EQUITY PURCHASE AGREEMENT
THIS AGREEMENT is made as of January 24, 1994, between USAI
Acquisition Corp., a Delaware corporation (the "Company") , and Golder,
Thoma, Xxxxxxx, Xxxxxx Fund IV Limited Partnership, an Illinois limited
partnership (the "Purchaser"). Except as otherwise indicated herein,
capitalized terms used herein are defined in Section 6 hereof.
The parties hereto agree as follows:
Section 1. AUTHORIZATION AND CLOSING.
1A. AUTHORIZATION OF THE STOCK. The Company shall authorize the
issuance and sale to the Purchaser of 170,000 shares of its Common Stock, par
value $.01 per share (the "Common Stock") , and 233,000 shares of its
Preferred Stock, par value $.01 per share (the "Preferred Stock"), each
having the rights and preferences set forth in EXHIBIT A attached hereto. The
Common Stock and the Preferred Stock are collectively referred to herein as
the "Stock."
1B. PURCHASE AND SALE OF THE STOCK.
(i) At the Closing (as defined in Section 1C below) , the
Company shall sell to the Purchaser and, subject to the terms and conditions
set forth herein, the Purchaser shall purchase from the Company 20,000 shares
of the Common Stock at a price of $10 per share.
(ii) The Purchaser may, at its sole election, purchase from time
to time, upon written notice to the Board of Directors (the "Board"), up to
150,000 additional shares of Common Stock at a price of $10 per share (as
adjusted from time to time as a result of stock dividends, splits,
recapitalizations on similar events).
(iii) The Purchaser may, at its sole election, purchase from time
to time, upon written notice to the Board, up to 233,000 shares of the
Preferred Stock at a price of $100 per share (as adjusted from time to time
as a result of stock dividends, stock splits, recapitalizations and similar
events). At the time of any such purchase, the Purchaser shall be entitled to
receive, and the Company shall be obligated to deliver, satisfactory
representations and warranties similar to (and in addition to) those
contained in Section 5 herein and all other information and documentation as
the Purchaser may reasonably request.
1C. THE CLOSING. The closing of the purchase and sale of the
Stock (the "Closing") shall take place at the off ices of Xxxxxxxx & Xxxxx,
000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 at 10:00 a.m. on January 24,
1994, or at such other place or on such other date as may be mutually
agreeable to the Company and the Purchaser. At the Closing, the Company shall
deliver to the Purchaser stock certificates evidencing the Common Stock to be
purchased by the Purchaser, registered in the Purchaser's name, upon payment
of the purchase price thereof by a cashier's or certified check, or by wire
transfer of immediately available funds to such account as designated by the
Company in the amount of $200,000.00.
Section 2. CONDITIONS OF THE PURCHASER'S OBLIGATION AT THE
CLOSING. The obligation of the Purchaser to purchase and pay for the Stock
at the Closing is subject to the satisfaction as of the Closing of the
following conditions:
2A. REPRESENTATIONS AND WARRANTIES; COVENANTS. The
representations and warranties contained in Section 5 hereof shall be true
and correct at and as of the Closing as though then made, except to the
extent of changes caused by the transactions expressly contemplated herein,
and the Company shall have performed in all material respects all of the
covenants required to be performed by it hereunder prior to the Closing.
2B. AMENDMENT OF CERTIFICATE OF INCORPORATION. The Company's
certificate of incorporation (the "Certificate of Incorporation") shall have
been amended to include the provisions set forth in EXHIBIT A hereto, shall
be in full force and effect under the laws of Delaware as of the Closing as
so amended and shall not have been further amended or modified.
2C. MANAGEMENT AGREEMENTS. The Company shall have entered into
a senior management agreements, in form and substance substantially similar
to EXHIBIT B-1 attached hereto (the "Management Agreements"), with each of
Xxxxx X. Xxxxxx ("Xxxxxx") and Xxxxxxx X. Xxxxx ("Xxxxx") and a consultant
stock agreement in form and substance substantially similar to EXHIBIT B-2
attached hereto (the "Consultant Agreement") with Xxxxxx Xxxxxx ("Xxxxxx") ,
and the Management Agreements and Consultant Agreement shall not have been
amended or modified and shall be in full force and effect as of the Closing.
2D. EMPLOYMENT AGREEMENT. Xxxxxx and Stone shall have each
entered into an employment agreement, in form and substance substantially
similar to Exhibit C-1 and EXHIBIT C-2, respectively, attached hereto (the
"Employment Agreements"), and the Employment Agreements shall not have been
amended or modified and shall be in full force and effect as of the Closing.
2E. STOCKHOLDERS AGREEMENT. The Company, the Purchaser, Xxxxxx,
Xxxxxx and Xxxxx shall have entered into a stockholders agreement, in form
and substance substantially similar to EXHIBIT D attached hereto (the
"Stockholders Agreement"), and the Stockholders Agreement shall be in full
force and effect as of the Closing.
2F. PROFESSIONAL SERVICES AGREEMENT. The Company and Xxxxxx,
Xxxxxx, Cressey, Rauner, Inc., a Delaware corporation, shall have entered
into a professional services agreement, in form and substance substantially
similar to EXHIBIT -F attached hereto (the "Services Agreement"), and the
Services Agreement shall be in full force and effect as of the Closing.
