior to the Closing
Date in a form acceptable to the Purchasers in order to effectuate the
transactions contemplated herein. None of the provisions of the Certificate of
Incorporation or Bylaws shall prohibit or restrict the authority of the board of
directors of the Company, by action of a majority of its members, from amending
the Bylaws.
(h) Liability Insurance. The Company shall have provided to
-------------------
the Purchasers a copy of the insurance policies together with the riders and
schedules thereto which evidence compliance with the provisions set forth in
Section 6.14.
(i) Average Stock Price. The average of the average of the
-------------------
daily high and low sales price for a share of Common Stock on the New York Stock
Exchange for each ten (10) New York Stock Exchange trading day period commencing
on the date hereof and ending prior to the Closing Date shall be greater than or
equal to $1.75.
(j) Employment Agreements. The Company and the applicable
---------------------
employees shall have entered into the employment agreements contemplated by
Section 6.10(a).
(k) Directors Waivers and Consents. The Company shall have
------------------------------
obtained each of the waivers and consents contemplated by Section 6.10(b).
(l) Credit Facility Amendments. The Company shall have
--------------------------
entered into the amendments to the Credit Facility specified in Section 6.12.
ARTICLE VIII
ADDITIONAL AGREEMENTS
---------------------
8.1. Subscription for Warrants. On the Closing Date, the Company
-------------------------
and the Purchasers shall enter into the Warrant Agreement pursuant to which the
Company shall issue to the Purchasers, the Warrants, at an exercise price of
$3.00 per share. The Warrants shall be evidenced by one or more warrant
certificates in the form attached as an exhibit to the Warrant Agreement (the
"Warrant Certificate").
-------------------
8.2. Registration Rights Agreement. On the Closing Date, the
-----------------------------
Company and the Purchasers shall enter into the Registration Rights Agreement.
ARTICLE IX
INDEMNIFICATION
---------------
38
9.1. Survival of Representations, Etc. The representations,
--------------------------------
warranties, covenants and agreements of the parties hereto contained herein
shall survive the Closing, but shall terminate on the date eighteen months from
the Closing Date; provided, however, that there shall be no such termination
-------- -------
with respect to any representation or warranty as to which a bona fide claim has
been asserted prior to such date.
9.2. Indemnification by the Company. The Company shall indemnify
------------------------------
and hold harmless each of the Purchasers and its Affiliates, directors,
officers, advisors, agents and employees (the "Purchaser Indemnified Parties")
-----------------------------
to the fullest extent lawful, from and against any and all demands, losses,
damages, penalties, claims, liabilities, obligations, actions, causes of action,
and reasonable expenses (including without limitation, costs of investigating,
preparing or defending any such claim or action and reasonable legal fees and
expenses) (collectively, "Losses"), (i) arising out of or in connection with
------
this Agreement, the transactions contemplated hereby, and/or the delivery,
enforcement and performance of this Agreement or the Ancillary Agreements, or
(ii) arising by reason of or resulting from any breach of any warranty,
representation, covenant or agreement of the Company contained in this Agreement
or in any certificate delivered pursuant thereto; provided, however, that no
-------- -------
Purchaser Indemnified Party shall be entitled to indemnification by the Company
hereunder with respect to any Losses arising solely from the bad faith or gross
negligence (as finally determined by a court of competent jurisdiction) of such
Purchaser Indemnified Party or any Affiliate, director, officer, agent, or
employee of such Purchaser Indemnified Party.
9.3. Indemnification by the Purchasers. Each Purchaser shall
---------------------------------
indemnify and hold harmless the Company and its Affiliates, directors, officers,
advisors, agents and employees (the "Company Indemnified Parties" and, together
---------------------------
with the Purchasers Indemnified Parties, the "Indemnified Parties") to the
-------------------
fullest extent lawful, from and against any and all Losses arising by reason of
or resulting from any breach of any warranty, representation, covenant or
agreement of such Purchaser contained in this Agreement or in any certificate
delivered pursuant thereto, provided, however, that no Company Indemnified Party
shall be entitled to indemnification by any Purchaser hereunder with respect to
any Losses arising solely from the bad faith or gross negligence (as finally
determined by a court of competent jurisdiction) of such Company Indemnified
Party, or any Affiliate, director, officer, agent or employee of such Company
Indemnified Party.
9.4. Limitation on Indemnities. No claim may be made against an
-------------------------
indemnifying party for indemnification pursuant to either Section 9.2 or Section
9.3 until the aggregate dollar amount of all Losses indemnifiable pursuant to
such section exceeds $1,500,000. The indemnification obligations of the Company
pursuant to Section 9.2 and the indemnification obligations of the Purchasers
pursuant to Section 9.3 shall be effective only until the dollar amount paid in
respect of the Losses indemnified against under such clause of this Agreement
aggregates to an amount equal to $45,000,000.
9.5. Losses. The term "Losses" as used in this Section 9 is not
------
limited to matters asserted by third parties, but includes Losses incurred or
sustained by an Indemnified Party in the absence of third party claims. Payments
by an Indemnified Party of amounts for
39
which such Indemnified Party is indemnified hereunder shall not necessarily be a
condition precedent to recovery.
9.6. Defense of Claims. If a claim for Losses (a "Claim") is to be
----------------- -----
made by an Indemnified Party, such Indemnified Party shall give written notice
(a "Claim Notice") to the indemnifying party as soon as practicable after such
------------
Indemnified Party becomes aware of any fact, condition or event which may give
rise to Losses for which indemnification may be sought under this Section 9. If
any lawsuit or enforcement action is filed against any Indemnified Party
hereunder, notice thereof (a "Third Party Notice") shall be given to the
------------------
indemnifying party as promptly as practicable (and in any event within fifteen
(15) calendar days after the service of the citation or summons). The failure of
any indemnified party to give timely notice hereunder shall not affect rights to
indemnification hereunder, except to the extent that the indemnifying party
demonstrates actual damage caused by such failure. After receipt of a Third
Party Notice, if the indemnifying party shall acknowledge in writing to the
indemnified party that the indemnifying party shall be obligated under the terms
of its indemnity hereunder in connection with such lawsuit or action, then the
indemnifying party shall be entitled, if it so elects, (i) to take control of
the defense and investigation of such lawsuit or action, (ii) to employ and
engage attorneys of its own choice to handle and defend the same, at the
indemnifying party's cost, risk and expense unless the named parties to such
action or proceeding include both the indemnifying party and the indemnified
party and the indemnified party has been advised in writing by counsel that
there may be one or more legal defenses available to such indemnified party that
are different from or additional to those available to the indemnifying party,
and (iii) to compromise or settle such claim, which compromise or settlement
shall be made only with the written consent of the indemnified party, such
consent not to be unreasonably withheld. The indemnified party shall cooperate
in all reasonable respects with the indemnifying party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom; and the indemnified party may, at its own cost, participate
in the investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom and appoint its own counsel therefor, at its own cost. The
parties shall also cooperate with each other in any notifications to insurers.
If the indemnifying party fails to assume the defense of such claim within
fifteen (15) calendar days after receipt of the Third Party Notice, the
Indemnified Party against which such claim has been asserted will (upon
delivering notice to such effect to the indemnifying party) have the right to
undertake the defense, compromise or settlement of such claim and the
indemnifying party shall have the right to participate therein at its own cost;
provided, however, that such claim shall not be compromised or settled without
-------- -------
the written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld. In the event the indemnified party assumes the defense of
the claim the Indemnified Party will keep the indemnifying party reasonably
informed of the progress of any such defense, compromise or settlement.
Notwithstanding the foregoing, the indemnifying party shall not be liable for
the reasonable fees and expenses of more than one separate firm of attorneys at
any time for any and all Indemnified Parties (which firm shall be designated in
writing by such Indemnified Party or Parties) in connection with any one such
action or proceeding arising out of the same general allegations or
circumstances.