2G. BLUE SKY CLEARANCE. The Company shall have made all filings
under applicable state securities laws necessary to consummate the issuance
of the Stock pursuant to this Agreement in compliance with such laws.
-2-
2H. CLOSING DOCUMENTS. The Company shall have delivered to the
Purchaser all of the following documents:
(i) an Officer's Certificate, dated the date of the Closing,
stating that the conditions specified in section 1 and Sections 2A through
2G, inclusive, have been fully satisfied;
(ii) certified copies of (a) the resolutions duly adopted by the
Company"s board of directors authorizing the execution, delivery and
performance of this Agreement, the Management Agreements, the Consultant
Agreement, the Employment Agreements, the Stockholders Agreement, the
Services Agreement and each of the other agreements contemplated hereby, the
filing of the amendment to the Certificate of Incorporation referred to in
Section 2B, the issuance and sale of the Common Stock and the CONSUMMATION of
all other transactions contemplated by this Agreement, and (b) the
resolutions duly adopted by the Company's stockholders adopting the amendment
to the Certificate of Incorporation referred to in Section 2B;
(iii) certified copies of the Certificate of Incorporation and the
Company's bylaws, each as in effect at the Closing; and
(iv) such other documents relating to the transactions
contemplated by this Agreement as the Purchaser or its counsel may reasonably
request.
21. FEES AND EXPENSES. The Company shall have reimbursed the
Purchaser for the fees and expenses as provided in Section 7A hereof.
2J. COMPLIANCE WITH APPLICABLE LAWS. The purchase of Stock by
the Purchaser hereunder shall not be prohibited by any applicable law or
governmental regulation, shall not subject the Purchaser to any penalty,
liability or, in the Purchaser's sole judgment, other onerous condition under
or pursuant to any applicable law or governmental regulation, and shall be
permitted by laws and regulations of the jurisdictions to which the Purchaser
is subject.
2K. WAIVER. Any condition specified in this Section 2 may be
waived only if such waiver is set f xxxx in a writing executed by the
Purchaser.
Section 3. COVENANTS.
3A. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company
shall deliver to the Purchaser (so long as the Purchaser holds any Stock) and
to each subsequent holder of at least 25% of the Investor Common Stock and
each subsequent holder of at least 25% of the Investor Preferred Stock:
(i) as soon as available but in any event within 30 days after
the end of each quarterly accounting period in each fiscal year, unaudited
consolidating and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such quarterly period and for the
-3-
period from the beginning of the fiscal year to the end of such quarterly
period, and consolidating and consolidated balance sheets of the Company and
its Subsidiaries as of the end of such quarterly period, setting forth in
each case comparisons to the annual budget and to the corresponding period in
the preceding fiscal year, and all such statements shall be prepared in
accordance with generally accepted accounting principles, consistently
applied, subject to the absence of footnote disclosures and to normal
year-end adjustments;
(ii) accompanying the financial statements referred to in Section
(i) , an Officer's Certificate stating that neither the Company nor any of
its Subsidiaries is in default under any of its other material agreements or,
if any such default exists, specifying the nature and period of existence
thereof and what actions the Company and its Subsidiaries have taken and
propose to take with respect thereto;
(iii) within 120 days after the end of each fiscal year,
consolidating and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such fiscal year, and consolidating and
consolidated balance sheets of the Company and its Subsidiaries as of the end
of such fiscal year, all prepared in accordance with generally accepted
accounting principles, consistently applied, and accompanied by (a) with
respect to the consolidated portions of such statements (except with respect
to budget data) , an opinion containing no exceptions or qualifications
(except for qualifications regarding specified contingent liabilities) of an
independent accounting firm of recognized national standing acceptable to the
holders of a majority of each of the Investor Common Stock and the Investor
Preferred Stock, and (b) a copy of such firm's annual management letter to
the Board;
(iv) promptly upon receipt thereof, any additional reports,
management letters or other detailed information concerning significant
aspects of the Company's operations or financial affairs given to the Company
by its independent accountants (and not otherwise contained in other
materials provided hereunder);
(v) at least 30 days prior to the beginning of each fiscal year,
an annual budget prepared on a monthly basis for the Company and its
Subsidiaries for such fiscal year (displaying anticipated statements of
income and cash flows and balance sheets) , and promptly upon preparation
thereof any other significant budgets prepared by the Company and any
revisions of such annual or other budgets, and within 30 days after any
quarterly period in which there is a material adverse deviation from the
annual budget, an Officer's Certificate explaining the deviation and what
actions the Company has taken and proposes to take with respect thereto;
(vi) promptly (but in any event within five business days) after
the discovery or receipt of notice of any default under any material
agreement to which it or any of its Subsidiaries is a party or any other
material adverse event or circumstance affecting the Company or any
Subsidiary (including the filing of any material litigation against the
Company or any Subsidiary or the existence of any dispute with any Person
which involves a reasonable likelihood of such litigation being commenced),
an Officer's Certificate specifying the nature and period of existence
-4-
thereof and what actions the Company and its Subsidiaries have taken and
propose to take with respect thereto; and
(vii) with reasonable promptness, such other information and
financial data concerning the Company and its Subsidiaries as any Person
entitled to receive information under this Section 3A may reasonably request.