9.7. Tax Treatment of Indemnity. The parties agree that any
--------------------------
indemnification payments made pursuant to this Agreement shall be treated for
Tax purposes as an adjustment to
40
the consideration for the purchase of the Securities, unless otherwise required
by applicable law, in which event indemnification payments shall be made in an
amount sufficient to indemnify the party on a net after-Tax basis.
ARTICLE X
MISCELLANEOUS
-------------
10.1. Termination. Prior to the Closing, this Agreement may be
terminated:
(a) by mutual written consent of the Company and the
Purchasers;
(b) by the Purchasers or the Company if (i) the Closing shall
not have occurred on or before December 31, 1996; provided however, that this
-------- -------
provision shall not be available to the Purchaser if the Company has the right
to terminate this Agreement under Section 10.1(d), and this provision shall not
be available to the Company if Purchaser has the right to terminate this
Agreement under Section 10.1(c); or (ii) the stockholders of the Company shall
have rejected at the Stockholders Meeting any matter contained in the Proxy
Materials relating to the adoption and approval of the Certificate Amendments or
the transactions contemplated under this Agreement and the Ancillary Agreements;
(c) by the Purchasers, if there is a breach of any
representation or warranty set forth in Article 4 hereof or any covenant or
agreement to be complied with or performed by the Company pursuant to the terms
of this Agreement except for any breach which would not have a Material Adverse
Effect on the Company or the Purchasers, provided that the Purchasers may not
--------
terminate this Agreement prior to the Closing if the Company has not had an
adequate opportunity to cure such failure;
(d) by the Company, if there is a material breach of any
representation or warranty set forth in Article 5 hereof or of any covenant
or agreement to be complied with or performed by the Purchasers pursuant to
terms of this Agreement except for any breach which would not have a
Material Adverse Effect on the Company, provided that the Company may not
--------
terminate this Agreement prior to the Closing if the Purchasers have not had an
adequate opportunity to cure such failure;
(e) by the Company or the Purchasers, if at any time prior to
the Closing the Board of Directors of the Company has, pursuant to Section 6.8
in the exercise of its fiduciary obligations, entered into a definitive
agreement with respect to an Alternative Transaction; and
41
(f) by the Company or the Purchasers, if at any time prior to
the Closing Date, the average of the average of the daily high and low sales
price for a share of Common Stock on the New York Stock Exchange for any ten
(10) New York Stock Exchange trading day period commencing on or after the date
hereof and ending prior to the Closing Date shall be less than $1.75.
10.2. In the Event of Termination: In the event of termination of
---------------------------
this Agreement:
(a) Each party will redeliver all documents, work papers and
other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof to the party
furnishing the same;
(b) The provisions of Section 10.3 shall continue in full
force and effect; and
(c) No party hereto shall have any liability or further
obligation to any other party relating to the transactions contemplated hereby,
provided that no such termination shall relieve any party from liability or a
prior breach of this Agreement.
10.3. Fees and Expenses. The Company shall be responsible for the
-----------------
payment of all expenses incurred by the Company in connection with the
transactions contemplated hereunder, regardless of whether such transactions
close, including, without limitation, all fees and expenses incurred in
connection with the Proxy Materials and the fees and expenses of the Company's
legal counsel and all third party consultants engaged by the Company to assist
in the transactions. On the Closing Date, the Company shall reimburse the
Purchasers for the Carlyle Transaction Expenses. In the event that the Agreement
is terminated, other than pursuant to Section 10.1(d) or Section 10.1(e) hereof,
the Company shall reimburse the Purchasers for the Carlyle Transaction Expenses.
In the event that (x) the Agreement is terminated pursuant to Section 10.1(e)
hereof, or (y) the transactions as contemplated hereunder are not consummated
for any reason other than a termination by the Company pursuant to Section
10.1(d) and the Company thereafter successfully closes an Alternative
Transaction other than to an Affiliate of the Company on or prior to June 30,
1997, the Company shall pay to Carlyle the greater of (i) three percent (3%) of
the consideration for securities and/or assets of the Company agreed to between
the parties as part of the Alternative Transaction or (ii) the Carlyle
Transaction Expenses. In addition, if the Closing does not occur for any reason
and the Company successfully closes at a later date an acquisition as to which
Carlyle has provided significant advisory services, the Company shall pay a
standard investment banking fee and reimburse Carlyle for all the Carlyle
Transaction Expenses.