Each of the financial statements referred to in Sections 3A(i) and 3A(iii)
shall be true and correct in all material respects as of the dates and for
the periods stated therein, subject in the case of the unaudited financial
statements to changes resulting from normal year-end audit adjustments (none
of which would, alone or in the aggregate, be materially adverse to the
financial condition, operating results, assets, operations or business
prospects of the Company and its Subsidiaries taken as a whole).
3B. INSPECTION OF PROPERTY. The Company shall permit any
representatives designated by the Purchaser (so long as the Purchaser holds
any Stock) or any subsequent holder of at least 25% of the outstanding
Investor Common Stock or any subsequent holder of at least 25% of the
outstanding Investor Preferred Stock, upon reasonable notice and during
normal business hours and such other times as any such holder may reasonably
request, to (i) visit and inspect any of the properties of the Company and
its Subsidiaries, (ii) examine the corporate and financial records of the
Company and its Subsidiaries and make copies thereof or extracts therefrom
and (iii) discuss the affairs, finances and accounts of any such corporations
with the directors, officers, key employees and independent accountants of
the Company and its Subsidiaries.
3C. RESTRICTIONS. The Company shall not, without the prior
written consent of largest holder of the Investor Preferred Stock:
(i) directly or indirectly declare or pay any dividends or make
any distributions upon any of its equity securities;
(ii) except as contemplated in the Management Agreement and the
Stockholders Agreement, directly or indirectly redeem, purchase or otherwise
acquire, or permit any Subsidiary to redeem, purchase or otherwise acquire,
any of the Company's equity securities (including, without limitation,
warrants, options and other rights to acquire equity securities);
(iii) except as expressly contemplated by this Agreement, the
Management Agreement and the Stockholders Agreement, authorize, issue or
enter into, or permit any Subsidiary to authorize, issue or enter into, any
agreement providing for the issuance (contingent or otherwise) of, (a) any
notes or debt securities containing equity features (including, without
limitation, any notes or debt securities convertible into or exchangeable for
equity securities, issued in connection with the issuance of equity
securities or containing profit participation features) or (b) any equity
securities (or any securities convertible into or exchangeable for any equity
securities);
-5-
(iv) merge or consolidate with any Person or permit any
Subsidiary to merge or consolidate with any Person (other than a wholly owned
Subsidiary);
(v) sell, lease or otherwise dispose of, or permit any
Subsidiary to sell, lease or otherwise dispose of, more than 5% of the
consolidated assets of the Company and its Subsidiaries (computed on the
basis of book value, determined in accordance with generally accepted
accounting principles consistently applied, or fair market value, determined
by the Company's board of directors in its reasonable good faith judgment) in
any transaction or series of related transactions (other than sales of
inventory in the ordinary course of business);
(vi) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction (including, without limitation, any
reorganization into partnership form);
(vii) acquire, or permit any Subsidiary to acquire, any interest
in any business (whether by a purchase of assets, purchase of stock, merger
or otherwise) , or enter into any joint venture;
(viii) enter into, or permit any Subsidiary to enter into, the
ownership, active management or operation of any business other than the
acquisition and operation of a business within the construction aggregates
industry;
(ix) other than the Employment Agreements, enter into, or permit
any Subsidiary to enter into, any transaction with any of its or any
Subsidiary's officers, directors, employees or Affiliates or any individual
related by blood, marriage or adoption to any such Person (a "Relative") or
any entity in which any such Person or individual owns a beneficial interest
(a "Related Entity"), except for normal employment arrangements and benefit
programs on reasonable terms and except as otherwise expressly contemplated
by this Agreement, the Management Agreement and the proposed acquisition by
the Company of Western Rock, Inc. (the "Proposed Acquisition"); provided that
in no event shall any Relative or Related Entity be employed by, render
services to or receive compensation from the Company or any Subsidiary;
(x) create, incur, assume or suffer to exist, or permit any
Subsidiary to create, incur, assume or suffer to exist, Indebtedness
exceeding the amounts approved therefor by the Board in the annual budget;
3D. AFFIRMATIVE COVENANTS. So long as any Investor Stock
remains outstanding, the Company shall, and shall cause each Subsidiary to:
(i) enter into and maintain appropriate nondisclosure and
noncompete agreements with its key employees;
(ii) comply with all applicable laws, rules and regulations of all
governmental authorities, the violation of which would reasonably be expected to
have a material adverse effect
-6-
upon the financial condition, operating results, assets, operations or
business prospects of the Company and its Subsidiaries taken as a whole and
pay and discharge when payable all taxes, assessments and governmental
charges (to the extent that the same are being contested in good faith and
adequate reserves therefor have been established);
3E. CURRENT PUBLIC INFORMATION. At all times after the Company
has filed a registration statement with the Securities and Exchange
Commission pursuant to the requirements of either the Securities Act or the
Securities Exchange Act, the Company shall file all reports required to be
filed by it under the Securities Act and the Securities Exchange Act and the
rules and regulations adopted by the Securities and Exchange Commission
thereunder and shall take such further action as any holder or holders of
Restricted Securities may reasonably request, all to the extent required to
enable such holders to sell Restricted Securities pursuant to (i) Rule 144
adopted by the Securities and Exchange Commission under the Securities Act
(as such rule may be amended from time to time) or any similar rule or
regulation hereafter adopted by the Securities and Exchange Commission or
(ii) a registration statement on Form S-2 or S-3 or any similar registration
form hereafter adopted by the Securities and Exchange Commission. Upon
request, the Company shall deliver to any holder of Restricted Securities a
written statement as to whether it has complied with such requirements.
3F. AMENDMENT OF OTHER AGREEMENTS. The Company shall not amend,
modify or waive any provision of the Management Agreement without the prior
written consent of the holders of a majority of each of the Investor Common
Stock and the Investor Preferred Stock, and the Company shall enforce the
provisions of the Management Agreement and shall exercise all of its rights
and remedies thereunder (including, without limitation, any repurchase
options and first refusal rights) unless it is otherwise directed by the
holders of a majority of each of the Investor Common Stock and the Investor
Preferred Stock.
3G. LIMITED PREEMPTIVE RIGHTS.
(i) Except for the issuance of Common Stock (a) pursuant to the
Management Agreements, (b) to management of the' Company, (c) pursuant to the
Proposed Acquisition, or (d) pursuant to a public offering registered under
the Securities Act, if the Company at any time after the Closing authorizes
the issuance or sale of any shares of Stock or any securities containing
options or rights to acquire any shares of Stock (other than as a dividend on
the outstanding Stock), the Company shall first offer to sell to each holder
of Investor Stock a portion of such stock or securities equal to the quotient
determined by dividing (1) the number of shares of Investor Stock held by
such holder by (2)' the total number of shares of Stock outstanding on a
fully diluted basis immediately prior to such issuance. Each holder of
Investor Stock shall be entitled to purchase such stock or securities at the
most favorable price and on the most favorable terms as such stock or
securities are to be offered to any other Persons.
(ii) In order to exercise its purchase rights hereunder, a holder
of Investor Stock must within 15 days after receipt of written notice from
the Company describing in reasonable detail
-7-
the stock or securities being offered, the purchase price thereof, the
payment terms and such holder's percentage allotment deliver a written notice
to the Company describing its election hereunder. If all of the stock and
securities offered to the holders of Investor Stock is not fully subscribed
by such holders, the remaining stock and securities shall be reoffered by the
Company to the holders purchasing their full allotment upon the terms set
forth in this Section, except that such holders must exercise their purchase
rights within five days after receipt of such reoffer.
(iii) Upon the expiration of the offering periods described above,
the Company shall be entitled to sell such stock or securities which the
holders of Investor Stock have not elected to purchase during the 90 days
following such expiration on terms and conditions no more favorable to the
purchasers thereof than those offered to such holders. Any stock or
securities offered or sold by the Company after such 90-day period must be
reoffered to the holders of Investor Stock pursuant to the terms of this
Section.
(iv) Nothing contained in this Section 3G shall be deemed to
amend, modify or limit in any way the restrictions on the issuance of shares
of Stock set forth in Section 3C hereof or elsewhere in this Agreement, in
the Stockholders Agreement or in any other agreement to which the Company is
presently bound.
3H. PUBLIC DISCLOSURES. The Company shall not, nor shall it
permit any Subsidiary to, disclose the Purchaser's name or identity as an
investor in the Company in any press release or other public announcement or
in any document or material filed with any governmental entity, without the
prior written consent of the Purchaser, unless such disclosure is required by
applicable law or governmental regulations or by order of a court of
competent jurisdiction, in which case prior to making such disclosure the
Company shall give written notice to the Purchaser describing in reasonable
detail the proposed content of such disclosure and shall permit the Purchaser
to review and comment upon the form and substance of such disclosure.
Section 4. TRANSFER OF RESTRICTED SECURITIES.
(i) Restricted Securities are transferable only pursuant to (a)
public offerings registered under the Securities Act, (b) Rule 144 or Rule
144A of the Securities and Exchange Commission (or any similar rule or rules
then in force) if such rule or rules are available or (c) subject to the
conditions specified in Section 4(ii) below, any other legally available
means of transfer.
(ii) In connection with the transfer of any Restricted Securities
(other than a transfer described in Section 4 (i) (a) or (b) above), the
holder thereof shall deliver written notice to the Company describing in
reasonable detail the transfer or proposed transfer, together with an opinion
of Xxxxxxxx & Xxxxx or other counsel which (to the Company's reasonable
satisfaction) is knowledgeable in securities law matters to the effect that
such transfer of Restricted Securities may be effected without registration
of such Restricted Securities under the Securities Act. In addition, if the
holder of the Restricted Securities delivers to the Company an opinion of
Xxxxxxxx & Xxxxx or
-8-
such other counsel that no subsequent transfer of such Restricted Securities
shall require registration under the Securities Act, the Company shall
promptly upon such contemplated transfer deliver new certificates for such
Restricted Securities which do not bear the Securities Act legend set forth
in Section 7C. If the company is not required to deliver new certificates for
such Restricted Securities not bearing such legend, the holder thereof shall
not transfer the same until the prospective transferee has confirmed to the
Company in writing its agreement to be bound by the conditions contained in
this Section and Section 7C.
(iii) Upon the request of the Purchaser, the Company shall
promptly supply to the Purchaser or its prospective transferees all
information regarding the Company required to be delivered in connection with
a transfer pursuant to Rule 144A of the Securities and Exchange Commission.