10.4. Minority Protection. During any period in which the Carlyle
-------------------
Affiliates collectively beneficially own shares of capital stock of the Company
having 20% or more of the votes that may be cast generally at annual or special
meetings of stockholders (a) any contract or transaction between the Company and
any Carlyle Affiliate (as defined therein) shall be voidable by the Company
unless the board of directors, in good faith, authorizes the contract or
transaction
42
by the affirmative vote of a majority of the directors of the Company not
elected as directors by the holders of the Convertible Preferred Stock voting as
a separate class (the "Non-Preferred Stock Directors"), (b) any acquisition of
-----------------------------
capital stock of the Company by any Carlyle Affiliate, the result of which shall
cause one or more Carlyle Affiliates to beneficially own, in the aggregate,
shares of capital stock in the Company having 75% or more of the votes that may
be cast generally at annual or special meetings of stockholders, shall be
subject to the prior approval of the Non-Preferred Stock Directors, provided
that, for purposes of subparagraphs (a) and (b), the Non-Preferred Stock
Directors may be counted in determining the presence of a quorum at a meeting of
the board of directors which authorizes the contract or transaction, and (c) no
Carlyle Affiliate shall consummate any "going private" transaction (within the
meaning of Rule 13e-3 under the Exchange Act) without the prior approval of (i)
the board of directors by the affirmative vote of a majority of the Non-Carlyle
Preferred Stock Directors and (ii) a majority of the shares of Common Stock held
by persons other than Carlyle Affiliates.
10.5. Injunctive Relief. The parties hereto acknowledge and agree
-----------------
that irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement, and shall be entitled to enforce specifically the provisions of this
Agreement, in any court of the United States or any state thereof having
jurisdiction, in addition to any other remedy to which the parties may be
entitled under the Agreement or at law or in equity.
10.6. Independent Determination. From and after the Closing Date,
-------------------------
all decisions on behalf of the Company as to payment of indemnification pursuant
hereto and otherwise regarding the Company's rights and obligations pursuant to
this Agreement and the Ancillary Agreements shall be made by a committee of the
board of directors consisting of all directors not elected by the holders of the
Convertible Preferred Stock voting as a separate class and a decision of a
majority of such directors shall be the decision of the committee. Nothing
contained in this Section 10.5 shall prevent any Indemnified Party from
receiving indemnification pursuant to some other source (such as, by way of
example, the bylaws of the Company in the event that such Indemnified Party is a
director of the Company and such director seeks indemnification due to
circumstances that do not pertain to an alleged breach of this Agreement), and
the determination as to whether indemnification pursuant to such other source is
available shall be made in accordance with the procedures applicable thereto.
10.7. Brokers, etc.
------------
(a) The Company shall be solely responsible for any amounts
owed to Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation and Environmental
Financial Consulting Group. Inc. and any of their financial advisor, broker,
agent, finder or similar intermediary retained by or acting on behalf of the
Company in connection with the sale and purchase of the Securities as
contemplated herein.
43
(b) The Company shall reimburse the Purchasers for all cost of
making any filing under the HSR Act, including the cost of all filing fees
payable thereunder.
10.8. Assignment. Neither this Agreement nor any of the rights or
----------
obligations hereunder may be assigned by the Company without the prior written
consent of the Purchasers, or by the Purchasers without the prior written
consent of the Company, except that each Purchaser may, without such consent,
assign, in whole or in part, the right to acquire the Securities hereunder to an
Affiliate of such Purchaser. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, and no other person shall have any right, benefit or
obligation hereunder.