Section 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a
material inducement to the Purchaser to enter into this Agreement and
purchase the Stock, the Company hereby represents and warrants to the
Purchaser that:
5A. ORGANIZATION AND CORPORATE POWER. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware and is qualified to do business in every jurisdiction in
which the failure to so qualify might reasonably be expected to have a
material adverse effect on the financial condition, operating results,
assets, operations or business prospects of the Company taken as a whole. The
Company has all requisite corporate power and authority and all material
licenses, permits and authorizations necessary to own and operate its
properties, to carry on its businesses as now conducted and presently
proposed to be conducted and to carry out the transactions contemplated by
this Agreement. The copies of the Company's and each Subsidiary"s Certificate
of Incorporation and bylaws which have been furnished to the Purchaser's
counsel reflect all amendments made thereto at any time prior to the date of
this Agreement and are correct and complete.
5B. CAPITAL STOCK AND RELATED MATTERS. As of the closing and
immediately thereafter, the authorized capital stock of the Company shall
consist of 250,000 shares of Common Stock (22,824 of which shall be issued
and outstanding) and 500,000 shares of Preferred Stock (none of which shall
be issued and outstanding and 233,000 of which shall be reserved for issuance
to the Purchaser pursuant to Section 1B(iii) hereof) . As of the Closing,
neither the Company nor any Subsidiary shall have outstanding any stock or
securities convertible or exchangeable for any shares of its capital stock or
containing any profit participation features, nor shall it have outstanding
any rights or options to subscribe for or to purchase its capital stock or
any stock or securities convertible into or exchangeable for its capital
stock or any stock appreciation rights or phantom stock plans other than
pursuant to and as contemplated by the Management Agreement. As of the
Closing, neither the Company nor any Subsidiary shall be subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock or any warrants, options or other
rights to acquire its capital stock, except pursuant to this Agreement, the
Management
-9-
Agreement and the Stockholders Agreement. As of the Closing, all of the
outstanding shares of the Company's capital stock shall be validly issued,
fully paid and nonassessable.
(ii) There are no statutory or contractual stockholders
preemptive rights or rights of refusal with respect to the issuance of the
Stock hereunder or the issuance of the Preferred Stock pursuant to Section
1B(iii) hereof, except as expressly provided herein. Based in part on the
investment representations of the Purchaser in Section 7C, the Company has
not violated any applicable federal or state securities laws in connection
with the offer, sale or issuance of any of its capital stock, and the offer,
sale and issuance of the Stock hereunder and pursuant to Section 1B(iii)
hereof do not and will not require registration under the Securities Act or
any applicable state securities laws. There are no agreements among the
Company's stockholders with respect to the voting or transfer of the
Company's capital stock or with respect to any other aspect of the Company's
affairs, except for the Stockholders Agreement and the Management Agreement.
5C. SUBSIDIARIES: INVESTMENTS. The Company does not own or hold
any shares of stock or any other security or interest in any other Person or
any rights to acquire any such security or interest, and the Company has
never had any Subsidiary.
5D. AUTHORIZATION: NO BREACH. The execution, delivery and
performance of this Agreement, the Management Agreements, the Stockholders
Agreement, the Acquisition Agreement and all other agreements contemplated
hereby to which the Company is a party and the filing of the amendment of the
Certificate of Incorporation have been duly authorized by the Company. This
Agreement, the Management Agreements, the Stockholders Agreement, the
Certificate of Incorporation, the Acquisition Agreement and all other
agreements contemplated hereby each constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms. The
execution and delivery by the Company of this Agreement, the Management
Agreements, the Stockholders Agreement and all other agreements contemplated
hereby to which the Company is a party, the offering, sale and issuance of
the Stock hereunder and pursuant to Section 1B (ii) , the amendment of the
Certificate of Incorporation and the fulfillment of and compliance with the
respective terms hereof and thereof by the Company, do not and shall not (i)
conflict with or result in a breach of the terms, conditions or provisions
of, (ii) constitute a default under, (iii) result in the creation of any
lien, security interest, charge or encumbrance upon the Company's capital
stock or assets pursuant to, (iv) give any third party the right to modify,
terminate or accelerate any obligation under, (v) result in a violation of,
or (vi) require any authorization, consent, approval, exemption or other
action by or notice to any court or administrative or governmental body
pursuant to, the Certificate of Incorporation or bylaws of the Company, or
any law, statute, rule or regulation to which the Company is subject, or any
agreement, instrument, order, judgment or decree to which the Company is a
party or by which it is bound.
5E. CONDUCT OF BUSINESS; LIABILITIES. Other than the
negotiation, execution and delivery of this Agreement, the Management
Agreements, the Stockholders Agreement and the other agreements contemplated
hereby and thereby, prior to the Closing, the Company has not (i) conducted
any business, (ii) incurred any expenses, obligations or liabilities (whether
accrued,
-10-
absolute, contingent, unliquidated or otherwise, whether or not known to the
Company and whether due or to become due and regardless of when asserted) ,
(iii) owned any assets, (iv) entered into any contracts or agreements, or (v)
violated any laws or governmental rules or regulations.
5F. TAX MATTERS. The Company and each Subsidiary have filed all
tax returns (if any) which they are required to file under applicable laws
and regulations; all such returns are complete and correct in all material
respects; the Company and each Subsidiary have paid all taxes due and owing
by them and have withheld and paid over all taxes which they are obligated to
withhold from amounts paid or owing to any employee, stockholder, creditor or
other third party; neither the Company nor any Subsidiary has waived any
statute of limitations with respect to taxes or agreed to any extension of
time with respect to a tax assessment or deficiency; the assessment of any
additional taxes for periods for which returns have been filed is not
expected; no foreign, federal, state or local tax audits are pending or being
conducted with respect to the Company or any Subsidiary, no information
related to tax matters has been requested by any foreign, federal, state or
local taxing authority and no notice indicating an intent to open an audit or
other review has been received by the Company or any Subsidiary from any
foreign, federal, state or local taxing authority; and there are no
unresolved questions or claims concerning the Company's or any Subsidiary's
tax liability. Neither the Company nor any Subsidiary has made an election
under S341(f) of the IRC.
5G. LITIGATION, ETC. There are no actions, suits, proceedings,
orders, investigations or claims pending or, to the best of the Company's
knowledge, threatened against or affecting the Company or any Subsidiary (or
to the best of the Company's knowledge, pending or threatened against or
affecting any of the officers, directors or employees of the Company and its
Subsidiaries with respect to its business or proposed business activities) at
law or in equity, or before or by any governmental department, commission,
board, bureau, agency or instrumentality (including, without limitation, any
action, suit, proceeding or investigation with respect to the transactions
contemplated by this Agreement); neither the Company nor any Subsidiary is
subject to any arbitration proceedings under collective bargaining agreements
or otherwise or, to the best of the Company's knowledge, any governmental
investigations or inquiries; and, to the best of the Company's knowledge,
there is no basis for any of the foregoing. Neither the Company nor any
Subsidiary is subject to any judgment, order or decree of any court or other
governmental agency. Neither the Company nor any Subsidiary has received any
opinion or memorandum or legal advice from legal counsel to the effect that
it is exposed, from a legal standpoint, to any liability or disadvantage
which may be material to its business.
5H. BROKERAGE. There are no claims for brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement binding
upon the Company or any Subsidiary except pursuant to that certain agreement
between Xxxxxxx X. Xxxxx and Xxxxxx X. Xxxxxxxxx dated October 7, 1993. The
Company shall pay, and hold the Purchaser harmless against, any liability,
loss or expense (including, without limitation, attorneys' fees and
out-of-pocket expenses) arising in connection with any such claim.
-11-
51. GOVERNMENTAL CONSENT, ETC. No permit, consent, approval or
authorization of, or declaration to or filing with, any governmental
authority is required in connection with the execution, delivery and
performance by the Company of this Agreement or the other agreements
contemplated hereby, or the CONSUMMATION by the Company of any other
transactions contemplated hereby or thereby.
5J. ERISA. The Company does not maintain or have any obligation
to contribute to or any other liability with respect to or under (including
but not limited to current or potential withdrawal liability), nor has it
ever maintained or had any obligation to contribute to or any other liability
with respect to or under, (i) any plan or arrangement whether or not
terminated, which provides medical, health or life insurance or other welfare
type benefits for current or future retired or terminated employees (except
for limited continued medical benefit coverage required to be provided under
Section 4980B of the IRC or as required under applicable state law), (ii) any
"multiemployer plan" (as defined in Section 3(37) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") , (iii) any employee plan
which is a tax qualified "defined benefit plan" (as defined in Section 3(35)
of ERISA), whether or not terminated, (iv) any employee plan which is a
tax-qualified "defined contribution plan" (as defined in Section 3(34) of
ERISA), whether or not terminated, or (v) any other plan or arrangement
providing benefits to current or former employees, including any bonus plan,
plan for deferred compensation, employee health or other welfare benefit plan
or other arrangement, whether or not terminated. For purposes of this Section
5J, the term "Company" includes all organizations under common control with
the Company pursuant to Section 414(b) or (c) of the IRC.
5K. COMPLIANCE WITH LAWS. Except as set forth on the attached
"Compliance Schedule," neither the Company nor any Subsidiary has violated
any law or any governmental regulation or requirement which violation would
reasonably be expected to have a material adverse effect upon the financial
condition, operation results, assets, operations or business prospects of the
Company and its Subsidiaries taken as a whole, and neither the Company nor
any Subsidiary has received notice of any such violation. Neither the Company
nor any Subsidiary is subject to any clean up liability, or has reason to
believe it may become subject to any clean up liability, under any federal,
state or local environmental law, rule or regulation.
5L. DISCLOSURE. Neither this Agreement nor any of the
schedules, attachments, written statements, documents, certificates or other
items prepared or supplied to the Purchaser by or on behalf of the Company
with respect to the transactions contemplated hereby contain any untrue
statement of a material fact or omit a material fact necessary to make each
statement contained herein or therein not misleading. There is no f act which
the Company has not disclosed to the Purchaser in writing and of which any of
its officers, directors or executive employees is aware and which has had or
might reasonably be anticipated to have a material adverse effect upon the
existing or expected financial condition, operating results, assets, customer
or supplier relations, employee relations or business prospects of the
Company and its Subsidiaries taken as a whole.