10.9. Notices. Unless otherwise provided herein, any notice,
-------
request, instruction or other document to be given hereunder by any party to the
other shall be in writing and delivered by hand-delivery, registered first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery, as
follows:
If to the Company:
International Technology Corporation
00000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: President
with a copy to: Secretary
With an additional copy to:
Xxxxxx, Xxxx & Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxxx
44
If to any Purchaser:
c/o The Carlyle Group
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. X'Xxxxxxx
With a copy to:
Xxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxxx
or to such other place and with such other copies as either party may designate
as to itself by written notice to the other.
All such notices, requests, instructions or other documents shall be
deemed to have been duly given; at the time delivered by hand, if personally
delivered; four business days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged by
addressee, if by telecopier transmission; and on the next business day if timely
delivered to an air courier guaranteeing overnight delivery.
10.10. Choice of Law. This Agreement shall be construed,
-------------
interpreted and the rights of the parties determined in accordance with the
internal laws of the State of California, without regard to the conflict of law
principles thereof, except with respect to matters of law concerning the
internal corporate affairs of any corporate entity which is a party to or the
subject of this Agreement, and as to those matters the law of the jurisdiction
under which the respective entity derives its powers shall govern.
10.11. Entire Agreement; Amendments and Waivers. This Agreement,
----------------------------------------
including all schedules attached hereto (each, a "Schedule" and, collectively,
the "Schedules") constitutes the entire agreement among the parties pertaining
to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties, including the written summary of proposed terms between the Company and
the Purchasers. Capitalized terms used in the Schedules but not defined therein
shall have the respective meanings ascribed to such terms in this Agreement. Any
item disclosed in one Schedule shall be deemed to have been disclosed in all
other Schedules.
45
10.12. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.13. Invalidity. In the event that any one or more of the
----------
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any other such instrument.
10.14. Headings. The headings of the Articles and Sections herein
--------
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
10.15. Limitation of Liability. In no event shall any partner or
-----------------------
representative of `any Purchaser (except for any Purchaser which is a general
partnership) or of any partnership which is a partner of any Purchaser or any
partner of any such partnership, or any direct or indirect stockholder, officer,
director, partner, employee or any other such person, be personally liable for
any obligation of the Purchasers under this Agreement. In no event shall any
direct or indirect stockholder, officer, director, partner, employee or
salesperson of the Company or any Subsidiary or any other such person, be
personally liable for any obligation of the Company under this Agreement.
46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
INTERNATIONAL TECHNOLOGY CORPORATION
By: /s/ Xxxxxxx X. XxXxxx
---------------------
Name: Xxxxxxx X. XxXxxx
-----------------
Title: President and Acting Chief
--------------------------
Executive Officer
-----------------
CARLYLE PARTNERS II, L.P.
By: TC Group, L.L.C., its General Partner
By: /s/ Xxxxxx X. X'Xxxxxxx
-----------------------
Name: Xxxxxx X. X'Xxxxxxx
-------------------
Title: Managing Director
-----------------
CARLYLE PARTNERS III L.P.
By: TC Group, L.L.C., its General Partner
By: /s/ Xxxxxx X. X'Xxxxxxx
-----------------------
Name: Xxxxxx X. X'Xxxxxxx
-------------------
Title: Managing Director
-----------------
CARLYLE INTERNATIONAL PARTNERS II, L.P.
By: TC Group, L.L.C., its General Partner
By: /s/ Xxxxxx X. X'Xxxxxxx
-----------------------
Name: Xxxxxx X. X'Xxxxxxx
-------------------
Title: Managing Director
-----------------
47
CARLYLE INTERNATIONAL PARTNERS III, L.P.
By: TC Group, L.L.C., its General Partner
By: /s/ Xxxxxx X. X'Xxxxxxx
-----------------------
Name: Xxxxxx X. X'Xxxxxxx
-------------------
Title: Managing Director
-----------------
C/S INTERNATIONAL PARTNERS
By: TC Group, L.L.C., its General Partner
By: /s/ Xxxxxx X. X'Xxxxxxx
-----------------------
Name: Xxxxxx X. X'Xxxxxxx
-------------------
Title: Managing Director
-----------------
48