-12-
5M. CLOSING DATE. The representations and warranties of the
Company contained in this Section 5 and elsewhere in this Agreement and all
information contained in any exhibit, schedule or attachment hereto or in any
writing delivered by, or on behalf of, the Company to the Purchaser shall be
true and correct in all material respects on the date of the Closing as
though then made, except as affected by the transactions expressly
contemplated by this Agreement.
Section 6. DEFINITIONS. For the purposes of this Agreement,
the following terms have the meanings set forth below:
"AFFILIATE" of any particular person or entity means any other
person or entity controlling, controlled by or under common control with such
particular person or entity.
"INDEBTEDNESS" means all indebtedness for borrowed money (including
purchase money obligations) maturing one year or more from the date of
creation or incurrence thereof or renewable or extendible at the option of
the debtor to a date one year or more from the date of creation or incurrence
thereof, all indebtedness under revolving credit arrangements extending over
a year or more, all capitalized lease obligations and all guarantees of any
of the foregoing.
"INVESTOR COMMON STOCK" means (i) the Common Stock issued hereunder
or pursuant to Section 1B(ii) hereof and (ii) any common Stock issued or
issuable with respect to the Common Stock referred to in clause (i) above by
way of stock dividends or stock splits or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization. As
to any particular shares of Investor Common Stock, such shares shall cease to
be Investor Common Stock when they have been (a) effectively registered under
the Securities Act and disposed of in accordance with the registration
statement covering them or (b) distributed to the public through a broker,
dealer or market maker pursuant to Rule 144 under the Securities Act (or any
similar rule then in force).
"INVESTOR PREFERRED STOCK" means (i) the Preferred Stock issued
hereunder or pursuant to Section 1B(iii) hereof and (ii) any Preferred Stock
issued or issuable with respect to the Preferred Stock referred to in clause
(i) above by way of stock dividends or stock splits or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular shares of Investor Preferred Stock, such
shares shall cease to be Investor Preferred Stock when they have been (a)
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them or (b) distributed to the
public through a broker, dealer or market maker pursuant to Rule 144 under
the Securities Act (or any similar rule then in force).
"INVESTOR STOCK" means the Investor Common Stock and the Investor
Preferred Stock.
"IRC" means the Internal Revenue Code of 1986, as amended, and any
reference to any particular IRC section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
-13-
"OFFICER'S CERTIFICATE" means a certificate signed by the Company's
president or its chief financial officer, stating that (i) the officer
signing such certificate has made or has caused to be made such
investigations as are necessary in order to permit him to verify the accuracy
of the information set forth in such certificate and (ii) to the best of such
officer's knowledge, such certificate does not misstate any material fact and
does not omit to state any fact necessary to make the certificate not
misleading.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department,
agency or political subdivision thereof.
"RESTRICTED SECURITIES" means (i) the Stock issued hereunder and
pursuant to Sections 1B(i), 1B(ii) and 1B(iii) hereof and (ii) any securities
issued with respect to the securities referred to in clause (i) or (ii) above
by way of a stock dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other reorganization.
As to any particular Restricted Securities, such securities shall cease to be
Restricted Securities when they have (a) been effectively registered under
the Securities Act and disposed of in accordance with the registration
statement covering them, (b) become eligible for sale pursuant to Rule 144(k)
(or any similar provision then in force) under the Securities Act or (c) been
otherwise transferred and new certificates for them not bearing the
Securities Act legend set f xxxx in Section 7C have been delivered by the
Company in accordance with Section 4 (ii) . Whenever any particular
securities cease to be Restricted Securities, the holder thereof shall be
entitled to receive from the Company, without expense, new securities of like
tenor not bearing a Securities Act legend of the character set forth in
Section 7C.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or
any similar federal law then in force.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, or any similar federal law then in force.
"SECURITIES AND EXCHANGE COMMISSION" includes any governmental body
or agency succeeding to the FUNCTIONS THEREOF.
"SUBSIDIARY" means any corporation of which the securities having a
majority of the ordinary voting power in electing the board of directors are,
at the time as of which any determination is being made, owned by the Company
either directly or through one or more Subsidiaries.
7. MISCELLANEOUS.
7A. EXPENSES. The Company agrees to pay, and hold the Purchaser
and all holders of Investor Stock harmless against liability for the payment
of, (i) the fees and expenses of their
-14-
counsel arising in connection with the negotiation and execution of this
Agreement and the CONSUMMATION of the transactions contemplated by this
Agreement (INCLUDING BUT not limited to fees and expenses arising with
respect to any subsequent purchase of Stock pursuant to Sections 1B(ii) and
1B(iii) hereof), (ii) the fees and expenses incurred with respect to any
amendments or waivers (whether or not the same become effective) under or in
respect of this Agreement, the Management Agreement, the Stockholders
Agreement, the Proposed Acquisition, the other agreements contemplated hereby
and the Certificate of INCORPORATION, (III) stamp and other taxes which may
be payable in respect of the execution and delivery of this Agreement or the
issuance, delivery or acquisition of any shares of Stock purchased hereunder
or in accordance with Section 1B(ii) hereof, and (iv) the fees and expenses
incurred with respect to the interpretation or enforcement of the rights
granted under this Agreement, the Management Agreements, the Stockholders
Agreement, the other agreements contemplated hereby (INCLUDING THOSE related
to the Proposed Acquisition) and the Certificate of INCORPORATION AND the
Company's bylaws.
7B. REMEDIES. Each holder of Stock shall have all rights and
remedies set forth in this Agreement and the Certificate of INCORPORATION AND
all rights and remedies which such holders have been granted at any time
under any other agreement or contract and all of the rights which such
holders have under any law. Any Person having any rights under any provision
of this Agreement shall be entitled to enforce such rights specifically
(without posting a bond or other security), to recover damages by reason of
any breach of any provision of this Agreement and to exercise all other
rights granted by law.
7C. PURCHASER'S INVESTMENT REPRESENTATIONS. The Purchaser
hereby represents that it is acquiring the Restricted securities purchased
hereunder or acquired pursuant hereto for its own account with the present
intention of holding such securities for purposes of investment, and that it
has no intention of selling such securities in a public distribution in
violation of the federal securities laws or any applicable state securities
laws; provided that nothing contained herein shall prevent the Purchaser and
subsequent holders of Restricted Securities from transferring such securities
in compliance with the provisions of section 4 hereof. Each certificate for
Restricted Securities shall be imprinted with a legend in substantially the
following form:
"The securities represented by this certificate were
originally issued on January 24, 1994, and have not been
registered under the Securities Act of 1933, as amended. The
transfer of the securities represented by this certificate
is subject to the conditions specified in the Equity
Purchase Agreement, dated as of January 24, 1994, between
the issuer and a certain investor, and the Company reserves
the right to refuse the transfer of such securities until
such conditions have been fulfilled with respect to such
transfer. A copy of such conditions shall be furnished by
the issuer to the holder hereof upon written request and
without charge."
-15-
7D. CONSENT TO AMENDMENTS. Except as otherwise expressly
provided herein, the provisions of this Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company has obtained the
written consent of the holders of a majority of each of the Investor Common
Stock and the Investor Preferred Stock. No other course of dealing between
the Company and the holder of any Stock or any delay in exercising any rights
hereunder or under the Certificate of Incorporation shall operate as a waiver
of any rights of any such holders. For purposes of this Agreement, shares of
Stock held by the Company or any Subsidiaries shall not be deemed to be
outstanding.
7E. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein or made in writing by any
party in connection herewith shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby,
regardless of any investigation made by the Purchaser or on its behalf.
7F. SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by
or on behalf of any of the parties hereto shall bind and inure to the benefit
of the respective successors and assigns of the parties hereto whether so
expressed or not. In addition, and whether or not any express assignment has
been made, the provisions of this Agreement which are for the Purchaser's
benefit as a purchaser or holder of Stock are also for the benefit of, and
enforceable by, any subsequent holder of such Stock.
7G. GENERAL LY ACCEPTED ACCOUNTING PRINCIPLES. Where any
accounting determination or calculation is required to be made under this
Agreement or the exhibits hereto, such determination or calculation (unless
otherwise provided) shall be made in accordance with generally accepted
accounting principles, consistently applied, except that if because of a
change in generally accepted accounting principles the Company would have to
alter a previously utilized accounting method or policy in order to remain in
compliance with generally accepted accounting principles, such determination
or calculation shall continue to be made in accordance with the Company's
previous accounting methods and policies.
7H. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
71. COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, any one of which need not contain the signatures
of more than one party, but all such counterparts taken together shall
constitute one and the same Agreement.
7J. DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive
headings of this Agreement are inserted for convenience only and do not
constitute a Section of this Agreement. The use of the word "including" in
this Agreement shall be by way of example rather than by limitation.
-16-
7K. GOVERNING LAW. The corporate law of Delaware shall govern
all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement and the exhibits and schedules hereto shall
be governed by and construed in accordance with the internal laws of the
State of Illinois, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of Illinois or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Illinois.
7L. NOTICES. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient, sent to the recipient by reputable express
courier service (charges prepaid) or mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications shall be sent to the Purchaser and to the
Company at the address indicated below:
IF TO THE COMPANY:
USAI Acquisition Corp.
000-0 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: President
IF TO THE PURCHASER:
Golder, Thoma, Xxxxxxx, Xxxxxx Fund IV
Limited Partnership
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxxx
WITH A COPY TO:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Xxxx X. Xxxxxxxxxx
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
* * * * *
-17-
-18-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date first written above.
USAI ACQUISITION CORP.
By:
---------------------------
Its:
---------------------------
GOLDER, THOMA, XXXXXXX, XXXXXX
FUND IV LIMITED PARTNERSHIP
By: Golder, Thoma, Cressey, Rauner, Inc.
Its: General Partner
By:
---------------------------
Its:
---------------------------
-19-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date first written above.
USAI ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Its:
---------------------------
XXXXXX,, THOMA, CRESSEY, XXXXXX
FUND IV LIMITED PARTNERSHIP
By: Golder, Thoma, Cressey, Rauner, Inc.
Its: General Partner
By: /s/ Xxxxx Xxxxxx
---------------------------
Its:
---------------------------
-20-
LIST OF EXHIBITS
Exhibit A - Certificate of Amendment
Exhibit B-1 - Management Agreement
Exhibit B-2 - Consultant Agreement
Exhibit C-1 - Employment Agreement
Exhibit C-2 - Employment Agreement
Exhibit D - Stockholders Agreement
Exhibit E - Services Agreement
21
